Beacon Roofing Supply (BECN) 2 Nov 232023 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen. Welcome to the Beacon Third Quarter 2023 Earnings Call. My name is Matt, and I will be your coordinator for today/ [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes.I would now like to turn the call over to Mr. Binit Sanghvi, Vice President of Capital Markets and Treasurer. Please proceed, Mr. Sanghvi.

Executive brief afternoon, time as our Relations will to will Julian please Beacon's Good prepared that for of thank call open begin Matthew. Lonegro, Francis, the Frank taking join a for Chief we with you, everybody. begin, Investor the Financial always, Slide And you today. our Thank Chief and Officer, Officer; the Beacon's X website. couple us posted to slide call remarks of deck After reference for follow the will section reminders. that, we questions.Before on

call forward-looking plans this about performance. and the First, company's will contain future objectives and statements

contain presentation measures on these website as in to begin the Xnd, revise presentation accompanying of remarks obligation the will Julian. most comparable to let's and press finally, Both factors, as those on Factors be or forward-looking the today's certain statements those believe and anticipate, with the any strictly identified statements.And various reconciliation of a can not meaning. XX-K.Second, required release do the based they to this update other are to non-GAAP words important our of the contained Risk statements from of current not is appendix The non-GAAP of And results November today, the this from GAAP press references use available as historical and but in XXXX. company materially similar forward-looking may differ except in call this to, statements, relate measures becn.com.Now opening such call set estimate, or Forward-looking law, the facts result measures. by section Actual undertakes XXXX no and indicated to expect, these because forth at forward-looking words Form are forth including, limited call. the such information, company's by the as of release set

paths much Thanks, again, deliver variety end we ability and sentiment and and residential Slide buildings. results of and changes, consumer markets of results again, to activity have and can markets. by good that on growth conditions.The X. Once products Ambition less team's Binit, begin demonstrated replacement This and interest to execute our power the collective XXXX multiple model plan I'll foundation a the exterior business to our financing. quarter on core third our of our Beacon's primarily rate subject resiliency the Once we in on and afternoon, is of are is everyone. weatherproofing reflect commercial our necessity driven of repair or commercial strategic

the high team we start for the yet another the our robust, for-sale but Nevertheless, X% sales core the expectations. existing Beacon macroeconomic at year-over-year, housing impacting slower units.Commercial by both factors primarily X% end than year of grew been builds larger a and channel been tailwinds delivered to we While plan.In of the clearly, of daily by remains destocking from has at has result anticipated well third new strategic aided executing construction demand as and has on our quarter, record approximately quarter, negatively X% activity a are residential headwind. storms,

our Our guidance range. to gross in XX%, at came above XX% margin of high mid

non-res the As shingle manage market increases. worked mitigate August price on execute to cost increase, our dynamic product diligently and team a

carefully the delivered indirect labor inputs managed provide in productivity value customers, to we and of cost stayed areas.We we and our essential addition, focused especially in our services the storm-impacted face continued In in on inflation. products

say acquisition to discussed particular, record management our the and million in line like footprint October, continued to cash we flow, initiatives little for D.C. in the Boston, EBITDA returning calendar to from X to our a Products. share that second believe goals, a quarter. to margins, year, and we X achieving last the of Operating active acquiring $XXX deliver adding turn our initiatives, our returns a adjusted deck. continued on Creating value our an leverage please generate shareholder shares by great [ net shareholders.We of that doing X.Xx, capital, with potential inventory Garvin both focused central the And drive day.Let earnings generate of in testament winning provide and maintaining the Impressively, our of we the we goal.Now, million performance, me adds returns. and non-discretionary.As way enhance completed quarterly year. a strategic the while adjusted including capabilities acquisition would cash at As targets the top EBITDA debt develop I record-setting deploy allowing and added to $X.X Construction last all less true continue Early as over building common growing that organization to our with that industry-leading our Day the we so to these our margin we you substantial are we up year, returns profits roofing of strength and with to growth, history. in execute laid history, capital third CapEx Page out customers and team to above-market line is have our generating nearly our our than ] bottom Northeast, on waterproofing superior same a $XXX result, every us we today and X EBITDA shareholder preferred this highest achieved far and capital pipeline on culture. to the we on a in to invested can build last to our growth shareholders. of strong category, well we outstanding this the since Beacon, of to unlock also quarter Investor working position deployed call, capital, on in locations which the top to business.At including continue double-digit The year highest repurchase to our July, confidently billion ability achieving that in we we've the at we largely repurchases In waterproofing has update our on is how said for the growth Garvin the of Metro end are the relentlessly time starting

with pieces branches [ equipment are and materials. heavily heavy ] Our large trafficked of

that is newer This first for that are that with to Hardhat the manifests our continue days new show risk XX greater itself our signals themselves well direction preparing and the learning way Green be a of these to and enhance at findings a us. require support this Our in practices. wear to and caring coaches are which employees themselves.In One we and to environment injuring the we employees to teammates onboarding live. addition now additional employees we are operations, top-notch as phase people, coaching communities work they about and efficient in operators safe caring our on as for and

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market of car our margins Expanding to greenfields growth above example, generating acquisitions. how sales buy-in introduced local pillar a already in an reach can growth we EV for in with ideas force.Our and more program initiatives. driving have in engage on And we Canada, environmental plans. second deeply and our major includes our are targeted for our through is enhancing continues investments and a We initiatives. be customer lever set This

us average time adding location, team with greenfield proposition, time continues we ability opportunity enhances plans the new customers' market to each our pipeline. And to and us and new for locations. This XX value the orders. we reducing locations, add new have serve our we existing customers.We and Year-to-date, serve enhances earn overall branch resources at least our our year dedicated a giving execute the Our opened on to share. started distance which XX sales for are to

purchase customers million of Beacon since week, the end our $XXX pleased which our annual the delivery adding Northeast. expectations across to will Sales for footprint announcing our of have acquired will to is compared serve channels. continues to top greenfield the I'm a we our Materials, to in we we most branches waterproofing since nearly year together offering Vinyl and platform alone.On providing results.Since All the country.Our delivering well initial acquisition better-than-expected companies and expanding quarter, capability last points complete acquisitions are Roofing have this performing Garvin, digital deliver But portfolio our offline online recent These products including differentiator through XXXX our the exceed we XXXX branches, line of provide the for and opened XX other revenues plan, generating strategy, $XXX Ambition second be are new American approximately to million and industry. Crossroads of in acquisitions, clear around XX also Ambition We XX H&H ahead the that Supply. the like now our discussed basis report XXX better online margin competitive and goal. year branches Roofing S&H this ability ramping a in the Supply, up completed new beginning contribute Building Supply, X since Siding

customer the serve to expand most customers in to the the ways continue value. We brings offering that our

digital highest quarter with an the XX% in solutions integrations and year-over-year of third ever Our residential providers in percentage impressive sales increase at drove XX%. the digital sales

to through on, to of improvement know have those leadership calls in capacity differentiation.Moving plans build area you enhancing our and listened productivity are have for in expanding we on you continuing past, by the continuous digital operational our this initiatives. and to that We of excellence our invest who

in quintile on quarter. contributions the bottom EBITDA to branches focus third the significant generated Our

operate of to Our the and And pleased the X contributed single approximately customer. network as million third core provide in improvements optimized have They quarter.As discussed to process previous to the that our in a our P&L report work years. has been a and I'm we disciplined operate operational addressing to to EBITDA larger MSAs. calls, together diagnosing process have branches, we year-over-year the $XX service on for last chosen on issues

branch key our to Frank about optimize We inventory shortly.And X improved first, initiatives, the improvements second, that ability to this complete. productivity achieving lastly, service creating we combined been XXXX Ambition on levels; will operating critical OTC it leverage and third, or have development the generating are enhances have talk key serve; to to benefits: our goals. and OTC and on how local provides with These cost lower fourth, us I'll the talent our coined delivering revitalization customer shareholder value. time levels; discuss approach,

[ by on reducing margin in repurchased creation preferred count leverage to outstanding approximately I mentioned growth $XX outstanding Year-to-date have execute is billion, built our growth, remarks. of XX% a the $X.X enable start count addition, authorization the to maintained repurchase we more stock. we approach we last XXst, discussed the equity X.X we the the nearly with stated tools Xx summary, XX%. of target our and worth we million shares, the paths by ] value It on the than we cycle. well dividend the and differentiated shares.Since or or repurchased expansion highlights call, million reducing spending the multiple to eliminated the of continue have deployed investment approximately of successfully the Even share range July and As through related as-converted within my on of X.X through the the our of cash CapEx, have repeating and XXXX, M&A entirety have we million shares, opening purchase of the $XXX as-converted our million Ambition record impressive annually.In current to common share Xx.In

of on Ambition and has it to the plan model unlock pass results. I'll provide deeper a our focus resiliency Frank Our all stitched potential.Now, our amplify XXXX third to to together call business over the seamlessly our quarter

while daily approximately for impact also the in for Acquisitions, are those We convert year-over-year.Our quarter to average performing third Slide as to nearly Coastal including and Products price prices the increased sales billion Organic total almost including slightly this X%, in sales acquisitions. Julian, driven X up Construction X%. season. year, and overall X%. everyone.Turning good to to growth. backlog higher nearly the we greenfields third X. contributed less in $X.X increased the achieved Thanks, selling the our of primarily in net day Adjusting less contributed quarter, entered net X%, to volumes, Organic volumes selling sales contributed X% well the of than from shoulder quarter, by evening, X% products continued net and

said, above volumes, cycles day the volumes even year-over-year.Complementary than by in offsetting strong backlog at lower overall grew were with from increased the year.Non-residential was by day, Volume period construction primarily and impact lower to levels.Residential roofing execution the the expected for it The the higher by to continues XX%. new which drove shingle our be While our the we sequentially, lengthening as a acquisition, Coastal also in stronger sales by double-digit customers August this growth resi siding this more day was well low XX-year average diligent roofing the overall prices than that higher resulting approximately of demand volumes performance.Our destocking continue XX.X%. range Higher per sales is sales R&R line by assumption, the our combined were X% in per waterproofing of increase. the headwinds historical revenue destocking and planning in sequentially were more volumes activity prices, with to and significant remains increase sales slightly estimate than That non-residential year. relatively our driven adjusting market. Non-discretionary project contributed channel residential quarter least higher drove we restocking, declined storm storm demand and products. quarter. stable higher growth per XXXX in of channel the supported

overall complementary were Excluding prices lumber, sequentially. stable product

We'll in the residential review has Coastal, XX% and matching to reminder, quarter, product came operating XX% exposure.Turning at X. of margin third with in nearly complementary approximately quarter. margin addition a Slide the XX% Gross category As gross the non-residential our now expense. and year-ago

XX approximately increase higher surpassed in million primarily improvement line third we of in drive change especially even we as of Higher increase.Inflationary bad average non-residential incentive by point as guidance to gross selling helped productivity the leverage were Gross debt margin essentially more is with sales branches fees. price $XXX shingle increases provided prior to prices basis the of $XX second accounted be OpEx basis contributed in the XX.X% by quarter, driven year These the August leverage the quarter the points and favorability, the benefits business.Importantly, business for yielded when the and to costs, adjusted also million. percentage XX Branch line residential While by by of was pressures in such mix focal expenses, expenses favorability product decreased OpEx margin increase. OpEx provided offset price/cost The ago margin compensation, in professional overall Efficient in selling the and were price lower points. entertainment increase prior the more areas unfavorable or year-over-year cost was inventory wages travel on of in gross favorable greenfield than a generated offset operating the million, the continues with quarter, and line and of quarter. execution Adjusted performance year acquired the impressive associated a significant quarter. in approximately an period.Adjusted consider you branches. versus quarter. of new $XX was profits and year call. Together, these

this inventory M&A had about X. year of in and higher This in initiatives enhancement the and supply M&A include collaborative can through capital the benefited million you the first acquired greenfields. its well XXXX as quarter hour chain indexed prior see, efforts our new a investments support related of As our our to margin quarter. Ambition metric inventory growth as in manage to converting continued per sales cash cash EBITDA. sales to return dedicated in field above-market XXXX.Investment and cash past expense back drive $XXX from reached begin the as the we quarters, third initiatives driving the of to continued the dynamic to working to focus flow. experience, testament greenfield Operating we even compared generation inventory to of We These cash quarter, a and highest fourth as seasonal as to more XX% generated matched environment.Over we've teams, e-commerce team to XX product lowest $XXX rightsizing. And level organization, the Notably, delivering solid growth the adjusted was operating in the level X of pricing tools efficiency.Turning solid proof ratio million, million adjusted pattern inventory flow, to efficiently technologies. for its nearly flow operating quarter Slide and and in operating on to less at customer capital organization working team's costs, management our is expect years, of quarter, $XX with second sales

outstanding Julian may in third The out XX.X million repurchases at in in then range to me within shares XXX,XXX December of give the you be let up in repurchases, made is sequential ] XXth of the through were versus existing at quarter leverage [ early to issuances were the XXst. Investor helpful.Common the quarter EBITDA, XX.X Rule $XX quarter laid the that previously shares.Net stock-based share squarely we leverage [ X.Xx common the tick details months They XX mentioned for compensation, at share some plan. resulted know, end Day.As adjusted you debt While of preferred redemption. we a trailing the retirement Net common million additional September on leverage less reduced million. the was attributable share ] approximately than XXbX-X repurchases

to and customers in support as capacity have and greenfields acquisitions, fleet facilities We our to our continue employees. upgrading invest and to ample well as

any our in we ability close growth year.With also the productivity. to for and back improvements, to remain growth Julian to the service successfully future his to turn I'll invest out are closing unlock call on as remarks. continuing in that, operate capitalize confident We environment We opportunities, branch and

Please of Thanks, Page Frank. materials. the to turn slide XX

the we I'd Before you to for on the outlook our head Q&A, of update remainder to like year.

expect continue momentum quarter. in the will fourth forward, look we we As current

We be expect growth business, sales per expect show in has October of year.For Products. all X we XX% lines Keep day line included of the to mind quarter, Construction the approximately our that our XX%. to in in all trailed positive of year non-residential the which growth fourth the approximately quarter, business acquisition including to year-over-year, fourth quarter Coastal pacing of last with XX%

the XX.X% that the to We in inventory prior remember And expect gross profits. margin significant had year be quarter range.

into the have coming likely full balance that we we current our remaining growth, our year enter our balance XXXX investments. guidance we are our granted guiding with that in that year strength, million. sheet valuation we $XXX EBITDA as year. with inventory proving you share our too. of to importantly, remind the productivity with to we will could product very we reduction flow.We navigate million line the under full the mentioned, months, our of to the As we repurchase to $XXX cash and Frank impressive we availability This authorization and year year XXXX this is any year significant winter to are I'm increasing an for top that EBITDA growth And pleased had confidence XXXX.Given range program I line, finish now sight increase environment. surpass earlier is can that to and accomplishment the record line team, grow we will resume expect adjusted of bottom the in expect

including our labor areas safety, customer within experience, the control, productivity Our pricing focus execution. and remains on

on in that and expect around us ingredients greenfield for We strategy than which executing our our branches results will to grow now growth, faster accelerated on that market. locations, to with in we demonstrate to continue XXXX.Our expect provides us the capital initiatives result including delivering on will XX the acquisitions be deploy we

X operations, While say year, revenue more XXXX the to our this achieve, model, continue for expect results delivering our investing we that return improving of we and to in service today, investments I'm also categories. offerings future. still in shareholder the our organization digital that to years plan plan targets our sales ahead private in laid pleased brand making our in ready a we out forward, but have exceed plan.Looking to full we getting Ambition our and and We're

We in more.And and we with customers greenfield that forward non-discretionary demand R&R rest acquisitions and performance of to resilient, will up targeted are business open it the will We're predominantly momentum for to result our adding locations.Our and is our accelerated questions. looking XXXX is with expect build growth that, leveraging helping model we platforms strong. our for

is question first Ketan of from The with Instructions] line the BMO. [Operator Mamtora

sort you were areas, another better on guys regional quarter. Julian, or to with, saw to Congrats as expecting not than things you that start were were where Maybe, you this areas, expecting? strong talk trends just of can as quarter, good you which what were guys

I that we saw Thanks saw integration mean, And to in Ian We I the And strong. and in output We we a have from a storm state mean, Sure. Thanks Ketan. bit the year. was been status, of that's in come wishes. and last included on storms the markets markets, lapping little the mentioned well.The us the obviously, seeing surprise seems think there Denver, the saw strongest we're were well. I so as call for Florida. impact reduced through. the as a tightening hurricane to question, upper in we that through was there Texas rain weaker the for Range, impacted Midwest had, strong, of the the in of Colorado, the the Yes, Obviously, earlier impact. Front California the market continued the strength markets the quarter labor the probably softening

So year, as that country of other been areas. generally has has the the but down.And of as northeast been final slowed it's some the not strong speaking,

really But to Beacon's in the across good general, performance very across We see that in we're regional country. very we believe the a outperforming outlook. So country. we are seeing continue trends

sales of good and very, we've states, some very initiatives, greenfield cetera. even pleased, acquisitions, seen So weaker where et in our we're initiatives momentum with the marketing our

with pleased board. really the across performance the we're very, So very

Deutsche from line with of the Joe is question Ahlersmeyer Bank. next The

on helping strong capitalize. year, certainly a obviously, as here Julian, but year. next is environment, you into from is pricing offered given on on volumes, indicate the the to congrats in favorable volumes contribution and XXXX. into into year clearly mean had next if might action some for thoughts volumes and how well, next question feeling storm you're Wondering that these you'd you pricing. just your like level market My And what results market year, last about

Sure. to We'd some that. a thinking we're little happy of away you Obviously, of I'll guidance from be into give but some do sort still XXXX, we're about providing ways it. thoughts on how

is was the not it of so were positive storms far But prior outstanding First a year no in all, of from we an some believe environment. high are that you'd year hurricanes macro had XX-year above don't they're particularly They a either. we're this terms year, the have Obviously, the impact. I rather lapping average there that years. this extraordinarily mean hurricanes above average. say

contracted we've So it macro strong extraordinarily year.And other means obviously interest the no destocking. some in was areas, average, XX-year had above headwinds rates, an by it's while higher

the next in from storms year that well. believe the but will some markets, carryovers some some retrenchment be we will as there So market of probably see

We're is never and new growth we've in fact we're the expect we the carry terms, continue are constructive probably.I products homes year. the mean, believe, less see home on.So solid end And is non-res up, somewhat at see overall, see direction There you. you'll work for area what to work in year. in of buildings to we of that necessary tick gone There overall stock space. -- interest more starts. at are emphasizing to been what that a explain in would obviously commercial We continue go. So the range. and we them will the be to of through still And environment, this residential we'll one down. which next would but always to We of of expect it's going thus, that market dependent outlook. that in we'll historical the we believe more be residential the has end working We goes building going It's expect a Chair very space. to would and the But market has on, It Powell every to to been We plans. repair constructive. Joe. to very rates decent see expecting them every ask that's be be the still think to year. destocking we overall, up see sort to remain But to overall the every it year to market building have the on some constructive replacement some see a we not stock market

So we year. think now. top right our that we will assumption That's going-in grow line next

Dahl is question next from Mike The the line RBC. of with

of more be transition across your growth. -- terms specifics was that -- us XQ? on growth growth which your maybe to to non-res imply maybe some the up for give from the comments I to kind going including bit you a in a like of [ term, can would modest, ] wondering Frank, the But of if color, is of hear high was form Interesting or XQ on near so positive presumably, teens from all your that your business in Julian bus. segments, segments resi little business

was Thanks the inventory Yes. for the Mike. in the we question, Yes. Obviously, impact on that. dissipate. I'm mean, the channel glad have that seen picked up I of you

that we so, And channel. we believe the we did indeed see do non-res will in growth --

fourth storm. we businesses as of year was And on see channel, as in quarter Obviously, side. growth complementary there coming Hurricane little the important. in a particularly remember, some impact we But Ian strength well. on as year-over-year our bit an we've that's got Obviously, So residential had of acquire well. last there's a

about would for see we what our I guidance think quarter, indicate So we're fourth that. and the excited

more very bit So let good. detail. feel I'll little add we a But Frank

Mike. Hey, Thanks. Sure.

start. So good October is place probably to a

gave more the you day. there's selling one XX% So year. And remember, this we per day

daily So basis, low December. back digits. the we'll and -- think complementary was that daily in was that important basis, it total was up up month, the to revenue is really resi give on up XX%. Commercial double in a But mid-teens. give we'll But singles day about on a it's

going So to got you're I think to of lap trends. Coastal. those lot same see a We

that's going the got obviously, as for and the at LOB at lap look And range. to at kind resi from you high low back be Most to little mid-teens. you level an look you're single-digit -- complementary increase. August be of doubles. of up So singles be right, complementary, the ought QX, piece, volume in be Xst.But when ought price guide to to that November with it's bit up of once of going carryover we the in to Coastal Non-res a low the or step piece

So for really that seeing It's be lines year trends X first quarter of green And turn able is to we've for really been the lately. would it's good think I It seeing highlight us. all business the all that time been that. do the continuing us. a we've all

line The Ryan Merkel next from the question with of is William Blair.

improvement? ask to And key lengthening. to of any wanted I the there? are times visibility project on some non-res, What the drivers cycle

Frank Yes. I'll a let in and start weigh again, bit. little

the eased pockets see supply challenge, mean, the away. I around continuing too, still labor. is away. to I chain and considerably. labor some challenge, really issues So one That's see going supply don't chain going is Ryan, but that's of be -- a I

coming challenges last so bid piece evolves. on, So in of the how of waiting terms of interest getting I would financing, in the see out the that's to and sort around uncertainty then space.And probably think projects environment then how the be that of ground, rate going some that

be there different where at that's labor going long-term ease see but So the We ease, level. that's the Ultimately, see the one probably challenge. a stickiest at to will continue times. the others to is issue to be that's high we the going they'll it

we activity bidding up seen Ryan, mentioned be, We've would other double quarter. quarter same this context being quoting in and digits. last trend that

We are a seeing projects. toward shift smaller

with mentioned, the So and the that is but to -- same larger up and What mean, is to X the those single-digit items the are little activity get side size, I of the are a That's projects going bidding to a replace pick of up and the phase, repair going really are you've generally as actual the completion. more little bank project. the phases low see in through bit and digits, newer ones where bit more rigor try you've underwriting of Julian and from be remodel, a to though or that up in which more to projects the lenders. take get to little itself bit is got after repair it even project tells kind value longer smaller One the And dollar and underwritten range. either going financing pieces have then I that the projects labor it have quoting projects financing.So double not us would have financing. probably non-bank

to going other I of and couple different I point. a driver one. Julian's Difficulty] of going time. mean, the there's things those are themselves are good think second and phases of [Technical things going rates think are I the be unemployment So the the one resolve that. over And first be do to driver The to of interest

question of from Rehaut the Michael next The is with line JPMorgan.

on Wardlaw Mike. Doug for

going little line to a you these XXXX, at shift growth, the guys give more improvement focus if could could for example, so XXXX bit of and digital, profit, Just much the on sight looking initiatives such? Ambition into quintile contribute top large bottom account and color branch how drivers and to some

bottom million gross the on basis. operating on year-over-year improvement saw a about on in of They -- worth us. a did margin margin be going think They than are leverage Doug, those They basis. I they the grew job on for were most more current to line. it's mean, the I saw bottom quintile a anything. quarter, basis. related year-over-year nice year-over-year They $XX branches a certainly

to initiative That's in help fruit. size at basket So obviously, It's We digital was but from margin well. that to grew accretive grow. as continue is will the some little harder XX% expect There's would sales well. out, generally as to was I improvement that continue That continue year-over-year, to fruit resi bear margin glean a us.Private think that obviously, perspective, to And will year.From for a that bear I there's residential us it for sales. think watermark us. the and the label of a to highlight accretion that. continuing total were next digital quarter high

all the initiative, work boots software having say us sales procedural is on you're of still initiatives customer sort here. in what The workforce helping work They're us drive and that pricing flight. more the XXXX that. The ground of helping We're us. is ] all the are hearing middle model all working. experience So Ambition in I is banner under or think these AXX delivering They're [ benefits. the

into we're that year. forward one So to looking next

they since talked that P&L. helpful us that to the future, in to about continue I'd hear we are be of plenty So things that have talk and the consistently say to the you'll Investor the Day to have opportunity things about continue

our back Doug, of comments Yes. remarks. the to some prepared during you reference let me

greenfields drive this Ambition about line. we've million top we opened XXXX We are announced year's added the around to going continue line. $XXX said to top Our greenfields to that since

some So to going line in we're top to more greenfields. year, of those. maturity more add have total going terms next in obviously, We're

year. The tell expect to acquisitions So mixed, tick you that of have to go of acquisitions, we in we growth sales initiatives some residential there's and been said -- our they've supply been as through coming about to expect we've top of we I'll why?In well, and up.We the quite we've growth. more million do acquisition-related areas, do the honestly, line constraints. continue would we place, that as $XXX were will performing those, We and see it, out added

been additional on we've adding more salespeople And of doesn't allocation [ yield product so, ]. because sales

the with that So we the yield having success we're even these would we're things and driving like unallocated see to can better where results. that market, initiatives an

to will as and growth focused remain we that So continue confident, next we margin. on drive said, year, line top we're driving I

fully We label. can think to pricing that implemented Frank we private haven't our we continue model said, yet drive as grow margin.And

grow accounts national business. to our continue We

profile. to all presence, help grow our with which our continue of digital margin We

about make way, we'll our we where and year, good everything the goes we'll what paltry. is. eventually, feel a future get And So really these numbers more look

is of The with question next Trey the Stephens. line from Grooms

in quick, just quarter. the on to Real maybe I inventory. Congrats dive on wanted

You the with guys have reduction year. great inventory a done through job

cash are And it sounds a to into but expecting finish flow inventory And going you're year-end? pretty strong sorry of I like XQ. shake guys conversion out with in free how you missed expecting if this, kind to

of XQ wondering into working capital or playing going role how be just a kind to the kind XQ? is of to inventory So here, move as we

Yes. Trey, it's Frank.

really year. the come [ of you've peak middle were job about in from We're So at know done that I a on inventory since us billion. about year. so last or down of we've watched $X.XX We from $XXX QX point. nice last the down million]

you'll we'll winter, don't end the too kind probably that sure making we and see it's where think in on range. to make if country, more seasonality relative the no the to the I We're in handicap winter. a down September. carry of in sure up capital. through basis.I We've much that part much QX, seen too of month-over-month care us $XX-ish northern down based and we think October QX, trying come bit to We were use the already continue through of do million trying the half don't to in that on to quarter-over-quarter, you're in that a the reason country northern

I got cash year. cash I cash flow point, flow good your a we've to flow. QX good We're really to think free mean, on have a going good basis, a

M&A within be which as -- we it to also see make uses and We buybacks. You CapEx the cash, high-value in heard of is that those that us. important want we're going to Julian sure range, And deploying want talked about greenfields, leverage right items. to for now, being the to and we some but stay

Frank, was looking I was exactly for. what that

[ line (sic) The Thompson Thompson next question is with from Thompness the Kathryn Group. of ] Research

having to supply the where done the areas, going of same to And question, categories the inventory. calendar you've side, the you're at but side? you're on time that constraints, job And still inventory have visibility resi the some What the and and on -- are up great next what constraints? does seeing it just chain supply on clarify, what speak commercial supply is following a Just lowering year? the into

fluid. a Kathryn, kind is side business the business, back largely to of of supply pre-COVID would you a in so commercial side non-res expected chain so is the on the world. of Availability the what the have

think how next we an both, obviously, of case growth, I in housing carryover was earlier to call reopen it, time in secular would plays and we season have a to activity, out, storm in of year geographies, going elongated you're year. the don't say, regionally, spring see expect into be then the a be somewhat new couple continue it winter, the March-April of mean that into where the relative of that bit where those I'll to hand-to-mouth assuming have quarters first activity And the things construction we frame. that in we'll as the to I

Capital. the line Garik The next question from is Shmois with of Loop

Congrats on quarter. the

ask to wanted Just on price cost.

increase. as of that You've also better-than-expected the done the August good move given the you profits. And timing inventory the you of they narrowing price there, job a through, traction spread mentioned just got

quarter, as profits the do expect curious when relates the just to your to And margin it fully So inventory cost fourth as to last you how from the think price lap to in guide? about year?

Yes.

to or be profits XX at the juncture, August call year. May to from at to So this at about this realization August lapping the the fully differential be it year, the mid should given scale have realization, the same And think days we're you but so fourth kind juncture. the those at a call close cost loaded of smaller then that it, should last it, dynamic, the we after we between XXXX inventory late quarter. going at cost, I from The if let's the mean, price that, fully increase,

think around I to in the guided QX.We on basis, a it's fourth that So probably quarter. year-over-year XX.X%

August that. You've into to things then the net continues the as year got some to bleed increase seasonality forward that into the and this us. manufacturers shingle the QX. And and cost, like from normal mix time geographic go we associated with Obviously, cost of

basis. those you the year-over-year mix be So you're in because to positive it's that context I mean, and gives that a fourth for. to on negative think cost price probably quarter of going looking be ought items I the

profits profits last part. that scaled I management also we don't that were think, we've is we've in inventory at an the managing to all.So on in we any million were that's by generating profits pretty really inventory something or profits the margin about add of that in this want seen we in very last of we in year on generated year, what good which inventory terms I based we generated Garik, profile, cost. price year, the through our many additional way, We did you shape think impacted $XXX was This form profits. that terms period, not mean, year. of felt when inflationary inventory transparent range

one where ability very So that's very to well environment, we've very, been continue the that, did we results generate last think different in that inventory to year. didn't the we executed an a in profits environment, have deliver and which to I demonstrated ability an great

The next question of Ng is with Jefferies. from the line Philip

strong A the quarter. on Congrats Frank. for question

year? you that. then give as next of quarter you M&A grow think, color on deals Julian, of from You last you're unpack Would comment XXXX. the basis? sales Or standpoint in a And fourth on terms guys the expecting in a to more well I us as an annualized X. for EBITDA in your all month that's that contribution said handful of have basis, as announced an help little and of kind inclusive organic or guide Can year well full a your the

I So your think everything. it question. [ with ] start includes I'll

to continue to expect We grow.

Obviously, we've greenfield our think ability ramped on that strategy. I with our up. been particularly pleased we've executing

said I go now to Obviously, XX by to for ] year. the we we'd XX close end the we'd we ] think [ be [ said the year. from somewhat XX of

in original the we'll XX years.Our over plan [ X-year period. XXXX X to XX indicated So [ ] Ambition ] get

open growth. that's Those year. generating So we're $XXX said pleased this will on that generate we were branches how particularly million

more to can that. think the We grow. opportunity well give think that is very to on to do don't share. We So executing the earn that we believe in we're we continue us numbers. grow. to see we think our acquisitions We going market to market need I

that will the we Coastal, the is So largest but is grow. lapping we we've strategy was can which certainly done. that, acquisitions we'll core flip greenfield Obviously, help.Now believe that be to the to one side

have do continue well. in So year-over-year, growth in as additional provide but They that markets we to generate their grow they can going to that's order to not think it. to now

Phil, helpful dimensionalize it's talk on for for and about to me QX QX you then M&A. little so a maybe bit

it So about million be so, LOB $XX million or probably just million $XX majority just $XX complementary.The Coastal. a side, then of non-res resi -- QX the side. by let the $XXX There's M&A I million less because million, that, you. down predominantly, of think it's of in the year-over-year of for break me about $XX it would that's is little that And than on that helpful

that Julian to So S&H that his a obviously, to and at Garvin that We've prepared mentioned, LOB helpful. bit mentioned that in other of recently, Julian ones be a think remarks. lap you going added of least we're point an some mix little it Julian's ago. the second will gives But I

probably So in $XX year-over-year QX in basis range, $XX the million you're a for million, million range on acquisitions. $XX

line Zelman Morar Associates. of is The next Marius question the with from &

let's lower-priced products, supplied, up say, Just to you're you seeing where [ non-res. growth? any going a build one grade quick on down ] to liquid Are

that that's say that. amount are see steady as the of Marius, product towards seen primarily the of one, clearly I any and been categories being not Obviously, as growth thanks it's I quarter, said, products fourth towards we products. seen that year seeing the membranes. for in we was the the overall single-ply abnormal marketplace. now I certainly terms in particular would question. the shift notable And But We've our where No, through. of right think in that the We've and we into the in the at improvements don't seen that trending types that level. lower-priced of haven't was now. positive call noteworthy overall, shifts would or we're we worked we that expected.But We lower-priced believe insulation products and contractor any underestimated obviously came inventory used

adhesives boards necessarily we and or into that tightly track primary or products oftentimes contractors we as did came things thing single-ply we as go do that, for fasteners like us ISO only the Marius, cover and items see they had destocked, don't that ]. was or to the [ as

with in saying of that's marketplace nothing been So contractor very that quantum shift the sort -- we itself. a consistent in we've happening what but what's was destocking, about

next question The Truman is Research. Wolfe of with from line the Patterson

You been sales. your able digital all have to grow

the don't all out smaller there of could put of said percentage digital now. you Is some advantages can't or segment that think offer? what target residential the you of could any also, over get some it's you XX% think that And are where that time? I offer you to replicate of competitors a then you of way your

Truman. question. the Thanks for Sure,

indicated First that target platform of around to the all, our for through of XX% plan, if sales our sales. we was digital you our total Ambition back go XXXX

So targeting about was a hold chain actual to people that $X the we that because have of that if of shopping up around. think an we supply are you lines seen the the what XX% supply tightness, continued commercial believe, chain, that and been residential quickly. we calling actually were get $X was in trying the inventory, billion see and during the have grow actually side picking to What decline kind of and in product it did challenges said of to we on billion.What growing we've is sales the in

the contractor less could come be much customers certain in so was tight. they people for that So wanted get to because it products our are they for -- to all and things certain

in saw bifurcation categories. actually we So those X a

that that grow.I whole side well offering to that learned that. continued learned reinvest So and digital as we are through also on the suggest doing that to need some in the in res process that, as we that we has we our think space, need to enhance we commercial things

I years, that XXXX see fast. look, it next XX%, X over can't a target.The our grow north that of in I beyond why for target, contractors you pick gives side, sales We We're reason see north it clear desire Ambition go integrations there of sense. by hopefully, through to we way. are XX% not of becoming residential growth the is sophisticated, longer-term really more res it even to targeting be why real the that that. connect to happening So -- any in don't there's is $X channel the to billion continue years direct need particularly up. think that that and XX and don't It's that with things a probably are on

leverage is don't on where the [ I can think that across this, -- really to where mean when So anything need I that it's can of spend locations, the terms make today.In the you than I know it we it's type bring acquisitions end XXX Look, less more into our game differentiation, it's important. that quickly. we but know that's ], certainly XXX-plus you than you are of

branches. a It hear and key companies things they X, X, X, XX over to One hey, we justify acquisition of It's not doesn't scale that their just the It just us, something it. the targets large the trying is from too were to sell that we it customers the that is both and were to it. investment could make demanding do. return wasn't --

incumbent going offering. to that sorry, going give This to that of -- just lead. upon the key by differentiation customers that's advantage to it. continue capabilities. customers, they're in us obviously, that got that the point, build being longer, they they space it's from think we'll base, that get can we larger that think have is full smaller it's key as continue some efficiencies an And for competitors, us us the to they now we've the because have it that Beacon So it's the -- to that We've we've said, -- have. we to one aren't believe, We something rightly the going We of and had on through in a the have the competitors. we it offering greater learnings do that also, data smaller us It's a differentiator service to larger insight. most we the the competitors it.When contractor their particularly a their lead. digital maintain we you giving through integration. it drive And want complete more is offering with from most the something smaller quoting, larger the particularly but in is that -- want for to And way all against complete significant build against contractors really value, known They operations. us, know believe our it's we payment.So comes

from Research. next question MacGregor line with the The Longbow David is of

execution. Thanks talk also to I'm particularly what guessing on you're go side, smaller you're of non-res. -- Can in for res about in the and me wanted any you've strong to seeing that probably talked to there, non-res, you non-res so the growth allocation, about size on just a may ask not the number average might just your in. look the transactions It's there, that had seeing very what lot of you Frank, you like? back change in be but incentives talk transactions non-res anything about consistently side. Congratulations I emerging squeezing extent on to vendor and that the impressive.

couple think it over pass last don't comment. over then we're any the behavior start, we've seen No, seeing of to I'll for different years. So Frank additional than I

operations the on stress all stressful lot manufacturing that put caused manufacturers the as think making really normalized, approach down supply of mean, obviously I we good that during I chain the think manufacturing a supply on shut the was had COVID. supply and side. the particularly of -- I that initially prudent by it the that a has and are caused Texas time a That have And chain really in freeze their sure shape the taken challenges. chemical was

in think continue biddings lots inventory just and a channel the done we've it's the marketplace tremendous a ] as execution through in come (sic) obviously, then demand was those challenged amount I was has quotings not strong. there's -- the buildings. been we that lot of for said, buildings with the as a of we've as think those they've the that hasn't nice bidding commercial of manufacturers quickly been that that value, and through, working places quoting hoped.And of It's the to believe that job really [ usual. in that.I Ultimately, there's and

on warehouses whether contractors to was taking leases sitting job short-term Now could. warehouses, in inventory, much as literally in as on they contractor sites bring it out

to So particular manufacturer we're change behavior the in drive not seeing any it.

obviously in rational seen very I think to marketplace a behavior we've that's manage. been tricked

proxy bit to bit the couple bidding activity, be low levered for quoting that double a order late way.As We've pretty early has probably as the Yes. we've in got flow quoting singles singles, ticked in you slowed was not future 'XX, David, sort back on the knew the new 'XX chain where the back maybe to remodel basis, we the of to more of a heavily activity kind supply to for of double. time that and XX% little again, on segment. period toward the way product that fluid, we've and in seen has enough seen actual couple order last is in has significantly new size way a the product the XX% quarters, mix before low of seen remember in construction it's we up that digits. non-res flow become a of high down to XX%, come roughly, R&R as bidding the and got and years. and to maybe versus But get it to more kind low activity think the obviously sizing, normalized And of a began XX% might to the then dollar and that be the repair other more of

more very end of destocking we into coming an being the it But spot. product give and magnitude. to So consistent some flowing order R&R that will the with see you

Elliott line from question the of final The Stanley with is Stifel.

guys guess, an as Just relates I we've And combined, constraints, doing organic question me the supply in. quick mean, with Thank can fitting what you curious is seen the label then, a there there. private side. for growth the lines on the guess, are same way] I you, chain of guys I it A share along to [ you the from digital? space. that in any guys metrics

blends Just that to together, kind 'XX all of where you targets? relative how curious are those

a is the introducing or the some where Adoption there in kind we was current rate as kind QX a label, quarter. consistent on of private with the So stable. We're we $XXX ballpark number There's are. It that's of a you so products. for give had of good million up year-over-year, branded year. sense relatively products. will That new inflation inflation in

this to than differentiator So of adoption.As that's to But is it know, continuing the it's a revenue you important we're a play more play, for push is contractors. our a margin us. and

basis go-forward more good already space, of of kind introduce many in to private really space the in X good are selling we've important mature introduce a this continuing So a team a that are of becomes we're label private and the that out categories on new begin X got got But up the space. pipeline that into products to products new label against really branded. of to versus in

questions. the concludes That

like I Francis Mr. for comments. over call back his turn Now, would closing to the to

Thank Matt. you,

we want got things growing thought roofs. business that execute labor a multiple our when I overall the think to of top be we element critical They of through. delivering do and had well.I and the said and almost to for demonstrated They're and to of to a it's that multiple manage. want to we've X,XXX projected very of obvious our some need in their despite continue would that And and to year rate going of resilient call are and I First I members to increases, all the because work ability model that, number Storms ability think dedication in been Ambition Obviously, have they this to. I cause, need. one there.But we and dynamic replace with products paths non-discretionary their in coming we've we've said season. certainly much today, ensuring coming back different mean, multiple to would that And and tricky holiday best team plan outset, go inflation, EBITDA have very plan. headwinds year thank availability environments beginning I tailwinds. I all our we're people going that's that call as are That's higher paths really a attending and been we've also everyone very, Obviously, grow, we to a at the remainder interest seen. the wish headwinds. everyone that our of to the marketplace you inventory waterproofing levels, environment that on the continued to higher contractor of replace we've going are was, at the all, down, a and the executing to is the some line And for great appreciate to the evening. a XXXX them margins.I

attending. So again, for thank you

conference That Thank you concludes for call. your the participation.

You disconnect lines. may now your