Core & Main (CNM) 6 Sep 232023 Q2 Earnings call transcript

Hello, everyone, and welcome to the Core & Main Second Quarter 2023 Earnings Call. My name is Bruno, and I'll be operating your call today. [Operator Instructions] I will now hand over to your host, Robyn Bradbury. Please go ahead.

Thank you. everyone. morning, Good Bradbury, for Robyn of and Finance This & Vice Main. Relations Core Investor is President

outlook We to am our and second Steve are morning our Mark quarter this thrilled LeClair, Financial earnings have Witkowski, you recent Q&A financial call then discuss will our with today's call. Officer. Executive followed results lead I Mark Chief joined full business update, a by second acquisitions. quarter Chief followed an by will us today a overview Officer, session. join and year Steve of by our our for

the Steve's We call will remarks. conclude with closing

We the release this Investor issued morning to of earnings section presentation website. our a our second Relations quarter and press posted

include forward-looking These subject the reminder, our uncertainties could and Exchange risks earnings press and are our that set with statements. and and release, the and to our risks Such in a expectations actual uncertainties from the our press include Commission. filings differ Securities call factors in results statements projections. to cause and statements As this presentation made release during forth

certain in financial release in We reconciliation Main. discuss Thank presentation. our interest the Core these of your A in are be operating results non-GAAP assessing & press also measures, of business. believe which of can our investor measures useful our will earnings in found we the appendix and you for

now call Executive I Steve over the turn LeClair. Chief will to Officer,

today. for you us Thank everyone. morning, joining Good Robyn. Thanks,

business. of record as equal $X.X business our of on were up another Core to on delivered you're we X from If & our the XXXX. and with brief results XX% across billion last operational quarter fiscal quarter excellence focus of we'll following second along update. maintain solid year's the driving quarter page presentation, high, Sales second with a investor begin Main

water strong Municipal and municipal the been market demand increased half the Residential rates. construction budgets, by resilient, wastewater soft supported healthy performed replacement compared year. has as performance. largely has through and last and has repair been year's of expected first End utility demand to

the for of as optimistic lots, to to in from demand year, homebuyers. are half supply continued look and limited invest be for builders second lot the developed of developments continues We there a

probably market flat quarter. was the non-residential through second The

are relevant for pockets new to starts to of The exposure and long project the in need the for technical sector. to is Core more different highly cycles. due these on of and remains our see non-residential expertise size, within water beginning effect due provide extreme term broad we However, our the weather these to types for to happen increasing water robust can scarcity. well potential markets. over events water trends the project Despite softness generally on projects solutions near-term as this softness demand management Main select for stability market positioned starts, capitalize across in various scale, &

demand impact year strong either are margins continue year, expect products we to sector, price of highly as to pricing of in full our industry. the increases. delivered coupled in resilient year our the or the made of fact slightly of through our margin EBITDA provides Overall, which execution. gross most specific a have through for a our framework half in first sustained positive adjusted our anniversary the pricing second non-discretionary prior specified the we disciplined the for We from and quarter the with due pricing part Prices industry, XX.X% that nature for

initiatives our on again gross Gross to margins from prior exceeded execute as we margin our continue benefit expectations inventory investments. and yet

the balance prices. catch We sheet inventory from as second in efforts, in cash up our strategic optimization quarter market shareholders. business, We inventory M&A, our expect to half gross of margins with and the reinvest return flow year, capital pursue to continue second robust creating the generated costs in capacity normalizing to the

quarter, $XXX share and end, shareholder transaction a we from million shares. this $XXX our second of the deployed during that majority XX share our over million executed year, count repurchase diluted having retiring This million by capital repurchase marks reducing shares. share second To X million

Turning X, Foster added distributor drainage, of combined on seven control to erosion partner of during worksite team precast locations recent and approximately is our and solutions, installer, the to concrete of to and businesses leading of net Supply at products, expertise geosynthetics has choice collective Bringing infrastructure Foster and product and our quarter, storm combine our innovative meet high Supply and other The two differentiated offerings solutions to performing acquisitions will waterworks West family allow Core contractors and $XXX customers. seeking Main that and operating page us million challenges. needs on the of annual & generating Since service producer, Tennessee, a our a for been municipalities, we shared across out specialty to sales Virginia. basis. Kentucky, XXXX, unique for the team

Dangelo offer reliable was an Southern gained Dangelo enhance the waterworks capabilities strategy of these in protection at Since service, has our breadth knowledge, this contractors product and dedication water, extensive key of our service offering acquisition and sewer, fire other related products. a aligning The our of protection team with Southern advancing talent, enhance expansion and new through underground locations and provided greatly three complimentary Both product presence product California. customer provider California. businesses XXXX, storm of with geographies, an and connect while drainage, in lines, offering. leading fire infrastructure. including products into with to service will outstanding and

adding driving growth high-quality look moving to Core more through committed like these the forward. to are & Main And M&A. family forward sustainable businesses we We to

to role I'll to fragmented We of page highly X. diverse how we to large Turning and critical industry. our connecting set now suppliers chain are with base. well positioned discuss play supply a by win a customer a in

attract allows of product with and and us capabilities, Combined, us these provide business convenience delivery. to competitors, service, expertise, to capabilities provide to projects. local customer multi-regional smaller timely from purchasing consistent availability, and which benefit and from large [prep], more municipalities contractors the customers advantages and complex relative Our locations branch our technical allow our

distribution availability distribution recognize to into us from increasingly benefit significant product new specifications. restrictive and a suppliers to supplier extend proposition our limit and our favorable exclusivity entrants sales geographic industry rights agreements view enables us Our with ability and deep This believe we and for product These opportunities competitive an they their our well line reach as restrictive advantage. arrangements. exclusive as provide sustainable and knowledge as partner local and customers, value given integral of technical to and

a local carry lines, brands, needs. At and effectively our range local of our branches to to to product levels inventory project level, respond customer's tailored the specification

We scoping planning product solution often develop sales insights performing customer's needs. project list a by complement knowledge network specialists and and Our associates specifically are our sourcing national and decades with product digital custom platforms solution, leveraging to curating to and trained of this technology experience of expertise planning, takeoffs into our in a our and proprietary tailored incorporate needs. customer's and worth that regional

online bidding, a delivery proprietary loyalty customer and build materials seamless planning, platform customer portals Our experience. management, by more facilitating bidding and

of well-being prioritize development also and We in people. our the investments

profitable top Our award-winning a mission-driven development our of and drive training to to programs while talent culture. supportive growth maintaining us accelerate enable

in track the Our allows our dedication most to individuals developing and and motivated to industry. retain industry qualified us leaders

career to expertise. associates and knowledge utilizing addition, In provide our opportunities we while attractive their growth local

are role which the across is our procured set increasingly as products, customer chain suppliers. broad of from higher distributor levels becoming the availability specialized large The base of of within a important a number value demands fragmented of

and product advantages As smaller competitive our industry position regulations specifications, new becomes our with over to local win more us complex competitors. scalable our

to hosting Investor October to in The in-person York Day the to I over and inaugural City Xth. I'd Before financial we're that growth will our also drivers, event call and hosted virtually, present our turn on strategy, we objectives. like and business be New both Mark, plan announce

you If about our Relations any reach to the have through team. event, Investor us out please questions

to it Mark. will and year I that, our financial ahead, over now to results Mark full outlook. discuss Go With turn

line first while of organic quarter the growth, year, consistent our contributed grew Acquisitions sales compared prior net XXXX. our sales approximately sales comparative XX% We in basis. year digits. second were page and very are mid-single when fiscal Thanks, of Steve. $X.X In reported results. begin in single-digit expectations. the net down with period quarter billion the net X% and with on strong I'll the volumes of sales year-over-year with was performance contributed low price well with a to performing on aggregate, follows X This roughly which for quarter prior highlights

compared of the of performance consistent margin execution Gross was our and benefit higher accretive cost selling with prior inventory initiatives the offset the of year and by period with reflects our prior year. acquisitions, margin enhancement XX.X% the

in we have prior XXXX and we margin seen we As costs expect last prices, gross in as normalize inventory our up catch quarter. have margin quarters, discussed gross with to market reduction sequential from a already

percentage the XX.X%. Interest period. to was basis expense senior cost of was unhedged acquisitions. rates of for administrative on inflation The quarter prior increase as general and increased and compared due our Selling, higher impact the sales term increase $XX million to the loan. million the net SG&A second XX the quarter. in $XXX increased of reflects expenses The SG&A points X% a year with interest second portion variable $XX in million for

in for million due million the quarter expense increase rate compared income decrease year in income tax in the year decrease holdings held period. period, interest $XXX tax income quarter of interests tax prior & reflecting due effective $XX and expense recorded SG&A, to was non-controlling the $XXX in rates prior We XX.X% of Main with partnership to We net interest a XX.X% in with The the of million $XX higher the effective second respectively. higher The taxes. recorded and of holders. Core second by million compared was

shares. to counts was basis in decreased X% margin offset quarter prior share per in earnings margin was decrease million earnings lower adjusted the second The to and adjusted increase in compared $XXX decrease XX share EBITDA EBITDA points per year due XX.X%. to share an in XX X% EBITDA to the Adjusted income, partially Diluted due with The by million period. SG&A. down following was of repurchase lower the net decreased $X.XX,

XX. flow XXX% Turning second cash adjusted of operating robust EBITDA. from We delivered the $XXX reflecting million, to over quarter conversion in page

inventory net last from the XX% of from to about cash quarter, inventory benefit quarter. On started acquired inventory support generating in even through a year-over-year costs, middle was to and product the inventory year, of this we optimization for new $XXX greenfields. higher acquisitions the continue our million down inventory with We basis,

debt available Net and of half inventory the last done second we $XXX,XXX,XXX billion was in at in than generated million offering year end of stands flow times capital quarter more we and took we have and share the X.X liquidity we experience normal allocation continue quarter. concurrently executed our levels XX million strong June during was our repurchase at seasonality. to four quarters actions $X.X The following the shareholder. cash operating as a over leverage optimize We of over cash generation with continue the by majority the public secondary shares of the $XXX the

reduced consistent our diluted increasing shareholder while a We participant transactions, arise. As to from we opportunities as liquidity share expect shares ample by majority of share our our we business, repurchases be result count investing and capacity a in maintain public to these the continue float. in and X million

fiscal like to XXXX the of Before I’d to on you we update XX. remainder Q&A, for outlook on page head the

played quarter second the and expected pricing. resilient stable through results as demand out with Our

the replacement builder of is the expected end easier terms is be growth, as through of expected and second year. year-over-year half and stronger to comparisons. we remain the sentiment municipal to first demand in steady demand continues than improve to Residential In repair half volume the face

in we softness Steve pockets for to starts non-residential select As project mentioned now earlier, see beginning are new markets. of

bidding that backlog, and second it the is the we slightly to in be the the the year, positive our in and resilient expect half for net second sequentially year. the on the year. for contribution resulting pace, single-digits Pricing sales order non-residential price down we quarter full market activity Based stable in and expect quarter from a of to low remain first was

gross margins. initiatives margin our and for synergies M&A Our continue drive from to structural gains

low-cost However, of through continue to in we third sold our and gross quarters as have normalizing the expect we most margins inventory. fourth

to we results together, our outlook date. are all Taken on narrowing based annual

in for are expectation EBITDA We second optimization narrowing accelerated raising inventory to in our gross the billion range $X.X $XXX for strong the flow quarter. be be adjusted in of due performance conversion the to $XXX we adjusted billion margin $X.X range expect We're million in range to expectation net efforts. XXX% of of operating of to also to cash to be the our to and sales to our our due XX% million EBITDA

our focus service, and technical control, customer execution. be on always, our As including areas productivity, within will expertise, pricing

continue and delivering initiatives expect we on will initiatives. capital in pipeline on our organic deploy will accelerated We growth M&A including executing growth, that to result on our

We are enter more look to value forward well customers demand complex part reliable the in infrastructure key a stakeholders. market creating as our for We the season. construction our build positioned outperform this we to helping of environment,

At open this time, it I'd questions. like to for up

Bouley [Operator line Our is Please Barclays. from Instructions] your Matthew now go question ahead. first comes Matthew, from open.

few on seeing you taking Maybe some just Hey, good times it non-resi softness. questions. for morning, one everyone. of the out Thanks pockets since a called

of verticals little I decline more single-digits we in areas. for might perhaps exactly and different seeing a be bit. you the you curious across year a Just little that on than if sanguine seeing a What regions? are low think can is other elaborate

some curious puts So expectations low just kind you. of Thank there what takes that the decline and single-digit non-resi. around of are in of

Yeah. saw and really around in entire much across started it we second question, been -- pretty but in broad some see Matthew. the the Yes, of we as country. the quarter, pockets the Thanks to Geographically, we pockets comments, different for softness. it's mentioned flat was

that lending keep on So seen well things. to lot we're these just the we've it in for front some in And these are possible And projects really seen non-res. it's pockets that mind a edge west, Northeast certainly as of the softening tightening of due of out standards. in

commercial year. we'll what various the to say I types, be our overall, into with watching how But with shapes bridges. got would exposure closely up So and construction is horizontal broad the what we from to project we've that as half activities this get everything bidding of back roads construction pretty

these so different us, provides we'll can projects generally sometimes it for for And happen stability see in how and these demand cycles.

Got it.

that. Okay. into then for you Thank of zooming kind margin gross expectation. secondly, And the

forward. you sort you. of calling with step been Just that, your by then could margin out some going normalization QX? of of Any curious, QX? you're color already the success we gross maybe initiatives. versus Are for of Thank talk QX and just kind back of through structural fully having if And the expectation the normalized sort cadence of on you've kind

question. Yeah. Thanks, Matthew, for the

we've about number. the was margin XXX consistent been of terms In off the to XXX with points cadence indicating of basis at 'XX year we're gross of looking basis margins, pretty points gross that normalization full and

quarter we So QX you a of really strong in second we XXX did see the had. were about off points that down sequentially, basis

of back we into to finished then to at little we're going progress that QX see point, QX on a 'XX. we're 'XX kind base more maybe of and now So some at happen in off confident through QX, lingering normalization seeing bit based building as trough we that the we're really start really QX, into that of probably what that as

So and of We in continues I'd that the on this about based those early initiatives. That's products say of seeing pricing in we're on start continue to items have expect there right point. into on the the this this and good lot do continue progress innings of our a continued private our year XXXX expect to later some still year those 'XX. available a are key balance initiative. expect that benefits for through to on the now at really really of we'll particular particular, we based that's into -- from and to seeing pretty see I lot that what how initiatives, label it did thinking benefit continued we're and accelerate. quarter kind

guys. Mark. Steve. Good Thanks, Thanks, Great. luck,

Thanks, Matthew.

from from Our David next Baird. is line question open. comes David, Manthey proceed. your now Please

morning, Thank you. everyone. Good

in you're First here, level to up you expecting quarter the XXX XX% XX% off, I that gross to believe year, basis closer Mark, margin level clarify, retrenchment the first points to just of XXX annual to said notwithstanding. last

on there. fourth from your by build quarter this should implying range XX.X% you're quarterly margin that XX% year then Is a to trough gross hopefully, in basis expectation? So the and that that of

Yeah, the we Dave, And of and depending think fair. in into to That's that's these QX. that kick building really on that initiatives, off we make progress XXXX. hopefully to get about QX expect early do base more on it in, how into as

Okay. think municipalities about end dollars? you to those here? And are already the the then we how (ph) are build talk municipalities should second, how those dollars if from about expect you fiscal the your dollars -- Are And could I December, mean, could state year nimble about or of status moving federal June up [IIJ] into flowing, talk in of with most funds. the accessing you how certain them September, revolving

this Dave, Yes, Steve. is

to line of So see of we some from didn't through projects seen the quarter much projects, really handful first there them, and a signs service at and in plant replacements, in evolve quarter. We really much started second quarter. all haven't couple lead of second some see the a treatment

So we how I What tailwind. a to really to that do dollars is that to going to that get these a think this certainly stuff projects tell is It's be out is municipalities. hard some and lot would fall of this bigger administration to the on into this build these you tell current is trying seeing urgency start to flowing. we're see going

just the been kind right we But anticipated the for of seen come, see we year. has haven't way through -- slow how to trickle have would just of of now, half we'll it out. it back it plays as So and it the

much. very you Thank

Thanks, Dave.

now is open. next Kathryn, from Thompson from proceed. comes question Please line Our Kathryn Research. your Thompson

for Brian Biros Kathryn. This for Hey, Thank good taking is questions. you on my morning. actually

you're you light seeing types the can if Just that outlook, more type of it's on of it's would heavy the non-res be office versus in, else? non-res additional if touch softness just or something the or projects any color on On helpful. projects

seeing multifamily where early that being which out. the of we has signs we've projects, softening happen. of certainly non-res What seeing We're data categorize Brian. we're Manufacturing move scoped are Yeah, right is some continues to forward. been large seen centers a into the lot now

think the has But in certainly multifamily quarter. area are obviously, an things been really softened that's horizon some we last this that that on piece the So do there's coming.

maybe to data manufacturing, Where kind mentioned, forward Okay. that other Makes guess project touching Core long going category trend a mega in be ones when I & of seems the than mega sense. for of if project, a the project the Main that on Main And into the all the forward? trend also How does the kind just more centers, for the you it's & can even residential fits of time. trend but Core just around in growing stuff there's you. infrastructure, non-res, mega project Thank going that. grow out going see built there's kind

number protection these is Yeah. There's we of construction a the goes of amount systems, commercial we and get is and fire obvious there underground storm facilities. the drainage pockets Certainly, commercial lots also, a mega participate an work most when immense the in. that where lot goes up, in then projects preparing the goes these there. And that activity into of that into

that product and that changes been product us and of how the to that systems, about So the detaining install provide our lot has come a contractors lot and in water train really regulatory a place category the instrumental. it been big for has retaining release from to from into quick preventing a that on storm of have ability

to plants and as project continues treatment see well. areas areas in eventually, is expansion residential enhancement commercial well. of So a surrounding you and the and then definitely construction participate treatment that the as those water wastewater and as And to of we grow the addition in lot what

Thank you.

next Our comes Capital. from now Please go Dahl Mike is line RBC from question Mike, ahead. open. your

to morning. Good my Thanks stick I'm for non-res. taking going questions. with

in the concerns think may you're to separate out calling a think verticals. comments, It there multifamily, those just that commercial in based lot I around is weakness non-res. non-res, just broader on of construction out which the Steve, some kind potentially the categorize people So seems prior like non-res of I of are kind from core clarify,

would if the of kind So be expectation think flatter your that? year? you about that out non-res you stripping is characterize Or would for how still ex-multifamily multifamily,

would over I that as too. also warehousing sure, Yeah. months, last Flatter, for really area protection well, for another see XX strong decline seen That's fire to products. we but think that is we've the XX been a

in So decline been an that as X has area we've seen well. that

low non-res. the And Got as stable. XQ it. the know I for half. like down follow-up, then was first Okay. It in year seems a single-digits

have even been might XQ up stable. or think a I little

think second So XQ are sharper that should we kind of it this that is cadence, then down that of XQ? to Any see please. of you and half of mid-single on to we the specifically, non-res somewhat weaker in When expect on probably implies XQ starting about manifests kind the is second already comments cadence that digits-ish. as in hit half kind decline some the a piece or

keep Mike, in about non-resi, starts also you I think we're fairly mean, balanced completions. between Yeah, I as mind, and think

So particular, seeing protection side. side, in we're What multifamily, mentioned, still as in the up That we're on our say And the the business. bit seeing fire Steve in little of start completion we're a softness the beginnings is on commercial. shows warehousing. strength in lot I'd

cadence So pressure. stable a some a from given still end overall, the But that's I just in relatively market see we'll overall standpoint, mix. expect volume I think still would QX, us for

the factor -- we temporary, drop-off into how we year. from half much a start could that little really comps expect to here out, the call we wanted definitely see last starts plays into we'll seeing to other QX, was but there I'd of the the as it run started side, of in we start the easier pressure out. through So second but we second a half that is get be residential something do year, still recently the on to saw say

some then offset there pressure. some that provide the to volume just we optimism So and of the year-over-year trends think residential

of more volume offsets see, pressure I'd from in in given perspective QX of those position a in the little probably some we then a be So and better should say, should QX.

helpful. Thanks, Okay. That’s Thanks, Steve. very Mark.

Thanks. Yeah.

comes from Sachs. Joe Our open. go Please Joe, line Ritchie is from your next question now Goldman ahead.

is first between on basically the fire My Srivastava sales Ritchie. protection this X%. on was decline just dynamics question different pricing Vivek this for play product the segments. the at and Fire Hi, is sales Joe quarter protection down

I think in But product actually attribute pricing an up. pricing was the there. segments, other was

So can half year? these you happening between on the provide think color how next pricing to some and across products different what's second about it and in

commodity Yeah, sure, steel that particular Vivek. That first carry fire that Thanks side. on guess, And type I product that the of a say, do say, for pipe, diameter, are on used product for I'd that's products is that the smaller product question. protection particular one we've more, industries. significant That's line. seen, we line line. pretty the I'd across steel various declines we pricing used have, pipe that products

product what protection quarter-over-quarter. you're being the of with line fire a majority really to down seeing that's So X% XX%

price I'd categories, has whole stable product a as either other been been pretty The there. say, and or consistent up

that fire really, pipe that protection big revenue. difference up a that with steel So of the is category the lot makes

just this just a billion will of next could $XX about from just bill, year $XX water as early that to I more have the you math specifically term, a fair longer you perspective. take or this suggests as Thanks. guys guys this $XX around billion some on about opportunity. And a highlighted opportunity $XX gear you bit a previously Is start from $XX billion, back-of-the-envelope for this longer? bill. about And it, we XX% market opportunity to And seeing billion billion billion maybe sales bit doing share, think shifting maybe way some $X think over

we're municipalities would to that. in for the projects we'll funds. to Most through start down been point, starting be are has that state anticipate on of and been or draw the scoping that hard Up revolving this to it funds we distributed, to going that those it get here. seeing flow Well, has now

tailwind have a in that good 'XX is certainly us, anticipation should our and effect So and this XXXX beyond. for

Thanks. Great.

Thank you.

is Patrick, next Baumann now comes Our question Patrick from go Please JPMorgan. ahead. from line your open.

good Hi, morning.

or costs, in costs just well respect First to how in I expectation if however curious ability Maybe And relevant, performance next you you the as seeing still you the think for cost. you're costs. the expenses current talk well about variable to quarter think of about talk operating your as on your one the about to with some rest it environment? as manage able -- facility to Could you is year, those that want SG&A. over the be people versus I as to I'm guess? inflation just bucket the imagine fixed of manage

inflation Yeah. for -- Thanks, we definitely a cost Patrick, as lot costs labor But our across highly we facility is experienced the variable. question. costs. inflation, us for mentioned, Operating of you have other and distribution

into even the get of some market. has to lagged some that ability of that price And our

seeing up. greenfields. invested and to in we've So show invest But lot of our a continue pressure initiatives, that more of we're also growth

anticipating As normalization the I'd opportunities for to the to there find back new continue say we an highlighted the quarter, in we're experience half. of that we as we growth. some example, margin and in invest

We comp cost incentive quickly plans. out structure of a relatively our given that lot have with comes variable our cost

experience that So comes as of out cost very quickly some that we normalization.

So cost that a becomes operating to way quickly. fairly in line that get

that look by see need -- a of make market Obviously, market-by-market adjustments those basis. the of we typically to that's on where to if do we softness materializes. we'll some market the So And and there, continue easy are some levers.

allocation. the one sheet just balance capital maybe then and And Helpful. on

X.X So the this leverage, quarter. as I is of times think,

you to your an remind on priorities for the perspective? kind company if Thank M&A Just and capital us what the just of think wondering how target is leverage about allocation, for the update from us financial especially pipeline you. can

We've area the go an Patrick. X.X opportunities. we'd the times X in. operating Yeah, times debt to we're We That's right X said you're at Thanks, before, leverage about willing right. for Yeah. net that definitely to quarter leverage. finished be comfortable up to

that Pipeline from This that -- growth be very remain organic our our priority. fairly priorities business next capital a allocation strong, perspective. we Our M&A is very initiatives is capital-intensive active. there continues to have. allocation light

year. what We've we're we've that this other You've got currently the and opportunities seen several in pipeline. at completed looking

longer reinvested of So priority. And able growth continue capital another a generate to And potential that expect continue opportunities that priority as dividends then little repurchases will given quarter arise. as road, just continues to be a a share in potential also evaluate complete we've then down opportunity the be be amount share and we and we'll we the those repurchases. initiatives that the to completed to obviously, to during that the excess

Thanks.

just a there, On more still is just how normalization one follow-up much inventory to cash. Sorry, perspective? related from there opportunity inventory,

I lot in potentially first pretty XXXX. QX. that say I throughout year. this inventory the seasonally we've XXXX to want could inventory made we'll QX. and with to been then lead with we're seasonal throughout the we more to the align more see inventory just here would throughout you'd of expect would say, And QX, good continue I even remember, Yeah. rightsizing progress we'll we've typically, business. do get -- that in rightsizing QX progress a done expect, nature lowering work really significant all way to we've in be of some And us here half pleased But of through yet the say the to hard but if where so XXXX,

Best much. so Thanks Great. of luck.

is Please from now Instructions] next [Operator ahead. Anthony, Anthony Pettinari question comes open. your go Citi. from Our line

morning. Good

assumptions volume be a X%, about positive & you single-digit intact kind finer and Do point guess, net -- to, kind you X% market do 'XX don't of sales any growth of as growth is I And of see maybe past, then as underlying the terms view that. we that long-term to know, Just Core the price and between XXXX kind mean, about think then still of the outgrowing it I in you possible of Main still I in there? beyond? sort the and I of there. algorithm of low put sort On down think talked guidance, wondering

piece guidance, Thanks, that one positive acquisitions. year. Yeah. the the down for X% Anthony. sales full say, I'd Yeah, first, to on of X% is

organic the be an And and that we seen standpoint, for the stable through year. pricing that to the We stable expect expect and half X contribute X second to here of do from full year. points to have then very

volume single-digit again, for the primarily price then low the that's overall, then the mid-single-digit significant to half. some year. (ph) mentioned, the a contributing full the in we've year. we're [that side. in leaves And some non-resi of full seeing seen in down the on So the softness And first of from And for resi perspective, with range range due softening we as the] beginnings

lot we've the product In that of of we're would points target X X say, in terms our categories growth, different across growth, confident there very long-term intact. above-market to initiatives of a of above-market that got is I basis

up in opportunity to to pick way. that continue we've continue that We believe share to got

very there sort way helpful. Okay. earlier question, That's we think is of a just to And about SG&A then an target up think term. margin long on margin or about following the normalized SG&A as

sales, to to we productivity as say I think think leverage Anthony, of we times Yeah, about through pretty be either grow X.X to that margin, able gross rate X.X consistent sales been or growth. we've sales that to times growth, expect margin a at as enhancement SG&A we SG&A the about

of that cost So and target some trickier and bouncing grow look fixed this we SG&A operating obviously, little with a it. business portion that I'd able leverage as leverage our at. be margin But makes of to say expect to overall, to it around, we the normalization gross

basis to, standpoint. at So equate that can it, rate XX of that points call year a improvement XX to SG&A

from SG&A our at as the look as leverage and business. you tracking grow that, then continue as to year we'll can think see year, this we're we I last where we So rate

Okay. helpful. That’s I’ll it over. turn very

All Thank right. you.

is ahead. Obin line Bank comes open. Please of from next America. Andrew now your go question Andrew, from Our

David on this is for Andrew Hi, Obin. Ridley-Lane

ask to change Just could wanted EBITDA you in guidance. if bridge the adjusted the

I was much the think outperformance that half How versus change midpoint. year? any it outlook up the versus was million additional in $XX XQ the at the for about of the of back acquisitions

the And range as we more But say market gross million I'd beat the increase the I'd really terms pricing from it raised of from the at sector. quarter. we're standpoint, kind David. end factor more increase million. I'd achieved kind talked as the of good particular. in right. then the was in the why obviously, of we in $XXX narrowed midpoint, $XXX midpoint a of that primary non-resi a Yeah, Thanks, it offset, we in to a stability Yeah. from watch the margin of gross margin that was end didn't a in that I'd softness of quarter. we of we to that second the confident guidance say we've was pricing related an to because -- about the say, there the due you're At rate better-than-expected portion say top for

the Got maybe from what or of you you your it, have your there but over back more good when ask next, I wanted how pricing be, would could of a have pricing expectations background, but on imagine pretty a just couple would half here be suppliers, sort And it. for the handle months? I I the much call of sort to for variability just pricing mean, in notifications

why We've -- really dedicated the seen and But on for the firm, David. may puts have level categories. sector. half. product given are through these from each confidence to we pricing of that remain of part, the a that's just There Thanks, most some different the some and continue couple suppliers, will totally of of them second many be takes the

resilient supply/demand characteristics help So the area in mechanism. carry that kind more hold true and pricing of a

going the sustained we're to pretty through So see that confident second we're half. pricing

much. you very Thank

Thank you, David.

questions. further We no currently have

to LeClair So please I closing remarks. for go hand over Steve to would like ahead. back Steve,

have you the was on you for to a us call. pleasure today. Thank all It joining again

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tremendous Investor month. Main. & providing your opportunity us, that we of you Core of Operator, during and ahead for interest look look forward a in a amount next Day Thank have our to deeper We concludes our call.

concludes Ladies and for today's joining. you call. this gentlemen, Thank

now you. lines. Thank may your You disconnect