Core & Main (CNM) 6 Sep 232024 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

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

We remarks. We of release section will quarter to conclude this the our press Relations call Investor our with website. presentation Steve's earnings a the issued closing morning posted and second

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

call also the will our & Appendix results certain I We in found A we to Core Main. measures, press can our Executive and over our the of business. presentation. Thank Chief will measures of be operating reconciliation these Officer, of your investor Steve in in interest useful earnings non-GAAP believe are the now for which release LeClair. discuss assessing financial in turn you

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

solid the billion supported high Sales has soft through a second strong and excellence by demand record delivered & as year. XX% from brief resilient largely on demand maintain on along and last I'll X to budgets increased year's has and If Municipal healthy another results wastewater with were business. begin repair across replacement our of half we Main utility our last expected operational second with performance. fiscal focus been presentation, quarter the market compared update. Core first $X.X investor Residential been as water up the and construction to driving following performed of equal XXXX. End has you're quarter the municipal of quarter business Page of rates. year's

optimistic the as We continues development lot continued supply to for second look from the was in half of invest second are demand the of a there limited and market quarter. lots flat homebuyers. The year through be developed broadly nonresidential to builders for

fact strong of and in year margins of adjusted disciplined due EBITDA execution. industry, a continue our the industry. robust in XX.X% the to weather anniversary water are happen gross as water the increasing new or impact Core our for part through quarter most near-term for well pricing the long from we over due framework Main specified specific made softness demand resilient which generally to in Overall, and price across delivered projects that see softness our half term in our the slightly stability the due management water However, is as to positioned remain to within broad different & solutions on products exposure year our of various events of are provides sustained more pricing sector. We full we to have positive expect our for this starts to the potential highly and of of technical nondiscretionary a we pricing prior need extreme for nonresidential for year provide markets. increases. the size, on the market for second scale effects first expertise relevant capitalize the scarcity. trends with to these can Prices for project these coupled select pockets our types starts, sector, nature either highly through Despite beginning margin the cycles. The demand in project

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

We X second generated the of expect capital return costs we as capital strategic million to with majority robust $XXX continue inventory and up efforts, from inventory in second having share shareholders. To during market year, our count a optimization to This in executed balance shares. prices. We reducing sheet our normalize shareholder second XX million M&A business, gross transaction creating half from catch the to this second marks retiring deployed our $XXX share year in cash million to repurchase by the the that reinvest of share margins million diluted flow our capacity pursue shares. and quarter, quarter repurchase the end, over

storm Page expertise on Kentucky, strategy product family solutions, businesses our enhance contractors operating acquisitions seeking challenges. protection of with new service choice California. Both differentiated needs Foster erosion and service and add was service protection site provider offer while our drainage of locations municipalities gained of for The is Tennessee and recent million an customer an and XXXX, our expansion producer, product and concrete of a X partner out this that team Main will offering drainage to storm geosynthetics Bringing Southern West annual outstanding to Since will customers. D'Angelo and water, solutions businesses our combine offering, to provided advancing the to We and of X. shared Virginia. enhance to been high-performing for other precast products, and approximately knowledge, with XXXX, of contractors team into combined water innovative a products. to Southern dedication added sales of including across California. the control service and at sewer, locations D'Angelo the infrastructure offerings complementary generating talent during allow and other and us distributor these breadth of with $XXX has the and product a net works team in fire presence X greatly the product Since at Core related specialty and Turning meet capabilities in geography, and leading of leading and products work through & infrastructure. Supply quarter, reliable basis. acquisition unique Supply X on Foster installer our key our underground waterworks fire extensive our aligning line has collective

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

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

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

and a inventory suppliers opportunities supplier and ability Our and favorable from to for local as sales levels extend to range proposition a knowledge exclusive and brands recognize geographic an to reach specification availability value specifications. their line needs. technical restrictive benefit and we local our partner deep exclusivity industry arrangements. and product to and provide increasingly These product significant given with competitive effectively entrants they customers' believe into branches us of our lines, restricted sustainable distribution the tailored as enables customers, agreements level, as our view limit distribution carry and well to project local product new to integral respond us This advantage. At rights our our of

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

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

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

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

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

to In large across value a role is while as which growth distributor the team our of of associates of specialized the addition, within suppliers. opportunities local fragmented availability and broad their important knowledge increasingly we provide products, levels expertise. The becoming attractive a our utilizing higher from customer career set procured number demands base are of

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

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

questions that, I any the about financial team. With have out to will it Mark year turn event, reach over to outlook. full Relations results now us Go you our to our discuss and Mark. ahead, please Investor If through

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

We income adjusted million to and in Holdings interest The basis effective loan. for $XX Main increase million we The The X% respectively. margin period. from quarter. Selling, and tax and in decrease reduction & prior margin a of reflects year shares. Adjusted was already holders. We portion repurchase income have prior million, quarter. tax percentage recorded $XX in the the million increased market XX period. held due tax the of second EBITDA second increase XX.X%, in to to gross million an EBITDA of noncontrolling $XX by of net with term to per catch effective to impact year inventory was discussed million and interest and by higher partnership the year the as with in $XXX due XX.X%. variable quarter last SG&A income count our offset inflation points $XXX decrease $XXX senior share decrease XX was on XXXX the due we quarter with period, second administrative second million higher higher up due quarter XX.X% expect the to prior expense per we cost rates a to points net to our increase in of with was $XXX down in sequential period. interest increased decreased decrease was The prices, basis recorded margin decreased the the prior XX partially as sales in to XX.X%. Interest compared gross interest million The earnings following in second and in was normalize $XX earnings with SG&A adjusted of of As compared rate expense net year a higher $X.XX, Core in taxes. quarter the in the expense seen have share general was lower Diluted in the X% compared X% for share increase rates margin million acquisitions. income The lower SG&A. the cost SG&A, expenses compared EBITDA of quarters, prior unhedged reflecting for to due

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

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

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

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

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

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

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

softness nonresidential in order pace, bidding nonresidential down single now market earlier, we we the digits be to of on for expect As for markets. and Steve select beginning our Based new pockets backlog, to starts see year. project the activity mentioned low are

the sequentially from the is in expect was quarter it contribution a in in the year. resilient we Pricing that the in price for second sales year, second half full quarter, positive the resulting remain net of stable slightly first to and

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

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

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

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

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

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

as part are We helping reliable market demand value season. At outperform this look customers the time, stakeholders. well more I'd like for it construction in infrastructure for positioned we build to our forward environment, this complex our enter We key to of the questions. to open creating up a

Barclays. question from Matthew first comes Our Bouley Instructions] [Operator from

softness. times out on some one seeing you just called since Maybe non-resi it a few of pockets

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

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

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

seen So that of And tightening the softening in as some to we've Northeast non-res. certainly projects standards. it's pockets seen possible due in are it well for these out lending west,

of lot these keep just on in things. that we're Now the edge mind really a of front

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

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

it. Got

Okay. into margin And the secondly, of zooming gross then kind expectation.

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

Matthew, for Thanks, Yes. question. the

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

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

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

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

question Baird. Manthey next comes from Our from David

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

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

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

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

this Dave, is Yes, Steve.

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

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

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

comes from Thompson Katherine question from next Our Thompson Research.

This is Biros Katherine. actually Brian for on

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

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

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

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

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

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

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

Our from Mike RBC next Dahl comes question from Capital.

stick to with going non-res. I'm

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

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

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

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

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

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

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

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

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

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

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

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

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

Joe Sachs. from Goldman question comes from next Our Ritchie

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

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

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

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

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

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

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

term, maybe shifting more a billion longer And bill. $XX gear water the bit just

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

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

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

question comes Patrick Our from from next Baumann JPMorgan.

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

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

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

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

plans. highlighted of we a for cost margin as structure relatively we with experience the to quarter, that given out our some continue quickly example, half, the there invest have opportunities an lot As to we normalization back we incentive in and anticipating growth. I'd new variable of the comes comp cost in our we're say find that

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

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

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

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

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

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

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

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

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

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

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

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

from [Operator Anthony from Citi. Pettinari next comes Instructions] question Our

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

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

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

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

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

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

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

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

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

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

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

America. question next comes Our Obin Bank from Andrew of from

This is Andrew David Ridley-Lane on for Obin.

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

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

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

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

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

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

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

questions. We currently have no further

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

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

our end Our hard performance consistently is support the the of teams, branches and of operational markets. quarter-after-quarter our on strong our a and of diversity result products and focus work functional excellence

innovation strategy growth platform provides value execution. agility, our grounded as for creation is opportunity significant Our and in

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

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