Greetings and welcome to TopBuild's Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, PI Aquino, Vice President of Investor Relations. Thank you. You may begin.

Good morning and thanks for joining us. On our call today are Robert Buck, President and Chief Executive Officer, and Rob Kuhns, Chief Financial Officer. We have posted our earnings release, senior management's formal remarks, and a presentation that summarizes our comments on our website. Many of our remarks today will include forward-looking statements, which are subject to known and unknown risks and uncertainties, including those set forth in this morning's press release as well as in the company's filings with the SEC. The company assumes no obligation to update any forward-looking statements because of new information, future events, or otherwise. Please note that some of the financial measures to be discussed during this call will be on a non-GAAP basis. The non-GAAP measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. We have provided a reconciliation of these financial measures to the most comparable GAAP measures in a table included in today's press release and in our presentation, both of which are available on our website. I'll now turn the call over to President and CEO, Robert Buck.

Good morning and thank you for joining us today. TopBuild delivered a solid second quarter, with both segments growing top line sales and bottom-line profits. Our teams have stayed focused on driving profitable growth and operational improvements across all of our businesses, even considering uneven housing demand and various commercial project delays, both the result of higher interest rates for longer than originally anticipated. I'm proud of the strength of our team and the diversification of our business model, which positions us well to deliver long-term growth. Today's underbuilt housing landscape, rising household formations, potential for interest rate moderation, and escalating demand for energy efficient building codes support the long-term demand for TopBuild's products and services. Turning to our results, sales grew 3.7% to $1.37 billion as both of our segments realized pricing, increased volumes, and benefited from acquisitions. While volumes across both segments improved, they were softer than we anticipated in the quarter. We reported adjusted EBITDA of $277.7 million, and an adjusted EBITDA margin of 20.3%. Excluding last year's estimated $10 million margin benefit in Q2 related to our multi-family and Commercial business, our same-branch incremental EBITDA margin was 41.2%, which is a result of the continued excellent work by our Special Operations team. When adjusting for this margin benefit last year, we delivered both the highest quarterly sales in our history and the highest adjusted EBITDA margin in our history. This demonstrates that the fundamentals of our business are performing well. On the material side, fiberglass and certain commercial products are still in tight supply. Our teams are doing a great job managing through the supply situation and while we saw volume growth in both segments this quarter, our growth was constrained by material supply. Turning to our end markets, our residential business grew 5.4% in the quarter. The single-family environment continues to improve, and although housing demand has been choppy in certain regions, our teams continue to do a nice job balancing price and volume given current local business conditions. We continue to see year-over-year growth in multi-family work, although bidding has slowed. Our backlog remains strong, and we fully expect the backlog to carry into 2025. The Commercial and Industrial end markets are also feeling the impact of the higher interest rate environment as the timing of some projects has been pushed out to 2025, but the good news is that we are not seeing project cancellations. We see these projects as future demand, and this is more of a timing issue. As we have noted before, we participate across numerous verticals in commercial and industrial. Let me spend a minute talking about one such commercial and industrial vertical that is growing rapidly. Data centers store and manage digital data for organizations in highly regulated and controlled environments. Today, there are over 150 active projects in various stages under construction in the United States. On the Installation side, our teams participate in applications such as fireproofing and firestopping, fiberglass insulation, spray foam, acoustics and various types of rigid board applications on the interior and exterior walls. On the Specialty Distribution side of the business, our services range from distributing standard mechanical insulation products to custom fabricated and engineered insulation solutions. For example, on the exterior of the building, we will distribute insulation for the piping of air chillers, we custom fabricate aluminum jacket coverings, and provide calcium silicate inserts that both insulate and provide structural integrity in long runs of critical piping. We also provide insulation for interior ductwork and other mechanical systems. Just to give you an idea of some of the work we're doing, in the Pacific Northwest, we are working on a 27-acre data center project that has six data halls planned. We started work about a month ago, although we originally planned to be on site earlier in Q2. Given the delay, we now anticipate our work on this project will continue into early 2025. In the Southwest, we have been awarded six buildings within a large data center business park. For just one of these buildings, we will be providing over 55,000 linear feet of insulation. In short, our total TopBuild revenue for a data center project can be as much as $7 million to $8 million. Our backlog of work related to data centers continues to grow, with projects secured well into 2026. Moving to capital allocation, acquisitions continue to be our number one priority. In the last 18 months, we have made acquisitions totaling approximately $280 million in annual revenue. M&A is a core competency of TopBuild, and we have a strong track record of execution and generating great returns for shareholders. One recent acquisition that closed at the end of May was Texas Insulation, with $39 million in annual sales. With three locations, Texas Insulation's talented team expands our spray foam capabilities in an important and rapidly growing geography, demonstrating our ability to make acquisitions in our core insulation business. Today, our M&A pipeline is as strong as ever, and our team is busy evaluating numerous potential acquisition candidates across all three end markets we serve. While we remain focused on our core of insulation, we are always evaluating opportunities to leverage our core competencies and have the potential to expand our total addressable market. As we announced last quarter, our Board approved a new $1 billion share repurchase program. In the second quarter, we returned approximately $505 million to shareholders, which demonstrates management's and our Board's confidence in the business outlook. As you saw in our press release this morning, we are revising our outlook for 2024. Rob will speak to the guidance in more detail, but the revision is, in large part, a reflection of timing of demand, rather than any underlying changes in the business. In summary, we posted another quarter of solid growth and our business performed very well as we've navigated uneven demand, project delays, and supply tightness. We are confident we will deliver another year of strong profitable growth and increased shareholder value. Rob?

Thanks, Robert, and thank you to our teams for their effort as we delivered another solid quarter. Total sales of $1.37 billion, the highest quarter in our history, grew 3.7% as both segments grew sales sequentially and on a year-over-year basis. M&A, net of a disposition, drove a 2.3% increase, while price was up 1.3%. Price was primarily driven by the first quarter fiberglass price increase, partially offset by a 1% decrease due to lower prices on spray foam and gutters that carried over from last year. On a segment basis, Installation grew net sales by 5.2% to $851 million; net M&A added 2.9%, pricing added 1.3%, and volume was up 1.0%. Residential sales grew 6.7% for the Installation segment as sales for single-family homes continued to improve, both sequentially and on a year-over-year basis, and multi-family sales continued to be strong due to our backlog. The Installation segment's commercial sales were down 1.9% due to shifts in project timing and material availability. Net sales for Specialty Distribution grew 3.2% to $593 million in the second quarter. Volume improved 0.6%, while pricing and acquisitions each contributed 1.3%. Specialty Distribution Residential sales grew by 4.6% as demand for single-family homes continued to improve. Commercial and industrial sales for the Distribution segment also grew by 2.3%. In the second quarter, we delivered gross profit of $423.9 million, or a 31% margin, which was 100 basis points lower than last year. As we've discussed over the last several quarters, our second quarter 2023 margins had a one-time benefit of approximately $10 million from higher-than-normal margins on multi-family and commercial projects. Excluding this, gross margin declined 30 basis points versus last year, primarily due to the impact of acquisitions. Our second quarter adjusted SG&A expense was 13.6% of sales, a 30 basis point improvement over the prior year. TopBuild's adjusted EBITDA in the second quarter totaled $277.7 million, or a margin of 20.3%. Excluding the $10 million margin benefit from last year, our adjusted EBITDA margin expanded 10 basis points, and our same-branch incremental EBITDA margin was 41.2%, driven by productivity gains and improved pricing in both segments. The Installation segment had an adjusted EBITDA margin of 22.3%, a 10 basis point expansion after excluding the $10 million benefit last year, and Specialty Distribution's adjusted EBITDA margin rose 10 basis points year-over-year to 17.7%. Other income and expense of $7.2 million in the quarter was down from $14 million last year due to interest income from higher cash balances. Adjusted earnings per diluted share totaled $5.42 in the quarter, 3.2% higher than last year. Turning now to our balance sheet and cash flow. We had total liquidity of $899.5 million at quarter end, which includes cash of $463.2 million and availability under our revolver of $436.2 million. Net debt at the end of the quarter was $947.4 million, and our leverage ratio was 0.88 times the last 12 months adjusted EBITDA. Working capital as a percent of sales was 14.8% in the quarter, down 10 basis points compared to last year at this time. While working capital is lower than it was a year ago, it has risen since year-end due to material availability as we work to ensure that we have inventory on hand. Free cash flow for the trailing 12 months totaled $663.4 million, an increase of 11.9% versus $592.9 million last year. Our capital allocation priorities remain clear. M&A continues to be our number one priority for reinvestment. To date in 2024, we've completed six acquisitions totaling more than $100 million in annual revenue, and as Robert noted earlier, acquisitions have totaled $280 million of revenue on an annual basis for the last 18 months. Our second capital allocation priority is returning capital to shareholders, and in the quarter, we repurchased 1.25 million shares at an average price of approximately $405 per share, totaling $505.2 million. At the end of June, we had $649.2 million remaining under the authorization. You can expect us to continue to prioritize our M&A pipeline and to be opportunistic with our share repurchases. Finally, turning to our outlook, we are revising our full year sales guidance to $5.3 to $5.5 billion. This reduction of $100 million at the midpoint reflects the choppiness in demand, primarily in our commercial markets, partially offset by recent M&A and higher prices from the second fiberglass price increase. While demand is still strong, some of the growth we had anticipated in the second half of this year will likely be pushed into 2025. We continue to expect 2024 residential sales to grow mid-single digits, and we now expect low single-digit growth in commercial and industrial. We have also tightened and lowered our EBITDA guidance to a range of $1.055 billion to $1.125 billion, which is a reduction of $20 million at the midpoint and reflects our solid year-to-date profit performance as well as confidence in our team's ability to continue to drive profitable growth and productivity improvements. I also want to remind you that the $10 million one-time multifamily and commercial margin benefit we discussed this quarter had a $25 million impact for the full year. The remaining $15 million will impact the third quarter of 2023 and should be considered in year-over-year profit and margin comparisons as we move forward. Our teams have done a great job to date, and we're confident about our outlook for the balance of our year. We're excited about our future, as macro fundamentals continue to support long-term growth and opportunities for our business. Robert?

Before we open the call up to questions, let me make a couple of final comments. The macro fundamentals of our business are strong and supportive of growing demand for the foreseeable future. We have a proven, differentiated business model, a disciplined capital allocation approach, and continuous focus on driving improvements in the business and executing well. We have a strong track record of delivering increased shareholder value, and we are confident we will deliver another strong year of profitable growth. Let me close by expressing my gratitude to our teams for their hard work, dedication, and focus on servicing our customers and keeping each other safe. Thank you for your efforts to consistently execute and drive improvement across our business. With that, Operator, we are ready for questions.

Thank you. We will now be conducting a question-and-answer session. Thank you. Our first question comes from the line of Stephen Kim with Evercore. Please proceed with your question.

Yes, thanks very much, guys. Appreciate all the color. When we look at your results this quarter, we were a little bit surprised by the overall price realization in the quarter; we thought they might be a bit stronger. I was curious, were there any mix issues at all to call out? And then also, if you get your guidance, I think you said that really, the reason for the reduction in the guidance is this commercial industrial segment. And I think you indicated that you thought that, that might be up low single digits for the full year. Just wanted to clarify, does that imply a positive year-over-year trend in commercial and industrial in the back half? Or does that trend toward something more like flat to down?

Hey Stephen, this is Rob. So, on the first question there around price, the important part to remember there is we are overlapping some price decreases we had in the second quarter of last year on both gutters and spray foam. That accounts for probably about a headwind of about 1% on our overall base. For the company, I mean I think overall, we feel good about the price increase that happened in the first quarter coming into the second quarter. I think that's ultimately reflected in our gross profit at 31%, while down 100 basis points year-over-year. You've got to remember the $10 million that we've called out last year around the multifamily. So, when you adjust for that, the 31% comparing to a 31.3% last year, is pretty much in line with where we were a year ago. If you look, 31.3% is the highest in our history of the company. I think this is like the third time it's ever gotten over 31%. So, we feel pretty good about the price realization there. On your question around guidance and the guidance for low single digits on commercial, that is probably the biggest change in our guidance. It's really around some of the choppiness we've seen from a project volume perspective on both the install and the distribution side of things. We've seen some project delays. We've had some supply chain issues with products like Aerogel and Mineral Wool and some fiberglass products as well. So, definitely some choppiness there. So, we're lowering that. So, we're not breaking down the second half per se, but it does, if you take that low single digit and kind of back into a second half number, it does imply low single-digit growth for commercial year-over-year in the second half, and it implies some growth from the first half. So, I think that's really an important point, too, is that we see the second half improving year-over-year in both residential and commercial. We see it improving the prior year as well as to the first half. We just don't see it improving as much as we had in our original guidance.

Yes, that is very helpful. I appreciate that. My second question is about the margins. You mentioned that your margins are strong, which is encouraging to see. Could you elaborate on your outlook regarding ongoing productivity from your teams? In the past, you referred to a special ops team that has been crucial for productivity. I want to confirm whether you are now including the results from the special ops team in your guidance for 2024, as you have not included them historically.

Yes, I would say it's included in the back half guidance we have here. What we've said in the past is it's not included in that long-term EBITDA guide of $22 million to $27 million because that $22 million to $27 million can really, if you have $10 million of productivity, it's really going to change that percentage depending on how much your incremental same-branch sales are. It could be 1% on a big sales number, a much lower or a much bigger number on a smaller sales change. So, we haven't included that, but it's definitely included in what we've got included for our guide for the back half of this year.

Okay, that’s perfect. Thanks so much, guys.

Thank you.

Our next question comes from the line of Susan Maklari with Goldman Sachs. Please proceed with your question.

Thank you. Good morning, everyone.

Good morning.

My first question is, you mentioned that there's been some regional shifts in terms of the single-family. It's been a bit uneven maybe across the different markets. Can you talk about where you're seeing more strength or more weakness and how that could perhaps come through as you think about the back half?

Yes, good morning, Susan. It's Robert. So, I'll give you both sides. So strength, definitely still Southeast Carolinas, Florida, Texas, California, even is very strong for us right now. I'd say some weaker spots, we've seen uneven, or to use the term that we use choppiness. Pacific Northwest is a good example of that, which if you look at starts and some of the numbers support that and even if you hear from some of the other public companies to support that and as well as the Northeast. And then I'd say if you take an area like Arizona that's been pretty good, it's kind of city-by-city in Arizona. So, definitely seeing some strength. I think you've seen some of the starts numbers. We think it will continue to improve as long as we see those starts come out of the ground in some of those slower regions here in the back half.

Okay, that's helpful. And then maybe turning to capital allocation. It's nice to see the $500 million or so of buybacks. Can you just talk about your appetite to continue to use up the $649 million or so that's remaining in the authorization? And any comments with that on the M&A pipeline and how you're thinking about that also as a use of cash?

Yes, I mean, Susan, this is Rob. So, from a capital allocation standpoint, our priorities are unchanged. I mean M&A remains our number one capital allocation priority. We've had a great 18 months as Robert talked about on the call a little bit in terms of the number of deals and the amount of revenue we've added. Our pipeline right now is very healthy, I'd say, as healthy as we've had it in a while, so we feel really good about that moving forward. As far as buybacks go, we're going to continue to do what we've done in the past is prioritize that with our M&A pipeline and be opportunistic moving forward here.

Okay. Thank you, both for the color and good luck with everything.

Thank you.

Our next question comes from the line of Ken Zener with Seaport. Please proceed with your question.

Morning everybody.

Morning Ken.

Could you speak to what seems to be an unusual situation regarding the lack of installation materials, such as spray foam? It seems this may have contributed to some of your challenges. With low volume, I imagine there are some exceptions. If material supply is constrained, it appears that growth is limited. How rare is this from your viewpoint? And why aren’t we observing higher pricing if supply is indeed so restricted?

Yes, good morning. Ken, it's Robert. I'll address the first part regarding material availability. Fiberglass remains in tight supply, and Q2 was particularly challenging due to maintenance and some unexpected downtime among suppliers. This has affected distribution more than our inventory levels would suggest. Looking ahead, we anticipate improvements in the second half of the year, including the potential for alternative materials in response to developments with builders and foam codes. While we've mentioned new capacities becoming available, those are more likely to materialize in 2025. Regarding pricing, we feel confident in our ability to manage it. We allowed some slower regions to make pricing decisions amidst fluctuations, but overall, the team did well in covering prices and any extra costs associated with third-party purchases.

Yes, I think we feel positively about the pricing environment, particularly regarding the first price increase, which has been beneficial for our margins. We're currently in the process of addressing the second fiberglass price increase, so we'll have more updates on that later this year.

Great. And I wonder if you guys could put the word choppiness given your perspective in the industry. Robert, what choppiness means within the context of new home inventory, whether on units or month supply is higher than normal? But I assume that's most evident in your choppy market. Can you kind of talk about how that's playing out when you have all these homes under construction, nine months' supply as of the last month from the census data? Can you just put that in context of how you think that's going to play out?

Yes, Ken. So, let me start with kind of the definition, and I'm sure, Rob, I'll hear as well talking about some of the units in the numbers. So, relative to that, I gave a couple of examples on an earlier question. So, let me just pick on the Pacific Northwest as an example. So, you see the start, you see the completion; you just don't need the work coming out of the ground yet. So, builders are generally positive, especially production builders are generally positive for the back half, it's just not coming to fruition. Now, you go to another example, maybe like Southern California or Florida, folks are going to continue to build even though they may have seen some slower sales in like in May or June or potentially in July, they're still building in some of those areas. So, that's choppiness, that's why we refer to it by region because it's a little different as things play out region-to-region. And you're right, we have that footprint where we get that perspective a lot of folks maybe don't give. So, that's kind of the definition of how we see it. Rob, you want to add anything?

Yes, I mean, I think Robert said it well there. I think when we talk about choppiness, it's really about we're seeing strong demand in certain markets and weaker in others. And as he mentioned, some of the starts data, you can see supports that in parts of the country where things aren't moving quite as quickly right now. And we're seeing the same phenomenon on the commercial side as well. So, while overall, we're still seeing growth from a volume perspective, this quarter, the first quarter, the second quarter here of this year was the first quarter that we've seen our same-branch residential sales grow since the first quarter of last year. So, things are trending up but just not as quickly as we had originally anticipated in our guidance to start the year.

Thank you very much.

Thank you.

Our next question comes from the line of Phil Ng with Jefferies. Please proceed with your question.

Hey, good morning. This is Maggie on for Phil. I guess going off of that question, we've seen such a strong improvement in single-family starts year-to-date. So, I guess, where is the disconnect between that in your volumes? And when do you anticipate that improvement starting to flow through? And are there any considerations? I know those supply constraints have been tempering volumes. But anything else, extended cycle times that we should be mindful of that would extend that lag between starts and your volumes?

Yes, Maggie, this is Rob. So, I'd say if you look at the first half of this year, starts are up particularly on the single-family starts, right? Obviously, multifamily is not. But single-family is up, I think, about 16% year-to-date. Completions are up 1% because you've got to remember the first half of last year, we had the heavy backlog helping support our work. So, the comp first half was tougher. Our same-branch sales were up in that area. We were kind of flattish at 1% on the TruTeam side, the first half of this year. So, we're pretty much in line with completions. Now, to your point, that improvement being starts should make its way into the third quarter here, third and fourth quarter. And we should see some improvement in comps, assuming that comes through. But like Robert said, it's really varying stories across the country in terms of how quickly that's flowing through. So, we've got that baked into our guidance. We do have volumes improving in the second half of the year, but we have tampered that down a little bit based on what we've seen here late in the second quarter and even here early third quarter.

Maggie, if you observe some of the public builders over the past few weeks, it's apparent that their activities are quite inconsistent in different regions of the country. Higher interest rates may have caused some hesitation among buyers in the second quarter. While certain areas are experiencing slowdowns, we are noticing new developments emerging. As Rob mentioned, we expected the momentum from earlier to carry into the latter half of the year.

Okay. Okay, that's super helpful. And then on lease, it's a more recent development, but potential rate cuts coming later this year. Curious if you had conversations both with your residential customers and on the commercial side. How we're anticipating the impact of that potentially flowing through later this year or in 2025?

Yes, we are definitely having conversations about this. If we consider the situation and observe what unfolds in September, it seems more relevant for October and November. From my perspective, we are seeing strong momentum heading into 2025. If a rate cut occurs, it should positively influence consumer sentiment. When you factor in the lead time, it should help get 2025 off to a solid start and establish a positive trend.

Our next question comes from the line of Michael Rehaut with JPMorgan. Please proceed with your question.

Hi, everyone. This is Andrew on for Mike. I appreciate you taking the questions. I just wanted to dive into maybe what productivity and other initiatives contributed to your profitability year-to-date versus maybe last year? And how can we think about these going forward?

Yes, this is Rob. So, I'd say, I mean, it's not a number we break out, but it's a huge part of our story. Robert talked about it in the past on the call about what our special ops teams do in terms of working with our bottom performing branches. With 400 branches across our network of install and distribution, 400-plus branches, there's always a bottom quartile to work on and lots of opportunities. So, as we talk about margins moving forward. And our margins in the past, right? We typically outshoot our targeted incremental of $22 million to $27 million. And a lot of that is because of the work of that team, and we're always striving to do that. But it's not a number we break out on a quarterly basis.

But if you're looking for a little bit of color around the initiatives. So if you look at the distribution margins, which we would say are doing really well. Definitely, the special ops team has definitely been focused in some of our mechanical businesses where we can optimize logistics of our footprint and stuff and also relative to just distribution productivity and sales productivity. So, we've definitely seen it and we see it showing definitely our distribution margins, and that's been an area that we continue to work both sides of the business, but I know specific things that we saw benefit from our distribution business here in the first half of 2024.

Got it, makes sense. I appreciate that. And then maybe how do you view kind of the opportunity on margins over the next one to two years, maybe hypothetically if the market were to slow alongside a weaker macro, could we expect decrementals to look similar to incrementals or are there kind of offsetting factors considered?

Yes, one of the strengths of our model is its high variable cost structure. In the event of a slowdown, we need to reduce costs by slowing down material purchases. Labor is our largest expense, so during a downturn, we focus on our labor structure. The duration of the slowdown is crucial. In previous downturns, we've opted to maintain our labor force if we anticipated a short-term impact, as we want to be ready when demand rebounds. However, if we perceive the downturn as long-term, further reductions will be necessary. We have navigated similar challenges before, such as during the COVID-19 pandemic, and were fortunate that our markets recovered quickly. To address your inquiry, we would target a decremental range similar to $22 million to $27 million. It will likely be a bit uneven due to fixed costs, which tend to come in larger increments rather than smoothly over time.

Got it. That’s very helpful. I'll pass it on. Thank you so much.

Our next question comes the line of Jeffrey Stevenson with Loop Capital. Please proceed with your question.

Hi thanks for taking my questions today. Just at a high level, can you talk about the variance between large reduction and independent builder growth in your second quarter installation volumes and whether you expect that trend to widen as we move throughout the back half as first half housing started to show up more meaningfully in the results moving forward?

Yes, Jeff, I would say similar to what much of the industry data indicates, we are seeing growth with the large builders as they continue to gain market share, particularly due to their ability to implement rate buy-downs. This has provided them with a significant advantage in the market, and we have experienced growth alongside them during this period.

Okay, great. And then you talked about kind of your heavy commercial work and some of the projects going on where you've seen delays. But on the light commercial side, can you give any color on how demand trended in the second quarter and whether you've experienced any slowdown in bidding activity during the quarter?

Yes, good morning, Jeff, it's Robert. So, look, we definitely saw some project delays light and heavy commercial, both overall, I would say, light commercial did a little better than heavy commercial. And then it does follow residential trends. So, I think we saw some nice performance on the light commercial side and I think given the share position that we've taken there. And as we look forward, we say bidding activity is strong, both in heavy commercial. I think it's just taken some momentum on these project delays. And I think as you heard us say in the prepared remarks, no cancellations, which is the critical thing to look at and to categorize as well. So this is, as we said, this is timing more than anything else.

Okay, great. Thank you.

Thank you.

Our next question comes from Trey Grooms with Stephens. Please go ahead with your question.

Good morning. This is Noah Merkousko on for Trey. Thanks for taking my questions.

Morning Noah.

So, first, I want it on multifamily. I think if I heard Craig, you said the current backlog will carry you into 2025. I think that's been pretty consistent about what you've said your expectations for 2024. So, is that to mean as we look at the back half of the year that volumes for multifamily won't be down year-over-year? I guess just any kind of directional sort of thoughts on how multifamily looks in the back half? And then the second part of the question is, if it is the case that we're not really seeing the volume declines yet despite starts for multifamily being down quite significantly, does that push the headwind to 2025? And just any kind of thoughts on what that headwind could look like?

Yes, Noah, this is Rob. So, I'd say the multifamily, it's going to play out region-by-region, so we could see some volume slowness in the back half of the year in certain parts of the country. But overall, we feel pretty good about it. I mean, when we look at our backlog on multifamily right now, we've certainly eaten into it this year, but it's about 18% lower than it was a year ago at this time. And with more than a half year's worth of sales in there. So, if that stuff all comes through, we should be looking pretty good in the back half of this year. Again, you deal with project delays and timing in different markets. So, we'll have to see how that plays out. But we haven't baked a significant decline in multifamily into our guidance.

The take per unit is so much more on the single-family units. So, as that shift is less to a point less of an impact for us.

Got it. That makes sense. And then for my follow-up, you called out spray foam and gutter pricing as a headwind in the quarter. Similar question, just how should we be thinking about that in the back half of the year? Will that continue to be a headwind to pricing?

No, those occurred in the second quarter of last year. So, those should roll off in the back half. And as a result, we should see about a 1% uplift in pricing from where we are today.

All right. Great, that’s helpful. Good luck with the rest of the year.

Thank you.

We have no further questions at this time. I'd now like to turn the floor back over to management for closing comments.

Thanks for joining us this morning. We look forward to talking with you in our Q3 call.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.