TopBuild Corp at Jefferies Industrials Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Philip Ng - Jefferies LLC - Analyst : <_ALACRA_META_ABSTRACT>That's a perfect segue way, Robert. I mean, I think we are all -- well, I am upbeat about housing long term just because we're short in supply. And hopefully you get rate cuts very soon. But some of the public and private companies that have talked about their trends, there's just air pocket, whether it's multifamily, single-family and maybe even project delays. Just give us a little color on what you're seeing in the marketplace and what type of conversations you're having with your customers?

Question: Philip Ng - Jefferies LLC - Analyst : Okay. you revised your outlook of a smidge and mostly on commercial in terms of the back half. You talked about choppiness. Has that choppiness accelerated maybe even in some of your resi business in recent months or it's been pretty much more of the same?

Question: Philip Ng - Jefferies LLC - Analyst : Okay. So that's a perfect segue, right? So it sounds like some of the choppiness is rate sensitive. So if we get a rate cut soon, help us think through the lag, right? I would imagine that you would see some inflection, but just give us some color on the lag in terms of your business.

Question: Philip Ng - Jefferies LLC - Analyst : On the resi side, could you see that momentum inflect as early as early next year or it's going to be a little more elongated?

Question: Philip Ng - Jefferies LLC - Analyst : That's helpful. In terms of interest rates -- sorry, to kind of harp on this, is there a technical threshold that you think will really move the needle that you have to get to like the high 5s or low 6, which two rate cuts, we could probably be there already, where we see activity kind of bounce? And on the resi side, in particular, the public builders have been taking share and are in a pretty good spot. Are you having any conversations with some of the smaller regional guys get more reinvigorated and start to kind of reengage on looking at new projects and whatnot?

Question: Philip Ng - Jefferies LLC - Analyst : Multifamily, obviously, we had like a super cycle, right? We're kind of seeing starts on multifamily bottom out here in that 300,000-ish range. How do you kind of see that rippling through your business? I know price cost on multifamily was a big good guide in 2023, but kind of 2024 and beyond, I think that normalizes. So kind of help us think through that handoff from multi to single family, what that does from a top line perspective. Is there any huge impact, good or bad on margins or mix as well?

Question: Philip Ng - Jefferies LLC - Analyst : Is there any mix or margin impact with multi versus single-family?

Question: Philip Ng - Jefferies LLC - Analyst : Okay. Super. Insulation is kind of the rare building products category where we've seen pretty good pricing momentum, there's a price increase out there for fiberglass for the midyear. How is that kind of progressing? You've been able to kind of push that through and be a good guy. And then are you seeing any pricing momentum in some of your other categories, whether it's mineral wool or spray foam?

Question: Philip Ng - Jefferies LLC - Analyst : Okay. And then on the commercial side, part of the reason why you lowered your outlook in the back half was commercial. As you kind of pointed out, it's encouraging. It has been more cancellations rather than -- I'm sorry, more project delays than cancellations. What are your customers saying? Is most of the delays is rate sensitive? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 3:00PM, BLD.N - TopBuild Corp at Jefferies Industrials Conference Just give us a little perspective on how you kind of view your commercial business. There's obviously a light commercial element and there's a heavy commercial. The dynamics and fundamentals are probably a little different.

Question: Philip Ng - Jefferies LLC - Analyst : That's great. Because most of the trends, whether it's Dodge starts and whatnot in light commercial, it's been weaker. So it sounds like some of the TopBuild initiatives are really driving share gains?

Question: Philip Ng - Jefferies LLC - Analyst : Okay. M&A has obviously been a big part of the growth story and you guys create a lot of value. Give us a little perspective of what you're seeing out there, whether it's from a pipeline standpoint? Is it more skewed towards resi? Any chunkier, larger C&I opportunities that may have sprung up?

Question: Philip Ng - Jefferies LLC - Analyst : You mentioned you walked away from that deal. But in terms of that C&I space, there are -- from my understanding, there are bigger guys out there. Just give us a little more color on the market structure because on the resi side, it's a lot more fragmented, smaller players. Have you had some dialogue with some of these bigger guys?

Question: Philip Ng - Jefferies LLC - Analyst : Your track record in terms of unlocking synergy is pretty much unparalleled for this industry. The resi playbook is really simple. You buy a lot of insulation, you get big procurement. Give us a little more flavor on the C&I side, the value creation opportunity and where you're seeing a lot of opportunity to unlock value, whether it's synergies on the cost side or commercial side?

Question: Philip Ng - Jefferies LLC - Analyst : Okay. Your margin expansion has been really impressive over the years. So the team has done a great job. You generally guide to like a mid-20% incremental on the organic side. How much more runway do you have? I know you guys have that continuous improvement team to come in and kind of get to unlock more value. Just give us a little more thought in terms of how much more runway do you have to kind of bring that bottom quartile and whatnot to drive margins higher?

Question: Philip Ng - Jefferies LLC - Analyst : Super. I mean, your resi business is much shorter cycle, commercial and multifamily a little longer. Give us a little color in terms of how backlogs and orders and bidding is kind of shaking out and how much visibility you have? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 3:00PM, BLD.N - TopBuild Corp at Jefferies Industrials Conference

Question: Philip Ng - Jefferies LLC - Analyst : How are you positioned to service some of these mega projects? Are you better positioned because of your size and scale or pretty comparable across the market?

Question: Philip Ng - Jefferies LLC - Analyst : Great. can't not ask you about the election, right? We got some different outcomes. What does that mean for your business? And maybe the answer is, it doesn't matter, you just want the election to be out of the way, but help us think of what that could all mean for you guys? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 3:00PM, BLD.N - TopBuild Corp at Jefferies Industrials Conference

Question: Philip Ng - Jefferies LLC - Analyst : Great. Once again, you guys do have a lot of cash. You guys announced a big buyback program and bought back a lot of stock. How are you thinking about buybacks for the rest of the year? And just longer term, how do you think about buybacks more broadly?

Question: Philip Ng - Jefferies LLC - Analyst : Great problem to have. When we think about '25, let's say, we get a bounce back into demand, how is TopBuild situated to kind of meet that demand, whether it's your labor, access to material? And do you see any bottlenecks at the builder level and other trades?

Question: Philip Ng - Jefferies LLC - Analyst : Okay. Well, Robert, I appreciate all the great insights. We're going to have to wrap it up here. Thank you so much.