Alex Isaac

Alex Isaac, on for Michael Root, asked about the price and supply trends for fiberglass in Q2 and the outlook for the second half, including potential impacts on price-cost dynamics. He also questioned what drove IBP's volume outperformance relative to the broader single-family and multifamily markets.

Answer

EVP, CFO & Director Michael Miller stated that the fiberglass pricing environment has been 'relatively benign' with no significant price deflation, but noted that tariffs could present a challenge in Q4. Regarding volume outperformance, Miller credited the exceptional execution of their field teams, highlighting mid-to-high single-digit growth in key states like the Carolinas, Texas, and several Midwestern states. He added that IBP's relatively lower market share in the struggling Florida market was a perverse benefit.

Alex Isaac, on for Michael Rehaut at JPMorgan, inquired about single-family demand trends across different builder types and regions, as well as the outlook for material prices through 2026.

Answer

CFO Michael Miller observed that regional and local builder business performed slightly better than production builders in Q1. He noted a shift in their internal outlook for public builder revenue from positive 3% to negative 3%. Geographically, Florida is weak while Texas and the West Coast are solid. On materials, both Mr. Miller and CEO Jeffrey Edwards described the cost environment as 'benign' and not inflationary, with the main uncertainty being potential tariffs, which could have a $10-20 million impact.

Alex Isaac, on for Mike Rehaut, inquired about the M&A pipeline compared to the past year and asked for an outlook on fiberglass supply and price/cost dynamics in 2025.

Answer

CEO Jeffrey Edwards described the M&A pipeline as 'as good as it's been,' driven by private owners' retirement plans rather than market conditions. On fiberglass, Edwards noted a recent manufacturer price increase failed due to ample supply, and he remains skeptical about a potential spring increase. CFO Michael Miller added that a successful price hike would imply a stronger demand environment, which would be a net positive for IBP.

Alex Isaac, calling for Michael Rehaut at JPMorgan Chase & Co., asked for more granular detail on what drove the downward revision in demand expectations across regions and requested more information on the direct-to-consumer (D2C) business within the SDA segment.

Answer

Marc Bitzer, Chairman & CEO, explained the demand revisions were driven by poor consumer sentiment in North America, a broader economic slowdown in Latin America, and unfavorable weather patterns in India. For the SDA segment, he described the D2C business as a high-growth, complementary channel that is approaching nearly a quarter of the segment's sales and offers an attractive margin profile.

Alex Isaac of J.P. Morgan inquired about the regional focus of the new markets Forestar has recently entered and the on-the-ground conditions observed across its operating regions. Additionally, he asked if the company has considered converting to a REIT structure.

Answer

President and CEO Anthony Oxley identified the new markets as the Pacific Northwest, Northern California, Salt Lake, and Reno, confirming teams are now on the ground. EVP, CFO & Treasurer James Allen responded to the second question, stating that a REIT conversion has not been seriously considered as Forestar's business model is focused on being a land developer, not a land banker or financing entity.

Alex Isaac of J.P. Morgan asked about the regional focus of Forestar's recent new market entries and for observations on conditions across those regions. He also inquired whether Forestar has considered converting to a Real Estate Investment Trust (REIT) structure.

Answer

President and CEO Anthony Oxley identified the new markets as the Pacific Northwest, Northern California, Salt Lake, and Reno, confirming that teams are now on the ground. Regarding the REIT question, EVP, CFO & Treasurer James Allen stated that it is not a consideration, as Forestar's business model is focused on being a land developer, not a financing entity like a land banker.

Alex Isaac of J.P. Morgan asked for details on the new markets Forestar has entered, including any regional focus and on-the-ground conditions. He also inquired whether Forestar has considered converting to a REIT structure.

Answer

President and CEO Anthony Oxley identified the new markets as the Pacific Northwest, Northern California, Salt Lake, and Reno, where teams are now established. Regarding the corporate structure, EVP, CFO & Treasurer James Allen stated that a REIT conversion has not been seriously considered, as Forestar's business model is focused on land development rather than financing.

Alex Isaac from J.P. Morgan inquired about the new markets Forestar has recently entered, asking about their regional focus and on-the-ground conditions. He also asked whether Forestar has ever considered converting to a REIT structure, similar to some competitors in the land development space.

Answer

President and CEO Anthony Oxley identified the new markets as being in the Pacific Northwest, Northern California, Salt Lake, and Reno. Regarding the corporate structure, EVP, CFO & Treasurer James Allen stated that a REIT conversion has not been seriously considered, as Forestar's business model is focused on being a developer rather than a land banker or financing entity.

Alex Isaac, on behalf of Michael Rehaut at JPMorgan Chase & Co., asked about the potential impact of federal deregulation on lot supply, particularly in constrained markets. He also inquired about the long-term outlook for gross margins and where they might settle in a steady-state environment.

Answer

President and CEO Anthony Oxley stated that it was 'too early to tell' the potential impact of any federal deregulation. Regarding margins, Mr. Oxley noted they have been stable in the 21% to 23% range and that he believes they are in a 'relatively stable margin environment' without the significant cost pressures seen in the post-COVID period, though results remain subject to market conditions.