Garik Shmois • Loop Capital Markets

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CFO Gail Peck projected continued growth in gross profit per ton for the second half, aided by the accretive Stavola acquisition, focusing on sustained growth through pricing and cost discipline rather than a specific target. President and CEO Antonio Carrillo added that the M&A pipeline for bolt-on acquisitions remains full. As the company approaches its target leverage ratio, it will be more comfortable deploying capital for both M&A and organic growth projects, such as the recently announced plant conversion.

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CFO Gail Peck confirmed the pricing figures and reiterated the full-year guidance for mid-single-digit organic price growth. CEO Antonio Carrillo explained that Stavola's hard rock operations carry a higher average selling price, which lifts the overall reported pricing. Peck affirmed a positive outlook for segment margins, expecting pricing to continue outpacing cost inflation and reiterated guidance for high single-digit organic EBITDA growth for the year.

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CFO Gail Peck projected flattish to slightly up organic volumes for aggregates in 2025, acknowledging a slow start to the year due to cold and wet weather. CEO Antonio Carrillo explained the CapEx reduction is focused on growth spending to prioritize deleveraging post-Stavola. He detailed that completed projects, like the Florida concrete plant and New Mexico wind tower facility, are expected to be accretive and contribute to 2025 growth.

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CFO Scott Cottrill confirmed that the fixed cost absorption issue from the winter inventory build is now mostly behind them. President & CEO D. Scott Barbour provided a detailed response on competition, emphasizing that sequential pricing has been stable for over a year. He stressed the resiliency of ADS's business model, cost management, and operational execution, stating that radical price actions do not increase demand in the current market.

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An executive expressed confidence in their daily pricing management process, which analyzes jobs, customers, and competitors, noting it has been effective for the past four quarters. Another executive affirmed that acquisitions are a key part of the growth strategy and that with leverage at 1.1x, the company has significant capacity to act on opportunities. They are actively looking at all options to put the balance sheet to work for incremental growth.

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CFO Scott Cottrill explained that the company continues to realize efficiencies in transportation and network operations, with benefits from recent productivity investments reflected in Q3 performance. He confirmed the facility consolidations will generate savings but stated they are already embedded in the full-year guidance and will not be quantified separately.

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CEO Scott Barbour explained that the nonresidential slowdown was most evident in the flattening growth of Allied Products, as projects were consistently being pushed out rather than canceled. He attributed this to general uncertainty holding up project releases. CFO Scott Cottrill confirmed there is no risk of destocking and noted that while some prior-quarter interplant freight costs were a headwind, transportation is expected to be favorable in the second half of the year.

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CEO Jim Mintern described the Outdoor Living business as resilient, with particularly strong performance in premixed products. COO Randy Lake explained the aggregate pricing mix was impacted by weather, which delayed sales of higher-value premium products. He expects this to normalize as activity increases and reaffirmed the full-year mid-to-high single-digit pricing outlook.

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Executive Jim Mintern responded that CRH is not yet seeing any change in sellers' aspirations or entry multiples for acquisitions, noting the 8 deals in Q1 were done at typical average multiples. Executive Randy Lake clarified that Q1 maintenance activities were standard for the winter season and planned to match expected demand, not an unusual pull-forward caused by weather.

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MasterBrand CEO Dave Banyard and American Woodmark CEO Scott Culbreth explained the timing is opportune to create a financially fortified entity with enhanced value for customers and expanded opportunities for associates. Banyard detailed that synergies are projected to be roughly 40% from G&A/indirect costs and 60% from COGS. He also expressed confidence in navigating the regulatory process, highlighting that the merger creates a more diversified channel mix that benefits all partners.

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CEO R. Banyard explained that additional pricing is being implemented via a surcharge to counter tariffs. He noted that recent demand spikes are likely pre-buying ahead of tariff impacts, not a signal of stronger underlying demand, and expects a downturn in late Q2 and into the second half. Banyard added that while Q2 decrementals will be impacted by unabsorbed tariff costs and ongoing factory realignment, the company is making adjustments to variable costs and has plans for further fixed cost reductions if needed, without sacrificing future growth at this stage.

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President and CEO R. Banyard confirmed that negative mix was the primary driver of the 4% net ASP decline, as volume declines were concentrated in higher-priced, made-to-order products. He attributed the February recovery to a rebound in the repair and remodel (R&R) business to pre-holiday levels. Executive VP and CFO Andrea Simon added that stronger ASP was also seen in February, boosting confidence in price realization. Regarding cost savings, Banyard stated the goal is to offset the incremental $15 million investment in the 'Tech Enabled' initiative.

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CEO Dave Banyard explained that while a summer slowdown in housing starts may create a future soft patch, significant new business wins with large builders should offset this and enable volume growth in Q4. He noted pricing pressure was consistent with prior quarters, driven by promotions in the R&R market and consumer trade-downs in new construction. Regarding synergies, Banyard described the Supreme integration as being in the 'middle innings,' with a focus on sales team organization and dealer training, with tangible results expected in 2025. CFO Andi Simon added that the price/cost lag is expected to correct in Q4.

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CEO Brian Gray clarified that the increase in larger jobs is a reflection of DOTs bundling projects rather than a change in company strategy. He noted that while underlying demand is strong, July weather remained mixed in certain areas. He confirmed that July's performance and the potential for volume recovery were already factored into the revised full-year guidance.

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President and CEO Brian Gray stated that the contracting backlog is near record levels with similar margins to last year. While some markets face margin pressure, others are strong, and the Strata acquisition brings accretive margins, leading to a positive outlook. Regarding costs, Gray noted that the drop in oil prices has not been material enough to alter guidance, as the diesel benefit is minimal in the low-activity first quarter.

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President and CEO Brian Gray stated that the historical earnings cadence should remain largely consistent, with a small loss in Q1 and peak earnings in Q3, though he noted that an increase in private work could benefit the second half. Regarding pricing, Gray explained that their dynamic pricing model is continuous throughout the year, not tied to a single annual increase, and that the guided mid-single-digit price growth for aggregates is a sustainable level.

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President and CEO Brian Gray expressed confidence in continued pricing momentum into 2025, citing strong demand fundamentals, disciplined bidding, and ongoing benefits from dynamic pricing and PIT Crew efficiency initiatives. He confirmed wet weather in Texas had a negative impact on sales. CFO Nathan Ring clarified that revenue from recent acquisitions would be nominal in Q4 and was not a major factor in the guidance.

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Chair & CEO J. Thomas Hill described mid-year increases as occurring in 'some products in some markets,' primarily setting up for 2026. He noted H1 pricing was impacted by geographic mix from weather in the high-margin Southeast. Senior VP & CFO Mary Carlisle emphasized the strong underlying momentum, with 8% mix-adjusted pricing, as the key metric.

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CEO James Hill described pricing as 'as expected,' with successful January 1st increases and ongoing discussions for mid-year hikes. He noted that strong public demand helps offset challenges on the private side. CFO Mary Andrews Carlisle added that acquisitions are performing well and are expected to contribute about $150 million for the full year, with a focus on capturing synergies through the 'Vulcan Way' disciplines.

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CEO Tom Hill confirmed that Vulcan will 'absolutely' announce mid-year price increases, likely near the end of Q1, though they are not included in the current guidance. He noted that while parsing out the exact impact of prior mid-year hikes is difficult, they definitely help both the amplitude and timing of subsequent January 1 increases by giving customers more time to react.

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Chairman and CEO James Hill explained that successful mid-year price increases in 2024 and strong backlogs provide good visibility and momentum for the high single-digit price growth forecast in 2025. He expressed confidence in achieving a ninth consecutive quarter of double-digit growth in cash gross profit per ton. SVP and CFO Mary Andrews Carlisle added that this focus on unit profitability is key to free cash flow generation, noting the 36% year-to-date increase in free cash flow despite lower volumes.

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CFO Kevin Zdimal provided specific margin guidance, projecting CCM margins around 31% in Q3 and 29% in Q4, with CWT margins expected to be around 20% for both quarters. VP of Investor Relations Mehul Patel clarified that the ~$30 million in CWT opportunities consist of $12 million in annualized savings from automation and footprint consolidation, plus roughly $14 million in synergies from the PlastiFab and ThermoFoam acquisitions.

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CEO D. Koch clarified that the pre-buy was minimal, mostly isolated to Canada, and not expected to have a meaningful forward impact. He stated that channel inventories remain light due to carrying costs and market uncertainty. Regarding sourcing, Koch explained that the strategy for MDI hasn't changed, relying on a competitive RFP process and strong supplier relationships, and that the company has multiple options to manage potential cost pressures, including passing them through, absorbing them, or changing suppliers.

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CEO D. Koch noted that a new leader and a revised go-to-market strategy should drive improvement in the spray foam insulation business. VP of IR Mehul Patel added that CWT's guided growth is primarily from M&A, with the underlying market expected to be flat and pricing adding 50-100 basis points. Regarding bidding activity, Koch attributed late-year improvement to increased market stability and the inability to delay projects further due to tight labor. He reiterated that reroofing remains strong while new construction will likely start soft before picking up.

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CFO Kevin Zdimal and VP of Investor Relations Mehul Patel explained that CWT pricing had steadily improved, with the year-over-year decline moderating to about 2% in the second half, in line with expectations outside of some pressure in spray foam. CEO Chris Koch attributed the weaker-than-expected CWT performance primarily to the further deterioration in residential markets, driven by affordability issues and interest rate uncertainty, which caused consumers to delay projects.

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CFO Melanie Hart projected that for the second half, pricing will be a more favorable contributor to gross margin, and the negative impact from product mix will lessen. CEO Peter Arvan attributed the European improvement to strong performance in southern countries and increased stability, which offset a slight decline in France.

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CFO Melanie M. Hart confirmed that the announced June price increase from one vendor is included in the updated pricing benefit forecast. CEO Peter Arvan attributed the positive sales trend in the spring to the timing of the Easter holiday falling into the second quarter this year and a favorable weather comparison to a weaker April in the prior year.

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President and CEO Peter Arvan stated that the M&A pipeline consists of typical consolidation opportunities and that nothing out of the ordinary is expected. On the topic of labor, Arvan commented that the company is not hearing of significant labor pool disruptions from its builders, as he believes the existing, experienced labor force is largely unaffected by recent policy changes.

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President and CEO Peter Arvan advised not to read too much into the commercial growth deceleration, attributing the volatility to the timing of large projects. Regarding retail, he explained that while non-discretionary chemical sales are steady, discretionary items like high-end robotic cleaners are facing headwinds, impacting overall retail performance despite strong wholesale sell-in to dealers.

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SVP of Finance & CFO Al Mestyshin confirmed that a negative mix shift affected both segments. He explained that North America is typically a higher-margin region for both businesses, and when it grows slower than other regions, it results in an unfavorable geographic mix that pressures the consolidated price/mix metric.

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CFO Allen Mistysyn explained that for both segments, North America is typically a higher gross margin region. Because North American sales did not grow as fast as other regions during the quarter, it created a negative mix shift that pressured the overall price/mix realization for both segments.

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Executive Heidi Petz provided a direct response, stating, 'Not really, Garik.' She clarified that while there might be minor exceptions, any such activity is not material and is not an active conversation across the company's business units.

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CEO Heidi Petz confirmed that DIY demand was weaker than expected, while SVP & CFO Allen Mistysyn added that PRO paint was also under pressure in Q4. For 2025, they anticipate that volumes for both will improve as existing home turnover recovers, with a sales trajectory similar to the broader company: a choppy first half followed by improvement.

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Executive Allen Mistysyn described the approach as situational, with the primary focus on driving operating margin. He explained that in some years leverage comes from SG&A control, while in others, like the present, strong gross margin performance allows for opportunistic reinvestment into long-term growth initiatives.

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President & CEO Scott Culbreth mentioned that beyond tariffs, the guidance models inflation for commodities, labor, and transportation. SVP & CFO Paul Joachimczyk quantified the annual EBITDA benefit from the Orange, Virginia facility closure at approximately $5 million to $6 million.

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Executive M. Culbreth explained that the sales guidance is maintained due to expected better second-half performance driven by pricing tailwinds, contributions from new stock kitchen and bath business, and easier year-over-year comparisons in the home center business. On the cost side, Culbreth noted continued inflationary pressures on particle board, labor, final mile delivery, and linerboard.

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Executive M. Culbreth explained that while Q1 new construction demand was strong, a second-half slowdown is anticipated due to lagging housing starts. He confirmed that both new construction and remodel markets would likely need several interest rate cuts to see a significant demand boost, with benefits materializing in mid-calendar 2025. Culbreth attributed the stable EBITDA margin guidance to planned pricing actions and ongoing operational efficiencies.

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Chair and CEO Ward Nye confirmed this assumption was 'entirely fair.' He noted that infrastructure represented 33% of the business in Q1, a seasonally low number that he expects to grow given the quantum and aggregates-intensity of upcoming projects. While acknowledging that the company isn't putting 'a lot of stock' in a near-term residential recovery, he highlighted the market is structurally underbuilt and well-positioned for when demand returns, which would not require a large move in interest rates or home prices.

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CEO Ward Nye quantified the recent inventory drawdown impact as a $30 million headwind in Q3 and $20 million in Q4, expecting the process to be complete by mid-year 2025. Regarding the volume outlook, he noted that while the private construction outlook has become more muted due to 'higher for longer' interest rates, the public infrastructure outlook feels more robust. He suggested this is driven by the need to deploy IIJA funds, resulting in a net effect that feels like a wash compared to the previous outlook.

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CEO C. Nye described the deals as margin-accretive, pure aggregate bolt-ons with over 150 million tons of reserves in key markets. He stated there would be minimal P&L impact in Q4 due to purchase price accounting. He highlighted their success in raising prices at prior acquisitions, noting the price delta on the Blue Water assets has already narrowed from $5 to $3 per ton, demonstrating their integration strategy.

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CFO Chris Calzaretta clarified that for Mineral Fiber volumes, the company anticipates a softer first half of 2025 followed by a more favorable second half as market uncertainty settles. Regarding AUV, he noted that while the innovation pipeline offers potential for sustained future growth, the outlook for 2025 is relatively balanced throughout the year.

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CEO Vic Grizzle confirmed the mix impact was almost entirely due to channel mix from a retail load-in for newly awarded stores, while underlying product mix remains positive. He attributed strong manufacturing productivity to fundamental operational excellence, including record plant reliability and reduced downtime, in addition to ongoing scrap and quality initiatives.

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CFO Todd Fister explained that the higher 2025 CapEx is driven by several multiyear strategic projects for growth, productivity, and sustainability. While spending will remain elevated in the near term to complete these projects, he reiterated the long-term target for CapEx is 4-5% of sales. This goal is supported by the addition of the capital-efficient Doors business and the sale of the capital-intensive glass reinforcements business.

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Chief Financial Officer Todd Fister confirmed that Composites pricing has shown good sequential stability, crediting strong commercial and operational execution. He noted that while it is too early to comment on contract negotiations, the business remains focused on adding customer value and managing costs to maintain stable margins in a challenging global market.

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CEO Robert Buck acknowledged that supply was tight at times during Q3, with some impact on volumes, but stated TopBuild is well-positioned for Q4. He provided a detailed regional breakdown, noting improvements in the Northeast and Northwest; steady conditions in Utah, the Carolinas, and parts of Texas; and 'choppy' performance in Southern California, Arizona, Austin, and parts of Florida.

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CEO Keith Allman clarified that pro paint share gains are driven by market outperformance based on product quality, brand strength, and sales effectiveness, not significant changes in shelf space. CFO Rick Westenberg described the wellness business as stable, with performance in line with the overall plumbing segment and benefiting from the Sauna360 acquisition.

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