Jeffrey Stevenson

Jeffrey Stevenson (Loop Capital) asked about the rollout timeline and expected benefits of the field service management system, as well as an update on large project delays in the development business, segment backlogs, and the timeline for the cold start initiative.

Answer

CFO Brett Urban stated the field service management system rollout will be complete by Q1/Q2 of the new year, acting as a capacity creation tool for efficiency. CEO Dale Asplund noted cyclicality in the development business, with 5 of 10 cold starts opening in 2026 and the rest in process, aiming to broaden job service. Brett added that while Q4 2025 saw a reduction, the business is expected to be choppy in H1 2026 but return to growth in H2 as project delays clear.

Jeffrey Stevenson from Loop Capital Markets LLC asked for an update on project delays in the development business and whether the margin benefits from 'One BrightView' initiatives are expected to be sustainable into fiscal 2026.

Answer

President and CEO Dale Asplund confirmed the development delays were purely timing-related, noting the backlog grew and that nearly half of the $14M quarterly revenue delay was from just three large projects with no scope reduction. EVP & CFO Brett Urban added that the company is opening 10 new development branches to fuel future growth. Both executives affirmed that the margin benefits from fleet, procurement, and centralization are sustainable and will continue to fund investments in sales to drive top-line growth.

Jeffrey Stevenson questioned the drivers behind the strong Q1 maintenance margin expansion and the expected cadence for the rest of the year. He also asked about progress in shifting the snow removal business to fixed-price contracts.

Answer

CEO Dale Asplund attributed the 140 basis point maintenance margin expansion to SG&A savings from a prior-year restructuring, noting the benefit will be lapped after Q2. CFO Brett Urban reiterated confidence in the full-year guidance. On the snow business, Asplund explained that a heavy snow year, like the current one, provides a strong opportunity to convert more customers to fixed-rate contracts for the following season.

Jeffrey Stevenson of Loop Capital Markets inquired about the primary drivers for the guided 60-100 basis points of maintenance margin expansion in fiscal 2025 and asked about recent trends in ancillary demand and potential upside from hurricane cleanup.

Answer

President and CEO Dale Asplund attributed the margin expansion to a combination of organic growth, which improves route density, and higher ancillary revenue from improved customer retention. CFO Brett Urban added that significant operating leverage from a 100 basis point reduction in TTM SG&A is a major factor. Regarding recent events, Dale Asplund confirmed they see potential upside from hurricane cleanup work in Florida, which is not fully built into guidance, and that ancillary requests are increasing with retention.

Jeffrey Stevenson asked about the disparity in pricing dynamics between residential installation and distribution, specifically if installation's relative strength is due to TopBuild's national scale and service, and if elevated channel inventories are driving increased competition in distribution. He also inquired about the evolution of the roofing M&A pipeline since the Progressive acquisition and the potential for accelerated bolt-on acquisitions in 2026.

Answer

Robert Buck, President and CEO, explained that residential installation benefits from TopBuild's bundled solution, strong service, and builder relationships, helping to maintain margins despite fiberglass pressure. In distribution, readily available material creates supply/demand pressure and increased competitive dynamics, particularly for residential fiberglass and spray foam. He confirmed active engagement in the roofing M&A pipeline, leveraging both new and existing relationships, with expectations for good execution on acquisitions in 2026.

Jeffrey Stevenson of Loop Capital Markets asked for more color on the performance variance between light and heavy commercial demand within the Installation segment and whether bidding activity for light commercial has stabilized.

Answer

CFO Rob Kuhns highlighted a stark contrast, stating that light commercial sales were down double digits while heavy commercial sales were up double digits. President and CEO Robert Buck added that while light commercial demand tends to follow residential trends, the company continues to see bidding opportunities and potential for share growth in that market.

Jeffrey Stevenson asked about the sustainability of growth from SiteOne Landscape Supply Inc.'s internal initiatives, such as private label and small customer segments, and whether share gains are expected to continue tracking above pre-pandemic levels. He also sought clarification on the primary reasons for Q3 pricing exceeding original expectations.

Answer

Doug Black, Chairman and CEO, affirmed significant runway for growth in private label (aiming for 25-30% from current 15%) and small customer segments, expecting SiteOne Landscape Supply Inc. to be an above-market grower for many years through these and other initiatives. John Guthrie, EVP, CFO, and Assistant Secretary, explained that Q3 pricing came in better than expected because competitive pricing, especially for grass seed, was not as severe as initially anticipated, leading to a slightly stronger outcome.

Jeffrey Stevenson asked about the sustainability of SiteOne Landscape Supply Inc.'s growth from internal initiatives, such as private label brands and small customers, and whether share gains are expected to continue tracking above pre-pandemic levels in the coming years. He also sought clarification on the primary variance that led to Q3 pricing coming in better than the original flattish expectation.

Answer

Chairman and CEO Doug Black stated that SiteOne has significant runway with private label and small customer growth, expecting these initiatives to drive market share gains for the next 3-5 years and beyond, aiming for 25-30% private label penetration long-term. He confirmed the company's goal to be an above-market grower for many years. EVP, CFO, and Assistant Secretary John Guthrie explained that Q3 pricing outperformed expectations because the competitive pricing environment, particularly for grass seed and other products, was not as severe as initially anticipated, resulting in slightly stronger performance than the expected flat outlook.

Jeffrey Stevenson of Loop Capital Markets asked for more detail on the improving demand trends in the repair and upgrade market and inquired whether seller expectations in the M&A market have changed recently.

Answer

CEO Doug Black noted that sequential improvement in demand for products like hardscapes and lighting through 2024 indicates market stabilization, supporting a 'flat to slightly down' outlook for 2025. EVP, Strategy and Development Scott Salmon described the M&A environment as 'pretty status quo,' with no significant changes in seller expectations and a continued robust pipeline.

Jeffrey Stevenson inquired about the repair and remodel (R&R) market, asking if there were any signs of improving bidding activity and if high interest rates were causing project delays. He also asked if maintenance volume tailwinds would continue into 2025.

Answer

CEO Doug Black reported no improvement in R&R activity, confirming that high interest rates are suppressing the middle market that relies on financing. He believes lower rates would support a rebound. He clarified that the maintenance market is steady, and recent volume growth was primarily due to grass seed prices normalizing, which spurred usage, rather than a broad acceleration of pent-up demand.

Jeffrey Stevenson inquired about specialty volume trends during the quarter, particularly for EWP and Millwork, and the drivers behind the 30% growth in the multifamily business. He also asked if the success of the Portland greenfield would accelerate the timeline for future expansion.

Answer

CEO & President, Shyam Reddy, explained that market share gains are being driven by a deliberate strategy to create demand through multifamily and builder pull-through initiatives, which is offsetting broader market softness. He noted that investments in logistics and project management are key to their 30% year-over-year growth in the multifamily channel. Reddy also confirmed that learnings from the successful Portland greenfield will help accelerate future projects, though finding suitable real estate remains the primary constraint.

Jeffrey Stevenson of Loop Capital Markets LLC inquired about specialty volume trends during the quarter, the specific drivers behind the 30% growth in the multifamily business, and whether the success of the Portland greenfield would accelerate future expansion plans.

Answer

CEO Shyam Reddy explained that the company's demand creation strategy, focusing on multifamily and builder pull-through efforts, is driving market share gains despite a soft housing market. He highlighted that early investments in multifamily logistics and project management are enabling this growth. Regarding greenfields, Reddy noted that while the Portland success provides valuable learnings, the primary constraint for future projects remains securing suitable real estate, not the company's willingness to expand.

Jeffrey Stevenson of Loop Capital Markets LLC inquired about specialty volume trends during Q2, particularly for EWP and Millwork, and the primary drivers behind the 30% year-over-year growth in the multifamily channel. He also asked if the success of the Portland greenfield facility would accelerate the timeline for future greenfield projects.

Answer

CEO & President Shyam Reddy explained that the company's demand creation strategy, focusing on multifamily and builder pull-through efforts, is successfully driving volume growth and market share gains in a soft market. He attributed the strong multifamily growth to early investments in logistics and project management capabilities, which provide a value-add service for customers. Regarding greenfields, Reddy noted that while the Portland success offers valuable learnings, the primary constraint for future expansion remains the availability of suitable real estate, not a lack of desire to expand.

Jeffrey Stevenson inquired about the percentage of lumber sourced from Canada and the company's ability to adjust its sourcing strategy if tariffs increase. He also asked for an update on the pilot program with production builders and whether seller expectations in the M&A market have become more reasonable.

Answer

CEO Shyam Reddy reported that less than 20% of lumber is sourced from Canada and expressed confidence in passing through any tariff-related costs quickly. He noted that the builder pull-through program is working well, particularly in the East and South, helping to offset market softness and gain share. On the M&A front, Reddy confirmed that deal flow is increasing and that seller valuation expectations are coming down, narrowing the bid-ask spread.

Jeffrey Stevenson asked for more detail on the sequential improvement in specialty product pricing, the expected cadence of pricing in fiscal 2025, feedback from partners on repair and remodel (R&R) demand, and the completion timeline for the company's e-commerce platform.

Answer

Shyam Reddy, President and CEO, expressed pride in five consecutive quarters of specialty product volume growth, attributing it to a targeted strategy. While acknowledging pricing uncertainty due to policy shifts, he conveyed confidence in managing it through their value proposition and operational scale. Reddy noted that while R&R demand remains soft due to low existing home sales, BlueLinx is gaining share through its focus on national accounts. He confirmed the transportation management system would be implemented by Q3 2025 and described the e-commerce rollout as a multiyear journey, currently in a pilot phase to gather customer feedback before a wider launch.

Jeffrey Stevenson asked about the primary drivers behind the positive volume growth in specialty products like EWP and millwork, questioning if it stemmed from housing completions, seasonality, or other factors. He also inquired about any sequential moderation in price deflation for these categories and the potential for price stabilization in 2025. Finally, he asked about the supply-demand dynamics for structural products and whether prices could continue to rise from current levels.

Answer

President and CEO Shyam Reddy attributed the volume growth primarily to a focused share gain strategy targeting national accounts and multifamily, alongside product line expansions and new product launches, with a minor seasonal benefit. Reddy confirmed a slight sequential price improvement in specialty products in early Q4, supporting the company's confidence in year-over-year price improvement in the second half of 2025. He explained that structural margins were impacted by an inventory reserve in Q2 that reversed in Q3, normalizing the year-to-date margin, and noted that industry inventory levels now appear balanced.

Jeffrey Stevenson from Loop Capital Markets LLC asked about the timing of the new Summit decking product load-in for the 1,500 new stores, whether it was completed in Q2, and inquired about underlying demand trends for composite decking. He also asked about the opportunity to gain share in two-step distribution for Deckorators.

Answer

CEO Will Schwartz explained that the load-in for the new stores was minimal in Q2, as retailers avoid swaps during the peak selling season. The majority of the rollout will occur in the back half of the year to be ready for the 2026 decking season, coinciding with new capacity coming online. He noted a divide in the market, with affluent customers continuing to spend on composite decking. Schwartz emphasized that the SureStone technology and marketing are opening doors with distributors, and UFP's internal distribution network is critical for reaching markets without a distribution partner.

Jeffrey Stevenson of Loop Capital Markets asked if strong heavy commercial results were driven by delayed projects moving forward and inquired about sequential pricing trends for spray foam.

Answer

CFO Michael Miller confirmed the positive trend in heavy commercial is expected to continue and was not driven by any specific project pull-forwards. Regarding spray foam, he reported that there was some price improvement in the quarter. He added that the gross margin headwind from spray foam was less severe than in the prior quarter and expressed confidence it would not be a headwind in the second half of the year.

Jeffrey Stevenson asked about the drivers behind the 6% organic growth in commercial sales and if project delays were a factor. He also questioned if fiberglass supply constraints impacted Q3 volume and how the company is positioned with inventory.

Answer

CEO Jeffrey Edwards attributed the commercial growth to improved performance in the heavy commercial business, which has been approved to pursue revenue growth again. He noted light commercial remains soft. On supply, he clarified that while tight, it did not cause any jobs to go uncompleted. CFO Michael Miller added that the company's internal sourcing strategy is helping to manage inventory and alleviate supply pressures.

Jeffrey Stevenson of Loop Capital Markets questioned if Griffon is building inventory ahead of tariffs, the possibility of exemptions for products like fans, and whether a consumer slowdown could impact the high-end residential garage door market.

Answer

Executive Brian Harris confirmed they will leverage inventory to manage through tariffs and will make a case for exemptions, though no details are available. He noted HBP demand remains healthy. Chairman and CEO Ronald Kramer added that the HBP segment's market leadership, product innovation, and service position it for continued growth from repair/remodel and eventual new construction recovery.

Jeffrey Stevenson from Loop Capital Markets LLC asked about the progress on standardizing manufacturing processes and its potential to enable future footprint consolidation. He also requested more detail on the new business wins with homebuilder customers.

Answer

CEO William Christensen detailed progress on two fronts: investing in significant automation at key sites, like a new system being installed in Texas, and a strategic review of product complexity to simplify offerings. Regarding builder wins, he clarified that while the company is ahead of its internal plan for *booking* new business, there is a 6-to-9-month lag before this translates to revenue. The P&L impact is expected to be small in the second half of the year, especially given the flat spring building season.

Jeffrey Stevenson asked if the merger of a large competitor could create near-term Siding share gain opportunities for LP due to potential integration complexities. He also questioned whether the recovery in shed demand is sustainable or primarily the result of easy year-over-year comparisons.

Answer

CEO William Southern responded that LP is relentlessly pursuing market share growth and will capitalize on any opportunities that arise from competitor disruption, though he couldn't quantify a specific impact. Regarding shed demand, he stated his belief that it is a sustainable recovery driven by macroeconomic factors and consumer need for space, not just an easy comparison to a weak prior year.

Jeffrey Stevenson from Loop Capital asked if install services were positive in Q1 and if the company was leaning into its third-party model as a competitive advantage. He also inquired about the M&A pipeline and whether seller expectations were improving or pulling back.

Answer

CEO Peter Jackson confirmed the core install business is doing well, though facing headwinds from multifamily, and that the third-party model remains the right one for the company. On M&A, he stated it is the latter: sellers are pulling back amid market uncertainty, leading to a quiet environment. He expressed satisfaction in closing the Alpine Lumber acquisition before the market cooled.

Jeffrey Stevenson asked if single-family mix headwinds from smaller, less complex homes are expected to moderate through 2025. He also inquired about the historical sales contribution from March within the first quarter.

Answer

CFO Pete Beckmann responded that the guidance assumes a relatively stable single-family mix compared to the Q4 exit rate, though some prior-year headwinds will still be lapped in the first half. CEO Peter Jackson acknowledged March is an important month but did not provide a specific historical sales percentage.

Jeffrey Stevenson inquired about the runway for productivity savings and whether the recent strong performance is sustainable into 2025. He also asked about the trend of builders trading down to lower-value products to manage costs, questioning how widespread it is and if it will continue.

Answer

CEO Designate Peter Jackson expressed confidence in future productivity gains, stating the company is in the 'early innings' of what is possible, though these efforts will need to be balanced with the upcoming ERP conversion. On product mix, he confirmed that the trade-down to enhance affordability is a widespread trend but noted that the pace of this shift has largely stabilized in the second half of the year.

Jeffrey Stevenson asked if GMS saw a deceleration in single-family demand through the quarter due to a starts-related 'air pocket' and whether this weakness would persist. He also inquired about Steel Framing pricing, asking if it was stabilizing and could improve in 2025.

Answer

CEO John Turner responded that while the single-family outlook is lower than previously expected, they are forecasting flat volumes for the next quarter, not a dramatic deceleration. He noted the market is choppy and highly dependent on mortgage rates. For Steel Framing, Turner believes pricing has stabilized near the bottom and expects it to remain flat in the first half of 2025, with potential for improvement in the back half if lower interest rates boost demand in related industries like automotive and appliances.

Jeffrey Stevenson of Loop Capital Markets asked about the success of passing through wallboard price increases during the quarter compared to prior expectations. He also inquired about the wide variance between the negative commercial wallboard volume outlook and the positive ceilings volume outlook, seeking reasons for the confidence in ceilings.

Answer

CEO John Turner acknowledged that the company did not meet its wallboard pricing expectations, with the shortfall accounting for 20 basis points of the gross margin miss. He noted that price realization was slower in the commercial space due to longer project cycles. For ceilings, Turner explained that its strength is driven by project types that are currently performing well, such as data centers, healthcare, and education, which are heavy users of ceiling tiles and grid, offsetting weakness in general commercial construction.

Jeffrey Stevenson followed up on the drivers of general line sales strength, the company's inventory strategy for the next six months, and the timeline and operational impact of the Oakdale, Louisiana plant modernization.

Answer

CFO Kelly Hibbs attributed general line strength to a combination of strategic initiatives in doors and millwork and suppliers adding new SKUs. Jeff Strom, Head of BMD, described inventory management as a balancing act, stating they would err on the side of having stock to serve customers. Troy Little, Head of Wood Products, detailed the Oakdale project timeline (Q4 '24 - Q2 '25) and confirmed they have built up veneer inventory to prevent customer supply disruptions.