Keith Hughes • Truist Financial Corporation

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CEO Aaron Erter reiterated that customers will continue managing inventory down in Q2 and Q3 due to market cautiousness. He pushed back on the share loss narrative, emphasizing differences in reporting timing and market segment focus compared to competitors. Regarding AZEK, Mr. Erter stated there are no integration problems or business slowdowns, describing the outlook as prudent amidst market challenges and reaffirming his confidence in the AZEK business.

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CEO Aaron Erter detailed the outlook, noting R&R is expected to be down mid-to-high single digits and multifamily will also be down, though less than in FY'25. He clarified that the core single-family exteriors business experienced solid growth, but this was offset by significant declines in the multifamily and interiors businesses.

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CFO Rachel Wilson confirmed that pulp and cement were both significantly up year-over-year and were the main drivers of margin pressure. CEO Aaron Erter added that while pricing is expected to offset most raw material inflation, the HOS program provides a crucial lever to cover any remainder and to fund growth initiatives.

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CFO Todd Fister acknowledged a mixed outlook for light commercial markets like retail and office buildings. However, he emphasized that the insulation take-per-unit in these applications is significantly lower than in heavy commercial and industrial projects. The accelerated growth in high-value end-markets like data centers is more than offsetting any softness in light commercial, resulting in a positive overall outlook for the C&I business.

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CEO Brian Chambers acknowledged the difficulty of a direct year-over-year comparison due to acquisition-related accounting noise. He stated that the low-to-mid-teen EBITDA margin guidance would equate to a mid-single-digit EBIT margin. He also announced that the company will guide on EBITDA for the Doors segment going forward to provide a clearer view of operational performance.

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CFO Samantha Stoddard clarified that the next major debt maturity is the $400 million senior notes due in 2027, which become current in late 2026. CEO William Christensen explained that the re-evaluation of the European business is a comprehensive assessment of whether JELD-WEN is the best long-term owner, considering operational progress, market recovery potential, and future capital needs. Stoddard quantified the Towanda revenue impact to be at the high end of the guided range, representing a 5-6% headwind to North American revenue.

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CEO Bill Christensen responded that the negative mix impact is now at a predictable run rate and that price increases are necessary to pass through persistent inflation. CFO Samantha Stoddard added that some pricing is carryover from last year. Christensen stated the customer loss would be anniversaried around the end of Q3, and Stoddard confirmed the corporate cost headwind is from the reinstatement of normal variable compensation.

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CFO Rob Kunins confirmed the 40% C&I mix includes Progressive. CEO Robert Buck stated Progressive's business is majority heavy commercial, with Kunins adding that 70% is reroof/services. Buck noted Progressive is 'agnostic' on roofing applications. Management indicated no signs of recovery yet in the light commercial market.

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CFO Rob Kuhns provided specific figures, noting a clear divergence. On a same-branch revenue basis, the residential side of the segment was down approximately 5%, while the commercial side was up around 2%. He highlighted that the mechanical insulation business was the strongest performer within the commercial group.

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CFO Rob Kuhns confirmed that since the C&I business (guided to low-single-digit growth) is a larger part of Specialty Distribution, the Installation segment will face tougher year-over-year sales comparisons. CEO Robert Buck reiterated that fiberglass price increases lack traction. Kuhns added that while some price pressure exists in slower markets, especially for spray foam, it is not widespread, and margins are holding up well overall due to a focus on optimizing the volume-margin balance.

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CFO Rob Kuhns indicated that total residential sales are expected to be roughly flat for the full year, implying a slight decline in Q4 driven primarily by multifamily. He noted multifamily would be a challenge in early 2025 but that the company expects to outperform the market. CEO Robert Buck added that a steady increase in single-family starts and the continued adoption of stricter energy codes would be key drivers for future pricing power.

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SVP & CFO Brenda Lovcik reiterated the Q3 and Q4 adjusted EBITDA margin guidance of 32% and 31% respectively, driven by gross margin improvements from the elimination of Enhance-related costs and the benefits of level-loading. President & CEO Bryan Fairbanks described sell-through as variable, noting it was weak in May due to weather but picked up considerably in mid-June and continued to do well into July.

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SVP & CFO Brenda Lovcik reiterated the Q3 and Q4 EBITDA margin guidance of 32% and 31% respectively, driven by gross margin improvements from eliminating Enhance costs and level-loading benefits. President & CEO Bryan Fairbanks noted that sell-through was weak in May due to poor weather but picked up considerably in mid-June and continued to be strong into July.

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CFO Brenda Lovcik confirmed that SG&A spending is typically front-loaded for marketing and product launches, so the dollar amount should decelerate after Q1. CEO Bryan Fairbanks anticipated Q4 production would be flattish with Q1 levels and affirmed that the new inventory strategy is designed to reduce quarter-to-quarter revenue volatility in a more normalized market environment.

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CEO Bryan Fairbanks declined to provide an exact split but noted that railing is expected to see double-digit growth, with the remainder coming from decking. He confirmed that railing production, which includes both internally manufactured and sourced products, is expected to expand to meet demand, highlighting that year-end inventory was built up to ensure service levels during the busy season.

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CEO Bryan Fairbanks clarified that the inventory reduction is expected primarily in the pro distribution channel, as home center inventory is managed via consignment. He also confirmed the Arkansas facility will replace purchased recycled pellets, not virgin material, providing a net cost benefit even with transportation costs.

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EVP and President – Specialized Products, Furniture, Flooring & Textile Products R. Samuel Smith explained that the business is bifurcated, with higher-end products performing well. The Q2 volume decline was driven by lower-price-point customers and significant disruptions from April's tariff announcements on Southeast Asia and China, which caused a 'start-stop' in orders from retailers. Smith anticipates the business will improve in the second half as trade policies stabilize.

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An executive, likely Sam Smith, explained that Leggett's North American auto components are USMCA compliant and thus face minimal direct tariff impact, though indirect risks from lower auto sales exist. Tyson Hegel, President of Bedding Products, stated it is difficult to forecast the impact on low-price mattresses but noted reciprocal tariffs would be key to leveling the playing field. He also confirmed they saw a ramp-up of imported mattresses late in 2024, suggesting a pre-tariff inventory build.

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CEO Karl Glassman explained the underperformance is partly due to a negative mix shift in adjustable beds, where lower-priced promotional models are outselling higher-end ones. He stressed the conservative guidance is based on macro concerns, not company-specific issues. Bedding Products executive Tyson Hagale added that restructuring attrition and lapping a customer exit also contribute to the delta. Hagale clarified that slide data on adjustable beds reflected a higher mix of lower-priced units.

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CEO Peter Jackson confirmed that acquisitions have grown the truss profile but that the category has been impacted by the downturn, with competitive pressure extending to trusses and EWP. CFO Pete Beckmann added that the significant 28% decline in the multifamily segment, which is heavy in manufactured products, was a major contributor to the overall category's performance, with unit volume being the primary driver.

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CFO Pete Beckmann stated the company doesn't break out price versus volume but noted the decline was disproportionately impacted by multifamily, where truss sales were down 46%. He clarified that the multifamily business is starting to flatten out now, but year-over-year comps won't reach parity until closer to the fourth quarter due to lapping the prior year's strength.

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CFO Pete Beckmann clarified that the multifamily headwind is front-half weighted due to lapping difficult prior-year comparisons. CEO Peter Jackson stated that despite this cadence, the dynamic would not be enough to drive overall year-over-year EBITDA growth in the second half.

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J. Thomas Hill, Chair & CEO, indicated that while some non-residential volume impact will occur in H2 2025, it's more of a 2026-2027 story. Regarding H2 pricing, he expects continued momentum but noted that sequential growth might be moderated by product mix due to a higher proportion of base material for the strong highway sector.

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CEO James Hill attributed the 3% decline in freight-adjusted unit cash cost to three main factors: improving operating efficiencies from the 'Vulcan Way of Operating', disciplined spending control during cold weather, and the weather-related delay of certain expenditures like stripping. He emphasized that costs can be lumpy quarter-to-quarter and reiterated the full-year guidance for low-to-mid-single-digit cost growth, while noting the company's goal is to outperform that target.

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CEO Tom Hill described the weather in January and February as 'not a great start' due to cold and snow, but noted the annual plan anticipates some weather disruptions. Regarding the acquisition, he stated it fits 'very well,' with aggregates and asphalt integrating with existing operations, while the ready-mix assets provide an excellent new market position for Vulcan.

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Chairman and CEO James Hill projected low single-digit volume growth for 2025, assuming normal weather patterns. He stated that this level of growth would not require sacrificing volumes to achieve their high single-digit pricing targets. The growth is expected to be driven by project deferrals from 2024, strength in public and residential construction, partially offset by weakness in private non-residential.

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CEO D. Christian Koch stated that after a slight rise in Q2, MDI costs are expected to flatten out for the remainder of the year. VP of Investor Relations Mehul Patel clarified that CWT pricing is stable year-over-year across all product lines. He specifically noted that pricing pressure in spray foam has bottomed out, with prices expected to remain stable rather than increase.

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CFO Kevin Zdimal confirmed that CWT pricing was down approximately 1% in the first quarter. CEO D. Koch affirmed that the decline was driven by the spray foam product line. In response to the outlook, Koch noted that cost pressures from materials like fire retardants (ATO), fasteners, and plates were having a significant industry impact and are expected to continue into the second quarter, suggesting a basis for future price realization.

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CEO Doug Black explained that the improvements stem from several areas. Key drivers include strengthening the leadership teams at these branches, enhancing customer service to drive organic sales growth, and implementing SG&A reductions to align costs with market demand. He cited the significant SG&A takeout at Pioneer as a prime example of this effort.

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Executive John Guthrie confirmed the $4.5 million was a one-time charge that is not expected to recur in 2025. He also specified that annual grass seed sales are roughly $150 million and PVC pipe constitutes approximately 4% of total company sales.

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EVP & CFO John Guthrie confirmed that Pioneer remains a 'very low contributor' and is 'measurably diluting' to the overall EBITDA margin. CEO Doug Black stated that while the branch consolidations will contribute to cost savings, they are just one part of a broader strategy to manage SG&A, which also includes turning around Pioneer and other operational initiatives.

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CEO Vic Grizzle described the distribution consolidation as a continuing trend from which Armstrong has historically benefited. He expressed confidence in the situation due to management continuity at the acquired distributor. Regarding Temploc, he stated that while it's a long-term opportunity, he expects meaningful traction and sales acceleration in 2026 and 2027, and confirmed it is 'very nicely' accretive to AUV.

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CEO Victor Grizzle explained that WAVE is experiencing indirect tariff impacts as domestic steel prices rise, and it has already implemented two price increases to stay ahead of inflation, expecting to expand margins this year. He contrasted this with 2018, when there was a lag. For the Architectural Specialties segment, Grizzle stated that price contribution was minimal, with growth primarily driven by winning more projects. CFO Christopher Calzaretta added that they still expect mid-single-digit equity earnings growth from WAVE for the full year.

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CEO Vic Grizzle reported that the office vertical is stabilizing, with consistent, sideways order patterns and positive bidding activity. He identified transportation and data centers as the strongest end markets, with healthcare also remaining positive and education being supported by state and municipal bonds.

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CFO Chris Calzaretta projected a continuation of low single-digit input cost deflation in Q4, with modest inflation expected for raw materials in 2025. CEO Vic Grizzle clarified that while large transportation projects are a meaningful contributor to AS growth, the organic growth is broad-based across the portfolio, supported by a healthy backlog.

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EVP & CFO Craig Kesler clarified that while pricing was down year-over-year, it was sequentially flat, with the decline having occurred in prior quarters. He described the pricing environment as 'range bound' and expects it to remain stable until there is a meaningful change in demand volume.

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President & COO Paul De Cock acknowledged continued price pressure in the panels business but noted it was partially offset by growth in high-end decorative panels. He described the European flooring market as difficult but highlighted that laminate performance improved throughout the quarter. CFO James Brunk added that while he wouldn't speculate on the exact margin profile, laminate and LVT are margin accretive.

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Executive James Brunk attributed the positive mix to strong performance of premium products and a favorable channel mix from the commercial business. President and COO Paul De Cock and CEO Jeff Lorberbaum added that price increases are being announced and implemented throughout Q2, with the full impact of higher-cost inventory expected to flow through in Q3.

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CFO James Brunk detailed the savings, stating that approximately $80 million was realized in 2024, with an incremental $100 million expected in 2025. CEO Jeff Lorberbaum explained that the positive mix is expected to come from new product introductions, which carry higher average selling prices and margins than the products they are replacing.

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Executive James Brunk confirmed the plan, originally announced at $100 million, should now yield slightly more as plans have been firmed up. He stated that the company expects to realize $20 million to $25 million of the savings this year, with the majority (about two-thirds of the remainder) flowing through in 2025 and a small portion carrying over into 2026. He affirmed the projects are on schedule.

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Executive Jim Mintern described the division's Q1 as resilient. He noted a delayed spring season for the Outdoor Living business but saw a good recovery in April/May. For the Building and Infrastructure business, he sees a positive outlook driven by water and energy infrastructure demand. Executive Alan Connolly confirmed that 2024 land sales were an exceptional $237 million, compared to the normalized expectation of $75 million.

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CEO Jim Mintern described 2025 as an 'opportunity-rich environment' for M&A, emphasizing that CRH's strength lies in acquiring and integrating businesses across its existing footprint in high-growth markets. He explained that the Outdoor Living business is fundamentally connected to the core materials business (concrete and aggregates) and that growth will come from acquiring similar businesses and connecting them to the existing network.

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Executive Randy Lake stated that the strong demand environment supports continued pricing momentum. He projected double-digit aggregate price growth for the full year 2024 and anticipated mid-to-high single-digit price increases in 2025, alongside low single-digit volume growth, driven by strong backlogs and the need to offset ongoing cost inflation.

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Chair and CEO Ward Nye shared anecdotal information suggesting a push to get a new bill done before the mid-term elections next year for a smoother transition. While he would not be surprised to see a headline number smaller than the IIJA's $1.2 trillion, he expects the proportion dedicated to highways, bridges, roads, and streets to be much higher. When asked if the amount for roads and bridges could be greater than the IIJA's allocation, Nye responded, 'I think that's certainly where people are trending, yes.'

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CFO Bill Brundage explained that the significant margin impact was due to a confluence of factors in a seasonally light quarter: weak volumes, a competitive market, persistent deflation, and the sales mix shift. CEO Kevin Murphy confirmed that the Fire business's sales decline was heavily driven by deflation in steel pipe, which is a major component of that business, though he noted that underlying volumes remain solid.

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CFO Bill Brundage explained that SG&A pressure was anticipated due to market headwinds and commodity deflation, particularly in the first half. He noted that while total costs rose about 5%, volume grew 3%, with the difference driven by wage inflation and strategic investments in trainees, HVAC expansion, and large project teams. Regarding gross margins, Brundage attributed the 10 basis point decline to a business mix-shift, as faster-growing, lower-margin businesses like HVAC (+10%) and Waterworks (+3%) had a greater impact. CEO Kevin Murphy added that the company is pleased with the gross margin profile of its commodity business amidst deflation.

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CEO John Turner identified weakness in retail, office, and high-rise mixed-use projects, which are sensitive to private financing, as the primary drivers of the commercial downturn. He noted that data centers, healthcare, and public education remain stable. Turner and CFO Scott Deakin clarified that the initial $30 million in cost savings is fully realized on a run-rate basis, with the additional $20 million to be fully implemented by Q1 fiscal 2026, resulting in a steady ~$12-15 million quarterly impact.

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CEO John Turner clarified that the challenging conditions in multifamily and commercial are expected to persist for the next few quarters until interest rates improve. He explained that Ceilings volumes are outperforming Wallboard because they benefit more from resilient project types like data centers, healthcare, and education. Turner also highlighted that the recent Kamco acquisition significantly strengthened their Ceilings business, particularly in the recovering New York City market.

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CEO John Turner attributed the steel pricing pressure to an oversupplied market, noting that demand from larger consumers like automotive and appliances is stagnant. On the July slowdown, he explained that the market weakness arrived a quarter or two faster than expected. He confirmed his expectation that multifamily volumes will continue to decline more sharply than commercial volumes until a recovery begins, likely in mid-2025.

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CFO Michael Miller explained that the current inflationary environment is benign, with recent price/mix benefits being carryovers from prior periods. He characterized the overall pricing environment as relatively soft for both IBP and its suppliers.

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CEO Jeffrey Edwards characterized the price-to-cost spread for fiberglass as 'fairly neutral' to 'slightly negative.' He confirmed that this dynamic, which was present in the third quarter, is expected to persist through the winter months.

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CFO Mark Witkowski highlighted that the central U.S. region, which was heavily impacted by weather in Q2, saw a strong resumption of construction activity, and the municipal market also rebounded well. CEO Steve LeClair stated definitively that Core & Main has not received any subpoenas and is not named as a defendant in any related cases.

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An executive explained that the improvement in average ticket is a significant factor in the improving comp trend. However, the primary headwind on ticket remains the wood and laminate categories, as fewer home flips mean fewer large-scale projects. Customers are focusing more on smaller bathroom jobs. CEO Tom Taylor added that despite this, the trend of customers choosing 'better and best' products continues, which helps profitability.

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CFO Rick Westenberg affirmed that Masco's M&A strategy is consistent and focused on bolt-on acquisitions within its core plumbing, coatings, or wellness businesses, similar to the Sauna360 transaction. He also stated that the Kichler divestiture closed on September 18.

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