Stephen Chelton

Stephen Chelton asked about the level of competition for tuck-under M&A deals, specifically if it's becoming tougher to deploy capital at attractive valuations across different segments. He also sought more detail on the slowdown in roofing awards, the macro factors weighing on projects, and how long the pause in reroofing activity might last.

Answer

Scott Patterson (CEO) confirmed a competitive M&A environment with high multiples, particularly in fire protection and residential property management, and trending higher in roofing, noting numerous private equity-owned platforms. He added that roofing M&A activity has slowed due to the uncertain environment and companies experiencing year-over-year declines. Regarding roofing, Scott Patterson (CEO) stated that uncertainty will carry through Q4, requiring macroeconomic stability for improvement. He highlighted that some reroof projects can be delayed and noted specific large branches (Las Vegas, Florida) were down due to missing significant projects and weather impacts, while reaffirming excellent long-term demand prospects.

Stephen Chelton inquired about the competitive landscape for tuck-under M&A deals, asking if deploying capital at attractive valuations was becoming more challenging across different segments. He also sought further detail on the factors causing the slowdown in roofing awards despite strong bid activity, particularly regarding the duration of the pause in reroofing projects.

Answer

Scott Patterson (CEO) confirmed a very competitive environment with high multiples, especially in fire protection and residential property management, and trending higher in roofing with dozens of private equity-owned platforms. He noted a recent slowdown in roofing M&A due to the uncertain environment and declining year-over-year results for many companies. He reiterated the need for macroeconomic stability, noting that reroof projects can be deferred. He highlighted that while most branches perform at year-ago levels, three large branches that benefited from significant new construction and reroof work last year are down, skewing results. He emphasized the excellent long-term demand prospects for roofing.