BLD

Robert Buck noted the clear profitable growth strategy, significant growth opportunities in the $95 billion total addressable market, differentiated business model, and cycle-tested leadership team. John Achille discussed supply chain environment with fiberglass supply loosen and spray foam availability, and operational excellence efforts including aligning cost structure, leveraging technology, integrating SPI, and progress in commercial roofing. Robert Kuhns reflected on past growth, detailed fourth quarter results by segment, and provided 2026 guidance.

2026 guidance is for sales of $5.925 billion to $6.225 billion and adjusted EBITDA of $1.005 billion to $1.155 billion. Midpoint of revenue guidance at $6.075 billion assumes volume and price each down low-single digits, residential down mid-single digits, commercial and industrial up low single digits, and M&A contributing $800 million to $850 million. Midpoint of adjusted EBITDA guidance at $1.08 billion assumes EBITDA decremental on lower volumes, $55 million of price/cost headwinds, and EBITDA margin on M&A in mid-teens with Progressive and SPI synergies impacting 2026.

Fourth quarter sales rose 13.2% to $1.49 billion. Fourth quarter Installation Services sales of $798 million rose 1.2% with M&A contribution offsetting volume and pricing decline. Specialty Distribution sales totaled $755 million in the quarter, up 25.5% with acquisitions and pricing contributing but offset by volume decline. Fourth quarter adjusted gross profit was $416 million with a margin of 28%, down 190 basis points. Adjusted SG&A as a percentage of sales in the fourth quarter was 14.1%, up from 13.2% last year. TopBuild adjusted EBITDA in the quarter totaled $265 million, or a margin of 17.9%, down 180 basis points. Full year 2025 generated $697 million in free cash flow. 2026 guidance is for sales of $5.925 billion to $6.225 billion and adjusted EBITDA of $1.005 billion to $1.155 billion with expectations of volume and price down low-single digits, residential down mid-single digits, commercial and industrial up low single digits, and M&A contributing $800 million to $850 million in revenue.

Q: Dig into guide path for single-family starts, differences in private vs public builders' conversations.

A: Regional privates cost competitive, smaller custom builders least impacted.

Q: Solid backlogs on commercial industrial side, delineation between light vs heavy commercial.

A: Light commercial typically follows residential, some positive trending in backlogs.

Q: Pricing trends, $55 million price/cost headwinds, flow through impact.

A: Price cost headwinds in different markets, teams disciplined, operational excellence efforts.

Q: Realignment in specialty distribution field leadership.

A: Ensuring right leadership in distinct businesses, good mix of talent.

Q: Cross-selling opportunities in SPI integration.

A: Connecting sales teams, planning digital resources.

Q: Cost structure across business, positioning, adjustments.

A: Constantly monitoring, 70% variable costs, can adjust quickly.

Q: Pricing outlook, split of $55 million price/cost headwind.

A: Mixed bag of products, specialty distribution had pricing increase in 4Q.

Q: Margin guidance, productivity initiatives, levers if demand weaker.

A: Synergies, cost structure adjustments, monitoring macro.

Q: Residential vs specialty distribution volume dynamics.

A: Resi and light commercial slow, specialty distribution less impacted due to diversification.

Q: Florida, Texas dynamics impacting business.

A: Florida starting to recover, Texas still flat, mixed across regions.

Q: Pricing out-the-door vs cost, local decisions.

A: Pricing local decisions, macro environment causing margin headwinds.

Q: Commercial roofing dynamics, market volume growth, outlook.

A: Progressive had strong 2025, Johnson acquisition expands platform, backlogs growing.

Q: Cost outs sustainability, swing factors in margins.

A: Some cost outs sustainable, higher margin end assumes higher volumes, better price/cost.

Q: Price/cost outlook impact on installation vs specialty distribution.

A: More price cost pressure on distribution side due to business mix.

Q: Weather impact on 1Q.

A: Significant, baked into quarterly revenue bookend.

Q: Other areas driving growth in mechanical and commercial segment.

A: Education, healthcare, manufacturing, food and beverage, diverse verticals.

Q: Commercial roofing pricing tracking, difference from consolidated company.

A: Overall flattish, pricing baked into M&A number