TopBuild Corp. (BLD) Earnings Call Transcript & Summary

All right. This is Joe Ahlersmeyer from Deutsche Bank, and we are here with Rob Kuhns of TopBuild, Chief Financial Officer, came into the role earlier this year after working with the company, and prior to that, in FP&A at Mohawk. So we are happy to have you here. Thanks for taking the time.

Yes. Thank you, Joe. Thanks for having us.

If you'd like to maybe just share a few opening remarks, get us started, and then we'll go into Q&A.

Sure. Sure. So it was a great quarter for TopBuild. We just reported our results. Our team did a great job. Again, this quarter our sales were $1.3 billion, up 23% on a same branch basis. And we are pleasantly surprised with our 9% volume growth in the quarter, so very good there. EBITDA at 19.9%, a record high for the company, up 120 basis points year-over-year. So if you look at the end markets we serve, on the residential side, that makes up about 65% of our business. Right now, doing very well on the residential side, which is probably surprising to hear, given all that's going on in housing right now. But the backlog of work that's out there right now on the residential side is keeping us busy. So that was part of what drove our good results in the quarter. And we think that backlog is going to keep us busy through Q1, and then we'll see what happens from there. On the other side of the business, commercial/industrial, that's now 35% of our business. Good quarter there as well. Volumes up in our legacy business as well as with DI, the company we acquired that does mechanical insulation distribution. We acquired them in the fourth quarter. Their volumes were very strong in the quarter, and so they are off to a great start. Synergy is on track. We're ahead of schedule actually at this point. So we're feeling very good there. So I'd say we're cautiously optimistic about where things are heading on the commercial/industrial side. Obviously, on the residential side, we're watching like everybody else what's going on with the builders and with starts. And we've got our playbook ready. So when things do slow down on our side, we'll make the necessary adjustments we need to. And I'm confident we'll come out on the back end of that stronger than we did going in. So we look at the downturn as an opportunity to continue growing through M&A and to rightsize our business to what we need to go to forward.

Yes. Great. I think help people reconcile that piece where you say 2/3 of your business is residential, yet you outperformed in the quarter and you raised guidance into the end of the year. You talked about the backlog, but everybody sees the starts headline. So can you maybe just help us understand what is specific about installation that makes it track more to a completion number, which we've, obviously, seen a huge divergence right now? And then just what are your expectations? You talked about the backlog going into Q1, but what are your expectations right now around where starts go and where completions go in the near term?

Yes. Yes. So -- looking at -- if you go back over the past year or so, really that starts completions' equation kind of got broken. We used to historically look at our revenue based on trailing 3 months starts data, which is similar to completions. Typically, the construction cycle of the house is around 6 months, and our work comes in about halfway through. So either one of those metrics, if you looked over time, our sales kind of tracked with them. But what really happened over the last 1.5 years, with all the supply chain issues and labor shortages, is that equation got broken, right? And so starts kept going up, but completions had a limit to it because of all the constraints. So we haven't seen completions really get ahead of $1.4 million. So as a result, with starts consistently well above that for the last 1.5 years, there's this big backlog of houses under construction to be completed. So that's why if you walked into one of our shops today, you wouldn't know anything is going on negatively on the residential side of things because we're as busy as can be with that backlog of work. Our best estimate with the backlog that's out there, it's about 1.7 million starts that are out there. It's heavy multifamily right now, and it's about half and half single-family/multifamily, which is heavier multifamily than the typical mix. We think single-family, for sure, gets us into Q1. Multifamily might last us a little bit longer than that.

Great. Yes. And we'll get into multifamily a little bit more because I think that's one where -- there's a little bit of a difference in how the product gets installed, how much goes into a unit. But first, maybe let's talk about the pricing that you've seen throughout 2020, 2021 into '22, and now all 4 manufacturers are saying another 10% price increase in December. Yet on your call, you talked about builders looking to find ways to cut costs around their suppliers. And so just help us reconcile that? You have the manufacturers telling you prices are going up. You have the builders telling you that their cost need to come down. You're in the middle of that. So how are you going to manage?

Right. Yes, it's really a unique time in our industry, and that's what we were pointing out on the call is that you've got the builders who are seeing the downturn already, right? They've got their orders going down. But on the other side of the equation, you've got the manufacturers who are just like us, they are very busy right now because we still see the strong demand from the backlog. So they still have inflation that they're dealing with, and they're still pushing that with us. We're still under allocation with the fiberglass manufacturers. That's how tight the supply is on that side of things. So it's a unique time right now. I mean, TopBuild, historically, we've done a really good job of managing volume and price. We've built tools into our ERP system to really manage that by market, by product. And you'll see that on the upturn, we did a great job of managing that equation. So here as things get challenged, we think we'll do a great job managing that going forward.

Yes. I want to push a little bit on it because a very large builder last week talked about negotiating with suppliers on homes being started. He talked about the backlog. It seems like maybe those homes are protected from a price perspective, and the backlog takes you into 1Q, perhaps further. So if you could add a layer of when you think that the pushback on price might start to impact results, obviously, very volume dependent, but is there a way to think about that into '23, understanding, of course, you haven't given guidance yet?

Yes. Yes. And it's really hard to say how that's going to play out. From our perspective, we're getting pushback on price, but we always get pushback on price from the builders, right? There's never been a time even in the uptime that a builder was coming to us. saying, "Hey, give us a price increase." So it's a negotiation and it really happens locally market-by-market. And that's how this is going to ultimately play out. Because ultimately, the housing market in Tampa is going to be different than the housing market in Las Vegas and in Houston. And so those negotiations, from a price perspective, are all handled locally. And that's why we feel like we've got the advantage with our tools and systems because we manage that inside of our system market by market, product by product. So that's going to give us an advantage. Even if there is price pressure, we may have to give up some price in Houston, but probably not in Tampa.

All right. Great. And if you think about insulation, primarily what you do, you do other products as well, but you have this sort of dual go-to-market where you have an installation segment, where you are buying the product from the manufacturer, but you own the labor as well that is going in and installing it, but you also have a segment where you're strictly just selling the product. So is it right to think that you may have better pricing power on the install segment, given just how tight labor is or is there something more to consider there?

Yes. No. I think historically, if you look, pricing power on the install side does tend to be stronger because of tight labor that definitely helps us on that side of the equation. On the distribution side, we've expanded margins significantly on that side of the business over the past 5 years. Some of that's because of how good a job we do on the price/cost equation, but a lot of it's structural things we've done in the business. We brought in a new management team there back in 2018. We manage the fixed costs very aggressively on that side of things. So certainly, on the distribution side, if we get into a significant downturn where there's a lot of material available and there's a lot of material available, our competitors are going to bring down price and it will get more competitive on that side of things.

Yes. Makes sense. On the residential side, could you maybe break that out by what is multifamily and what is single-family for folks? And then if we're thinking about the multifamily backlog, roughly in units, similar to the size of the single-family backlog, which, of course, on a relative basis, is much larger, right? Typically, single-family is, what, call it, 2/3 of starts for the year, give or take. But if the backlogs are roughly the same size, that indicates how big the multifamily backlog is. So is there -- are there things to consider about that backlog? Because on the single-family side, I sort of think of it as one job at a time, right? But if multifamily unit has 10 or even 20 in one of these one structures, is that something to consider? And then as well, there's the amount of product per unit, right? It's different than a single-family houses. What are the considerations?

Yes. I mean we're pretty agnostic at the end of the day in terms of single-family versus multifamily. I mean our mix of that is going to follow what the market does. So roughly 70-30, I'd say, single-family based on the starts and completions data. To your point, that backlog right now on the multifamily side is over half of it. So that's probably going to last us a little bit longer than on the single-family side. Our take per unit in terms of material that goes into multifamily, it's obviously less. It's about, I'd say, 40% to 50% of what it is on a single-family start. But there are efficiencies we gain on the multifamily side and that you're doing multiple units. You're not going job site to job sites. So there's some efficiencies we gain there as well.

Okay. And the take per unit, is that just material? Or is that dollars inclusive of labor?

That's labor and material.

Okay. Is there a difference between TruTeam and Service Partners with respect to the mix on multifamily and single?

No, they're going to be pretty similar in terms of following the market there.

Okay. Let's see. So commercial, you talked about commercial and industrial, obviously, industrial being a more recent addition. But one of the themes throughout earnings season was that commercial, especially sort of light commercial, the low-rise nonres that has been doing fairly well. Thinking about also metal building insulation, which is skews to data centers and things like that, it's no surprise that those are sort of holding up a little bit better as well. Is it right to think about these as just a continuation of strong residential over the past 2 years? Or is there something more structural within commercial that you would point out that's sort of buoying those?

Yes. And if you looked at our nonresidential business, it's important to look at it -- the different pieces of it. So we've got our legacy building insulation, installation that we do. And that is what Joe has referenced there, we do the light commercial as well as heavy commercial. Light commercial does trend with residential, typically a few months behind it. So that should have a little different lag than residential. On the heavy commercial side, those are bigger projects, building such as this. And since COVID, I'd say that business has been a little slower to recover. They've dealt with a lot of the same supply chain and labor constraints that we saw on the residential side of things. But we're optimistic with that because right now our bidding activity and backlogs for that business are very strong. So we're optimistic that we could see growth in that business next year. And then with DI, the mechanical insulation company we bought last year, distribution company in the fourth quarter, their business has been very strong in the mechanical insulation side. That business is about 50% new projects and about 50% repair and replacement. So they're going to see a different cycle than they are going to be tied to the commercial cycle as heavily. They tend to see lower peaks and valleys along the way because of that MRO business, because you got to replace the mechanical insulation in plants and things such as that. So we're -- like I said, we're cautious but -- because we know interest rates can have an impact on those projects on the commercial side as well. But we're feeling pretty good. And like I said, our backlogs and bidding activity remains strong.

That's great. Is there a way to think about the margin profile of commercial versus residential? Or for that matter, the pricing power probably has a lot to do with that. So have we seen similar pricing on the commercial side relative to residential because within your 2 segments, they're combined, right? So we don't have that level of detail.

Yes, I'd say on the commercial side, it's -- they haven't seen as much price, and that's more because of the product mix on that side of things. So there's a little less fiberglass that goes into the commercial side of the business. It's a little heavier. On spray foam, that's also doing a lot of fireproofing and firestopping work. And so those products haven't seen as much inflation as we've seen on the fiberglass side of things. So from a price perspective, I'd say they've had a little bit less inflation -- but what was the other part of your question on that?

Just the margin profile.

The margin profile, yes, overall, the margins between residential and commercial are pretty similar. I mean the costs that go into can be a little different because of the product mix. Heavy commercial will involve a little more labor, but the overall margins are pretty similar.

But your share within, I guess, both commercial and industrial are significantly below what it is for residential. So if we think of that as an opportunity, sort of what is your target around share if you've got one for those markets? And how might we think about that progressing over the next several years?

Yes. So if you look at those end markets that we talked about on the residential side, we get to -- we've got about 40% share. We get to about 30% with our install business and 10% with our distribution. On the commercial building insulation side, so our legacy business, we got about 10% share. And then on the mechanical installation, we've got about 10% share as well. Those are all $5 billion to $5.5 billion market in terms of insulation. So we, obviously, have more opportunities on the commercial and industrial side. And what we like about that is, with DI, there's some chunkier deals in there as well, some larger companies. So we definitely see M&A as our continued best use of capital. And I think you'll see us continue to focus on that even in a downturn.

Okay. Great. DIs, Distribution International, biggest acquisition, I think you've done since coming public, spinning out of Masco. And it's quite different from the core business, particularly residential, but even in the commercial side. Commercial, I would think, is actually closer to residential than it is to industrial in many ways. There's many end markets within Distribution International. If you could just maybe talk about those end markets, what they are, sort of what they represent within the context of that business? And then as we think about just where the growth can come from within those end markets? Because the core of the question is, this has been sitting in acquisitions contribution to your revenue for the last 4 quarters, and to model the segment, we sort of understood what to overlay from a sales perspective. But as we look going forward, we have to apply some assumptions around growth, which the profile for growth in that segment is now going to be much different from what it's been in the past. So just any help there on understanding how to think about the growth of the specialty distribution segment.

Yes. And I'd go back and just say DI, we didn't really see it outside of our core. I mean when we think about our products, we think about being an insulation company and what they focus on as insulation. If you looked at their top 10 list of suppliers, very similar to our top 10 listed suppliers. So there were definitely some big synergies there, and that's why we were so attracted to that business. As you think about trying to model that going forward, like I said, I think you're going to see less cyclicality with their business than you see on the residential side or even in our legacy commercial business. The end markets are very diversified at the end of the day. There's liquid natural gas, petrochemical, manufacturing, food and beverage. There's a lot of different projects that insulation goes into, so it's pretty well diversified. And like I talked about, the revenue mix is 50% MRO, so repair/replacement. So again, I think that's going to help smooth out the revenue over time. Now we have pointed out on our calls that quarter-to-quarter, the revenue can be a little lumpy because it's very project-based. So the projects that these -- that go on at a big Exxon Mobile plant or something like that, when you got that going on and you ship that in a quarter, that's going to have a significant impact on your revenue. So forecasting and modeling, that's going to be a challenge for all of us, I think. But like I said, we're definitely cautiously optimistic about that business moving forward.

Yes, 50% MRO, repair/replace, you're optimistic about the business. Is it right to think that given supply chain tightness, factories running pretty much at capacity, there's been a lot of deferred maintenance, particularly around these products. And that should sort of provide a tailwind. The headwind, obviously, being recessionary times, staff companies pulling back on the capital needed to do the projects. So obviously, 2023, we're going to hear more about it in a few months. But is there a belief within TopBuild that there's pent-up demand for the products of DI?

Yes, we believe so. And we think we've definitely seen that here in the last couple of quarters. So coming out of COVID, their business was definitely impacted during COVID. A lot of these projects got delayed during the COVID time frame. If you looked at their revenue when we bought them, the trailing 12 months was around $750 million. They've done close to $250 million in the last couple of quarters. So the business is performing very well, and a lot of those projects have come back online. So we're -- we don't have a ton of visibility into the back half of next year yet, but we're definitely optimistic like I said that that's going to continue.

Yes. Remind us what you said about synergies here because there were, I think, a few buckets and some targets over a 2-year period. Just maybe lay out what those were, where you are on track for those because we're about halfway through, I think, the synergy period?

Yes. Yes. So when we did the deal, we said we'd generate $35 million to $40 million of run rate synergies by the end of the second year. So we just lapped the first year. And we said by the end of the first year, we'd have roughly half of those in place. I can tell you, sitting here today, we're a little ahead of schedule on that right now. As you think about the buckets of that, it's about 40% supply chain synergies. I'd say we're pretty much 100% done with those. Those are in the bank at this point. Pretty much on target with what we expected there. 35% coming from back-office synergies. I'd say we're roughly a little over halfway there. We just finished our ERP conversion with DI or at least for the majority of their branches, we completed it. And so a lot of the heavy lift is there, and a lot of the headcount will come out now in 2023 related to that. And then the final piece, I'd say, is on the operational side of things. Still a lot of things being investigated there. We've definitely seen some savings on insurances, logistics, a lot of things still in the hopper there on that side of things. That's where we signed up for 25% of our synergies, and I'd say, we're a little less halfway there on that piece of the synergies.

Okay. Great. So it sounds like integration going rather well. I think at the time when you did the acquisition, if we think about the value chain, right, there's the manufacturer, there's the distributor, there's the installer, and that's really -- if I'm thinking about the residential side, you don't manufacture, you distribute and you distribute and install. But with this business, there's manufacturers, then there's an additional layer of fabrication, if I'm not mistaken. And then again, there continues to be the install side of things. I think when you did the acquisition, you said the installation side is not really something that you are looking to integrate into, it's really just the fabrication and distribution. So I'm curious, as you've gotten in, you have the keys now, you're doing the integration, is that still something that you believe is the right path forward for this entity?

Yes. Yes. I'd say you're right on that, and we definitely think that is the right path forward. I mean the installation on that side is very different than the installation we do. The skill sets of the people that do that are completely different. And so it's not something we would have synergies with if we try to get into it. And it would be very messy to try to get into that from this point because you'd be talking about starting to try to acquire your customers, which can get a little bit -- get messy with the supply chain. So definitely not something we're looking at. Like you said, part of what we did like about DI is the fabricated products that they do. It's probably about 35% to 40% of their total revenue. The biggest chunk of that being metal building installation, which we were already doing in our distribution business. So again, a nice overlap in synergies between those 2. And then the other 15% is on fabricating custom insulation on the mechanical side. Again, if you think about wrapping pipes and building a lot of that stuff has to be custom made. And so with that custom product, we can charge a little better margin, which is another thing we liked about the acquisition.

Yes. That was going to be my next question. It sounds like if it's less standardized, there's margin opportunity. Is there also a higher labor element to that fabrication process, either through the design, obviously, helping your customers understand what they need but then also those actually taking the sort of like raw material, if you will, and then fabricating it into something that could be used by the customer?

Yes. I mean the -- and we just did a tour of our Houston facility with our Board a few weeks ago. And I can't remember the product now, but they were showing us a product that they had custom-made for a customer, which was going to save them significant time because of how they cut it, it was going to save on the assembly time, right? So that's really the value add and why you're able to charge that higher margin is that you're saving them time on the labor side, so they're willing to pay for that in the product.

Yes, makes a lot of sense. Let's go back to TopBuild, TruTeam the install side and talk a little bit about TopBuild Home Services. So this is something I'm a little less familiar with. I'd like to know sort of how it -- what was the genesis of it, but also get into some examples of how this helps builders, right? Because it seems like something that has tremendous growth opportunity, I'd like to hear more about that as well. But I think specific examples would sort of help bring that to life for folks?

Yes. So TopBuild Home Services, it's about a 20-million-plus size business inside of our install segment. And their energy efficiency experts, right, and so they go around, they do consulting with the builders. So if a builder is trying to understand how to improve his energy efficiency rating of a home, they will do consulting with them on what installation to use, where to do different air seals and things of that nature. They do training for the builders. So they will train some of the trades on how to install things. They train some of our folks as well. And then the final piece and the biggest piece what they do is testing them. So they will do the testing. So when you buy a house, when you get the -- it has a certain HERS rating or it has the Energy star rating, that's our folks from TopBuild Home Services that go in and do that testing. And with the -- we do see it as an opportunity for growth. We're in about 30 of the top MSAs right now with that business. So we think there's some M&A opportunities potentially on that front. And there's opportunities with the inflation Reduction Act. There's some additional tax credits out there. And one of the tax credits is for getting your house energy tested, and these are the folks that would do that energy testing for you. So we definitely feel good about that business moving forward.

And that would be a builder getting the tax credit from having the testing done, correct?

They do today, and we help with that. We help with the testing for that. But the way I understand it is, you now, as a homeowner, can also get that testing done, and that's a part of -- you've taken that credit from -- I think it was like a $500 credit as a homeowner to now a $1,200, and this testing could be a piece of that.

Okay. Are there other opportunities within the IRA? A small part of your business is R&R. Is there something for homeowners that want to put different insulation in? Is there a tax credit there for those folks?

Yes. I don't think insulation was called out specifically as something you could take a credit for, but obviously, any of these bills that are moving towards higher energy efficiency, insulation is always going to be a part of that equation, right? So I think it's going to be a tailwind to our business. To your point, R&R, it's, call it, 5% to 7% of our total business right now.

Great. If you don't mind just laying out, you had an Investor Day in May, where you talked about long-term growth and your targets around that, interesting timing, of course, with the way that mortgage rates were going and now, of course, throughout June, July and into the fall, we've seen the deceleration in new home orders. So maybe just talk about what those targets were at the time? And just how you might be thinking differently about them? Obviously, I'm not asking you to update your long-term algorithm at this stage, but I think it is top of mind for investors sort of those folks that decided to talk about the long term, how they're sort of adapting to the new environment.

Yes. Yes. I think -- I mean, if you go back to our Investor Day, we laid out, I think, a path to revenue of $6.7 billion, I think, by 2025. I think that was a number if I had it right. But -- and basically, the concept was, hey, if we continue the compounded annual growth rate of about 13% that we've done over the last 5 years, that's where we would be, right? And we didn't get into specifics of volume, price, M&A. And a good thing we didn't, right, because they'd be blown out of the water right now with what's happened with interest rates. So certainly, I think we could still get there, right? I think for us to get there now, residential volumes will certainly be more challenged than we thought back then. So to get there, maybe M&A plays a bigger piece of the equation, right? We definitely like I think I mentioned, in a downturn, see M&A as an opportunity. I mean, we're a capital-light business. CapEx runs about 1.5% to 2% of sales. So any down -- and our cost structure is very flexible. 70% of our costs are variable, which is made up of material and labor. So obviously, material, we can variabilize that very quickly by just not ordering. Our labor is primarily paid on piece rate, and so that variabilizes very quickly. And then on the fixed semi-variable cost side of things, the biggest cost there is people cost as well. So again, something we can variabilize if necessary, right? So with that low CapEx model, high variable costs, in a downturn, we're confident we'll continue to generate cash flow, and I think you'll see us continue to use that towards M&A.

Yes. I think one of the questions people have right now on the cost actions for what potentially could be a shallow, short downturn, particularly in light of difficulties hiring, you talked about being a capital-light business, your main capital is your people as your installers and you've done a lot to foster an environment where people want to work. And so how do you sort of balance? I think what you said was variabilizing the people part. With understanding that these are assets that are probably hard to get back in a period where things get tight again. So is there appetite at the company to sort of have a little bit of a worse decremental situation for 2, 3 quarters, potentially knowing that it's harder to get these people back than to have them leave?

Yes. Yes. And we've talked about that at Investor Day, we laid out our downside scenario and talked about our target decremental being at the same as our incrementals, which is 22% to 27%. And we kind of laid out the formula for how to get to that 27%, right? We said, "Hey, if sales are off 20%, we got to cut the variable cost 20%. And in that fixed cost -- semi-fixed cost bucket, we got to cut that by about 10%, and that gets us to the 27%. And we're comfortable that we can do that in a downside scenario. But to your point, and we've talked about this a lot, if we believe it's going to be a short-term downturn, we're not going let go of that labor quickly, right? And so that will put that decremental higher in that type of situation. So that's going to be the art of all of this -- for all of us here as this downturn comes is figuring out how long do we see it stay in there? How long is it going to last? Because to your point, with labor as tight as it's been, we don't want to let it go and then potentially be looking at growth in the near-term future and having to try to hire that labor back.

Right. If I think about the value of you and the other largest player in the industry, for the manufacturers, it seems to me that, that value would be greater in periods of lower volumes, right? You're offering them stability of order patterns, you're baseloading their plants. That's not necessarily something that has been the case over the last couple of years with such tight capacity and demand in housing, of course. So if we think about where starts can go from here, I'm not asking you to put a number out there, but 900,000, 800,000, 700,000 starts potentially for some time, do you feel like the value that you bring as the largest distributor can sort of come back in, and you'll see that benefit either in your selling margin or in other ways?

Yes. No, we definitely -- as the largest player in the industry, definitely feel like we have an advantage there with the suppliers. And to your point, if we do see a prolonged downturn and starts down for a significant period of time, when they have excess material, we're the first people they are going to call, right, to move that material, and we know we're going to get the best price when that happens. So for sure, in a downturn, that's how we see that playing out.

And you talked about M&A, right? So some of these longer-term targets that you put out at your Investor Day, the longer-term framework for capital allocation, probably largely unchanged in the period where you just have a pullback in housing. So on the M&A side, I think you talked about it already being a little potentially easier in those environments. Is that a function of the owners of these smaller businesses just saying, "I'm not willing to go through another downturn? Or is there a succession element to it?" What's sort of the reasoning why it becomes an easier environment to do M&A?

Yes. I mean -- and it varies, right? Everybody's selling decision is a different one at a different time. Some don't want to go through another downturn, as you referenced. Some are nearing retirement and see it as a good time to get out. So it's hard to generalize across that. But we definitely see it as a chance for us, as people are struggling, to get out there and try to find assets at a good price. And like I said before, we're going to continue generating a lot of cash. And so we -- M&A has been a great return on cash for us. It's been a big part of our story. We've developed a core competency with M&A in terms of integrations. We've done 30-plus deals since our spin, and we, every time, come put them on our ERP systems. Because like I talked about, that's an advantage for us. And we do that on day 1, we've got thorough diligence processes and modeling we go through. And being the largest player and the advantages we have there, the synergies we get on M&A are pretty straightforward at the end of the day, right? It's primarily material synergies and back-office synergies, and we can recognize those typically very quickly.

Great. If we think about sort of the concentric circles around your business right now, what are the other white spaces that you feel like you can fill within the portfolio through M&A?

Yes, I mean we don't spend a lot of time outside of our core because what -- like I said, I think we look at our core as being insulation, whether that be on the residential, commercial or mechanical side. When people talk to us, we get people talking to us about some products outside of there. And we have branches that do some other things. We have some glass and windows and gutters and things like that, where if we have a branch that's doing that and doing it well, we continue doing it. But insulation is definitely our core, and that's definitely where we see continued opportunity for growth because when you look at those 3 end markets and you put our share together, we're the #1 player in all the markets, but we've got a combined 20% share. So we see a lot of opportunities still there.

Great. Well, Rob, thanks for being here today, and thanks for doing the conversation.

Thanks, Joe.