Participants

Robert Buck; President, Chief Executive Officer, Director; TopBuild Corp

Robert Kuhns; Chief Financial Officer, Vice President; TopBuild Corp

Presentation

Operator

Greetings, and welcome to TopBuild Third Quarter 2024 earnings conference call. At this time, all participants are in a listen only mode. (Operator Instructions)It is now my pleasure to introduce your host, Pete Aquino, Vice President, Investor Relations. Thank you. You may begin.

Good morning and thank you for joining us today.
I'm joined by Robert Buck, our President and Chief Executive Officer, Robert Kuhns, our Chief Financial Officer. We posted our earnings release, senior management's formal remarks and a presentation that summarizes our comments on our website at topbuild.com. Many of our remarks today will include forward-looking statements, which are subject to known and unknown risks and uncertainties, including those set forth in this morning's press release and in the Company's SEC filings.
The Company assumes no obligation to update any forward-looking statements because of new information, future events or otherwise. Please note that some other financial measures to be discussed during this call will be on a non-GAAP basis.
These non-GAAP measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. We've provided a reconciliation of these financial measures to their most comparable GAAP measures in today's press release and in our presentation, both of which are available on our website. I'd like to now turn the call over to our President and CEO, Robert Buck.

Robert Buck

Good morning, and thank you for joining us today for powder share that in the third quarter, we reached another store card for TopBuild sales and adjusted EBITDA performance. In terms of our teams that are very good job across both our installation and distribution segments, posting top line growth and bottom line profit expansion. This quarter is a prime example of our ability to perform well in any environment. The landscape for building products in the third quarter was in many ways, much like the second quarter, although we've seen improvement in inflation to metrics and the labor market is strong. Housing demand in the second half of the year has been slower than anticipated. Single family residential starts to vary widely across the country. Even as mortgage rates drifted lower ahead of the Fed rate cut in September. Home buyer behavior suggests the consumers are holding out for a lower rate environment and election certainty were recently . Mortgage rates have been on the rise. Again, on the multi-family side, we're still working through our backlog. Multifamily demand has slowed and were not expected to improve in the fourth quarter and as we move into 2025.
As a reminder, multifamily units typically require about 40% of the installation when compared to single-family unit. Our businesses much more weighted towards single-family, consistent with the industry on the commercial industrial side, but it is still very active and we have a strong backlog going into 2025. As we talked about last quarter, some project starts have been pushed out primarily for financing reasons. We have not seen an uptick in cancellations. So we anticipate that with the financing environment improves, these projects will move forward. Turning to our results, we performed very well in the third quarter. Given the macroenvironment, sales increased 3.6% to $1.37 billion as volumes grew benefited from acquisitions and realize in pricing across both installation and specialty distribution. Our adjusted EBITDA totaled $285.1 million and adjusted EBITDA margin was 20.8%.
Given our operations with over 14,000 employees, we are a people business and every day continue to be. Everyone plays a key role in what we achieved every day to labor, align incentives and develop and reward our employees accordingly. On the material side, fiberglass is still on allocation planned and unplanned maintenance remains persistent with the manufacturers and a new manufacturing facility in Texas has been slower than anticipated coming online. Our teams are doing a good job managing the continued tight supply environment. Our special ops teams continues to be an important part of our story and how we continue to improve productivity and drive profitability. As you see in our results, as I've done a recent calls, I want to spend time highlighted in that particular area of our business to provide a better understanding of our differentiated model.
Today, I want to briefly touch on cross roads are Canadian specialty distribution business and mechanical and metal building insulation crossovers, joint TopBuild through the acquisition of distribution in the NASH in 2021 with its long history in Canada, there are a leader in the commercial marine and industrial end markets. We operate out 18 facilities located in key markets across Canada, and our focus is to deliver the best service possible for our customers. Our value add, especially fabrication capabilities, differentiate us from the competition and enable us to be the go-to supplier of innovative products and resources for our customers. Our focus include both the ongoing maintenance of commercial and industrial facilities and a diverse and an impressive list of new construction projects.
one of our more notable projects for which we are currently the lead supplier, liquefied natural gas project on the West Coast of British Columbia. This is the largest infrastructure project and Canada's history. We're also the lead supplier for large shipbuilding program for the Canadian Coast Guard as well as numerous nuclear power and oil sands projects. Our Crossroads management team is highly accomplished, and we're very proud of their hard work. They've been driving the business forward and have consistently achieved growth above the market. Turning to capital allocation. M&a is a core competency of TopBuild and acquisitions continue to be our number one capital allocation priority. We have a solid track record of generating strong returns for shareholders.
We are pleased to have recently announced agreement to acquire Shannon global energy solutions, mechanical installation company servicing, multinational commercial and industrial customers, sanitization upstate New York, and generates approximately $11 million in annual revenue. This brings our 2024 year to date acquisition count to say seven for a total of four total of approximately $118 million annual revenue. Given our robust pipeline of very active M&A environment, we've allocated more resources to support our M&A efforts as we evaluate several opportunities across our end markets. We continue to concentrate on our core of insulation are also learning about opportunities that have the potential to expand our total addressable market. Importantly, we will stay disciplined as we focus on those opportunities. The best leverage our core competencies.
Also in the third quarter, we continued our share buyback program, repurchasing $1.07 million shares for a total of 413,900,000.0. As you saw in our press release this morning and considering today's macro environment, we are tightening our outlook on 2024, which Rob will cover in more detail. Before I turn it over to Rob, let me reiterate that we reiterate we are performing very well in the macro environment that has been choppier than anyone had anticipated at the beginning of the year.
Despite this 20, 24 will be another strong year of profitable growth for TopBuild, we are very well positioned to capitalize on improving demand that we believe will materialize as 2025 2025 progresses. We participate in a great category and industry. And as we differentiated and we have a differentiated business model, the underlying fundamentals are strong . And under Bill housing market in the US, rising household formations and the prospect for lower interest rates. These factors, coupled with the critical role that installation plays and driving energy efficiency and beating Street and the building codes demonstrate why we're bullish about the long term growth opportunity for TopBuild. Rob?

Robert Kuhns

Thanks, Robert. I'd like to extend my thanks to our teams for their hard work and delivering and another excellent quarter. As Robert noted, record high sales of $1.37 billion grew 3.6% versus prior year, with both segments showing growth year over year and sequentially, M&A net of a disposition contributed 2.3%, while price was up 1% in volume improved 0.4%. Third quarter pricing of 1% reflects the continued realization of higher fiber glass pricing, net of new price reductions on spray foam, driven by increased supply. Why Turning to our segments, installation sales grew 4.2% to $856.4 million. That M&A added 2.7%. Pricing contributed 1.1% and volume was up 0.5%. Residential say improved slightly from the second quarter and grew 3.7% versus prior year due to M&A and single-family growth, partially offset by slowing multifamily sales. Commercial sales improved slightly from the second quarter and grew 6.8% versus prior year due to M&A and time we have projects. Specialty Distribution sales rose 5.1% to $ 600.4 million in the third quarter. Volume improved 3%.
Acquisitions added 1.4% and pricing contributed 0.8%. Sales to the residential end market improved slightly from the second quarter and grew by 8.5% versus prior year. Sales to the commercial and industrial end markets slowed slightly from the second quarter and grew by 2.9% versus prior year third quarter adjusted gross profit of $421.8 million or a 30.7% margin was 100 basis points lower than last year. As we've discussed in the past, our 2023 third quarter results included a one-time benefit of approximately $15 million from higher than normal margins on multifamily and commercial projects in the installation segment. Excluding this, adjusted gross margin improved by 10 basis points versus last year as we continue to focus on driving productivity and profitability across our operations.
Third quarter adjusted SG&A as a percent of sales was 12.8%, an improvement of 40 basis points versus last year. Topbuild. Adjusted EBITDA in the second quarter totaled $285.1 million or a margin of 20.8%. Excluding the $15 million a margin benefit from last year, we expanded adjusted EBITDA margin by 50 basis points. Installation segment adjusted EBITDA margin was 22.3%, a 40 basis point improvement after excluding last year's $15 million benefit. Adjusted EBITDA margin for the Specialty Distribution segment expanded by 20 basis points versus 2023 to 18.4%. Other income and expense of $16.1 million in the third quarter was $ 3.3 million higher than prior year due to lower interest income, which was driven by lower cash balances. Third quarter adjusted earnings per diluted share of 4.6% compared to last year. Moving to our balance sheet and cash flow, total liquidity was $693.6 million at the end of the quarter. Cash was $257.3 million, and we have $ 436.2 million of availability under our revolver.
We ended the quarter with net debt of $1.14 billion, and our net debt leverage ratio was $1.06 times. Trailing 12 months adjusted EBITDA working capital as a percentage of sales was 14.1%, an improvement of 50 basis points compared to prior year. Free cash flow for the trailing 12 months totaled $698 million, representing a 2.6% improvement over the same period prior year. We continue to strategically allocate the strong free cash flows and our capital allocation priorities remain unchanged with acquisitions. Our top priority. This year, we have announced seven transactions and we continue to have a very healthy pipeline. Our second priority remains returning capital to shareholders. And in the third quarter, we bought back $413.9 million or $1.07 million shares. That brings our year-to-date share buybacks to $ 919.2 million or $ $2.3 million shares as of September third.
And if $235.2 million remains under our current share repurchase authorization. Finally, turning to our outlook, we are narrowing our full year guidance. We expect to finish the year with sales between 5.3 and EUR5.35 billion, which represents year-over-year growth of 2.5% at the midpoint. We have also tightened our adjusted EBITDA expectations to $1.055billion to $ 1.085 billion. While the macro environment has not played out the way we had originally thought this year, 2024 is shaping up to be our ninth consecutive year of sales and profit growth, something we are very proud of what the choppiness of our end markets is likely to continue into the first half of 2025.
We think the underlying fundamentals for demand in our industry remains strong, and we are confident that we will continue to drive profitable growth and increase shareholder value. Robert. Before opening the call to questions, let me reiterate some of my opening remarks. We have a proven differentiated business model, a disciplined capital allocation approach and an ongoing focus on strong execution and driving improvements throughout the business. As we look ahead, the macro fundamentals of our business are supportive of construction demand growth.
We are inherently well positioned to capitalize on the opportunities for increased energy efficiency and strengthening building codes. We can have a significant opportunity to drive growth through M&A pipeline is healthy, and we are very active.
We have a great track record of evaluating, acquiring and integrating businesses generating solid returns. We remain committed to building on our track record of delivering increased shareholder value, and we expect 2024 to be another strong year of profitable growth.
I'll conclude by thanking our teams for their continued dedication, focus on our customers and commitment to safety. We want to thank you for your efforts to consistently execute and drive improvements across our business. With that, operator, we're ready to open the lines for questions.

Question and Answer Session

Operator

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad.
A confirmation tone will indicate your line from the question queue, you may press star two. If you would like to remove your question from the queue For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. one moment, please. While we poll for questions. Thank you.
Our first question comes from the line of Philip Ng with Jefferies. Please proceed with your question.

Hey, good morning, everyone. This is Maggie on for Phil. On bond that you closed some of the current choppiness to continuing into the first half of next year. Can you give us a framework for how to think about 2020 sites? And do you have enough levers to continue driving organic top-line and EBITDA growth, even if we don't see a meaningful acceleration in the single-family starts next year?

Robert Kuhns

Yes. And yes, maybe this is Rob. So obviously, we haven't put out our guidance for 2025. But as we look ahead, we're optimistic about 2025 that that could be our 10th consecutive year of sales and profit growth. Obviously, we're dealing with some some choppiness in the end markets right now. Tom. But overall, like we've talked about, the fundamentals, we know are strong. We're optimistic that that rates will come down next year. And you know, for resi and commercial, that should be good for end market demands. While we know the headwinds on multi-family, we saw started to see that hit us in Q three that we're going to continue to see that into Q4 and into early next year.
It's important to remember that in our 10% of our business total business, um, right now our bidding activity there has actually picked up some. So we're optimistic that things may have bottomed out there and that could be getting better. And then the rest of our business. Now, even if that was down 30% for the whole year, which which we don't think it would be, we think given our share we've taken there, they're the the bidding activity we're seeing.
We're not going to be any down anywhere near what the market is. But um, you know, the rest of our business would need to be up for it. That's down 30% next year in line with what starts are down year to date. We need to be up a little over 3% in the rest of our core business, which we think is definitely doable. So in a long answer to your question, yes, we still see a path for sales and profit organic growth next year.

Okay. That that's really helpful. And then wanted to dig into pricing on you have the imager fiberglass and fee-based cash flow realization for that. We've been getting some feedback that builders are getting some pricing achieved. So just wanted to if you could go through how some of those conversations are going on. And then on the spray foam side, you mentioned price reductions. Are you starting to see prices stabilized or are there going to be continued headwinds in that category

Robert Buck

In against for average On the fiberglass I think as Rob pointed out in his remarks, that we don't believe so improvement quarter over quarter, Q2, Q2 to Q3 on fiberglass, but look has been a lot of definitely conversations, thousands of conversations with the builders given the choppiness and stuff. So overall, we feel like if you can see in our performance, the team's done a nice job there. But it's as you might imagine, region-by-region region, local geography by geography, conversation and situation, but our old Rockies on a nice job, this three foam, definitely.
I think there's a there was a lot of, you know, upbeat talk about spray foam to go back to beginning of the year with change and energy codes, and it just has a pencil have for the builder. So in anticipation and then dissipation of folks were thinking you see a lot of supply come into big markets like Texas, and that's created a competitive situation. We would think that's not sustainable. What can you know, stabilizing here coming out of 24 going into 25.

All right. Thanks so much.

Operator

Our next question comes from the line of Stephen Kim with Evercore. Please proceed with your question.

Hi, this is Stephen for Steve. Thanks for taking the question. And just sticking with pricing there outside of fiberglass and spray foam, how should we think about the pricing dynamics of the other products in the quarter and kind of going forward with our deflation there? So if you could touch on that, but that would be helpful.

Robert Kuhns

Yes, this is Rob. So I'd say overall the there are other product categories, no meaningful change. The to the two movements from quarter to quarter was, as Robert said, we saw improvement in price realization on the fiberglass side from Q2 to Q3. And then in Q 3, the new news there was the spray foam price decreases that we felt we got we got decreases on the supply side as well, as Robert talked about things got a little more competitive in certain markets with new supply coming online. So that that had the opposite impact ended up with kind of muted 1%, but the other product categories and then have a meaningful impact.

Hey, guys, it's Steve. Just jump in and of I guess my question I had kind of done just a housekeeping item first, that money to confirm that you actually had an extra day this quarter on it, which is included in your volume. And I assume that that also you have an extra day in the fourth quarter. So just if you could confirm that. And then a larger question about the commercial projects as CNI delays. I think last time we met our Robert, you have you thought that most of those projects will likely only going to be delayed by like a couple of months or something because if they were going to be delayed longer than that, I think you had indicated that the customers would probably like come back to you asking you to extend your quoted pricing and they weren't doing that. So you said probably, you know, they're only delayed a couple of months. I'm curious, has that changed? Are we looking at longer delays now? And if maybe you could describe if so, what does that make you think about for fiscal 25? Are you going to have more of a bunching of projects and 25? So are we actually going to see more C&I activity and 25? And you previously thought or help me think through the dynamics there? So money?

Robert Buck

Steve Roberts, I'll take the first part of that. The commercial industrial side on the rock couldn't talk about the days in the quarter. So yes, I think as a great question that you have there. So there have been more delays. I think the positive is no cancellations that happens. Even I think last time Warner Mathai, we're talking about some big data center from and we were working on that had been delayed, you know, three or four months at that point now receives projects delayed three or four months or even a couple of quarters into 2025. So as Rob talked about, I think in his remarks, we talked about special distribution and the volume there. We're pretty happy. So what was driving that has been some good maintenance and repair work on that is hit from in the C&I side, that business.
So that was today that we expect, assuming a stable financial environment and things improve their bigger pickup in the capital projects on and the bigger projects on the commercial industrial side in 2025. So bidding remains active, no cancellation uptick. So I'd say we're positive from that perspective. But definitely continued delays in project. Sounds a little bit longer to take like you might enable can be a mega project or give you some some verticals that you might talk about. Ev and battery plants have been a great example of has some demand has slowed down. Our projects are being delayed or pushed out, not canceled And to that would be an example that we see that are a little more extended delays.

Robert Kuhns

Yes. And then just a hit on your house keeping items there. You're correct that it's plus one day in Q3 and Q4 on a year-over-year basis.

Perfect. Thanks so much, guys.

Robert Buck

Thank you.

Operator

Our next question comes from the line of Michael Rehaut with JPMorgan. Please proceed with your question.

Hi, thanks. Good morning, everyone. Thanks for taking my questions. First, maybe a little bit also have a housekeeping question, just to kind of better appreciate the degree of magnitude here. Given the variety of your end markets and products that you offer. If you could just remind us roughly what percent of sales you know is does commercial represent as well as on the residential side spray foam as a percent of your overall sales or if it's more relevant installation, your installation segment just to kind of better appreciate, you know, the again the impact of some of the the mix trends in these areas.

Robert Kuhns

Sure, Mike, this is Rob. So pretty straightforward answers there. You know, commercial industrial for for our business on the install side were about 15% of our of our total sales, especially distribution is about 60%. And that puts it at TopBuild kind of around 35%, um, spray foam between the segments. On the install side, you're talking 15% to 20% of total sales distribution around 10%, and that puts the overall TopBuild it at that 10% to 15% type number.

Okay, great, great. And then and I assume when you kind of talk about the commercial projects being delayed aid, that is kind of broadly speaking, referring to the overall CNO's commercial industrial numbers that you just quoted?

Robert Buck

Yes, that's correct. So no particular geography to point out or anything like that. It's a pretty neutral across the across the country. And even thinking about the verticals that I spoke about earlier.

Okay. All right. Because I think also a part of that is you know, there is a portion of the commercial industrial business. It's kind of more recurring. So I don't know if that would be kind of outside of those percentages, so to speak.

Robert Kuhns

Yes. I mean, inside of the 35% is the recurring revenue. So like Robert said, the recurring was strong in the quarter and our overall C&I for the quarter was up 4% across the Company. So, you know, more in line with our is actually a little better than reduced assumption. We had coming into it into the back half of the year. Here we were thinking more kind of low single digit growth in that. That was a little better than we thought in the quarter.

Great, great. Second question relates more to the M&A backdrop. And we see the the continued activity this year. I think going back to the beginning of the year with the SPI. deal that fell through for for reasons that obviously we're all familiar with us. That was a relatively larger deal. And I think there is some maybe concern out there that similar larger deals may be harder to come by. So Ian, I'm just kind of curious what your thoughts around kind of continue to talk about the M&A backdrop remaining robust.
A lot of activity, a lot of opportunity kind of on the medium to larger side. I was wondering if you could kind of review your prospects across your three times more B&O, some relevant to the medium to larger opportunities are more on the commercial industrial side, but kind of where you stand with those types of acquisitions? And how should we think about the next two or three years as it relates to the potential for additional medium to larger deals?

Robert Buck

Yes, Mike Roberts, and I'll take that from a few different angles. So you have a look at the current pipeline and what we have under NDAs and deals that were closer to their. It's really across all three, some of the day in some end markets there that we service. And there's some nice chunkier deals in their 40s, 50, $60 million type of deals. And then there's the smaller $15million, $20 million type of deals as well. So on. So very active right now, not just active, but I'd say a lot of things that we're working for an M&A perspective. I think your question's a good question. As you think longer term here, may obviously, SPI. just remain at that point as a very small piece to that business that they've got focused only on the MBIP. So we still see mechanical industrial side has great opportunity.
That's why we do call out Shannon, because as we were working on SPI., we kind of slowed some of those in that space. And now we're seeing that activity pick back up, which is agree. I think we're excited about what's happening there that as we think two or three years, I think it's a key point that we talk about. And that is really we're focused on the core comp occupancies that TopBuild has in our in our core competencies. We're very comfortable on have a competency of running this dispersed branch network type of model with, you know, central support.
Obviously, we from a culture perspective, what we built relative to this micro-client version of local empowerment piece surrounded by the safety and the technology we have in place. And then obviously, we're known for the labor and how we've been able to attract and retain labor. So models that fit that along with how we leverage supply chain and then able to build through not just organically through M&A. You take those core competencies with Rite Aid things that I just mentioned. We think that opens up avenues for us that are great, you know, great opportunities and stuff that are very, very close to what we do. So we're pretty optimistic and good line of sight to the next two to three years of how we think about.

Great. Thanks so much.

Robert Buck

Thank you.

Operator

Our next question comes from the line of Susan Maklari with Goldman Sachs. Please proceed with your question.

Thank you. Good morning, everyone. My first question is around the energy efficiency initiatives that you had mentioned as the builders are struggling with the affordability headwinds and rates are continuing to have higher versus lower. Can you talk about how some of that is perhaps flowing through and how it may come through over the course of the next year or so?

Robert Buck

Now I'll start with that Susan's, Robert. So yes, as I mentioned earlier, whenever you're talking about spray foam, there's been some excitement, but that is end of the day. The builders just getting that to pencil out. Some hasn't really come to fruition. So there are other installation, i.e., fiberglass on alternatives. There where that definitely if you think about, you know, like a bone and blanket, which you may have heard the term bids in the industry before that we can definitely competition and meet the codes as well. So as you know, given our model, we're pretty agnostic, we can go with a lot of different solutions for the builders, and that's what we're giving them today.
So definitely see it playing out where, you know, these codes are going to be a tailwind, and we're going to satisfy those Web fiberglass solutions or other solutions. And they'll be someplace. I'm sure some folks will use some spray foam to meet those cuts may be in the customer, even in the regional sector there. But I don't think it'll hold back there. Implementation of some of the code more stringent Coach, if you will.

Okay. That's helpful. And then thinking about the cost environment that can you just talk about labor availability that you're seeing there? Has that changed or has it gotten any better for you, how you're thinking about wage inflation? And then I guess, you know, as it relates to that, also just some of the Company specific efforts such they're pursuing as it relates to being more productive and efficient, especially on some of the on the distribution efforts there.

Robert Buck

So from a labor perspective, as you know, has always been a strength for us and I'd say is there's been choppiness in certain markets and stuff labors then become more readily available. But as we look out further into $0.25 as things pick back up, we definitely think labor for the industry, not for TopBuild. I would react strength in a relative to the inflation piece. We really haven't seen it in just a reminder, the majority of our workforce there is on a piece, right? So whenever we talk about our special ops teams and really working productivity, that's what we're constantly doing. So we've been at you never really heard us talk much about the wage inflation side because we really worked on improve the productivity and things specifically that we're working on.
There's some better tools that we're putting in place for our teams in the field to make them more efficient of getting on job sites installed perspective as well. So we continue to work those. And that includes on the distribution side with our drivers. If you think about from a distribution model drivers being a very important part of the team there. So working activities there to make that more productive, both in warehouses, but the drivers specifically as well.

Okay. Thank you for the color and good luck with everything.

Robert Buck

Thank you.

Operator

Our next question comes from the line of Jeffrey Stevenson with Loop Capital. Please proceed with your question.

Hi, thanks. It's Josh Borstein in for Jeff. Thanks for taking my question. I was wondering if supply constraints on the fiberglass side, have any impact to volumes similar to what you saw in prior quarters? And maybe just speak broadly, how you're positioned from inventories going into the fourth quarter distribution of supply constraints you talked about?

Robert Buck

Yes, good morning, it's Robert. So third quarter saw some fluctuations relative to supply them, I would say was tighter to start the quarter on eased up in some of the choppier markets somewhat during the third quarter, maybe in the August timeframe, early September. But as some maintenance started hitting and some unplanned maintenance started hitting on deftly material tightened up again here as we came through October.
So little fluctuation in that from some impact in the Q three from a tight environment, I'd say sitting here going into Q4, we think we're positioned well from that perspective as we see as we got through October. And we know they're the spin-off plan in Texas, which you mentioned this lower coming online. We expected to be up and going here towards the end of the year ahead and into 2025. So I think we feel pretty comfortable from that perspective. Obviously, everything we supply and demand are event driven there. So we'll see what happens with the starts here coming up in the next 30, 60 days as well.

Okay. Thanks for that. And just wondering if you could provide maybe some more color just geographically, what you're seeing by region.

Robert Buck

Sure. So I think about let me just kind of think about this a little bit, maybe go through the through the country. So I think about some of the Northeast, Mid-Atlantic, maybe that off the Northwest, Northern California, I think we've seen some improvements there. Look a bit activity and sales. So I'd say we've seen some improvement in those areas that I think about kind of steady. As she said, I hope the Carolinas on Colorado, Dallas has continued to pull through well as well as San Antonio Denver .
And then if I said a some areas that you'd my term choppy, I'd say maybe like Southern California, certainly Arizona markets often will be a good good. You know, example that Houston a little bit as well. The thing about Texas and Florida some, but it's just kind of a market by market there. I think maybe on a previous call, our previous conference, I mentioned like the Naples area, it would be a slower one, but we continue to see remain to be strong in Florida has gotten a little bit of impact you think about the hurricanes and stuff as well. So I think that when you know, we'll continue to be steady and improve. But hopefully that gives you a little flavor around the country.

No, it does. Thanks for that.

Operator

Our next question comes from the line with from Keith Hughes with Truist Securities . Please proceed with your question.

Thank you. In the fourth quarter. Got good. Are you expecting your multi-family business in terms of dollars minutes-of-use? You want to do it to be down?

Robert Kuhns

Yes, Keith, this is Rob. So we don't we don't split it out between between single-family and multifamily. I mean, we're still expecting our total resin sales for the full year. I'd say when you when you when you put it all together, we're looked into full year kind of flat on total ready sales from. So you can you can kind of back into the fourth quarter assumption that has a slightly negative from a from a revenue side. Obviously multi-family will be driving the bigger chunk of that.

Do you think whatever the numbers it seems like that's probably going to get worse or the beginning of the year was, but that's directionally where you see the market?

Robert Kuhns

Well, yes, I think multi-family, albeit be a challenge as we move into Q1 and Q2. But um, you know, like we were talking about, we've actually seen some of our bidding activity pickup there. So we think we're going to do better than the market on that side of things. And then like I pointed out earlier, the fact that it is 10% of our total business.
No, we don't need to see too big of an uptick on the single-family and commercial side to offset it. So there were obviously 2025 in a lot of variables still to be seen. But we're cautiously optimistic, like I said earlier that it will be another year of growth. Most of my probably definitely tougher and tougher first half versus second half, I would say, next year as well.

And I guess on the on the pricing side, the Yum, to sum it up much this year from what do you think it would take to get back to some higher and voice and in terms of what you're getting from your suppliers as well as what you can put to your customers? The key drivers?

Robert Buck

I think a couple of things. one is, you know, we definitely see the demand. I think more of a, you know, even some steady increase on the single-family starts. As we talk about. You can have a you can ever, you know, as Rob said, we're going to perform better than the market or multifamily, whatever that looks like. But in a lot more fiberglass, as you very well know, goes into a single family units, I think the demand side on the single family. And I think you're going to see the codes continue to kick in here in 2025 as well. And we're seeing the builders prepare for that. I think that's going to we think material will be tight. And on 2020, I think we're set up well for that.

Okay. Thank you.

Operator

Our next question comes from the line of Rafe Jadrosich with Bank of America. Please proceed with your question.

Hi, guys. This is actually Sean comment on for rate of first on a spray foam price changes. Can you talk about the cadence of price changes there? Are they consistent or is this more of a dynamic pricing model versus fiberglass? And then how is that spread between fiberglass and spray foam changed over time?

Robert Kuhns

Yes, morning shown us, Rob. So why didn't that question is, is that we think about how much changed over time. As you know, if you go back during come at some of the material constraints of 2020 and 2021, dramatic inflation from a spray foam perspective on that, definitely gotten more realistic are pulled back here and we'll say the last 18 months. But it's still I'm going to say 2.5 times and some are potentially more than fiberglass.
And then if you think about from a, you know, of course, flash price environment, it's pretty dynamic. There was a lot of optimism fueled the early part of the year about the builders and energy codes and using fiberglass, especially on some really big markets like Texas, Southern California, Florida against them, that's been harder for the builders to pencil out. So you see you sell more supply come out and more blenders come on. And that created some dynamics around that pricing cost side, we don't think that's sustainable. And so that's why we've said earlier, we think that stabilizes had not a 24 or early 25. So that's kind of the dynamics of what's happened a little bit of history as well.

Okay. Got it. And then you mentioned that you guys are looking at opportunities to expand the addressable market. Can you just kind of expand on what those opportunities are that you're evaluating these new products or markets? And then is it more on the installation or distribution side?

Robert Kuhns

Yes. I think you know, relative to growth and M&A, I mean, we're always looking at some of any opportunities in our core business. I mean, we really think about our core business are so much runway still left in our core business. Never we think about in our residential commercial industrial around building insulation and commercial mechanical industrial insulation solution. So a lot of runway there. So as we look at acquisitions, right, looking at geographies, where would be good opportunities for us occur or MSA., so plenty of runway there that drives into our thoughts.
And as we look longer term, the two to three years, it's really about these core competencies that they have given our history of of going back pretty topical. We really learned a lot about M&A. And I think you've seen a very successful track record since 17 in this business in U.S. because you've got to build M&A off core competencies. And so I've talked about our core competencies, which you know, goes from a cold care to our confidence, comfort level of confidence that we have around M&A and run this dispersed model with central support. In the background, we're very, very good at labor on. We're very good at driving on productivity and the model and supply chain leverage. And so we're not going to do anything outside those core competencies, and that's how we think about it. And it has given us really good line of sight as to what that looks like here in the coming timeframe. Does that complete your question?

Yes, thank you.

Operator

Our next question comes from the line of Ken Zener with Seaport Research. Please proceed with your question.

Good morning, everybody. Morning. Ian, appreciate your comments. Regionally, I like your positive study and choppy market definition, given that you and competitor have probably the best data are at in terms of bids from within that context, could you maybe just comment on how your I mean your your salespeople are conveying positive, steady choppy to in terms of like the bidding? Is there a price pressure if there's obviously volume pressure, given the rising a number of finished homes that builders have right? And seems like they're pulling back on starts a little bit, and obviously, rates have gone up in the last six weeks.
But could you maybe give us some context for this if it's a supply issue, it's a demand issue. As you know, your teams to say pricings issue or they're pushing back on us. But also, given your perspective, does this make sense what's happening just kind of micro cycles where it takes a little bit to get adjusted to interest rates? It's very interesting and I think your view matters. Thank you.

Robert Buck

They can this Robert's out of out of start? I'm sure Rob will have some some color to add as well. So that is for getting on one of the many good things about central analyze the therapy that we have as we're able to see those rates looking out across the country, by geography, by MSA. And so that does rise, you know, our commentary as well as in our cadence with the field of understanding what they're seeing.
But I think you're right. I think there's this calibration time period of, you know, addressing some of the political uncertainty, those types of things that's going to happen as well as from an adjustment period that happens. But I would say, you know, obviously, you're talking to our builders, which we do about what their outlook is for 25 for the first half back half of that type of thing. That's where we get our information from. And that's a pretty pretty fact-based coming from a combination of our conversations are salespeople as well as what we can see from us a big weight perspective in our ERP system.

Robert Kuhns

And I'll just I mean, I'll just add to that, Ken. I think it as Robert stressed earlier, it's really a market by market situation out there within states like Florida and Texas, we're seeing we're seeing differences. So um, that that's the choppiness we refer to. And I think ultimately from a from a broader view rate certainty, we definitely saw as rates went up, that rate certainly played a big player there.
As rates were going up, people hit pause. And then once rates stabilized and people realize the 3% in mortgages weren't coming back anytime soon, demand came back from. Obviously, the buydowns from the builders have helped that a lot to. But now with rates have been the other direction at some point, we hope right on your kind of seeing that same pause button, I think from from some buyers out there where they're saying. Okay. Well, if I can get this cheaper and a few months now I'll sit here on the sideline. So I think that that's a big the driving factor behind what you're seeing there. And that choppiness,

Robert Buck

As we said, right at the long-term fundamentals are solid. And so those things do breakthroughs here where people get comfortable in the environment rates to stabilize. I guess some of the uncertainty, you know, out of the way and maybe even filters some of the promises that have been made from that perspective? We've definitely will be ready from a topline perspective. As you know, Ken's labor is a strength for us. We feel good about the material situation, how we're situated there as well. So I think dumb things do improve. We're going to be ready.

I really appreciate that. And maybe if I could come at it from another angle because you have a broad perspective on the national housing and I think people like myself, it sometimes overly biased by what the public builders are saying. So many of the public builders are calling for a 10% growth. Does that is that kind of consistent with the public versus private Delta as they think about their business next year? Starts probably aren't growing 10% overall, but many builders are looking for 10% growth. Does that mean the publics are still gaining a lot of shares that really just that we're focused on Orlando, Dallas and not enough on Michigan? Are these the smaller markets? Thank you.

Robert Buck

Yes, as we think about our custom builders, which we do major work, custom builders and the regional builders that I think the back is a stabilized rate environment and what they're expecting that they expect a nice improvement in their business as well because they haven't been able to do that by downs and stuff that large public set up. So you get to that more stable environment and the outlook for for those moderating rate, I'd say the regionals and the small custom-built are still positive as well.

Thank you very much.

Operator

As a reminder, if you would like to ask a question, press star one on your telephone keypad.
Our next question comes from the line of Adam Baumgarten with Zelman & Associates. Please proceed with your question.

Hey, good morning, everyone. Just on the pricing side, can you put a finer point on the magnitude of the headwind to overall pricing from the spray foam declines? Just because I know you had talked about the fiberglass side improving on a year-over-year basis from 2Q to 3Q, but I think it was offset by spray foam . So any color on the magnitude just so we can get have a better apples to apples comparison on the fiber buy-side?

Robert Kuhns

This is Rob. So I'd say the spray foam impact, we've had about 130 basis points on the price. And then the other thing to keep in mind, when you look at our price number two is it's a price mix, right? So as you see shifts in customer regions or products, we also have some impact is there. But by far, the biggest headwind to the improvement in fiberglass was the spray foam price decreases, and that was about 130 basis points.

Okay. Got it. That's helpful. And then just to clarify on the kind of tightening of the guidance range and the midpoint coming down, was that solely due to lower single-family or just overall risks, residential growth in general, not any change at this point in your C&I outlooks?

Robert Kuhns

Yes, I'd say it was definitely ready focus, not CNI. The drop last quarter was more driven by the choppiness in C&I this quarter. I'd say it's, you know, residential and primarily multifamily, right? Some of the backlog we thought would come through in the third quarter. We saw some delays with some of that backlog.
So definitely seeing some slowing on the multifamily side. And then it's important to keep in mind the hurricanes to write certainly, you know, the the midpoint point and higher end of our range didn't didn't contemplate the hurricanes that we've seen in the third and fourth quarter. Now I'd say it was about a $10 million impact in Q2 three and and roughly about $ 8 million here in Q4.

Got it. Thanks. Best of luck.

Robert Kuhns

Thanks.

Operator

Thank you. Reached the end of the question and answer session. Mr. Buck, I would like to turn the floor back over to you for closing comments.

Robert Buck

We appreciate you joining us today and your interest and TopBuild. We look forward to seeing you in person at conferences later this month and in the December. Thank you.

Operator

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.