Greetings, and welcome to TopBuild's Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to P.I. Aquino, Vice President of Investor Relations. Thank you. You may begin.

Good morning and thanks for joining us. With me today are Robert Buck, our President and CEO; John Achille, our COO; and Rob Kuhns, our CFO. Our earnings release, senior management's formal remarks and a deck summarizing our comments can be found 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 of the 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 have provided a reconciliation of these financial measures to the most comparable GAAP measures in today's press release and in our presentation, both of which are available on our website. Let me now turn the call over to our President and CEO, Robert Buck.

Thanks, and good morning, everyone. We appreciate you being with us. As P.I. mentioned, Rob and I are joined by John Achille, our COO. I've asked John to start joining us so he can share his business insights, including our ongoing efforts to drive operational excellence across the organization. Many of you will remember meeting John at our Investor Day a few months ago. We were really pleased to see many of you at our Investor Day in December, and if you weren't able to attend in person, I hope you've taken the opportunity to watch the replay on our website. I'd like to start my comments today by reiterating a couple of the key themes and messages that we shared in December. First, we have a clear, profitable growth strategy and a proven track record of delivering compounded growth and strong shareholder returns. Second, we have significant growth opportunities across our $95 billion total addressable market, which has increased non-cyclical and non-discretionary revenue drivers. We generate very strong free cash flow and we're disciplined in deploying capital both organically and through M&A. Third, we have a differentiated business model and we will continue to leverage our connected technology platform to continue driving growth and operational excellence to improve the customer experience. Finally, we have a cycle-tested leadership team. We're proud of the people-first culture we've built at TopBuild and we're grateful for the commitment of our nearly 15,000 employees to growing our business and to working safely every day. Let me now transition to discussing the operating environment at a high level. In the fourth quarter, weakness in the residential and light commercial end markets persisted. Consumer confidence remains low, interest rates are still elevated, and affordability continues to be an issue, all drivers of muted demand in the…

Thanks, Robert. I'm glad to be here with you today. I'd like to cover two key areas, the supply chain environment and our ongoing efforts to drive operational excellence across the business. As housing demand has softened, we've seen the supply of building insulation and more specifically fiberglass loosen and become more available. In the second half of 2025, we saw a couple of fiberglass lines come down for extended maintenance as manufacturers work to balance supply with demand and stabilize pricing. We have strong relationships with our suppliers and our conversations are ongoing. Importantly we are leveraging our tools and technology platform to manage inventory across the branch network. On the spray foam side, we continue to see plenty of availability. For mechanical insulation, fiberglass pipe insulation remains on allocation, and we continue to work closely with our supplier partners to ensure that we receive our fair share of existing supply. Turning to operational excellence, we have great control of our business. You'll remember that in the first quarter of 2025, we were able to quickly take actions to align our cost structure with the demand outlook. Our work here continues as we navigate changes in the macro environment. We talked at Investor Day about how we leverage technology and take information from our businesses to share best practices, be more efficient and further optimize the network, everything from installer productivity to job site routing to shipments. Our field teams are doing a great job managing profitability. As soft demand has persisted, we are responding appropriately and making disciplined pricing and volume decisions at the local level. Our efforts to optimize our cost structure across the business are ongoing, and ops leadership continues to focus on the bottom quartile of our branches to improve performance. On the Specialty Distribution…

Thanks, John. 2025 marked our 10th year as a standalone public company and so I thought I would take a quick second to reflect back on our growth. Over the past decade, we have grown our sales and adjusted earnings per share at compounded annual rates of 13% and 31% respectively. This extraordinary growth has been the result of our unique business model that is driven by our people and culture. I want to take this opportunity to thank our teams in the field and at our branch support center for their efforts in delivering these results. And while we are proud of TopBuild's past successes, we are even more excited about the growth opportunities that lie ahead, which we detailed at our Investor Day in December. Before I dive into the numbers, I wanted to point out that we've provided a little more detail in our presentation this quarter to split out our same branch results versus M&A results. Given the sizable impact of the Progressive and SPI acquisitions that we closed last year, we thought that would be useful. Shifting to our fourth quarter results, total net sales were $1.49 billion, up 13.2% to prior year. Acquisitions contributed 23.0%, as both Progressive and SPI had solid quarters and exceeded our expectations. Pricing added 0.7% as positive price on gutters and mechanical insulation was partially offset by lower pricing on residential insulation products. Volume declined 10.5% driven by ongoing weakness in the residential and light commercial end markets. Turning to our segments, Installation Services sales of $798 million rose 1.2% compared to last year. The M&A contribution of 16.3% more than offset the volume decline of 14.5% and pricing decline of 0.5%. Specialty Distribution sales totaled $755 million in the quarter, up 25.5% versus last year. Acquisitions added 28.9%…

Thanks, Rob. Let me close with a couple of thoughts on our outlook. On the residential side of the business, external forecasts vary with some optimism for the back half of the year. And while we expect demand will improve, its not yet clear what that timing will be and it is too early in the year to bank on a second half recovery. This uncertainty is baked into our guidance as Rob discussed. Should the environment improve over the course of the year, we are very well positioned to capitalize. On the commercial and industrial front, bidding activity and backlog are solid and we are poised to capture growth in those verticals that are expanding. So, while near-term uncertainty exists, we remain bullish about the underlying fundamentals of our industry, our $95 billion total addressable market and our ability to capitalize on both organic and inorganic growth opportunities. We have a proven track record of success fueled by our unique, flexible and capital-efficient business model. We are well diversified between residential and commercial/industrial, between Installation Services and Distribution, as well as between cyclical and non-cyclical revenue. We have great control over our business, and we have demonstrated the ability to adapt quickly and navigate broader changes in the environment. Finally, we're disciplined stewards of capital. We have an active and robust M&A pipeline, and we'll continue to focus on compounding returns and delivering increased shareholder value. With that, operator, let's open up the line for questions.

[Operator Instructions] And our first question comes from the line of Sam Reid with Wells Fargo.

Maybe starting off with a big picture question. I wanted to dig a little bit deeper into the guide path for single-family starts as we move through the year. It sounds like you're rightfully embedding really no recovery here, which I think is probably the right call. We obviously do have a lot of detail from the public builders, especially on the production side on their outlook for starts. But just curious kind of what you're hearing from the private builders and perhaps any differences in what those private builder conversations sound like versus what the public sound like?

Sam, this is Robert. So you're right. You get a lot of color from the public builders, which I'm sure you've seen in their guides as well as discussions came out of the Builders' Show last week. I'd say the regional builders, the private regional builders are keeping very cost competitive there, pushing to make sure that they get their volumes and maintain their own compared to the publics. And then I'd say on the smaller custom builders, they're probably the least impacted. So they seem to definitely be holding their own relative to demand when you think about their customer base as well. That's some of the color we see regional privates as well as the custom privates.

All helpful color there. And then maybe switching gears. It does sound like you're seeing some relatively solid backlogs on the commercial industrial side. But I did perhaps pick up on a little bit of a delineation between light versus heavy commercial. Would just love to hear kind of where we are on the light commercial side and maybe just talk through kind of how a recovery on the light side could potentially work.

Yes. I think we typically see the light follow residential. I think we see some positive trending in some of our backlogs on the light side. As we talk about backlogs relative to commercial industrial, as we think about mechanical insulation, as we think about roofing, we see those probably trending at a faster clip. But typically, lighter commercial does follow residential. But we see some trending there in the right direction, we believe. But again, more optimism on the mechanical and the commercial roofing side.

And our next question comes from the line of Michael Rehaut with JPMorgan.

First wanted to also kind of delve in a little bit to the outlook and really focusing around the pricing trends. You mentioned that embedded in your outlook is $55 million in price/cost headwinds and also that your mid-single-digit decline for resi is inclusive of pricing. So I guess it's more of a revenue type of number. Just wanted to get a better sense for when you think about the $55 million, how much of that is negative price or if all of that is negative price? And how you would expect that to flow through and impact the results throughout the year, if it's going to be more first quarter or first half weighted? Just trying to get a sense of the degree of impact, particularly as we start out the year.

Yes, Mike, this is Rob. So similar to last year, we started talking about these price cost headwinds, definitely something we started seeing pockets of in different markets as certain markets slowed, pressure picks up around that side of things. We obviously were pretty successful last year doing a lot to take cost out, both through negotiations with our suppliers, but also a lot of costs we took out in the business to help maintain margins. And certainly, that's going to be the focus and the things that we can control in 2026. But since the main tenet of our guidance was really around, hey, the environment here from a macro standpoint, we're not going to forecast it improving dramatically. We do think we'll continue to see those headwinds similar to what we saw last year. It pops up in different pockets and different markets as you go through the year. I'd say, just like we said last year, it probably progressively gets a little worse as the year goes on. But we definitely saw some of that pressure in the fourth quarter, not quite as much as we had thought in our guidance, but we thought it was prudent to continue that given the macro environment we're in right now. [Audio Gap] We did some branch rationalization in the first quarter that's helped take cost out. We have realigned our headcount given the volumes we're seeing right now. And we continue to do all the same things we've done in the past around focus on bottom quartile and focus on operational excellence, and those things have helped offset some of the price cost headwinds we've seen in the markets.

I would say, Mike, this is Robert. I'd say the teams in the field did a nice job. I mean they remain very disciplined. They were driving where they could the operational excellence piece that Rob talked about. But they did a nice job staying very disciplined during the year and to announce Johnson Roofing earlier this week. So we spent time in the first 6 months with Progressive, working the M&A process, working the integration of the M&A process. So we're in a really good space there relative to how our process works and even front end of identifying deals to diligence to the back-end integration. So we've made a lot of progress there. Very active on the front, I would say, smaller deals to bigger chunkier deals. And I would say, given the relationships that the Progressive team have on some of the smaller deals and some of the relationships we have in the industry, I'd say we're not competing right now in those [Audio Gap] be disciplined. We're looking for good quality companies, and we're definitely building some relationships and evaluating several right now.

Great. That's super helpful. And then switching topics here a little bit. On the prepared remarks, I think you mentioned the realignment in the specialty distribution field leadership. Can you talk about that a little bit more and kind of what the intention was there?

Yes. This is John. As far as the changes that we made, when you think of 3 distinct businesses that we have on the specialty distribution side, just making sure we have the right leadership in place. And I think coming off the SPI acquisition, we got some nice talent there that was able to accent with our existing talent. So just really good experience that we have leading those businesses today, driving the operational excellence that we expect of those teams. So that was really the biggest change there.

I think its really speaks to the pace at which John and the team have really worked the integration piece. So really quickly getting the right leadership team in place, which, by the way, some of that was SPI folks from the SPI side, some of our folks from the DI side. So a nice mix of the team, which we think is driving buy-in and integration pretty aggressively here. And I think we said in our prepared remarks, highly confident in the top end or exceeding our synergy number that we talked about whenever we announced that deal.

Yes. And just one more comment on that just around guidance, right? In terms of we've included the run rate that we signed up for, for year 1 around synergies. And if there's anything we see opportunity in this year in terms of overachieving the midpoint of our guidance, it's definitely around the synergies, right? And so that's why when we think about what we can do, we're about controlling the controllables. The macro is going to be what it's going to be, but we're focused 100% on driving these synergies and getting the results that we can control there.

And the next question comes from the line of Susan Maklari with Goldman Sachs.

My first question is on the cross-selling opportunities that you highlighted in your prepared remarks as you're working on the integration of SPI. Can you give a bit more color on what those are and how we should think about them coming through?

Yes, Susan, this is John. Yes, so I would say today, cross-selling for us is very -- it's very much just people talking to other people within our business, right? So we could have a DI customer that we have a great relationship with that happens to be working on a job where we can also offer that customer an installed service. So today, it's really just connecting our sales teams and our managers. But we do plan on putting some digital resources behind that in the future and really making that kind of just leveraging another one of our strengths where we touch all these different types of projects through different businesses that we have. So it's an exciting opportunity for us, and we plan on investing to make it even seamless for our internal staff.

Okay. That's helpful. And then as we do enter another year that seems like it could be fairly challenged as we think about the outlook for housing and the macro. Can you talk a bit about the cost structure across the business? How you're thinking about your positioning? Are there opportunities to perhaps make further adjustments in there? And what you're watching to determine if that needs to happen?

Yes. I mean, Susan, this is Rob. That's something we're constantly monitoring, certainly something we have an advantage given a common ERP across our footprint, our ability to see activity going on in the business on a daily basis and make adjustments. Last year was a great example as we saw things begin to slow early in the year, we quickly took action. And we'll be doing the same thing this year, right? We're going to continue to monitor the macro situation, continue to monitor what's going on. More than 70% of our costs are variable. So we can adjust quickly and make changes where we need to.

And our next question comes from the line of Phil Ng with Jefferies.

This is Maggie on for Phil. First, I wanted to dig into the pricing outlook. I mean pricing held up pretty well in the quarter and even stepped up in distribution, maybe a function of the end market exposure. But how should we think about that guide for down low single-digit pricing in the outlook between the 2 segments and how the $55 million price/cost headwind is split? And I think you also said 4Q or maybe it was 2025 total, you saw some inflation in gutters and spray foam and fiberglass saw some pressure. Any color on how that's trending into 2026?

Yes, Maggie, this is Rob. So that price cost bucket, it's obviously a mixed bag of products, some with price inflation, some with price pressure and price deflation. And it's one of the good things about the diversification we have in our model now, right? And you can see that coming through on the -- particularly on the specialty distribution side, where, as you pointed out, pricing actually increased in the fourth quarter on the distribution side, and that's because of the heavier exposure to the commercial products on that side, the mechanical insulation and also a heavier concentration of gutters on distribution than what we have on the install side. So when you think about that mixed bag of products, we -- throughout last year, I'd say we started the year with some carryover pricing in fiberglass that was favorable, but definitely as the year progressed, saw that get pressured and saw prices go down a bit in the back half of the year. Pretty similar on spray foam. Mechanical, we saw good price increases throughout the year. Commercial projects were strong, particularly on the mechanical side and had really good pricing there. Gutters because of tariffs saw some pricing. So when you put that all together for the year, we netted out to positive sales price. I'd say it was still a drag on margins when you netted everything out from a cost perspective, roughly about 10 basis points when you net everything we were able to do from a cost perspective, so not terribly impactful. But -- as we look out, like I said earlier, we expect a similar environment. We expect pricing on mechanical to be strong given the strong demand there. The pricing on fiberglass and spray foam, we continue to -- we think we'll continue to see pressure as we did the back half of this year, and that's really the biggest driver of the price pressure that we're talking about in 2026.

Okay. Got it. That was all really helpful. And next, on the margin guidance, the pressure makes sense with volume deleverage and the price cost headwinds you've outlined. But -- you're always doing stuff on the bottom quintile branches and the special ops teams to drive margins. Wondering if the outlook incorporates any of those productivity initiatives or if that could be upside to the guide? And then maybe just walk us through some different levers you have if demand is weaker than the outlook currently.

Yes, Maggie, this is Rob. So in the prepared remarks, we tried to give you some bookends around where EBITDA margins will be throughout the year. I'd say like we said in the prepared remarks, the strongest quarter will be Q3, probably in the neighborhood of 18.5% or call it, 18% to 19% and Q1 more in that 16.5%. And so we're definitely seeing the -- we've talked a lot already about kind of some of the price cost pressure. And we -- like we've said, we've done a really good job of offsetting a lot of that with cost reductions, and we plan to continue to do that. But the other thing that's really impacting margins, too, is M&A, particularly the SPI transaction with that being a 10% EBITDA business that we acquired in the fourth quarter, still running around 10% today. But obviously, like we talked about, we see a lot of opportunities on the synergy side. We're moving quickly there. And with synergies, the goal would be to get that to the mid-teens this year. So we'll see that improve as the year goes on, on that piece. So that's definitely a big lever in terms of what we can do this year. And then like I said earlier, I mean, the other levers are around our cost structure, and we're going to continue to monitor the environment. We feel like we made the adjustments necessary for the current volume environment we're in, but we'll make -- if that does get worse from here, we'll adjust and take more action. So that volume guide we talked about and saying, hey, we expect volume down low single digits for the year, but talked about a decremental of 27%. I mean that includes us taking cost out to get to that 27%. So definitely something we're -- we've done in the past and something we're comfortable we'll be able to do this year.

And our next question comes from the line of Ken Zener with Seaport Research.

Can you guys talk to -- it is going to be more residential focused. The guidance for res is down mid-single digit. Can you bridge the dynamics between kind of on the install side, the 15% decline we see, realizing some res is rolling through specialty distribution, which is down 6%. And then talk to the persistence or the dynamics why on the install side, the volume down. And if you see an equivalent decline, I guess, in the same residential products that you're not installing.

Yes, Ken, this is Rob. So from a volume perspective, on the install side in the fourth quarter, we definitely saw residential down single-family and multifamily as we've seen throughout the year, we would definitely say particularly December slowed down significantly. We were well ahead of our expectations at the end of November and then December slowed significantly on the resi side. And on the install side, our commercial business, as we've talked about throughout the year, about half of that business on the install insulation side is light commercial work. That's been slow throughout the year. So that also has been a drag on volumes on that side. So that's -- the resi side and light commercial side, really driven by the slower starts environment. On the specialty distribution side, because of the diversification of our end markets there, right, and now that being a much heavier commercial focused business, you're not seeing as big an impact. We definitely have the resi products down, and that's why volumes overall were down, but we were able to offset a good portion of that with a really good year in mechanical insulation and also on some of the other commercial products we move through the Service Partners side of things and through our metal building business.

Okay. And then given that you guys have a very -- probably the best -- amongst the best visibility on what builders -- what you're bidding on, the mid-single-digit decline, could you comment on Florida, Texas, if you would feel comfortable kind of talking about the dynamics you're seeing given that those markets were certainly impacted by COVID. It seems like we're kind of coming through that more in Florida versus Texas. But could you talk to how that is impacting your business, if you would?

Yes, Ken, it's John. So on the resi side, Florida, you hit on it. It's a bit optimistic down there. We're seeing things start to recover. I would say there's a good story coming there versus Texas, probably still a little flat to slow. So we're seeing a little mixed bag between those 2. But maybe just take the opportunity to take you around the country a little bit. The Northeast off to a bit of a flat start, but I would say there's a good story coming there, probably impacted by weather as that area just got hammered again this past week. So nothing surprising there. Midwest, a bit flat. But really down the middle of the country, we see some good optimism through Arkansas, Missouri, Iowa, some probably nice story going to shape up there. And then as you work out west a little bit, Colorado is still a little slow out of the gate. Just west of that, some of the Northwestern -- the Pacific Northwest, we've got probably a good story coming there, Montana, Utah. And really, the only one that's not showing signs of improvement is more around California. So that's the only one that I've marked as probably hasn't necessarily bottomed out yet.

And our next question comes from the line of Mike Dahl with RBC Capital Markets.

Sorry to belabor the pricing point. I just want to make sure we understand kind of the out-the-door pricing versus the cost you're taking. Our sense has been that on the resi fiberglass side, there is kind of low single-digit price pressure that the OEMs are also seeing. So if you're looking for down low singles on price out the door, is that worse for you in the resi insulation and that's why you're seeing the price cost pressure? Or just maybe a little more color on that kind of differential and what's actually driving that? And I think, Maggie you asked this, but also maybe just another clarification on how much is assumed within the install versus distribution side?

Yes. So this is Rob, Mike. So we don't break out the guidance by segment. But to give you -- try to give a little more color on the pricing. I mean, we have seen -- there is price pressure, obviously, in the market. The builders are dealing with affordability challenges, demand challenges. So there's been price pressure on that side. Like you said, the manufacturers are definitely feeling that as well. And so there have been price reductions. I mean, for us, what I have to always remind folks is, I mean, pricing is a local decision in our business, right? It's a local -- the builders are making local decisions. So it's literally thousands of decisions being made around pricing. And so we think we do a really good job of adjusting to local markets and controlling that and putting guardrails around it with our ERP system. But just given the macro environment, we saw it in the fourth quarter. We do see markets where things are getting more competitive, prices are picking up. We're going to do what we can to recover that. But even if we recover dollar for dollar with what we're seeing there, that can be a margin headwind for us as well. So we're going to do our best to offset it. But like we said in the midpoint of our guidance, we've got a headwind baked in there.

Mike, this is Robert. Just to build upon that. I mean, I think we've done exactly what we said, right? We talked about being disciplined in 2025, but volumes have stayed slower for longer. And so as they stay slower for longer, you get the things that John talked about in his prepared remarks where we're making some good disciplined decisions at the local level, which is what Rob just talked about. So disciplined. And then as things stay slower for longer, then we appropriately stay disciplined but pivot appropriately as well.

Okay. Got it. Yes, that's helpful. I appreciate it. My second question, just on the commercial roofing dynamics. Can you -- I appreciate some of the high-level commentary. Since that business has some today pretty concentrated geographic exposures, can you help us understand at a market level, what you're seeing on the commercial roofing kind of end market volume growth and then maybe then the outgrowth that Progressive is seeing and what you're assuming versus the market in '26?

Yes. So maybe I'll -- this is Robert. So I'll start looking backwards a little bit. Progressive had a great 2025, some nice organic growth in the business, really strong execution in Q4. And if we look at back half of the year, our ownership of Progressive. So great job in '25. As we look at '26, I think I mentioned a while ago, those backlogs are growing at a steeper clip. And you're right, I mean, great footprint in the Southwest in Arizona, Texas, those areas. Johnson, obviously, we just purchased is focused Texas, but also did some work in Oklahoma and Louisiana as well. So we've got a nice footprint down there. But we do quite a bit of travel in that work. I know we just picked up a major project in Idaho. We're doing some projects up in Utah as well. So we'll travel for some of the bigger projects. But as we do M&A, as you think about the future, we'll build out that footprint. And that's part of -- as we're looking at companies, looking at where we want to be, that type of thing, part of it is building out that footprint. So we think a great 2026 coming on the commercial roofing side and the leading indicator of that is backlogs and obviously staying close to the Progressive team. And as John said, they're doing a fabulous job. And again, a platform that we see building upon here with a high level of confidence.

And our next question comes from the line of Trey Grooms with Stephens Inc.

So you guys have been realigning headcount and some other actions you've taken. When we get back into an eventual kind of recovery mode, I guess the question is, how much of these cost outs do you see as sustainable versus kind of what you need to bring back pretty quickly as you look at the different levers you guys have been pulling?

Yes, Trey, this is Rob. I'll start. From a cost perspective, there's definitely a portion of what we did last year that we think will stick, right? I mean some of the facility consolidations, that rent cost isn't going to come back on us. Some of the back office fixed costs, we like to try to move on. We're trying to do things in the back office to automate and do things more efficiently. So our hope there would be to not have to add back as much on that side. And then obviously, the installer side, we're going to need to add back to adjust to the volumes as they go. But that's where our recruiting practices and our skill at doing that comes into play, and we've always outperformed at that. So we're confident we'll be able to adjust and get labor back as volume comes back.

All right. And then I know you touched on this a little bit. But as we're looking at the guide on the margins, the puts and takes there, you mentioned synergies as an area where there may could possibly be some upside there. You seem pretty confident in that. But as we think about the high end of the margin range versus the low end, again, we're specifically asking about the margins. So where -- what would be the other swing factors there, in your opinion, to get us to the high end versus the low end outside of the synergies? Is that going to be more volume related? Or could there be some swings in price cost? Or where are the more likely kind of swing factors there?

Yes. I mean you kind of hit on the 2 key ones there. I mean, for sure, the higher end of our range assumes higher volumes. And if that comes, we'll definitely -- like we typically say, we expect our incrementals to be in that 22% to 27% type range, and we're going to increase margins by putting volume in at that level. If demand is stronger, we would expect the price/cost situation to improve as well. So that's the second piece of that. So those are really the 2 other things. I mean the other piece is what we can do with the cost structure, which is like what I referenced earlier in terms of our focus, we're focused on what we can control there. And so we're doing all the things we always do around operational excellence. And this year, we have the unique opportunity with the synergies to outperform on that piece as well.

And our next question comes from the line of Adam Baumgarten with Vertical Research Partners.

Just back to the price/cost outlook. I guess is it fair to headwinds, you noted that $55 million will be felt more acutely in installation than specialty distribution given the competitive behavior that you guys mentioned earlier?

It will -- so I'd say, I mean, the price cost pressure on the residential products, we've seen more of it in distribution, right? Because of the labor component on install, it's less pressure there. It doesn't mean we don't have any pressure there, but we've seen less. But the distribution side, it doesn't show up as much in the P&L because of the diversification of the business on that side. So from a pure impact of what you'll see, yes, more than likely, I'd say more of it would be on the install side just because of the business mix piece of it.

Okay. Got it. And then just since John brought it up when he was through the markets, just any kind of sizing you could do on the weather impact you've seen in 1Q so far given the couple of storms...

Yes, really hard at this point, given we're still shoveling out in certain parts of the country. So it's definitely significant and definitely baked into kind of that -- or at least what we know as of today baked into kind of that bookend we gave around quarterly revenue.

And our next question comes from the line of Reuben Garner with Benchmark Company.

Most of my questions have been answered. I just have one on the commercial business and outlook. I was wondering, data centers have been a pretty big focus of late, but I was wondering if you could go into a little more detail on some of the other areas that you're seeing that are driving growth in your mechanical and commercial segment. And what kind of -- if you had to pick, is this -- is the mechanical side where you see the most upside to your outlook at this point this year?

Yes. This is Robert, Reuben. So I would say, as we think about some of the other verticals here, so obviously, data centers is -- you hear everybody talking about that. But I think the one thing is we look across the verticals, make sure we're bidding across the verticals, so you don't become too heavily reliant on one. So I would say education is big right now. Health care for sure. We're seeing manufacturing as well. So we're seeing it really across the board, even some things, food and beverage on the mechanical side. So really diverse, several of them growing there, and we're making sure that we're bidding across all the different verticals from that. And that's why we talk about -- we do think there's upside there. There's going to be growth. Rob talked about in the guidance of commercial industrial growth. So we do see upside potential there. We think both top line and bottom line. We talked about how we're going to lean in on the synergies, highly confident in our synergy number around the SPI [indiscernible] but also the Progressive synergies. It was a smaller number, but we're highly confident in that. And then I talked about how the outlook is on commercial roofing for '26 as we look at backlogs and work that we're securing there. So definitely commercial, industrial, mechanical and roofing, we would say those are upsides and really across the different verticals.

And our next question comes from the line of Collin Verron with Deutsche Bank.

Just one for me. You talked about pricing in some of your categories, but I don't think you mentioned commercial roofing. I know it's a smaller piece of the pie right now, but it's growing. So I'd just be curious as to how prices are tracking there and if the price cost expectations differ from the consolidated company at all in 2026.

Yes. So obviously, for -- in our guide right now, any pricing related to roofing or at least for half of the year is baked into the M&A number. But overall, I'd say, in general, pricing is flattish on the commercial roofing side from what we're seeing. They can get a little bit different pricing depending on their mix of business from new roof to reroof -- and depending on new roofs, what end market it goes into. So there's a little bit of a mix element there. But from an overall pricing perspective with the suppliers, I'd say it's an overall flattish environment right now.

Operator, do we have anyone else in the queue?

No. With that, that was the last question. So I would like to pass the floor back to Robert Buck for any closing comments.

Okay. Thanks, everyone, for joining us today. We look forward to seeing many of you at the upcoming conferences. Thank you.

Thank you. And with that, ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time, and have a wonderful day.