Welcome to the TopBuild Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Tabitha Zane. Please go ahead..

Thank you, and good morning. On the call today are Jerry Volas, Chief Executive Officer; Robert Buck, President and Chief Operating Officer; and John Peterson, Chief Financial Officer. We have posted senior management's formal remarks on the Investor Relations section of our website at topbuild.com.

As shown on Slide 2 of today's presentation, many of our remarks will include forward-looking statements concerning the company's operations and financial condition. These forward-looking statements include known and unknown risks, including those set forth in this morning's press release, as well as in the company's filings with the SEC.

The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. Please note that, other than as otherwise specifically stated, the financial measures to be discussed on this call will be on a non-GAAP basis.

The 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 the table included in today's press release and in the presentation accompanying this call. Please turn to Slide 3.

I will now turn the call over to Jerry Volas..

Good morning, and thank you for joining us today. What a difference since we last spoke with you just a few months ago. COVID-19 has produced an unprecedented chapter for our country and the world. First and foremost, we extend condolences and get-well wishes to those whose health and safety has been directly affected by this virus.

Speaking on behalf of our leadership team and our 10,000 employees, TopBuild will prioritize whatever is necessary as a responsible citizen to manage through this pandemic. From a business standpoint, TopBuild is fortunate, as our installation and distribution services are considered essential in all but a few states.

With strict safety protocols in place, our TruTeam crews are on job sites, and our Service Partners co-workers are filling and delivering orders. In addition, our traditionally conservative approach to managing our balance sheet provides us with ample liquidity to weather this storm.

For those who have been following our company for many years, you know we are significantly stronger financially and leaner operationally than we were a decade ago. Many of the decisions made during the 2009 housing correction are benefitting us today, as we face what will likely be a slowdown in housing starts.

Our leadership team is proactively managing every aspect of our operations to minimize the impact of the pandemic on our company. Robert will talk in detail about what we’ve done from an operations standpoint to weather this period and what we are doing moving forward to ensure we capitalize on housing’s projected recovery.

Be assured we put the health and safety of our employees, their families our customers and our supplier partners first. While we can’t determine the trajectory of housing starts, in our opinion, the medium and longer-term outlook for housing remains favorable.

The last housing downturn was accelerated by an oversupply of housing from both overbuilding and foreclosures. Neither of those factors are in the mix today. The good news, from our point of view, is that both new home inventory and mortgage rates are very low and are expected to remain so.

We look for consumer confidence to drive builder activity as the economy recovers. Turning to our financial results, we had a solid first quarter, with only minimal impact from the COVID-19 pandemic. Revenue increased 5.5% and adjusted EBITDA margin expanded 150 basis points to 13.5%.

The conversion of our top line to the bottom line was outstanding and produced adjusted EPS of $1.37 for the quarter, a 29.2% increase. All of the other earnings-related metrics were very good, and John will provide more detail on those.

Moving to Slide 5, we completed two acquisitions in the first quarter, Cooper Glass and Hunter Insulation, both of which we announced on our fourth quarter call in February. Given the current level of uncertainty, we have intentionally hit the pause button on further acquisitions.

Looking ahead, we are fortunate to have a strong balance sheet with plenty of dry powder and expect to eventually resume our acquisition program, which remains our number one capital allocation priority. The $50 million ASR we announced last October was completed in the first quarter at an average price of $107.31 per share.

Year-to-date through April 30, we have acquired 415,787 shares at an average price of $74.23 per share. Due to the uncertainty of the full impact of COVID-19, we have put our share repurchase program on hold. I'll now turn the call over to Robert..

optimized our footprint, shutting down over 130 redundant branches; moved all of our branches to a common ERP system; simplified our business processes; exited non-core products, renewing our focus on our core lines of business; significantly cut redundant fixed overhead; removed waste out of the business; brought talent back into the business in our field operations; and appropriately leveraged our supply chain scale.

These strategic and deliberate actions over the last several years have not just honed our current strategy as TopBuild, but have created a very focused cadence by which we run the company on a daily basis. So, we are a very different company today than we were just five years ago at the time of the spin from Masco.

Our decade-long focus on operational efficiency, sales and labor productivity, and strong balance sheet management is serving us well as we manage our business to best serve our customers, care for our employees, and position our company to gain share and grow as housing recovers.

Turning to Slide 8, our playbook, honed over the years, has multiple levers we can pull to take costs out of the business. Obviously, one of the easiest targets is discretionary spending, and we have already identified and eliminated the majority of those expenses.

Capital expenditures have also been pared back considerably and we have taken appropriate actions to reduce overhead. Our two largest cost buckets are labor and material.

Starting with material, we have no long-term commitments with any of our manufacturers and are working closely with our supplier partners to align our supply of material with demand, keeping our price/cost model in sync. Turning to labor, as most of you know, labor has been extremely tight in the construction industry.

Currently, with most states allowing construction services to continue and a good backlog of housing starts, we are keeping the majority of our crews busy and, in some instances, bringing on new team members.

However, in states where construction was deemed non-essential, and in those branches where work has slowed, we have flexed our labor force on the downside. To help mitigate this impact, we have implemented a COVID-19 Leave Plan that continues to pay our team members for a period of time to help provide assistance to them and their families.

We believe this is the right investment in our team to create goodwill and improve the probability we can rehire them when conditions improve.

As we have stated previously, we believe we are the employer of choice in our industry and our COVID-19 Leave Plan demonstrates our commitment to our employees and the strength of the company today and for the future.

From an ongoing labor management perspective, having all of our branches on a common ERP system gives us a distinct competitive advantage. It is another unique strength for TopBuild.

For example, in Florida, our Jacksonville, Orlando, and Tampa branches can pull resources - labor, trucks, materials - from each location as needed, enabling us to meet customer demands efficiently and keep labor productivity high.

The integrated ERP system also gives us real-time information across all of our branches that allows us to respond quickly in this dynamic environment. At this point, we have not closed or consolidated any branches. However, our playbook incorporates various scenarios, and this is another lever we can pull to take costs out of the business.

This is a normal cadence of our monthly branch operations review. Moving to Slide 9, as we look at our business as a whole, we see a clear opportunity to differentiate our company from most of our competitors and play offense. We can service and support our existing customers while gaining new customers and growing market share.

Our national network, ability to retain labor, and financial stability, give us the flexibility to meet changing customers’ demands, something many smaller companies may not be able to do over the next few months.

For example, in a few major markets we have already picked up new business, as some of our competitors have struggled to provide consistent service. In closing, we recognize that the situation remains fluid. Our leadership team continues to monitor our operations on a daily basis and we will calibrate the business as needed.

I am extremely proud of the way our entire team has stepped up to meet this challenge - our Operations Team, headed up by Steve Raia, Jeff Franklin, David Cushen, Jeff Benson, all of our teams in the field and of course our Branch Support Center Team.

You do not make it through these times and come out on the other side stronger without an aligned leadership team with a sense of urgency, and that is what we have in spades at TopBuild. We know how to quickly adapt to changing market conditions to ensure we are on the best and safest course possible for our employees and our company.

John?.

elimination of most travel, entertainment and in-person meetings; postponement of other discretionary spending; significant reduction of capital expenditures; and the reduction of workforce in both the field and at our Branch Support Center As Robert noted, we also have the option to close or mothball branches but we’ll be appropriately cautious before taking this step.

We don’t believe this downturn in housing will be as deep or as long as the last one, and we want to ensure we’ll be able to properly service our customers and play offense as we enter the recovery. As we’ve often discussed with many of you on the call today, all of TopBuild’s branches roll up to a common ERP system.

This provides us many advantages, as we can track daily activity in every branch, giving us the ability to react quickly to business changes real time. While we can’t predict how long the economic impact of the pandemic will last, we are confident in our long-term strategy and our ability to adjust to changing market conditions.

Jerry?.

I am extremely proud of Robert, John, and their teams for the work they have done and continue to do every day to manage our company through these difficult times. We are laser focused on controlling costs and ensuring we can continue to serve our customers where we are safely permitted to do so.

As I said in my opening remarks, we remain bullish on residential and commercial construction for the medium and long term. In the near term, our experienced management team and strong balance sheet will guide us through the current environment.

And while we can’t predict the timing of the recovery, we are confident TopBuild will be well positioned when it does arrive. Operator, we are ready for questions..

[Operator Instructions]. Our first question comes from the line of Ken Zener of KeyBanc..

So, appreciate your comments about April down 9%, but can you maybe talk operationally to how your shared ERP systems, you know, tactically can help you? So, I know sometimes you've talked about moving teams intra region, for example, or between cities and pricing.

So, is there something about, you know, when you think about sharing resources between branches to ease your fixed costs, I mean, how should we think about that? Is that - or how do you think about that? I mean, is there - you know, is it a mileage issue between branches? I know driving time's important for you guys.

Could you go into that a little bit, is my first question..

Hi, Ken, good morning, it's Robert. So, I'll take the first part of that. So, yes, the ERP system we definitely see as a definitive strength for the business.

So relative to, you know, as we're looking to, you know, route crews, route jobs, route shipments, obviously, that gives us the ability to do that the most efficient way possible relative to our crews or from a distribution perspective.

You know, we talk about sharing labor, we talk about sharing material, we talk about sharing equipment, trucks, other equipment as well. So, you know, as you may see demand fluctuate in a certain market from that perspective, it's easy for us, very easy for us, and most importantly, our managers in the field, to move those resources around.

So it allows us to keep labor productivity high, allows us to keep asset utilization high among some of that equipment as well. You mentioned pricing.

You know, I think you know that we have great controls in our system relative to margin thresholds and how those are approved with our leadership team in the field as well, so it gives us a lot of opportunities.

And, you know, I think if you even look at how we eliminated redundancies in the footprint, and even how dedicated we are to merging acquisitions onto our ERP system, we think it's a great tool to drive those efficiencies, and it gives us visibility. It gives us visibility of labor productivity.

It gives us visibility of demand in the field by branch, by region, by customer. So, it allows us to grow into a lot of different areas, which allows our operators in the field to really pull those levers, you know, on a daily, weekly, monthly basis to help the business perform and drive that performance..

Excellent, and then, John, the incrementals you guys have been delivering are pretty amazing.

I assume that's not what you would expect to achieve if sales decline, so could you talk to a little about pricing in terms of when you do contracts, which I assume perhaps might be a bit delayed, just given construction constraints we see? But how are you thinking about pricing where it is today versus bids you're seeing? I mean, if April is down 9% so far, it seems like it would be harder to have pricing going through.

So, I mean, how are initial conversations going around bids? Thank you very much - and prices - thank you..

Thank you, and it's Robert again. So, you know, absolutely constant discussions with builders, as always - not just now, but as always - whenever we're bidding new work, and in this type of environment, there's always going to be some pressure from a margin perspective.

At the same time, we're making sure, as we always have, to really drive efficiencies, drive productivity, work our supply chain piece of it as well. So, you know, you can expect us to continue to do that, but there will be discussions that are ongoing with builders, and again, on the supply chain side as well in this type of environment.

And it will all depend on, you know, how demand goes here in the next few months, in the couple quarters here as well..

Hey Ken, Jerry here. The one thing I would add to that is, you know, Robert's commentary around visibility, it gives us the ability to always play that balance between price and volume, you know, locally if we have that visibility by branch.

So we're pretty good at understanding what the tradeoffs are, and they're different by geography, so that's another advantage that we have. And over time, I think we've shown that we can do that throughout the cycle, and this will just be another example of us doing that well..

And our next question comes from the line of Mike Wood with Nomura Instinet..

Could you give us a sense of where the pace of new orders coming in for April are tracking, not the sales? And when would you expect the benefits of the backlog that you have, the start of - you know, and stop mitigating kind of that new order decline pace?.

Hey, Mike, this is John. So, you know, obviously, the reason we came off the guidance is because of the uncertainty in the environment right now.

And so, although we did operate in April at a pretty good clip - and I think that was pretty constant, by the way, throughout the month - it's the unknown right now, obviously, that's affecting our ability to predict what's going on the May, June, and beyond that timeframe.

So, at this point, we're not going to speculate in terms of when the backlog's going to drop. That can include even the potential or the possibility there's cancellations on things we've bid, et cetera. So, we're not going to talk about that in terms of a go-forward, and that's our position at this point..

Okay, and what are the puts and takes that may make the decrementals better or worse than that, you know, kind of mid-20% gross margins and that fixed-cost piece that you highlighted, 20% to 30%? And would there be any short-term inefficiencies in second quarter from implementing any COVID-19-type precautions?.

Yes, Mike, so this is John again. So, yes, we gave you that breakdown, that 70%, 20%, and 10%, so how we address the 20% and 10% is going to be obviously critical in terms of how the decrementals look. So, typically, we would be in the same range, the 22% to 27% that we provide for incremental margins.

I think initially in the second quarter, we're going to be a little deliberate and thoughtful as this ramps down, and we anticipate that happening to some degree here throughout the second quarter. We don't want to get shortsighted and shorthanded in terms of the recovery, also.

So I think we would expect the decrementals in the second quarter to be a little bit higher than 30%, but as we get to kind of an ongoing run rate, I think that 22% to 27% range that we provide for incrementals is probably a good way to think of the business..

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

On the commercial side, can you remind us how deep your backlogs are? And it would be helpful to kind of break down some of the end markets within commercial..

Good morning, Phil, it's Robert. So, you know, the backlog, I think we talked about not necessarily dollars, but visibility. I mean, we're bidding work today. I mean, let me start off by saying one thing that we've probably been pleasantly surprised with is the amount of bidding that we continue to do on the commercial side.

There's been a lot of jobs that have come to us that we've been bidding, and our activity there has kept up pretty consistently from a bidding perspective during this time. You know, we're bidding jobs definitely into 2022 now, so not just this year, next year, but some longer-term jobs that go out as well.

As we think about, I think you know we have plus or minus about 17, 18 heavy commercial locations across the U.S., everywhere from New York to, you know, through D.C. Baltimore to Orlando, and then across the country, Chicago and, you know, really well represented out West - Seattle, Northern California, Southern California.

So, as you can imagine, as we talked about commercial some here, the biggest areas of impact would be the areas that you would think. So, Washington State, Seattle, we have a lot of heavy commercial operations there. Northern California, which you probably remember was one of the first areas to do some of the shelter-in-place type of actions.

The tri-city area, New York, New Jersey, Connecticut, that area as well. That's where we saw some of the biggest impact, where we've seen delays in projects - not necessarily cancellation of projects, buy just some delays in projects.

And again, as I mentioned, we're seeing the Washington State area, we're seeing some of those jobs open back up, as well as some Northern California jobs open back up..

Excellent. And then, within your distribution business, I think in the past you've talked about one of the added benefits is, in the downturn, you might be able to win back some of that business on the contractor side where they got too big.

You know, are you seeing that dynamic play out currently, or is it still too early?.

Phil, this is John. So I think, you know, the whole basis of that is that, you know, customers we're not servicing today, some of them may be buying direct from the manufacturer. So, a little too early to say that there's been an impact from that at this point in time, about a month and a half into this.

But I think as this plays out, that's certainly a potential, and we'd expect that to deliver some incremental results from service partners, again, depending on the depth and breadth of the downturn here..

Got it. And just one last one from me. Just piggy-backing a question earlier, you know, your two biggest costs - cost profile is the variable side. It's labor and your raw mat side. Doesn't sound like you're furloughing a ton of people, from a headcount standpoint. And then, obviously, the fiberglass manufacturers got some pricing in January.

So, just wanted to understand, you know, how quickly can you manage these two bigger pieces to help you kind of get back to the decrementals you talked about?.

Phil, I'm sorry, is your question around labor and material and how quickly we can-.

Yes, how quickly can you throttle that back, because I think those are your two biggest cost components, right?.

Yes, material's pretty immediate. On that one, obviously, we will dial down our purchasing, you know, immediately, as we see the reduction. I think labor, we're always going to be a little bit cautious as, you know, the market starts to decline a little bit. We don't want to get shortsighted. We don't want to get caught short servicing customers.

But certainly, that's something we turn around pretty quickly also. It's just that there's a little bit of inefficiency as you're declining, both in terms of the ability to service the customer, and again, you're a little bit more cautious to let go of that labor in the decline mode..

[Operator Instructions]. Our next question comes from the line of Trey Morrish from Evercore ISI..

Someone talk a little bit about your pricing, and [indiscernible] talked about you're able to push pricing and raise pricing because of the tightness in the labor. However, as it starts pulling back, it seems that labor is less likely going to be as tight.

And similarly, with demand for new construction, at least in the near term, likely to fall, insulation manufacturers may - or have the potential to also pull back on pricing.

So I'm wondering, how are you thinking about your pricing to your customers going forward over the next 3 to 6 months, as estimated is likely to at least remain weak in the near term?.

Trey, this is Robert. As I mentioned earlier, you know, in constant discussions - not just now, but it's normal - constant discussions with builders, and then obviously, our supply chain partners as well. I mean, whenever we think about labor and, you know, from that perspective, we haven't seen anything significant yet.

I would say that, you know, during this time, whenever service is extremely important from a customer perspective, you know, we've focused on that. We think that will continue to be, you know, critical.

So, let me give you one example of what's causing delays today in the field is inspections, the limited number of inspectors that are in the field today. So, the last thing a builder wants to do is miss his inspection today, because you're going to have, you know, extreme delays in getting that inspector back out.

So, you know, I would say making sure that we're able to service them timely basis so they get their inspections, meet their inspections, pass inspections and such. But I would say, on the other side of the labor piece of it, we see it as an opportunity. We see it as an opportunity.

There are some markets that, you know, we're growing in that we're gaining business, where some of our - in some major markets where we've seen some competitors stumble due to service. We're seeing it as an opportunity to pick up some labor in those markets that remain strong, and we also see it as an opportunity to upgrade some of the team as well.

So, I would see we take the labor as, you know, yes, there will be conversations with builders. We'll drive productivity. We'll also drive service and continue to differentiate ourselves from the other side.

We see the labor piece as an opportunity in certain markets, and an opportunity to upgrade the team, both in the field and from a back-office perspective as well..

Got it. Thanks very much for that. And then, just thinking about volumes and sales across the country, you talked about how April is down 9%, four states where you're kind of shut down and some commercial projects have been pushed out.

But outside of those areas that were forced to be shut down, were sales actually down in April, or were they kind of flush or maybe even showing some strength in major regions?.

Trey, this is Robert. So, yes, the states that John spoke to are the main drivers. I think I also mentioned the tristate area, New Jersey, Connecticut, Northern California being drivers.

But, you know, a lot of areas that we were strong, we would say that those four areas, as well as commercial, more than made up that 9% that John spoke to in the month of April.

And, you know, if I think about through that Southwest area, Texas, Florida, even up to the Carolinas, we are, you know, still working our crews at a pretty full pace right now, given some of the backlog. And, you know, we are still bidding new work as well.

But definitely those four areas and some of those heavy commercial spots that I mentioned more than drove that..

Yes, and just to be clear, also, the 9% is on a same-branch basis. We did have some M&A on the three acquisitions, a little over a couple million dollars in the month of April also, so….

Our next question comes from the line of Justin Speer of Zelman & Associates..

Just a couple few questions, actually.

Just recognizing that this is more of a 2021 kind of discussion in terms of the revenue impact for you, but what's your outlook across the core in verticals in the nonresidential channel that you play in in terms of like starts activity, based on your conversations and based on your experience, given the nature of the disruptions that we're seeing right now?.

Justin, I would say - so your question is around residential starts and what we see 2021? Is that the question?.

Nonresidential, so more commercial and office and some of the nonresidential work that you do..

You know, Justin, Robert may have a few things to say about this, but my point of view on the whole thing is that the depth of what happens here and how long it lasts, both residential and commercial, and just the economy in general, obviously depends a lot on the consumer.

Like, what - how fast does the consumer bounce back? I mean, there are - you can make an argument on either side of the equation. You know, we believe that the consumer will come back over a period of time here. It may take a quarter or two for that to happen.

The thing that we like about TopBuild, and what we've always talked about, is the diversity that we have across residential, commercial, the fact that we're represented geographically across the entire country. And so, whatever trendlines or paradigm changes come out of this, we're somewhat agnostic relative to that impacting our company.

So, I would say - and Robert and John may have something they want to add to this - by 2021, I would think that we'll be back in reasonable shape and we'll start to reestablish the momentum that we had in the first quarter.

I mean, the first quarter, everybody knows that the housing industry and TopBuild, we were actually doing fantastic and looking towards one heck of a good 2020 and on into 2021. So, this is a speed bump, without question, but there's a lot of reasons to believe. I mean, you hear - you read articles about people.

You know, they've been trapped in their homes for two months. You know, now you hear a lot about nesting. People are going to want to buy homes. They're going to want to have a bigger home. They're going to want to have this or that. So, there's a lot of reason to believe that, coming out of this, there are going to be some positive housing trends.

And also, don't forget that we were underbuilt coming into this, and so that's much, much different than 2009. So those are some of the reasons why I'm very positive, actually. And I think that, you know, later this year into 2021, I expect to have momentum reestablished, without question..

And Justin, this is John. I think the thing I'd add to that is, when you talk about nonresidential, or commercial, is that, you know, as we've shown the past five years, we've had fantastic evidence of growing share.

So even if the market does get a little flattish, we think we've got a great opportunity to continue to push in there and continue to gain share in that space, as we've done. So that remains a prime opportunity for us in a growth mode or a flat mode..

That's helpful, and I'd love to get a sense for what nonresidential activity looked like in the first quarter and where it paced in April, recognizing there were disruptions, but just to kind of get a baseline..

Justin, it's Robert. So, on a same-branch basis, on the commercial side, we were up in Q1. You know, our backlogs, we had very good backlogs heading out of Q1, as I mentioned.

We were bidding jobs into 2022, and that bidding has kept up in the commercial space, so we were glad to see that, as John said, continuing to push, picking up share in different markets across the country. And again, these projects we feel like are delayed, not - we're not seeing projects cancelled.

The only other thing I would just mention is multifamily. You know, we're bidding a lot of multifamily now, so not just single family, but multifamily.

And as Jerry mentioned, as people probably move to the suburbs more, which is one of the things you hear happening here, we think that footprint that we have, you know, will serve us well, as there may be some of that migration..

Excellent. Last question for me is just on the M&A playbook going forward.

What do you need to see to gain more confidence with deploying capital towards M&A? And love to get a sense for your mindset in terms of timing or magnitude, or perhaps the type or the nature of M&A in terms of residential, nonresidential areas that you think are interesting as you think about deploying capital..

Justin, we're still very much in the M&A game. You know, we made the comment in our prepared remarks that we're hitting the pause button just for what I think will be a short timeframe here. It's still our number one capital allocation priority. The acquisitions we've done have performed extremely well, so we're very anxious to continue that.

You know, we talked about hitting the pause button. We thought that was the prudent thing to do here, for a quarter or two, to see how this evolves and see if we're right about the trajectory and if we're right that, by 2021, we're back moving in a positive direction. So, you know, we have a pretty full pipeline of folks that we've been talking to.

We're going to continue conversations with other candidates. And so, as I said, if we're right about the trajectory here, you know, look for M&A to continue to be both residential and commercial. Look for that to be really important to TopBuild going forward, just like it has been the last couple, three years..

[Operator Instructions]. Our next question comes from the line of Keith Hughes with SunTrust..

My question has been asked and answered. Thank you..

Thank you, and the next question comes from the line of Seldon Clark with Deutsche Bank..

Kind of just longer term, but how does the supply/demand balance feel in the insulation market right now, relative to previous downturns? Do you think that just the nature of this slowdown and the shutdowns has helped at all from the supply side, you know, just given the fact that things had to be forced to shut down and we kind of knew this was coming, to some extent?.

Seldon, it's Robert. So, you know, I would say, I think Jerry mentioned earlier, this is very different than what happened previously, right? I mean, there's been, you know, underbuilding. There's been pent-up demand. Even if you think about some of these areas that have been shut down, you know, as you're opening back up, there is a backlog.

There is pent-up demand there, so we would expect that to come through here. So I'd say it doesn't feel as - you know, from my timeframe going back 10 years ago, it definitely is different than it was 10 years ago, given that overbuilt situation.

And then I think, you know, obviously, you're hearing the builders say that they're slowing down on building the specs. They're building what's sold, so we would expect that to manage things through, and that will prevent some of the overbuilt from happening as well.

So, and then my last comment would be - others may have comments, but just the multifamily side, and we're bidding a lot of multifamily work, which could speak to the affordability issue that will be coming up here in the next 12, 18 or so months.

So we would be, you know, obviously well represented there and participating from the multifamily perspective as well..

Okay, that's helpful.

And I guess, as it relates to your backlogs and just like new orders that you're seeing, how much line of sight does this give you from a timing perspective, and what are the buyers - what's the buyers' ability to cancel or defer some of these orders if things don't kind of come back, or slowdown in the next couple of months?.

Yes, this is John. So I think, you know, typically we talk about this, that on single-family, we have about a 60- to 90-day type of window where we see, and that's under normal conditions.

I think what makes this a little, you know, different, obviously, is the uncertainty involved here, and builders do have the ability to cancel a previously placed order that we have, or delay one. And that's what's causing us to pause in terms of giving any type of guidance near term, certainly long term, also.

So, you know, I'd say generally, we have the 2 to 3 months on the single-family side, but again, we've got to be cautious here in terms of, you know, what builders are going to do, because we can't predict that right now. And it's just going to depend on, you know, what happens in terms of their pipeline, and that will certainly affect us.

In terms of the commercial side, again, a nice, healthy pipeline there that we're working. I think the challenge there, as we've said, especially on the heavy commercial right now, those have been delayed to a large degree, disproportionately more than we've seen in any other line of business.

So if you think about heavy commercial, you know, the reason for that, multiple trades on the jobsite. So, you know, in that case, GCs are going to be very, very cautious until there is some level of comfort from a safety standpoint.

So, again, we're not seeing those jobs cancelled, but they are being deferred, at least to a larger degree than we've seen anything on the residential side at this point..

Our next question comes from the line of Trey Grooms with Stephens. Trey Grooms, your line is now open.

Can you verify mute button?.

Yes, sorry about that, and sorry, I missed a portion of the Q&A, so forgive me if this has been asked.

But, you know, with the current situation, do you think that this could change the M&A people at all for your guys? Do you think this could bring new opportunities that maybe otherwise wouldn't have come up? And what's your appetite for something like that, as you kind of look into the next few quarters or the next several months here?.

Trey, Jerry here. Our appetite for M&A is, you know, even though we have our foot on the brake right now, we view that as very short term. It's still our number one capital allocation priority. We've been hugely successful with it, and so we have a pipeline that's pretty full right now.

We have - are still talking to a number of people, and we'll talk to more. So, you know, here, if it plays out like I think it will here and we do reestablish some momentum in the business here by the end of the year into next year, you can look for us to get involved in M&A to the degree that we have.

I mean, it's been a big part of our success here over the last couple, 3 years, and we think it will certainly be on a go-forward basis. And, you know, we have the balance sheet and the liquidity to be able to do it. You know, we're not limping here as it relates to dry powder to be able to do things.

So, as to whether or not there are, you know, some short-term opportunities from anybody here in terms of their business, in terms of the timing, I mean, we're open to that, for sure. And again, the strength of our balance sheet and our liquidity puts us in a position to be able to do that.

And so, you know conversations are ongoing, and look for us to stay in the game..

There are no other questions at this time. I'll turn the call back over to you for any closing remarks..

Thanks, everybody. We look forward to our second quarter earnings call in early August. Be safe..

Thank you. That does conclude the call for today. We thank you for your participation. Have a great day..