Good evening, ladies and gentlemen, and welcome to the Beacon Second Quarter 2024 Earnings Call. My name is Elliot. I’ll be your coordinator for today. At this time, all participants are in listen-only mode. We will be conducting a question-and-answer session towards the end of this call. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the call over to Mr. Binit Sanghvi, Vice President, Capital Markets and Treasurer. Please proceed, Mr. Sanghvi.

Thank you, Elliot. Good evening, everybody. And as always, we thank you for taking the time to join our call. Today, I’m joined by Julian Francis, our Chief Executive Officer; and Prith Gandhi, Beacon’s Chief Financial Officer. Julian and Prith will begin today’s call with prepared remarks that will follow the slide deck posted to the Investor Relations section of Beacon’s website. After that, we will open the call for questions. Before we begin, please reference Slide 2 for a couple of brief reminders. First, this call will contain forward-looking statements about the company’s plans and objectives and future performance. Forward-looking statements can be identified because they do not relate strictly to historical or current facts and use words such as anticipate, estimate, expect, believe and other words of similar meaning. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, those set forth in the Risk Factors section of the company’s 2023 Form 10-K. Second, the forward-looking statements contained in this call are based on information as of today, August 1, 2024, and except as required by law, the company undertakes no obligation to update or revise any of these forward-looking statements. And finally, this call will contain references to certain non-GAAP measures. The reconciliation of these non-GAAP measures to the most comparable GAAP measures is set forth in today’s press release and the appendix to the presentation accompanying this call. Both the press release and the presentation are available on our website at becn.com. Now, let’s begin with opening remarks from Julian.

Thanks, Binit. Good afternoon, everyone. I’m pleased to say that we delivered another quarter of solid execution on our growth initiatives. But before I begin our review, let me remind you of the assumptions that underpinned our prior outlook. We expected the residential roofing market would be down year-on-year as storm-related demand declined substantially and more than offset the improvement in new residential construction and non-storm-related reroofing. In commercial roofing, we said that there would be a contraction in the installation activity in the first half of the year, but our volumes would grow because of last year’s contract destocking. We also expected a shift to more repair and reroofing activity rather than new commercial construction. That would impact product mix in this part of our business. By and large, end market demand has performed as we expected, with commercial slightly better than anticipated and new rare slightly worse, and we expect storm demand to be in line with the 10-year average. Now let’s begin on Slide 4. Against this backdrop, our team demonstrated that our Ambition 2025 plan has created multiple paths to growth, and we delivered a record for quarterly sales. In the second quarter, average selling prices were up low-single digits year-over-year, which combined with contributions from greenfields and acquisitions to drive net sales nearly 7% higher although slightly lower than our initial expectations given the weather in the quarter. And once again, we delivered double-digit adjusted EBITDA margins. Our gross margin came in at 25.6%, approximately 20 basis points above the second quarter of last year but below our expectations, largely due to the lower-than-expected contribution from inventory profits related to our April single price increase. Adjusted OpEx increased primarily from additional headcount as we maintain staffing at our branches to meet a higher level of…

Thanks, Julian, and good evening, everyone. Turning now to Slide 7. We achieved almost $2.7 billion in total net sales in the second quarter, up nearly 70% year-over-year primarily driven by the impact of acquisitions and higher average selling prices. As Julian mentioned, we had wet weather and precipitation in large slots of the country particularly in May, as well as excessive heat throughout the quarter that impacted the number of roofing days during Q2. Nevertheless, we were able to achieve organic sales growth across all three lines of business and set a new quarterly sales record. In the aggregate, price contributed over 2% to revenue growth, while organic volumes were up less than 1%, including contributions from greenfield. Acquisitions completed within the last 12 months, are performing well and contributed more than 4% growth to daily net sales year-over-year. Residential roofing sales were higher by more than 2% as higher prices were partially offset by lower shipments in regions that are lapping higher storm and hail demand, including in Florida. Recall that Q2 2023 was a record second quarter for shingle shipments. And while our residential volumes were down on a year-over-year basis, the R&R market remains resilient and consistent with our planning assumptions. Beacon's volumes compared favorably to industry shipments or ARMA during the quarter, but it is always important to keep in mind that there is destocking or restocking at the distributor level in any given quarter. With that in mind, we estimate that we grew at least in line with the market. Our team executed the April shingle price increase to discipline, achieving good realization regionally. As a result, we achieved price growth in the low to mid-single-digit percentages year-over-year. Non-residential sales increased by more than 11% based on strong R&R activity and the comparison to…

Thanks, Prith. Now please reference Page 11 of the slide materials. Before we head to Q&A, I'd like to update you on our outlook for the remainder of 2024. We expect the momentum we experienced in the first half and outlined at the beginning of this call to continue into the third quarter. We expect that the residential repair and reroof market demand will be lower this year, driven by lower storm demand which, at this point, appears to remain on track to meet our assumption of the 10-year average. We continue to believe non-storm related demand will be higher in both new construction and aged replacement despite higher interest rates. In our commercial roofing business, we monitor the Architectural Billing Index, which continues to remain significantly below 50, indicating contraction in activity. And while we expect better than expected repair and reroofing activity to continue, contracted destocking was largely over at the end of the second quarter of 2023, and so the year-on-year comps should return to more normal levels. For the third quarter, we expect total sales per day growth to be in the high single-digit range year-over-year, above the July sales growth of low single digits per day. We expect gross margin to be in the high 25% range, around 30 basis points higher than in our second quarter. This includes current expectations regarding our announced August price increase realization. Operating expenses are expected to increase year-over-year, largely attributable to the higher head count from greenfields and acquired branches. As mentioned earlier, our focus on operational efficiency and proactively managing resources will intensify. As a result, we expect adjusted operating expenses as a percentage of sales to be in line with the third quarter of last year. Regarding the second half of the year, we remain focused…

Thank you. [Operator Instructions] We now turn to Michael Rehaut with JPMorgan. Your line is open. Please go ahead.

Hi, thanks, good afternoon and thanks for taking my question. Wanted to first zero in a little bit on the SG&A in 2Q, and you kind of reviewed in your prepared remarks on some of the drivers that appeared to be a bit higher than expected on a year-over-year basis and a percent of revenue. At the same time, you said you're focused on driving efficiencies in the second half and expect percent of sales, SG&A to be flat year-over-year. So what's driving the, let's say, were there certain temporary elements that drove the higher expense in the second quarter relative to expectations and what are the actions that you're taking to maybe get that back online and a percent of sales year-over-year basis for the back half or at least for the third quarter.

Thanks, Michael. This is Julian. And yes, I mean, I think it's the question that's going to be on everyone's minds for our second quarter. So – it was a really difficult sort of second quarter to manage at a branch level. So we saw record daily sales but we didn't see it consistently because of the weather. So we were staffed up to serve that really high demand level. But it was never consistent. And managing that on a day-to-day basis, we didn't do it as well as I'd hoped, but I think that, that was a big driver of it. Obviously, we added a number of greenfields and acquisitions earlier in the year this year than we've done previously. And so that adds to our total OpEx count. And so you've sort of flatlined it this year will be similar number of branches opened in the first half and the second half, which was a little bit more back-end weighted last year. So that drove year-over-year increase as well. But the big thing with this variability in day-to-day volume, we were staffed ready – the inventory was ready for it, and we think it was just so variable on a day-to-day basis in the markets that it became tricky to manage and so we were a little bit – we missed a little bit on that side of things in terms of our overall management. Now as you also asked about sort of looking forward and how does that adjust? We've sat down with our operating groups and sort of sat down and said, look, we've got to get this back in line. We've got to create operating leverage from sales growth, and we're going to have to manage that more aggressively. We've already started doing that. We've taken action in June and July to make sure that we've got the right level of staffing for the demand that's in the market. We're seeing – still seeing some variability in terms of day-to-day sales. But we are being much more aggressive in terms of managing sort of levels of staffing on a day-to-day basis than we were in the second quarter. Like I said, I don't think we missed it by much, we'd come into the year expecting a strong second quarter with storm carryover from last year. As I said, with the what we saw on really good days was what we had anticipated. We call the market. What we obviously couldn't call was the weather. And that certainly had an impact on how we manage it. We think we'll work our way through that and get that back to where it should be. I don't know if Prith has got anything to add in terms of specifics. But that's really what drove it.

Yes. Just maybe just a couple of points of color. So a couple of other things in terms of the overall OpEx its $37 million [ph], $63 million increase year-over-year, $27 million of that came from the M&A and greenfield. And I think when we spoke with you all in May, our expectation was that destock component of the OpEx would be relatively flat. And if you remember, that was $22 million in Q1. And as we discussed some of the acquisitions that we've done have significant work to kind of bring them up to – and create value. And so we've had some timing issues with some of that. So that's part of the reason as well.

Great. Now thank you for that. I appreciate all the detail there. I guess, secondly, just thinking about bigger picture on the gross margin side, I think, Julian, you highlighted some of the incremental benefits that you continue to get from the bottom quartile work. And obviously, there are a lot of other initiatives that you have in place on the gross margin side. So conceptually, how should we think about bottom quartile contributions over the next couple of years, should they continue moderate in size, perhaps just given low-hanging fruit impact from the prior year or from prior years, and it kind of gets incrementally tougher as you go forward? And maybe you could just kind of review other opportunities around gross margin over the next couple of years from a strategic initiative standpoint.

Yes, Michael, I'll touch on that briefly. Certainly, we've seen dramatic improvement as now in the bottom quintile contribution to EBITDA margins. I think it's been one of the real highlights for the last few years, how the team has really come together and driven that. It is incrementally harder now to drive a little bit more. But we reset the branches each year. So we still believe there's opportunity – we've also expanded our thinking on this and sort of said, look, what's the real opportunity if we can get each of the sort of quintile groupings to get it up to the next quintile sort of thing. So we're exploring what it would take to really move all of those elements forward, and we think that the pricing model, the work we're doing on private label and digital, all of those initiatives are certainly contributing. I think the – we were probably challenged in the quarter on price coming through in the market. We saw obviously the single price increase in April. We had expectations probably to better realization in the quarter than we actually saw. And I think that was partly due to the variability of demand on a day-to-day basis in the market as well. We saw very good realization where – we had very strong markets, and we saw very low realization in markets, as we mentioned, we've called out Florida before. And in fact, we called out Florida in – I'll call in May is a place that we weren't expecting to see a lot of price and that actually materialize. So there's still a lot of work to be done on that. But I continue to believe that private label digital pricing model continue to drive margin and our bottom quintile branch process will continue. And like I said, I think we're looking for ways to expand that process to more branches to make sure that we're working the full gamut of the problem. So I continue to believe that we've got room to expand our gross margin on a product line basis. But as I said, the mix has shifted much more towards commercial. We were very deliberate about that. We think that it has a great profile for return on capital. But it does have lower gross margin. So we continue to look for ways to improve that as well.

Great. Thanks so much.

[Operator Instructions] We now turn to Garik Shmois with Loop Capital. Your line is open. Please go ahead.

Hi, thanks for taking my question. I was wondering if you could talk about the acceleration you're expecting on a daily sales basis, here in the third quarter, starting July up low single digits. I think you're expecting to be up high single digits for the quarter. So if you can unpack the drivers of the stronger expected August and September, that will be great.

Yes. Look, Garik, I mean, the market overall has been good. Like I said, I mean, we saw record daily sales in the second quarter on a day-to-day basis. It just wasn't consistent and would have a day where it dropped off. We think some of the weather impact in Q2 is going to get pushed into Q3. So we're expecting that demand hasn't gone away. I mean if you need a roof, you're going to get a roof. And if it brings some one day, you're going to get to with the next day. So we think there'll be some continued push into the third quarter with demand pretty good, and we're excited about that opportunity. We do think that there's – there's an August 1 price increase. The price increase went into effect today on shingles. So we'll see that pick up on the top line in the rest of this quarter as well and then the back half of the year tends to be a little bit more biased to activity. So now if we're going to get 100-degree days across the entire country for the entire third quarter, and we'll be watching that. But overall, we – like I said, we feel pretty good about the market. We're probably a little bit more bullish on what – than we were coming into the year on commercial, as we’ve said. Residential reroof has been very good. The storm demand, we think is going to come in around the 10-year average. That’s what kind of what we feel we’re tracking. New res was slightly worse. But overall, we came into the year calling for a very healthy market, and that’s what we’ve got. We think some of the demand got pushed out of Q2 and is probably going to appear in Q3.

We now turn to Adam Baumgarten with Zelman & Associates. Your line is open. Please go ahead.

Hey guys, give a sense for maybe how many days on the roof for lost in the second quarter? And was it across both residential and commercial? Or is it more focused on residential?

So Adam, I’ll let Prith touch on it. But we do have some statistics. I mean, we – look, I tried to avoid being the weatherman since I joined the company, and that’s not it, we get weather every day. I mean, there was clearly some well-reported impact. But in terms of the number of days we do watch that, but I think that’s less indicative than the total of the market. As I said, we think it did have an impact. We think it’s probably pushed into some into Q3. Prith?

Yes. So look, it’s generally biased towards the residential market because a lot of our deliveries are on top of the roof. So that’s one point to make. The other thing is between normal weeks and weeks where we’ve experienced weather, the kind of demand difference is about low-single digits. And we think about 1/3 of the weeks in the quarter were affected by weather, so.

Thank you.

Our next question comes from David Manthey with Baird. Your line is open. Please go ahead.

Yes. Thank you. Good afternoon. Relative to your comments on lack of expected inventory profits, I’m a bit confused as to what happened there. I think if you go back to the early part of the year, no one really thought that single price increase is going to stick and you’re able to get low to mid-single digits, but the gross margin fell short of your expectations anyway. I’m assuming you didn’t play inventory chicken, like we used to in the old days. And maybe you could just help me understand the dynamic there.

Yes. I’ll touch on it, and Prith can maybe quantify some things. But coming into the quarter, we did expect much better price realization than we actually saw we came out of the gate on the pricing pretty healthy, but we normally see it climb over several weeks as we implemented across all of the customer base. So it usually takes some time to get it done. And so you continue to generate those inventory profits, but the spike is usually early on. In this one, we got good realization in markets where the demand was strong, but in weaker markets, there was some delay in getting the price put in place. And then as the quarter went on, we just didn’t get it implemented throughout. The demand remained weak in some of those markets, and so we didn’t generate any of the inventory profits we thought in certain markets, and we generated good amount than what we would have expected in others. So on – when you add it all up, we thought we were going to get a much better realization across the entire country than we actually did. And so both the delay in implementing some of the increases to meet some of the competitive situations meant that we just didn’t get the profits as our inventory costs rose through the quarter. The price rose slightly above it, but it didn’t get the normal spike at the beginning and then flattening out. We sort of tailed up and so you just don’t generate inventory profits that way.

Yes. I mean, the only thing to add, as you guys know, we use weighted average inventory costing, right? And so on days, even when you’re not selling the weighted average cost of inventory if you’re buying continues to go up, and we were buying inventory throughout the quarter. So that’s the only thing to add.

Our next question comes from Mike Dahl with RBC. Your line is open. Please go ahead.

Yes. Thanks. Just as a follow-up to that, just given what you just articulated around the path of realization on what the price and inventory profits. Can you be more specific about what’s embedded in your 3Q and full year guide with respect to the August price increase, both in terms of top line help and inventory profit?

Well, in terms of the inventory profit for the quarter, in the August price increase, we expect similar kind of progression as we’ve seen with the April price increase. I think what we said in the prepared remarks was 30 basis points improvement. We see a similar pattern with this price increase.

We now turn to Trey Grooms with Stephens. Your line is open. Please go ahead.

Yes. Thanks. Just kind of a quick bit of clarity here on the free cash flow comment maybe being weighted a little bit more to the 4Q. Could you go into a little bit more detail on that? I know it can kind of shift around a little bit seasonally, but any more color on the timing there? Thank you.

Yes. I mean, look, it’s – we bought inventory throughout the second quarter and as we’ve discussed, we were kind of expecting roughly in the order of $500 million of free cash flow for the full year. And we’ve basically kind of burn cash in the first half to the order of $250 million. So we expect the back half of the year to produce, call it, in the order of $750 million in free cash flow and roughly evenly spread between the two quarters.

Okay. Got it. Thanks for the clarity there.

Yes. Sorry, it’s not unusual for us to build, obviously, inventory in the first half of the year. I mean it’s – the back half of the year is when most of the roofing activity gets done. So we come in a little heavy in – we expect to continue to bring product in during the third quarter because demand will be – we believe, will be pretty good. And then we expect to we’ll certainly diminish the inventory we have, but that will probably just accelerate into the fourth quarter as demand falls off, we’ll reduce our purchases unless we see some more demand come in, but that’s why the shape of it is such.

Okay. So I guess I’m – just to clarify again, is it when you say evenly split, 3Q and 4Q should be roughly evenly split or is it going to be 4Q weighted? I’m misunderstanding. Sorry for...

Yes, more in 4Q, but overall, yes, let’s call it, 60-40 in that order.

Okay. All right. Well, thanks for clearing that up. Appreciate it. Thank you.

Thanks, Trey.

Our next question comes from Philip Ng with Jefferies. Your line is open. Please go ahead.

Hey guys, this is Nagy [ph] on for Phil. Just going back to the organic volumes in 2Q is kind of flattish. Any color on the breakout between the segments would be helpful. And then could you give assistance of the magnitude of what greenfields are contributing. I know you did maybe around 30 greenfield branches last year. So how much are those contributing on the organic side?

Yes. I think, Nagy [ph], the – in terms of the greenfield, I’ll let Prith touch on that as in terms of the greenfields, we said that we initially launched Ambition 2025 that we would do 10 a year. We ramped that up because we’ve been a very successful program for us. I think in the – in total for – at the end of this year, we’re estimating somewhere in the region and Prith will correct me if I get this a little bit wrong, but somewhere in the region of $400 million plus of total revenue from greenfields that we’ve started since Ambition 2025. I think that’s the number that we’re looking at. So it’s pretty substantial across those 58 plus by the end of the year in terms of total revenue.

Yes. It’s actually over $500 million. So it’s great contribution overall. In terms of the actual organic demand for the quarter, it’s roughly 2.8% of the 6.8% in revenue growth comes from organic and that includes both the existing branches as well as the greenfields.

We now turn to Kathryn Thompson with Thompson Research Group. Your line is open. Please go ahead.

Hey, thank you for taking my question today. I just wanted to focus on the commercial segment, which, as you pointed out is improving despite the ABI readings. But we would argue and based on our feedback from the field [ph] and the companies we talk to the ABIs becoming less relevant, in part because it doesn’t capture some of the mega projects for instance, when you look at put in place numbers, the manufacturing segment – subsegment in and of itself has doubled to north 15% of the total mix since 2018. With that in mind, do you have any additional color or numbers you can frame around the mix shift and types of projects that you’re servicing today and maybe even in the quarter in the commercial end segment and how that has changed and in particular, parsing out between new and repair and remodel within the commercial segment. Thank you.

Yes, Kathryn, I’ll try to get to some of that. So certainly, what we have seen is, coming into the year, we were expecting the installed volume to be down as we said. And specific to Beacon because of the contractor behavior last year, we were expecting volumes to grow. But coming into the year, we were certainly watching the overall demand level very carefully, and it’s actually held up pretty well. Our bidding and quoting activity across the Board has been good. Look, the – we’ve seen good amount of government work and schools have come through, and they are generally repair and remodel, repair and reroof markets. We think some of that got pushed out. As we said, it biased more towards new construction during COVID. Those would be big jobs that we're getting done. The reroof work is clearly getting done more now. And that's been a boost for us as well. It's a little bit of a mix shift in product. But overall, that's good. Obviously, office and retail has been a little bit softer. Certainly, we sort of get mixed with multifamily. Multifamily has been way off. Some of that is more commercial roofing than residential roofing. And then office has been a little bit soft, but most of the segments that we look at have actually been holding up pretty well. And it's more of the shift towards the repair and replace work than the new. And I think that's reflected in the ABI Index in terms of why it's so weak, there's more of this shift away from the new construction, which I think ABI biases towards. So I think if you think about the commercial real estate market as a whole. I think we reflect that pretty well where the segments are strong and where the segments are weak. So you mentioned manufacturing, you mentioned data warehouses – warehouses in general, those remain pretty good. And we continue to see, like I said, good bidding and quoting activity going out into the fourth quarter now and even early next year. So we remain quite bullish. And I think that we began focusing on this a couple of years ago as a market that we thought we could create a lot of value in. And we think we've been doing very well in that market as well. So we're very pleased with the results there.

We now turn to Keith Hughes with Truist. Your line is open. Please go ahead.

Thank you. I guess in the second half, let's built into this guidance. Are you assuming your – excuse me, your residential roofing unit – you may have said this earlier, are you assuming they're down low single digits or let me put words in your mouth just what's kind of the view there?

Sorry, Keith, you didn't – you weren't clear coming through that.

Okay. Let me just say it again. In the second half guidance, sales guidance, what do you have implied on units and residential roofing year-over-year, roughly?

Yes. So for – just one second, Keith.

Yes, fine.

Yes. So for the full year – for Q3 in terms of residential, we're expecting in terms of price and volume kind of low single digits on price and a little bit better on volume.

And for the pricing, I think it's…

Yes, go ahead. And on Q4 kind of mid – negative mid-single digits on volume for Q4 year-over-year.

Okay. And you were faced, you did double-digit positives in the second half in units last year. Is that those numbers about right?

Yes, that would have been about right, Keith, obviously, we had a strong storm come through towards the end of last year, which was particularly a strong finish to the year, particularly in Q4. So Q4 residential comps this year are going to be tough because there was such a big store demand towards the end of last year. So we would expect to – we would certainly expect that to be down, but we expect the overall quarter to see growth organically, yes.

Okay, great. Thank you.

Our next question comes from David MacGregor with Longbow Research. Your line is open. Please go ahead.

Thanks. Good afternoon and thanks for taking the question and apologies for the background noise here. But Julian, I just want to ask you a question on how you respond to a changing macro and I guess, tactically, what do you do differently to protect margins, it becomes clear that we're heading into a harder landing macro.

Yes. Look, we – David, the fact is that we fundamentally believe that the macro economy is not the overall driver of reroofing demand, which represents 80% of the business. It's really driven by the total number of houses out there and the total number of buildings. And as I've said for several years now, there's always more buildings at the end of the year than there are at the beginning. We consistently build more. So we continue to expect to see a good demand environment. We believe that the aging housing stock, the aging commercial stock presents real opportunity for us. But in terms of where I think your question is going is really around our operating posture. And look, we've been very focused on driving efficiency at the branches, trying to make sure we've got good cost control. I think we had a very difficult second quarter to manage. I think we learned how to do that through the quarter, and we expect to get better. But really, it is ours management at the branch are we making sure that we're being efficient. Are we staffed at the right level on a day-to-day basis? Are we getting the right efficiency out of the branches? Are we focused on our bottom quintile process to yield the margins. And then I think that ultimately, we are looking at private label, digital on our pricing model in order to give us a little bit of boost on the margin side as well. We think these are all significant contributors we need to execute against those. We have not seen yet the impact of the pricing model that's – that we're putting in. We should be complete with that at the – certainly, the first half, maybe the end of the first quarter of 2025. And we think that's exactly what we thought it was, and we said we believe it would yield 50 basis points of improvement in gross margin. So there's a lot of work that we continue to do, both at the gross margin level, but more importantly, at the EBITDA level to enhance our margin, not just protect it, and we think we can do that. We were a little – I'll be honest, we were disappointed with the performance on OpEx in the second quarter. But we'll bounce back from that, and we'll get it right, and we'll move forward and we'll continue to drive operating performance.

Thanks, Julian.

Thanks for the question, David.

Our final question comes from Reuben Garner with Benchmark Company. Your line is open. Please go ahead.

Thank you. Good evening, everybody. Forgive me if I mischaracterized this, but it would seem that your outlook, at least for organic kind of top line for the second half is pretty comparable to what you're looking for before maybe a touch better, but in your prepared remarks or in the press release kind of worry about it. You mentioned something about being proactive to respond to market conditions by adjusting resources and inventory. I was just curious if you could kind of square up those comments, Julian, because it seems like you remain pretty bullish and things have been good outside of some weather, but you're talking about kind of making adjustments. So if you could just kind of clarify that for me to be great. Thanks, guys.

Yes, absolutely, Reuben. I mean look, I think that the reality of the market today has been that we've got some very good markets, some particularly bad markets, and it's been very variable. And the difference is that our branches aren't able to move around. I mean the manufacturers can move single shipments around the country, they can waterfall it and they can flow where the demand is. We still have to operate branches even in the weak markets and serve those markets. I mean if you pick Florida, for example, I think you'd see the owner shipments there are off 40%, 50%, maybe not 50%, 40% for the year. And we still – it's still a very large market, and we have to adjust to make sure that we've got the right staffing levels in those markets, and we've got the right resources that, that market is off a lot and making sure you get ahead of it is important. We've got several markets that are quite weak. I think we've executed price in those markets and continue to see things go through, but we've got to be able to get staffing levels right. The flip side is in markets where it's been particularly good. We've got to make sure that we've got the right level of people in those markets as well, so that we can take advantage of strong markets. And I think that we will adjust after the second quarter where I don't think we executed on that as well as we could have done, we need to get better at that. We need to adjust, and that's really where our comments come from. The variability of the markets. We've got to make sure we get it right.

Got it. Very helpful. Thanks guys. Good luck going forward.

Thanks very much for your question, Reuben.

That concludes the questions. Now I would like to turn the call back over to Mr. Francis for his closing comments.

Thank you, Elliot. I just want to say thank you to all of you for your interest in Beacon and your continued support of our efforts to improve the business. We continue to be very pleased with our top line performance and the growth that we are seeing, we believe we've demonstrated that we have multiple paths for growth. We also believe we've got multiple paths for margin-enhancing initiatives that are driving success at the bottom line as well, and we continue to believe that there's further opportunity in this business. So with that, thank you very much for your attention. Thanks very much for attending, and thanks. Bye.

Ladies and gentlemen, today's call has now concluded. We'd like to thank for your participation. You may now disconnect your lines.