Acquisition Highlights - TopBuild acquired Specialty Products & Insulation (SPI) for $1 billion in an all-cash transaction[1,7] - The acquisition is expected to generate $35 million to $40 million in annual run-rate cost synergies within two years[7,21] - The transaction closed on October 7, 2025[20] SPI Snapshot - SPI's sales mix consists of 85% building insulation and 15% mechanical insulation[4] - SPI's end market is comprised of 87% residential and 13% commercial & industrial[4] - SPI's demand drivers are 45% maintenance and repair and 55% new construction[4] - SPI's revenue was approximately $700 million as of June 30, 2025, with an EBITDA of $75 million and an EBITDA margin of 10.7%[20] Financial Impact - The acquisition is immediately accretive to EPS[20] - Inclusive of tax asset, represents 12.4x EBITDA or 8.3x EBITDA post-synergies[20] - TopBuild's pro forma net debt to adjusted EBITDA is approximately 2.4x as of June 30, 2025[20] - TopBuild pro forma revenue is $6.4 billion[24] - Approximately 22% of TopBuild's total revenue is non-cyclical[25]

Group 1: Rio Tinto Ltd (RIO) - The share price of Rio Tinto has increased by 4.2% since the beginning of 2025 and is currently 13.1% above its 52-week low [1] - Rio Tinto is the world's second-largest metal and mining company, focusing on minerals and metals exploration, development, production, and processing, with four core business units: Aluminium, Copper & Diamonds, Energy & Minerals, and Iron Ore [1] - Iron ore is the largest export for Rio Tinto, significantly impacting the company's performance and earnings volatility due to fluctuations in iron ore and other key commodity prices [2] Group 2: Reece Limited (REH) - Reece Limited is Australia's largest plumbing and bathroom supplies business, operating for over 100 years and diversifying into irrigation, pools, civil construction, and HVAC systems [3] - The company has experienced steady revenue growth in recent years, with consistent dividend payments despite a typically low dividend yield [4] - Reece Limited currently offers a historical dividend yield of approximately 2.22%, which is higher than its 5-year average of 1.06% [7] Group 3: Share Price Valuation - The dividend yield serves as a quick indicator of a company's stability and ability to consistently pay out profits to shareholders [5] - Rio Tinto's current dividend yield is around 5.28%, lower than its 5-year average of 6.80%, indicating a potential decline in dividends or an increase in share price [6] - The valuation of REH shares can be assessed through various methods, including Discounted Cash Flow (DCF) and Dividend Discount Models (DDM), with resources available for learning these techniques [7]

Financial Data and Key Metrics Changes - Organic sales grew by 6% in Q3 2025, with segment margins expanding by 20 basis points to 17.6% [4][22] - Adjusted EPS increased by 11% year-over-year, reaching $1.05, exceeding guidance [23] - Year-to-date adjusted free cash flow nearly doubled to $1.8 billion, with over 100% free cash flow conversion expected for the year [4][29] Business Line Data and Key Metrics Changes - Orders grew by 2%, with strength in The Americas offset by softness in China [5][24] - In The Americas, orders increased by 5%, while EMEA saw a 2% rise, and APAC experienced a decline [24][25] - Adjusted segment EBITDA margins improved across regions, with EMEA up 100 basis points to 14.1% and APAC up 70 basis points to 19.4% [26] Market Data and Key Metrics Changes - The backlog grew by 11% to a record $14.6 billion, with both system and service backlogs increasing [5][27] - Sales in The Americas rose by 7% organically, driven by HVAC and controls [25] - APAC sales grew by 6% organically, with strong double-digit growth in the service business [26] Company Strategy and Development Direction - The company is focusing on customer centricity, operational efficiency, and innovation to drive growth [7][8] - A new business system is being developed, emphasizing simplification, acceleration, and scaling through lean principles and digitization [12][14] - The company is evaluating its portfolio for potential acquisitions or exits to ensure sustainable growth [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of core vertical markets despite challenges in China [63] - The company anticipates low single-digit organic sales growth in Q4, with a reaffirmation of mid-single-digit growth for the full year [27][28] - There is a focus on improving operational efficiency and cash flow conversion, with expectations of maintaining over 100% free cash flow conversion [29][50] Other Important Information - The sale of the residential and light commercial HVAC business to Bosch is expected to close in Q4, with most proceeds returned to shareholders [30] - The company is committed to returning 100% of free cash flow to shareholders through dividends and share repurchases [29] Q&A Session Summary Question: Initial observations and KPIs focus - Management highlighted the need to sharpen customer focus and drive growth through innovation and operational improvements [34][35] Question: Accelerating growth in Fire and Security - Management sees potential in both HVAC and Fire and Security, with plans to apply new business systems to improve performance [45][46] Question: Free cash flow opportunities - Management noted strong cash flow performance driven by improved collection management and operational efficiencies [49][50] Question: Orders and growth outlook - Management expressed confidence in healthy pipelines despite lower-than-expected order growth, particularly in China [62][63] Question: 2026 outlook and Investor Day - Management is working on the 2026 plan and aims to provide a clearer long-term outlook as the year progresses [72][74]