Core Insights - The company reported a 2% increase in consolidated sales for the third quarter, reaching a record $778 million, with same-branch sales remaining roughly flat [12]. - The heavy commercial end market was a significant driver of sales growth, with a 12% increase in commercial same-branch sales, while residential same-branch sales declined by 3% [12][5]. - The company has been actively acquiring businesses to enhance its product offerings and market presence, including a North Carolina manufacturer with annual revenue of $20 million [6] and several other acquisitions totaling approximately $19 million in annual sales [7]. Sales Performance - Same-branch new single-family installation sales decreased by 2%, while multifamily installation sales fell by 7% [1]. - Despite the challenges in the residential market, the company has seen growth in complementary product sales by double digits compared to the previous year [1]. - The heavy commercial segment continues to show strong performance, with expectations for sustained sales and profitability beyond 2025 [5]. Financial Highlights - The company returned nearly $213 million to shareholders through dividends and stock repurchases during the nine months ended September 30, 2025 [2]. - Adjusted EBITDA for the third quarter reached a record $140 million, reflecting an adjusted EBITDA margin of 18% [14]. - Cash flow from operating activities increased by 16% to $307 million, primarily due to improvements in working capital management [15]. Market Outlook - The outlook for new residential construction in 2026 is expected to be flat compared to 2025, influenced by consumer confidence and housing affordability challenges [8]. - The company anticipates that multifamily housing will continue to meet the needs of growing markets, particularly for individuals facing housing affordability concerns [8][9]. - The company remains optimistic about the long-term fundamentals of the US housing construction industry, despite current market challenges [3][10]. Operational Efficiency - The company has maintained a disciplined approach to managing selling and administrative expenses, which decreased as a percentage of sales [14]. - The adjusted gross margin for the third quarter improved to 34%, up from 33.8% in the prior year, attributed to a favorable shift in customer, product, and geographic mix [13]. - The company is focused on capital allocation to achieve attractive returns while distributing excess cash to shareholders [16]. Regional Performance - The Midwest and Northeast regions showed low single-digit sales growth, while the South remained flat and the West experienced a slight decline [31]. - The company has benefited from its strong market share in the Midwest and Northeast, which have performed better relative to other regions [31][32]. - The performance of the heavy commercial business has helped offset weaknesses in the light commercial segment [23]. Acquisition Strategy - The company is actively seeking well-run businesses that align with its strategic goals and support attractive returns on invested capital [6]. - The residential installation market remains fragmented, presenting considerable opportunities for consolidation [6]. - The company has a robust pipeline for potential acquisitions, particularly in the heavy commercial sector, which is expected to drive future growth [78].