Greetings and welcome to the TopBuild to Acquire Progressive Roofing Conference Call and Webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question-and-answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to PI Aquino, Vice President, Investor Relations. Please go ahead.
Good morning, everyone, and thank you for joining us on short notice. With me today are Robert Buck, our President and CEO, and Rob Kuhns, our CFO. Earlier this morning, we issued a press release announcing that we've entered into a definitive agreement to acquire Progressive Roofing, a leader in the Commercial Roofing Installation Services Sector. 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've provided a reconciliation of these financial measures to the most comparable GAAP measures in today's press release. On our website, we've posted the release as well as a presentation that provides an overview of the transaction that we'll be referring to on this call. Let me now turn the call over to our President and CEO, Robert Buck, who will start on slide three.
Good morning, and thank you for joining us. Rob and I are excited to be with you to discuss today's announcement, which represents an important step in our growth journey. We will cover the transaction overview first, and then I will give you more detail on Progressive Roofing and our strategic rationale behind the deal. Rob will talk about the attractiveness of the Commercial Roofing industry, and then we will open it up for Q&A. We are establishing a new platform for growth with the strategic acquisition of Progressive Roofing as we remain committed to creating value for our shareholders. Progressive is a highly profitable leader in Commercial Roofing Installation and aftermarket services in the United States. Progressive provides a full suite of offerings across the Commercial Roofing life cycle.
The company serves key geographies out of their 12 branch locations and will provide TopBuild with a great platform for future geographic expansion and growth. Commercial Roofing Installation is a large, highly fragmented industry with a total addressable market of about $75 billion. A significant portion of Commercial Roofing services are non-discretionary, providing a non-cyclical, stable revenue stream with favorable margins. From a financial perspective, Progressive has a solid track record of profitable growth. Revenue for the trailing 12 months ended March 31, 2025, totaled $438 million, and the company delivered EBITDA of $89 million, a very healthy margin of 20.3%. Given the company's financial strength, we anticipate the transaction will be immediately accretive to EPS. The acquisition has an all-cash consideration of $810 million, which implies a multiple of 9.1 times EBITDA. Assuming about $5 million in synergies, this gets us to an 8.6 times EBITDA multiple post-synergies.
We expect to fund the acquisition with proceeds from our recently expanded credit facility. Pro forma for the transaction, net debt to adjusted EBITDA for the first quarter of 2025 is approximately 1.6 times, which is well within our target leverage range. Finally, we expect the transaction to close early in the third quarter. Thanks, Rob. Looking at slide four, you can see more details on Progressive Roofing. The company, which was founded in 1978, offers comprehensive services across the full Roofing life cycle, from new construction to non-discretionary and recurring revenue streams from reRoofing and maintenance services. In fact, about 70% of Progressive's business is reRoofing, maintenance, and services. Progressive is one of the largest Commercial Roofing services companies in the United States. Its sales growth has outpaced the market for the last few years. The company employs approximately 1,700 team members across the United States.
The management team is highly experienced and brings deep industry expertise, a strong commitment to safety, and a track record of attracting and retaining labor. Approximately 80% of Progressive's Customer base are multi-year repeat clients, a direct result of the high-quality work and service they deliver. Progressive's Customers span a diverse set of Verticals, including Industrial, Technology, Government, Education, and Healthcare. They've also been very successful at accelerating growth and extending their Geographic reach through both greenfield and M&A activities. Let me take you through our strategic rationale at a high level on slide five, and then Rob and I will cover each one in more detail. Commercial Roofing and this acquisition are a natural adjacency for TopBuild. First, it aligns with our TopBuild core strengths and culture. By building on our core competencies, we're better positioned for success, giving us the right to win.
Second, the acquisition of Progressive Roofing broadens our product and service offerings for General Contractors. Third, the addition of Progressive increases our exposure to non-Cyclical and non-Discretionary revenue drivers. Finally, the transaction provides a scalable platform into a sector with a large fragment of total addressable market. Those of you that follow TopBuild closely have heard us talk over the last few quarters about our thoughts on adjacencies and how we think about building on our core strengths. On slide six, we've highlighted how Progressive Roofing's Operations complement TopBuild and why the company is such a great fit. Both companies successfully utilize a dispersed branch business model with local empowerment and central support. We both place high value on maintaining strong partnerships with our suppliers, many of which are shared.
Progressive has also made meaningful investments in technology, processes, and training to capture performance metrics and provide data-driven insights across the business. Progressive and TopBuild are committed to safety and to cultivating a collaborative working environment. Safety programs, technical skill development, and well-defined career roadmaps have enabled each of us to become an employer of choice in a competitive labor market. Finally, like TopBuild, Progressive has a proven track record of successful, accretive acquisitions and integration of those businesses. The company brings with it a strong pipeline of opportunities that will add to our ongoing growth. Turning to slide seven, on the left, you can see several of the shared suppliers across both businesses. The diagram on the right shows how Progressive expands our installation and service capabilities to provide the broadest offering of building envelope solutions for general Contractor Customers. Let me now hand it over to Rob.
Thanks, Robert. I'll start my comments on slide eight and give you some color on the revenue streams of Progressive Roofing. Progressive's revenue is approximately 55% reRoofing and 15% maintenance and services, largely in line with the overall Commercial Roofing industry. These revenue streams are driven by non-cyclical and non-discretionary demand. Demand for reRoofing and maintenance services continues to strengthen due to an aging installed base of commercial buildings and more frequent weather events. 30% of the company's revenue comes from new construction, with those roofs providing a pipeline for future maintenance services and eventually reRoofing. Slide nine gives you a sense for just how large and how highly fragmented the Commercial Roofing services landscape is. With such a large total addressable market, approximately $75 billion, the acquisition of Progressive Roofing represents a robust platform for scalable future growth.
On a combined basis, the 20 largest Commercial Roofing companies account for only about 10% of the market, and no single player accounts for more than 2% of the market. The great majority of the landscape is made up of tens of thousands of privately owned local businesses across the United States. As Robert mentioned earlier, Progressive has a proven track record of scaling its business both organically and via acquisition. The company has an established M&A playbook and a strong pipeline of acquisition opportunities. Importantly, the company has experience with integrating acquisitions, successfully realizing synergies, and driving margin expansion. Together, the complementary M&A strengths of TopBuild and Progressive provide significant potential for growth. Last week, TopBuild celebrated our 10-year anniversary as a public company, and as you can see on slide 10, we've delivered very strong growth and returns over that period of time.
Having successfully completed 43 Acquisitions in our 10 years, M&A continues to be our number one Capital Allocation priority. Our Installation End Markets continue to provide significant White Space for growth, and you will see us continue to do acquisitions in that space. In addition, we are extremely excited to be expanding those M&A growth opportunities into the Commercial Roofing market. Investors can rest assured that we will continue to maintain the disciplined M&A approach and rigorous diligence that we have in the past, which has led to the profitable growth, strong free cash flows, and significant returns on invested capital that you see on this slide. With that, let me turn it back to Robert to wrap up our prepared remarks.
Let me close our call today by summarizing why we're so enthusiastic about this transaction. On slide 11. Progressive Roofing and TopBuild are very closely aligned in how we operate our businesses, empower our branches, and invest in our people and our culture. Together, we can broaden our building envelope offerings to Commercial Customers while expanding into the $75 billion Commercial Roofing Installation and Services market. The acquisition increases our sales resiliency given the sector's non-cyclical, non-discretionary, recurring revenue drivers. Approximately 70% of Progressive's revenue is generated by reRoofing and maintenance services. Progressive also provides a new platform for growth in a highly fragmented industry. Between our installation end markets and Commercial Roofing Installation and Services, we have a well-developed M&A pipeline across a total addressable market of nearly $95 billion. We're very excited to welcome the Progressive Roofing team to the TopBuild family.
We anticipate hosting an investor day in the coming months to share our progress and our plans to continue to drive sustainable, profitable growth and creating value for our shareholders. We expect to share more details soon. With that, operator, let's open up the line for questions.
Certainly. Without conducting a question and answer session, if you'd like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one. One moment, please, while we call for questions. Our first question today is coming from Stephen Kim from Evercore ISI. Your line is now live.
Yeah, thanks very much, guys. Exciting stuff. Thanks for all the information so far. I wanted to explore, if I could, the $5 million synergy target you set up and maybe broaden the question to include potential purchase synergies and sales synergies. The question basically is, can you help us understand what that $5 million encompasses? Are there any purchase synergies that you see with this acquisition? Are there any potential sales synergies that you see as well?
Hey, good morning, Stephen. It's Robert. I'll start. Yeah, out of the $5 million, it's about half and half between material and some other supply chain kind of opportunities and then some what I'd call indirect opportunities that we see in acquisitions, and we're highly confident with the Progressive acquisition. We feel highly confident in that number, but definitely some purchasing synergies are part of that. We think as we do more deals in this space, those synergy opportunities will continue to grow, as you might expect. High level of confidence relative to that. Second question, can you repeat it again?
I think you pretty much addressed it, although I just did have a question. I didn't really know what you meant by indirect, what exactly that encompassed.
Yeah, so that would be like insurances, those types of things that we see the leverage on in our acquisitions. I think the second question, sorry, was around selling opportunities. Yeah, we see some cross-selling opportunities. Let me give you kind of an example. Progressive is playing big in the space of data centers. As you know, we very much so do on the Mechanical Side and on our heavy Commercial Side of our business as well. That is going to be some of the same general Contractor relationships. How we will be able to take leads and offer a more broader bundle to these Contractor Customers. We definitely are going to see some opportunities in that. The deal was not based upon that, but given discussions that we have already had, we know those opportunities are going to exist.
Stephen, this is Rob. As you know, on these deals, we like to underpromise and overdeliver, for sure, when it comes to synergies. Like Robert said, this deal is really about getting a platform and the future synergies we're going to be able to drive with future deals in this space.
Yeah, that's encouraging. I guess a second question would be whether you see opportunities to distribute Roofing products, or is it your intent to only provide labor? Because we observe that your other two existing segments are primarily based around distribution of products. This one seems like maybe it's more about just simply providing the labor. I just want to see if you could clarify that for us.
Yeah, so this is definitely install the bundle package of material and labor in this Commercial Side of the business, Commercial Roofing side of the business, Stephen. Your question is a good one. From a distribution side, there's actually some of these products that cross over, as you saw where we talked about supplier crossover. There's actually some of these products that we already supply. If you look at a built-up Roofing system and some of the Polyiso boards, some of the sealants, some of the maybe Air Barriers, those types of things, those are similar products we're already distributing today. There's already some nice crossover for some of the complementary products in Roofing and what we already distribute in our core business today.
You're not looking to expand significantly that distribution of Commercial Roofing products. Am I right about that?
Yeah, you're correct. No plan for any significant expansion of that.
Okay, perfect. Thanks so much, guys.
You got it.
Thank you. Next question is coming from Phil Ng from Jefferies. Your line is now live.
Hey, good morning, everyone. This is Maggie on for Phil. I guess first, kind of similar to Steve's last question, how should we think about this opportunity between just the Commercial Side of Roofing? Is there any opportunity on the Residential Side, not specifically with the Progressive acquisition, but do you think of this as a platform for maybe future expansion into the Residential Side?
Hey, Maggie, Robert. We did a lot of work here in the space around Roofing to understand the opportunities here for the future. As we looked at that and looked at the Commercial Side, it was much more attractive to us for the reasons that we talked about. Residential would not be an area that we're looking at going into. We think there's different pressures in that part of the industry. We're strictly here focused on the Commercial Side of it. Really no plans to expand into the Residential Side of Roofing.
Okay. Okay, that makes sense. You talked about, for Progressive, the last few years, it’s seeing outsized growth versus the industry. Maybe we could dig a little more into that. Is that more M&A-driven, or are there organic expansion initiatives that they’ve been benefiting from?
Hey, Maggie, this is Rob. Yeah, I can start with that. I mean, their growth has been great, both on the organic and M&A side. I can tell you the industry on the organic side has been kind of traditionally more kind of low single-digit volume, low single-digit price, so kind of growing at mid-single digits. And over the last four years, Progressive's grown somewhere north of 20% just with their core business. Then you layer on top of that, they've done, in the last, call it two years, they've done three acquisitions that have added to their sales as well. Like we've talked about in the presentation, they've got a, similar to us, a very good process around M&A, a very thorough process. That is definitely a big opportunity moving forward is to r ev up that engine on the M&A side and continue their growth both organically and via M&A.
Okay, great. Super helpful. And congrats on the deal.
Thank you.
Thank you. Next question is coming from Trey from Stephens. Your line is now live.
Hey, good morning, everyone. This is Ethan on for Trey. Thanks for taking the question. Just wanted to ask, how does the addition of more stable through-the-cycle Roofing demand with Progressive and other acquisitions in the future, how does that benefit TopBuild's free cash generation and enhance your M&A roll-up strategy? Is the cash conversion there similar to TopBuild? Thanks.
Yeah. Yeah, I'll start with the end of that. I mean, from a cash conversion, it's very similar. In fact, their CapEx actually runs a little lower than ours. We run 1-1.5%. They've typically run a little bit lower than that. Their Working Capital, similar, around kind of more towards the high end of ours, probably 13-13.5%. Great free cash flow generation in the business. As you mentioned, I mean, the resiliency of the revenue in this space is something we really are excited about, right? It's something that when we got into DI, into the mechanical space, we learned about the recurring revenue streams we have there. That's really helping us out in that side of the business today. As we look at this business, we get even more excited.
Even the entire industry. You're looking at 70% of the revenues being non-discretionary. Your roof is leaking, you're going to get it fixed. Type of work. Very excited about that, very excited about the resiliency of our revenue streams going forward and the opportunity to continue to grow those.
Okay, got it. Got it. How are you looking to balance M&A moving forward in Roofing versus Insulation? Understanding you mentioned you still plan to continue Insulation-related M&A. Separately, while it's still early days here, are there any other verticals at this point you'd be willing to consider that might further that comprehensive building envelope portfolio, or is it more just wait and see down the road what opportunities present themselves? Thank you.
Yeah, Ethan, Robert. Look, we expect to be active both in our core of Insulation. There still is, Rob mentioned in his prepared remarks, a lot of white space there. We are very active. The pipeline is still active in that, both on the mechanical side and in the Residential Commercial side of our current core Insulation business. Progressive has a very active pipeline and some deals that we already know that are potentially out there on the Commercial Roofing side. You are going to see us be active in both. We know we have runway in both areas here for the future. As far as other verticals, nothing that we would mention. I think we talked about the TAM being now nearly $95 billion. There is a lot of runway, a lot of white space there.
In some of our work here, we did see things in our core business that we continue to work on and expand there. We got a lot of opportunity here. We did a lot of diligence in this space, and it was the right time for us to move here into the Commercial Roofing side of business. We just continue to build a great path of growth here for our shareholders and for the business.
Great. Thank you very much. I'll pass it on.
Thank you. Next question is coming from Susan Maklari from Goldman Sachs. Her line is now live.
Thank you. Good morning, everyone.
Good morning.
The first question is on the $75 billion TAM that you talked about in your prepared remarks. Can you give us a bit more detail, breaking that down? How much of that is in the core sort of deals that you would be interested in? How do you think about the areas that you really want to focus on as you build out the platform and the potential, how that could come together?
Yeah, Susan, this is Rob. I mean, just giving you a little bit more color on that. I mean, it includes both the new construction as well as the R&R, the re-Roofing, the maintenance. So it's the total TAM of all of those, with roughly 70% of that being on the R&R side and 30% being new construction. As you look at the lay of the land there with the competition, and we've got a nice chart in the presentation on that, the largest 20 players in that space make up about 10% of the market. And then the other 90% is a lot of local businesses, similar to what we've seen in some of our core markets we have today. So a lot to be excited about there, just given the fragmentation and the potential for the future there.
Susan, this is Robert. Maybe I'll add on. If you look at the pipeline of deals, a lot of these companies are strictly focused in the Commercial Side of the business. That even makes looking at the pipeline more attractive.
Okay. That's helpful color. Then you mentioned that you'll be paying cash for this. I think you expect pro forma leverage to go up to about 1.6 times. Can you just talk about the uses of cash as this comes together, how you're thinking about deleveraging versus continuing to grow the business and perhaps shareholder returns?
Yep. Yeah. No, Susan, this is Rob again. I'd say. Obviously, at 1.6 times, we feel still very modestly levered there. We've, in the past, for the right deals, gone north of two, two and a half. We have plenty of room if we decide to, if we find another strategic deal that we think fits well. We have room to add some leverage. With the cash flow we're generating and the cash flow Progressive's going to generate for us, we have plenty of cash to continue to do the small to medium-sized deals that we do every quarter. We still feel like we have great runway on the buyback as well. We have the capacity to do both. You are going to see us continue forward as we have been here for the past few years from a capital allocation standpoint.
Okay. Thank you for the color and good luck.
Thank you.
Thank you. Next question is coming from Michael Rehaut from JPMorgan. Your line is now live.
Good morning. This is Alex Isaac on for Mike. Appreciate taking the question. I wanted to ask how you view complementary products going forward and whether we should see a focus on Roofing going forward or also continue to focus on other complementary products to add onto the platform.
Hey, good morning. This is Robert. If you think about our prepared remarks, we talked about the $95 billion TAM, and that obviously is our core Insulation space, which we remain focused in growing that organically and through acquisition, and we still see a lot of white space and runway. Then this new $75 billion TAM on the Commercial Roofing side, which is strictly focused on Commercial Roofing, the makeup of that TAM. I think you can expect to see us in that space, stay focused in that space. There is a lot of opportunity here for definitely the foreseeable future in our business. That is what we like about it. Great time to get into this area, and it is just such a natural adjacency for TopBuild and how it lines up with our strengths.
Progressive is just a great fit, given the team there and given the culture fit as well. It's perfect timing for this.
Yeah. The only thing I—this is Rob—the only thing I'd add to that. When we started this process over a year ago at looking at potential adjacencies or complementary products, we've done a deep dive on a lot of different categories. There are others that are attractive that potentially down the road might be opportunities for us. As Robert said, what came to the top of the list by far in that, in terms of where we felt TopBuild would have a right to win in terms of the attractiveness of the end market with things like recurring revenue, the profitability of the businesses, the size of the TAM, Commercial Roofing shot up to the top of that list for sure.
Given the white space we still have in our core of Insulation, given the white space we have in this TAM, I think you'll see us, as Robert said, staying focused on that here for the foreseeable future.
Sure. That sounds really great. One other last quick question on that. In terms of, you mentioned the technology investments and sort of that shared culture. How should we think about the integration of the ERPs and how do you view sort of that process on your end?
Yeah. So good morning. This is Robert. Look, we're going to, as you've seen us do in the past, we're going to take some time to learn the business. We know that we have some great tools. We know that Progressive has some great tools as well. During our discussions of getting this deal done, we've talked through those as well. If we think about some people tools, that type of thing, those will be some of the first areas that we're going to learn from an ERP perspective and make sure we have something that's actually going to add value to the Progressive business. Again, they built some really nice tools there, which really drives what they're able to do with their customers, how they bid projects, how they keep up the projects, and Track projects for successful installs. It'll be something that.
Will eventually be on the same system, but we're going to take some time to learn here, make sure the customer experience is not interrupted, and we continue to support what Progressive does, and that's excellent service for their customers.
Thanks. That sounds great. Appreciate it.
Thank you. Next question is coming from Collin Verron from Deutsche Bank. Your line is now live.
Good morning. Thanks for taking my question. Just one of the hallmarks of the Insulation installation business has been your ability to manage price costs and drive margin improvement. Can you just talk about the industry structure here for Progressive and how successful they have been and maybe the whole Commercial Roofing Installation business as a whole has been in managing price cost over time?
Yeah. Good morning, folks. Robert. So yeah, the team there has done a really nice job. I mean, if you think about, if you think about our history and our roadmap here, you talked about how we manage, how we manage margin, how we manage cost, price, that type of stuff. We've seen that in the same history that we've been looking at the Progressive business. And they've actually expanded margins through, I'd say, everything from sales development to talent to estimating process to how they bid the jobs, the jobs they select to how they manage the jobs, all the way through the process here. They've actually, what I call operational excellence, how they've worked that into their process. So we've seen, as we looked at the history of the business here of Progressive, we've seen the margin expand.
I think they have great control over that and how they manage labor once they go into the job site. Again, I go back to why it's such a great fit with TopBuild because the same things that we do to manage our business on the contract and installation side, we see Progressive doing the same things, how important the labor aspect of it is, how important these local relationships are, and how you manage that and how that eventually, at the end of the day, drifts down to the bottom line and the profitability of the business. Very similar characteristics, very similar makeup. It is a local business. We talk about this dispersed model. Again, why it's such a natural fit and very similar industry structure.
Great. That's really helpful, Colin. I guess just more concentrating more on the margin side. It already has a 20% EBITDA Margin. I guess, can you just talk about how sustainable that Margin is and sort of your guys' ability to expand it going forward here? Or is it really going to be concentrated on sort of the top-line growth on the Commercial Roofing side?
Yeah, Collin, this is Rob. I mean, obviously, it's a tremendous margin they have. Obviously, we've done a lot of homework in the space, looked at a lot of other players. I'd say they're best in class there, right? We know as we look at other companies, you're probably looking at more mid to upper teens. Just like we talk about in our commercial business with these large commercial projects, there's a wide range, right? There are some people more at the lower end of margins too with a lot of opportunity for improvement. We think these guys with their best practices and what they've been able to do in their business in terms of how they bid work, how they review those bids, as they share those best practices with other folks, there's going to be opportunities to lift up others in that space.
I mean, honestly, looking at their numbers, I don't see a ton of runway upwards, right? I think the big opportunity will be with the future deals and how we're able to expand the margins of those businesses by sharing the best practices that Progressive has today.
Understood. Thanks for all the color and taking my questions.
Thank you.
Thank you. Our next question today is coming from Rachel Georgic from Bank of America. Your line is now live.
Hi, good morning. Thanks for taking my question. I wanted to ask, can you talk a little bit about the management team at Progressive, if there's any changes that are going to happen? From just an M&A perspective, will Progressive and then TopBuild have separate M&A teams, or will that all be consolidated?
Yeah. Great question. The management team at Progressive, there will be no changes. They have a President, CEO that's running that business. He'll be staying. They have a COO that's heavily involved in the operations. He'll be staying. Their CFO or head of finance, he'll be staying on. They have a Chief Growth Officer, which is focused on growing the business inclusive of M&A and organically. He'll be staying on as well. The Progressive management team will be staying in place. Relative to the future on the M&A side, they've got a great process, a disciplined process. We're going to share best practices, but they have a lot of relationships in the space there. For now, we'll have our M&A team, what we'll call on the Roofing side of the business.
We'll have an M&A team on the Insulation side of the business, and those will run concurrently, but working with our TopBuild executive team here. We've already had those discussions, and I think everybody's pretty excited about how we're going to do that and keep the momentum in both businesses relative to M&A.
Great. That's really helpful. Then just a little bit more on the Roofing M&A side. Can you maybe compare it to the opportunity that you saw in Residential Installation if you go back historically in terms of how much you were able to consolidate the industry? I think you've been able to pay on smaller deals in Insulation, very attractive multiples, five, six times, and then you'd get the synergies would bring that down to three to four times. Should we think on smaller deals, you'll be able to pay a lot lower multiples than what you just paid for Progressive? Maybe if you can just compare the playbook that you did on Insulation that was so successful, how that compares to the commercial opportunity.
Yeah. I think you did a nice job of describing the landscape. It is very fragmented for sure as Rob went through. The top 20 make up 10% of the industry. There is a lot of opportunity, a lot of space for growth there, and a lot of relationships that are already established. Very similar from that perspective of what the landscape looks like. We are excited about that again. As we think about the dynamics here of the industry relative to this dispersed model, relative to the total package of material and labor, we see a very similar landscape to what we have been able to execute well on.
I think the last piece that I would say, Rob may have something to add, is if you look at the acquisitions that we do as TopBuild, obviously we get synergies day one, but then we bring this operational excellence piece to the table. That is what we see in Progressive. Rob talked about how they are going to, how Progressive teaches that Progressive way and that operational excellence and stuff. You have got this piece of driving synergies quickly, and you have got this way of constantly improving the business over time operationally from a sales perspective, from an operational perspective. They have a great, what I would call, business system around that. Very attractive. While this does create a new platform.
Yeah. This is Rob, right? The only thing I would add to that is just to hit on your question on multiples. We expect, and what we've seen from the deals these guys have done, is that on the smaller deals, smaller than this, medium-sized deals, the multiple is going to be less than this. On some of the larger, chunkier deals that are out there, just like in our space, the multiple is going to be a little bit higher, but obviously the synergy opportunities on those deals will be significantly greater. We are very excited about it.
That's really helpful. Thank you.
Thank you. Next question is coming from Reuben Garner from Benchmark Company. Your line is now live.
Thank you for taking my questions. Good morning.
Good morning.
Maybe to start, a follow-up on the pricing environment. I know the materials itself in the space have been under pressure recently. You mentioned how it's similar to the Insulation space and that you're selling labor. Can you talk about how pricing has held up more recently for Progressive?
Yeah. Good morning. This is Robert. Whenever we look at it over time, they've done a nice job of sustaining, I would say, actually growing. As they've looked at ways of improving business, how they're bidding the work, how the jobs they're taking, the jobs that leverage their strengths, how they manage labor on the site, the number of man-hours, man-days on the sites and stuff. We talked about their investment in technology and kind of using data-driven insights into the business. They've done a really nice job over the past, I'm going to say, two to three years in growing that competency in their business. Even given some of the dynamics you mentioned, they've done a nice job of maintaining and even expanding.
Some people have asked the question or may ask the question about tariff impact, very minimal, similar to what we talked about in our core business, very minimal on this side as well. It is a lot of attractive parts about this business and a great company and Progressive.
Great. That was going to be my second question, so I'm going to sneak one more in. One of the advantages that you have in the Insulation space is a pretty significant material purchasing advantage. Does Progressive have an advantage over smaller peers today? Is that something that maybe you think you can gain over time as you consolidate the space? Any kind of color there on how much material synergies they might have over smaller companies that you may purchase down the road would be helpful?
Yeah. Maybe a couple of comments there. I think Rob said it well. As we do more deals in the space, we expect the synergies to continue to improve. The bigger the deals, the more attractive the synergies. I would just say from a Progressive standpoint, they have great supplier relationships, done a nice job of building those over the years, and I think they see the benefit of that.
Great. Thanks, guys, and good luck.
Thank you.
Thank you.
Thank you. We appreciate it of our question and answer session. I'd like to turn the floor back over for any further closing comments.
We appreciate all of you joining us for today's call. Please reach out with any questions, and we'll talk with you next when we announce our second quarter earnings in early August. Thank you.
Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.