Builders FirstSource (BLDR) 8 Nov 222022 Q3 Earnings call transcript

Good day, and welcome to the Builders FirstSource Third Quarter 2022 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by management and the question-and-answer session. [Operator Instructions] I'd now like to turn the call over to Mr. Michael Neese, Senior Vice President, Investor Relations for Builders FirstSource. Please go ahead, sir.

Todd. you, Thank welcome and third XXXX quarter Good to call. earnings morning, our Dave the CEO; on me Flitman, call CFO. With our are our Jackson, and Peter review results will third XXXX. we Today, our for quarter

call and investors.bldr.com. presentation release website press quarter on our third for The today's are available at investor

to for from the considered refer for provide non-GAAP certain call. items. during investor and GAAP informational slides the today most measures. GAAP from they isolation results be discussed We in results include several should purposes, non-GAAP will presentation the comparable We The results not and adjusted these directly

You and to investors believe to can and presentation. they measures find a the corresponding applicable filings useful be in reconciliation of our these non-GAAP where we can the earnings measures discussion press why of SEC GAAP release,

in results. this release, Reform forward-looking and I'll cautionary our review remarks filings statements call the differ section the and forward-looking in actual meaning projections. cause future on in to Litigation to Dave. statements Private SEC over factors the today's within Securities contain of that, for With Please that and statements from projections and presentation results call the Act forward-looking our could turn release press the and of various press Our

for Mike. Thanks, joining and morning, Good everyone, thanks call. our

third our our strong consistent of value-added results execution. resonate strength quarter our including Our and customers reflect products business, that our fundamental the with and services

products. long-term organic EBITDA. combined our outline tailored nearly to focus driving products execute providing quarter, a On cost and I how investments we increase Slide winning core high-performing performance, growth organically priorities: growing existing X, and sales, core like new partner to through consistently third acceleration excellence, In you productivity relationships customers margin service, X, our adjusted solutions choice. this acquisitions. operations, strategy higher XX% a we record our continuing the are On which strategic We our build business of continue including X.X% operational relentless value-added value-added we and helped would on controls services, in strengthening to make of quarter. That and of strategic tuck-in excellent in produce remind expanding in against with by our our delivered collectively us us and in customer culture Slide

delivered maximize M&A. additional billion System, by as sales. XX% $X.X creation. shares, months common our long-term of still buyback repurchase in approximately BMC quarter capital in leading to Since continue and million have we leveraged We our shares Specifically, record billion our our to strategic we tuck-in ongoing we program repurchasing the the retiring stock XX value have repurchased more increasing billion this in look by in capital we Since value-added results ago, to favorable million $X of have purchases. productivity acquisitions will $XX Through X-TEAM remaining shares, opportunities toward the repurchase than BFS deployed on for share We our we year. billion commitment slightly savings authorization $X deployed our $XXX launched Operating to market quarter. merger, current million roughly nearly invested outstanding. now considering recent common product October, $X to highlighted we dynamics XX have our We in and

well by sales R&R increased Other story, solid Multi-family single-family XX% organic again, further approximately products products organic be growth results projects. choice XX%. our billion driven are a support drove the by Once positioned grew $X products. when our value-added nearly a was turn delivered while constraints XX%, increased weaker in prior sales we of Let's almost Repair, X%. to strong supplier for multi-family and Other Slide limited We value-added third to net segment. was and year to mainly and attributable and quarter growth supply growth to in growth our backlog X. validating of increased Core these in Remodel on ability over sales. that this

$X.X of by of our billion XX.X%. returning and adjusted has with we the were During but productivity share constrained, driven margin pricing in results a a EBITDA These quarter, strong ongoing normal. supply gains, discipline been to market third that generated initiatives execution, is

X. M&A to Turning on Slide

and the profitable we of value-added to Trussway, growth, acquisitions customers multifamily core execute diversifying with of the addition portfolio In serve are our our objective which start our to have focus strategy. footprint Southeast. four and that advance aligned our we better exposure. acquisitions completed our expanding tuck-in closed growth geographic that to of organic in continue quarter, in Since we our trusses, market September, collectively on our footprint the expands accelerating markets, end our In Southwest key enhancing acquisition our in our

the which acquisition to longstanding provides Trussway, track our with acquisitions proposition. Gulf family. acquired we September, teams in We records our July, Phoenix. high-growth Coast. Door us In & assets excited the welcome resources Hardware, long-term to with Fulcrum with Then facilities providing high-return also and additional closed acquired and contractor-focused the in Lumber our These of that and to their will growth customer Group which us our profitable pro enhanced Supply, we Fulcrum We're in BFS the ability relationships October, Building in acquire HomCo, value in dedicated Pima represent footprint boost of millwork lumberyards, of Arizona. capabilities and markets Pima HomCo Flagstaff, millwork

per average million several next manner. a invest far The on $XXX We ambition deploying have disciplined highly year. million $XXX approximately fragmented this while capital industry the in our years M&A nature for of to spent our year so on supports

sense. continue we continue creation valuations remain acquisitive to will to be where our ensure navigate market We we stewards for As capital make to vigilant value of long-term near-term dynamics, drive shareholders. we

that over of Paradigm growth and business quarter acquisitions. to year to the homebuilding digital business. Paradigm the are pioneering just well one of The industry. in and the the of of turn perform to original marks transformation completion let's continues discuss Now X end Apollo our in Slide role exceptionally the we since The third investing our long-term

committed software to On build executing our and homebuilder digital remain of sales side, development plan team operations. out the BFS to integration with our we

will during about marketplace As process more us will with customers visualization digital highlighted held into we quarter, to you our platform on meetings virtually XXX our representatives design, design at next materials and our in products, believe pilot customers. and and introducing homebuilding key tools sales that for and than our We to new the streamlined successfully supplier our as to one the integrated build the grow our now including the build be models XXXX, customer tell specifying of XX home beginning brand we takeoff planning, easy-to-use are BFS digital new And structural third and launch excited the we a last technology material we engage in of the which new We place have budgeting. their provide mybldr.com builder industry. of with momentum this website will help functions, choice ordering small operational quarter.

to Turning productivity.

that these the quarter, outlined operating $XX our and in macro environment system. allow demand, quickly far on $XXX $XX pull, of starts in capacity respond, in appropriate In as variable are us increased million exceed shown million a our optimizing business points X-TEAM we Last effectively with expect housing carryover expense footprint, resilience down and drive have this our of the expenses reiterate XXXX we delivered projects improvement BFS projects further streamlining as including important we savings reducing market synergies, spend, have costs productivity we of and we many discretionary million and will full In to our current model, to taking savings managing to flex for in productivity uncertainty. accelerating X Slide so significantly, scenario of leverage challenged to actions. through where addition workforce structure believe the to year we to are and the levers

with scale, a years manner proactive much to effective initiatives, the to last Our in and allow cycle combined more recessionary ago. compared XX these us operate

decline a XX% public order to XX% commentary on we rates seen As announcements, the builder the have has in all in suggested average.

in confidence on and had mortgage very we we have a third weighing strong prices. higher results, demand daily and commodity consumer as rates begun slowdown average see While declining are to quarter sales

Our down amid double ago, low significant year versus were volumes products. preliminary a September a digits build October decline and in early-stage

difficult few and curb costs, never to quickly the be best is work environment. market these our levers to line including with our our company align This facilities. and to such, decisions volumes we travel, must a As team in members, pulled reducing with position this with levels, deceleration sales moratorium and but the are affected easy, navigate responsive to rationalizing respect on a putting and overtime to inventory bringing we evolving nonessential headcount

protect are growth the opportunities business challenging and to but decisively our committed foreseeable We position, act to and for proactively the we remain value the future, into are will that as organic delivering and proposition. We managing accelerating our towards anticipate inorganic market allocating capital are overall necessary. we resize and the operating value-generating downturn, leading on strategically prepared environment to

We value operating environment, shareholders. are well, confident create will for we outpace that no our matter continue the market long-term and the to execute

for past FirstSource where in equally need. and due to many for value reside, have by Builders shareholders, especially the decisions our caused As to communities been our members on sound laser-focused weeks supporting team several is of are Hurricane difficult fundamentally drive the that making as The we devoted devastation customers business Ian. times

saddened to emergency that organizations suffered after made out gone humanitarian include have who We supporting Our contributions countless team they safe team want who BFS rebuild. been we've but damage disaster. I learn relief them were Cares, I over offering appreciation to Samaritan's team these program donated FirstSource support to extend all ground as the Peter will have exceptional the communities call weeks, and and to Builders heartfelt has American rebuild. and and that organizations with them We beyond impacted. catastrophic results. that to with and assisting Moreover, financial efforts. now immediately Ian to Myers, send team efforts. to Wisconsin, humbled each individuals Purse relief ready stand over are the work natural third truly quarter Cross, and who who a Hurricane I discuss members filled and facing to those to recent these gratitude hearts team assistance of Ian, above to We special supplies such going selflessly Florida. recognize families all our X,XXX $XXX,XXX community by displaced In Red more hardship caring Fort miles supportive with The Hurricane company's like times individuals a with our the few their to lead members local the be behind essentials, that a we semi-truck to our in members and members of and It's them a support our homes. those these go organization. on help to partnered helps than to the to stand to members my organizations to turn the are support Wausau, relieved our

you, to million pleased we in Dave, I'm a quarter, report the the balance quarter. $XXX financial good of We morning, stock all strong while billion strong generated free results common sheet. record flow everyone. maintaining that cash third repurchased Thank of quarterly our during and delivered $X.X and a

financial with our management disciplined alignment execution, Our consistent priorities. performance and reflects operational strategic

and with a operating challenging expense processes proactive environment. mindset have are amid already operating management a enhanced our strong We

with a us the with this on we maintaining cover balance provide sheet, shareholder navigate will net All focus but profile to market. creating flexibility Our and you morning. low fortress I value. while, the liquidity dynamic are topics long-term leverage decelerating three substantial

third review First, our results. quarter I'll

full I'll for I'll an discuss Second, deployment. our update guidance finally, And year provide on capital XXXX.

year to increase pricing locations expenses been increase has of within continued about and a XX.X% by half Gross factors: of X.X% is from to quarter, begin sales increased reflecting billion, that as our in returning third additional points $X customer the grew grew XX% organic discipline by our by in categories with our value-added what compared two market, initiatives investments. on XX.X%, and supply-constrained driven net but acquired compensation and strategic X. profit XX.X% The Slide margin period. the of result XXX expenses to to in product operating sales for months; wages sales of last SG&A such as increase IT, normal. higher quarter the $X mix digital Gross generated product increased value-added which we work was the increased and variable products performance XX prior to a by our net as category meet a fuel-related profitability. enhance $X.X and driven sales the basis billion Let's year-over-year. reviewing Core costs We needs. productivity increased billion, remainder was and and

period. higher increase as gross sales XX.X% Adjusted controlling net in income adjusted the by prior points product value-added million sales, an driving XX.X%. was EBITDA year to of net adjusted SG&A during income growth, partially sales and and increased focused $X.XX of driven the expense. $XXX quarter XX.X% the points compared percentage remain third the EBITDA categories of The XXX sales on by higher year in by primarily EBITDA or period income adjusted income net We XX.X%. prior EPS from net to XXX increased to net net We $X.XX disciplined million successfully adjusted EPS a Adjusted of executed total As driven of tax SG&A improved expenses pricing. or in margin increase $XXX mix by primarily offset of a basis was and importance adjusted and basis margin, improvement. from

sheet our on let's turn Now to strong XX. liquidity Slide and balance

trailing Our provided growth, was cash billion, by third while yield sales primarily organic pricing expenditures profitability cost capital operating September for free management approximately increased return by was million. invested flow quarter Free We robust of the XX.X% disciplined XX. were driven generated operating flow effective was management. flow $X.X XX $X.X cash $XX billion, capital to and core activities and working ended capital months due on XX.X%, cash cash while

Moving to capital deployment.

million have six put mentioned, $XXX to Dave acquisitions. this As year, through work we approximately

the shares at average million an quarter, for XX% perspective, nearly of equates put $XX.XX. of we adjusted XX.X $XXX EPS change. approximately To stock price in million to the $X.XX repurchase repurchased the $X.XX, this During

QX far million average In at addition, $XXX we price of $XX.XX. so in shares an have repurchased approximately X.X million for stock

and favorable repurchase will We opportunities capital continue are to to we prudent look committed to deployment, shares. for

stated months last approximately Our EBITDA, within XX XX our well of was estimated to Xx. ratio target net EBITDA adjusted September as Xx our debt-to-EBITDA our approximately business and X.Xx of X.Xx base XXXX

was their capital achieved fantastic We strong we long-term no our We cash to quarter the and enhanced and Excluding in availability and skill overall industry. end, ABL, billion, of million under a our hand. for leadership maturities on our across team At revolving credit consisting $X.X approximately liquidity the of had quarter. dedication. our I deployed want metrics in facility total have thank $XXX XXXX. board, entire until debt $X.X billion borrowing our

to XX. Slide Turning

and commodity important to assess continue results by business our of We approach it our a showcases to normalizing base is This using believe methodology. profitability the volatility. underlying company strength

business a As our thousand per feet. board normalized assumes commodity reminder, margins and static $XXX base at definition prices

our sales year maintaining adjusted guidance base business are our We EBITDA. on and full

of enter like XX. base months Slide year total full business and the final I to outlook would Turning discuss to as we company XXXX. our

We prices the expect amid over commodity the of quarter results to declining decelerate seasonality, fourth rates, and balance cooling housing market. normal the higher

end of results starts, the backlog of are through homes the substantial single-family the under our be supported we by we construction. year seeing expect While slower to

guide remains to or unchanged X% sales XX% on at net billion $XX.X the base business midpoint. at Our

business unchanged. Our guide EBITDA also base remains

the to billion growth or continue We of XX% expect $X.X midpoint. to XX% at

full margin. year we left you sales, also performance. Given EBITDA total including full less and than the we have anticipated will adjusted in today, guidance for provide providing our year two net adjusted year, are with XXXX This total months EBITDA company the

be or full $XX.X to approximately billion We billion. net over our to XXXX total expect sales XX% sales XX% $XX.X year of billion company net to $XX

XXX on points EBITDA prior approximately year full the XX% the $X.X price over profit billion expect XX.X% forecast now $X.X and forecast of margin our The total Adjusted We basis fluctuations. commodity outlook free EBITDA cash over basis or XXX billion higher billion, to an improved approximately XX.X%. our We range expect billion. is be increase to billion $X.X XXXX $X.X our adjusted of cash to EBITDA of $X.X to based results is free points to flow to XX.X% on $X.X timing of $X.X billion. XXXX of from XXXX flow margin billion to to adjusted adjusted be XX% or EBITDA

based release assumptions, XXXX Our is the outlined outlook which in earnings presentation. and are on several

rates mortgage across in low starts double year digits, and higher cancellation full our double inflation, digits. rates single-family the down geographies to Given expect be we

to starts up up and be digits. continue to R&R expect the in in low multifamily We low be digits to mid-single to double the

Regarding near-term versus estimate midpoint million at demand, will multifamily quarters. mix diversification for is million due XXXX prior CapEx our in $XXX of is improve chain gaining momentum guidance $XXX of and delays. continued our supply the to coming

on to and year's of begin to it XXXX next ability helpful challenging might the a budget, midst As thought a our finalizing we we in of operating are reminder weather the to books close provide environment. be

outlook our our provide XXXX QX will full We call February. during demand in

high-level declining double-digit to in of, transparency of a illustrative you business capable spirit provide XXX,XXX is year to what starts example our approximately example, an XX% give from we to and However, consistent of operational the and like single-family XXXX. we can next of believe platform, sense deliver I'd you disciplined differentiated sustain of in EBITDA our a and flow given In billion, that $X cash execution solid management. over margin million X

a management We enhanced with are mindset strong expense processes have to control costs. operating already and our tightly proactive

flow operating With with outperform $X.X Our over XXXX, XXXX beyond. long-term line us call a with Dave to have more debt this balance remarks. over to platform billion than sheet for me year, that, and $X to of and premier until closing sight into free turn of positioning provided billion fortress let maturities robust back no his cash and liquidity the in

to us gain Thanks, business reiterating will share strengths by in the want close to underlying our environment. enable any Peter. that I of

in leader fragmented highly market industry. the are a We

of customers, solutions with growing of portfolio and our us a products that resonate making We partner have choice. a value-added

optimizing are diversified and growth. operations capacity a stream constantly our and have revenue for long-term We

We adds our approach financial generate operational consistently We significant solid laser-focused returns long-term of a excellence, take generate executing advantage. free are enables to in with growth long-term a on to our we organic strategy. competitive optionality and while which focus. uncertainty, disciplined which inorganic and flow We cash times

Our industry is discouraged. prior year, clearly experiencing are versus we not deceleration the but

in in costs close customers ability downturn remain partners. to will environment stay confident and are we navigate any our to and supply proactive streamline to our playbook through and We our market implementing

values long-term our sights We while will through as near-term our keeping execute principles continue core volatility guidepost. market to our on our goals, operating our and

importantly, and highly Todd, very succeeded and Finally, for let's experienced a that prior call value strong, most team knows the joining today. open please long cycles us and leadership many compounded have the to seasoned we you shareholder over has for again term. Thank through perhaps now deliver how questions.

first take Matthew of [Operator from Bouley Instructions] We'll our question Barclays.

Congrats on the results.

chain. that just guide, for then could comments margin for like double-digit know example, in you decremental and XX% EBITDA. normalization and margin that a does between about sustain the end of we're look in on single-family kind sort kind a of allows non-commodity? supply And there how of double-digit a But decremental like think some EBITDA something implying you commodity in made kind loosening margin? the to breakout you're commodity QX period look what I scenario at I of comfort If that sustaining EBITDA the XXX,XXX around of decremental QX at that of XXXX starts. give that us I So

a good question. Yes. that's No, Sure.

of at the seeing highlighting we're there numbers same what of a happening you're what time. think I terms market the confluence in is in

a is to you the normal you market, as the overlay you generally buckling in slowing fall market if prices think a us the overall, decline we of it's those the due well of commodities decelerating just time seasonal you decline. commodity We periods. in to year, returning business for sort for environment see year, is QX a a where the about supply So see and into down lot decelerating as a And traditional normally what seasonality. chain in win. see see that This

it all in opposite trend, compare if direction last in those you is to And categories. year, so the of obviously, the

We in extensively out. decline we're talked in of time. the slower to return see in that some over or commodities, that, the of over the terms that what a so think, last is retrenching We're decline sales, I those play beginning So of things anticipating to all about in gross market normal margins.

we through to quarter. our that's will our ability manage the still We've we of our business in the put factors. normalized to with all discussion strength We would the really So starts. fourth think market the that at a in us in that and dynamic be be considered about prices, in commodity double-digit XXX,XXX all that really those as the considering well of where space, mix EBITDA position as think our

secondly, Thanks that, Okay. Got I And Peter. it. for ask about to wanted pricing. then That's helpful.

in to supply-constrained at has a mentioned guys a You returning couple is that now but of there pricing top the supply-constrained. times market less market, that been discipline

please And might how are price more in correct just at think but homebuilder pricing your around guide, I that I QX. be non-commodity digits. QX you play thinking negative volumes top me tracking the you feel if if core with be it about on guys take seems deflation products? implying what I I to could like I'm from customers starting implied double said are low And you pushback wrong, you down wrong there? might there. also But be

increasing, plenty but Well, becomes bit of the do. flow terms that's lot kind and I'm there of in ready supply from through there's think battle margins but competitive, in right? won't baked that customers haven't pass-through. will and a for that As a back of We're as the is, of a It get way, material as quarter. bit seen you the more now we can there do vendors expect, of their think I of progressing available, becomes gross we're for that and would But is we margin normal. heading you'd of more that in seeing always give pricing in. terms fourth we've that We We right? Competition credit. a expect, ready what we slowed who of dynamic in direction. We detail part towards the and increases, that any happen. supply of lot we're terms be what I as as a you, not going could way certainly, my to I'm the that. are of see margins cuts in pushback, down pullback provide sure result

Yes.

think that one is an I last point Matt. there, important

I couple think suppliers the volumes, saw pretty point, point. gone the have the away. have for commodities, price this last we to allocations of outside we the not seen years that of But much Peter's our to concessions from

Our next question Stephens of comes Inc. Grooms from Trey

Good I the congrats And also the quarter. performance to on everyone. morning, great have in say

Trey. Thanks,

like into that thinking seems XX% of kind So guide, double-digit to triangulate for how margin of of back that kind kind XX%. that number there? if EBITDA long-term mean, around Peter. number? the digit, of Am you've that back towards in long-term to of to pointing kind that little margin a be should of in margins double -- about you're environment. just it circling in we Or going about a of environment, on talked then off start single-family referring I clarity Is we normal. there kind And And progressing is more your that's XXX,XXX, also you're bit housing gross difference? that that I kind kind the

but defended. is or This don't just give anybody tablets is forecast. two we I The an all this where can want be anything, on to stone think it's We sense what you of the a writing XXX,XXX that double-digit example. pieces. we think. want EBITDA So

a two normalized Certainly, settle of be marketplace. good been of still back given things XX% market. challenging margin When we I it business. We or at margins, over will marks gross talked a think from it somewhere feel feel There's than ways question dynamics comes of numbers has more modestly we it about that year our last we've even a into the down we've spending. know with out plus, we looked we to where about gross the be the and because work good discipline north Sunday, a think XX% of believe got about the in within margins north will where us to in about allow about just improved good pricing we'll we to lot the point refined there's to give six kind our expect starts from threw guidance movement slower see, still XX%. improved there. about starts, of and is but that that think continue But of QX organization XX% what the that to maintain to both reason Certainly also competition we we there. to start we down increased will in not how metric of that ready XX% sort market, -- towards the and but a level in single-family out what XX%

of double-digit think been talking I legacy sort that that out I the margins you'll I would think just neither that we EBITDA have, strength since and we've will see we've we add, just recall double-digit about company lot on the And had EBITDA and margin, the we're levels. at platform those of the start built through the cycle. differentiation the a confident play merger that that

all are and got well that. very with Yes. No, that's guys of clear, loud -- that and executing I you

So that? savings looking I at we that if million for the year that, the there. $XXX that be on in were full year, you're how would kind environment? housing much that guess And sustainable And or of volume in productivity where how a hats about start off I sales-dependent talking guess is of

put the excellence, to cost year that and the integration through of as we continue in then said see gas at what importantly out, and you're targeting stepped and our started And we've fixed play starting forward a we and projections Day on plan financial Peter. long momentum. over outlined that ago, our us, slowly start, it synergies operational the we build productivity. those and on Investor behind to I'll over and to the the were I'll When X% we we to flip term X% merger we

we So that to of fundamental clearest optimize strengths target There's we move the do of and and in we you answer that over what the confident can area to are more towards is we're give continue going we're opportunity business. that long-term lots that efficient, get believe time. I building to

to guess while I be organization are And Yes. things there's telling efficiency. adjustments them we've volume a done and in that P&L after. to the tracking real operations, because right? all improve These is are there, expenses and our get certain that not add before differently that that volume We're and as you to that I process, items there Trey, just tracing We're changes will have certainly would and waste number. improvements leverage things finance staffing changed are rid ensure you these impact operational changes, contract of volume-driven,

question We'll Dahl from Mike Capital next take Markets. RBC of our

So The starts additional thanks that sensitivity. so in possible in a I follow-up If the to with think you recent XX% to XX% appreciate it's as months. as environment level or of acknowledged, you that, at 'XX the lag year, next worse. I XXX,XXX down Dave, impact for a even it's potentially down that orders this XX hits high builder you One lagged about, more point. on very far. color Peter, the

type double saying Or It And would the That's like drive it the I take your guess, to you ask so of sounds does double-digit that below sensitivity you're maybe level. comfortable in contemplate way. margins. can What margins defend that? sensitivity somewhat decline digits? different

Yes.

in, end certainly certainly of ahead before I our don't of projections. up get to -- our a process customers want We'll budgeting dig We early you'd any we're here. expect. We little finish midst of year, think it's the to in the as the on us XXXX. for that on Mike,

illustrative gave this were know, market, a built in the question, organization in different than as you by changing realm As And we day day. just we're last said on and and as capabilities company that in confidence. a And the we've of I it's it's in anytime the past. example this challenging we

was So that really It's to on to year. really illustrative opine mean next starts early too may be and what didn't tell.

it. Got

nice on Obviously, activity. question, free support second capital this My allocation. your buyback goals cash year you've to got really flow Okay. just the and

on ticking a leverage bit. have up You base business the

Xx seems it off leverage the year like up anticipating declines upper that the Xx some core of it's could If may next you're cash strong free business, and out end your looking flow, you possible some towards to to while range. throw keep ticking in

are how You've for thinking funding got your of buyback So the about aggressiveness relative earmarked you M&A. program?

on thoughts at how the any buyback bit? time Is you're going back little You've toggle it aggressive forward? looking been to really Or buyback. on a the that

Thanks the for question. Sure.

look, at capital priority. and the the our allocation return growth capital of and through in third We'll We'll to look future invest not as priorities we'll M&A change company. next the shareholders have our company, first So will inside the not downturn.

have pipeline However, sense, and to the even repurchases. share front, make around very is in valuations thing the strong, M&A same still our

very we, this disciplined Mike, point, So been to of stewards have capital.

Sure, our We some. capital will your We right our believe up with comfortable bulletproof that. very things We're be disciplined sheet. remain we're tick to point, will with a and cash balance stewards cash. the flow do to through got leverage going We've of cycle. our the strong, may

our take next BMO Mamtora We'll question Ketan Capital Markets. from of

drop but that curious example Peter, base back whether of quarter. kind be, And Should think the you of should margin, it think absolute it, I'm single-family as EBITDA, sort in impact your EBITDA. billion. on starts to the be of a Any drop total that It's coming be you. that how may XX, similar XX, is with year, but that the whatever business we business, be congrats see should about just should greater, on $X.X a may high-level next your perspective the helpful. it will EBITDA Thank base just XX, not less? of about X/X and number we gave we business whatever strong as does

No, great Yes. a question. that's Sure.

think you core the post-merger, importantly, cycle. base really and through combined representative but entity more is the our it the how functioning it at of is operations business, of about our If

to So our would sales. roughly base expect it starts the fair the Single-family run. starts. It's on is XX% we overall of move long see on representing of probably predictor starts, a multi-family in sales based the business best business combined our

to has there about we've pretty within think and margins chain broadly, about this space a more been, significant also issues. lot, talked the impact a the gross on you As supply due dynamics the

would So to expect normalize bit. we margins certainly, a gross

to very If gross account is of for there in and single-family happen the the there right? healthy. to declining or business business. implement, described, but number starts the with -- to you all think still That's scenarios you going going overall still a be We'll some you you gross is margins, if nature starts a that delevering strong. as on EBITDA of be is a of We'll be be smaller smaller margins. the math, gained amount around more about competitive

to what would the investments making in the that better gaining making productivity that describe I What do. the we're are the we're the counterpoints that's So just to improvements at in would we're share it. increased is value add, how be business say and I we broadly

and to better balance you for So That's right we're dialed-in able through what 'XX there's a to now numbers. give are working there. planning be

No, then great. question. helpful. And follow-up is one Very other this

I'm one tick the will are long So think through for do sort work cancellation obviously, less curious, starts current to backlog take starting or we are down. to two of just Is there? a you of or sort to more? builders see it of But up, rates how quarter that event come it homes

high, quite indicates to little in some today, there. construction products. question. a what answer counterpoint terms decline those cushion have nice On script a early in one the bit stay homes there's alluded the in I I those to under the of we I wish great numbers units, knew trends The seen in bigger we've think That's a that. total is of we really seen which really hand,

and trusses, unit build earlier of home, that to doors, on you if backlog. that of the Timing indicate So going to you're move with declines say some you way, to of construction then a that windows through say. think framing it, products we're the we're seeing bigger about tough another starting would start under to which construction cycle lumber, your

I think the would QX, say. think most bulk to would it's of but too early common burn through it, I just I've QX, the be forecast that heard we

luck helpful. and half Got into over. XXXX. I very the Good it. back in will turn it That's

Zelman from of question Adam Baumgarten next our take We'll & Associates.

Just going us business environment? back a the to for a the September overall and Did how performed? to the down October volume it give outperform trends, business continue value-add maybe in sense

mean, did. the business obviously, in the last It I over part we've a for year. value-add reasons invested There's did. It our that. of few

millwork, in in automation, better both done that windows, we paid. and better ability performance nice the yielded area some to of capacity, productivity, the have facilities, on and lot of decade right, other Both those a investments, and made the the components, that's So well really in over inorganic form really of doors investments layer compete. internal also acquisitions but has and the side new past an we've with better then you

focus paying We our that. is off. So in those will it do think areas continue to

compete well we in won't to challenges that where but very a face Now think there's say we to win we're environment. that in fewer starts, still that market positioned isn't very, to

that in that smaller the itself some Got incremental maybe time? just the up. just of then And it. you just then It towards that's opportunity and color would coming launch targeted have additional on for launch sized that be sounds that maybe billion maybe $X to Is like an opportunity mybldr.com builders. it's And over helpful. guys market

And billion. it's to question. no, incremental good Very Yes. $X the not

hitting very retail side we manufacturers the we've window be targeting builders excited again beginning, we platform Paradigm, whole it that about of and the we've the said, very with in And major launch. configuration. was the of at and small as house first. heavily a on bought we that said a investing design As from were but handle door we are development to the the focused able this to we as build platform that was it in milestone And narrowly said, We're with been out business. to --

months what the time. in, more excited over bring to heavy with But the with development side, lifting have will to we're that said, about forward. have and consistent to we continue we milestone. come and we're on there excited So And be XX, that XX

our Collin Jefferies. take next Verron question We'll from of

I Can just decremental and illustrative with go you're value-add just especially assumptions your color you some because sales the there I about the environment. pricing. could decline that ask products, XX% from just be to organic taking wanted start in core share, the changes starts back provide declines more in that? into some margin

just moving pieces be lot of seems to starts. a and beyond the here single-family So there

any there So color helpful. would be

the be into to of numbers. get honest, Colin. Yes, dissection and I the sub goal wasn't mean, to try the

third of anticipate the to still where and a think that position my that And back where those we time us are market-leading lead to platform internally very value-add profitable average. expect a digital a business. But certainly the and here regression productivity comments year. at Beginning environment think while revert go fourth to down. through metric, margins. double-digit We pretty be it's through we've in we're quarters still included to number is see be the significant Ketan an our a out do and starts even and norms I will to think that We're where commodities we've and got slowdown to long-term to very we with got there with difficult -- in helping ago think areas. little a improvements in in We and play historical a estimates in investments applicable that there'll different the certainly margins. will some that on that declines continue to

those factors. inclusive So of it's certainly

detail you February right, more for a into You're the announcement have lot we guide the we and 'XX. where give get we'll on as

on the seeing Okay. maybe purchase that's the here given of different And what the and then multiples how can pipeline M&A macro strategy just you're and environment, history? your you touch from just weakening kind market in

all of executed believe far, And XX have on down upon got But just the downturn, as that this, level of a at Well, do issue a the to the get course valuation. expect very discipline we've and and through through understand I valuations. I with And like bit want been still to may severity times while high more may that time. will now. pipeline of again, dependent we've for the while. hear And a here right? the things and said the disciplined the so we the on length will remain you slow since a we becomes continue we merger, strong we acquisitions downturn. pipeline for Valuation active

Reuben from Company. question next our Benchmark of Garner The take We'll

congrats results Good morning, everybody, in the quarter. the and on

seeing Have the of add the of quarter they margins to far returned value the in on kind a or about can value-added margin of progressed you non-value-added and manner? commodity have "normal" last end already front held talk in commodities of so this towards So kind the versus businesses, the you're or kind quarter? or better the in what similar

Yes.

time speaking, So prices by The more than value-add, the value-add and they expect, We the begun category did have, side, just general. quickly normal, that just of that cost -- to little would it in more maybe of volatility a bit you expect led and continue, haven't right? right? to commodities expect commodity We've more respond just over They a would good the yet. bit normalize move margins got We Historically We stickier to to question. are all but given side as quickly. gotten return the it. are way by quicker. margins

there? in kind rationalization. guess, can year out just detail as that making are well, weather then embedded there? I the distribution outlook? of, cuts kind cost And Is for there it. Is that I of footprint? Any you manufacturing You mothballing that mentioned of mentioned savings none consolidation the go of throw that some facility dollar Got any to you that provided of into guess you that next it for capabilities? of Is kind storm. more what you those? could And Is scenario amount

taken just peak this early in our about really quarter, the I point, we've being would the say to at headcount the of that peak, from the of that end Yes. second out quarter. third X,XXX and

last given where manufacturing of down. markets is in be the more smaller shut the and some to those that market, rationalized may not facilities your needed strength of not we the assets This question, And years just are redundant taking I rationalizing have two have we the consolidation facilities. capacity. primarily of want in the have process to we We or out XX clear, to

fact, that but now. In all that capacity needed had, we've different we've are times

said the really quantify But as happens what at that in point. to will this on of actions the in we proactive be marketplace. and I so I And any decisive don't call, want given

question next comes Our Truist. from Keith Hughes of

of you backlog multifamily anywhere of near this how multi-families. to guess strong kind question continuing level? in be guidance. you how long your a Continues as on a a discussed view or A I have long do in of

I is as committed multifamily franchise both able we're in staying invest Panel of talked business consolidated throughout there right $X.X going to And good with Keith, year. the about, the know $X.X we and what bring over is with with is that to billion about that we've to the that and need people integrate a slowdown strength to single-family you. space as mean, now, FirstSource a Truss spot. yes, together they're place need and have to deliver. of bright truss we acquisitions. strong. Multifamily that team, that Trussway we about it stayed would our a is starts, meet certainly for The something a and and be, into to added great we're ability And year of business excited in to a we've space. that profitability thank able the housing this that we've got existing in and to be millwork multifamily billion Builders on appear backlog them feel the we teams Certainly

in we're that So optimistic space. certainly very

up show planning down. it in and activity how multifamily, to long numbers? start And activity on of slows -- What's kind take your

a nine a average. single-family good versus vary it's that's months about We talking to a bit, multifamily side. does months. you're nine around substantially XX XX probably but Generally, around longer days usually It say usually lead Yes, being on time. the

Our Elliott Stanley of from next Stifel. comes question

on question X. A Slide quick the

You are downside guys talked the actions taking. some you of about

With standpoint are? the those next targets that leverage downside year, basically is can should saying more you thinking laid was all you complete And you've you here? need double-digit EBITDA from things out, that Or from decelerate actions? margin hit framework into just of that these I to where a

you on given That an how that Balls that downturn And into didn't Harvey upon to the of we there gets. you fairly We have EBITDA double-digit levers early capability. and illustrative to pull, show more indication just that those margin. depending all acting directly the lead those actions was the severe we're

I certainly, pull where and directly as severe, gets the more But wouldn't on. those as So will we think downturn linked. goes leverage about time more

guess on side. automation I switching gears the And

help them some some expectations should mean year? you about projects. at CapEx about talked You come where we us modestly. Could projects? kind CapEx guide of the of And saw are think you next are? those how down I I high-return What for

constrained We our And at long the continue automating we we facilities been, four automated and which eight we looking labor, particularly started coming the future need that years, have market. think and that our industry we We over think fully to manufacturing in that our Georgia is play. in the invest we to long-term our heavily We up labor we skilled time, to truss had manufacturing this to are said be long-term couple right next any in that's automation line as Well, first we going talked and facilities. facilities. quarter. about for fully time committed last come. in play right across more of in to a potential That's

and going company stock. of We forward. into single we'll the outside of That capital our our is the deploy biggest maintenance rolling continue facilities area refreshing will

get windows actually that access all we what get right need for equipment we the right the to I fleet and that been when manage we to advantage way now to, are And equipment that to equipment a this those And it the sadly, have trucks, of all of haven't our taking need, do to able slowing we to can think balance ability the when strength given to able to we do in have do need things but down. the we been the have continue right? We slower sheet, haven't even get the long even the we ability it to we market. is of term, where need, some refresh

of Our next question comes Davidson. Yinger D.A. from Kurt

then into margin XX% is kind that you at part that all? dependent which I the certain And on you've front, the gross of a of QX upon normalize, assumption? the latter seen and to start Just has in surprised speed at QX start guess,

Thank question. the for you

feel unfortunately, a this the market to see watch that I is a I and XX% of with. side, out have in seen hypothetical. has. gross I if the think that know Still starts from surprised by the as bit So a far. plus band margin XX% is tell don't grapple if It's so a migrating about we've you stage, quite the combined would the just We're pans it just it how with good it a down, in starts. as entity measured I'm it number. going to long we honestly, forecasting you and surprised specific way. the it's strong at on would And It's well. I very but what perspective. I'm stayed done as tell

Right.

you do that some loss maybe about how the of as on I That's value Okay. just trade some power and cost builders mean, then in lastly, to think the start with becoming zero helpful. And of better, kind side impacting the availability proposition offerings? incrementally the of pricing value-added of

value-added about excited the any We're in those market. of long-term potential Yes. offerings

any will more drive to of a we can for here. You that to we're continue Peter's value think growth products. a their less taking get lot make we continue readily haven't more some with They're to be about our business. any the basis And job it, we doing those our relative in customers. the We to They're efficient, our a compared actions we'll going matters rest be the to earlier a work to at of and slowdown same downturn, labor we that people. site efficiency on in believe comments, may even penetration continue. And think way going But in that seen take available. traction add the described lot

it. QX Got right. Well, I luck All appreciate here in guys. good color, and the

Riley. Our Rygiel next from Alex question B. comes with

a you the inventory talk with bit levels? your of it to be And most could comfort compares how sort it, of that out any understanding channel? are the inventory of that channel, about other in your you historical level, sort Can

Yes. Thanks, Alex.

real right? generally observed that the make focus to the So inventory right we've ensuring as We for in support market, have manage on trying the a us sure that days market. it able has amount we're a the field the been hand, we're we in basis on dynamics to

down during So position. said, stay the -- it up that right That I moment. us and think we're close to requires to up in in

decks to windows Certainly, from overhang. the think progress little We repositioned A I bit more go. a company about an that. needed we've total on what little on cleared bit perspective, -- pretty made to. we company and being a talked immaterial. we've it's But

always there's certainly improvement, we'd the Certainly, always good. optimize band pretty feeling like we're but of well we within can So to where be.

And on two change your base Is a business since for that appear a three It that prices. you then sort estimated Slide secondly, or of them? certain there it despite the didn't XX, on explanations shows quarter number commodity second would of simple acquisitions.

we adjust talked announcement. helpful primarily the Yes. It materially might prices. We've sensitivity. moved normalized to just trying M&A. a But to has the of the for lumber it margins QX about applying it's the We full year little same. new We stayed then ways to the do think years. be that the it going linked keep more any we're folks not part don't our to something have acquisitions. different because additions the when has to part just couple look a We're update and and It's that year current

we We participation. will for this appears at questions earnings no your third It have you conclude call. thank time. This today's quarter further

time. You at may any disconnect