Builders FirstSource (BLDR) 2 Aug 232023 Q2 Earnings call transcript

Good day, and welcome to the Builders FirstSource Second Quarter 2023 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. sir. ahead, go Please

Good welcome Angela. quarter our earnings call. morning you, to and second Thank

the Dave on review call and on investor XXXX. me With are release press at our the quarter and Today, investors.bldr.com. The for earnings Peter are Rush, CFO. we website results will available our presentation second of our Jackson, CEO; our

the We will our call. during refer to investor several presentation slides from

non-GAAP informational results these The and adjusted certain GAAP results discussed considered provide for today items. the comparable be non-GAAP should and results from most purposes, include they We isolation GAAP for in directly measures.

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

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

turn the to With that, over I’ll Dave. call

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

for prepared dynamic a we XXXX, year. Entering and challenging

Multi-Family long During the a diversification over and more the anticipated strength an than portfolio, in growth term. market first by we outperformance half, than potential area providing in Multi-Family, strong stable projected. we performance, of originally product driven is had the identified better and environment continued our as value-added housing

few the have we put years differentiated over are We the truly generate results. seeing past platform together

dedication strategic from executing our our instill amazing members. exceed initiatives few the which commitment to a team near-term We testament our is years, and over unwavering operational the and continue through of last targets contributions by priorities, to

service are industry the be strive business to easiest with. do exceptional on delivering to always We company focused and customer the in

to continuing acquisitions. growth, through added improvement value mixed expand driving through share while We’re tuck-in

reach more us offerings recent customer proven a earnings. these in to immediately our base enhance acquisitions in accretive to have extend our allowed Moreover, years value-added have diverse acquisitions Our be to markets. to our and also attractive

deploy We free tuck-in million continue alone. the repurchasing second two and and acquisitions of prudently to consistently $XXX making over shares cash capital, flow robust in generate quarter

Despite buy-downs reporting of rate for normalizing such their in new many proactive and builders as headwinds construction efficiencies. homes helping customer places, highest construction. challenges, of navigate and stabilizing stream elevated our interest is half in an this shortages resilient get Many of is sidelines. have XXXX first home prospective buyers results builders that successfully a help a on existing off the by dynamic digital and and approach due the are that give we with confidence level us posed right partially to mortgage builders the demand driving affordability to rates improve innovations Public service incredible the steps, have value-added in team widespread the solutions, healthy sale, economic at our environment. taking place been With customer-centric executing stronger-than-expected to focus showing strategies results single-family prices

right the ensure helping our deliveries and right are full year have time. from by material in XX% which improvement continued time the We on XX%, to cycle full deliveries highlighted customers in at time, our our is during last quarter. lower customers second the On

on second our at quarter X. slide Looking highlights

the Multi-Family percentage segment in to driven and increased to XX margin related by our products from mix XX.X% value-added a gross commodity cost Our is healthy environment. industry talented operations averages field perspective team, execute reflection to a in impact years We positive EBITDA overall, points margin, execution of timing. This largely which due leadership maintained basis XX-plus adjusted effectively our double-digit ability a an challenging showcasing of our experience. stronger from

Turning to $XX strong in savings the the quarter. productivity across delivering We X. by slide million during drove business

efficiencies, and generate Team to One focused on continues manufacturing System delivery BFS improvement. Operating Our robust

to Our was X% expect exceptionally quarter, recent year acquisitions compared and in streak of quarter. prior Multi-Family the XXXX. this contributed an this the an continue increase the strong on tailwind of Multi-Family and remainder for EBITDA to X% we to top-line

will normalize While the in Single-Family we stronger first we compared to optimistic same expect of Multi-Family remain to footing first or of around second XXXX. that, the quarter the next period, year, on starts half be

reductions expenses needs. cost structure, need a the the controlling variable includes focus cost vital future for it us. optimization and relates As SG&A ongoing of capacity other This balancing for remains to against footprint our and our

and We over are while strategy the discretionary costs a long-term. on in managing job on great our short-term, done our executing spending, focused our has team the

Turning to on X. slide M&A

next target of investing an average several with committed in M&A for in disciplined We far a four attractive the per continue still million goal approach. to have opportunities completed are deals we XXXX, year years. to Thus and $XXX our of

acquisitions scale capabilities second the JB Detroit market. Millwork acquired Supply. added week, the earlier expands of which in Builders presence the quarter, through our and we and During Lumber, And millwork we this Millworks Church’s

We’re excited BFS to our the welcome to members talented family. new team

X. and substantially increased our since Our have value-added markets end investments product XXXX, shown QX diversified as our organic on mix M&A and slide

environment. seen driven quarters, even of have have gross starts recent and a the higher our down housing in we this fruit We margins in growth

on slide allocation. and organic towards M&A would update to growth investments, the provide capital of an we X. like to Moving capital share repurchases. $XXX over tuck-in deployed second I million In quarter,

communicated to Day in deployed $X cumulatively XXXX and $XX end goal approximately billion of billion the remain since achieve to Investor XXXX. have We our track of on XXXX at $X.X billion our

on homebuilding turn offerings. Now will commitment long-term technologies believe X new innovations digital digital across service update product and enhance to strategy. our to our greater for an We deliver efficiency slide our let’s and firmly and

to digital continue industry a a growing the the platform. pioneering We have play in made significant of in digital and homebuilding transformation role investment our

will to integrated as our is lead building seek homes. digital to to ensure affordable adoption better, operations more that made it across we have We platform a a priority create

as next-generation by these and estimating tools BFS XD customers homebuilding offering entry is management estimating and efficiency Paradigm’s our more in combines over serves process transparency saving Configuration customers our the to the myBLDR.com collaborative time our create for It customers process. and cost control improved to Together, platform. with point project building our their designed It both both allow our ultimately and technology design, model. money. their Home and clients, engagement

continue by innings investing in an in digital billion to to innovations but incremental still and to technologies we as gain solutions We out long-term our remain of are our roll partner come we at December. end ability forward will we to Investor in and to commitment in Day detail $X more sustained digital these lead as our strategy confident extend and have early look XXXX. choice BFS’ product providing our sales on in believe in more We market, the our the to users

impression to Houston, the members do. environment continuing turn BFS, of daily am More, a one she That’s and Perla service More, like to in of first our to exemplifying want an who on call team people-first our, a together high-performing, providing huge and values. Do her philosophy. May, More colleagues. to embody Build Supervisor Texas, team true Be I execute is has grateful the culture how in Before our over our our of to MVPs I why team core members challenging At Inventory heart we recognize In we the say at basis. customers I a made we all Peter, honored was organization keep excellent managers for in Jover spirit that Control for as our to our on

new team, the positive embraces industry. great pursuit lead and make the to on Employees year. proud me women others, learning Perla’s would we of first attitude new appreciate during skills had of have difference to of like really mentoring attitude our outperformance especially jump in -- the young full that she not help the achieved in and makes Without to for our willingness how supervisors The this excellence effort a team. this we half her organization. Pearl

results our greater second quarter financial detail. turn now in over Peter the to to I’ll call discuss

Thank everyone. and Dave, you, good morning,

face results our performance quarter highlighted the value-added of increased of mix in particularly the Our macro proud during margin our services. the of business by our I’m and of gross driven products further resilience pressures.

solutions well are marketplace healthy a in positioned the differentiated balance with and sheet. We

the We that and our continue in value-added I’m strong to generate in financial scale, to robust growth to sustained come. investments ongoing this capital. combination free year, cash confident of flow position lead prudently EBITDA the a and products, margin digital deploy and double-digit adjusted years will industry-leading and

this cover will morning. topics three with I you

our recap second I’ll results. First, quarter

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

quarter Let’s performance begin by on reviewing second XX. our slide

than spot, expected, due by XX%. demand a prior continues in sales billion $X.X year. decreased XX%, decline by which better the organic growing in sales. to We Core delivered be was to XX% net slower a bright over Multi-Family nearly Single-Family despite

As Dave to our in market. as time mentioned, acquisitions largely Multi-Family longer strength was driven this attributable the as the for recent end margins, favorable well lead by

X to nearly of versus cumulative the percentage growth grew other approximately effect of net year. and focus X%, past to due the contributed points by prior mainly R&R sales capacity increased year sales. and over our The acquisitions

these sales improving fourth Importantly, the of higher-margin a supplier versus position of value-added our products this represented as XXXX, net quarter for reflecting choice our XX% in quarter XX% products. of

value-add. to additional the prior $X.X billion, mainly with year of by lower stronger strength XX.X% particular overall Gross a in products year. margin and basis in to quarter, from to increased value-added to million second operations was due $XX $X.XX partially During mix points period. decreased primarily the acquired XX.X%, compared billion, the variable in gross offset XX compensation, decrease by a last driven expenses SG&A Multi-Family profit

$XX the million Acquisitions in SG&A increased quarter. by

costs total net XXX integrating on XX.X%, attributable operating sales, We net increased leverage to and by sales. points of to effectively primarily efficiently, decreased and on percentage a containing acquisitions. As remain operations SG&A basis focused

market decline continue of was EBITDA primarily remained we business. execute improved lower and a to driven million, a deflation. EBITDA basis including Adjusted sales, XX%, decline sequentially a drive robust as margin commodity a net housing by organic in to $XXX XX%, points attributable across core productivity slower the products XX approximately and up Adjusted

deflation. was quarter. adjusted from Adjusted volumes the was and net in down an in prior sales The decrease net $X.XX income commodity $XXX billion XX% income driven million, primarily year decrease net a income adjusted in by of

the of diluted in which per share shares, compared $X.XX nearly $X.XX partially offset decrease period. per by to our were X adjusted quarter. EPS in $X.XX was year added earnings roughly during prior Adjusted The share million repurchase

core quarter amid products. guidance we outperformance value-added our mix business gross in second in May, Our and supported by results provided exceeded margin the strength

durability the our to margin of percentage normalized XX%-plus. gross long-term our confidence believe is previous our continue we XX%-plus in We expectation strength of and gain versus margin at and performance, now

balance flow, XX. liquidity and cash our sheet Now, on to let’s turn slide

quarter second in, Single-Family expenditures down approximately approximately prior were flow million, Our reduction $XXX million. Capital million All attributable flow period, operating compared we commodity deflation $XXX the and to to year of $XXX million. $XXX in cash was cash free mainly healthy delivered a starts.

XX.X%, our was the on flow ended For cash XX XX.X%. while months June capital yield operating free was cash trailing flow XX, invested return

Our leverage was EBITDA was net to X.X times. times, business adjusted ratio base while X.X debt approximately

XXXX. our borrowing and until the $XXX quarter credit million on ABL, cash maturities Excluding of $XXX net $XXX was hand. availability we in approximately liquidity our consisting facility debt end, million, total have million long-term of no under revolving At

to deployment. Moving capital

approximately In quarter, total, X August share. XXXX. at million $XXX.XX $XXX an of million we stock price of second shares repurchased average the repurchased we shares approximately our outstanding have since of per for XX% During

$sXXX and while on we’ll and organic capital, authorization remaining inorganic recent from our remain sheet. XXXX. share million look $X stewards opportunities repurchase maintaining disciplined million most have for continue We our balance We fortress to growth of approximately April

to our Let’s turn slide XX. outlook on

provide encouraging the have of our guidance, visibility of Several July customers providing of year the industry. trends greater and market. Our in us the to are our and in full resilience sales confidence our national confidence with strength better fuel begun

total business enter As half the guidance as a of result, and full XXXX. we back base year establishing company we our are

by company for Our normalizing strength base profitability underlying the showcases commodity and our business approach volatility. of

base we industry. business prices static feet. normalized business our commodity our where reminder, $XXX to our the is helpful per aspects at and drive clearly core assess outperformance board a attention of in This to definition focused have As margins sustainable assumes X,XXX the

is on Our base $XX.X guide sales billion. net business

year roughly EBITDA of business $X.X time, company at total XX.X%. are net guide total adjusted base and full margin. Our margins, gross this we providing for EBITDA margin At is also a including billion adjusted guidance XXXX, EBITDA sales,

$XX.X we $XX.X XXXX, year net full expect For to company total sales billion be billion. to

to forecasted billion to to We margin XX% we be are to EBITDA expect a Adjusted of gross be to $X.X range XX%. $X.X adjusted billion. XX% guiding to EBITDA is And XX%. margins

required margins with costs normal reflected disciplined our recent inflation. along to from value-added in products Our increases pricing operating offset mix in greater above

half expect of normalize. continue year, As margins we to second move business gross we the Multi-Family through the both and to our

We expect cash full free of billion. flow $X.X year billion XXXX to $X

commodity cash average free to $XXX. $XXX flow assumes prices in range forecast Our the of

Our release of assumptions. of on XXXX full to a several these outlook assumptions. is for the refer investor earnings Please list based XX slide and our presentation

to As wrap I exceptionally reiterate our to strategic well I up, we drive want that goals. positioned are

Our illustrates this years momentum a year deliver that will sustain adjusted belief margin our guidance in that we and to the EBITDA double-digit come.

to that providing best-in-class continue revised of substantial sheet. business, positioned long-term flow, to of our healthy gross financial our As we on generate or an I’m our upwardly XX% confident reap already normalized flexibility the benefits further of platform cash transformed operating achieve continue we balance will margin are free to higher. top

will shareholder we and capital maximize Importantly, to value. diligently deploy continue long-term

that, turn final With for over thoughts. back me to call let Dave the some

Thanks, Peter.

Let today me did than close we we the by building better feel the of saying about beginning year. at environment the that current

invest continuing strategy growth. to our and executing to future We’re drive

that over productivity our first win Our half a operational and to any is headwinds. proud build reflect years platform few which I our up profitability environment. the in excellence, hard to am of past market safety, BFS driving work in set results despite increased differentiated the has

positioned stabilize, today stronger are for end We position we as future. a great markets in even an and are further

technology of continue game to be forefront I’m for a the digital industry. our which strategy, the at will with confident be We’ll changer

upcoming are well there. share you in December to in Day to and positioned shareholder Investor this look Xth seeing We year exceptionally drive to our on I’m and Atlanta come. details to value excited years at more forward

open Thank the questions. joining us now for let’s you Operator, please for again today. call

question with first today comes Our Barclays. Bouley Matthew Instructions] [Operator from

with morning, gross questions. for congrats question consecutively. which the Thanks the raised everyone. now the start Good on taking on long-term the guide, twice And you’ve results. I’ll margin

of So, your past kind my to for question incremental to what’s step you’d to or are you the in looking given XX% of the year, take what changed this of forward, step you yet from signs -- be kind confidence that’s another then, given XX% step in And higher that that another gross is, days of in give XX%. margin course, XX confidence?

question. So, I’ll pause there. That’s the first

it. all, of first Well, thanks, Matt. We appreciate

of market’s really margins the terms about to right, -- particularly excited I ability business don’t continued very we as supply pleased to to were have continuing able that. the normal, what is and look has for, overall think of we of talked the We’re this been a the what back certainly concerned about core with getting evolve. and strength alone in business chain margins. been post now, the with grow We’ve we’ve way it do to gross mean the impactful. particularly normalization, reset about years the The to the and for to merger our what in year, of business, were well, a would value-add mix couple of we’ve And been that starts, level actually. sustain

points regions, quarter What commodity of saw versus due we’ve a in talk of normal sort this the would to a things yet, of categories a we not stability the about Again, performance tailwinds. the certainly we’ve I market, our level. of bit parts as this looked this gross Multi-Family, of to just lot be hundred is lot really margins, to basis cost get being a and transitory least quarter, can of level seen be while the And tailwind sort lot stable some product due was established a out. describe way it timing, quite substantial couple seen year out for of At there the misleading. we of a at commodities little what contracts. When a where we’ve of we’re played

continue Obviously, We’ve have the signal want seen permanent. and don’t know of normalize, we’re that it. So, And to we certainly that. sure but the to with is certain still where pressure we’re to it. anybody where that’s things will not we’ll pleased end up, areas things down. market we But we quite take

We’re we’ve of We than played that’s have that pretty look said, we business, of you and margins indicates out and invest pretty the some on even that in to really, out, really to it. that. going desirable -- But confidence to it’s we’re core, be end better of to we’re see certainly, bps up obviously, in was for left I We’ll what the But better that with if and performing we now, all normalize expected. take means monitor forward. we’ll XX wait normal margins. time. that’s good it continuing going decent and because mean, feel about certainly overall things where just over Multi-Family, going customers, value-add, the the and a continues than gross the gained builder step-down to in strength lot we’re much that at which how and thought our for of happen, strength continue it’s continue for our what to plus we think

our period And that’s Matt, the fruits over with going merger manufacturing how in and add, to BMC, over feel since longer the invested Hey starting would as better capabilities, contribute margins is the to $XXX getting a I again. we’re we’ve of upgrading This to Dave. just we’re million and thanks well. that. automating see of

answer, that Thanks, helpful. very guys, comprehensive Got it. for

you’re base the what $XXX guess, but the I going Kind don’t this you address that like in much is mentioned, base of cost maybe this Multi-Family if to kind some there’s, of timing, I rounding, some you. know, question. business, of roughly commodity base maybe million business? it side How anything Thank into on the saying Peter, -- So, Multi-Family else looks zooming besides of OSB? above you of the could is there earnings commodity break down that’s that other And year. commodity, there’s above next

question, good No, Matt. Yes.

take trying a normalize for not lumber also base those reminder, that’s basic is just same to normalize fluctuation two the to out and we attributable for, just $XXX commodities. in really we So Anything right? commodity margins business ways, any

$XXX some for we yes, attributable the it’s margins does you else, normalize year, within that’s impact this And Within rounding. don’t that but margins. $XXX that there’s you margins. million mentioned that have particular So mentioned, mostly that to it that anywhere million

a So, has those outperforming the is vast the is the of year. certainly over majority of through because that normalization flows them. Multi-Family, There roofing, our trusses significant course what it’s is the piece from well have the of component the So wall into right? flowed panels, of a obviously of products, a commodities as that commodity as component including margins manufactured of in floor, which

for that. adjustment So, we take an

So, is the attributable this is primary change margins that the driver year. the to commodity

comes next from Grooms Stephens. Trey with The question

the echo the I’d work outstanding Yes, the quarter. congrats on in

Thanks, Trey. I it. appreciate

Sure.

think to So, that that expect strong mentioned this on I remain you through you year. Multi-Family,

you anything hearing is -- kind more coming backlog or time of kind timing just from their backlogs around this anything of there, or a of and kind the your would customers on at about this seeing high-level in suggest that are is So, your anything that or expectation point? slowdown Multi-Family that that

Yes.

around tail time. lot of lot be of And that come online new evidence the going end that factor. to a would all a online. these before same We projects be the are our year to there’s at in that digested typical of year, one That’s have other supply from this a customers at seeing comes

at some online little that kind the dynamics of well. themselves some -- cost openings glut that sure exactly to work factor as to And out. to going of capital, until that make generate the of time a out bit right to the of year, that end has have or the Those capital. rents cost that able gets that equation the other digested. work of And comes of it of versus The is of being they’re

that believe in feel start The So, these problem, long there a to know, a that in, first great segment picking bit plan temporary like and there’s back of something necessarily be second scenario, the will to again. will half worry and a hearing quarter it we delay is then about. But and the from up Multi-Family as what year. projects next execution not is of for the overall, things we we’re so be we little are might term a in long a lag be going be got be you us time in to first to

Right. Got it.

through Peter, year. you And margins mentioned expecting Okay. to gross you’re the moderate then,

if XX% missed out this, you’re I Sorry XX% to the calling year. but for

You’ve running XX% been range. at the

more in seeing still now? you high normalization the the at of are for far thus margin in that or quarter, any it or any So, in range change the third end of holding is kind

Yes. question. No, good

we to it -- goes again, the see So, trends. to countervailing continue

then we accuracy in see commodities the know margin, of gross of We where the pretty this back continue to out of think contracts were price current half And play the to core less pretty just that will related see I how -- purchase erosion we’re of it has the we’ll to with year. Multi-Family market kind at. and timing reasonable because continue some but expected, and that continued, through than we of the

next performance got pretty July significantly a I and good but same been Certainly, year. is gross trends we’ve look. there’s year, the the of pretty significant So, throughout overlay in different, over with don’t remain decent the normalization the the think being margins Multi-Family’s

one fruit, said of in that have you kind I as or amount If which time? you that Where little we where would about you. is level. the over you automation would that billion in, that a are of Thank plants Great. be automated? And you like classify over bearing higher invested you which pretty few how bit last could $XXX clear. sneak is to more maybe more so in think should the or process, years,

prioritizing of where pretty and have some really long more we we level typically, of upgrade that level projects. opportunity, about the excited we’re have continue runway ongoing. with and a acquisitions, and feel to those every Obviously, tell of in a And as and automation plant you would about know, automation. that we’ll there I we back acquisitions we we have do to good you, there’s there’s Yes. go improve, as those has automation plan level that

customer And automation as excited it vendor. to as about we’re about in foot we’re always technology when our our as for this good well. much space talking also digital, comes on a We’re manufacturing front

yes, So we’re where to go. continue can about excited this

question comes BMO from The Markets. Ketan Capital Mamtora with next

Thank you. And congrats in on at the this what housing looking to a your strong M&A seller start expectations? quarter. A how And of in couple sort of M&A at any approach things. or there you held do has year, pipeline than point? I’m sort has the change the given of just curious, expected -- one, what of better been people is

question. improved. Thanks the has for actually Yes, the pipeline M&A

out, just was think sideline the the play how the people exactly changing at year and kept fact things beginning to I for that going on were half. year the weren’t of sure the the first people

second now M&A like how we’ll opportunities in a to couple good And look are to in invest about half excited We’re the future. we’re and more continue seeing at. in feel the really we that

been July Got July of started -- or talked QX to you Peter, well. it. Is about to even sort any there what way it all at quite the of relative trend maybe has of year-over-year? sort is quantify sort possible like off And

other describe to it Yes. a know don’t refreshing It’s than been year. I how --

through it year quite year. seasonality capacity. nothing but run has been of affordability, Same and months utilization throughout big it’s to the We’ve with we refreshingly well. due alluded to the been a our We’ve and the to certain For they’ve has by there’s quite as consistently regard has due gotten and market a be pretty move gotten the bright busier areas the reluctance out with able good around progression during with little leaning well. in very good came catastrophic what to building. of It how into has with interest rates, customer areas, our in that into concerns they’ve spots the and that vendors, large, been still really would existing of normal to out of where that on been obvious tight, expect of all demand performed they’ve a our surprisingly we’re in adjusted see with a there base, new been well. to we like we summer. see sold quite construction here is And Few seen volumes but We confidence home, the there. lot seems Nothing’s the spot, overwhelmed. And busy behalf really new the COVID. sell to to that an normal excited year, through been the and to

The Baumgarten comes Adam with Zelman from & next question Associates.

environment. Just a question on the

for maybe supply the the seen in cycle strains? an about any construction year-to-date, With hearing or industry are for Maybe specifically, times ramping you’ve builders? starts you chain not you guys but extension the for

Yes.

to the normalized a chain extent. has supply think great I

when premium are an not COVID-related the categories but times I versus lead of There’s still, extended, there. things that windows is or think seeing a example, saw we’re where -- are couple of anything normalizing. out product issues, magnitude you slightly

demand, those in staffing very is a the by the new some of with vendor our getting and slight. lot temporary back there look partners and of normal on to very up adjustments uptick to Now, demand, staff be but

shape. would in supply a all pretty good perspective, chain we’re all, I So, in from say,

channel more Good product it. were out And some around I there tail R&R just in quarter? think increased And any and switching capacity you also as in the color maybe the then hear. to Okay, that just that. got a being R&R the really then stood categories business, to had strong mentioned gears particularly

Yes.

focused most the R&R, R&R part, chance. where way the and we’re markets we Pro new on Pro But the the through cases. both a the specific very we R&R, serve few same So markets service are it construction there with for

heavy with has end construction the pretty years, you’ve you the new come the the other. up where from side. obviously, of demand And of from got one or certain it So, lines bulk time over past couple

business. R&R of provide opened as and bit, box that So a in generally traditional And with would to we’re contractor said incremental us just or they we if Pro a available prefer expertise the because versus that the big the up use past, services pullback Pro more player. capacity, small R&R I a all

outperformer business, The That’s products performance and Pro across categories, continued products I R&R. and excited the stepping product the for outline for within family the an say back we we’re just category. of really windows, performed or nice to of doors that. I pretty would year, about categories, see millwork whole say, been would the in us the well we’ve all

next Mike RBC Capital Dahl The question from Markets. with comes

First on few there’s question pieces. been big Multi-Family back Obviously, is kind of side. the moving a

some investments inorganically then, made of as that both organically percentage a Multi-Family mix market overall increased. of mix the And has space. and -- You’ve in

You when versus more I quantification through of new kind And there be think Maybe permit think activity can Maybe or not next alluded and just that’s you Multi-Family of market it’s sort you a your normalization. been in think, I out look ebbs margins mix color? what year. off, shifts? would has And some help flows? don’t framed dropping you you best at as if and you normal kind Multi-Family, to quantify of now sales, what looking the little to internal know

that in of Yes. marketplace. the is and even in we’ve Multi-Family We’ve competed had terms the successful, right change lot of No, your invested in We’ve we’ve lot, how core Yes. very point a category. on. in been business a

a overall big has the change and into the of in market of us. change that this kind impact for our a big I been think leaning

sky mix, Multi-Family right? it’s So a to scrapers. attributable largely but mix it’s increased So not truss, we’re in that’s that

the network capacity and That’s in flows. large-scale are withstand market if think been we been certain to our We’re not even a of That sweet remarkably below in I spot. frame positioning sort constraints the shopping be well. country. deliver improve counted And as some facilities our our sort can reliable We’ve four-storey of competitor. serious, the seen complexes, in our arena structures. or ability on of operating to wood apartment doing ebbs right? and and and We’re able got be malls there have to around We has through

us of know And together even we we’re all of we and -- do in to bought We momentum some share. the come we sort gained share, nice that really we’ve true, middle give really think do think we integration. is that that though So, momentum. has

So, to together. still teams this getting early days all those in is us of work terms for

what we’re the holds. really excited about So, future

in probably you dial normal an that, reset. of probably right in think as but it’s get it’s for we directionally, in maybe year, world. we’ll a probably the Now, we’re normalize, We of you, into to that XX% beyond in today XX% next about sales that are when we’re things like back seeing environment closer half

versa. I into that Single-Family were Yes. and we entrants We vice diversification that acquisition just would would when that added Multi-Family a purposeful from play add. and be it segment, knowing

expecting is expecting as So, footing. Multi-Family we’re normalizes, what to stable we’re Single-Family on remain

good Multi-Family it what -- is of truss the so a can in plan. we jobs addition, In run makes investment such world, truss us a for out Single-Family

Single-Family Multi-Family plants out that jobs have we do today. more side of that we versa, are work each our run when out, Multi-Family capacity. and has they vice maxed So, have than When we plants

So, in both flows we’ve those manage plan all we ebbs businesses sides of to got place intentionally. and and of through did a so

level. differentials a time of That’s simplify Got a product category, lot in second spent the of kind it. just XX% normal, plus just Multi-Family at you. then this us you’ve question, every helpful. you’re can legs, high about kind high talking commodities, not you help on by Thank level Maybe terms margins. at my level, of between when high a a Yes. dissecting of necessarily but now between the very And margin

do be? it lumber? kind Just any Is blended at of -- driving level XX%? where you margin on and will value-add of like the think a a a new high Just what’s kind low-XXs XX value-add your

Yes.

value-add about think high-teens that margins We running was So, the kind if you We to talked margins. were gross running we’ve kind that. kind low-XXs historical the XXX -- XX%. we commodities talked basis were higher X,XXX were about of XX% generally how gross of about how to points for than guidances to of we had,

some I of we in today would are of tell kind the you it. noise with where

higher, the for than is we’ve increased to just some of on substantially pay seen talked increases the about the cost But we’ve in delivery lot, across So The the order inflation, increases to seen We’re need higher right? value-add. that board. to reiterate, higher also the a of board costs. if across we the margins sort be

half higher, then, the you’ve some mix in a to to has to used And old third of further across cover in the seen XX% about the Multi-Family, which to that we business, that. our we’ve increased seen gross causing that business third pretty it the have displacement board So, And overall a more side drift impacted increase swings. shift did things normalized days that margin margins from allowed the away stop. up the XX be productivity. mix some you’ve commodity seen further we’ve incremental full two really -- to and of to the the to what our closer margin substantial most and of is talked be And now back to what a

that feeding the signaling, all to get and the normalization. going watch of allow are right, those us play from the to to is XX%-plus continued we’re for mix that is confident. the of XX% But sort shift full dial what see XX%, guidance Multi-Family. again, in overall out, midpoint, the the So, to inflation, components higher down productivity, That we’re year we going in as continue amount. to for more that that the we’ll And is the

from Steven Group. Research The Thompson with next comes Ramsey question

go this is EBITDA $XXX with conversation EBITDA million. connecting base dots, down the savings million and along productivity year’s the continue If to $XXX saying productivity. you’re and wanted each then I midpoint sales the I’m the base

if of the savings, math like I with decremental is in, this of year? future midpoint low-XX% look level as to a flowing range, as years the be dollar that strong is mean, margins in productivity my going out productivity backing So, correct.

how we and well, pretty be Well, better, see it’s how process buy, the inflation, can buy, we we continue setting can to confident every it improve, we’ll we we’re this internally, for deliver way impact back certainly that leverage those office, the goals what to what where be certainly those are year to we’re are all year it or we’re lot we’re to shooting exactly offset think things for. our ourselves. improve continue continue headed. operations, whether projects of the we we of that have Internally, we Will we a that it,

a platform given across and how to the of multiple the acquisitions. we’ve We improvement there and believe acquisitions one take a of take from those ability our a platform. best there’s best learned We’ve to huge leverage practices XXX-plus culture. the practice of it our opportunity locations from we’re continuous built product And --

be people do that to each because area have of for one locations purpose, market. to best the the part across XXX -- it or it We the dedicated in scale benefit in versus we divisions way is our very to able our that believe just of one

we’re confident year of at the achieve each period set that current we’ve the we for So, ourselves improvement levels future. can in for a continuous that long

other Okay, And on much is sure business? productivity much And of that maybe the more of is much manufacturing then automation versus side on side? of helpful. is from general how that driven coming savings, how distribution to that the make of the improvements? How the

Yes.

inbound in So, the operating versus sides. getting we’re the what probably and half on terms the it’s of sort of half

both accumulate of in We’re right. directionally, a that it’s probably of individual projects But bunch doing contribute. sort a to lot with

The Bank. next Deutsche Joe with question comes from Ahlersmeyer

backlogs quarter. based may wanted your visibility just into just have inventory and the this -- to I you on for your Multi-Family

and sales phasing of EBITDA just quarter third the margin help on any maybe even and fourth the Just versus the overall quarter? gross

more This normally, lower likely it’s it’s think we we a normal. better on seasonal would X representation. Qs I the just as based bit X. I fourth X think and a Qs and what quarter than and said I X are think in year, perform Well, always before, to be

a that’s one quarter forecasting pretty QX little my a two weaker of part confidence weaker. feel the Certainly, be expect as gets quarters out, bit it’s we to would we murky. more So, out, always, good;

to right maybe think So the way it. about

making the But then productivity on come on the And inventory costs additional down could down see the where go P&L. actually way looking spring you’re you stronger that’s I market? to and balance, have inventory market, you’re there gain sure the in or commodity it preparing, seen through XXXX, in that we’ve rolled hand balances, have the we Understood. given the inventory come guess, for service to as what is on a other

more probably the latter. Yes,

chain have inventory teams of continuing excess millwork and So got or performance. observation by really have that we We’ve the a we years, is absolutely absolutely great inventory Operating out When capital clean up the of just-in-time I’ll have in sort your last correct. we windows fantastic teams post be job done that up, -- the it on grow, to had out we the streamlined craziness whatever, over on feel included. couple a supply whether of in managing our you’re But rolling or facilities. of clearing we’ve start great tightening very way, hand of had the saying of more right. job done a working

growth on that usage into and coming being least the see, what being stop into tailwind we a based do start So, right where the on group. expect capital future now, seeing we’re to horizon, the at we working would

next Verron Jefferies. with The question Collin from comes

-- could Bureau between guys differences seeing here. in public acceleration bouncing you point, production BLDR from builders the with large you’re just the the sales this off highlighted on behind the talk I your Single-Family this was And Single-Family the orders really builders point, at comment you smaller Census see at You’ve any this from and in builders. do data bottom bottom a and a then the hoping the particularly customers perspective? about being

really of year. builders both about more and results rest public that Well, our reporting were we the the encouraged even by for the projections were certainly the

environment. that over half calling able in confidence back feel of that better than second this gave project confident the So, -- us we everyone And like to year half but that certainly expected the stable it’s being not again, to of for up really we year. robust, the what we that can do we feel and over the I’m have the

in your in quantify are about talk opportunity? That’s guys helpful. reaching on and guys where in you takeoff journey sales providing some then that of Can Great. And digital figures. maybe good provided those $X the billion some you you color terms revenues adoption, just

Yes.

modest. scale focus. is technology right the That’s capable pilots We’re at tuning internally very, like that metrics of of the it’s not revenue, we sort this some that growing are the excited and It’s is now. honest. along. year’s coming sort of The intend but that sure a tuning. continuing few focus the to about but well about stable got goal. some really very going have be We’ve and what given is digital. pretty technology, what making through all we’ve looks to It’s completing hints we it’s move put It’s technology not days, it. running The built, The early It’s together. to and

that and We’re certainly information beyond. on we pretty Investor ‘XX the Day in in and And we’ll significant expecting layout of the December. into of increases more as timing get have some that our

comes question from Reuben Company. next The The Benchmark with Garner

again I the quarter. Congrats some issues earlier. strong guess, on I had connection

stands inventory inventory. dealer peers, of hesitant perspective add. repeat Can in or how that of was you you running I So, something and inventory? than sorry, usual manufacturers you’re first is smaller folks now? Is volume are both that kind an distributors thin some about question your that are the to and kind guys where the heard channel times? are it’s normal relative two-step anything, We’ve talk on you a I some thinner is advantage to of you where But if kind from advance. have over your just viewing stocking historically and curious product of from

we’re right? I of not running COVID. challenges normal would seeing It’s supply did just more environment. I after say kind we we’re normal, of a think operating same the

through job Our to coming unbelievable normal for back us. done getting of an and guys have that

with we be fluctuations now. seasonal where just would We’re normally

start as usual point. we as wane during of see kind head to the of we’ll the into months. will business But at quarter, a this inventory So fourth quarter in it seasonal the third and buildup we’re

asked, not about on then,, lumber think And base that does there. an revenue have how to But got higher, to to business of if $XXX know I’m sure we’re continuing way this much one great. run updated out an I Okay, you’ve the and sensitivity was if but lumber? impact profit?

Yes. That’s Reuben. question, a good

back. bring noticed much clarity. sensitivity in we that business back the confusion as we brought that have base may guidance estimate, back and Candidly, as did I chart You not caused the think but

going try different a to approach. we’re So,

based up seeing What this by if think I between in today, can $XXX, we and really what we’re goes or worth tell annual million you, EBITDA. lumber on is it’s $XXX and down million $X,XXX, $XXX

down order and show results, before delivery commodity use about of right? I normalized to if are: sometimes type There as thumb assuming in just it’s in need assumptions into in that’s think specific right? that and up of one, to midpoint, of impact that time, change are the metric. The the two XXX the little as mind, the bit through. -- then, takes you ground, months, flows important margin the You then that it’s that that there commodities. in a keep a It’s So, range, inventory lag in I normalized two things our of longer pricing change a rule number the three, but And please up will on go keep that margins. that impact four mind, are of most it

EBITDA. those million annual assumptions that million of to worth rule But that, of are So, mind, just very keep in two $XXX and between thumb. lumber $XXX critical $XXX again,

And a clarification, lumber Peter. altogether commodity? that quick Is and OSB

a we XX-XX Correct. And assume mix. OSB lumber

Davidson. D.A. with Yinger Kurt from comes question next The

you’ve what you traditional in competitors, of guess, Are strength products. guess, And the given the kind the a do I about with distributed term, terms of long I more kind differential some seeing Just differentiate lean the widening invest in extent greater to behind versus talked of, there? value-add about ability how margin think guess, over of I those you in your to category solutions? or and

Yes.

the significant We -- tough was a -- specifically marketplace. we’ve a is required out have in we that difference. people manufacturing the lead. of made saw we productivity, coming put not had think our to our to backlog us with. it manufacturer where the in to extend a all. And we emphasis I they that to door the the people it that And and in wanted saw increase we’re made ways improvements has that space, have choose We investment commitment type believe those business with our do business truss shops wanted insignificant. we’re we believe clear of on do finding And of didn’t customers do in wasn’t for -- and first to COVID, leader most most environment. to to find see the that pick our where us truss And especially to who and

about good feel our position. we So,

going I -- competition on it think think for I we’ve you a to where will catch be nice see us. opportunity, investment. lead people them us such today, are got for to our just tough make anywhere

it. Got

frame as And performance Okay. a you’d would it how there kind of manufactured first mean in the relative how bit. just guess hoping your products footprint, That’s Single-Family sales then organic Single-Family over what trailed to characterize points. in kind pricing helpful. seems the seen just Curious reconcile well, maybe of some I you on like those that’s the core start side. different starts half volume I if and you there data we’ve second, could I was And just

the and you the we’ve of And it’s turned think I is best over much No, it most seen best that’s stick look question. a don’t something market. what indicator think It’s as the to market sort as pretty sort What performance down fair down, didn’t our know. the a starts down for as boils time. is at Yes. measuring I as simply of quarter. accurate regularly, we at we go are

as towards we bit said probably of gone the in start. there’s beginning one-third little a the past, with start, turned has the the haven’t up, that, towards of leveraged the market to that’s And mix market. we’re do We’ve up the the As right? two-thirds end as product much of

So one piece. that’s

we’re not is know Another the of it at start. that We probably the start. at not we’re

XX, We’re job hit when our later days from site. to sometimes first anywhere the XX product starts

So, little in timing our terms hit. of of a bit shifting that of around orders when

estimation, given hundred right a Based million line the during the We of dollars in lot of little time share bit big pretty a worth. talked on bit have that how our in thought supply a of seeing chain feel disruptions where now. good. but customer little up about by at the having trends we couple others We we that’s now, we’re seeing probably being the and a giving advantaged effective more we struggle. we meeting were as anticipated, we’re of needs numbers kind of back And you’re product more may

good pretty we So, are about market. feeling the versus overall where

The next question comes from with Jay Wedbush. McCanless

not lumber I The seen lumber, we’ve goods? had, are starting framing take only be able on question your you value-add of for some prices, starting price but goods, months. to especially the move first the guess, to on couple to up flow sequentially into I is pricing also commodity that last

it only the of hear because that, Like on to durability the will though skeptical but a in, it much little We’ll to keep follow some year. has I’ll see. bit of about is one see always, has it next We’ll been online that coming on pans it but something yes, and I certainly on. that so one modestly sure. to big we eye capacity we time basis. take mean, OSB. I’m over a personally an started is point fully The where move movers feather out, incremental that on consistent the certainly make

see making freeing and than Okay. at beginning been people may willing some just a or underwriting the more That’s some of of acquisition sell the on they bank question, tightening this terms of some Is M&A standards have to be way. your And hear. year? targets? up potential starting that second in to might of lending the Are phrased you to different then good

that. say lately, reasonable makes been we a would factor. That would we’ve start that hasn’t that been to see looking what sense I at

Manthey with Baird. The question comes next from David

an one benign Quinn pretty is Dave. And than or commodity to same Fredrickson then, think slight the like I’ll assuming and question are expectations back change made just on you structural improvement the This environment the due dynamic here. in Peter, ask sound moderation? contracts, and lags remained better expected. you the comment gross with among for Hi. value-add is their competitive Do and a half that’s margin it competitiveness earlier Yes. in uptick you your has for there? there in price competitors

So, be careful I that. a need to how little answer guess, I I

hand, competition in margin first have erosion seen we full the period, incremental core stop. On and business,

as not Now, outperformance it’s much the It’s we not much hence as in that as forecasted, as expected. area. we

been competitive we’re need the which increasing that would value that lot it, customers of within safety improve their that’s that what site see cycle to need confidence leveraging a volumes that that a the in I site times, there’s strength and it we’re value-add, that meeting them efficiencies, say they their us price in to to do do job at they’re their allows better. a gives our job point

So, competition. we’re all with pleased and the certainly been have that of seeing

or to done you Now, market, others structural where But the margin gross cost, if that investments but lastly, we’ve those costs as I on the has you we’ve overall of is. a little work. of also components made, to impact whatever got lot cover the a truck or more then included, wage make think seen, well, but we’ve want inflation had certainly, a us costs incremental that the it

on all more efficiency sometimes on strength are allowed earn of the new seen equipment, a those be that it’s but We’re year-on-year much our that layers more has and of it same equipment efficient because better that facilities, the just we’ve sometimes automation why same new things And us is and it’s process. equipment to whether self-help improvements, sustainable.

point, the to sure in-full can can want always are who time make money more going do by better our we’re right? good quality on quality for to and these more being others competitive, that time. helps and where high builders then think houses Dave’s better, to reliable We choice And struggling. be us being make still or if it I on are that partner of be we is their

for for major And example. price. a on houses us XX for price by our market month to we try back the They way, those we, lower at would customer same had a delivered which of just than truss XX someone days. a In real-life add later less came I else a inside houses, a XX

us, by generated money proposition. and best or to want do and to that’s to So, allowed make recognize do for value we that we we customers, able them the And for being where what they our us that’s be. stickiness

over today’s additional the conclude does for now any closing remarks. question-and-answer back will presenters program This to session. I our turn

very much. Thank you Have great a day.

Thanks, everyone.

does Thank This conclude program. for your participation. today’s you

any may You time. at disconnect