Builders FirstSource (BLDR) 1 Nov 232023 Q3 Earnings call transcript

Good day, and welcome to the Builders FirstSource Third Quarter 2023 Earnings Conference Call. Today's call is scheduled to last about 1 hour including remarks by management and a question-and-answer session. [Operator Instructions]

I'd now like to turn the call over to Heather Kos, Senior Vice President, Investor Relations for Builders FirstSource. Please go ahead.

to quarter welcome call. and morning, our earnings third Good Rush, call and With the Dave our me on CFO. are CEO; our Peter Jackson, earnings Investor website The and available release our on Presentation at are investors.builders.com. press

to separate Investor our We will from refer Presentation the during call.

GAAP include directly results certain in non-GAAP non-GAAP results informational isolation be comparable considered purposes, and from today items. discussed adjusted provide most We GAAP results measures. and The not the these for for they should

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

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

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

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

Before Builders I FirstSource to we Heather the team. want to formally begin, welcome

leading her a excited someone are have of which knowledge critical relations, with to decades and experience function We here. welcome. investor is deep Heather,

our put have several strength our we value-added of over to volatility caused footprint third the reflect operational by place Despite initiatives years. on QX Now industry the resilient portfolio, performance. results macroeconomic headwinds, quarter our in and past broad

attractive being in as our remain and benefits partner drive outlook challenges strategy and in we we of margins. executing mortgage our customers is continue best mix rates, due our XXXX focus to to the and our healthy inflation investments This confident multifamily. for on increasing our growth. long-term While generate the proof of We remain to product

our in and to increase efficiently, create and continue loyalty expand flow to cash free footprint. the customer We invest business robust more operate

productivity in efficiencies customers' well challenges operational automation address We improvements. investing excellence, in process are our and including and now the as driving as our supply committed future. to savings are helping chain into efforts and labor These

customers during year are quarter. by deliveries and third us. customers highlighted We and On infill XX% our building last to material from time, deliveries time reduce which loyalty the our is in the their XX% improving have the ensure at cycle times, helping right trust right our infill

custom help leading We are investments [indiscernible] value-added our build we efficiently. position M&A a we solutions our accretive have improvement mix in value-added These us desirable and our achieve business. to in market across driving share will are organically and coverage in higher-margin through enhanced as acquisitions the help more product products these grow

for Our strong cash deployment, all towards multiple capital flow free value. provides shareholder creating paths

our a to we runway Given bolster the tuck-ins, acquisitive disciplined remain opportunities. of long the potential on will while maintaining highest return focus potential growth

our multifamily Looking in Slide approximately to margin margins value-added a our products, at improved mix business primarily our third due normalization margins, sequential remained X. resilient, including core have Despite stronger was on overall Gross down only XX% basis. quarter efficiencies. slightly highlights and on mainstream and and

strong, is execution field highlighting environment. dynamic talented team. and a manage reflection margin our challenging a EBITDA focused our adjusted in Our and to remains effectively operations This also of our ability leadership

effectiveness million delivers system, Turning of the during and people, across This operating the growth. generated building by which productivity our of to X. We Team $XX excellence BFS Slide value savings One strong business quarter. the reflects

X% in X% tailwind contributed sales recent compared acquisitions this the year Our of an quarter. increase and prior EBITDA to a multifamily quarter. Multifamily in in remained

quarter declining of the the second of for before around remainder In fact, the strength year. to next continue XXXX

needs. need for expense the optimization and future capacity ongoing management includes of balancing reductions a our This footprint area. SG&A remains the Disciplined against focus key cost

on focused strategy discretionary in for our are the long the executing has while term. and our our managed responsibly short team spending, term costs We

results such reported the industry, and have providing by our challenges incentives builders prospective as interest to national attract Regarding buyers. resilient ease rate affordability buydowns

of traffic inventory sale to for homes existing also construction. steering is new limited The

to we affordable. will we our launch As continue value-added and emphasis service, our digital customer more our expanding mix XXXX, faster, efficient look product building make to BFS and tool forward maintain on our best-in-class more process

Turning to M&A on Slide X.

of have to remaining million. target while third X we prior attractive the year opportunities quarter, with completed We financially sales Through disciplined. roughly aggregate deals continue $XXX

we manufacturing Cash with & material trust Frank's Carry, distributor acquired a leading Panhandle. the September, In in building Florida

the which help expanded in market. area. We the are And to in our this acquisition members team we us the will family. acquired welcome with these We're in BFS quarter, to the talented presence excited grow earlier builders third new pleased that Lumber Church's Detroit

Slide have mix shown on M&A and X, product diversified organic end markets. increased substantially As our value-added our investments and our

fruit market. the seen in gross of this quarters down a housing have We recent through even margins growth in higher

on X. provide allocation. update Slide to would capital like to I an Moving

at the $X.X and December achieve of track our remain Investor our third deployed shares approximately million the billion over line of our prudently During on strong to to in sheet, $X billion capital employing of XXXX balance and XXXX quarter, of X stated made capital maintaining We since as repurchased XXXX. Day $XX acquisitions billion priorities. goal we with end communicated while $XXX tuck-in deployed cumulatively in

update let's our X for Slide strategy. on X turn an Now and to digital

to product the homebuilding innovations and We greater new are across drive digital in efficiency industry service generating offerings. our leading steadfast enhance to in our and and evolution our commitment

digital our team offering priority As to create Taking and customers with proprietary our clients transparency and over our money saving homebuilding gives for process, improved engagement both we configuration and making adoption more to full it homebuilding the their efficiencies across building members and personalized. our for operations. the process. this entire the forward QX, our designed in we in tools, look bldr.com both meeting more and control product to our while customers process time launch is have On customers by drive made a

partner industry our as adoption we for and our quarter, to and in extend upcoming These third prepare as are efforts development product the our forward milestones incremental at our the the next look attain lead the billion reshape sales Day sharing of We with important goal full in our by of Investor in more $X product you launch. month. market we to journey XXXX In information and million. continued choice

goals. every she's held roles we over with Dean, the earned of is ourselves Carolina people General full of our her on her pride opportunity BFS, the At taken to nickname, South more than helping career achieve their Susan our Manager she's the who advantage team presented BFS, has various Florence, member years growth Through recognizing location. team XX her see make manager, team promoted and different our happen. her to Sue and problems all ability exceptional for In Since Dini, solve achieve led at them. Sue empowering being here stories BFS. potential excited results ways, Sue's the grow by has magic to members' to that members like me as her location can made general A

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

Thank and good morning, everyone. Dave, you,

of Our third model the operating quarter volatility. face results demonstrate effectiveness macro our in of the

deploying and which the balance highest We during are share return included capital maintaining the to quarter. repurchases healthy opportunities, prudently sheet a

financial strong value our leveraging advantages creation are and future We for sustainable to growth position shareholders. competitive our drive and

topics you this X will I cover morning. with

our recap quarter I'll First, results. third

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

chain XX. delivered organic over and our driven billion a sales commodity net normalization reviewing Slide sales by begin third decline quarter supply performance decreased on We $X.X by in prior to XX, year, XX% X%. single family the demand by of Let's approximately due or XX%, deployment in slower

acquisitions well longer by Multifamily grew by as for lead as market. to over recent largely and X% attributable this margins, favorable our driven end time the

sales grew R&R capacity the other X% focus versus year. amid prior and by and over increased

effect the points acquisitions to approximately X past our net cumulative sales. of over The contributed of growth year percentage

since Importantly, X value-added this the of for reflects Day products. QX these XX% increasing of This as represented XXXX. points our sales net higher-margin position Investor in quarter, supplier choice our products percentage

During to to Gross core normalization margins, year decrease of decreasing compared previously roughly billion, the by discussed our gross in XX.X%, of XX XX% were multifamily was organic basis basis $X.X approximately a gross the points third due points XXX prior quarter, period. margins offset profit overearning.

million million, year by from $XX inflation. operations to last million in of SG&A partially $XX in the by compensation, to the mainly additional due acquired $XXX increased expenses decreased Acquisitions offset variable lower SG&A quarter.

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

and million, XX%, Adjusted basis up net $XXX continue a to lower to driven points a across down primarily drive margin was commodity EBITDA productivity deflation. business. market housing XX by we the XX.X%, execute robust and remained approximately weaker improved sales as EBITDA sequentially Adjusted due

to was The down million decrease year $XXX net lower XX% the sales. largely Adjusted was million net of prior income due $XXX quarter. from

the per On earnings $X.XX, in diluted was Adjusted $X.XX share basis, prior $X.XX share year XX% to period. share. a added down per roughly repurchases year-over-year compared

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

compared operating and a year quarter period, deflation Third the $XXX $XXX to flow to million, down market. attributable approximately commodity housing cash prior mainly was weaker

million. $XXX were free healthy cash flow expenditures approximately $XXX of Capital in, million. All we delivered

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

business to adjusted debt X.Xx. net base was X.Xx while ratio leverage approximately was Our EBIT

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

to deployment. Moving capital

million at repurchased at stock share. quarter, have $XXX.XX price repurchased of we per the During $XX.XX average third approximately of $X.X million billion price $XXX an Year-to-date, for of average per shares we share. an nearly shares X.X

on program have April approved our repurchase We remaining million in share $X approximately recent of most billion XXXX. $XXX

and deliver for a ability capital returns. of multiple capital to paths high creation stewards through proven deploy and disciplined remain We have value

Now let's XX. our Slide turn on to outlook

than were Given softer that our QX sales a little headwinds, did. affordability it

the was guidance we we our company healthy. our continued base gives that focus outlined And business call. total in for seasonally that sales second -- execution XXXX will and However, our our EBITDA and focus October achieve year full earnings confidence us quarter trend

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

EBITDA be XX% adjusted of gross to a to billion expect to EBITDA to margin range We XX%. Adjusted to forecasted is $X.X billion. to margins XX.X% and XX.X% $X.X the be

costs. disciplined offset Our operating recent reflect mix normal required products, pricing with greater to increased margins above along of a value-added

move end multifamily both through expect year, to normalize. the margins we the business to of our continue gross the we As and

assumes XXXX expect free to billion of forecast $X.X $XXX in cash flow The $XXX. $X the free We billion. flow full to year average of commodity prices cash range

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

XX. Turning to Slides and XX

to helps showcases aspects clearly assess base and by and of underlying approach have the sustainable for our we As volatility. our business sales strength outperformance. company where profitability normalizing business a focused This core margins the the attention drive reminder, of commodity our to

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

business at EBITDA billion guide XX.X%. of Our a margin base $X.X is

range of platform. But market best-in-class XXXX. for We should recognize we the Moving performance to to analysis to and laid we that this our operating to not emphasize XXXX across clarify demonstrate out conditions Slide potential did we is fund our commodity we positioned into demonstrate is that of Like of for XXXX help scenario XX. year, earlier generate guidance this these how year-end. are performance resilient focus housing coming and a expectations have approach scenarios range year strength a full as

positioning the up, and in ability create As exceptional strategic to I growth. want near-term value we a confident in any reiterate outlook, execute goals our profitable support our wrap that are to environment to to our

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

Peter. Thanks,

to close deliver by pillars creation. saying executing on long-term we're that Let our me value strategic

excellence, driving effort resulted be to team profitability for platform, our us tireless increased productivity headwinds. operational and exceptional of up above-market for I is a Our proud continue and safety, has in profitability despite setting market come. growth differentiated years to which

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

technology as the will the I'm a with digital for forefront game BFS tools changer confident industry. of be We'll remain our at

marketplace the free strong flow and due navigate value-added balance in complex sheet to operating are environments solutions, fortress to We positioned exceptionally well our generation. cash

Atlanta our We're Thank excited in to and more X joining you seeing our to there. at us on long-term again share forward details for look upcoming you vision Investor about today. Day December

questions. call the now open for please Operator,

Instructions] question [Operator Barclays. comes Matthew with our from Bouley first And

perhaps can longer helpful it's you framework assumptions of look 'XX that outlined I focus bit preclude to the very those especially questioning, Investor think a Day, term. here, ahead line you more that the on so

So will focus my that. questions on

a R&R in and quarter about I are the next you the think very that could Dave, I turn made see earlier multifamily in specific comment you into multifamily year. making of second footnote 'XX. assumptions that

contemplated that from is question XXXX is, perspective growth and margin how my framework? both a So multifamily

question. the Appreciate Matt. Thanks, Yes.

As a to be have you know, XX tend months. cycle the XX longer multifamily projects life to

capital are healthy a bit the what in us of first seeing right carry the next backlog the -- the things So a there's quarter changing long the effect the into that's return through slower for changing right what's ground, won't what's multifamily again come pause What's the be and in going digests 'XX. year. to will at year. they just we're end and as projects up and is projects that on market. to see out temporary the figure rents, new what get believe We of now of rents again, of is going can the this they and we a projects, between -- such dynamic start think the will in balance cost XXXX. necessarily some as to there's to cycle And pause, coming completing then a there's to the those But we because tail market get throughout be

be 'XX a in as off result. So for multifamily forecasting we're to

last Yes, it's seen We've I the just normalization. the of couple it, such displacement industry the included. add theme to multifamily in of think years, to over

about. think, we're see to a but of talking going going normalizing theme, some displacement. Things back in of what You're from that I that are well certainly lot

Got it.

And helpful. the, on sticking the one, then here. Very framework second Okay. I'm

parter. just guess, lower lower, where of low not of question in On And able that EBITDA that's guiding push there. would sort the there's outline given interest My the the mid-teens to harder be the questions and it single-family given the in end rates X%, X X kind a just X, the end? one, is of end cost down guess, gross lot implied I a there. out of lower then kind you out? margin know a effectively in of question. was side, that? why Number I part of scenario any And of part is to, So I lot sort of margin what you're a on a

Yes.

a of think factors. I So are there couple

and bit else, the the from economists. The we've try statisticians just terms comes see it the up let's the by, would with or the year. that the low temper come of first eliminating the sense little was number. Up sort do real expectations harvested nice trying to generally in a is end feedback say, until high ones next We would everybody we to certainly That's that recently, for ridiculous a of and like it growth next look very I year. some end, that tell that you

more from the revisions back, Admittedly, favorable. some pulled still fairly it's it of economists think recent have I but the

out. it's could we play gave did play of really a scenarios will is fair, that a number fair we the why sure. what So we there reason out, That's are range think a that comment, a the

want anything, you we've that's ability to And down. maintain margins to of to the to expect continue is our healthy an this, as margins love go what didn't of our -- ask challenging and to those you is business, from to nobody I informative because because to that. question I able and double-digit be the end as think see If when profitability even to we market the do mix the benefit demonstrated that's low

retain results. facilities really doing but the we're theme certainly and our and do operational what continue keep just costs. huge markets But really to over think about and business around a and because what the is performance unwise resize seeing around starts like. not something seeing discipline I looks excellence We'll we'll here great for need on Now numbers consistent depending business the to our

us. plenty we opportunities scale productivity. because are on platform the field platform. average that add, just those take push drive because that presented finding that opportunities continue do, of And and find with now what how lot to it's to And leadership save. to don't able costs maximize have ideas experience us it a runway to work reinventing -- And dollars value. to integrate of we have we our our keep the ideas to to The existing and to push do XX-year is our hard benefit a to markets to haven't They don't is know and Matt, continued to the X those these the effectively add of out been business we've those just group. that to scale identified we fact to have when focus allows done the whatever we've across costs companies, manage to in last we where the keep And yet in years of

Got the mid-teens it. have you did That's gross EBITDA around margin super helpful. And anything that my within guide? expectation question,

but anything well. specific, pullback, I say overall, the the think think, we give normalization in expect applies normalization to do won't it's theme, But to into We fair that multifamily, see I to as that particular. margins reversal of XXXX

it. you comprehensive in you. I very a Atlanta appreciate guys. Thank Got the answers, See month. in

Matt. Thanks,

And we have question Trey from Stephens. Grooms next with our

that So some Peter, maybe guide? XQ, healthy. you far? kind used mentioned what go first detail you're word here that maybe you your for were thus of And XQ what Can looking the seeing I you're October question, of into trends baking on kind think more you through in single-family -- assumption the

sure as their beginning been big new stable. where Dave good I get Builders commentary year, very well. I'm the We decided would at Sure. a rates reset it's right? year had been the that But can and will started. be has the when

the we push. strong. large in quarter. from think for bit Certainly, the whether were, expect variety the just commentary was reasons, of a be be a as it very And wasn't or of little thought did whatever be a as a we tone We bit weather or the nationals volume it factors I expected. there there'd little more would good

is still pleased continues, healthy. Our it's quite of quarter, with into But we're at of fourth the see pleased way of that the good. and that the the continue side the the has year profitability. business still concerned. with some certainly We're sales to our ability out performance was everybody on strength headlines sort despite played look to flow-through The good we as so

get they're going I'm right? Their be that Yes. builders The only but is to and to and payment buydowns plans get they're rate working. then is the that's with forward can They're the that payment go continue on methodology I'd that a still growth, house buyer to add they've they that communicated national a interest payment a monthly definitely the thing and push substantial stable, from the payment saying not into of robust based to to use selection ability working. expecting basically afford us. using

at stay for quarter, encouraging that's only rate and by to at So seasonality. the stable really a fourth be least affected

Yes.

full then it. color rollout your next on analysis for Okay. scenario up Got year rolled And the coming that how Any out? into that digital you plays soon.

It's have to we're of and the in out. It's of successes. initial going to the hundreds the the pleased to really it we've market costs customers. of the salespeople feeling We're hands as to market, but take show of certainly and But and leadership and the improve product been good in really on lot tools the to both the excited year. communication that far, going able We're from our adoption be the sales, development as and milestones our the with and efficiency tools millions benefit side feedback has we're the pretty well meeting great. of our is the organization that so modest into the first in getting focus a got about

preview on is development We this a week. track. The Yes. had right

it's it In want right make team, we we it development some methodic, we're and do the we But I want the is us way, introduce because to impressed the at continue way, want to sure going changed. adoption the get goes only And what not wowed to be we're but to to this you sure making to to for we really fact, you're allow. for sure one people, we the I that it's bite be going changeable. the to It's can't a guys way apple, success. we wait of to, showing when of change features, way do prudent by our this by. but see only get we for best the ensure and what customers

Joe And we question our have Ahlersmeyer next Bank. from with Deutsche

'XX kind add scenarios. your and of you here I wondering on take starts the business assumptions the because context you on some Quickly revenue if single-family that if the take numbers just on was revenue. could

other Your much output be things I on that, and sales guess there. in than would there's higher

I you're You're carryover multifamily into commodity talking though. assumptions, And about year that M&A giving the don't is and down. think next significant

if getting So to is seems just touch that type what outperformance of be if you're starts baking think I to in volume. price guess a could you or versus like sort the I'm mid-single-digit outperformance you Wondering actual to whether there that's volume. on some

we are guess re-baseline on I the short just components. answer is Yes. expecting key the outperformance. But if I some Yes.

we've our the to based saw big see growth there, where deliver Multifamily obviously, ability the in normalization certainly those able in on happening, areas, margins we drivers investments share and X in confident been in sales some to and both displaced are categories on down multifamily, and earning, the the we those continued the normalization, take but out that's we've made. what the,

from discussions. What you your That's sort of great. builders for mentioned on you the small encouraging. just regional ranges could any X with And economists groups then wondering Very even touch builders? discussions then and if differences between large into next outlook these getting those and in year? about And

cash as of total buydowns a to going well. of percentage main but a the guys increase and the Interestingly it's there's market, really keep what's -- enough, the access the smaller factor. are the big in have larger builders part differentiating don't a had, going that's at have there builders to smaller market the Well, which buyers, small is

don't what's is will robust I -- be industry through all the demand I last of use it faced there. clearly headwinds that that's every carried word is us the uncertainty Again, -- the I I think months. still standpoint from the it's a resolved, would all X stable. in an with the macroeconomic get as think we but think I mean

demand I there. think long-term proof an the it is is ultimate point that

far affordability long what as And can -- we So bet keep in environment. equation that as customers. be stable hearing it larger we're I as from that's will check, a our

And Truist. we have next question Hughes our Keith from with

A The in really question value-added saw couple products was going pressure normal. the of what there the outperformed quarter. the with on next quarter, those I like actual just specifically rest think company talked of products. much looks you didn't the quarters and as the market the as on average in what about

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

One and quarter that was starts that the performed expected the and in feel of volume the versus last that that understood this sustainable. drew business. about good we exactly number has year, and what sure attention was things are the obviously going It us start given my number. margins on than and making very by better over it's we both the the saying I'll real the confidence

seeing the when still lack backlog, goods, of times were and millwork stores the were we by all What starts the cycle year, extended value-added business. we product. we categories, down, the in of the market massive regarded the the still right, growing as turn the product time, core our lumber is and thing through are sheet to at you're and that working But all the lumber that seeing in growth when our clearing. funders on was builders, manufactured when impact that quick. Windows same component a meaningful right, commodity saw the single-family -- turned last down That though, comps,

was So This last dynamic a year. we're that. lapping that year,

what just categories a is the so than on the timing seen a year-over-year. little weaker terms while a in bit it's of of is percentage on looking and that some we've average, bit And or actually worse other of statistically basis, line

the the but bit and issue. investing, benefits profitability seeing little it, good So on the still feel line, still about revenue both of still a comp

what's I as we attention And today, would the where just the we're X-week to that pay plants steady that won't of want that that's backlog, well. be I of a in customer backlog to is and our healthy. add seeing X- thing be level healthy at service to kind still because stay we average

Okay. seeing lumber? are there deflation you're other One quarter. prices the that Or in the products any deflating where year-over-year? price Is question other on all

in across to terms bulk of it the the board, little We've vast in back. not lot We've it Probably of there. at majority it's Value-add, say. the margin of no, I'd elsewhere. those value about increase a of But certain we've and bit normalization. board. is pulled fair But pull seen in commodity least talked probably. say erode. components. add, the general, the margins across the and I think That has it's We've the competition inflation Clearly, a categories of some some seen impacts back. seen

price vendors? you from Were higher or cost about asking

really lumber, that in in more I the general, seeing are -- other. out there warehouse, between I coming would products call was and well, both. besides deflation out and just of specific in mean any you

it engineered talked seen would back. modest. say, price that about are quarters. portion we've obvious example in couple in and think categories I of some make increases a pretty general, fairly it's probably I a have lumber. that substantial after is we've most of given some the There been Well, They prior commodities moves, had is though,

of and normal The out regular cost it. increase good a leveled news back most the for inflation, that's cost more that's to for is part, increases

And from Jefferies. our with next question we Collin have Verron

of you're and assumptions multifamily. the maybe R&R business scenarios XXXX how perspective. what I the the in up single-family thinking through stacks on markets end mix from market those or margin can a appreciate kind I around us color was just product about hoping walk the potential informs how your R&R you

for business and us, so a the it's range, lot that you of fairly commercial inclusive there's know. is there. of our as retail XX% small Yes. in R&R In categories that's --

to seen as slowed, capacity some in, focus allowed more market In overall general, had has a us the bit is that and we've what available success. we've had we've and that's

-- ability So been feeling but economists what access available as want capacity it categories who side the our offering to we've of there services see R&R, portfolio of in on good while headlines far about the so expertise to and to it. some pretty seen and that haven't able we fill there's but get we're investment to well, have in our it, better customers been product the

maybe would color. margins in walk you quarter the that, through helpful that that have step-down to the us you margin how side, us resilient then that you up previous had and gross margins to get this Can think the just there? were anticipated? why guide think help I I could than And your term happen quickly Very on held than the guide think about And better longer implied. punted in think you

that's No, dollar Collin. a Yes. question, million

right. absolutely You're

We this. continue to wrestle with

we've of a the the given anticipated. it, we bit took took, it's that see to little it's continue We than of trends think been we has lot given of of share but to normalization, a say of price that slower bit little played lot I it. and and we a back It took back right? a The and out, that fair

amount quarter, what did a of expected. This we see we fair

a some mind, the to we beat margin my not massive, was expected. accumulated of the just your point, the favorable but line little of in than the beat a some productivity, some product where tailwinds think it that on of number better a into came originally the would around mix, I rebates, the timing healthy than some least expected, have of some and the at was what of

it's be of but months up investments with gained Those we've to of a That, to efficiencies manufacturing along a time, number. bit we're it, meaningful X made and and things track again, you there, actually see in starting sourcing. doing in more automation on able using our add our product, lower get bit. landed I'd adding bite And leverage little is thing opportunities product. come those direct we bite get chain a they cost, But over a only here in a have if the a the and help. back supply on time, on better, actually The focus to We look out little scale a there start

have question we And Adam next from with our Baumgarten Zelman.

business expecting Do perspective at multifamily you're the a it's expect know been quarter margin bit point? second of declines year. the next XXXX a from you tailwind. I a mentioned You in that this normalize in of to that

and hand both kind competition mark of resulting then the a level the little things in those margins, think just volumes glove, the We are bit.

And our Kurt from Yinger next question comes D.A. with Davidson.

where And long. just guess how you I kind of line. I margin back if that multifamily the would characterize of some kind were of talked expect tail benefits, to stick of stands to that mean, pretty seems the normalization a are normalized quarters, about but be? stage would the of margin several started I to into Because peel And it wanted gross process on also year in? in what time, how next versus over core gross you to we we you materialize, that last like the stretches long

to your love there. thoughts just I So get

Yes.

for that all set couple we've So there's of about. multifamily stipulate you we've which talked aside have already think If the reasons I a right? different pieces, you

to I is the single we've of I it. think the more normalization but seen of bulk think on family core margin go, the the products. we've There's in the that bulk storyline seen

percentages and the margin one at look mid-single talking subcategories you're We've QX you categories. of in 'XX, QX 'XX commodity of to back in given the given space. back If that margin digits we've quarter-over-quarter, so every price

that been we've it, we've about, processing been talking normalization that think we've and digesting So don't I we're done. it. been

probably it's at there, in I [indiscernible]. We the There's far see think than certain another the markets. but when we look trends and numbers. leg categories smaller

in second seventh sixth, the not we're So We're inning. here. the in inning

That normalize certain of that said, terms the timing benefits, in and come thing. rebates, that And Dave been think of right? us is see we be deal not year, when we we of this do when a it things into through every see said, for year. big quarter, multifamily like next sort timing there's to and minimized, certainly It's will

learnings away year? that look these implement early you've from launch of that the are change Okay. some That's the of some full-scale next the most offerings super the you've kind helpful. on of And where had. that seen programs of And particular What the front, traction? some kind then of that promising you've big maybe technology just curious within on you'll or I'm pilots taken with to

learning not a Yes. That's to for pilot tell how would the question. great understand learning implement are you, I we're develop.

we the to shows is it trades So ahead mistakes one HVAC quickest of said engaged the get it you and is goes a product And for because the minimizes saving before take modules Having the potentially where plumbing into other, the on that that used the you the builders is one what want field of are each get the get. fly them. with one it in into all field. the and pilots module, plans from think the where collision favorite that learn collide them that, have those we've resolve of to can and gives framing, main in for you would live and folks return it that all particularly that put the the that would

what trying the front So the customer perspective that resolved most from to the positive end. on one that's get But really we're we feedback get probably on. everything is do a

go we when a that a problems solving So they're to have product for. the the solved launch, full

example Maybe Dave just best referring the is was of digital shoppable the that, twin. to that

the been with to aspect the roofing environment a might user the has of that technically as buy core want design, it type is interface, into buck this, user UI/UX and and shop putting the able X-dimensional dynamic. impacted and it on experience, the In or siding bang you're from and it see that able pick to be experience plan, to of whatever, ability. that for real taking a real is have or rendering, complex, challenging You're both be you it. entire shop They right? quote the it So and a It's it right? be imagine, quite

summer to really when you're So getting it. on feedback the the this and that it what and scenes on, meet they're behind tweaks the to how been how that in transact is really to we've tool focused state stands, works, head need of it right, with putting of them, making actually -- day product interact front going our as drive to see about the Dave, for download the pilot big I feedback talks really all We to some excited a what and agree super That's going It's recently and us using the with. and or customers coming got some stuff on teams are from so development like about up with one stuff development. recently. functionality

question comes Fredrickson next with our from And Baird. Quinn

the thinking or just should swing anything fiscal there? high-end else curious the in end, of terms 'XX Just there low be really versus on factor about rates we the the scenarios

question, trying in affordability of particular rates focus in us No that starts for are in to predict terms number.

the It's really mortgage though. and healthy, minds. in that referred sales a We've magic of question an very is in there that of Dave a of is see continued production balance impact everybody's step-down type interesting industry. on to, rates to But through stable, as puts this number industry

on So to far, no, here but certainly bit highlight little close we're trying that a And seeing keeping really eye what a you're it it. before.

month gathering ranges These that the last We in we from we've what encompasses economists are X. economists. the were different or this seen saw from we that think

kind on and context this, dial but we'll with. to continue it we're we'll certainly, up the what update that's of which seeing, in came So based to continue

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to that favorable ready outline we've really think numbers regardless And regardless. got a with our positive deliver going We're of high-performing kind this where the I here of scenarios is We're is business. goes.

the in than and plus put people to become to market out a fear for there want can more didn't sometimes the what's we So appropriate. hesitate little this to skepticism contemplate because

on Okay. these a is of Or then, baked into kind And of certain savings that X% Investor productivity it talked Day? the productivity the is kind scenarios? at there typical about you side, the X% target to

asked couple things. to So want do that I I'm you differentiate glad of question between because a

First all, is the X% to our goal X% internally. of

steer into because don't your we ever wrong I direction. load So you numbers do not that to the want

right? harder, certainly talk to fruit. couple In of you harvesting it it able do, of years terms we've gets low-hanging mean, of being the what I being been about the first

We have more a savings to to become those over challenging, productivity think I a tremendous bit programmatic opportunity deliver savings. time. more But bit a continue

an discussion to we And of a part our think but over the continue I important December moderating on So annual to that well. as of number intend deliver be appropriate, will in time. is that

field any say in everybody it. for And points. employee an employee can we at and up mean now. come incentives idea embedded of with we our We that it's rewarded definitively, I it's idea that the to what in that we palpate savings use culture to submit Well, all idea. I an have from, can if offer

culture. So it is our embedded in

have set the the is target, year And focus. proud try to to I'm and that will savings We what initiatives together our consistently year. to ability each come primary be every leaders deliver from field about set identify goals

Dahl, Mike our have question Markets. next RBC from we And Capital

Peter, I pause is framing and end that of the want to by phrasing next of guess, looked stick with the multifamily a and, challenge year. then of kind I

further to even starting we that numbers rebound potentially XX%, talked no that of next XXXX. are declines greater year about XX% to and think and starts talk significantly I and are in

for like And of and industry specifically what that X in That's are are you a X Is multifamily kind who part for So alluded to? you've kind this economists has to participants been of talking as view? you maybe multifamily? part embedding follow-up. high-level informing

remind in cycle us Just business versus of later construction multifamily the tied maybe much there? to how your more starts to mid- is in

slowdown now even it -- duration I but pause. see to bidding I translate would new get clarify, doesn't Peter. only of a Pause project means months Well, underway, multifamily, project for to XX a a necessarily guess, definitely of to in from the and so a sales from of when to want -- planning the we and anticipating XX because thing, we're trying standpoint

yes. Yes,

the family. couple guess we scenarios, I'd on bounce back different a in talked I of in little you a about to So when a bit it about talked single Dave comments multifamily, did refer make

X separate to starters. sure So those for I want make we

already, question in so. mind, outside's in right? we're because and and no is. that pause There's see into our We and don't the of next declines when the the middle quotes selling coming, can bids we're the Multifamily, seeing we year know

of and which we some careful are play that to to U.S. below, the in one this thing the see environment. favorable a don't bit really we think is to That's be day other and most for the stories the wood be we going or into and of real right? needs our that. high-rise in do not more age We're sell Now also I to X we some multifamily the structures, part, that of housing the think is frame want responsive urban dynamics market

it sure. is in terms pessimism have Is pencil But a made are certainly it going of downturn. the numbers there. I and would not have projects to seeing. up out, There are stage, accurate Wouldn't rule say we your anywhere. we seeing the and rates what I'm seen we're not comments you've possible? higher more difficult deals been it out a teeing

balance ability where do also doing our from thing single-family scale to is a we second I certainly But load think to can For change the our recently. move and product perspective. shifts. One to us, couple multifamily vice versa, We put a though, our we've things. to which is value-added to facilities of we been

run, some that ensure the do do we're So in if cyclicality multifamily the protecting franchise in and even near we'll term. we this even that long because continue to there's

closer second multifamily just not it's weighted say completion towards bit weighted question, the of more XX% kind it a because is which that closer the the that XX% with to of millwork, which To start towards, at of that. product and up-front business the and that's is would completion, little and being little your completion is ratio it probably to and what the the of towards directionally, weighted I a related with trust is bulk bit

at why many. best it's next end to best more we multifamily the than term a where is is quick for figured maybe all, cheaper it be wanted relatively option, the the to into think got because mean the the and be out use rent I get The own can't family I'd I add underlying I've affordability will single place. my how to and first concerns, the to than thing of we chance that's they is but a get of the get factor pay, just mortgage, I day, pause, rental only number if

too So I that something we of the see there. is It's maybe out pause overall hold optimistic. that because demand

that now mean point, with. agree certainly last we I Yes. Okay.

dictate kind distinction probably it's have I and too. in things think just and financing to below duration terms a of other an mechanics best then question of important what's of the is going the there, and and story

second My the margin follow-up, or side. question is which also related on

the margin sales, quantify the of help again, being of kind XX% you've multifamily of core setting go about of the to, ad setting which currently thinking current covered kind that and of aside core or X%, change that nauseam dynamics of understand from on in and mix, XX% multifamily the type a mix, say, margin to us overearning a the is can that total we your impact X%, just overearning sales, see to aside in you margin? So business, just multifamily kind company better-than-average and about if were

here. to a your question. guidance understand want good don't be I totally question. I into to I for XXXX. want So careful getting It's start

throughout the hope you. this said directionally comment on I I'll we've So of things based year. some helpful to it's

in average about we overearnings. and been a kind margins the of for that overearning. you you're starting so them go by you look of different It's I think as XXX-ish I at if that through what range-ish, and described we've together, kind think quarter. point that's talked

of those see think than you they and competition, year of has so off. the of overearning. that and play I'm describing about some market in But that's what to will challenge the adds But downturn, all kind a the I'm this that are you're different terms another of talking a to. capacity we together. referring model unusual what been numbers if layer and of big bets Now and both

with BMO And our from next Capital Keith question Markets. Mamtora comes

regions terms of regions, you talked of about one some weaker noticeable are bit some doing I just either little you the how stronger are being October. seeing the in of of versus in a of key product was other? can about curious, any but categories, or talk sort We your terms far change in the

Yes, in beginning of definitely. the year,

saw stronger, was right? to west As the this, West worst. we came the we of sort into got markets east,

bit changed struggled West out That and little bit. a bottomed longer. I'd year the progressed. a as little say, little a Central bounced

not there's other expected. I longer of than don't think in probably certain horrible, the drag I South the anything if sort sales terms Again, trends, markets. differences. parts comparing of but the that trailed of they meaningful I'm seen know year-over-year we've we Central

they're all pretty think I comparable.

has bit for the balance. little say Yes. say I'd a I sure. sure. Texas for would parts showed relatively flatten more a That's of West of

some in the I the so uptick the we're think gas we're great at a comparison. close. discrepancy between beginning nice relative markets of more point markets. and year, not was a wider. from of year-over-year stable of with seeing at great those But [indiscernible] perspective all Central It's It's uptick across this

And Research from Thompson our final Group. comes question Ramsey with Steven

new XXXX any on outperformance. about the it's the accounts? you [indiscernible], thinking market color Just penetration if outperformance are accounts of how outperformance existing that On or to bigger get

products We're the investing value-added in industry. Like keep I taking football, services stop to of mean that couple in there's and need key running. of the going can't continue keep and play. this a same to we're they if run, Yes. for in run the to advantage we categories going

and to to wrestle the That's home. effectiveness. we're what of Builders problems. the They labor capital cycle with for to They times continue of wrestle with wrestle a continue at. building on-site availability the cost continue with efficiency good

we're more up really we online going going to multiple got continue to where it's taken markets got plants We've think invest. capacity coming to We've So coming online. in quickly. be

So that's an important piece.

important more of we're We in this already where already and industry. choice the be there. make is we're that lead. also is supplier we've think big best partner of the digital. that hugely with a We to going got space have to efficient big in customers about the to to that the take most leap but we choice think beneficial easiest other us both for technology, think We're we us piece even business the The a do and our

where only I'd We're for us. The seeing Peter at pain we very beginning. industry. the emphasize customers' opportunities is thing points said as those what looking at and are, the our We're identify

how and that trying additional we're in focusing for we to products. ways solve share. We've that. into we're our challenges do for So can create can and opportunity operations core already major We're got customers our that we that grow base on -- expand and good looking labor now There's what expand and help do at markets ourselves. we're

would up go I mode been were couple of make sales effort years we guys as that already concerted the business had. a covered the thing and to the gatherers. and add, we had maintenance we have invest out somewhat handling We've more is The also We're sales in they going of are to to. other have had force than to in last hunters

here. wrap will initiatives those things that we So two are realistic think

and XXXX XXXX the the that the the cash are capital And factors scenarios, What there like Okay. on midpoint working between looks midpoint it then is down midpoint difference CapEx? million of from Helpful. free the guide. the about flow EBITDA, drive $XXX

as when And use in consistent We working it's straightforward tremendous stable, it's Yes, business, about to XX% we for us. the a thumb flat. some midpoint of business when And decrementals We a to generally working we hopefully, know that of our about rule on everything that. it's capital. answer is proxy shrink the capital. going incrementals And use this is guys capital. released down. a growing, sort of with amount happens good when we're and of sales working And that's what you

there. Obviously, working some issues is managing that past good the some you've through the we've of over on just some with flex done the talking the takes couple But of been top about and the work size answer line. got primary We've puts capital years.

it you does lot today's This for And for participation. Thank like we looks of your our conclude session. time a program. have Q&A

You disconnect. may now