Builders FirstSource (BLDR) 5 Nov 242024 Q3 Earnings call transcript

Good day, and welcome to the Builders FirstSource Third Quarter 2024 Earnings Conference Call. Today's call is scheduled to last about 1 hour, including remarks by management and the 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 earnings and morning, our XXXX third call. Good Beckman, Dave on Designate; CEO; Pete the me Rush, and CFO, call and CEO With our are our Designate. Jackson, and CFO; our Peter

reminder, for refer CFO The available to during and on the a planned presentation provide informational at website call. The non-GAAP release and and succession. results for these on GAAP non-GAAP announced be include We presentation earnings results we As a comparable XX, GAAP investors.bldr.com, not from CEO today discussed our should measures. results and isolation the purposes, directly press certain are September they we our adjusted in will items. considered most

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

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

everyone. Thank you, morning, and Heather, good

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hard the with Carolina supplies hit fill region. to and Charlotte delivered them Blairsville trucks locations Western and Our North

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not active ensure of near saying the wrap term. smooth I want I'll I'm to our up transition a am a in supporting member to over call I'll BFS growth Board, again. you, to an continuing and enjoy success. Thank away. and hand by now as our role I'm that to going serve to I the excited continue far taking Peter.

as and morning, and are as has we his champion the I BFS to for Dave, indebted at decades and to you, saying a good start we all, his our Dave and service of forward. steward inspire Dave of leader, to it us truly by want will of move company everyone. continue people. excellence done Thank that legacy

the have BFS of world-class to humbled talented, named FirstSource. CEO and next commitment and this tremendous business honored and built. success our and made we truly be I'm that had organization team by the Builders represent contributions fantastic I'm grateful because the team. has to hard-working of a become

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learn is improve to the other opportunity each third we how and the within company. And collaborate from

work enhance a expertise, I believe and together. we We opportunity a we how of wealth real have knowledge technologies innovative have to

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rigor. now turn our quarter Slide which our X. third and our I'm highlights of on proud to operational execution resilient performance, reflects Let's

rate continue gross soft see uncertainty extreme of sales challenges, amid Despite these to we delivered weather. margins as Even nearly strong XX%. we and

margin Our adjusted mid-teens model our transformed better our product for consecutive highlights remained in which business has portfolio XX and the differentiated or quarters, EBITDA scale. and

move strategy. Let's specific are on where our the to Slide we some touch executing of X, ways we

and to Our for portfolio a of with continues remains advantage value-added products our competitive and services bolster customers. partnerships BFS

operational as QX, year-to-date, million to digital with in through progress million productivity levels primarily $XXX by delivering from and steady feedback adoption demonstrated initiatives. have efficient seen see driven and of more procurement continue hear great We customers we each excellence $XX week. in and manufacturing savings increasing We've

pleased our Installed stewards a from by discretionary install great opportunity spending increased services for remain as to as challenges. flexibility. sales and of that continues year-over-year, maximize XX% We to we us playbooks labor on are operational disciplined markets. be continuing I'm helping focus address successful leverage customers we

levels have We maintaining over an consolidated XX facilities XX%. rate customers and to while delivery our in-full of service year-to-date on-time our with

fluctuate for mixed, initial Single-family near continued first below term. additional the cut amid rate and on rates the and as softness waiting to has The QX, sidelines September remaining in in interest ongoing some in rate cuts reaction homebuyers mortgage with been challenges normal Fed's the affordability starts.

less has the headwind from On basis, should to is to us. negative affordability of about as amid is attractive normalized be for value net a record new multifamily business we lap X% and a adapted performance year. Comparisons challenges. Multifamily to a get expected. a profitable fallen housing start As reminder, activity muted an market XX% represents of sales continues last the and has as

QX sizes and Builders from exit find have current interest percentage year land infrastructure of basis, As and the having a we point to been in navigate help options. especially environment and challenges. address market builders regulatory, from the buydowns this buy availability all our detailed specs, addition land buyers a by 'XX limited velocity is rates. affordable which to affordability call, on roughly of and to indicates have challenges, QX are margin options development multifamily. To builders on rate simpler impacted smaller down to homes erosion of Smaller and half employed of our about full

our well help as product We are balanced offering needs for that margins. passing through includes This customers builder homes the a of mix with in their addresses cost by leaning maintain while consumers lower partnering costs. lower as to them material

wood instance, to engineered supply trusses For fewer alleviate affordability and more sold have help have we to floor continued challenges.

in We reduce like have lower-cost windows more products and also supplied help offerings to doors costs.

our and dollars, increase support our and profit in well strong, we growth headwinds positioned remains need starts to actions for margin gross these subside. Although to begin and profile less customers structural as sales of are

X. to Turning on Slide M&A

to continue pursue disciplined. attractive We while remaining opportunities financially

installer Wyoming Orange custom in manufacturer deals X acquired having In record track trust in a proven the July, aggregate we through products doors August, the the Sunrise Windows leading muscle we top transactions. County, designs, and and California. Millwork, in building an distributor acquired third Delaware. cabinet developed grow SOCAP, Wood years, we roughly impressive we independent Components, September, these millwork. North a doors markets of of $XXX to have Texas. And have we single capacity manufacturer Western the in and distributor M&A, sales dealer CRI memory and XXXX high-end successfully high trim, substantial the installer area trust Reno quarter, leading and Mountain installer in and with a completed multifamily a area, Flagstaff, and Doran Over an Arizona In of of and the to Trust, and and Reno integrating million. In a Trust acquired Windows

the Lumber, our October, to reinforce contractors, in homeowners which in These provides Rhode building to remodelers growing of we range and area. value-added Island acquired products. materials acquisitions Additionally, commitment Douglas a

X, an capital talented to excited to family. On provide update the are BFS We Slide team allocation. on new welcome these members we

share to share during billion opportunities, approximately the We December. our Day this $XXX In on we'll track XXXX deployed including track acquisitions at billion strategically capital roughly we record, repurchases. of driven the allocate year Investor we quarters by $X.X tuck-in repurchases and [indiscernible] remain through $X.X to $X.X X to the continue executed of from and and addition outlined first of to to million. last XXXX X capital to It's billion acquisitions high-return

and organic Now and position extending are updates latest let's X, our digital tools, homebuilder industry further substantial we Slide so, focused leadership customers on strategy. creating the our BFS doing in discuss driving our digital turn for growth. and value With our on to

our of challenging the target growth strong adoption audience We with smaller seen market. despite builders and have

have including late launching platform, broad incremental existing which platform million $XXX February, seen We $XX and XXX top far, through placed have sales orders acceptance nearly interest were of we from so multiple from digital customers. had of our new million builders. Since in the of

targeted of sales our initial approximately headwinds incremental expect in very to target $XXX incremental date, of segment sales confident $XXX million. we're as total in of goal XXXX, the in builders, meet customers. new remain versus from ability Despite our market slow grow to of sales million in pleased the our While win given we now incremental wallet start, we we XXXX $X billion our and share with

Before track exceptional a long finance to results the as witnessed over, turn into say shareholder want I have leader to away. He the look value. Pete, and we CFO. role has which firsthand. call fortunate partnering are of step Pete take Beckmann very I with forward I've him that deliver to a it I compound proven record to

and Thank for Peter, I everyone. morning, as good the CFO. appreciate serve opportunity I you, to am introduction, the grateful and

during quarter the and years legacy helping disciplined maintaining forecasting, of responsible ] while ProBuild growth strategy roles housing responsibility, continued we recently, financial partnered and allocation. Despite enable we last including to For I where the BMC in of B&A enterprise continue Analysis, as financial as Planning our we of execute was at mergers. Most have strategic and operating all Financial levels and spent record and SVP through profitable with for model. [ prudent the our XX companies third I market resilient annual to cycle results delivered and and planning. management have choppiness BFS look forward integral an and increasing part capital the track our of served of capital I background, the

disciplined share cash acquisitions free flow our repurchases our by capital We to balance witnessed and drive the are generation quarter. portrait and deployment, leveraging during as sheet

scale line Our over as to financial partners to act value and sight creation to us clear homebuilders, long key compound term. flexibility have the a and of enable we

market for turns. when are leverage the meaningful positioned well We operating

I'll third I capital our topics this second, provide XXXX first, and guidance, with update related results; quarter finally, will and scenarios on I'll X an assumptions. recap cover you our I'll our morning: deployment; discuss XXXX

to sales a begin as driven X core by Let's reviewing billion, third on X.X% by sales our X.X%, of were Net and growth trend performance a decrease and Slides in and contributed quarter that acquisitions decline deflation. of net continues organic day by $X.X XX. X additional X.X%. multifamily sales downward, partially from X.X% decrease The selling X% in was commodity of offset

a as central amid in The given decline value was the a in partially offset XX% decrease prior organic by almost and remodel This in region. sales comps the multifamily increase driven decline strong by lower was we in strength year's per X.X% lap of single-family a and repair X%, small start.

As been X for there recent calls, starts organic main have reconciled we on sales. have shared variables single-family

The first permits is the variable lag starts. and between

This permit continue generally cycle to last polls the permit quarter, see seen quarter, impact unlike extended early we a have we stay time. where completion of

the our As a a lag expect set. start rule X-month roughly of thumb, between we and first

home average has as Second, have of size fallen the complexity value and decreased. the

products. products manufacture although margins biller to will during today, start third of selling sales deliver some Finally, price leader are dollars there have products the sales represented performance. Value-added and XX% less we market begin in in slight we of Summarized, strong the operating net seen noncommodity our cuts normalization and remain quarter.

rule organic points, write-offs, prior roughly products. decrease acquired offset to a lower XX% XX% million, the sales. margins million $XXX Gross and of XX.X%, to and period. basis attributable thumb, operations driven primarily value-added sales year compensation billion, are asset net of up core profit $X.X were approximately XXX by multifamily partially increased our Gross was a due As normalization. SG&A $XX primarily lower to variable down made of compared to by multifamily

to SG&A SG&A sales, XX.X%. variable XX% percentage lower and by operations. On an net primarily to SG&A decreased of compensation points increased basis to total lower is sales, a adjusted offset $XXX variable $X net million, approximately Adjusted with XXX to million approximately attributable As due fixed annual volumes. XX% acquired basis, partially

an release. we reconciliation adjusted reference, in SG&A schedule the For have earnings

profit, XX%, partially gross offset fixed carefully to due lower as gross expenses driven managing primarily from down are Adjusted market focused offset adjustments. expenses the positioned costs after by XX.X%, the EBITDA $XXX was margin down lower to year, primarily are by partially well points EBITDA our was XXX by basis operating margins, on approximately lower prior operating lower SG&A profit grows. Adjusted We and our leverage million, income from and of lower net adjustments. Adjusted offset was after million due million lower year, after adjustments expenses lower prior $XXX to income expenses $XXX the profit, gross partially primarily tax by prior down share the XX% per year-over-year diluted per $X.XX a repurchases for earnings third $X.XX, added decrease a share Adjusted expense. quarter. of the share roughly to was basis, compared year. On operating

million. QX cash free quarter million, Now balance Slide let's flow, cash cash approximately operating $XXX mainly in sheet turn capital. of XX. and $XXX million, to Capital decrease and for our a were working to increase net was on attributable expenditures the flow million, an flow was liquidity $XX $XX

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

At of liquidity revolving approximately leverage was net approximately in hand. in on quarter while Our billion, X.Xx. was [indiscernible] debt trailing ratio $X.X our business was million the broader end, billion a and adjusted XX $X X.Xx, credit cash facility months EBITDA net to $XXX base total

Moving to capital deployment.

$XX.XX roughly quarter, price for repurchased total per we During $XXX at of the at XXXX, share. approximately program $X.X August the shares average inception stock shares million for of of per repurchased an of have our an we average price in outstanding buyback billion. third XX.X% Since $XXX.XX XXX,XXX share

a Helene show our We XX, modest We remain stewards around $XXX Milton, $X paths Slide creation million We capital and in amount Hurricane billion maximize sales, have authorization. regional outlook. our returns. On million relatively given have anticipate geographic of and impact disciplined from $XX value diversification. to on for approximately our remaining financial share XXXX a multiple we repurchase

net our to full we billion For range narrowed $XX.X of be expected billion. total XXXX, year have company to sales $XX.XX

$X.XX expect is billion. adjusted to of to be forecasted the EBITDA EBITDA We be to range in billion $X.XX margin XX.X% XX.X%. Adjusted to

XX% in XX% million We expectation XXXX to of the XX% be and our starts range to our also of guide This $X.X expect with $X remains long-term XX%. million. in single-family normalized year margin to gross of line to full

billion. $X.X is assumptions. these of X,XXX earnings release on our cash presentation several foot. free $XXX to key XXXX prices to based the assumptions. Please refer a to of year flow average board full per expect commodity outlook or range list billion and We $XXX in $X.X assuming XXXX of

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

XX. XX and Slides to Turning

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

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

business $X.X guide billion from base commodities. is margin EBITDA minimal impact a approximately reflects of at XX%, adjusted a Our which

Slide to roughly business [ long-term lower XX billion single-family single $X.X from midpoint better ] XXXX are XX, at gross starts, starts expecting and margin our EBITDA XX.X%. firm For the was and adjusted context, Slide normalized a EBITDA shows [indiscernible] we base be that XXX,XXX XXXX we our of this adjusted provide year. On

products, a productivity margin savings and improved of value-added profile commercial Our benefits. greater plus mix

the out for $X.X last turn some million single-family execute ability a growth strategy financial normalized back starts up, to and we long-term that, December XXXX. With call return Day The of I'll Peter to our assuming laid final over in and remain platform wrap I achievable, I As exceptional drive am flexibility. our in by our leveraging confident goals thoughts. to Investor

Pete. Thanks,

Let we me reiterating execute. continue close by to that

strong resilient generation profit significant underbuilt trends. the cash the us housing the Our any model flow is environment, evidenced our long-term this margins and demographic business industry allows confident to our in favorable quarter. I'm due in by and in win and to strength gross of third

are for positioned well growth we our of We to as tailwinds, help advantage execute these come drive years strategy. to take will which

customers by key investments a value products, solve to them to problems our through helping partner in services. value-added our our deepen and are proposition tools install digital We continue and

and in robust fortress hard environment, compound technological arming joining will to with customers. we shareholder proven please doing for now sheet to challenging questions. in value for continue development, today, tools well uncertain By and Instructions] an recover. Thank again and in leveraging our Our are future. to team with IT for are we grow playbook the value. Even to we generation flow are to choice continuing positioned the us growth for free now win you By of cash help long-term be to building today. balance call [Operator and future our install exceptionally continues the work for cutting-edge members us supplier along continue and investing the add open the the market as Operator,

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

Good to Peter morning, congratulations to and offer and everyone. Pete. wishes best best of want Dave I my to and luck

market scenarios. question, versus on for to -- my your wanted XXXX my for the So touch I first into these growth

guide obviously a looking the think guide. outlined into holding while reduced kind you the is So here, bit the end -- the you half by revenue guide way second of the I guys market

talking of you like and to about of growth share number. balance I'm thinking 'XX similar into as how looks around it But the scenarios, that relatively then curious it those you're term. your you're about the start So near draw in kind your

of get And about into your to are So as some thinking starting as I'm that. abate to headwinds growth how market these to you're if relative visibility XXXX any well. we curious

stop there, but. I'll So

in Thanks, Matt. Yes, a lot that there's question.

or say a were the we relief been necessarily terms wasn't didn't both inappropriately of couple market. think in behave fall. And rates are was appropriately nervous mortgage certainly have of choppiness So big interest cut, rally I the where factors. a quick in about seen a and rates buyers we have hoping election. today, rates I as everyone would when the there

So it's a choppy. been little

we've well. Still that. it seen been We've think year. all I watching performing

we headwinds. to, of competing pretty performance I -- think investing. think, in homes really certainly, fallen. see that. Those the well, biggest it's some organic The and certainly out on there, we That's business the core sales about and talked still at things have is value advantage when taking mean that look of have done faced disconnect. have pretty our We've that. been but solid been what open we've single-family our category. That challenging part, I happy what these But about and doesn't is what we're particularly has not hopefully starts done, led competitive. have opportunities. We're you

about year, fourth As think, I the that means out it's speaking, we next broadly and think there. mixed what into quarter into

thoughtful are perform. of You've well. some other and a believe, markets doing up of that. a little and are green bouncing in builders way, that headwinds seen got They're got bit We've seen seeing to managing sort we markets shoots struggled to reacting quite excess and inventory starting have and that

not guide by quarter certainly with the any that one the our some that at it's seen. focused certainly on stretch, visibility weather not conversations disruptions has market the it's seen a challenges, customers, having is fourth all but have the bad by we're we've helped the we that So market, into for

looking than get customers. commentary differentiated others. into better a we've cut. bag, as We with be it's the some from a there been of a at bit been our are bit we a rates days. mixed It's 'XX, the economists. We've doing talking will think As early reaction of

out in We mortgage will expect of a to We different market. more. likely will couple rates the at different settle least think to there will continue advantages have builders that be

is see people saved But as what today. like our of year, have what based So some few news, forward. over thinking new understand certainly go helpful a on the is what thought this we announcements There's helping performance we we past seeing last for opinions we're point the today. we're this weeks starting

it. Got

addressing question my long for And there. Okay.

scenarios. But gross in given at the margin where to the looking you're that still I the numbers exit your And that Second rate can the guide. of How other guide there. obviously, we go productivity, you margin XX% that through wanted drift and XXXX? the versus one competitive is install, as some XXXX could roughly again, between are some guys as XXXX. you just the add, dynamics of or for out confirm pluses value the minuses, way XX% see one, thinking

other pleased around we to and right continues margin arrow customers ] Overall, volumes the little in to are XX.X the day every environment a strong, it really services. performance. to bit. normalization values core an Matt, the thank the XXXX, with seen seeing up margin, a and are commodity is you XXX supported the our the compete, That to question. been has business favorable with we for products it the of resilient, on multifamily half we to the market, and basis benefit going competitive the business stay certainly it from our of environment. and continue we're average to in made certainly challenging from XXXX another very as and the margins has said continuing of headwind products XXX for install. year-to-date from the what especially half quarter result a and be points stayed about exit part is we've basis quiver, and we'll exit points, pretty in where value-added consistent normalization. It down compete expect a with a [ we're is us good Install continue despite We're from last

next from Charles hear with Sachs. We'll [indiscernible] Goldman

go question base Peter just understand approximately deserved. headwind. Well to and EBITDA First Pete moved XXXX we case of sure on to all, correctly, of -- in make to XX% scenario. can want incremental promotion congrats, implies at million on the I the we and this that going margin the back it first I once Maybe if scenarios. It XXXX Dave, to looking $XXX Matt's multifamily retirement.

leverage those do as First drive the see things the of and you right? in margin you in stabilizing across what as of up do the you XXXX to how to all, per XXXX terms that versus today the scenarios? And gross year, with you've And roughly see be just as you SG&A deceleration through to ability is see the well, flowing home seen next through the expecting through that content see sales scenarios? those follow consistent in

Thank you, and Charles. the comments questions. Appreciate the

lot look I table, the and say of early margins business on at there, a that the particular, around have in areas the going would I to what the continuing the it is we expect what So numbers there's think performance right? With us deliver. in on performance the reveals you'd

expect as initiatives. a of performance productivity see We to improved result

the continue see value-add. the strength We around to

light that market perform model in of a to look gross next year is, of continue We The volumes core I a to the the would category feel categories. good within for will you part various both something business the in sales opportunities and productivity about drive how margins as EBITDA operating say, margins. That and our as progresses. time around dynamics

but see of types way. dynamics dynamic some speaking, but builders, and in the can believe broadly a step here it's been is I would a weakness of timing see between to in gotten is directionally certainly positive X as we on of say think the depend down family it the a market. Single different I big stabilized, from we to level hold peak, but is a start will multifamily. I that where mentioned continue to we headed hopefully, it's sense our earlier, we the recovery think that's

add those. We there's industry's We the desirability deliver demand, we lot ability new continue days pent-up that the help and this but of can to scenarios market, positioned to some on we builders strength for think deliver and and again, do the a but to are it of well guide, of believe the homes help in in regard. -- a way. very This 'XX, think those color efficient in early

been the inventories recovery Peter. demand over see Okay. And particular, have value-add maybe months with different up, dynamics potentially you prices commodity [indiscernible] outlook have higher the housing improving product the of trending affecting in in the you portfolio guess how couple XXXX? in where business? across in against XXXX, That's And how for are and lumber helpful, last following ongoing if this this, persist your upside. I do prices your suggesting this that in in positioning you products competitive more

Yes.

certainly, be to the So past. in an sector in window a are XXX It's than side important on space lumber more and than the part below particular. of commodity were mills the to that for unpleasant a -- what commodity commodities we and in bit, although has delivery bouncing much the for bottom. I'd But would in say in we say, see so while lumber prices dimensional the that a continue us. space off I we was smaller it OSB do, we healthy have like for the that nice the to the

We driver bit category, have would I the influence. R&R, bigger days. I it's the product that new and far think early a while is a construction remodel highlight an repair is boost market of in And important fact a of seen little that demand

I looking an factor and I'm eye an think category, important keep So that's on. where, in that's if for that tailwind to support

continues and absorption to overhead of increase in the that certainly the will it we sales tailwind head, be for margins our as a hit nail costs. You for costs. better in If see

to balance eye to days. return want That there. close dysfunctional. think to we to pretty as affordability. on not Although, of always, a lumber $X,XXX want any us We was keep We the $X,XXX

market. to increase stabilize modest think, the I a healthy and So is, good

with hear from We'll RBC. Mike Dahl next

product you the and the any that quarter are? it of than XQ, outperformance was it outlook to and before. with the not quantify maybe wood-based the start want you margin then rising from benefit if any or Peter and terms start -- kind of that drivers at in just when the give to from M&A, in I the you the I sense with into both could on versus look seems again it in was on quarter X-parter there or thinking costs gross us install, about Congrats a a -- what or accretion that quarter, slightly would Pete. comment. I digital, it of maybe some And of than really the quarter in better out of kind contributors margins whether looking your whether to of like fourth gross recent what to like mean similarly, bucket want how the Dave, margin

can those quantification would that be talk or contributing you any if factors to there, So great.

performance a continue multifamily for to thanks in to respect normalization margin, With and see the question. we Mike, space. fee the

continue the expected continue gave to core rest productivity uplift resilient we the from mix we than guidance it what margins positive have And that business, we within last We mix and to of it to deliver. quarter. originally had deliver continues better is when and

margin forward that normalization As it is to still in seasonal broken that we of we'll we see and we to the multifamily, to pressure part see continue quarter share core in. in year. business off continue a normalization that environment of of and to And some the which and each record, look build, the competitive to some exit due the QX, of we're is kind the shoulder continued some be going as volume we and

Yes.

terms in on of the right think key drivers. I Pete's

bit of pressure We continue a under dynamic. competitive on to the be

see has offerings in You'll have core what we and of value we and strong. is I general, be but terms that made continued add core the what seasonality do product some part strength a you're in continued of think, to of the the something seeing

it. Got

Okay. look, look range And across understand say. on the you is I outcomes. when your of But 'XX and it's days, my as start it question, scenarios, I then second early

factors account might your outpacing the to revenue starts be out would or recently ranges like I back suggesting some imply actually their certainly guide, the subdued than the year, what upper played more you into it think been the the that it some seems environment. more have of then a this builders some that these of middle have taking little go outlooks in ranges. And mix of

terms both of pieces X So assuming whether improvement well, some maybe x relative of starts, also bigger of versus moving when you big more you what starts, and okay, your kind help of us revenue M&A. could talk some are? in in like assumptions to for the that not in but was thought that. I about improvement terms those how then bridge moving you some big just like, other -- Or overall digital of you're you framing how carryover to and hoping built that are some pieces in or there then market and there some kind

There's forecasts on commentary, I point mainly too that little the you're comments starting in I won't of the would Sure. go maybe game we, start right. your much of aren't the this economist and mean, into forecasters at say based stage the the but where bit the question. I detail, we're folding in is and folding can averages lot of of a your disconnected provide into around goes a lot leading the concern it. color. starts about I No a numbers. overall maybe most we're

X market. individual certainly an that's to builder no entire an important for partner While going move builder important us. and there's is the

with install. And the share things at fair it's the per like productivity. have especially around I at aligning it is expectation prices, commodity cost thinking of We've for level the got So carryover forecasting starts, start around to certainly economist average early are for we be some for stay digital say assumptions in flattening gain there and part. November. We an most at point hard able will think to we're leaned the the the initiatives that do for for into out M&A that we've generally we'll our in

but aggressively stable. seen a those been that's on We year. call this haven't seen reset say, mid-summer tried I certainly more earlier decline. something would down and continued we've basis, comparisons, the we've It's year-over-year it after hasn't out, to been moved since the

early know, important. high-level you as I challenging we So But lately. variable some this that be analytics, think things is of days, variables said, given how that's that's another game are the a we are tried included. But volatile like inclusive to

from David hear Baird. Manthey Next, we'll with

productivity, clarification XX. process everyone. you other both definitionally question that define just on My benefits about Congratulations then to capture talk us? also And well commercial first for is does When you could scale? Slide improvements as as

one. let Pete Dave, I'm handle to that thank you. going

Yes.

process knowledge do us our basis. buying, helps the productivity daily leverage So from company that really how scale savings how the on manufacturing we're and we're how we within and on But the improvement process we're is we well platform. things the well how operating well savings, get The a improvements. productivity that's and our across expertise

worked to commercial that We've about duration. there's saying the have customer supplier past the of other terms. talked the longer to where fixed-price in shorten benefits contracts. Within those, eliminate we used We've

get So or we don't pinched absorbing all risk. the commodity

and of CRM place play. come to scale we're is tools Our some with our where in put relationships into our we how that's and falling going that customers the through, and well managing

on bullets that side of see chart. that the you'll So in the

Jackson, Peter have And just this, might to want described you clear. but I be

the seeing basically And that just any in sounds trend or you improvement any deterioration in You talked I'm like those about in for out. my trends It sizes. you're understanding? those Is that scenarios. of are that single-family assuming wondering, housing scenarios, flatten matter

There's of of certainly in being of square That's right. that footage the of products home value mix one, Yes. pieces the in products same -- pretty lapping of those but are are appearing there, there home bunch bit a of a what in modest. based But flatten we're now. on out to Little the we're home, all but impact expecting right that. part yes, it seeing

Jadrosich And America. of go to Rafe with we'll Bank now

Pete. Peter of best to luck congrats and Dave, And to and

can the what would be in trends? But it talk obviously, of on multifamily, product Just And a you on terms could would going the commentary little to it segment, helpful. margins manufactured specifically everything there sort bit -- else? Like possible are multifamilies -- you impact that, decline year-over-year seeing of -- is through manufactured normalization. relative be trusses like any the multifamily product of you about if the revenue excluding that the

and to that about the in also you're talking space. Yes. in the seen multifamily the for products, been then We've the it but declines on seeing we've multifamily that question. over volume I'll manufacturing specifically What start, I'll Peter. the side. Thanks hand normalization,

the we're year. continue to at the exit that, reminder, decline I I we'd highest lap and manufactured but or prepared almost we're seeing value-added that's to tough just going our in within it's of the remarks think and and XX% volume in that the that point more last had we're XX% seeing within bottom the normalizing comps multifamily to come quarter stable peak, higher XX% down much overall. we products multifamily what also as multifamily the be products being It's And used is anticipating may As that's a that. and was to starts QX a a big that The That mentioned was percent as the we year. headwind, a what multifamily, the mix. We're of seeing normalize volume higher down. from year as

business hardest Yes. team multifamily The multifamily well part And has competed bit better, the been and just hit. I broadly more bit speaking, trust think work has a of found to business. the other stable. protect The a performed the opportunities been has

has highlighted about I think back pressure, in we trusses the shift that floor spoken side the side, seen the category single-family particularly certainly that in remarks that to EWB. the and

other there. In think with I products general, that's probably only manufactured we're that general. in pleased would the add still color I

from perspective. comp challenging. on us. I it an and think a from support a from for dynamic, good affordability But a productivity certainly it's basis well perspective, to has it's source performing about been customer a competitive feel we

about portion margins talk margin the that just value-add And That's you relative super today to anticipate value-add is helpful. margins the any that then The how XXXX moving then value-add And changing from the today, gross like there bridge that of just value-add which helpful. going is higher? can provided on you we to from is within changes mix forward? much

size of there, through There's lot savings to capacity. productivity a with do the had a We've of we've the generated operations. those and scale category of of that I in lot that ton A done tremendous mean ton of within added made We've itself right? acquisitions. sort a investment.

So offer. more speaking, performance would have say, there. The perspective a lot in there's certainly is to generally from lot a sustainable I that we the

past. geography and portfolio wider in a have the We than we coverage did

that's think over being continue where about That in expansion the as future. the that business install, growth. we investments years to part So into business the the can I exciting we've this of to harvested we return made grow

I an that future history even in more but for think the us, is that's category. exciting exciting holds what

Jefferies. Ng We'll to with go next Philip

back kick the from Peter, of at perspective. to is non-commodity choppy solid things When certainly, helpful for kind some kind mortgage here? And for scenarios from see any a give I market to off. XXXX, in rates products actually an you very scenarios. be your now. view us guess are assumption on your that what standpoint. quarter environment. look of pull Congrats it pricing assuming various upbeat a great you on And would to there

single down you profile low margin market if starts are could still pretty kind pointed actually earnings is the flat or look of choppy, to that digits? As power like out, what single-family

you, Thank Philip, questions. for your X

try the the want me could in We do me a go. correct do to and about scenarios, can didn't them, you and point you Let couple what XXXX I me say would -- in of direction me we back jump downside. a at We a downside.

a I think the generally speaking, downside. signaling like aren't I economists said,

past. the develops if there, past. certainly thinking predominant about that it. to time done we out we something it in where it in shy the put the can. going So been recent be over That need hasn't We're We've to not

protect to do they downside competitive by to I customers with it pretty hold think after that with that right? We get margins it. ability ourselves perform be the to ability business in and products the want. the is partnering this ability to of have demonstrated to size to positive,

want me think I you the to me that want go to I a that's with. points couple highlight. theme So probably Point other in of

are Your assuming products, any you mortgage thinking you about various are commodity? scenarios, how rates? not And [indiscernible] in pullback Peter,

assumption have don't we stuff. any of rate explicit an our in mortgage So

to is basically don't doing. are have that, sense in it. and what most happens what assumption off explicit the road of implicit think an of step I are lot the is we them it's embedded do My trying or but for the of middle economists taking

price our What pans where modest, what that is ended. seen we've from calling is that stability in the that see some will cuts now out. right seeing single-digit some a increases. right now. the era be say that's vendors is I pricing, It's we're but of in from tone We'll early of terms maybe pricing to little low In sense yet,

you, some or around size general? then next deals That's you How level front back Have pipeline market do with my helpful. smaller opportunities sellers of to M&A. And looking? you seen super of kind the the come the question larger in stabilization? how is Okay. in is of And

and Well, there's of by a with that I'd question question. strong. this yes, make quarter, mean this number, number is no I businesses market Smaller say up I the mean, there. I are large, X looking deals, looking strong. but nice is the there really pipeline the out be no good we're intent wide would They're find say It's look market a sell, looking move right? come a They're of at portfolio have time to sellers items pretty to with to it. exploring. continue that an but looking to at stuff. to not and

from next with hear Jay Wedbush. McCanless We'll

to thank and everyone and really relief, with for your you you to out Congratulations helping guys the important suppliers hurricane work.

So what gave to and question quarter the the this ahead go last you saw from the back to first could about the improved move talk up? confidence and I guess you EBITDA margin quarter had, that you going number I up gross Slide XX, margin to

little to of about gotten normalization to future you to of this XX% our question driven and a of I is head as a that XX% and understand has around We about was And big is wait minute, get between to from PBMC put feel how me Thanks, that help XX%. that Jay. down we clearer midpoint to we inputs if merger XX.X%. things were frequent a have to the done were until bridge business. range what will line estimate me that's telling of we gross long everybody continue received was sort out the the a margins had and little perform. kind normalized Investor defend have be of of of decided going that the view, there I give during Day pieces we my to it XX%, you're are is where was what So better out it. think have we for what rough should around like. And understand which one a to buckets of A XX, people right? understanding going what calmed what this. What we like to sight look Talking is to business we lay things this hesitant there's to a there the this

isn't or Investor for a a for this us correlates So QX thing. XXXX target This the to back Day. 'XX

just the had, Okay. R&R might maybe guys And question then kind you R&R know about and consumer larger other earlier to we starts. things I what a coming year single-family of are industry this Peter, again is guess talked expecting of Great. what much where you I guess so talk than go? you for being the could I outlook lumber

demand couple just you the in mean overall, product. I R&R closer on commercial. and clarify, being right, sort different to with about for probably at industrial based I the it half DIY sources, from to to the look want Yes. we're of a X/X is -- is seen lumber -- what to if the commodity X/X rest and of of we've of

pretty So certainly, that DIY R&R space is more important tone the has been good.

I rates a to is bit to bit little I do ages. we will, up. a pullback if There a release of this what commentators are pretty as people starts but went about have the start since little there certain for of effect is country and R&R mortgage in demand mortgage that lock-in in it that see housing that experienced rates, of can won't excited, think for renovations positive say who's the -- pent-up the sense lot stock example,

the the be for think of certainly market, a would a industry. tailwind that that I demand So construction out represents in balancing a on revival what

all is for I source favorable for on that think builders of pretty balance.

the think what a 'XX from modest 'XX-ish 'XX, for momentum so certainly positive see far to. itself. over and But there. we Pretty we good that's forecast look forward we of So in there's sort

Stevenson to Capital. Loop Jeffrey We'll go with now

Congrats, Dave, Peter and Pete.

savings expect So long few you've efficient benefits over the it trend do I runway procurement are a we year product and manufacturing to how better this on have initiatives. XXXX? through productivity last years? in expected this savings than should just strong you coming continue seen wondered in the And

I the fundamental just on waste Productivity been our more and best takes ways overstate inefficiencies that of conversion. of effectively ideas, Yes. is of organization the out practices, opportunity doing that won't feed there's at towards think that. But next level, working We really for sharing transition this together successful. impact years real the ERP has a we'll engaged see super business of something over is very in couple

a there, So balance both there has of time be the energy organization. lot and take to from a

continue we'll leaders continue can the from a we timing So out operating in X would say, of the into there's drive to mind that my and I perspective. future. question, that savings can But productivity continue better, in it the to balance well minds to get we

early in wonderful just better the business of with platform, our technology just and and tools of I innings think as a particularly fantastic for take we a teams. can we what do advantage we're

seeing, example That's regions? widespread is talk this great if across lower to wondered, builders was of it instead Okay. you value the from continue you're wondering products home. an about using then complex on in do how could your I the hear, focus the remarks you as lower EWP of floor trusses well value Peter. trade-off more such prepared I just into And in XXXX. to And expect

world the trying for home seeing I It's live say every way afford new these would homebuilder to own we're everywhere. that in to challenges. Well, is certainly tough their prices. we given buyers adapt in affordability it to just the

efficiently. we we're all looking ways for And more what to do so do

of whether of are that show your itself. mix pricing I that is, terms in size the this value being home, it's going pencil are in in comment, more up -- the of the whether a to or with little to home the products the direct actual, of it's sharper and more think, products the So what's going

from capability payment make cheaper that simpler, the negative for mix to match have seen homebuilder. in building the manufacturers order point announcements option think moved of to have even I homes current you've the today, people to these the sure pointed to of materials monthly price up

But That's I output the in terms seem what pace of think has say those some won't into not of continued bit far, products, not of seen that have large to step stabilized to see They a we in a year seeing individual has have the it categories. been homes, is the of half more think of product of value a We're of so sort we degree. to going shifts homes, the size been back I a declines. stable thing. down. what X-year throughout this

Thompson We'll go Steven next with Ramsey Research Group. to

of how R&R could you I'm I bit another and versus the wanted to strength the if on ask other on category, central more growth region a the backdrop. quarter curious solid organic share to allowing is this, factor What lastly, to this you my And regions? make other second much value-added versus in just up products category? a then question outperform? is wrapped maybe into

R&R smaller maybe think of would have first. smaller well. But second in question more we've some general, particularly more us we sell sell So just the the success I varied performed of open a our remodeler. I where doors business. what bit had for Certainly, a is as given just That of capacity through categories strength nice space. some a markets, it's around individual R&R a the of Central say that. in the nature those pretty to we we and from our markets. a North between the between perspective, continue available divisions component to lot in it. Certainly, the product go and variance smaller They

have We business. in that category expertise when it, a percentage lot and generally, them of we knowledge. have we on But product with do overall of focus small can it's matter to we And success that our value just subject fairly it. provide a repeat

we'll And Ketan BMO next from with Markets. hear Capital Mamtora

pretty that of multifamily. $XXX you've got million lapping Is Thank talk to sort $XXX sort -- revenue just you about of more XXXX, million In decline. you meaningful when are you. Coming year-over-year back to Or sort of of sort of through further move it's XXXX? sort in drop? still in of of because you sort deterioration as year-over-year a declines XXXX factoring

but I say It's It's lapping be Yes. primarily still effect will there. we -- the would stabilized, lapping.

side, QX of of margin we and it year? the normalization terms Or for to next seeing competitive Understood. sort of multi-family still that signs is single-family. in both end are you we And closer sort and sort on the there as for pressures? into move Are the of continuing price

normalization, continuing wane With to the fade. margin multifamily and it's

really As we year-over-year to most going by next comp And rate. said hitting we see QX prior of normalize the it's of in the kind think the exit of to but is prior strength results we're calls, normalization a out that we you year, that on had. year's

terms have to margin We well I'd up We're point based we're starts. basis miss end certainly much opportunity closer of sort to seeing the say below teed of that still the normalization. we're that in XXX normal I innings. want highlight velocity on the the overall, to we're late in exit don't

on than that from, So we But we pressure. came certainly believe creates the beginning. we're where closer based much

next And to Alex Riley. go with we'll Rygiel B.

you, A nice Thank very gentlemen. quarter.

is the your relates what XX% in which about As your installed And how quarter, percentage increased of does that today? that sales, to sales the gross overall it net impact margin?

trusses some as we're across on products. year-to-date products and is our XX% installing windows, and mix kind install profile framing as it's improvement and because millwork, at well So year. is doors, a over normal other margin of the prior The siting

overall to product think have you categories. I So the very margins all the it's know. complementary install, size want that we across of to

install think It's about $X.X last billion year. increased. it was -- was So $X.X I billion,

going it's to be So a from increase relative that.

And it receptivity tools, to should we product about cycle, how think are sort of and the then as given relates as your of digital product? marketing we the to its to relates where in the that housing it

Yes, question. that you asked I'm glad

momentum lot a that confess, it's We've in got It's out right? there. But we So works it's thinking what certainly industry a technology edge it's hard. be it's it's in good that efficient. exciting. new, any different -- digital and it unique still it an even more in is The hasn't how of cutting terms product competition the quickly. exists I can And of -- than absolutely worked. maybe very credit historically it versus will is adopted do harder to of but way it's really for, we about gave industry

continuing that comfortable with professionalized internally But believe a starts on help the tools business can it's be to efficient customers rates, that get the more and focus to in, under sort past years given they to guys. continuing how tools. pressure lean the been leverage with XX been of we're their our so make challenging. I be our more XXX to competitive homebuilders of can big they've is the partner because this continuing can And team couple do over compete, they and to year to builder, more much one and of way and they better against utilize the

market a No near we So question. been ultimately, be think, it's the positive. But will serving certainly, under a term, in pressure. it that's

will that question-and-answer today's the conclude FirstSource Call. you questions participation. this time, and As ladies gentlemen, there your Builders no Earnings XXXX Third are session and Conference further for at Thank Quarter

of disconnect this time, rest at day. your your may wonderful line and a You have