Q3 2024 GMS Inc Earnings Call

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Greetings welcome to G. M S Inc.

Operator: Greetings and welcome to GMS Inc.'s 3rd Quarter 2024 Earnings Conference. At this time, all participants are in a list. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance, please call the number displayed on the screen, com. Please press star zero on your telephone keypad. As a reminder, this conference is being broadcast live. It is now my pleasure to introduce you, Carey P

2024 earnings conference call at this time, all participants are in a listen only more.

A brief question and answer session, which followed the fallen presentation.

If anyone should be quiet upgrade the assistance during the conference <unk> on your telephone keypad as a reminder, dysfunction is being at a club.

It is now my pleasure to introduce you host carry Felts, Vice President and Investor Relations. Thank you must fetch you might begin.

Carey Phelps: Vice President of Industry Relations. Thank you, Ms. Phelps. Thank you. Good morning, and thank you for joining us for the GMS Earnings Conference call for the third quarter of fiscal 2024. I'm joined today by John Turner, President and Chief Executive Officer, and Scott Deakin, Senior Vice President and Chief Financial Officer. In addition to the press release issued this morning, we have posted PowerPoint slides to accompany this call in the investor section of our website at www.gms.gov. As detailed on slide 2, on today's call, management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Four forward-looking statements address matters that are subject to risks and uncertainties, many of which are beyond our control and may cause actual results to differ from those discussed today. As a reminder, forward-looking statements represent management's current estimates and expectations. The company assumes no obligation to update any forward-looking statements in the future.

Carey Phelp: Thank you.

Carey Phelp: Good morning, and thank you for joining us for the G. M. S earnings conference call for the third quarter of fiscal 2024, I'm joined today by John Turner, President and Chief Executive Officer, and Scott <unk>, Senior Vice President and Chief Financial Officer.

Carey Phelp: In addition to the press release issued this morning, we've posted Powerpoint slides to accompany this call and the investors section of our website at Www Dot G. M S Dot com.

Carey Phelp: As detailed onside too on today's call management's prepared remarks and answers to your questions may contain forward looking statements as defined in the private Securities Litigation Reform Act of 1995.

Forward looking statements the dress matters that are subject to risks and uncertainties many of which are beyond our control and may cause actual results to differ from those discussed today.

Carey Phelp: As a reminder, forward looking statements represent management's current estimates and expectation the.

Carey Phelp: The company assumes no obligation to update any forward looking statements in the future.

Carey Phelps: Listeners are encouraged to review the more detailed discussions related to these forward-looking statements contained in the company's filings with the SEC, including the risk factors section in the company's 10-K and other periodic reports. Today's presentation also includes a discussion of certain non-GAAP measures. The definitions and reconciliations of these non-GAAP measures are provided in the press release and presentation slides. Please note that references on this call to the third quarter of fiscal 2024 relate to the quarter ended January 31st, 2024. Finally, once we begin the question and answer session of the call, in the interest of time, we kindly request that you limit yourself to one question and one follow-up. With that, I'll turn the call over to John Turner, whose discussion will begin on slide three. Thank you.

Listeners are encouraged to review the more detailed discussions related to these forward looking statements contained in the company's filings with the F. D C, including the risk factor section in the company's 10-K and other periodic report.

Carey Phelp: Today's presentation also includes a discussion of certain non-GAAP measures the definitions and reconciliation for these non-GAAP measures are provided in the press release and presentation slides.

Carey Phelp: Please note that references on this call to the third quarter of fiscal 2024 relate to the quarter ended January 31st 2024.

Carey Phelp: Finally, once we begin to question and Anna <unk>.

Question and answer session of the call and the interest of time, we kindly request would you limit yourself to one question and one follow up.

With that I'll turn the call over to John Turner, whose discussion will begin on slide three.

Carey Phelp: <unk>.

John C. Turner: Thank you, Carey, and thank you all for joining us today. I would also like to thank our team for once again executing against our key initiatives and delivering outstanding service and solid results this quarter. Volume growth was realized across all of our major product categories, as we benefited both from our organic efforts and from the contributions of recent acquisitions. And, except in steel, pricing remained resilient and, in total, accretive to growth as compared with a year ago. Our increase in total net sales versus last year was achieved despite significant steel price deflation, which we expected, along with the near-term headwind of adverse weather conditions that we faced in late January. Typical weather forced all but one of our geographic divisions to shut down locations temporarily during the week of January 15th, delaying sales into the early part of our fourth quarter.

John C. Turner: Thank you Kerry.

Thank you all for joining us today.

John C. Turner: I would also like to thank our team for once again executing against our initiatives and delivering outstanding service and solid results this quarter.

John C. Turner: Volume growth was realized across all of our major product categories. As we've benefited both from our organic peppers and the contributions of recent acquisitions.

John C. Turner: Except in steel pricing remain resilient and in total accretive to growth as compared with a year ago.

John C. Turner: Our increase in total net sales versus last year was achieved despite significant feel price inflation, which we expected.

John C. Turner: Along with the near term headwind of adverse weather conditions that we faced in late January.

John C. Turner: Political whether force all but one of our geographic divisions to shutdown locations temporarily during the week of January 15th.

John C. Turner: <unk> into the early part of our fourth quarter still.

John C. Turner: Still, even with these challenges, we were pleased to deliver third-quarter net income of $51.9 million and adjusted EBITDA of $128 million, which were both above our previously communicated expectations. During the quarter, strong multifamily and commercial and market demand, along with an improving single-family backdrop and gains from acquisition, helped drive volume growth in wallboard, ceilings, steel framing, and complementary products. And these trends are expected to continue as we anticipate delivering both year-over-year and sequential growth in net sales for our fourth quarter as we close out fiscal 2024 at the end of April. While multifamily permits and starts do indicate a forthcoming slowdown, likely in the back half of this calendar year, for now, there remains a significant number of units still under construction.

John C. Turner: Still even with these challenges we were pleased to deliver a third quarter net income of $51.9 million and adjusted EBITDA of $128 million, which were both above our previously communicated expectations.

John C. Turner: During the quarter strong multifamily in commercial and market demand along with an improving single family backdrop and games from acquisitions Hulk drive volume growth and wallboard ceiling steel framing and complimentary products.

John C. Turner: And these trends are expected to continue as we anticipate delivering both your earlier and sequential growth in net sales for our fourth quarter as we close out fiscal 2024 at the end of April.

John C. Turner: While multifamily permits and starts do indicate a forthcoming slowdown likely in the back half of this calendar year for now there remains a significant number of units still under construction.

John C. Turner: Commercial is also expected to continue its current pace of solid demand as our internal and external channel checks indicate levels of backlog consistent with those we experienced in our third quarter. For single-family, we are encouraged by the continuing uptick in new home orders reported by our builder company and the three-month consecutive rise in Builder Confidence. Reflecting Expectations for an Improving Mortgage Rate Environment and the pronounced foundation of pent-up need for housing in a relatively supply-constrained environment.

John C. Turner: Commercial is also expected to continue its current pace, a solid demand as our internal and external channel checks indicate.

John C. Turner: Levels of backlog consistent with those we experienced in our third quarter.

John C. Turner: For single family, we are encouraged by the continuing uptick in new home order reported by our builder customers and the three months consecutive Verizon builder confidence levels.

John C. Turner: Flushing expectations for improving mortgage rate environment, and the pronounced foundation of pent up need for housing and a relatively supply constrained environment.

John C. Turner: In addition, we are pleased with the continued resilience of pricing in Wal-Mart, reinforcing what we continue to believe is a structurally changed industry with low levels of recent new or planned capacity and rising manufacturing costs, particularly given the declining availability of synthetic jets. Pricing and ceilings and complementary products have also held up well, while steel framing has performed as expected, with prices down substantially year over year. Although the Rothsfield price indices began escalating roughly four months ago, it appears that these have now reached a near-term peak.

John C. Turner: In addition, we are pleased with the continued resilience of pricing and wallboard reinforcing what we continue to believe as a structurally changed industry with low levels of recent new or planned capacity and rising manufacturing costs, particularly given the declining availability of synthetic gypsum.

John C. Turner: Pricing and feelings and complimentary products is also held up well while steel framing has performed as expected with prices down substantially year over year.

John C. Turner: Although rossville price indices began escalating roughly four months ago. It appears with these have now reached senior term peak.

John C. Turner: As such, while we expect our prices to slightly increase sequentially for our fiscal fourth quarter, those prices will likely flatten for at least the near term thereafter. Meanwhile, while navigating the near-term dynamics in end-market demand and pricing, our teams have continued to deliver solid results and have maintained their focus on the successful execution of our four strategic pillars, which are highlighted on slide four. First, measuring against data from the Gypsum Association, the Steel Framing Industry Association, and manufacturer disclosures.

John C. Turner: As such while we expect our prices to slightly increase sequentially for our fiscal fourth quarter those prices will likely flatten for at least the near term thereafter.

While navigating the near term dynamics and and market demand and pricing our team to continue to deliver solid results and have maintained their focus on the successful execution of our four strategic pillars, which are highlighted on slide four.

John C. Turner: First measuring against data from the Gypsum Association the steel framing industry Association and manufacturer disclosures. We believe that we have continued to expand our share each of our core product categories.

John C. Turner: We believe that we have continued to expand our share in each of our core product categories. Customers across our end markets are seeing the value that our scale, expertise, product breadth, and commitment to delivering outstanding service provide. In recent months, we have successfully secured a range of new projects, including expanding activity with some of the nation's largest residential homebuilders, while also winning commercial work in those sectors which remain most active, primarily manufacturing, medical, education, government, and data centers, as well as participation in many of the megaprojects underway across the country. Second, our complementary products category continues to grow as an increasingly important part of our product.

John C. Turner: Customers across our end markets are seeing the value that are scale expertise product breath and commitment to delivering outstanding service provider.

John C. Turner: Recent months, we've successfully secured a range of new projects, including expanding activity with some of the nation's largest residential homebuilders. While also winning commercial work in most sectors, which remain most active primarily manufacturing medical education government and data centers as well as participation in many.

John C. Turner: Of the Mega projects under way across the country.

John C. Turner: Second are complimentary products category continues to grow as an increasingly important part of our product mix.

John C. Turner: This category has made up 30% of our sales so far this year, and as we've said in previous quarters, our aim is to grow this category at twice the rate of our core product. In particular, we are placing emphasis on tools and fasteners, each in stucco and insulation, which collectively grew 11.7% for the, while the Total Complementary Products category grew 7.3%.

John C. Turner: This category is made up 30 per cent of our sales so far this fiscal year and as we've said in previous quarters. Our aim is to grow this category at twice the rate of our core products.

John C. Turner: In particular, we replacing emphasis on tools and fasteners, <unk> stucco and installation, which collectively grew 11.7% for the quarter.

John C. Turner: Total complimentary products category grew 7.3%.

John C. Turner: Over time, we expect to continue to drive accelerated growth in this margin accretive segment as a percentage of our overall net sales.

John C. Turner: Over time, we expect to continue to drive accelerated growth in this margin-accretive segment as a percentage of our overall net sales. Third, we are seeing success with our many productivity initiatives and our push to drive complexity costs out of the business, while further realizing the benefits of our attractive scale. Equipping our yard operators with the right tools and technologies continues to improve the efficiency of their operations.

John C. Turner: Third we are seeing success with our many productivity initiatives and are pushed to drive complexity costs out of the business.

John C. Turner: While further realizing the benefits of our attractive scale position.

John C. Turner: Equipping our yard operators with the right tools and technologies continues to improve the efficiency of their operations.

John C. Turner: Our e-commerce advancements are providing an enhanced customer experience and, among other features, offer an avenue for quick product, pricing, and order information. Together with Easy Online Payments, which customers are increasingly taking advantage of. Additionally, we are consolidating a number of our legacy legal entities and merging back-of-house functions, thereby reducing organizational and process complexity, along with costs, while also leveraging the standardization of our product, vendor, customer, and other operational data across the business. Collectively, these initiatives help drive additional profitability in the business and make us better operators, further positioning GMS as the provider of choice for our customers. Finally, our fourth strategic pillar is to expand our platform to include recruitment acquisition and greenfield. During the third quarter, we opened three new green... And we continue to focus on M&A to drive growth with attractive opportunities in both our core and complementary businesses.

John C. Turner: R e-commerce advancements are providing and enhance customer experience and among other features offering Avenue for quick product pricing and order information.

John C. Turner: Together with easy online payments, which customers are increasingly taking advantage of.

John C. Turner: Additionally, we are consolidating a number of our legacy legal entities emerging backup house functionality, thereby reducing organizational and process complexity along with cost while also leveraging the standardization of our product vendor customer and the other operational data across the business <unk>.

John C. Turner: Collectively these initiatives helped drive additional profitability in the business and make us better operators further positioning G. M S. As the provider of choice for our customers.

John C. Turner: Finally, our port strategic pillar is to expand our platform to accretive acquisition in Greenfield opportunities.

John C. Turner: During the third quarter, we opened three new rebuild and we continue to focus on M&A to drive growth with attractive opportunities in both of our core and complimentary businesses.

John C. Turner: In late December, as highlighted on slide five, we capitalized on one of these opportunities and announced our agreement to purchase Hamco Supply Corp., a leading distributor of building products in the New York City market. We are very excited about the prospects of this transaction, which we expect to close in the coming days. CHEMCO's values and highly regarded execution discipline align very well with our own, and we are pleased to welcome the company's leadership and employees as they join GMS.

In late December is highlighted on slide five we capitalize on one of these opportunities and announced our agreement to purchase Camco supply Corporation, leading distributor of building products in the New York City market we.

John C. Turner: We are very excited about the prospects of this transaction, which we expect to close in the coming days <unk>.

John C. Turner: <unk> values and highly regarded execution discipline Ah line, very well with our own and we are pleased to welcome the company's leadership and employees as they join G. M S.

John C. Turner: Bringing can't go into the G. M. S family of brands represents a unique opportunity to advance our strategic priorities.

John C. Turner: Bringing CanCo into the GMS family of brands represents a unique opportunity to advance our strategic priorities, including expanding our share in our core products and geographic expansion in the highly attractive New York City market. Additionally, as we continue to drive complementary product sales, this transaction will present cross-selling opportunities with other GMS operations in the area, including further expanding our leadership position in Walmart. We're very excited about becoming one of the top distributors in this key region, and will look to leverage CAMCO's excellent reputation for customer service and operational execution as a base for further organic and inorganic expansion. Before turning the call over to Scott, who will cover more on this exciting transaction and our business, I want, once again, to thank our team for maintaining our high level of service and performance during the quarter. We again successfully demonstrated the benefits of our end market balance and the flexibility and expertise we have in servicing each one. I am confident that we will continue to drive further growth and profitability as we execute on our strategic priorities. With that, I will turn the call over to Scott. Thanks, J.T. Good morning, everyone.

John C. Turner: Including expanding sharing our core products and geographic expansion in the highly attractive in New York City market.

John C. Turner: Additionally, as we continue to drive complimentary product sales. This transaction will present cross selling opportunities with other G. M. S operations in the area, including further expanding our leadership position in wallboard.

John C. Turner: We're very excited about becoming one of the top distributors in this region.

John C. Turner: And will look to leverage Campos excellent reputation for customer service and operational execution as a base for further organic and inorganic expansion.

John C. Turner: Before turning the call over to Scott, who will cover more on this exciting transaction and our business results I want once again to thank our team for maintaining our high level of service and performance during the quarter.

Speaker Change: We again successfully demonstrated the benefits of our end market balance and the flexibility and expertise we have and servicing each one.

Scott: I am confident that we will continue to drive further growth and profitability as we execute on our strategic priorities.

Scott: With that I will turn the call over to Scott.

Thanks, J K good morning, everyone.

Scott M. Deakin: As just mentioned, in late December, we entered into an agreement to acquire CanCo Supply Corporation & Affiliates for a purchase price of $321.5 million, inclusive of additional consideration in connection with the exit of a legacy pension fund. CAMCO, which generated $235 million in revenue during the 12 months into December 31, 2023, has four legacy locations in the greater New York City market, including yards in Brooklyn, Manhattan, Long Island, and Patterson. Plus, they recently added an important new greenfield location in the Bronx, which we believe will meaningfully add to CAMCO's top-line growth. Before any expected synergies, CAMCO has historically generated EBITDA margins roughly in line with the broader GMS business. In addition, over the next 24 to 36 months, we expect this transaction to generate cost and revenue synergies through the integration of our distribution networks and purchasing programs, cross-selling opportunities, notably for wallboard and complementary products, and SG&A savings. Moreover, as an asset transaction, we will have substantial tax benefits from intangible amortization.

Scott: It's just mentioned in late December we entered into an agreement to acquire Camco supply Corporation and affiliates for a purchase price of $321.5 million inclusive of additional consideration in connection with the exit of a legacy pension fund.

Scott: Kimco, which generated $235 million in revenue during the 12 months ended December 31st 2023 has four legacy locations in the Greater New York City market, including the origin, Brooklyn, Manhattan Long Island and Patterson.

They recently added an important new greenfield location in the Bronx, which we believe will meaningfully to came close top line growth.

Scott: Before any expected synergies cancel has historically generated EBITDA margins roughly in line with the broader gmo's business and.

Scott: In addition over the next 24 to 36 months, we expect this transaction to generally cost and revenue synergies through the integration of our distribution network some purchasing programs.

Scott: Cross selling opportunities, notably for wallboard in complementary products and SG&A savings.

Scott: Moreover, cause I asked the transaction we will we.

Scott: We will have substantial tax benefits from intangibles amortization.

Scott M. Deakin: All in, including these synergies and tax attributes, we expect to pay just above a seven and a half times pro forma EBITDA multiple for this business. We expect to fund this transaction with cash on hand and from borrowings under our ADL, which we expect would, all else being equal, briefly raise our net debt leverage ratio by less than one half turn before returning to our current level over approximately the next year. We are very pleased to be nearing the close of this highly strategic transaction.

Scott: All of them, including the synergies and text attributes we expect to pay just above a 75 times pro forma EBITDA multiple for this business.

Scott: We expect a phone this transaction with cash on hand, and from borrowings under our ABL, which we expect would all else being equal.

Scott: <unk> raise our net debt leverage ratio by less than one half term.

Scott: Four words, returning to our current level over approximately the next year.

Scott: We are very pleased to be nearing the close of this highly strategic transaction.

Scott M. Deakin: With that, let me move on to our results for our fiscal third quarter. Starting with slide six, net sales for a quarter increased 1.9% to $1.3 billion. Volume growth across all of our major product categories, coupled with resilient pricing for nearly all of our product lines, helped to offset an estimated $55 million of steel price deflation, assuming current volumes have been sold at prior year prices. Also, as J.T.

Speaker Change: With that let me move onto our results for fiscal third quarter.

Speaker Change: Starting to slide six net sales for the quarter increased 1.9% to $1.3 billion cause volume growth across all of our major product categories, coupled with Brazilian pricing for nearly all of our product lines helped to offset an estimated $55 million or steal price deflation.

Speaker Change: Assuming current volumes have been sold it prior your prices.

Speaker Change: Also it's J T mentioned mid January harsh weather conditions across much of our service territory delayed project demand and slowed delivery execution, pushing an estimated $15 million of net sales into our fiscal fourth quarter.

Scott M. Deakin: As mentioned, in mid-January, harsh weather conditions across much of our service territory delayed project demand and slowed delivery execution, pushing an estimated $15 million of net sales into our fiscal fourth quarter. This also forced some temporary operational inefficiencies as our teams added weekend and overtime hours to keep our customers' projects moving forward. Commercial and multifamily activity levels remained solid during the quarter, while the sentiment around single-family demand is improving. Our recent acquisitions, such as EMJ and Tanner, also contributed positively to our quarter's results. Organically, consolidated sales were essentially flat as compared with the same period a year ago.

Speaker Change: This also for some temporary operational inefficiencies as our teams added weekend in overtime hours to keep our customers projects moving forward.

Speaker Change: Commercial and multifamily activity levels remains solid during the quarter, while the sentiment around single family demand is improving our.

Speaker Change: A recent acquisitions such as Ian J antenna also contribute positively to our quarters results.

Speaker Change: Organically consolidated sales were essentially flat as compared with the same period a year ago.

Speaker Change: From you or send market perspective, multifamily sales dollars grew 8.2% year over year, well single family sales dollars declines $6, 1%.

Scott M. Deakin: From a USN market perspective, multifamily sales dollars grew 8.2% year-over-year, while single-family sales dollars declined 6.1%, resulting in a total residential sales dollar decline of 2.4%. Commercial sales dollars in the U.S. grew 1.7% as increased sales volumes were muted by significant steel price deflation. Wall Board sales dollars of $520.7 million were up 4% over the same period last year, with multifamily and commercial volumes up 12.7% and 7.9%, respectively. However, single family volumes were down only 2.3% year-over-year.

Speaker Change: Resolving a total residential sales dollar decline of 2.4%.

Speaker Change: Commercial sales dollars in the U S grew 1.7 per cent is increased sales volumes were muted by significant steal price deflation.

Speaker Change: Wallboard sales dollars or $527 million were up 4% over the same period last year with multifamily and commercial volumes of $12 seven per cent, 7.9% respectively.

Speaker Change: Single family volumes were down only 2.3 per cent your ear and based on our current run rates Gibbons, increasing sequential growth. We expect this comparison to turn positive for fiscal fourth quarter.

Speaker Change: Organically third quarter wallboard sales were up 3.5% compared with the prior year period comprised of a 3.6% increase in volume with a nearly flat price of mixed component.

Scott M. Deakin: And based on our current run rates, given increasing sequential growth, we expect this comparison to turn positive for our fiscal fourth quarter. Organically, third-quarter wallboard sales were up 3.5% compared with the prior year period, comprised of a 3.6% increase in volume with a nearly flat price and mix component. For the third quarter, the average realized wallboard price was $473 per 1,000 square feet, flat with a year ago and down slightly from our fiscal second quarter.

Speaker Change: For the third quarter of the average realize wallboard price was $473 per thousand square feet flat with a year ago and down slightly from our physical second quarter.

Speaker Change: Overall wallboard pricing continues to be resilient despite year over year declines in single family wallboard volumes for now five consecutive quarters.

Speaker Change: With continued improvement anticipated in the single family space.

Speaker Change: Developing renewal of price increase negotiations, we expect for wallboard pricing to improve at least slightly sequentially and year over year for fiscal fourth quarter.

Scott M. Deakin: Overall, wallboard pricing continues to be resilient despite year-over-year declines in single-family wallboard volumes for now five consecutive quarters, continued improvement anticipated in the single-family space, and the developing renewal of price increase negotiations. We expect wall-board pricing to improve at least slightly, both sequentially and year-over-year, for our fiscal fourth quarter. Ceiling sales of $155.7 million in the quarter were up 6.1%, all from the benefit of increased volumes, as any price benefits were offset by mix. Organic sales and ceilings grew 4.2%, with a 4.3% increase in volumes, slightly offset by a 0.1% decrease in price and mix. Third quarter steel framing sales of $203.4 million were down 13.3% versus the prior year quarter, as deflationary pricing drove a 24.3% decline in price and mix, while volumes increased 11%. Organically, steel framing sales were down 14% with a 24.2% decline in price next partially offset by a 10.2% increase in volume. While prices for steel framing products were down 21.9% year over year and 4% on a sequential basis, multiple framing manufacturers have issued notices of upcoming pricing.

Feeling sales of $155.7 million in the quarter were up 6.1% all from the benefit of increased volumes as any price benefits were offset by mix.

Speaker Change: Organic sales and ceilings crew, 4.2% with a 4.3% increase in volumes slightly offset by 0.1% decrease from price a mix.

Speaker Change: Third quarter steel framing sales of $203 $4 million were down 13.3% versus the prior year quarter.

Speaker Change: Deflationary pricing drove a 24.3% decline in price and mix while volumes increased 11%.

Speaker Change: Organically steel framing sales were down 14% with a 24.2% decline in price and mix, partially offset by a 10.2% increase in volume.

Speaker Change: Well prices for steel framing products were down 21.9% year over year and 4% on a sequential basis.

Speaker Change: Multiple framing manufacturers have issued notices of upcoming price increases.

Speaker Change: As a result, we expect for the year over year declines in pricing to continue to moderate as we finish up fiscal 2024.

Speaker Change: Some sequential improvement expected for fourth quarter.

Speaker Change: Complementary product sales of $378.6 million per quarter grew 7.3% year over year in total and 1.8% on an organic basis, representing the 15th consecutive quarter a through the cycle growth for this category.

Speaker Change: Extension of kind of complimentary products, particularly through tools and fasteners, Houston stucco and installation continues to be a key element of our strategic priorities.

Scott M. Deakin: As a result, we expect the year-over-year declines in pricing to continue to moderate as we finish out fiscal 2024, with some sequential improvement expected for our fourth quarter. Complementary product sales of $378.6 million for the quarter grew 7.3% year-over-year in total and 1.8% on an organic basis, representing the 15th consecutive quarter of three-cycle growth for this category. Expansion of complementary products, particularly for tools and fasteners, eaves and stucco, and insulation, continues to be a key element of our strategic priority. We are sharing commercial and purchasing best practices across the organization to promote the advancement of these product lines, building on our desire to expand this margin-accretive category through both organic and inorganic means.

Speaker Change: We are sharing commercial and purchasing best practices across the organization to promote the advancement of these product lines building on our desire to expand this margin accretive category through both organic and inorganic means.

Speaker Change: Now turning to slide seven which highlights our profitability for the quarter.

Speaker Change: Gross profit of $414 $7 million increased 3.1% compared to the prior year quarter, reflecting improved volumes and the associated attainment calendar year and volume incentive targets, partially offset by deflationary dynamic some steel pricing.

Speaker Change: Gross margin of 33 per cent was up 40 basis points as compared to 32.6% a year ago. Despite the steel deflation incrementally benefited mostly from a realisation of a purchasing incentives.

Scott M. Deakin: Now, turning to slide 7, which highlights our profitability for the quarter. Growth profit of $414.7 million increased 3.1% compared to the prior year quarter, reflecting improved volumes and the associated attainment of calendar year-end volume and center targets, partially offset by deflationary dynamics in steel prices. Gross margin of 33% was up 40 basis points as compared to 32.6% a year ago. Despite the steel deflation, it incrementally benefited mostly from a realization of the purchasing incentive. Selling general and administrative expenses were $295.7 million for the quarter, an increase of $28.3 million over the prior year quarter.

Speaker Change: Selling general and administrative expenses were $295.7 million for the quarter, an increase of $28.3 million over the prior year quarter.

Speaker Change: Nearly $10 million of that increase related to recent acquisitions in newly opened greenfield locations.

Speaker Change: The remaining organic increase was primarily driven by labor and other expenses, particularly those elevated by the higher cost of Serb mix and high volume of commercial and multifamily market demand.

Speaker Change: SG&A as a percentage of net sales.

Speaker Change: It was 23.5% an increase of 180 basis points from the third quarter of fiscal 2023.

Speaker Change: Along with the items I've just noted for SG&A expenses reduced revenue from steel price deflation negatively impacted SG&A leveraged buy 100 basis points and the weather related revenue delays and associated operational inefficiencies had an estimated 30 basis points of additional unfavourable impact.

Scott M. Deakin: Nearly $10 million of that increase related to recent acquisitions and newly opened greenfield locations. The remaining organic increase was primarily driven by labor and other expenses, particularly those elevated by the higher cost-to-serve mix and high volume of commercial and multifamily in-market demand. SG&A, a percentage of net sales, was 23.5%, an increase of 180 basis points from the third quarter of fiscal 2023. Along with the items I just noted for SG&A expenses, reduced revenue from steel price deflation negatively impacted SG&A leverage by 100 basis points, and the weather-related revenue delays and associated operational inefficiencies had an estimated 30 basis points of additional unfavorable impact. Adjusted SG&A expense as a percentage of net sales of 22.9% increased 150 basis points from 21.4% in the prior year quarter. All in, and with 10.9% higher interest expense, net income decreased 19.9% to $51.9 million for the quarter, or $1.28 per diluted share, compared to net income of $64.8 million, or $1.53 per diluted share, a year ago. Adjusted EBITDA of $128 million decreased 9.1%, or $12.8 million, as compared with a year ago.

Speaker Change: Adjusted SG&A expenses, a percentage of net sales of 22.9% increase of 150 basis points from 21.4% in the prior year quarter.

Speaker Change: Calling and was 10.9% higher interest expense net income decreased 19.9% to $51.9 million for the quarter $4 28 per diluted share compared to net income was $64.8 million $4 53 per diluted cheer.

Speaker Change: Ago.

Speaker Change: Adjusted EBITDA of $128 million decreased nine, 1% or $12.8 million as compared with a year ago.

Speaker Change: Justin EBITDA margin decreased to 10.2% compared to last year's third quarter level of 11.4%.

Speaker Change: Now shifting to our balance sheet, which was highlighted on slide eight.

Speaker Change: At January 31st we had cash on hand of $88.3 million and $866 $3 million of available liquidity under our revolving credit facility. We have no near term debt maturities in our net adjusted EBITDA that leverage at the end of the quarter was one five times improved from one six times a year ago.

Speaker Change: Given the approaching kimco transaction closure, we expect to end the fourth quarter with net debt leverage of approximately 1.8 times before monitoring back towards our current level over the next 12 months or so.

Scott M. Deakin: An adjusted EBITDA margin decreased to 10.2% compared to last year's third quarter level of 11.4%. Now, shifting to our balance sheet, which is highlighted on slide 8. At January 31st, we had cash on hand of $88.3 million and $866.3 million of available equity under our revolving credit facility. We have no near-term debt maturities, and our net adjusted EBITDA debt leverage at the end of the quarter was 1.5 times, improved from 1.6 times a year ago. Given the approaching CAMCO transaction closure, we expect to end the fourth quarter with net debt leverage of approximately 1.8 times before monitoring back towards our current level over the next 12 months or so. Just after the end of our third quarter, we opportunistically repriced our term loan B at SOFR plus 225, successfully achieving a 75 basis point improvement, which represents a $3.7 million annualized interest expense savings as compared to the prior terms Our loan agreement will expire in May of 2030, consistent with its prior term. For the quarter, cash provided by operating activities was $104.3 million compared to $134.1 million a year ago.

Speaker Change: Just after the end of our third quarter, we Opportunistically repriced our term loan B, a sofa plus 225 successfully achieving a 75 basis point improvement.

Speaker Change: Which represents a 3.7 million dollar annualized interest expense savings as compared to the prior terms or a 2.6 million dollar annual benefit to net income.

A loan agreement will expire in May of 2030, consistent with its prior term.

Speaker Change: But a quarter cash provided by operating activities was $104 $3 million compared to $134 $1 million a year ago freak.

Speaker Change: Free cash flow is $94 $1 million compared to $122.5 million for the same period last year.

Speaker Change: For the full year, we expect free cash flow generation for approximately 55% to 60% of adjusted EBITDA.

Speaker Change: Capital expenditures of $10.2 million for the quarter compared to $11.6 million a year ago.

Speaker Change: We continued to expected for the full year fiscal 2024 capital expenditures will be approximately $56 million with $58 million.

Speaker Change: We were purchased another 370000 shares of stock during the quarter for $24 $8 million and had $216 $5 million a share purchase authorization remaining of January 31.

We have a solid balance sheet with no near term maturities and attractive capital structure <unk>.

Speaker Change: Providing an effective foundation for the execution of our strategic priorities.

Speaker Change: Of note on the strength of our business and the health of our balance sheet Gmi's was upgraded earlier this month by Moody's investors service to be a one putting us now only one notch below investment grade.

Speaker Change: Looking forward, we expect to maintain our balanced approach to capital allocation is we intend to continue to invest in the business seek additional M&A opportunities and opportunistically leverage favourable market conditions to repurchase shares.

Scott M. Deakin: Free cash flow is $94.1 million compared to $122.5 million for the same period last year. For the full year, we expect free cash flow generation of approximately 55 to 60% of adjusted EBITDA. Capital expenditures of $10.2 million for the quarter compared to $11.6 million a year ago.

Speaker Change: I want to thank our team for the remarkable efforts to flex our operations as demand has shifted over time and for their commitment to drive improve profitability, all while maintaining exceptional levels of service.

Scott M. Deakin: We continue to expect that for the full year fiscal 2024, capital expenditures will be approximately $56 million to $58 million. We repurchased another 370,000 shares of stock during the quarter for $24.8 million, and we had $216.5 million of share purchase authorization remaining on January 31st. We have a solid balance sheet with no near-term maturities and an attractive capital structure, providing an effective foundation for the execution of our strategic priority. Of note, on the strength of our business and the health of our balance sheet, GMS was upgraded earlier this month by Moody's Investors Service to BA1, putting us now only one notch below investment grade. Looking forward, we expect to maintain our balanced approach to capital allocation as we intend to continue to invest in the business, seek additional M&A opportunities, and opportunistically leverage favorable market conditions to repurchase shares. I want to thank our team for the remarkable efforts to flex our operations as demand has shifted over time and for their commitment to drive improved profitability, all while maintaining exceptional levels of service. Before turning the call over to J.T.

Speaker Change: Before turning the call over to J T to provide review of our outlook in fourth quarter projections. Let me highlight two housekeeping items first. Please note. There are 64 selling days during the fourth quarter of fiscal 2024 as compared with 63 in the prior year period.

Speaker Change: The projections with J T will provide exclude any potential benefits from the camco transaction. However.

John C. Turner: However, once the transaction closes likely in the next few days, we would expect came through to add approximately $20 million in net sales.

John C. Turner: Approximately $2 million to $2.5 million of adjusted EBITDA for each full month as part of the G. M S. During our fiscal fourth quarter.

J Team: With that I will now turn the call over to J team. He will start on slide nine.

J Team: Thank you Scott.

J Team: Looking forward, we are encouraged by what we believe lies ahead for G. M X.

J Team: On our call in December we spoke about the likelihood of a potential air pocket and commercial activity starting some time during calendar 2024.

J Team: While stealing likely eventuality at some point it appears to be further down the road and we would have expected and likely less pronounced in both duration and severity.

J Team: The strength in the U S economy, the myriad large scale infrastructure stimulus programs.

Scott M. Deakin: Before providing a review of our Outlook and fourth quarter projections, let me highlight two housekeeping items. First, please note that there are 64 selling days during the fourth quarter of fiscal 2024, as compared with 63 in the prior year period. And second, the projections that JT will provide exclude any potential benefits from the CAMCO transaction.

J Team: And the expectation of reduced interest rates and loosening lendings conditions in the back half of 2024 provide more optimism than previously anticipated.

J Team: Assuming that there's still present risk of a broad contagion of commercial loan defaults is avoided.

J Team: And in the very near term our backlog would indicate similar levels of commercial activity in queue for as in our previous quarter.

Scott M. Deakin: However, once the transaction closes, likely in the next few days, we would expect Canco to add approximately $20 million in net sales, with approximately $2 to $2.5 million of adjusted EBITDA for each full month as part of GMS during our fiscal fourth quarter. With that, I'll now turn the call over to J.T., who will start on slide nine.

J Team: Our commercial volumes remained solid with particularly high demand for steel products.

J Team: Also February has proven to be a strong month, not only for commercial but across our other end markets.

J Team: Albeit in part due to the work that was weather delayed at the end of our third quarter.

J Team: Single family demand is improving and we expect it to show year over year improvement for the full calendar year of 2024.

John C. Turner: Thank you, Scott. Looking ahead, we are encouraged by what we believe lies ahead for GMS. On our call in December, we spoke about the likelihood of a potential air pocketing commercial activity starting sometime during calendar 2024. While still a likely eventuality at some point, it appears to be further down the road than we would have expected, and likely less pronounced in both duration and severity. Strengthening the U.S. Economy, the Myriad Large-Scale Infrastructure Stimulus Program, and the expectation of reduced interest rates and looser lending conditions in the back half of 2024 provide more optimism than previously anticipated, although only assuming that the still present risk of a broad contagion of commercial loan defaults is avoided.

J Team: For multifamily despite a reduction in starts its current backlog continues to drive construction activity and we expect it to do so for at least the next couple of quarters.

Given this backdrop and starting with wallboard volumes, we anticipate commercial to be up mid to high single digits for our fiscal fourth quarter on a per day basis multi.

J Team: Multifamily wallboard volumes are expected to grow low single digits as compared with the prior year period as we are progressively facing much tougher a year ago comparison.

J Team: And single family Wallboard volumes are expected to be up low single digits.

J Team: If realized will represent the first positive year over year comparison for single-family wallboard volume in a year and a half.

J Team: In total wallboard volumes are expected to be up low single digits per day as compared with the fourth quarter of last year.

John C. Turner: And in the very near term, our backlog would indicate similar levels of commercial activity in Q4 as in our previous quarter. Our commercial volumes remain solid, with particularly high demand for steel products. Also, February has proven to be a strong month, not only for commercial but across our other end markets, albeit in part due to the work that was weather delayed at the end of our third quarter. Single-family demand is improving, and we expect it to show year-over-year improvement for the full calendar year of 2024. For multifamily, despite a reduction in starts, its current backlog continues to drive construction activity, and we expect it to do so for at least the next couple of quarters. Given this backdrop, and starting with wall board volume,

J Team: Pricing for wallboard is expected to remain resilient with price increase negotiations currently underway.

J Team: As such for our fiscal fourth quarter, we expect wallboard prices to be up slightly in the low single digits, both sequentially and as compared to a year ago.

J Team: And feeling given our expectation of continued solid demand in our commercial and market. We expect low to mid single digit per day increases year over year for volume.

J Team: And at mid single digit increase for pricing mix.

J Team: Where steel framing as I stated earlier demand is expected to remain solid with per day volumes up in the mid teens for the fourth quarter.

J Team: While our prices appear to have stabilized and steel framing for now they still lag last year's level with a year over year decline in the low teens expected on a per day basis.

John C. Turner: We anticipate commercial to be up mid to high single digits for our fiscal fourth quarter on a per day basis. Multifamily wall board volumes are expected to grow in those single digits as compared with the prior year period, as we are progressively facing much tougher year-ago comparisons. And, single-family wall board volumes are expected to be up below single digits, which, if realized, will represent the first positive year-over-year comparison for single-family wall board volumes in a year and a half. In total, wall board volumes are expected to be up low single digits per day as compared with the fourth quarter of last year. Pricing for Wal-Mart is expected to remain resilient, with price increase negotiations currently underway.

Finally, net sales for our complimentary products are expected to grow high single digits on a per day basis as compared with the fourth quarter a year ago.

J Team: All in as shown on slide 10, including the additional sales dollars that were pushed into Q4 due to weather delays and factoring in an expectation for approximately $25 million a year over year deflation and steal pricing.

J Team: We anticipate net sales per day to increase mid single digits.

J Team: As compared with a year ago.

J Team: We also expect but the seal price deflation will make me really impact SG&A as a percentage of sales by an estimated 40 basis points.

J Team: For gross margin without the benefits we saw in Q3, when we achieved new volume tears associated with your and incentives.

J Team: A single family begins to increase as a component of our mix.

John C. Turner: As such, for our fiscal fourth quarter, we expect wall board prices to be up slightly in the low single digits, both sequentially and as compared to a year ago. For ceilings, given our expectation of continued solid demand in our commercial land market, we expect low to mid-single digit per day increases year-over-year for volume, and a mid-single-digit increase for price and MIPS. For steel framing, as I stated earlier, demand is expected to remain solid with per day volumes up in the mid-teens for the fourth quarter. While our prices appear to have stabilized in steel framing for now, they still lag last year's level, with a year-over-year decline in the low teens expected on a per-day basis.

J Team: We expect our gross margin to be approximately $32, 2% for the fourth quarter.

J Team: Altogether.

J Team: Chested EBITDA is expected to be in the range of $145 million to $150 million for the fourth quarter.

J Team: Looking ahead the fiscal 2025, we believe that we will again see the dynamics of our end market shift with strength building for single family.

J Team: While construction will likely reach completion by calendar Q3 on a substantial portion of what remains of the multifamily backlog.

J Team: We are currently expecting commercials to continue with activity levels that are similar to what we just reported for at least the next couple of quarters.

J Team: Given that with a balanced mix of end markets. Our team is ready for these expected shifts and it has been it has demonstrated our ability to flex as needed to best serve our customers.

John C. Turner: Finally, net sales for our complementary products are expected to grow high single digits on a per day basis, as compared with the fourth quarter a year ago. All in, as shown on slide 10, including the additional sales dollars that were pushed into Q4 due to weather delays, and factoring in an expectation of approximately $25 million of year-over-year deflation in steel prices. We anticipate net sales per day to increase by mid-single digits, as compared with a year ago. We also expect that steel price deflation will negatively impact SG&A as a percentage of sales by an estimated 40 basis points.

Speaker Change: Thank you for joining us today.

Speaker Change: Operator, we are ready to open the lines for questions.

Speaker Change: Thank you.

Speaker Change: You will now be conducting a question and lots of session. If you would like to ask a question. Please press one on the telephone keypad.

Speaker Change: Then formation is dawn will indicate your line isn't the question queue. You <unk>, if you would like to remove your questions from the queue.

Speaker Change: Dispense using speaker equipment.

Speaker Change: May be necessary to pick up the handset before pressing the stock Keith one moment. Please let me pull for questions.

John C. Turner: In Q3, when we achieved new volume tiers associated with year-end incentives, and a single family began to increase as a component of our mix. We expect our gross margin to be approximately 32.2% for the fourth quarter. All together, Adjusted EBITDA is expected to be in the range of $145 million to $150 million for the fourth quarter. Looking ahead to fiscal 2025, we believe that we will again see the dynamics of our end market shift. Strength Building for Single Families

David John Manthey: The first question comes from the line of David 90.

David John Manthey: Please go ahead.

David John Manthey: Thank you good morning, everyone J T. I think you just said that wallboard you expected it in the fourth quarter to beat up low single digits year over year at quarter over quarter. When I check if I have that right and also I have 481 for thousands in last fourth quarter.

Speaker Change: Check those facts is that correct.

Speaker Change: [noise] are you talking volume and price or just fries.

Speaker Change: There was a starting price.

John C. Turner: While construction will likely reach completion by calendar Q3 on a substantial portion of what remains of the multi-family background, we are currently expecting commercial to continue with activity levels that are similar to what we just reported for at least the next couple of quarters. Given that, with a balanced mix of end markets, our team is ready for these expected shifts and has been and has demonstrated our ability to flex as needed to best serve our customers. Thank you for joining us.

Speaker Change: Yeah, so sequentially, we expect it to improve and year over year, we expect it to be up slightly I'm looking to see if that order number or drive or anyone and just so you know we ended the third quarter at a roughly 480 in February tracking higher closer to 490.

Speaker Change: Okay.

Speaker Change: Yeah that was the gist of the question is the customer reaction to those February increases must be fairly good given that you're already seeing that affect you just four weeks right.

Operator: Operator, we are ready to open the line for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question. You may press star 2 if you would like to remove your questions from the question, for participants using speaker equipment. It may be necessary to pick up the handset before pressing the start button.

Speaker Change: Yeah, I mean, a customer reactions are never good to price increases but.

Speaker Change: The reality is there are parts of the market, where we are we are able to get slightly better prices at the moment.

Got it.

Speaker Change: Okay and then.

Speaker Change: Second question.

Speaker Change: Although it's negative for revenues and operating margins does lower steal pricing have a positive mix effect on your gross margin.

David John Manthey: One moment, please, while we poll for questions. The first question comes from the line of David Manthey. Bad, please. Thank you, good morning everyone.

Speaker Change: Can you just remind us in <unk> terms, where where seal ranks relatives. Your other segment.

John C. Turner: JT, I think you just said that Wal-Mart's expected it in the fourth quarter to be up low single digits year over year and quarter over quarter. I want to check if I have that right and also, I have $481,000 per thousand in the last fourth quarter. I just want to check those facts. Are you talking volume and price or just price? There, I'm just talking... Christ.

Speaker Change: Your product segments.

It's third but it's it's gross margins are pretty good so complimentary products wallboard steal very close to wallboard actually at this point in gross margin percent.

Speaker Change: And then feelings is the lowest of the gross margin percentages.

Speaker Change: Uh-huh.

Speaker Change: Okay. So it's still being down in the mix that actually might be slightly gross margin accretive when you think about the the effect of that.

John C. Turner: Yeah, so sequentially, we expect it to improve, and year over year, we expect it to be up slightly. I'm looking to see if that quarterly number was right. 481 and, just so you know, we ended the third quarter at roughly 480 and February was tracking higher, closer to 490. OK. Yeah, that was the question: customer reaction to those February increases must be fairly good given that you're already seeing an effect here just four weeks in, right? Customer reactions are never good to price increases, but the reality is there are parts of the market where we are able to get slightly better prices at the moment. I've got it. Okay, and then the second question.

Speaker Change: I mean.

Speaker Change: Slightly right I mean, it depends on the growth in the other categories, but yes with all that volume broke out the sales dollars will still be pretty significant so.

Speaker Change: It's.

10 basis points, maybe at the Max where I kind of deal not a lot.

Speaker Change: Okay.

Speaker Change: Thank you very much.

Speaker Change: Thank you.

Speaker Change: Thank you next question comes from the line of Noah Local school, Steven and please go ahead.

Noah Christopher Merkousko: Good morning, Thanks for taking my questions.

Speaker Change: Alright.

Noah Christopher Merkousko: So first I wanted to touch on that those are the wallboard price again again, you know really encouraging to see some some improvement here finally, it seems to be corresponding with single family, but I guess as we think longer term throughout calendar 24.

John C. Turner: Although it's negative for revenues and operating margins, does lower steel pricing have a positive mix effect on your gross margin? And if you just remind us in stack rank terms where steel ranks relative to your other segment, your product segment. It's third, but its gross margins are pretty good. So complementary products, wallboard, steel, very close to wallboard actually, at this point in gross margin percent, and then feelings is the lowest of the gross margin percentage. Okay, so with steel being down in the mix, that actually might be slightly gross margin accretive when you think about the effect of that. I mean, slightly, right?

Noah Christopher Merkousko: You know I I I think we should continue to see strong single family volumes. It is that kind of low single digit growth.

Noah Christopher Merkousko: Good you know kind of ballpark to think about just in terms of holding onto that price.

Noah Christopher Merkousko: That you got here in the physical four Q as we look too you know maybe the next three quarters.

Speaker Change: I would say, yes, and you're right, it's fully dependent on the strength in the single family market.

Speaker Change: And and just to follow up on that point the.

Speaker Change: <unk> not even consider some so maybe mix impact as you see you know a negative mixed impact in the sea more single family.

Speaker Change: That's right.

Speaker Change: Alright, Great and then one last one for me it sounds like your commentary around commercial has really improved it just hoping to get a little bit more detail there on what specific kind of and markets within commercial you're seeing that strength, the leading indicators still kind of.

John C. Turner: I mean, it depends on the growth and the other categories, but yes, with all that volume growth, though, the sales dollars will still be pretty significant. So it's 10 basis points maybe at the max, or I kind of deal, not a lot. Okay. Got it. Thank you very much.

David John Manthey: Yep, thank you. Thank you. Next question comes from the line of Noah Merkousko with Steven Inc. Good morning. Thanks for taking my questions. I don't know what...

Speaker Change: <unk> <unk>.

Speaker Change: Not so rosy picture as we look forward, so maybe kind of help us understand what what's driving your slightly differentiated view here.

Noah Christopher Merkousko: So first, I wanted to touch on that wallboard price again, really encouraging to see some improvement here finally seems to be corresponding with single-family. But I guess as we think longer term, throughout calendar year 24, I think we should continue to see strong single-family volumes. Is that kind of low single-digit growth a good, you know, kind of ballpark to think about just in terms of holding on to that price that you got here in the fiscal 4Q as we look to, you know, maybe the next three quarters? I would say yes, and you're right. It's fully dependent on the strength of the single-family market.

Speaker Change: I I think that if you look at just purely the Abi and you look at the impact of multifamily on the a V. I. It's a huge drag. So what you are seeing as you are seeing a much bigger headline decline.

Speaker Change: And we've already kind of accounted for that expected multifamily decline multifamily in our business, 15% to 17%. So we've kind of accounted for that and expect that in the back half. So it's not adhere to drag for us as that headline a V. I would indicate underneath that you're seeing a lot of strength in those categories I talked about.

John C. Turner: And just to follow up on that point, that even considers some maybe mixed impact as you see, you know, a negative mixed impact as you see more single-family homes. That's right. All right, great. And then one last one for me.

Speaker Change: Earlier, you're seeing a lot of make a project activity chip plant some car plants and all of the supporting infrastructure around all of that.

Speaker Change: Out there you are seeing strength in.

Speaker Change: Medical you're seeing strength and data centers note no slowing down and data centers right, particularly with this AI Revolution.

Noah Christopher Merkousko: You know, it sounds like your commentary around commercial has really improved. Just hoping to get a little bit more detail there on what specific kind of end markets within commercial you're seeing that strength. You know, the leading indicators still kind of point to a not so rosy picture as we look forward. So maybe kind of help us understand what's driving your slightly differentiated view here. I think that if you look at just purely the ABI and you look at the impact of multifamily on the ABI, it's a huge drag. So what you're seeing is you're seeing a much bigger headline decline, and we've already kind of accounted for that expected multifamily decline. Multifamily in our business, 15 to 17 percent.

Speaker Change: Going on so so a lot of the categories that have been driving the strength today continue to drive the strength tomorrow and I think the mega projects, probably offset a lot of the smaller commercial that's having a really hard time being funded all that being said the expectation is and you guys are probably watching the PCE. This morning, because I don't have my phone with me at the moment, but that's.

Speaker Change: Probably out already so I do think that the interest rate environment with you know most of the expectations being a June start for the fed funds rate to come back down again, I think that that would create this loosening of this tight funding situation that small commercial and medium commercial is facing.

John C. Turner: So we've kind of accounted for that and expect that in the back half. So it's not as huge a drag for us as that headline ABI would indicate. Underneath that, you're seeing a lot of strength in those categories I talked about earlier. You're seeing a lot of megaproject activity, chip plants, car plants, and all of the supporting infrastructure around all of that out there. You're seeing strength in Medical, you're seeing strength in data centers, no slowing down in data centers, right, particularly with this AI revolution going on. So a lot of the categories that have been driving the strength today will continue to drive the strength tomorrow, and I think the mega projects probably offset a lot of the smaller commercial that's having a really hard time being funded. All that being said, the expectation is, and you guys are probably watching the PCE this morning because I don't have my phone with me at the moment, but that's probably out already.

Speaker Change: And that's important to happen and I do think it's going to happen, but I think that's part of those the positivity.

Speaker Change: I am conveying is that large commercial already funded already in the pipeline is going to continue and hopefully what we see as we see those interest rates moderate into the back half of this year and really more importantly, the lending environment improves.

For commercial.

Speaker Change: Activity those things all come together and I believe will be fine I think that like we said, it's probably going to decline there'll be an air pocket, but it'll be later in the year and it will probably be not as severe as I would've, possibly five at the end of last in the last quarter.

Speaker Change: Well, that's really encouraging I appreciate all the color of their thanks for your time.

Absolutely.

Speaker Change: Thank you next question that's on the line off Scot singer via Davidson physical pain.

Scott M. Deakin: Great. Thank you and good morning, everyone.

Scott M. Deakin: Is that correct.

John C. Turner: So I do think that the interest rate environment, with most of the expectations being a June start for the Fed funds rate to come back down again, I think that that would create this loosening of this tight funding situation that small commercial and median commercial are facing. And that's important to happen. And I do think it's going to happen.

Scott M. Deakin: If if we look at I guess to 80 basis point decline in gross margin that's expected in queue for us is that primarily the purchase incentives falling off maybe a little bit of single family mix dynamic there with wallboard or are there any other kind of big factors within that.

Scott M. Deakin: Asian.

Asian: No. That's it it's basically the the expectation we had a pleasant surprise last year in the in the achievement of some of these calls that happened in the fourth quarter.

John C. Turner: But I think that's part of the positivity that I'm conveying is that large commercial, already funded, already in the pipeline, is going to continue. And hopefully, what we'll see is that interest rates moderate into the back half of this year. And really, more importantly, the lending environment improves for Commercial Activity. Those things all come together, and I believe we'll be fine. I think that, like we said, it's probably gonna decline, there'll be an air pocket, but it'll be later in the year, and it'll probably be not as severe as I would have possibly thought at the end of last year. Well, that's really encouraging. I appreciate all the color there.

Asian: We probably don't expect to see that again, so that's really one of the biggest reversals from quarter to quarter.

Asian: And year over year.

Speaker Change: Okay makes sense and then.

Okay, I'm cause a bit of a bigger deal talked about net leverage growing up to just under 1.8 times I guess as you think about deleveraging from that does that impact the appetite for for M&A over the next couple of quarters as you integrate and and.

Speaker Change: Down that that leverage bad or or do you still feel pretty comfortable with where that stands in.

Noah Christopher Merkousko: Thanks for the time. Absolutely. Thank you. The next question comes from the line of Kurt Yinger with DA Davidson. Thank you. And good morning, everyone.

Speaker Change: The right opportunity comes up there wouldn't be very much hesitancy.

Speaker Change: Yeah first clarify I wouldn't say, it's just under 1.8, plus probably 1.8 is probably the better number I don't want to resolve for what we'll be able to do there, but it doesn't lower our appetite at all as we said, we'll be able to get over a year's time based on combined cash flows of the business back through our current levels and.

Kurt Willem Yinger: If we look at, I guess, the 80 basis point decline and gross margin that's expected in Q4, is that primarily the purchase incentives falling off? Maybe a little bit of a single family mix dynamic there with wallboard? Or are there any other kind of big factors within that expectation?

Speaker Change: All of the strategic initiatives and deployment things that we're doing.

Speaker Change: Pedaled down so we were really comfortable with our debt Levered as we noted we just got an upgrade from Moody's just banks based on the strength of our balance sheet. So we're we're content with words position and think it gives us a lot of platform to continue to do what we're doing strategically.

Scott M. Deakin: No, that's it. It's basically the expectation. We had a pleasant surprise last year with the achievement of some of these goals that happened in the fourth quarter.

Scott M. Deakin: We probably don't expect to see that again, so that's really one of the biggest reversals from quarter to quarter and year over year. And then, um... Camco's a bit of a bigger deal. I talked about net leverage going up to just under 1.8 times. I guess as you think about deleveraging from that, does that impact the appetite for M&A over the next couple quarters as you integrate and work down that net leverage a bit? Or, or do you still feel pretty comfortable with where that stands? And, you know, if the right opportunity came up, there wouldn't be very much hesitancy. Yeah, first to clarify, I wouldn't say it's just under 1.8. I think probably 1.8 is probably the better number. I don't want to oversell sort of what we'll be able to do there, but it doesn't lower our appetite at all.

Speaker Change: Okay, great. Thanks, guys appreciate the color.

Speaker Change: Thank you thanks.

Speaker Change: Thank you next question comes from the line of <unk>.

Speaker Change: <unk>. Please go ahead.

Speaker Change: Okay. Thank you just a couple of questions, but one quickly the guidance for fiscal fourth quarter I assume that does not include Kim K is that correct.

Speaker Change: Yes, that's correct.

Speaker Change: And when do you have a good day and we were expected to close.

Speaker Change: Within the coming days.

Speaker Change: Okay short term okay.

Speaker Change: And then do your commentary on.

Speaker Change: Well, let me back up the commentary and soon we go there's a mix of stuff going on here that's compressing Navy.

Is that something that's going to run long term. It's it's happened the past scores is there something specific going on there or is this something that should change for you and then coming periods.

Speaker Change: It's just and market related right I mean, it just depends on the activity for that individual quarter, we I end up with more education or more of the low and then that makes us down if we get more office or we get more medical then that makes it will increase.

Scott M. Deakin: As we said, we'll be able to get back to our current levels over the year's time based on combined cash flows of the business. And on all of the strategic initiatives and deployment things that we're doing, you know, it still pedals down. So we are really comfortable with our debt leverage. As we noted, we just got an upgrade from Moody's just based on the strength of our balance sheet. So we're content with where it's positioned and think it gives us a lot of platform to continue to do what we're doing strategically. Okay, great. Thanks, guys.

Speaker Change: I think we're talking about having a more normalized mixed this coming quarter. When we when we gave the guidance there which is pricing van volume up so we're not expecting to see.

Speaker Change: A continuation, let's say of a of a decline of mix over the long haul, it's really just project dependence.

Speaker Change: Okay. The next question.

Speaker Change: You you short term view of commercial I was giving me a ball.

Speaker Change: Or just a generally constricted view and commercial in general.

Speaker Change: Are you seeing enough office remodel activity that that could be a actual growth sector for you in the next year or so is it is it big enough with this whole move to.

Kurt Willem Yinger: Thanks. Thank you. The next question comes from the line of Keith Hughes with Cruise Security. Okay, thank you. Just a couple questions, but one quick one.

Speaker Change: Office, it's cheaper in price and all that stuff is going on that big enough to to offset whatever continued pressure, we feel a new office construction.

Keith Brian Hughes: The guidance for fiscal fourth quarter, I assume that it does not include CAMCO. Is that correct? Yes, that's correct. And when do you have any kind of update on when you expect it to close? Within the coming days, very short term. And then your commentary on... on the Commodure and Sandwich. I know there's some mix of stuff going on here that's compressing the AUV, but is that something that's going to last long term? It's happened in the past quarters.

Speaker Change: You know it's not.

Speaker Change: Realizing itself in activity, yet, but it's certainly a lot of chatter right outlet.

And I wouldn't say that we have in our forecast considered a huge rebound in 2000 for an office I do think that in 2005.

Speaker Change: Or maybe even in the late 24, there will be some resolution in some of these larger markets with some of this empty space as well as some of the lending situations around some of that those properties, if those properties move and or change hands, regardless of what the price is.

John C. Turner: Is there something specific going on there, or is this something that should, you know, change for you in the coming period? It's just market related, right? I mean, it just depends on the activity for that individual quarter. If we end up with more education or more of the low end, then the mix is down. If we get more office or we get more medical, then the mix will increase. I think we're talking about having a more normalized mix this coming quarter when we give the guidance there, which is pricing up and volume up. So we're not expecting to see, you know, a continuation, let's say, of a decline in mix over the long haul.

Speaker Change: Those new owners will do something with those buildings.

Speaker Change: And when that happens that's good for us.

Speaker Change: But we're not we're not in my in my my.

Speaker Change: My optimism I'm not considering that in the 2024 calendar year, if that would be positive upside.

Speaker Change: Okay, great. Thank you very much.

Speaker Change: Thanksgiving.

Speaker Change: Thank you next question comes from the line of Steven <unk> Thompson to such please go ahead.

Keith Brian Hughes: It's really just a project Okay, the next final question, the view, the short-term view of commercial, excuse me, of, Well, just generally a constructive view on commercial in general. Are you seeing enough office remodel activity that that could be an actual growth sector for you in the next year or so? Is it big enough for this whole move to an office that's cheaper in price and all that stuff that's going on?

Steven Thompson: Hi, Good morning, I wanted to get a little more color on the camco deal good to hear that the margin profile of similar to yours I'm curious if there is some margin enhancement opportunity there or if it's more volume growth or.

Steven Thompson: If it's shifting their mixed to maybe look a little bit more like G. M. S with complementary products <unk> any way you want to elaborate on that.

John C. Turner: Is that big enough to offset whatever continued pressure we feel in new offices? You know, it's not realizing itself in activity yet, but there's certainly a lot of chatter, right out there. And I wouldn't say that we have, in our forecast, considered a huge rebound in 24 months in office. I do think that in 25, or maybe even in the late 24, there will be some resolution in some of these larger markets with some of this empty space, as well as some of the lending situations around some of that, those properties. If those properties move and or change hands, regardless of what the price is, the new owners will do something with those buildings. And when that happens, that's good. But we're not, we're not in my, in my, you know, my optimism.

Speaker Change: Well, that's all of the above.

Speaker Change: I would say that there's opportunity in all those areas I think theres purchasing synergy here, a little bit of G&A, not a lotta G&A opportunity because of the unique geography here, we don't have much overlap at all for in fact, we don't have any overlap at all in our businesses today. So so from that respect.

Speaker Change: The G&A savings comes in things like insurance in smaller areas.

Speaker Change: But we also have the ability we believe to enhance the mix.

Keith Brian Hughes: I'm not considering that in the 2024 calendar year, unless there would be positive upside. Okay, great. Thank you very much.

Speaker Change: But also drive some more volume and wallboard, we called that out specifically, we think we might be able to help.

Steven Ramsey: Thanks, Keith. Thank you. The next question comes from the line of Steven Ramsey. Thompson Research Group, please call. Hi, good morning; wanted to get a little more color on the CAMCO deal. Good to hear that the margin profile is similar to yours. I'm curious if there is some margin enhancement opportunity there, or if it's more volume growth, or if it's shifting their mix to maybe look a little bit more like GMS with complementary products. Just any way you want to elaborate on that. It's all of the above.

Speaker Change: On the wallboard side.

Speaker Change: I'll just add to Steven we've got the overhead of the Bronx location in those margins as well. So that's an exciting new opportunity to serve that borough of the city and as those revenues grow and we'll get a lot of air cover for revenues over those overhead costs that'll help hopefully over on profitability of the business as well.

Speaker Change: Yeah, I would call out anybody on the call is being from camp goes well visits we've had up there that is an exceptional greenfield facility.

Speaker Change: One of the best I've ever seen being open in a very very short period of time.

Speaker Change: Okay, Great and then zooming out on Friday, the three year cash usage over 50 per cent acquisition.

John C. Turner: I would say that there's opportunity in all those areas. I think there's purchasing synergy here, a little bit of G&A, not a lot of G&A opportunity because of the unique geography here. We don't have much overlap at all.

Speaker Change: 18 per cent to repurchase 15 to Capex I'm curious just you foresee you over the next three years that the capital usage could be something similar to that or if you think that mix more submit overtime.

John C. Turner: As a matter of fact, we don't have any overlap at all in our businesses today. So from that respect, the G&A savings come in things like insurance and smaller areas, but we also have the ability, we believe, to enhance the mix and also drive some more volume in wallboard, which we called out specifically. We think we might be able to help on the wallboard side.

Speaker Change: Well I would guess it would probably lean if it's going to change is going to lean more towards M&A than anything else.

Speaker Change: And we've got a strong backlog, we've got a good M&A engine.

John C. Turner: I'll just add to Steven, we've got the overhead of the Bronx location in those margins as well. So that's an exciting new opportunity to serve that borough of the city. And as those revenues grow, we'll get a lot of air cover for revenues over those overhead costs, and that will help improve the overall profitability of the business as well. Yeah, I would call out anybody on the call listening from CAMPCO as well, because visits we've had up there. That is an exceptional greenfield facility, one of the best I've ever seen being opened in a very, very short period of time.

Speaker Change: It's a core competency for us.

Speaker Change: And I think with race moderating in coming down I would expect to see the M&A market also accelerate a little bit so probably more towards M&A wouldn't be a significant shift maybe five to 10 points a percentage, but directionally that's spot on.

Speaker Change: Excellent that's a great color. Thank you.

Speaker Change: Thank you next question comes from the ninth of Mike Dog.

Michael Glaser Dahl: R B C capital markets. Please quiet.

Michael Glaser Dahl: Hi, Thanks for taking my questions. I also wanted to ask about Camco and my line just cut out for a minute so I apologize.

Steven Ramsey: Okay, great. And then zooming out on slide eight, the three-year cash usage, over 50% to acquisition. I'm curious if you foresee over the next three years that the capital usage could be something similar to that, or if you think that mix morphs a bit over time. Well, I would guess it's probably lean. If it's going to change, it's going to lean more towards M&A than anything else. And we've got a strong backlog. We've got a good M&A engine, a core competency for us. And I think with rates moderating and coming down, I'd expect to see the M&A market also accelerate a little bit. So, probably more towards M&A. Wouldn't be a significant shift, maybe five to 10 points of percentage, but directionally, that's spot on. Excellent. That's a great color.

Michael Glaser Dahl: Just ask this but.

Michael Glaser Dahl: Just in terms of their current mix of business can you help us understand what the <unk>.

Michael Glaser Dahl: The current mixes from a product category and and <unk> market standpoint, and then on the recent trend.

Michael Glaser Dahl: Twenty-three revenues are slightly down versus the prior kind of <unk>.

Michael Glaser Dahl: Trailing 12 months numbers you had provided.

Michael Glaser Dahl: And so a little more color on.

Michael Glaser Dahl: There are organic trends.

Michael Glaser Dahl: Ah currently and what you would expect organically for them in the upcoming quarters.

Michael Glaser Dahl: They are more weighted towards it again, we haven't closed so I don't have all the details sitting right in front of me, but they are more heavily weighted towards ceilings. There are they are an excellent feelings distributor.

Michael Glaser Dahl: Thank you. Thank you. The next question comes from the line of Mike Dahl with RBC Capital Markets. Please go ahead.

Michael Glaser Dahl: Probably the best from an independent perspective out there in an exceptionally strong market for ceilings, so they're a little more weighted toward feelings the.

Michael Glaser Dahl: Thanks for taking my questions. I also wanted to ask about Camco, but my line just cut out for a minute.

Michael Glaser Dahl: The balance there.

Michael Glaser Dahl: And a little underweight and complementary.

John C. Turner: So apologies, even just ask this, but just in terms of their current mix of business, can you help us understand what the current mix is from a product category and market standpoint, and then on the recent trends, if the 23 revenues are slightly down versus the prior kind of, trailing 12 month numbers you had provided. And so a little more color on that. There are organic trends currently and what you would expect organically for them in the upcoming quarters. They are more weighted towards, and again, we haven't closed, so I don't have all the details sitting right in front of me, but they are more heavily weighted towards ceilings.

Michael Glaser Dahl: Versus versus us and under waited and wallboard.

Michael Glaser Dahl: Versus us and while we were close in the next couple of days and get a lot more information on their sales.

Michael Glaser Dahl: It would be a guest to tell you, but I believe it's the same steel conditions that we're facing.

Primarily.

Speaker Change: Okay that makes sense and then.

Speaker Change: Looking at the numbers. So again this is kind of back of the envelope, but it seems like you're suggesting.

Speaker Change: Their legacy EBITDA might've been around kind of mid twenties million and if I look at your post.

Speaker Change: Cinergy multiple.

Speaker Change: Suggest you expect to get that up to around.

Speaker Change: 40 million.

Speaker Change: Yeah, that's not insignificant in terms of.

John C. Turner: They are excellent ceilings... Probably the best from an independent perspective out there in an exceptionally strong market. So they're a little more weighted towards feelings. The balance, they're a little underweighted and complementary. And while we'll close in the next couple of days and get a lot more information on their sales, It would be a guess to tell you, but I believe it's the same steel condition.

Speaker Change: Magnitude of Cinergy is when you when you don't have.

Speaker Change: Current geographic overlap so I know you articulated where they're coming.

Speaker Change: From at a high level can you give us a little more color on the.

Speaker Change: The relative contribution of.

Speaker Change: Cost synergies.

Speaker Change: Sales synergies and then.

Speaker Change: If the Greenfield location is included in that number.

Michael Glaser Dahl: That makes sense. And then... Looking at the numbers, so again, this is kind of back of the envelope, but it seems like you're suggesting their legacy EBITDA might have been around kind of mid-20s million. And if I look at your post synergy multiple, you know, it suggests you expect to get that up to around 40 million. Yeah, that's not insignificant in terms of the magnitude of synergies when you don't have current geographic overlap. So I know you articulated where they're coming from at a high level. Can you give us a little more color on that?

Speaker Change: And should we expect to greenfield to be about as it rams to be about the same size as their legacy branches.

Speaker Change: Yes is the answer to the last question. It's a very large facility actually it's an outstanding facility, a beautiful building well stocked great operational capability.

Speaker Change: And yes, we have given them credit for that and the growth expectation. There is included in our cinergy number.

Speaker Change:

Speaker Change: With a lot of effort you can imagine trying to get a facility up and running in the Bronx.

Speaker Change: <unk> of effort that it takes through permitting and investments et cetera. So.

John C. Turner: The relative contribution of cost synergies, sales synergies, and then if the green field location is included in that number, and should we expect the green field to be about, as it ramps up, about the same size as their legacy branches? Yeah, yes is the answer to the last question. It's a very large facility. Actually, it's an outstanding facility, a beautiful building, well stocked, and a great operational capability

Speaker Change: We feel really fortunate about that opportunity. So wallboard opportunity is another significant cinergy bump on the selling side, but also on the cost side, there as well as several other product cost opportunities. So if you were to look at purchasing cinergy. The Bronx, that's the large majority of the synergy.

Speaker Change: We've got in there as well as a little bit overall growth in the market and the least contributed to give us the G&A piece, which again is things more like benefits and scale advantages, we have in leases and interest expenses and things like that.

Scott M. Deakin: And yes, we've given them credit for that. And the growth expectation there is included in our synergy number. A lot of effort, you can imagine trying to get a facility up and running in the Bronx. The years of effort that it takes through permitting and investments, et cetera.

Speaker Change: Nine two the therapy cause I'd say, an asset transaction. We also got a significant tax amortization benefit from us which was essentially.

Scott M. Deakin: So we feel really fortunate about that opportunity. The wall board opportunity is another significant synergy both on the selling side but also on the cost side there, as well as several other product cost opportunities. So if you were to look at purchasing synergy, the Bronx, that's the large majority of the synergy that we've got in there, as well as a little bit of overall growth in the market. And the least contributive is the GNA piece, which again is things more like benefits and scale advantages we have in leases and interest expenses and things like that.

Speaker Change: Locked him for the next 15 years, and so think about that as more almost a reduction in price versus an EBITDA enhancement.

Speaker Change: Okay.

Speaker Change: <unk> I'll make sense and if I could just sneak one last one in in terms of timing, obviously your best point that.

Speaker Change: Savings is an ongoing one but timing realisation for the other synergies how should we think about that ramp.

Scott M. Deakin: Keep in mind, too, that because it's an asset transaction, we also get a significant tax amortization benefit from this, which is essentially locked in for the next 15 years. And so think about that as almost a reduction in price versus an EBITDA enhancement. Okay, that all makes sense. And if I could just make one last one, and in terms of timing, obviously, your best point is that tax savings is an ongoing one, but timing of realization for the other synergies, how should we think about that ramp? Well, I mean, purchasing synergies is fairly quick, right?

Speaker Change: Well I mean purchasing synergies are fairly quick right they will happen.

Speaker Change: In the very near term over the course of the next quarter plus we'll we'll be doing that.

Speaker Change: Growth in the Bronx is growth in the Bronx.

Startup operation. So that's that's kind of the the tail end of the 2436 months, we talked about so you have the tax benefit on any kind of immediate basis, you got purchasing synergies more on an immediate basis small G&A savings on an immediate basis and then the ramp up in the Bronx is the one that's going to take the longer period of time.

Scott M. Deakin: They'll happen, you know, in the very near term. Over the course of the next quarter plus, we'll be doing that. Growth in the Bronx is growth in the Bronx.

Speaker Change: Cross selling ramp up of wallboard and complimentary will will take a little bit of time to to get that foothold in place as well.

Scott M. Deakin: You know, it's a startup operation, so that's kind of the tail end of the 24 to 36 months we talked about. So you have the tax benefit on a kind of an immediate basis.

Speaker Change: <unk> very helpful. Thank you.

Speaker Change: Thank you. The final question comes from the line off <unk> Loop capital. Please go ahead.

Speaker Change: Hey, Thanks for taking my question. This morning I was wondering what are your current expectations on how long the multifamily backlog the last before any slowdown in multifamily begins to shop in Walmart on demand.

Scott M. Deakin: You've got purchasing synergies more on an immediate basis, small G&A savings on an immediate basis, and then the ramp-up in the Bronx is the one that's going to take the longest. And the cross-selling ramp-up of wallboard and complementary will take a little bit of time to get that foothold in place as well.

Speaker Change: Like calendar third quarter.

Speaker Change: I would expect to see things starting to soften.

Speaker Change: Okay understood and then.

Speaker Change: He said closing in a couple of days here, but just wanted to ask him M&A pipeline. If you could provide any more color on maybe improvement in salary expectations are kind of just your guys' sentiment moving forward. Thanks.

Michael Glaser Dahl: Thank you. The final question comes from the line of Zach Pacheco. Loopcap, Hey, thanks for taking my question this morning. I was wondering, what are your current expectations on how long the multifamily backlog will last before any slowdown in multifamily big ends to show up in wall-borne demand? A calendar third quarter.

Speaker Change: I mean, if they're sellers' expectations vary depending on the market and the strategic nature of it to us et cetera, but our pipeline is solid with our normal.

Speaker Change: Range of multiples.

John C. Turner: I'd expect to see things start to soften. Okay, understood. And then I know you said closing in a couple days here, but just wanted to ask on the M&A pipeline, if you could provide any more color on maybe improvement in seller expectations or kind of just your guys' sentiment moving forward. Thanks. I mean, you know, sellers' expectations vary depending on the market and the strategic nature of it to us, etc.

Speaker Change: This linked to unique because of that broth.

Speaker Change: The Bronx location.

Speaker Change:

Speaker Change: Really strong in Canada, where we're spending a lot of time and energy up they're really building our leadership position, but also very strong here.

Speaker Change: In the in the U S as well so no shortage of opportunity when it comes to that.

Speaker Change: Understood I appreciate it.

Speaker Change: Thanks.

Speaker Change: Thank you.

This concludes today's teleconference. Humid disconnect your lines at this time. Thank you for your participation.

Speaker Change: Thanks to everybody.

Zach Pacheco: But our pipeline is solid with our normal kind of, you know, range of multiples, this one's unique because of that Bronx, that Bronx, in the U.S. as well. So no shortage of opportunity when it comes to that. understood. I appreciate it. Thanks. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Thank you, everybody. BF-WATCH TV 2021 BF-WATCH TV 2021 BF-WATCH TV 2021

Speaker Change: [music].