Q1 2024 Builders FirstSource Inc Earnings Call

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Operator: The program is about to begin. If you need assistance during today's program, please press star zero. Good day, everyone, and welcome to the Builders FirstSource First Quarter 2024 Earnings Comp. Today's call is scheduled to last about one hour, including remarks by management and a question and answer session. In order to ask a question, please press the star key followed by the number 1 on your telephone at any time during the call.

Speaker Change: Good day, everyone and welcome to the builders to first sources first quarter 2024 earnings conference call.

Speaker Change: They should get call is scheduled to last about one hour, including remarks by management and the question and answer session.

In order to ask a question. Please press the star key followed by the number one on your telephone it at any time during the call.

Heather Anne Kos: I would now like to turn the call over to Heather Koss, Senior Vice President, Investor Relations, for Builders FirstSource. Please go ahead. Good morning, and welcome to our first quarter 2024 earnings call. With me on the call are Dave Rush, our CEO, and Peter Jackson, our CFO. The earnings press release and presentation are available on our website at investors.bldr.com. We will refer to the presentation during our call. The results discussed today include gap and non-gap results adjusted for certain items. We provide these non-gap results for informational purposes only, and they should not be considered in isolation from the most directly comparable gap measures.

Now I'd like to turn the call over to Heather Kos Senior Vice President Investor Relations for builders first source. Please go ahead.

Heather Anne Kos: You can find the reconciliation of these non-GAAP measures to the corresponding GAAP measures, where applicable, and a discussion of why we believe they can be useful to investors in our earnings press release, SEC filings, and presentation. Our remarks in the press release presentation and on this call contain forward-looking and cautionary statements within the meaning of the Private Securities Litigation Reform Act and projections of future results. Please review the forward-looking statements section in today's press release and in our SEC filings for various factors that could cause our actual results to differ from forward-looking statements and projections. With that, I'll turn the call over to Dave. Thank you, Heather. Good morning, everyone.

Heather Kos: Good morning, and welcome to our first quarter 2024 earnings call.

Heather Kos: With me on the call are Dave brush, our CEO and Peter Jackson, Our CFO. The earnings press release and presentation are available on our website at investors got B L. D. Our dotcom, we will refer to the presentation during our call.

Heather Kos: Our results discussed today include GAAP and non-GAAP results adjusted for certain items. We provide these non-GAAP results for informational purposes, and they should not be considered in isolation from the most directly comparable GAAP measures you can find the reconciliation of these non-GAAP measures to the corresponding GAAP measures where applicable and just.

Heather Kos: Question of why do we believe they could be useful to investors in our earnings press release, SEC filings and presentations our.

Heather Kos: Our remarks in the press release presentation and on this call contain forward looking and cautionary statements within the meaning of the private Securities Litigation Reform Act and projections of future results.

Heather Kos: Please review the forward looking statements section in today's press release and in our SEC filings for various factors that could cause our actual results to differ already looking statements and projections with that I'll turn the call over to Dave. Thank you Heather good morning, everyone. Thank you for joining our call.

David E. Rush: Thank you for joining our call. Our resilient first-quarter results reflect our differentiated product portfolio and scale. Our team members consistently focus on executing our strategic priorities, and our operational efficiency in doing so. As we expected, a weakening multifamily market and higher mortgage rates driving affordability challenges were headwinds to start the year.

Dave Brush: A resilient first quarter results reflect our differentiated product portfolio and scale.

Dave Brush: Team members consistent focus on executing our strategic priorities.

Dave Brush: And our operational efficiency initiatives.

Dave Brush: We expected a weak kneed multifamily market and higher mortgage rates driving affordability challenges.

Dave Brush: Liz to start the year.

David E. Rush: Despite these micro-challenges, we built on our successes and drove growth through our value-added products portfolio and our industry-leading digital platform. We are committed to advancing innovation and delivering exceptional customer service as a trusted and preferred partner to our customers. We are focused on executing our clear strategic pillars, as shown on slide 3. Our investments in value-added products, installation services, and digital solutions are driving organic growth, delivering greater efficiency, and empowering the next generation of home builders. For those who are new to the BFS story, value-added products include manufactured components such as trusses, ready frame, and wall panels, as well as windows, doors, and millwork.

Dave Brush: Despite these micro challenges, we build on our successes and drove growth through our value added product portfolio and our industry, leading digital platform. We are committed to advancing the innovation and delivering exceptional customer service as a trusted and preferred partner to our customers.

Dave Brush: We are focused on executing our clear strategic pillars as shown on slide three.

Dave Brush: Investments in value added products install services and digital solutions are driving organic growth delivering greater efficiency and empowering the next generation of homebuilding.

Dave Brush: For those who are new to the BFS story value added products include manufactured components, such as trusses ready frame and wall panels, as well as windows doors and millwork.

David E. Rush: Through our value-added products and installation services, we help meet our customer needs, such as reducing cycle times, addressing labor constraints, and improving home construction quality. Through our digital tools, we are providing our customers with a more efficient and cost-effective way to manage the construction of their homes that will increase existing customer stickiness, win new business, and improve our operational efficiency. We remain committed to innovation and continuously seeking to do things better.

Dave Brush: Value added products and installed services, we help meet our customer needs such as reducing cycle times addressing labor constraints and improving home construction quality.

Dave Brush: With our digital tools, we're providing our customers with a more efficient and cost effective way to manage the construction of their homes that will increase existing customer stickiness, and then new business and improve our operational efficiency.

Dave Brush: We remain committed to innovation and continuously seeking to do things better we have a robust set of operational and productivity initiatives and are focused on leveraging our scale in fixed cost, while delivering the highest quality products and services to our customers.

David E. Rush: We have a robust set of operational and productivity initiatives and are focused on leveraging our scale and fixed costs while delivering the highest quality products and services to our customers. We are deploying capital in a disciplined manner with a proven M&A strategy and a track record of buying back shares at competitive prices. Working alongside the best team in the industry, I am confident that we will continue to compound long-term shareholder value and achieve our strategic priorities. Now, let's turn to our first quarter highlights on slide four.

Dave Brush: We are deploying capital in a disciplined manner with a proven M&A strategy and a track record of buying back shares at competitive prices.

Dave Brush: Working alongside the best team in the industry I am confident that we will continue to compound long term shareholder value and achieve our strategic priorities.

Dave Brush: Let's turn to our first quarter highlights on slide four.

David E. Rush: We continue to deliver strong margins in Q1, reflecting our end-segment diversification, focused execution, and differentiated product portfolio and scale. Our gross margins of more than 33% reflect a higher mix of value-added products, including multifamily trusts, and our ability to manufacture more efficiently. We expect the multifamily N segment to progressively normalize over the course of this year, and we continue to see some normalization in core margins. Moving to slide 5, we're off to a strong start on our strategic initiative. Our full digital product launch at the International Builders Show in February was an exciting milestone. At a high level, our digital tools do three things.

Dave Brush: We continued to deliver strong margins in Q1, reflecting our in segment diversification focused execution and differentiated product portfolio and scale, our gross margins of more than 33% reflect a higher mix of value added products include.

Dave Brush: <unk> multi family trust and our ability to manufacture more efficiently. We expect the multifamily in segment to progressively normalize over the course of this year and we continue to see some normalization in core margins.

Dave Brush: Moving to slide five we're off to a strong start on our strategic initiatives, our full digital product launch at the international builders show in February was an exciting milestone at.

Dave Brush: At a high level, our digital tools do three things one solve customer pain points.

David E. Rush: One, solve customer pain points to make it even easier to partner with us and our suppliers, and three, help us gain incremental business from new and existing customers. It's a win-win, and we're excited about how everything is going so far after the launch. We've focused on operational excellence and innovation and using playbooks of proven best practices to increase our safety, efficiency, and wallet share with customers. One area where we're using playbooks is with our installed services.

Dave Brush: To make it even easier to partner with us and our suppliers and three help us gain incremental business from new and existing customers.

Dave Brush: Win win and we're excited about how everything is going so far after the launch.

Dave Brush: We focused on operational excellence and innovation and using Playbooks are proven best practices to increase our safety efficiency and wallet share with customers.

Dave Brush: One area, where we're using play books is with our installed services business. Our installed sales increased by 17% year over year as we leverage our capabilities to help customers address labor constraints. Additionally, we drove $40 million in productivity savings.

David E. Rush: Our install sales increased by 17% year-over-year as we leveraged our capabilities to help customers address labor constraints. Additionally, we drove $40 million in productivity savings in Q1, primarily through procurement and SG&A initiatives. We believe prudent expense management leads to maximum operational flexibility. This includes optimizing our footprint and balancing cost reductions against future capacity demand. We will remain disciplined managers of discretionary spending, no matter the operator.

Dave Brush: In Q1, primarily through procurement and SG&A initiatives.

Dave Brush: We believe prudent expense management leads to maximum operational flexibility. This includes optimizing our footprint and balancing cost reductions against future capacity demands. We will remain disciplined managers of just discretionary spending no matter the operating environment.

David E. Rush: Early momentum in single-family has slowed as persistent inflation has cooled short-term expectations for interest rates. However, low existing home inventories and pent-up demand provide an environment where growth has continued to build. Builders across the board are having to navigate affordability issues and challenges with the regulatory environment, land development, and infrastructure. It's evident that the large national builders have done a good job of utilizing specs, reducing home sizes, and providing interest rate buy-downs to assist buyers with affordable options. However, smaller builders are more likely to benefit from rate cuts.

Dave Brush: Yeah.

Dave Brush: Early momentum in single family has slowed as persistent inflation has cooled short term expectations for interest rate reductions, however, low existing home inventories and pent up demand provide an environment where growth has continued to build bill.

Dave Brush: Builders across the board are having to navigate affordability issues and challenges with the regulatory environment land development and infrastructure. It's evident that the large national builders have done a good job of utilizing specs, reducing home sizing home sizes and <unk>.

Dave Brush: Regarding interest rate buy downs towards to assist buyers with affordable options.

Dave Brush: Smaller builders were more likely to benefit from rate cuts were staying close contact with our customers of all sizes to maximize our business in the current environment.

David E. Rush: We are staying in close contact with our customers of all sizes to maximize our business in the current environment. As we have detailed on prior calls, multifamily became a headwind in Q1, as our activity levels and record backlogs declined versus the prior year. It is important to note, however, that multifamily remains a strong contributor to gross margins and EBITDA even at the current level. Turning the M&A on slide 6. We continue to target attractive opportunities while remaining financially disciplined.

Dave Brush: As we have detailed on prior calls multifamily became a headwind in Q1 as our activity levels and record backlogs have declined versus the prior year. It is important to note. However that multifamily remains a strong contributor to gross margins and.

Dave Brush: EBITDA even at current levels.

Dave Brush: Turning to M&A on slide six.

Dave Brush: We continue to target attractive opportunities, while remaining financially disciplined in the first quarter. We completed two deals with an aggregate 2023 sales of roughly $36 million in early February we acquired quality.

David E. Rush: In the first quarter, we completed two deals with aggregate 2023 sales of roughly $36 million. In early February, we acquired Quality Door and Millwork, a leading distributor of millwork doors and windows in southern Idaho. In March, we acquired Hanson Trusts, which further strengthens our value-added position in northern California and Nevada, and last week, we acquired Shunemans Building Materials. Shunemans manufactures, trusses, and distributes building materials in the Sioux Falls, South Dakota area.

Dave Brush: Doors, and millwork, a leading distributor of millwork doors and windows in southern Idaho.

Dave Brush: In March we acquired Hanson truss, which further strengthens our value added position in northern California, and Nevada.

Dave Brush: And last week, we acquired shut in mines building materials sentiments manufacturers trusses and distributes building materials in the Sioux Falls South Dakota area.

David E. Rush: We are excited to welcome these talented new team members to the BFS family. M&A and organic investments have increased value-added products as a percent of our overall mix by 700 basis points over the past two years and by 1,000 basis points if you go back to 2019. Our success with this strategy has been a core component of our improved margin profile through the cycle. We believe there is a long runway of M&A targets in our fragmented market, and we are pleased with recent improvements in the pipeline. Our disciplined approach to M&A includes increasing our market position in desirable geography.

We are excited to welcome these talented new team members to the BFS family <unk>.

David E. Rush: M&A and organic investments have increased value added products as a percent of our overall mix by 700 basis points over the past two years and by 1000 basis points. If you go back to 2019.

David E. Rush: Our success with this strategy has been a core component of our improved margin profile through the cycle.

We believe there is a long runway of M&A targets in our fragmented market and we are pleased with recent improvements in the pipeline.

David E. Rush: Our disciplined approach to M&A includes increasing our market position in desirable geographies.

David E. Rush: Extending our lead in value-added and specialty solutions and enhancing customer retention. On slide 7, we provide an update on capital allocation. During the first quarter, we completed a $1 billion note offering, which gave us additional financial flexibility to grow organically and remain acquisitive while maintaining a strong balance sheet. In addition to the two tuck-in acquisitions, we repurchased $20 million of shares.

David E. Rush: Extending our lead in value added and specialty solutions and enhancing customer retention.

David E. Rush: On slide seven we provide an update on capital allocation.

David E. Rush: During the first quarter, we completed a 1 billion dollar note offering which brought us additional flex some bit of financial flexibility to grow organically and we remain acquisitive, while maintaining a strong balance sheet.

David E. Rush: In addition to the two tuck in acquisitions, we repurchased $20 million of shares as proven by our track record will continue to buy back shares while allocating capital to high return opportunities we remain on track to strategically deploy five.

David E. Rush: As proven by our track record, we will continue to buy back shares while allocating capital to high-return opportunities. We remain on track to strategically deploy $5.5 to $8.5 billion of capital from 2024 to 2026, as outlined at Investor Day last December. Now, let's turn to slides 8 and 9 for an update on our digital strategy, as the only provider of an end-to-end digital platform in our space. We believe BFS digital tools will be transformative for the industry and a substantial driver of organic growth.

David E. Rush: Five to $8 $5 billion of capital from 'twenty to 'twenty four to 'twenty 'twenty six as outlined at Investor Day last December.

David E. Rush: Now, let's turn to slides eight and nine for an update on our digital strategy.

David E. Rush: As the only provider of an end to end digital platform in our space.

David E. Rush: We believe BFS digital tools will be transformative for the industry and a substantial driver of organic growth.

David E. Rush: Our easy-to-use portal, MyBLDR.com, seamlessly delivers our full digital capabilities to our customers. It is designed to create efficiencies for our team members and improve service for our customers by offering increased transparency and engagement in the home building process. Combined with our proprietary estimating and configuration tools, our customers will have more control over the entire building process. This will save time and money for both our customers and their clients while making the home building process more personal.

David E. Rush: Our easy to use portal I B L D. Our dot com seamlessly delivers our full digital capabilities to our customers. It is designed to create efficiencies for our team members and improve service for our customers by offering increased transparency and engagement.

David E. Rush: In the homebuilding process.

David E. Rush: Combined with our proprietary estimating and configuration tools tools, our customers will have more control over the entire building process. This will save time and money for both our customers and their clients, while making the homebuilding process more personalized.

David E. Rush: We were proud to highlight the full digital product capabilities at IBS in February. Our customers told us the new tools address an unmet need, and they were excited to use them in their business. Since launch in late February, we have seen orders on the digital platform go from nearly zero to over $60 million. In Q1, we had incremental sales of over $10 million. We remain confident in our ability to meet our targets of $200 million of incremental digital revenue by the end of this year and $1 billion by 2026 as we grow wallet share and win new customers.

David E. Rush: We were proud to highlight the full digital product capabilities and Ibs in February.

David E. Rush: Our customers told us the new tools address an unmet need and they were excited to use them in their businesses.

David E. Rush: Since launch in late February we have seen orders on the digital platform go from nearly zero to over $60 million in Q1, we had incremental sales of over $10 million, we remain confident in our ability to meet our targets of $200 million of ink.

David E. Rush: Mental digital revenue by the end of this year and $1 billion by 2026, as we grow wallet share and win new customers.

David E. Rush: One of our digital tools, BuildOptimized, uses advanced 3D modeling to identify construction clashes and resolve mechanical design conflicts before breaking ground. It ensures that architects, builders, and trades are coordinated and building to the same plan. As a proof point of the advantages of using this transformative tool, we've seen interest from four large customers. One of these customers has used it in three markets and 13 communities across 34 plants. On average, we have identified 150 conflicts per plant.

David E. Rush: One of our digital tool build optimize uses advanced three D modeling to identify construction clashes and resolve mechanical design conflicts before breaking ground.

David E. Rush: It ensures architects builders and trades are coordinated and building to the same plan as a proof point of the advantages of using this transformed a tool we've seen interest from four large builders. One of these customers has used it in three markets and 13 communities.

David E. Rush: Across 34 plants.

David E. Rush: On average we have identified 150 conflicts per plan resolving those conflicts before construction leads to job site time and cost savings.

David E. Rush: Resolving those conflicts before construction leads to jobsite time and cost savings. One of my favorite initiatives at BFS is acknowledging team members who go above and beyond. Aerospace in Atlanta, Georgia personifies this quality. Ira began with VFS in 1996 as a driver helper and rose through the ranks to operations manager, and now oversees our new Atlanta Millwork facility in Dakula. Aura has the respect of his team members because he's willing to do whatever it takes to solve problems and add value for our customers. Recently, when there were no available drivers for an urgent customer delivery that had to arrive that day, Ira drove the box truck himself to take care of the customer.

David E. Rush: One of my favorite initiatives at BFS is acknowledging team members, who go above and beyond.

David E. Rush: Aerospace and Atlanta, Georgia Personifies this quality.

David E. Rush: IRA began with DFS in 1996, as a driver of helper and rose through the ranks to operations manager and now oversees our new Atlanta millwork facility into cool.

David E. Rush: <unk> has the respect of his team members because he's willing to do whatever it takes to solve problems and add value for our customers recently when there was no available drivers or an urgent customer delivery that had to arrive that des Ara drove the box dragged himself to take care of the customer.

Peter M. Jackson: I am grateful for ARA's drive to lead by example, a quality we find consistently in leaders across the U.S. I'll now turn the call over to Peter to discuss our financial results in greater detail. Thank you, Dave, and good morning, everyone.

David E. Rush: I'm grateful for all of his drive to lead by example, and quality, we find consistently and leaders across BFS I'll now turn the call over to Peter to discuss our financial results in greater detail.

Peter: Thank you, Dave and good morning, everyone.

Peter M. Jackson: Our first quarter results demonstrated the effectiveness of our strategy and operating model. We are maintaining our fortress balance sheet and prudently deploying capital to the highest return opportunity. We've included acquisitions and share repurchases during. We are leveraging our sustainable competitive advantages and strong financial position to drive future growth and value creation for our customers and shareholders. I will cover three topics with you.

Peter: Our first quarter results demonstrated the effectiveness of our strategy and operating model.

Peter M. Jackson: We are maintaining our fortress balance sheet and prudently deploying capital to the highest return opportunities.

Peter M. Jackson: We concluded acquisitions and share repurchases during the quarter.

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

Peter M. Jackson: First, I'll recap our first quarter results. Then, I'll provide an update on our capital deployment. Finally, I'll discuss our 2024 Guidance and Related Assumptions. Let's begin by reviewing our first quarter performance on slides 10 and 11. We delivered $3.9 billion in net sales driven by growth from acquisitions of 1.9% or offset by commodity deflation of 1.7%. Poor organic sales, in line with the prior year, were driven by a single-family increase of more than 4% amid higher sales of early-stage homebuilding.

Peter M. Jackson: I will cover three topics with you this morning.

Peter M. Jackson: First I'll recap our first quarter results.

Peter M. Jackson: Second I'll provide an update on our capital deployment and finally, I'll discuss our 2020 for guidance and related assumptions.

Peter M. Jackson: From a geographic perspective, East sales were down mid-single digits, Central was flat, and the West was up mid-teens. As we signaled and expected, multifamily declined more than 13% as we lapped the prior year's strong comp. R&R Another also declined by almost five percent due to weakness predominantly in the Northeast from inclement weather.

Peter M. Jackson: Let's begin by reviewing our first quarter performance on slides 10 and 11.

Peter M. Jackson: We delivered $3 $9 billion in net sales driven by growth from acquisitions of one 9%.

Peter M. Jackson: The offset by commodity deflation of one 7%.

Peter M. Jackson: Organic sales in line with the prior year were driven by a single family increase of more than 4% amid higher sales early stage homebuilding products.

Peter M. Jackson: From a geographic perspective E sales were down mid single digits Central was flat in the west was up mid teens.

Peter M. Jackson: As we signaled in expected multifamily declined more than 13% as we lap the prior year's strong comps.

Peter M. Jackson: <unk>. Another also declined by almost 5% due to weakness predominantly in the northeast from inclement weather.

Peter M. Jackson: As we mentioned last quarter, inclement weather negatively impacted our operations in Q1 by roughly 3-4% of our overall sales. Value-added products represented approximately 52% of our net sales during the first quarter, demonstrating our strength and customer stickiness for these higher margin products. During the first quarter, gross profit was $1.3 billion, an increase of approximately 5% compared to the prior year period, and revenues were 33.4 percent, decreasing 190 bases per hour, mainly due to a timing shift in product mix toward lower-margin, early-stage home-building products, as well as lower margins, particularly in multifamily. SG&A increased $22 million to $926 million, primarily attributable to acquired operations

Peter M. Jackson: As we mentioned last quarter inclement weather negatively impacted our operations in Q1 by roughly 3% to 4% of our overall sales.

Peter M. Jackson: Value added products represented approximately 52% of our net sales during the first quarter.

Peter M. Jackson: Our strength and customer stickiness for these higher margin products.

Peter M. Jackson: During the first quarter gross profit was $1.3 million decrease of approximately 5% compared to the prior year period.

Peter M. Jackson: Gross margins were 33, 4% decreasing 190 basis points, mainly due to a timing shift in product mix towards lower margin early stage homebuilding products as well as margin normalization, particularly in multifamily.

Peter M. Jackson: SG&A increased $22 million to $926 million, primarily attributable to acquired operations as a percentage of net sales total SG&A increased 50 basis points to 23, 8%.

Peter M. Jackson: As a percentage of net sales, total SG&A increased 50 basis points to 23.8%. The team has done an excellent job managing it. We stand ready to leverage our fixed costs into the growing market. Adjusted EBITDA was $541 million, down approximately 14%, primarily driven by lower gross profit and higher operating expenses. Justin Evita margin was 13.9%, down 240 basis points from the prior year. Adjusted net income of $327 million was down $83 million from the prior year due to lower gross profit amid higher and higher operating expenses, primarily due to access.

Peter M. Jackson: The team has done an excellent job managing SG&A, and we stand ready to leverage our fixed crop costs into the growing market.

Peter M. Jackson: Adjusted EBITDA was $541 million down approximately 14%, primarily driven by lower gross profit and higher operating expenses.

Peter M. Jackson: Adjusted EBITDA margin was 13, 9% down 240 basis points from the prior year.

Peter M. Jackson: Adjusted net income of $327 million was down $83 million from the prior year due to lower gross profit amid higher and higher operating expenses, primarily due to acquisitions.

Peter M. Jackson: Adjusted earnings per diluted share was $2.65, a decrease of 11% compared to the prior year. On a year-over-year basis, share repurchases added roughly $0.29 per share for the first quarter. Now let's turn to our cash flow, balance sheet, and liquidity on slide 12. Our Q1 operating cash flow was approximately $317 million, down $337 million compared to the prior year period, mainly attributable to lower net income and an increase in net working. Capital expenditures for the quarter were $90 million, and free cash flow was approximately $228 million.

Peter M. Jackson: Adjusted earnings per diluted share was $2 65.

Peter M. Jackson: A decrease of 11% compared to the prior year on.

Peter M. Jackson: Year over year basis share repurchases added roughly <unk> 29 per share for the first quarter.

Peter M. Jackson: Now, let's turn to our cash flow balance sheet and liquidity on slide 12.

Peter M. Jackson: Our Q1 operating cash flow was approximately $317 million down $337 million compared to the prior year period, mainly attributable to lower net income and an increase in net working capital.

Peter M. Jackson: Capital expenditures for the quarter were $90 million and free cash flow was approximately $228 million.

Peter M. Jackson: For the last 12 months, ending March 31st, our free cash flow yield was approximately 6%, while operating cash flow return on invested capital was 22%. Our net debt to adjusted EBITDA ratio was approximately 1.1 times, while base business leverage was 1.2 times. In February, we completed a $1 billion private placement of 6 38 Senior Unsecured Notes due 2034, which enables maximum financial flexibility to grow organically and remain acquisitive. Excluding our ABL, we have no long-term debt maturities until 2030.

Peter M. Jackson: For the last 12 months ended March 31, our free cash flow yield is approximately 6% while operating cash flow return on invested capital was 22%.

Peter M. Jackson: Our net debt to adjusted EBITDA ratio was approximately one one times while base business leverage was one two times.

Peter M. Jackson: In February we completed a $1 billion private offering.

Peter M. Jackson: Six and three eight senior unsecured notes due 2034.

Peter M. Jackson: Which enables a maximum financial flexibility to grow organically and remain acquisitive.

Peter M. Jackson: Excluding our ABL, we have no long term debt maturities until 2030.

Peter M. Jackson: At quarter end, our total liquidity was approximately $2.4 billion, consisting of $1.7 billion in net borrowing availability under the revolving credit and approximately $700 million of cash. Moving to Capital Deployment, During the first quarter, we repurchased roughly 100,000 shares for $20 million at an average stock price of $202.67 per share. Since the inception of our buyback program in August 21, we have repurchased 42.2% of total shares outstanding at an average price of $70.42 per share for $6.1 billion. We have $980 million remaining on our share repurchase authorization.

Peter M. Jackson: At quarter end, our total liquidity was approximately $2 4 billion.

Peter M. Jackson: Consisting of $1 $7 billion of net borrowing availability under the revolving credit facility and approximately $700 million of cash on hand.

Peter M. Jackson: Moving to capital deployment.

Peter M. Jackson: During the first quarter, we repurchased roughly 100000 shares for $20 million at an average stock price of $202 67 per share.

Peter M. Jackson: Since the inception of our buyback program in August of 'twenty, One we have repurchased 42, 2% of total shares outstanding at an average price of $70 42 per share for $6 1 billion.

Peter M. Jackson: We have $980 million remaining on our share repurchase authorization.

Peter M. Jackson: We remain disciplined stewards of capital and have multiple paths for value creation to maximize. Now, let's turn to our outlook, which we are reaffirming on slide 13. For full year 2024, we expect total company net sales to be $17.5 to $18.5 billion.

Peter M. Jackson: We remain disciplined stewards of capital and have multiple paths for value creation to maximize returns.

Peter M. Jackson: Now, let's turn to our outlook, which we are reaffirming on slide 13.

Peter M. Jackson: For full year 2024, we expect total company net sales to be 17, five to $18 5 billion.

Peter M. Jackson: We expect adjusted EBITDA to be $2.4 to $2.8 billion, suggested even a margin is forecasted to be 14 to 15 percent, and we are guiding gross margins to a range of 30 to 33 percent, which is in line with our long-term normalized expectations. Our recent margins reflect above normal multi-family, on top of our greater mix of value-added products, along with the disciplined pricing required to offset increased operating costs. We expect full-year 2024 free cash flow of $1 to $1.2 billion. The Free Cash Flow Forecast assumes average commodity prices in the range of $400 to $440 per thousand portfolio.

Peter M. Jackson: We expect adjusted EBITDA to be 2.4 $2.8 billion.

Peter M. Jackson: Adjusted EBITDA margin is forecasted to be 14% to 15%.

Peter M. Jackson: We're guiding gross margins to a range of 30% to 33%, which is in line with our long term normalized expectation.

Peter M. Jackson: Our recent margins reflect above normal multifamily performance on top of our greater mix of value added products, along with the disciplined pricing required to offset increased operating costs.

Peter M. Jackson: We expect full year 2020 for free cash flow of $1 billion to $1.2 billion. The free cash flow forecast assumes average commodity prices in the range of 400 to $440 per thousand board foot.

Peter M. Jackson: Our 2024 outlook is based on several assumptions and includes an expectation of improving single-family growth. Please refer to our earnings release and slide 14 of the investor presentation for a list of these key assumptions. As you all know, we do not typically give quarterly guidance, but we wanted to provide directional color for Q2, given the ongoing interest rate on and the geopolitical. On a year-over-year basis, we expect Q2 net sales to be down low single digits to flat as single-family growth is offset by expected multi-family headwinds. Year-over-year adjusted EBITDA is expected to be down in the high teens in Q2, primarily given the impact of continued multifamily normalization.

Peter M. Jackson: Our 2024 outlook is based on several assumptions and includes an expectation for improving single family growth.

Peter M. Jackson: Please refer to our earnings release, and slide 14 of the Investor presentation for a list of these key assumptions.

Peter M. Jackson: As you all know we do not typically give quarterly guidance, but we wanted to provide directional color for Q2, given the ongoing interest rate uncertainty and the geopolitical situation.

Peter M. Jackson: And a year over year on a year over year basis, we expect Q2 net sales to be down low single digits to flat as single family growth is offset by expected multifamily had.

Peter M. Jackson: Year over year, adjusted EBITDA is expected to be down high teens in Q2, primarily given the impact of continued multifamily normalization.

Peter M. Jackson: Turning to slides 15 and 16, as a reminder, our base business approach showcases the underlying strength and profitability of our company by normalizing sales and margins for commodity volumes. This helps to clearly assess the core aspects of the business where we have focused our attention to drive sustainable outcomes. Today's business guide on net sales for 2024 is approximately $17.6 billion. Our base business adjusted EBITDA guide is approximately $2.4 billion at a margin of $13.5.

Peter M. Jackson: Turning to slides 15, and 16 as a reminder, our base business approach showcases the underlying strength and profitability of our company by normalizing sales and margins for commodity volatility.

Peter M. Jackson: This helps to clearly assess the core aspects of the business, where we have focused our attention to drive sustainable outperformance.

Peter M. Jackson: Our base business got on net sales for 2024 is approximately $17 6 billion.

Peter M. Jackson: Our base business adjusted EBIT Guide is approximately $2 4 billion.

Peter M. Jackson: At a margin of 13, 5%.

Peter M. Jackson: As I wrap up, I want to reiterate that we are confident in the near-term outlook, our exceptional positioning to execute our strategic goals, and our ability to create shareholder value in any environment. With that, I will turn the call back over to Dave for some final thoughts. Thanks, Peter.

Peter M. Jackson: As I wrap up I want to reiterate that we are confident in the near term outlook, our exceptional positioning to execute our strategic goals and our ability to create shareholder value in any environment.

Peter M. Jackson: With that let me turn the call back over to Dave for some final thoughts.

Dave: Thanks Peter.

David E. Rush: Let me close by summarizing how we're set up to drive long-term profitable growth by executing our strategic pillars. We believe we are the unquestioned leader in addressing our customers' pain through our focus on customer service, value-added products, and installation service. Our industry-leading digital innovations are bringing greater efficiency to home building and will win us new customers and grow WalletShare along the way. Our robust free cash flow generation is funding disciplined capital deployment that will maximize returns and compound long-term shareholder value. We have a proven playbook for growth during complex operating environments, and we'll keep working to be the best and deliver excellence every day. Thank you again for joining us today.

Dave: Let me close by summarizing how we're set up to drive long term profitable growth.

David E. Rush: Executing on our strategic pillars.

David E. Rush: We believe we are the unquestioned leader in addressing our customers' pain ones through our focus on customer service value added products and install services our industry, leading digital innovations are bringing greater efficiency to homebuilding and will win us new customer.

David E. Rush: And grow wallet share along the way.

David E. Rush: Our robust free cash flow generation is funding disciplined capital deployment that will maximize returns and compound long term shareholder value. We have a proven playbook for growth during complex operating environments, and we will keep working to be the best and deliver excellence.

David E. Rush: Every day.

Operator: Operator, please open the call now for questions. Absolutely. At this time, if you would like to ask a question, please press the star and one on your telephone keypad now. You may remove yourself from the queue at any time by pressing star 2, and once again that is star and 1 if you'd like to ask a question.

Speaker Change: Thank you again for joining us today operator, let's please open the call now for questions.

Operator: Absolutely at this time, if you would like to ask a question. Please press the star and one on your telephone keypad now.

Operator: You may remove yourself from the queue at any time by pressing star two and once again that is star and one if you'd like to ask a question.

Operator: We'll pause for just a moment to allow questions, and it does appear we have our first question from Matthew Booley with Barclays. Good morning, everyone.

Operator: We'll pause for just a moment to allow questions to queue.

Matthew Adrien Bouley: It does appear we have our first question from Matthew Bouley with Barclays.

Matthew Adrien Bouley: Thank you for taking the questions. I'll start out on the second quarter. I'm wondering what's implied in the second quarter gross margin. It seems that you're kind of, you know, moving into that full-year range of 30 to 33 percent in the second quarter, but correct me if I'm wrong. I know we're talking about normalization in both multifamily and the core. So within that second quarter gross margin, can we say that the over-earnings in both multifamily and the core have entirely rolled off, or are they not yet entirely rolled off? So would there be some sort of more to come beyond the second quarter? Thank you.

Matthew Adrien Bouley: Thank you everyone. Thank you for taking the questions.

Matthew Adrien Bouley: I'll start out on the second quarter.

Matthew Adrien Bouley: I'm wondering what's implied in the second quarter gross margin.

Matthew Adrien Bouley: It seems that you are kind of.

Matthew Adrien Bouley: Moving into that full year range of 30% to 33% in the second quarter, but correct me if I'm wrong.

Matthew Adrien Bouley: I know, we're talking about normalization in both multifamily and the core.

Matthew Adrien Bouley: So so within that second quarter gross margin can we say that the over earn in both multifamily and the core is entirely rolled off or not yet entirely rolled off so would there be sort of more to come beyond the second quarter. Thank you.

Peter M. Jackson: Thanks for the question. The margins that we're seeing are really in line with what we were expecting. The multifamily business, specifically, I think I outlined it a couple times, but for everybody just to restate it, will continue to normalize, will continue to go down over the course of the year, that sales will continue to decline back towards normal, and we'll continue to see margins, as a percentage, return back to normal as the year progresses. So not over, but very much in line with what we were expecting. You know margins. There are a couple things going on. We've talked about margin normalization being between 30 and 33.

Speaker Change: Good morning, Matt Thanks for the question.

Peter M. Jackson: So the margins that we're seeing are really in line with what we were expecting.

Peter M. Jackson: The multifamily business specifically.

Peter M. Jackson: Right.

Peter M. Jackson: I think outlined it a couple of times, but for everybody just to re state. It we will continue to normalize we'll continue to go down over the course of the year.

Peter M. Jackson: Okay.

Peter M. Jackson: Sales will continue to decline back towards normal and we will continue to see margins as a percentage returned back to normal as the year progresses. So.

Peter M. Jackson: Not over but.

Peter M. Jackson: It's very much in line with what we were expecting.

Peter M. Jackson: Margins.

Peter M. Jackson: There is a couple of things going on we've talked about margin normalization being between 30 and 33.

Peter M. Jackson: We think that's an accurate forecast. Just keep in mind that normalization, in this instance, would assume normal starts, which we're not quite back to yet. But that said, our guide for the year is still within that range. We've seen some good things hold on longer. And we think that's going to sustain us to be able to get to our guide for the year on. But it's performing about like we expected. It's not a surprise in terms of where the rates are, and where the margin level is. Thank you for that, Peter.

Peter M. Jackson: We think thats, an accurate forecast just keep in mind that normalization. In this instance, we assume normal starts which we're not quite back to yet.

Peter M. Jackson: But that said our guide for the year is still within that range. We've seen some good things hold on longer and we think that's going to sustain us to be able to get to our guide for the year on margins.

Peter: It's it's performing about like we expected it's not a surprise in terms of.

Peter M. Jackson: Where the rates where the margin levels are.

Speaker Change: Okay, Alright, thank you for that Peter.

Speaker Change: Secondly, the.

Peter M. Jackson: The multifamily revenue impact, you know, clearly it's quite concentrated in manufactured products. You know, I see multifamily was down 13% in Q1. It looks like you have one more, I think, tough year-over-year comparison in multifamily here in the second quarter. So, I guess within the second quarter guide is the assumption that multifamily is down sort of, you know, more than it was in the first quarter. Would that imply that Q2 is sort of the low point for multifamily year-over-year with lesser declines in the second half? Or should we assume that we should look for kind of a consistent headwind for multifamily declines through the balance of the year? Thank you. Yeah, it's the latter.

Speaker Change: The multifamily revenue impact.

Speaker Change: Clearly, it's quite concentrated in the manufactured products.

Peter M. Jackson: You know I see multifamily was down 13% in Q1.

Peter M. Jackson: It looks like you have one more I think tough year over year comparison and multifamily here.

Speaker Change: Here in the second quarter.

Peter M. Jackson: So I guess within the second quarter guide is the assumption that multifamily is down sort of more than it was in the first quarter.

Peter M. Jackson: Would that would that imply that Q2 is sort of the low point for multifamily year over year with lesser declines in the second half or should we assume that.

Speaker Change: We should look for kind of a consistent headwind from multifamily declines through the balance of the year. Thank you.

Speaker Change: Yeah. It's the latter you should expect a consistent decline from multifamily throughout the year.

Peter M. Jackson: You should expect a consistent decline from multifamily. It's a long-lead time product category, and we've got pretty good visibility into what we're expecting to see. There's certainly a bit of slippage from one month to the next at any given period, but I think what we're seeing and expecting in multifamily is another big decline in Q2 and a sort of a consistent year-over-year decline throughout the industry. We'll, of course, update you as we learn more. Thanks, Peter. Thanks, Dave.

Peter M. Jackson: Long lead time product category, we've got pretty good visibility to what we're expecting to see there certainly are a bit of slippage from one month to the not to the next in any given period, but I think what we're seeing and expecting in multifamily is.

Peter M. Jackson: Another big decline in Q2.

Peter M. Jackson: Sort of a consistent year over year decline throughout the end of the year well of course update you as as we learn more.

Speaker Change: Perfect. Thanks, Peter Thanks, David Good luck guys.

Speaker Change: Thanks, Matt.

Michael Glaser Dahl: Good luck, guys. And we have our next question from Mike Dahl with RBC Capital. Morning, thanks for taking my question. I want to ask...

Peter M. Jackson: And we have our next question from Mike Dahl with RBC capital markets.

Michael Glaser Dahl: Good morning, Thanks for taking my question.

Michael Glaser Dahl: I wanted to ask.

Michael Glaser Dahl: I guess it's effectively a follow-up here. When we think about what's implied for the second half, if we look at the 1Q results and the 2Q directional color. At the midpoint, it requires double-digit top-line growth and kind of 15% EBITDA margins. And at the high end, it would be kind of like mid-teens top-line growth and a 16% EBITDA margin. Both of those, just given the multifamily declines, your comments just now about further normalization and gross margin seemed difficult. So maybe you can help us there.

Michael Glaser Dahl: Yeah.

Michael Glaser Dahl: Secondly, a follow up there when we think about what's implied for the second half if we look at the <unk> results in the <unk>.

Michael Glaser Dahl: <unk> color.

Michael Glaser Dahl: At the midpoint it requires double digit top line growth and kind of 15% EBITDA margins in the high end would be kind of like mid teens top line growth.

Michael Glaser Dahl: 16 ebay.

Michael Glaser Dahl: EBITA margin.

Michael Glaser Dahl: Both of those just given the multifamily declines your comments just now about.

Michael Glaser Dahl: Further normalization in gross margin kind of theme difficult. So maybe you can help us there I guess, it's a roundabout way of asking more directly when you look at that full year guide is there a point in the rates that you think you are leaning more towards at this point like midpoint or lower or midpoint or higher maybe.

Peter M. Jackson: I guess it's a roundabout way of asking more directly. When you look at that full year guide, is there a point in the range that you think you're leaning more towards at this point, like midpoint or lower or midpoint or higher? Maybe just help us understand how that's evolved. Morning, Mike.

Peter M. Jackson: Maybe just help us understand how that's evolved.

Peter M. Jackson: Thanks for the question. In short, we're really confident in the forecast the way it's laid out. That guide is something that we put out there and feel good about reaffirming. The growth that you're talking about is already happening. So I think it came through in some of our materials.

Peter M. Jackson: Good morning, Mike Thanks for the question.

Peter M. Jackson: In short we are really confident in the in the forecast the waste laid out that guide is something that you put out there and feel good about reaffirming.

Peter M. Jackson: The growth that Youre talking about is is already happening. So I think it came through in some of our materials I think there's maybe this expectation that our whole business moves in the same way in the same quarter and that's really not what we're seeing here right you're seeing the.

Peter M. Jackson: I think there's maybe this expectation that our whole business moves in the same way, in the same order, and that's really not what we're seeing here, right? You're seeing the early parts of the building process, the lumber, the trusses, the stuff that hits the job site early after the start doing great. We're growing, the momentum is building. There are certainly some headwinds we're dealing with. I mean, we've talked a little bit about that.

Peter M. Jackson: Early parts of the building process the lumber the trust the stuff that hits the job site early after the start doing great. We're growing the momentum is building.

Peter M. Jackson: Certainly some headwinds we're dealing with I mean, we talked a little bit about that I'm sure, we'll talk more but the business performing very well in that category, we have not yet started to see.

Peter M. Jackson: I'm sure we'll talk more, but the business is performing very well in that category. We've not yet started to see the tailwind, the uplift from some of the later building process products, right? The doors, the millwork, that also.

Peter M. Jackson: Tailwind the uplift from some of the later building process products right doors millwork that are also good for us, but we have every confidence that that's coming that's going to continue to be a good <unk>.

Peter M. Jackson: But we have every confidence that that's coming, that that's going to continue to be a good tailwind for us. There are, of course, a lot of questions about what the overall market for single-family homes is going to do, a lot of questions about interest rates. But again, let's not forget, there's a lot of demand. There are a lot of confident home builders, there are a lot of good units and good production momentum going on, and we're participating. So we're not concerned about, you know, delivering based on everything we're seeing today. But we do have to digest multifamily, you know. I think we've been very transparent about that.

Peter M. Jackson: Tailwind for US there are of course, a lot of questions about what the overall market in single family is going to do a lot of questions about interest rates, but again, let's not forget theres a lot of demand out there. There are a lot of confidence homebuilders. There are a lot of good units and good production momentum going on and we're participating so we're not concern.

Peter M. Jackson: Earned about.

Peter M. Jackson: Delivering based on everything we're seeing today, but we do have to digest multifamily I think we've been very transparent about that.

Peter M. Jackson: It's working like we expected, and things are, you know, playing out. So yes, the back half of the year needs to be growing. But again, we're seeing good momentum that we think will pass through on the early stage products. We're seeing good growth in categories that we've leaned into, value add, and installation, and we continue to be active in M&A. So, certainly, a lot to be confident in. We're happy with the business and not shy about what we're seeing. The only thing I'd add is ECHO; the overall demand profile continues to be strong.

Peter M. Jackson: Working like we expected and things are playing out so yes, the back half of the year needs to be growing but again, we're seeing good momentum that we think will pass around their early stage products were seeing good growth in categories that we've leaned into value add install and we continue to be active M&A.

Peter M. Jackson: M&A, so certainly a lot to be.

Peter M. Jackson: Confident and we're happy with the business and not shy about what we're seeing for the rest of the year.

Peter M. Jackson: The only thing I'd add is echoed the overarching demand profile continues to be strong I think.

Peter M. Jackson: I think the timing of when they actually execute the buy is kind of what's a little more volatile than the expectation that they will execute the buy. And that's part of it, but our builder customers are still indicating that they're seeing that demand, and they're expecting the similar trajectory that we've forecasted for ourselves for the buy. Okay.

Peter M. Jackson: The timing of when they actually execute the buy is kind of what is a little more volatile than the expectation that they will execute the buy in.

Peter M. Jackson: That's part of it but our builder customers are still indicating.

Peter M. Jackson: They are seeing that demand and they are expecting the similar trajectory that we forecasted for ourselves for the back half.

Michael Glaser Dahl: And then, shifting gears just to... Capital Deployment and maybe specifically the buyback, I mean, you've got plenty of liquidity, your leverage is low, the buyback was really just nominal this quarter for the first time in a while. What can we take away from that, and maybe anything more specific about how you anticipate deploying capital through the year?

Speaker Change: Okay got it.

Michael Glaser Dahl: And then shifting gears to <unk>.

Michael Glaser Dahl: Capital deployment, and maybe specifically the.

Michael Glaser Dahl: The buyback I mean, you've got plenty of liquidity and Leverages is low the buyback was it was really just nominal this quarter for the first time in a while.

Michael Glaser Dahl: What can we what can we take away from that and maybe anything more specific about how you envision Macquarie capital through the year.

Michael Glaser Dahl: Yeah.

Peter M. Jackson: We're sitting on about $700 million in cash plus all the capacity in the ADL. Lots of cool M&A opportunities are popping up. We've done a couple of small deals so far, but we're sitting on a bunch of dry powder and excited about what the opportunities look like. We'll have to see how they play out.

Speaker Change: You're right, we're sitting on about $700 million in cash plus all the capacity in the ABL lots of cool M&A popping right. I mean, we've done a couple of small deals so far but we're sitting on a bunch of dry powder and excited about what the opportunities look like we'll have to see how they play out but at this moment in time.

Peter M. Jackson: But at this moment in time, we're ready to take advantage of the opportunities. A little bit of a slow start to the year, but we're filming. Great, thank you.

Peter M. Jackson: We're ready to take advantage of the opportunities that are going to present themselves. That's kind of how you should read that.

Peter M. Jackson: Little bit of a slow start to the year, but we're feeling good.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Trey Grooms: Thank you. And now we have our next question from Trey. I also want to touch on the guidance, believe it or not. You know, you guys mentioned, well, first off, you reiterated the full year. You mentioned that multifamily is going about as you expected. And clearly, you guys have been very vocal about your expectations and the kind of pullback there and on multifamily and the impact it could have. But, you know, clearly, the 2Q guide is lower than what I think most were kind of modeling or expecting.

Peter M. Jackson: And we have our next question from Trey Grooms with Stephens.

Trey Grooms: And everyone.

Trey Grooms: So wanted to touch on the guidance believe it or not.

Trey Grooms: You guys mentioned well first off you reiterated the full year, you mentioned that multifamily is going about as you expected.

Trey Grooms: And clearly you guys have been very vocal about your expectations.

Trey Grooms: Kind of the pullback there in multifamily and the impact it could have.

Trey Grooms: But.

Trey Grooms: Clearly the two Q guide is lower than what I think most were kind of modeling or expecting.

Trey Grooms: You know, but with you reiterating the full-year guide, is it fair to say that, you know, kind of overall, the 2Q is kind of tracking as you would have thought? Any surprises there? Or maybe even any areas where, you know, it's coming in better or worse than you would have expected as we've moved so far through the year? Yeah, thanks, Trey. What I would tell you is multifamily, in particular

Trey Grooms: But would you reiterating the full year guide is it fair to say that kind of overall the <unk> is kind of tracking as you would've thought any surprises there.

Trey Grooms: Or maybe even any areas, where it's coming in better or worse than you would have expected as we move so far through the year.

Speaker Change: Yes, Thanks, Jay what I would tell you is.

Trey Grooms: Multi family in specific.

Peter M. Jackson: Some of that backlog is getting extended. So where, you know, at one point in time in the year, I may have thought more of those jobs would finish quicker, they're spreading out. It's actually a good thing.

Speaker Change: Some of that backlog is getting extended so we're you know at one point in time in the year I may have thought more of those jobs that finished quicker they're spread out it is.

Peter M. Jackson: It kind of smoothed that transition for us in one way. The other thing I'd tell you about multifamily, our team has done a great job going after pseudo-multifamily. Smaller multifamily projects, customers they haven't typically gone after that are helping also transition that. Haven't started yet, but we're seeing a lot of good momentum in that space. Things like assisted living versus a four-level apartment complex.

Peter M. Jackson: Actually a good thing it kind of smooth that transition for us.

Peter M. Jackson: One way I would tell you about multifamily our team has done a great job.

Peter M. Jackson: Going after suite of multifamily smaller multifamily projects.

Peter M. Jackson: Customers. They haven't typically gone after that are helping also transition that hadn't started yet, but we're seeing a lot of good momentum in that space things like assisted living versus a four level apartment complex so smaller jobs.

Peter M. Jackson: So smaller jobs as you take them by themselves, but add them up, it'll help the transition. But single-family housing is kind of operating the way we expected it to. There have been, it's never retracted below a level.

Peter M. Jackson: As you take them.

Peter M. Jackson: Themselves, but added up it'll help the transition.

Peter M. Jackson: Single family is cannot operate and the way we expected it to there's been it's never retracted below a level, it's built and it's a continual build but at the end of the day is as deep of a build as we would like of course, not as not as robust as we would like ever but it's.

Peter M. Jackson: It's a build, and it's a continual build. But at the end of the day, is it as steep of a build as we would like? Of course not.

Peter M. Jackson: It's not as robust as we would like it to be, but it's steady and it's there, and it doesn't retract. That's an important factor, as it is a build even as it's a slower build than we'd love to see. And we're adjusting that as we need to in those markets. The only thing I might add is there's nothing in what's happened that is a surprise to us in terms of the variables, all the variables I think we've accounted for.

Peter M. Jackson: Steady and it's there and it doesn't retract that's an important factor as it is a build even as it's a slower build than we'd love to see and we're adjusting that as we need to to those market conditions.

Peter M. Jackson: The only thing I might add is there is nothing in what's happened that is a surprise to us in terms of the.

Peter M. Jackson: The variable all variables I think we've accounted for there are a couple of variables that were I would say bigger headwinds than we anticipated I think that weather thing is certainly throwing us a curve ball it'll bounce back, but that's been a tricky one to navigate particularly regionally.

Peter M. Jackson: There are a couple of variables that were, I would say, bigger headwinds than we anticipated. I think that weather thing has certainly thrown us a curveball. It'll bounce back, but that's been a tricky one to navigate, particularly regionally. And I think what builders have done to build homes more affordably, whether it be the size of the home or complexity of the home, there's some variability on that as well that we've been challenged with.

Peter M. Jackson: I think what builders have done to build homes more affordably, whether it be size of the home or complexity of the home. There is some variability on that as well that we've been challenged with but again I think we're in line and we're doing what we said we were going to do despite those variables.

Peter M. Jackson: But again, I think we're in line, and we're doing what we said we were going to do despite those variables. Yeah. And I would add, a good indicator for me is always our trust backlog. Our trust backlog is at healthy levels.

Peter M. Jackson: I would add you know a good indicator for me as always are trust backlog <unk> backlog is at healthy levels, it's continuing to build that as an indicator for us of what's to come and that you know.

Peter M. Jackson: It's continuing to build. That's an indicator for us of what's to come. And if that was starting to slack off, I might get a little more word, but it's where it needs to be for us to be in a healthy situation. Got it. All right. Well, thanks for all that color.

Peter M. Jackson: If that was starting to slack off I might get a little bit more word but.

Peter M. Jackson: It's where it needs to be for us to be in a healthy situation.

Trey Grooms: I appreciate it. And, you know, hearing that you're very confident in the guide and being able to reiterate that is very encouraging. So we appreciate it. And thanks. Good luck for the rest of the quarter. Thanks, Gregor. And our next question comes from Rafi Jadrasich with Bank of America. Hey, good morning, it's Rafe.

Speaker Change: Got it alright, well thanks for all that color I appreciate it and hearing that you're very confident in the guide and being able to reiterate it is is encouraging so we appreciate it and thanks.

Rafe Jason Jadrosich: Good luck for the rest of the quarter.

Rafe Jason Jadrosich: Thanks, Greg.

Rafe Jason Jadrosich: And our next question comes from Rafi, Joshua <unk> with Bank of America.

Rafe Jason Jadrosich: Thanks for taking my question. I just wanted to ask about commodity pricing in the first quarter. It was deflationary, but when we look at OSB prices, they were up, lumber prices seemed kind of flat sequentially. So can you just talk about what you're seeing there?

Rafe Jason Jadrosich: Hey, good morning, Thanks for taking my question I wanted to ask on the commodity pricing in the first quarter. It was deflationary, but when we look at OSB prices were up lumber prices seemed kind of flattish sequentially. So can you just talk about what youre seeing there.

Rafe Jason Jadrosich: Sure.

Rafe Jason Jadrosich: Either from a mix standpoint, or how is the competitive environment.

Rafe Jason Jadrosich: <unk> then like how do you expect that to go going forward.

Peter M. Jackson: Either from a mix standpoint, or how is the competitive environment evolving? And like, how do you expect that to go going forward? Morning, Rafe.

Rafe Jason Jadrosich: Good morning, Ralph Yes, So I would tell you right up front that commodities are where the war is happening that's where the fight is you know, it's where historically you've got the most aggressive players you've got the most dynamic pricing.

Peter M. Jackson: Yeah, so I would tell you right up front that commodities are where the war is, that's where the fight is, you know, it's where, historically, you've got the most aggressive players, you've got the most dynamic pricing, and the volatility of it. I think what you're seeing in the numbers is really just around timing. There's a little bit of a shift in terms of when we saw the OSB run versus when we were feeling it.

Peter M. Jackson: Pricing the volatility of it I think what youre seeing in the numbers is really just around timing.

Peter M. Jackson: There's a little bit of.

Peter M. Jackson: Shift in terms of when we saw the OSB won versus when we were feeling it.

Peter M. Jackson: You know, that'll come through at different points during the year, but I would expect us to be pretty much done with the bad news around the prices of commodities. What I will say, though, is while we saw the run in OSB, that's starting to walk back, and we saw a much smaller run on lumber, and that's walking back as well. So I think you're seeing that mood of the market recognizing higher for longer and trying to triangulate on what that means for commodities. Again, that's not our game.

Peter M. Jackson: That'll come through at different points during the year, but I would expect.

Peter M. Jackson: So our robots to be.

Peter M. Jackson: Pretty much done with the bad news around the prices of commodities, what I will say, though is while we saw the run in OSB that starting to walk back and we saw a much smaller on lumber and Thats walking back as well, so I think youre seeing that mood of the market recognizing higher for longer and.

Peter M. Jackson: Trying to triangulate on what that means to commodity prices, but again, that's not our game, we don't play the <unk>.

Peter M. Jackson: We don't play the, you know, commodities up, commodity down bet. We're continuing to run product just in time, move it quickly, price appropriately, and get paid for what we do. Our strategy hasn't changed at all.

Peter M. Jackson: Commodities out commodity down that we're continuing to on product just in time.

Peter M. Jackson: Quickly priced appropriately get paid for what we do at our strategy Hasnt changed at all in that category.

Speaker Change: Got it Okay very helpful. And then just on SG&A there there was some.

Peter M. Jackson: Very helpful. And then just on SG&A, there was some de-leverage in the first quarter. How should we think about that going forward here, especially if sales turn in the second half of the year? And then just remind us of the base in terms of incentive comp from last year. Do you have an easier comparison there?

Peter M. Jackson: Do you ever seen that in the first quarter.

Peter M. Jackson: Just how should we think about that going forward here, especially as if sales turned in the second half of the year.

Peter M. Jackson: And then just remind us of the base in terms of incentive comp from from from last year do you have an easier comparison, there and how do we just think about leverage versus what you've done historically.

Peter M. Jackson: And how do we just think about leverage versus what you've done historically? So SG&A, we saw a couple of one-timers come through in Q1 that hurt us a little bit. We had some credits last year that we didn't repeat this year. I wouldn't, from my perspective, and take it for what it's worth, I wouldn't read too much into it.

Peter M. Jackson: Yes, so SG&A, we saw a couple of one timers come through in Q1 that that hurt us a little bit.

Peter M. Jackson: Some of it with us.

Peter M. Jackson: We had some credits last year that didn't repeat this year I wouldn't from my perspective and take it for what it's worth I wouldn't read too much into it I think are consistent.

Peter M. Jackson: I think our consistent discipline around expenses will keep us in the ranges that you'd expect. Summer months are always our best leverage months, right, Q2, Q3, so you'll see that come through on the business. I guess I would say there isn't much of an adjustment, maybe a minor one, on the bonus side.

Peter M. Jackson: Discipline around expenses will keep us in the ranges that you would expect summer months are always our best.

Peter M. Jackson: Leverage months right Q2, Q3, so youll see that come through.

Peter M. Jackson: In terms of the.

Peter M. Jackson: The base business.

Peter M. Jackson: I guess I would say there isn't much of an adjustment maybe minor on the bonus side I think really the storyline around the year over year bonuses that we gave ourselves as you've seen a more challenging target and plan for this year. Our performance is more in line versus vastly.

Peter M. Jackson: I think really the storyline around the year-over-year bonuses is that we gave ourselves, as you've seen, a more challenging target and plan for this year, and our performance is more in line versus vastly outperforming that target. So you will see a pullback in the total amount of bonuses just by nature of that performance, which you'd expect.

Peter M. Jackson: Forming that target. So you will see a pullback in the total amount of bonus dollars just by nature of that performance, which you would expect.

Peter M. Jackson: I think that shareholders, management, and the board are all in alignment. So that'll be a bit of a tailwind versus the prior year just from a dollar. The only thing I'd add is our highest variable cost, obviously, is our labor, and the field and the team have done an exceptional job keeping labor as a percent of gross profit, which is our key metric, right in line with our operating, you know, within the parameters of what we set for ourselves in this level of sales and activity, and our tools for managing that cost are as good as they've ever been in my 25 years. So, you know, Thank you; it's very helpful.

Peter M. Jackson: Shareholders management and the board is all in alignment on that one.

Peter M. Jackson: So that'll be a bit of a tailwind versus the prior year just from a dollar amount perspective.

Peter M. Jackson: The only thing I'd add is our highest variable cost obviously is our labor in the field and the team have done an exceptional job keeping labor as a percent of gross profit, which is our key metric right in line with our operating.

Peter M. Jackson: Yeah.

Peter M. Jackson: Within the parameters of what we set for ourselves in this level of sales and activity and our tools for managing that cost are as good as they've ever been in my 25 years with the company. So.

Peter M. Jackson: The key factor for us in managing SG&A is how well, we manage our labor down at the field level and they've done exceptional at that.

Peter M. Jackson: Since the beginning of the year.

Peter M. Jackson: Thank you it's very helpful.

Rafe Jason Jadrosich: And we have our next question from... Thank you. The question on the windows and doors segment was down 2%.

Peter M. Jackson: And we have our next question from Keith Hughes with Truest.

Keith Brian Hughes: You talked about some product costs declining. Can you talk about that a little bit more? Which product?

Speaker Change: Thank you the question on the Windows and doors segment was 13% you talked about some product cost declining can you talk about that a little bit more what's product selling prices declining or inputs any kind of themselves.

Peter M. Jackson: And is that selling prices declining or inputs or any kind of details of the growth? Well, good morning, Keith. If you recall, Keith, this time last year or in the first quarter last year, we were just coming out of, you know, the normalization of the supply chain; windows and doors were getting delivered on time again, and the National Builders focus on completions in that first quarter was at a higher level just to catch up.

Keith Brian Hughes: Well.

Peter M. Jackson: Good morning, Keith if you recall keep this time last year or in the first quarter last year, we were just coming out of.

Peter M. Jackson: Normalization of supply chain Windows and doors were getting delivered timely again and the national builders focused on completions and that first quarter was at a higher level just to catch up that kind of was the pig in the pipeline for us last year and higher millwork and win.

Peter M. Jackson: That kind of was the pig in the python for us last year in higher millwork and window and door sales in the first quarter than normal. I would tell you this first quarter was, so we had to roll over those numbers from last year where they were a bit more tilted towards completions, where this year was more normal with respect to completions.

Peter M. Jackson: Door sales in the first quarter, then norm I would tell you. This first quarter was normal so we had to roll over those numbers from last year, where it was a bit.

Peter M. Jackson: More tilted towards completions, where this year was more normal with respect to completions.

Peter M. Jackson: There has been some deflation in the category, and specifically, I think with millwork on the millwork side, and that's affected it modestly. I think we saw pretty close, our volumes did exactly what we expected them to do, and it was more along the lines of some of the deflationary impact along with rolling over that higher degree of completions last first quarter that really explained the difference. Okay, thank you.

Peter M. Jackson: There has been some deflation in the category.

Peter M. Jackson: And specifically I think wood with millwork on the millwork side.

Peter M. Jackson: And thats affected it modestly I think we saw pretty close our volumes did exactly what we expected our volumes to do and it was more along the lines of some of the deflationary impact along with rolling over that higher degree of completions last first quarter that really.

Peter M. Jackson: We explained the difference.

Speaker Change: Okay. Thank you.

Adam Michael Baumgarten: And we have our next question from Adam Baumgarten with Zellman & Associates. Hey, good morning, guys. Can you talk about what you're seeing from a non-commodity pricing perspective and maybe specifically on the manufactured product side? So, you're talking about customer pricing or vendor pricing; you're pricing to customers. So it's, as you would expect, and while we play in those categories, that is less price sensitive on the manufacturing side because once you get locked in with a designer and you get locked in with somebody who's going to meet delivery schedules and whatnot, that becomes a more important factor.

Peter M. Jackson: And we have our next question from Adam Baumgarten, with Zelman and associates.

Adam Michael Baumgarten: Now, as commodities have fluctuated and the fact that they're a component of manufacturing, that affects the price as commodities go up or down, and they've been going down for lumber slightly. But you know what we've been able to offset some of that with our efficiency, that we've been able to gain throughout since the merger with our automation investors, and our continual improvement in actual board foot per labor hour produced has been a nice offset to some of those challenges, but as a whole, ValueAdded continues to hold in there better than Commodities, which of course is..., along with our strategy. Okay, I got it.

Adam Michael Baumgarten: Hey, good morning, guys.

Adam Michael Baumgarten: Talk about what youre seeing from a non commodity pricing perspective, and maybe specifically on the manufactured product site.

Adam Michael Baumgarten: So you're talking about you're talking about.

Adam Michael Baumgarten: Customer pricing our vendor pricing.

Adam Michael Baumgarten: Youre pricing to customers.

Adam Michael Baumgarten: Okay.

Adam Michael Baumgarten: So it's.

Adam Michael Baumgarten: As you would expect and why we play in those categories that is less price sensitive on the manufacturing side because.

Adam Michael Baumgarten: Once you get locked him with a designer and you get locked in with somebody who's going to meet delivery schedules and whatnot that becomes.

Adam Michael Baumgarten: More important factor now as commodities have fluctuated in the fact that they are a component of manufacturing.

Adam Michael Baumgarten: That affects the price as commodities go up or down and they've been going down for lumber slightly.

Adam Michael Baumgarten: But you know what we've been able to do is offset some of that with our efficiencies that.

Adam Michael Baumgarten: That we've been able to gain throughout since the merger with our automation investments and our continual improvement and actual board foot per labor hour produced.

Adam Michael Baumgarten: It's been a nice offset to some of those challenges.

Adam Michael Baumgarten: But as a whole value add continues the hold in there better than commodities, which of course is <unk>.

Adam Michael Baumgarten: Aligned with our strategy.

Peter M. Jackson: That's helpful. And then just on that three to 4% impact from weather you saw in 1Q, how should we expect that to be recovered? Is it mostly in 2Q, or is it going to span over a few quarters? Well, I was happy to say Q2 up until Houston got buried or flooded out. Generally, it takes about a quarter to a quarter and a half to catch back up. But it doesn't, unfortunately, just. Whipsaw back the other direction, but that's probably a reason. Got it.

Speaker Change: Okay got it that's helpful. And then just on the 3% to 4% impact from whether you saw him on <unk>, how should we expect that to be recouped is it mostly in <unk> or is it that span over a few quarters.

Peter M. Jackson: Yes.

Peter M. Jackson: Well I was happy to say Q2 up until Houston got buried or flooded out.

Peter M. Jackson: Generally it takes about a quarter to a quarter and a half.

Peter M. Jackson: Catch back up it doesn't unfortunately just.

Peter M. Jackson: Whipsaw back the other direction, but that's probably a reasonable way to think about it three or four months.

Adam Michael Baumgarten: Thanks. Best of luck. Thank you. And our next question comes from Stanley Elliot. Hey, good morning, everybody.

Speaker Change: Got it thanks best of luck.

Stanley Stoker Elliott: Thank you.

Adam Michael Baumgarten: And our next question comes from Stanley Elliott with Stifel.

Stanley Stoker Elliott: Thank you for the question. Um, can you talk a little bit about what you're seeing on the services piece, you know, the very strong numbers of 17% are this a reflection of your efforts to take it into new markets? Is this existing, you know, more services with some of your existing customers? And then, secondly, how should we eventually think about this as either an attach rate or pull through on, you know, some of the other things you're doing on the manufacturer side? Yeah, I would say all of the above.

Stanley Stoker Elliott: Hey, good morning, everybody. Thank you for the question.

Stanley Stoker Elliott: Can you talk a little bit about what youre seeing on the on the services piece.

Stanley Stoker Elliott: Strong numbers up 17%.

Stanley Stoker Elliott: Is this kind of reflection of your efforts to take it into new markets existing.

Stanley Stoker Elliott: More services with some of your existing customers and then I guess secondly, how should we eventually think about this as either an attach rate or pull through on that.

Stanley Stoker Elliott: On some of the other things you are doing on the manufacturing side.

David E. Rush: We had a strong installation business. We did $2.5 billion in labor and materials installed in 2023, so we had a nice base to work from. And our initial focus, as you would expect, was on the products that we're already good at in one market and leveraging that platform to other markets. And it's the products that we're most familiar with and the products that we distribute every day. So we've got off to a great start.

Stanley Stoker Elliott: Yeah, I would say all of the above.

David E. Rush: We had a strong install base, we did $2 5 billion in labor materials installed in 2023. So we had a nice base to work from and our initial focus as you would expect was on the products that we are already good at in one market and leveraging that.

David E. Rush: Platform to other markets and it's the products that we're most familiar with and the products that we distribute every day. So we got off to a great start a lot of that increase is from existing markets had already doing install because those are the ones that had the base to work from but we do.

David E. Rush: A lot of that increase is from existing markets that are already doing installations because those are the ones that have the base to work from. But we developed really nice... Playbooks, and we've had really good interest, which has been pool interest. So it's people reaching out, I want to get into this business, how do I do it the right way, versus us saying, hey, you need to get into this business, which is, in my role, in my seat, that's what you want to see.

David E. Rush: <unk> really nice play.

David E. Rush: Playbooks and we've had really good interest.

David E. Rush: As Ben pool interests, so as people, reaching out I want to get into this business, how do I do it the right way versus us, saying, Hey, you need to get into this business, which is in my role and my seat that's what you want to see.

Stanley Stoker Elliott: And we've got really good people, really good plans, and we just think it's the next evolution, and doing it methodically and in a way that we don't make mistakes. That's key for me, to do it the right way and make sure that what we're generating is customer value-added solutions. And curious, kind of tagging on that, if you're willing to share, are you seeing more of this uptake with, you know, some of the smaller builders, some of the more national builders, just trying to kind of get a sense for the flavor there? It depends on the product category, first of all, but the national builders certainly like the installation solution wherever they can apply it.

David E. Rush: And we've got really good people really good plans and we just think it's the next.

Stanley Stoker Elliott: Evolution for us as a company in solving customer pain points and doing it methodically and in a way that we don't make mistakes. That's key for me to do it the right way and make sure that you know.

Stanley Stoker Elliott: What we're generating as customer value added solutions.

Stanley Stoker Elliott: And curious kind of tagging on that if youre willing to share are you seeing more of this uptake with some of the smaller builders some of the more national builders, just trying to kind of get a sense for the flavor there.

Stanley Stoker Elliott: It's a little of it depends on the product category first of all but the national builders.

Stanley Stoker Elliott: Certainly like the install solution.

Stanley Stoker Elliott: Wherever they can apply the custom guys.

David E. Rush: The custom guys like it, but they're a little more specific to Millwork or a little more specific to installing Windows, probably not so much to install framing, right? It's a really good play for the National Builders. They seem to like that the best. But there are applications for both. To Dave's point, we do see a higher level of adoption of our value-added products. [inaudible] Perfect, guys. That's it for me.

David E. Rush: Like it but there are a little more specific to millwork or a little more specific to <unk>.

David E. Rush: Install windows, probably not so much install framing right. So.

David E. Rush: It's a really good play for the national builders, they seem to like that the best but it is there are applications for both segments and to Dave's point, we do see a higher level of adoption of our value added products to the larger players just generally yes.

David E. Rush: Install is the natural evolution to the value add is the next the next part of value add not only.

David E. Rush: Do you get the components delivered to the job site, but you actually install the components that are delivered to the job site.

David E. Rush: That's just a natural evolution of doing more for our customers.

David E. Rush: Perfect guys. That's it for me, Thanks, and best of luck.

Speaker Change: Thanks, Dan.

Stanley Stoker Elliott: Thanks and best of luck. And we have our next question from Colin Barron with Jeff. Hey, good morning.

David E. Rush: And we have our next question from Colin Baron with Jefferies.

Collin Andrew Verron: Thank you for taking my questions. I just wanted to start on the gross margin side of things. You talked about the shift in timing toward early stage home building products being a gross margin mixed headwind. Can you quantify that headwind either sequentially or year over year and how it compares to the headwind you're seeing from multifamily normalization? Following up on that, how you're thinking about that mix through the rest of the year, just given what you're seeing in Starch, the backlog, and conversation. Yeah, so I don't think I can give you the details, but good morning, Colin.

Collin Andrew Verron: Hey, good morning, Thank you for taking my questions.

Collin Andrew Verron: Just wanted to start on the gross margin side of things you talked about the shift in timing towards early stage homebuilding product gross margin mix headwind can you, maybe quantify that headwind either sequentially or year over year and how it compares to the headwind you're seeing from multifamily normalization.

Collin Andrew Verron: And just following up on that how youre thinking about that mix for the rest of the year just given what youre seeing in starts backlog in conversations with your customers.

Peter M. Jackson: Thank you for the question. I'm not sure I can give you the breakdown necessarily exactly what you're looking for. What I can tell you is on the mix side, you know, there is an expectation that we're going to see a trend back to normal mix. I don't think that's much of a stretch, right?

Speaker Change: Yeah. So I don't think I can give you the detail good morning, Colin. Thank you for the question Im not sure I can give you the breakdown necessarily exactly what youre looking for what I can tell you is on the mix side.

Peter M. Jackson:

Peter M. Jackson: It's an expectation that we're going to see a trend back to normal mix I don't think that's much of a stretch right. So what we're seeing right now is.

Peter M. Jackson: So what we're seeing right now is more of our growth being in pure commodities and trust, and the relationship between just those two categories biases it towards commodities. And commodities, like I was saying before, are where we've had the most aggressive normal. We've seen it across the board on gross margins, right? We've seen gross margin normalization. We've talked about it a lot. It's not just multifamily; it's single-family too.

Peter M. Jackson: More of our growth being in the pure commodities and the troughs and the relationship between just those two categories biases it towards the commodities and commodities like I was saying before is where we've had the most aggressive normalization we've seen it across the board on the gross margins right. We've seen gross margin normalization we've.

Peter M. Jackson: About it a lot it's not just multifamily and single family to me.

Peter M. Jackson: Matter of fact, this quarter, the bulk of it was single family normalization. Much of that is the mix, but a good chunk of that is also just what we've been messaging over the last year. And that is, we have seen this normalization play out. We have seen it across the business. And this year's margins are, when you peel back that multifamily stuff, a step down from where they were.

Peter M. Jackson: In fact this quarter the bulk of it was single family normalization.

Peter M. Jackson: That is the mix, but a good chunk of that is also just what we've been messaging over the last year and Thats. We have seen this normalization play out.

Peter M. Jackson: Across the business and this year's margins are when you Peel back that multifamily stuff.

Peter M. Jackson: That was why we were so adamant last year that our, you know, mid-30s gross margin numbers weren't going to hold on because we were seeing it play. But that mix will certainly be a tailwind as we regain the Reader Stage Building Products business, but we have, again, the lapping from the prior year. So that's why our guide is in that 30 to 33 range because we think that those three variables will play against each other and we want to try and give you the best insight possible to where we'll. Okay, that's helpful color. I guess I want to pivot towards the M&A pipeline. It sounds like it's pretty robust.

Peter M. Jackson: A step down from where they were that was why we were so adamant last year that are.

Peter M. Jackson: Mid thirties gross margin numbers weren't going to hold on because we were seeing it play out.

Peter M. Jackson: But that mix will certainly be a tailwind as we regain the bulk.

Peter M. Jackson: Lee.

Peter M. Jackson: Later stage building products, but we have again the lapping from the prior year. So that's why our guide is.

Peter M. Jackson: In that 30% to 33 range, because we think that those three variables will play against each other and we want to try and give you the best insight possible to where we'll end up.

Peter M. Jackson: Any color to the size of potential deals out there in the market and what those potential targets look like from a product offering perspective? We won't get that precise, but I think our strategy has not changed. The way we look at the market, where we're successful, where we can add the most value are all variables in the discussion. You know, there are always a million rumors about what may or may not trade. I think for us, it's imperative that we stay disciplined.

Peter M. Jackson: Okay. That's helpful color and I guess I want to pivot towards the M&A pipeline. It sounds like it's pretty robust any color as to the size of potential deals out there in the market and what those potential targets look like from a product offering perspective.

Peter M. Jackson: We won't get that precise, but I think our strategy has not changed right. The way we look at the market, where we're successful where we can add the most value are all variables.

Peter M. Jackson: In the discussion.

Peter M. Jackson: But I think that.

Peter M. Jackson: And we stay focused. What's exciting is, as it stands today, we see a lot of assets out there that fit that screen, and now we just have to see if we can get them across the finish line.

Peter M. Jackson: There is there are always a million rumors about what may or may not trade I think for us it's in.

Peter M. Jackson: Imperative that we stay disciplined and we stay focused what's exciting is as it stands today, we see a lot of assets out there that fit that screen and now we've just got to see if we can get them across the finish line.

Peter M. Jackson: Okay, thank you for taking my question. And our next question comes from Tyler Battery with, A question on the competitive environment. Are you seeing some of the smaller players out there maybe trying to get more aggressive to take market share? Is that having an impact on your performance and on your business? What I would tell you, Tyler, is not any more than usual. Again, where we differentiate ourselves is in the value-added solution and the value-added space. And that's for a reason. Anybody can do commodities. Anybody can deliver lumber.

Speaker Change: Okay. Thank you for taking my questions.

Speaker Change: Thanks, Tom.

Peter M. Jackson: And our next question comes from Tyler Battery with Oppenheimer.

Peter M. Jackson: It's hard to differentiate yourself in a straight distribution model, so we do see competition in that arena, for sure. We try to leverage our relationships with those customers where we do other stuff for them very well and use that as a way to continue to maintain share on the commodity side versus just getting into a price war. So we do see competition in that regard. We choose to compete where we want to compete in that regard, but we'll always do a high percentage of lumber.

Peter M. Jackson: Thank you good morning question on the competitive environment.

Peter M. Jackson: Youre seeing some of the smaller players out there maybe trying to get more aggressive to take market share is that having an impact on your on your performance on your business.

Speaker Change: Well, what I would tell you Tyler.

Peter M. Jackson: Not any more than usual.

Peter M. Jackson: Again, where we differentiate ourselves is in the value added solution and the value added space and that's for a reason anybody can do commodities anybody can deliver lumber is hard to differentiate yourself.

Peter M. Jackson: Straight distribution model.

Peter M. Jackson: So we do see competition.

Peter M. Jackson: In that arena for sure you know, we try to leverage our relationships with those customers where we do.

Peter M. Jackson: Other stuff for them is very well and and use that as a way to continue to have maintained share on the commodity side versus just getting into a price war.

Peter M. Jackson: So we do see competition in that regard, we choose to compete where we want to compete in that.

Peter M. Jackson: But we will always do.

Peter M. Jackson: A high percentage of lumber we're good at doing lumber, we're good at meeting schedules and making sure. The lumber is there when the customer wants it.

Peter M. Jackson: We're good at doing lumber. We're good at meeting schedules and making sure the lumber is there when the customer wants it. And we get recognized for that. And where we get that recognition is where we play.

Peter M. Jackson: And we get recognized for that and where we get that recognition is where we play.

Peter M. Jackson: In short, there is a lot more competition on the commodity side than the non-commodity side, and our reputation in the value-added space carries us along. The only thing I'll add, and I think it might be embedded in your question, is share. You know, I think one of the variables that we struggle with is what's the real share number? Generally, we would use single-family starts as a proxy for the market, and then we would compare our sales.

Peter M. Jackson: But in short a lot more competition on the commodity side than the non commodity side.

Peter M. Jackson: And our reputation on the value added space carries us along the way.

Peter M. Jackson: The only thing I'll add.

Peter M. Jackson: I think it might be embedded in your question is share.

Peter M. Jackson:

Peter M. Jackson: I think one of the variables that we struggled with is what's the real share number but generally we would use single family starts as a proxy for the market and then we would compare our sales against that.

Peter M. Jackson: In general, that's a really tricky thing right now because I think there are some meaningful differences between a starter unit and a sales dollar. Homes are smaller, the costs of those homes, and what is being put into them are simpler and cheaper.

Peter M. Jackson: In general that's a really tricky thing right now because I think there are some there are some meaningful differences between a start unit and a sales dollar homes are smaller the costs of those homes are what's being put into them are simpler and cheaper and we've seen some <unk>.

Peter M. Jackson: And we've seen some not insignificant cost reductions or pricing reductions in terms of what we're getting from our vendors and what we're selling into the market, whether it be commodities, which is the obvious one, but also EWP or millwork or any of the other ones we've talked about. Those all represent sort of gaps or deltas between those two units. And then you layer on a little bit of the timing-related stuff, whether it be, you know, how complete these homes are and what we're selling or the weather or whatever.

Peter M. Jackson: Not insignificant cost reductions or pricing reductions in terms of what we're getting from our vendors and what selling into the market.

Peter M. Jackson: Whether it be commodities, which is the obvious one but also.

Peter M. Jackson: EW P or millwork or any of the other ones. We've talked about those all represent sort of gaps or deltas between those two units of measure.

Peter M. Jackson: And then you layer on a little bit of a timing related staff, whether it would be.

Peter M. Jackson: Now complete these homes are in what were selling or the weather or whatever it certainly has made that whole discussion in that analysis really challenging.

Peter M. Jackson: It certainly has made that whole discussion and that analysis really challenging. But back to Dave's point, I think the only place we think we've maybe struggled or battled is in that commodity, the low end, where smaller competitors are more willing to get down in the dirt. Very helpful. And a quick follow-up on the R&R side of things, down 5% in the quarter. I think weather is probably impacting that. What are you seeing here in the second quarter?

Peter M. Jackson: But back to Dave's point I think the only place we think we.

Peter M. Jackson: Maybe struggle their battle is in that commodity the low end where smaller competitors.

Peter M. Jackson: Competitors are more willing to get down and dirty.

Peter M. Jackson: Okay very helpful and a quick follow up on the R&R side of things down 5% in the quarter I think why theyre probably impacting that.

Peter M. Jackson: Are you seeing here in the second quarter, there's a lot of different views on the R&R and market out there just share your confidence in terms of your growth outlook. This year in that end market.

Tyler Anton Batory: There are a lot of differing views on the R&R end market out there. Share your confidence in terms of your growth outlook this year in that end market. So, as it relates specifically to the first quarter, we're higher concentrated in R&R in the northeast. And the northeast was that set area of the country for us that was more greatly impacted by weather.

Tyler Anton Batory: So as it relates specifically to the first quarter, we were a higher concentrated in R&R and the northeast in the northeast was that set area of the country for us that was a great more greatly impacted by weather.

Peter M. Jackson: 20-23 days had serious weather in the quarter, so that's where we felt it. In general, I think R&R is kind of a two-edged sword, right? The bigger projects are facing some of the same kind of cost-of-money pressures that the small custom builder is facing, but the regular smaller projects, I think, are going to be along the same line as what you would expect. Okay, that's all for me. Thank you. And we have our next question from David Manthe with Baird. Thanks, Dave, Peter, good morning. My first question is about the digital.

Tyler Anton Batory: 20% to 23 days had serious weather in the quarter.

David John Manthey: That's where we felt it in general.

David John Manthey: You know I think R&R will be.

David John Manthey: It's kind of a two edged sword right. The bigger projects are facing some of the same kind of cost of money pressures.

David John Manthey: You know the small custom builder is facing but the <unk>.

Peter M. Jackson: Regular.

David John Manthey: Smaller projects I think are going to be.

David John Manthey: Along the same line as what you would expect.

David John Manthey: Okay. That's all for me thank you.

David John Manthey: Thank you.

David John Manthey: And we have our next question from David Manthey with Baird.

David John Manthey: Thanks, Dave Peter Good morning.

David John Manthey: So the revenue uptick is good to see. Could you share with us any data on the number of net users today versus a year ago or the end of last year, just to give us an idea of how that's going? And then, is there any prototypical customer type that's implementing the system, or is it just based on personality? Morning, Dave. Yeah, we're excited about digital. But I don't, unfortunately, have user numbers. I might be able to get them for you, but I don't have them off the top of my head.

David John Manthey: My first question is on the digital so the revenue uptick is good to see could you share with us any data the number of net users today versus a year ago or the end of last year.

Dave: Just to give us an idea of how that's ramping and then is there any prototypical customer type that is implementing the system or is it just based on personality and choice.

Speaker Change: Good morning, Dave Yeah, we're excited about digital.

David John Manthey: I don't Unfortunately have user numbers I might be able to get them for you, but I don't have them off the top of my head is going up we're seeing that they were gosh I don't know what it was five or 700 leads that we took out of Ivy asked we've got a lot of customers as we do our adoption in our roll out around the country that are coming onboard.

David E. Rush: It's going up. We're seeing that. There were, gosh, five or 700 leads that we took out of IDS.

David E. Rush: We've got a lot of customers as we do our adoption and our rollout around the country that are coming on board. While most of them are bid to smaller size builders, the profile I think that you're talking about are those that are leaning into digital and technology to be able to make themselves more efficient and more professional and better with, I think you've got, you know, sometimes it's generational, candidly, sometimes it's not, it's just the mentality around leveraging tools to take waste out of the job, make the job go quicker, connect with the with the home buyer a little bit more easily, more visually.

David E. Rush:

David E. Rush: While most of them are bid to smaller sized builders the profile I think that youre talking about are those that are.

David E. Rush: Leaning into digital and technology to be able to make themselves more efficient and more professional and better with their customers I think you've got.

David E. Rush: Sometimes it's generational candidly, sometimes it's not it's just the mentality around leveraging tools.

David E. Rush: To.

David E. Rush: Take waste out of the job make the job go quicker.

David E. Rush: With the homebuyer, a little bit more easily more easily.

David E. Rush: But it's such a compelling tool, in our opinion. It's got so much that can help the builder just get a little bit better every day, you know, that game we're all trying to play, creating efficiency, making it more transparent to the builder, to the trades, and to the home buyer. So those are the types of customers, the ones that really take advantage of technology to do that, that we're seeing early on. But in general, I think our digital tool has become increasingly becoming the new way of doing business just because it's so easy. It's, it's, you know, very modern; it's very smooth.

David E. Rush: But it's such a.

David E. Rush: In our in our opinion is such a compelling.

David E. Rush: Two it's got so much that that can help to build or just.

David E. Rush: Get a little bit better every day, you know that game are all trying to play creating efficiency.

David E. Rush: Making it more transparent.

David E. Rush: The builder to the trades.

David E. Rush: And to the homebuyer. So that those are the types of customers the ones that really take advantage of technology to do that that we are seeing early but in general I think our digital tools become.

David E. Rush: Is increasingly becoming the new way of doing business, just because it's so easy it's.

David E. Rush: And, so far, so good. We're excited about the ramp-up trend and how it's been progressing so far in the early days. What I would tell you what juices me the most is the traffic we had at our booth at IBS. I have never, in my 25 years of going to IBS, seen the kind of excitement and the kind of traffic that went through our booth, primarily because of our digital platform and showing what capabilities it was going to present.

David E. Rush: Very modern is very smooth.

David E. Rush: And so far so good we're excited about the ramp up trend and how its been progressing so far early days.

David E. Rush: I would tell you juices me the most was.

David E. Rush: The traffic we had at our booth at Ibs I've never in my 25 years with go into Ibs, and seeing the economy excitement and the kind of traffic that went through our booth.

David E. Rush: Merrily because of our digital.

David E. Rush: Platform and showing what.

David E. Rush: Capabilities that it was going to present the other the other thing I would say is think about it if you're a smaller builder.

David E. Rush: The other thing I would say is, think about it if you're a smaller builder, doing homes a year, you don't have the ability to invest in technology for yourself to get this to the level of platform that we're developing. What we're doing is leveraging our ability to make those investments and develop that platform for our customers of that size so that they can play in that space and be efficient without having to make a huge upfront investment in the world.

David E. Rush: 50 to 200 homes a year you don't have the ability to invest in technology for yourself.

David E. Rush: To get to the level of platform that we're developing what we're doing is leveraging our ability to make those investments develop that platform for our customers of that size. So that they can play in that space and be efficient without having to make a huge upfront investment in them.

David E. Rush: So that's the rationale behind why we developed it and why we think it'll be appealing to our customer base. And if IVS is any indication, we hit it right on the head. Thanks, guys. In the interest of time, I'll just pass it on.

David E. Rush: So that's the that's the rationale behind why we developed it and why we think it will be appealing to our customer base.

David E. Rush: Is any indication we hit it right on the head.

Speaker Change: Okay. Thanks, guys.

Speaker Change: Interest of time I'll just pass it on thank you.

Ed: Thanks, Ed.

David John Manthey: Thank you. And we have our next question from Jay McCandless, who said, Hey, good morning, everyone. So my first question, Peter, I think you called out some pretty positive sales trends for the Western US. Could you talk about how that's trended in April and May, similar pattern to what you saw in 1Q? Morning, Jay. Yeah, pretty similar.

David E. Rush: And we have our next question from Jay Mccanless with Wedbush.

Jay McCandless: Hey, good morning, everyone. So my first question.

David John Manthey: Peter I think you called out some some pretty positive sales trends for the Western U S could.

Jay McCandless: Could you talk about how that's trended in April and May similar pattern to what you saw in <unk>.

Peter: Good morning, Jay Yes pretty similar.

Jay McCandless: You know, I think that the West got hammered out of the gate, and they bounced back really nicely. A little more stable through the other two regions, but yeah, I think that spread pretty consistently. We'll have to see how this whole weather thing in Houston plays out, but for the time being, it's pretty good. Thanks. Taking the lumber question especially, some of the more commodity goods a step further, is this a function of not only higher mortgage rates, but was there an oversupply of commodity lumber in the system to start the year?

David John Manthey: I think that the.

Jay McCandless: West got hammered out of the gate and they bounce back really nicely.

Jay McCandless: <unk>.

Jay McCandless: A little more stable through the other two regions, but yes, I think thats been pretty consistent.

Jay McCandless: To see how this all weather thing in Houston plays out, but for the time being it's pretty good.

Speaker Change: Okay. Thanks, and then.

Jay McCandless: Taking the lumber question, especially some of the more commodity goods a step further.

Jay McCandless: Is this a function of not only higher mortgage rates, but what was there an oversupply of commodity lumber and the system to start in the year. Just wondering if this is all rate driven or if there's some other mitigating factors we need to be monitoring.

Jay McCandless: Just wondering if this is all rate-driven, if there's some other mitigating factors we need to be monitoring. We didn't see a lot of unusual behavior in the market, either. You know, tough for us to see that from others' perspectives, but it's a... It's a strong... I would say generally a strong and stable market. So I don't know how people made bets with regard to where stuff was.

Jay McCandless: We didn't see a lot of unusual behavior in the market now.

Jay McCandless: Tough tough for us to see that from others perspective, but.

Jay McCandless: It's.

Jay McCandless: It's a strong.

Jay McCandless: <unk>.

Jay McCandless: I think generally a strong and stable market. So I don't know how people made bets with regard to where we're stuff was moving.

Jay McCandless: Okay, great. Thanks for taking my question. All right.

Speaker Change: Okay, Okay, great. Thanks for taking my questions.

Speaker Change: Alright, Thanks Jay.

Jay McCandless: Thanks, Jay. And we have our next question from Keaton Mamtura with BMO Capital. Thank you. Peter, just one question. You've talked quite a bit about margin normalization and multifamily.

Jay McCandless: And we have a next question from Keith <unk> with BMO capital markets.

Ketan Mamtora: Thank you.

Ketan Mamtora: Just one question you've talked quite a bit about margin normalization in multifamily.

Ketan Mamtora: On the core organic, the single-family piece, do you think at this point we are sort of towards the end of that normalization? We are midway through. How would you characterize that? And are the competitive dynamics in that side of the business changing at all given the sort of pressure on EWP prices, given where lumber is today? Just curious to get your thoughts.

Ketan Mamtora: On the core organic the single family piece.

Ketan Mamtora: I think at this point.

Ketan Mamtora: And of that normalization.

Ketan Mamtora: Midway through how would you characterize that.

Ketan Mamtora: Are the competitive dynamics in that side of the business in that.

Ketan Mamtora: Changing at all given sort of pressure on AWP price is given where lumber is today just curious to get your thoughts.

Peter M. Jackson: Thank you, Don. So, yeah, I would tell you that we're closer to the end in terms of how we expect margins to normalize. We're still below normal in terms of volume, so that's a pressure-filled environment, always very competitive, always has been, and we expect it always will be on the commodity side, but that now needs to be a battle cry that we rise to, right? And it's something that we've done for years and we feel good about.

Speaker Change: Thank you John So yeah, I would tell you that we're closer to the end.

Peter M. Jackson: In terms of how we expect margins to normalize we're still below normal in terms of volumes. So that said, that's a pressure filled environment.

Peter M. Jackson: It's always very competitive always has been we expect it always will be on the commodity side.

Peter M. Jackson: But that now needs to be a.

Peter M. Jackson: Our battle Cry that we rise too right and it's something that we've done for years and we feel good about there is a.

Peter M. Jackson: There's an expectation that the little player will always be more competitive, and we think that'll continue to play out, but by and large, I think margins have performed well. There's certainly been some aggressiveness from certain vendors, but in most cases, it's in response to past moves. So more of a normalization, more of a rebound, you know, a mean reversion, if you will, rather than a Do you understand that? It does indeed.

Peter M. Jackson: There is an expectation that the.

Peter M. Jackson: Little player will always be more competitive and we think that will continue to play out but by and large I think margins have performed well theres certainly been some.

Peter M. Jackson: <unk> from certain vendors, but in most cases, it's in response to past moves so more of a normalization more of a rebound back.

Peter M. Jackson: Mean, reversion, if you will rather than a oh, we're in trouble, we didn't do something dramatic.

Speaker Change: That makes sense.

Speaker Change: It does thank you very much.

Ketan Mamtora: Thank you very much. And it appears we have reached our allotted time for the question and answer session today. That will conclude today's program. Thank you for your participation.

Speaker Change: And it appears we have reached our allotted time for the question and answer session. Today that will conclude today's program. Thank you for your participation you may now disconnect.

Speaker Change: Thank you.

Ketan Mamtora: [music].

Ketan Mamtora: Okay.

Ketan Mamtora: [music].

Ketan Mamtora: Hum.

Ketan Mamtora: [music].

Ketan Mamtora: Okay.

Ketan Mamtora: Perfect.

Ketan Mamtora: Hum.

Ketan Mamtora: [music].

Ketan Mamtora: Okay.

Ketan Mamtora: [music].

Ketan Mamtora: Okay.

Ketan Mamtora: Yeah.

Ketan Mamtora: Hum.

Ketan Mamtora: Okay.

Ketan Mamtora: [music].

Speaker Change: Uh huh.

Ketan Mamtora: [music].

Ketan Mamtora: Hum.

Ketan Mamtora: Yeah.

Ketan Mamtora: Okay.

Ketan Mamtora: Yeah.

Ketan Mamtora: Okay.

Ketan Mamtora: [music].