BLDR - Earnings call 4 2023 | Builders FirstSource, Inc.

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Operator

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

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

Heather Kos

to quarter welcome XXXX full and call. earnings morning, our and fourth year Good the Dave call and on me With are our Peter Rush, CFO. Jackson, CEO; our website presentation The available and press investor earnings on release our at investor.builders.com. are

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

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

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

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

David Rush

challenging starts, Good in our environment strength product reduction our for and resilient everyone, I'm proud operating in continued execution demonstrate significant call. and portfolio XXXX, delivered saw single-family members. of Thank thanks a of team results. Heather. full you, Despite which morning, results, broad which year joining the we our our by

points our value-added by the margin accomplished with our customers solutions. through with free We robust double-digit partnering As this their help of promised, address use along we and rigor cash delivered in pain to the teens, EBITDA through high a operational flow. closely

our strategy want out our where ongoing thank and XXXX for grateful to of in at be growth virtually person next your with also who across Investor Our further easiest the our December, support. we Day the everyone to laid participated journey. results in I We're industry. both the validate leg do business to in

front As we leading We initiatives, we our XXXX, remain focused and disciplined M&A begin through are deployment These with our value. in shareholder along desirable profitable digital operations solutions, long-term platform by commitment with in about on our to will proven value-added strategy. our deploying the capital of us. opportunities expanding to and markets efficient continue excited compound growth

homebuilding. value-added in market digital investments products, in differentiation, empowering are labor and value-added scale our customers' our to and improving clear such meet are cycle efficiency we construction Our as of reducing and times, delivering help driving By solutions the needs, next quality. addressing greater leveraging generation able home constraints

proof execution, that a point of were in our on have continued service time pleased to I'm improve As and year-over-year. our levels full

our was with Our committed investments operational was full while technology XXXX, keep XX% automation metrics on-time excellence delivery to performance to working our innovation XX%, will efficiency value. in and We drive to remain increase create and these in and in higher.

to are our have a scale productivity our of products highest set costs focused and while and on the customers. operational initiatives We robust and fixed quality delivering leveraging

the Our including and continuous to automation technology, greater improvement drive digital mindset in operations. improve construction employs and solutions, our our discipline process

focused strategy, pillar fortress maintaining sheet. are our As on an of important balance a we

of flexibility Our paths and deployment, priorities. flow set our free enabling capital cash clear financial strong provides multiple high-returning for

nearly We billion $X.X program shares. continued buyback our repurchasing of robust in XXXX,

a still to Board targets $X repurchase tuck-in our announce in our total increased in I'm a long disciplined market. authorization We and a billion. have share approach acquisitions our fragmented of runway yesterday, happy that to to of remain

solutions in and geographies and stickiness. desirable specialty M&A market Our value-added increasing focus extending areas our lead for customer include in enhancing position our

our robust XX% differentiated on margins product in that Let's and underscores XXXX, portfolio highlights delivered We EBITDA X. year to a Slide scale. turn our including strong margin full adjusted

margin in notably improved than our efficiencies. resilient multifamily business Our stronger gross and products, manufacturing XX% reflects value-added and more mix of

we we normalization margins. continue some As communicated, to in see have core

this We are over also seeing multifamily normalize of the it to and year. expect continue course

operate I improvement X, XXXX, always and are highlight a in to excited improvements more we every making the have to cost proud I be Slide incident team structural at to remarkable members am rate of I'm company At in over of recordable remove to the we XX% the also the created our a culture achievement. see priority, safer safety our excess want which day. Looking and highest our BFS, is efficiently. is

of we of million productivity work has expense for our are the of and need term. for the doing optimization the reductions XXXX. demands. future strategy savings long XXXX, strong cost executing in includes stewards spending, This footprint expect manage our team reflect responsibly initiatives, savings another against a for balancing We $XXX key and management disciplined while the short targeted we capacity remains ongoing term Prudent focus in also Our our on hard and area. the of productivity million discretionary remain costs $XXX SG&A

prior As QX supercharged multifamily worked through we year tailwind year had as as strong by expected, remained a in were a a strong acquisitions in we market. record Multifamily backlog.

levels. provide conjunction low single done to a options utilizing rate to home of affordable with steady purchase with job new mortgage lower homebuyers in interest National specs buydowns and family, inventories Builder customers have For helped good homes. rates existing activity us have

affordable. the and launching on robust highest by service, to the focus Our our more make customer being the this driving customers BFS digital and process providing best solutions quality year to tools building value-added our partner efficient our more is faster,

to on Turning X. Slide M&A

growth December, that the market leading Grand future a target sales into to distributor XXXX our for in in Lumber, in Standale as we financially strong $XXX the roughly continue fourth acquired the quarter, us materials we we serve our aggregate gives XXXX, acquired of with deals growing platform in a million. attractive completed and Michigan entry disciplined. In building the Rapids, Then Encore building Early X which We remaining market. represents while presence state. opportunities products Arkansas will

And Idaho. we of a windows Door early Quality February, in and and in distributor doors leading acquired Millwork, millwork, Southern

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

also show increased points of basis investments We a our the products XXX years. value-added our overall M&A percent past as and over mix X organic by how

Our success margin component of through our the has core a strategy been site. improved this with profile

On Slide X, we provide on an update allocation. capital

approximately for During made the acquisitions prudently fourth repurchased billion, we and while shares $XXX of we X of tuck-in line balance quarter, maintaining with stated XXXX, sheet. all strong our deployed million in the priorities. $X.X over And

cumulatively to communicated We to $X.X capital approximately Investor billion goal $X.X we at through and new XXXX, billion of $X.X XXXX deployed a have to Day our from billion XXXX. from past December deploy XXXX this

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

digital an growth a of our We are and for substantial differentiated position establishing combined with of the digital platform relationships. transformative only tools space, our operating industry. driver in will BFS as a believe model and for leading be provider end-to-end We the strong us

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

innovative next full adoption customers International teams Builders new focused on we these sales product our our week. To and operations tools. help the showcase capabilities to the We digital to these the powerful drive of are Show have solutions, training excited leverage at

year target meet to our We by share grow from our of digital $X $XXX and solutions XXXX ability are wallet confident of and by new value customers. incremental this as revenue and digital end then billion deliver in million of our we the

witnessed vital manager Rich our values and Alaska had that like market Throughout hands-on cares XX-year spending leadership in embodies companies. others. on deeply departments journey sets potential. their other. What time community go rooted service will Through career started the market is as his about with during has and pleasure recently the made his team year, in BFS he Rich tell Rapuzi, customer positive his established people at multiple assumed XXXX and and you Rich's His and Rich helping colleagues continuous is his roles. the for passion a reach acknowledge career, we he and no learning. team rep members impact in that remarkable of Legacy I his above Rich beyond. apart experience and truly these mentoring

endure As will touched. Rich prepares his for retirement later through this year, has the he impact lives

come. his While within he'll our for be will to years greatly missed, organization legacy resonate

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

Peter Jackson

Thank and you, good everyone. Dave, morning,

demonstrate the of throughout year of results regardless macro Our model the our operating effectiveness environment. the

deliver to highest success. sheet, balance flow value capital including for cash and us and acquisitions deploy positions Our the repurchases, prudently strong ability share continues fortress to return opportunities, and long-term to generation

I position advantages with our We to cover and value drive future our financial are competitive growth leveraging morning. shareholders. X you create will this sustainable topics strong and for

I'll quarter full our First, recap year fourth results. and

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

X%. in of billion X% performance by organic partially of a and decline fourth single-family deflation weak acquisitions supply from a sales market a sales, by quarter net reviewing sales on our XX commodity delivered We begin Slides in Let's XX. and $X.X core decline driven normalization. and core X% offset chain roughly driven growth of share The by by housing organic amid X%, were in

single-family market to pick is are there the That said, up. signs starting that

R&R to show beginning including versus by sales X% single and well in than mid-single due growth, by in driven acquisitions year X% XXXX. digits early lumber favorable by more as margins. truss. products high Our also are prior and to over grew digits increased Multifamily grew cycle growth focus growth as capacity other and our

supplier XX% these products during as products. choice net fourth value-added position the for our the quarter, represented of sales Importantly, of reflecting higher-margin our

quarter, multifamily, normalization. $X.X basis the billion, XXX a year mainly increasing X% fourth core margin tailwind to prior due Gross the margins decrease and a were partially of by During approximately offset compared to profit points productivity organic from XX.X%, gross period. was

inflation, SG&A by million by operations due reserve customer higher increased offset to to acquired compensation, expenses. million, and partially lower $XX mainly variable $XXX

the earnings drive a the of share year-over-year a we $X.XX repurchases continue lower quarter. was productivity points prior was decreased roughly net to net and to added net the approximately due primarily sales. Adjusted Adjusted Adjusted XXX housing to share from prior attributable X%, for year EBITDA of income fourth weak per business. As by margin basis compared leverage from as to sales. lower SG&A basis a On up year commodity EBITDA market XX% $X.XX, of due $XXX year. lower the across share improved prior increase down $XX million million and basis, diluted execute an per primarily Adjusted to to the million, cost XX.X%, increased percentage down from fixed was points sales, deflation. was total net $XXX XX XX.X%, sales driven

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

the cash housing and healthy billion XXXX Capital down approximately was the period, mainly billion, flow were million, we a Our prior billion. commodity market. operating in, expenditures attributable flow shrinking for $X.X $X.X year year delivered approximately $X.X compared deflation cash of to $XXX free all to

cash return XX% yield our XX%. flow was capital invested For free year, approximately was cash on operating the flow while

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

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

to deployment. Moving capital

quarter, X.X share. at million $XXX.XX $XXX an million stock price of fourth average the repurchased we shares approximately per for During

at nearly repurchased an we share. XXXX, $X.X billion of year average shares price per of of full the $XXX.XX For

to common repurchase on plan stewards deploy ability authorized As creation the stock, disciplined returns. billion approximately approved deliver capital remain Dave high paths the inclusive to $XXX Board in an of We approve for up capital to repurchase $X the April of remaining prior of and and the multiple have million mentioned, XXXX. share of of value

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

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

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

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

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

billion due year-over-year $XXX $X move growing working is We The from expect sales. of from change an decrease shrinking we due $X.X to XXXX full year XXXX expected billion. free cash capital to million flow as to primarily to

assumptions. $XXX a is the The average to for free release our key XX several these outlook assumes range per based [indiscernible] our in of flow presentation of Please X,XXX of list prices on assumptions. cash refer commodity forecast the to and investor XXXX $XXX Slide earnings

due we a know, single QX weather for flat the the X and to basis, all expected and do have impact we but be be to you days wanted digits net is sales QX down we given provide at conditions down to sales inclement margin to to not year-over-year adjusted typically On As we Year-over-year color share to expect give lost teens of high guidance, normalization. of in quarterly continued of the QX. as directional EBITDA roughly weather extreme start low year. low XXs

rebound We expect our conditions remain in subside. we as sales optimistic severe for XXXX. to the healthy housing Regardless, a weather market

Turning to Slides XX and XX.

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

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

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

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

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

David Rush

Peter. Thanks,

address by saying our that with along a competitive on to focus, focused strategic executing our their is me close in differentiator with our close our are This pillars. points partnership pain Let industry. we customers

solutions, unquestioned challenges. are we which in are value-added to effective and We address cycle the leader labor most the way time believe

share Our are efficiency new grow and to bringing way. customers along us and the will industry-leading digital greater innovations wallet homebuilding win

disciplined that compound strategy will capital flow cash value. Our deployment a robust long-term shareholder is funding generation free

Thank let's XXXX year, today. started. an again Operator, we for call you joining exciting the While just getting now for are open us was please questions.

Operator

Bouley with [Operator Matthew Instructions] Barclays. We'll go to first

Matthew Bouley

volume come. some and I on there to is So you're manufacturing. gross There off course, to of still margin, in your like looks guiding of But year, multifamily 'XX normalizing course, assume some leverage the it hear single-family there's with in growth, to exiting I business you. over start your XX%. this operating

And the I mix I in and year. top there's $XXX industry say continue years. if this think I you've to automation million heard that's and consolidating Dave of around don't forth rise, and done recent another on value-add everything assuming know that would in productivity you're so

kind being the So my margins it optimistic? XX%? normalizing point this I And you've too of year. timing below to is got am cadence, a tailwinds like lot gross seems where what's I guess, of of back

Peter Jackson

Matt. Thanks,

points all accurate. are Your

really nice job I the in think a sector. that we've value-add done

really job I maybe core is components that a certainly ongoing know be normalization in it. way. happen, big What from we candid or recognition I a we're is a want that X of not in hits think theme continue multifamily. managed normalization we I pricing a and margins, on us, XXXX. all in to the the consistent Those we've execute that There in that a but portion investors. disciplined in of with and a seeing productivity the to We And certainly, to have continuing expect are there's done think normalization is to cycle category. of a a and this good gross continuing driving

look we market, at as in a A of multifamily, it, multifamily there's a units right? but certainly So been ground. lot were pullback, the put dynamic

both that few and back and years, It's and in very pull back, There multifamily pretty last signals our are market very, healthy, in clear been done very it's full, the very normalizing. the well. going we've has Over pulling aggressively. broader backlog to numbers the is

all and based on sort in seeing expect latest We hit we'll information, it will of the us that year. start QX

starts, there's to in multifamily see of the starts normalization business below around shrinking. the headwind a And we business, to with a certainly, single-family country, We're continue but associated consider there pockets margins normal industry. this right? would So in we environment, that good competitive in a is what well normal be

that expect position to the continue don't there. So and we've for to our think of as continue but to where range we'll are aggressive, it's and out year progresses. that and protect to of certainly in had gross us to the market certain it's competitive We outside And communicated do get margin, be customer win there to the putting markets erode choice. to that

Matthew Bouley

is with guidance, the kind But blends question your to second maybe my speaking compared I of guess, to X% of one, think market a and the base days on to single Second low sticking growth your I business I and think, I growth in growth selling the end you're year, digits very know there's market. of, half. extra this couple

kind digital growth just later that? how from this market basis get where But outgrowth? expected you like of of year. of some of could course, bridge Sounds market play value-add kick does is your of in to year sales you to obviously, And kind start sort hundred the points of the us the into this to should several

Peter Jackson

Thanks, Matt.

You're right.

talked We year, that product are one we in with we'll of challenging relationships use. for we big good terms couple there's as put a what appreciated, this key about We're and really But real going organization this tailwind are is to excited to think do value market digital. a our about areas. there. ourselves anticipating is a us fairly customers, of lot enhancing an is attracting in which and we modest obviously A

So our we're number. putting that in

see also We in are to you continuing value add. invest as

ability equipment. types to we So provide products we've that got high-value ground. the didn't We've year We've impactful to new got have in capacity those got customers. new year our a this new last of

in win we in got in expect we certainly we we team. industry, And can team best So -- our need the the be the We've market. to we're growth from confident think that. and

to number there that really of combined us things give So growth represents ultimately. the those put really a share confidence to out X kind

David Rush

weighted year. and uniformly the It that more Matt, are for that by like customers ad a And are to very, But to time. a it add, and will when stick. start year still year be demand degree. to differences with the as in year our we'll seeing the start, the we're pinpoint a half all in to throughout a about long-term almost will that excited macro that back be little real the environment encouraging. and adoption of believe I drive that's as will It's organization difficult in whole. would obviously the is continue very the with more hockey timing time of customers. driven the optimistic training point But when they the experience There exact conversations during rebound we digital we the just

Operator

We'll turn now with to RBC Mike Dahl Capital.

Michael Dahl

on Just question of I free cash kind of differences swings some articulation flow. cap. working timing the of those and appreciate your in a

And beyond for move of conversion so this a lower-than-normal kind represents as we think I you. because XXXX

just has still growth we would to or pieces get -- higher, that talk you timing normal the can more be -- a ramp is it And cap of -- the any there? think, once how 'XX, expect conversion moving I to So back then get to of to kind working year rate through other has ramps? you helpful.

Peter Jackson

Absolutely.

multifamily turn us expect sales But turn working for tremendous to as turn we the amount know, a change the capital So is due you're comp environment. large of in business generally off numbers. see to big one normal going down. growth that turn The we And sort dramatic step spent is looked the from numbers related But is of on year-over-year to a you that a little show, That cash little going year. for when pretty on an right, the a And that when the than year from business year growth bit the down Mike. light would headwind use increasing a basis. to always we We're This number grow. us. bit a The that's shrinks year other. smaller a number to to EBITDA shrinking. obviously as way that the goes to a showed in a we it be in

benefit out So we And as there's on, and our bit hasn't in Investor we a expect Day, do in it deliver year. anticipate that higher we commitment little to to that laid normal be changed. cumulative a a

Operator

turn Deutsche Bank. We'll with Joe now to Ahlersmeyer

Joseph Ahlersmeyer

the just So in of the is it the got of phasing right going from weather XQ. trying probably more we're be we've XQ, to remainder think to the I'm into sales pushing if sales those year. about to headwind think that for

Peter Jackson

assessment, once. I at up. immediate all we due what an actually in quarters day, But fair of lost Joe. it's don't in see year. first will the like the we think a Typically, up catch the pick gradual X catch ultimately snapback to snapback up is we quarters what weather in future end at not do but the they that's a the as quarter the They feel back of

Joseph Ahlersmeyer

the business Are kind getting business, both you at commodity to for then opportunity normalization X a of the looking element multifamily talk and this normalization sort think projects? as and of the then in commodity it forward, And if we the all-in normalization your and guidance numbers? these versus right maybe full multifamily? the much within of about units base of going And is between the could below all the larger about 'XX market the just of

Peter Jackson

a multifamily it. core a nice, right, little These That's mentioned not but components the the that's of much of of left, bit of is the X last those last of business piece you and which the is Joe. certainly reconciliation

David Rush

would I you, tell you're exactly right. And

focused projects get to the Difficulty] Our projects all [Technical makes qualified that those rest that their on larger sales or those bridge And help easier only because opportunities focused of the that of for opportunity. difficult, of little a bit the teams for year. little light a timing those it also that still commercial. focused partly on smaller a in the of headwind time that have We're it will multifamily ground. out little the technically opportunities and customers still the looking But us for projects as takes are but on

Operator

now to Trey Stephens. Grooms turn We'll with

Trey Grooms

truss. on to to Is just turn you around. in frame think residential And seeing since you're growth and would you're secondly, just seeing color referring didn't standpoint maybe the -- mix there's that I time guess the be going stay mean high I mentioned single-digit slower growth noted if some And some reason with in there? that just truss starting there? low evidence in you lumber single-digit what's there? I I of timing Peter, January? anything trending something? or any or value there why know there would assume add any would then a outpace, I is at lumber be than would lumber? there from least color pace

Peter Jackson

Thanks for the question, Trey.

frame So was talking we're the time about XQ.

a was it So fourth quarter dynamic.

right? generally have then trusses delivered. No think lines, very here, close heard early. correlation about start it wide we haven't a talked not I for and but we those So of bit frame who trust. very into sell past, at maybe what lumber in the range is There storyline and between the time It's the maybe the first a is framing goes it, and unusual to very, there. a floor a argument

It's true some it's indicative the process. and also think the reflectable [Technical notice general, about And that are turn. and go is doors as later that of those the in the through that's of trim, later very Difficulty] year. didn't beginning we got out being and turned in you last to you talk build products windows you position. of I the What's products,

and lumber saw you 'XX, lot than of end hard. the down really go more truss. Lumber a down truss At

numbers of the was that go quarter lumber well So part to on the basis, last year. the back fourth aggressively as down you a answer for if comparison that's of

really basis, bit. a comp a up little more, on down it's little it was a because but bit So

David Rush

I value-added mean, than lumber together, more is hand-in-hand but truss and truss. go

think the in I have that's mind. keep thing to you

in So later the is process. [indiscernible] added

Operator

of Jadrosich now Rafe with Bank turn to America. We'll

Rafe Jadrosich

for assumptions XXXX -- macro what then would quarter, still you your comfortable be that. mean scenario and different of you Are we with earnings? Last for that a framework provided on should sort

has scenarios? to $X.XX in that starts EBITDA? be in the for thinking be and $X.X Would changed at lumber on $X.XX. to to $X.X else you Or still the about in X% XX% should or to market it upside to where looking So side track downside single-family million something is we those range

Peter Jackson

it's been it. of degree fair still how that any the subjective always the look haven't variables. think to bit at different. real I are a point No, think changes to ending directionally, yes. those we of But structural business. a I way a say for scenarios of think any indicative It's XXXX in to was There fair generally, that's because the

Rafe Jadrosich

That's margin And the single-family guidance with look your gross to just in tracking then it despite really line this XX%. it's are target as year, starts really you helpful. is at that for And below. long-term XX%

the think is million. assumption long-term $X.X I

have the 'XX you here, Or higher? look kind think if margin forward below there flowing to have still some gross do to are we target, As where something that's able of XX%? unique years starts do that's be keeping multifamily that is through? you that you you'll above it Is just because

Peter Jackson

question. good really a It's

we We few that this consider We're to said, be to feeling we confidence very normal. have consider term. component. manage from pockets margins a compete what a in likely good. normal That that normalization and a year in to some the above our very be We're confidence, to in see still categories continuing of about It's obviously it some we're strong, back confident that think see we're around our product normalization. country. couple in ability very comes long to and of what to I continuing the multifamily

At exact exact that an to this that stage, gross starts of say margins. I correlates point think point in to an it's it's hard

normal ranges in sort about that around can based everything It most now, like feels comfortable a of we normal. margins. that But range we're it I in think on range seeing. a we're right around talking hold lot confidence of

David Rush

resilient. belief range we and can customers product our that in opportunity to I hold as margin the and always that is more belief is products better more for a our that Those percentage is add overall valuable more portfolio margin help going are in would And number grow and a what that to as the have that resilience sales that our gross our value-added a fact And our result, within be of us. continue range as the solutions. to are we of

Operator

to We will Hughes with turn Keith now Truist.

Keith Hughes

your do projection think about thought just a source. versus positive don't And think you the loss for loss impacting business? margin what's When for you be specific would I to the if helpful. builders this here aligned 'XX, your in with going is been talk unit to such market, that's that really start is

Peter Jackson

I tough mean, predict, is as thing you timing know, a to Keith.

big sales. part, positive if based an commodities less I certainly there's gross the like it. We've market organic, give markets, be half It call out we're would some that the healthy. the we on of driven, we like there on in driver feels component it what of [indiscernible] is margins in of primarily the in kind an nice on based second seen give mix normalization talking a terms impact you Fed space signs lie you When days, seeing margins, public about helped, volume can't price/volume dynamic. think certainly early around in the we It's core the price important a of that's a normalization the the it's is numbers out year. certainly everything the in mix in of

we're starting to and what turning to has And see. this that's the unit be again. So our driver really to and that's expectation, accelerate year volumes starting

would So I there's really it certainly a lot becomes optimism, a question of point, at of this timing. say,

Operator

Verron Collin with to Jefferies. now turn We'll

Collin Verron

start normally on around more XX% that the of that just your I to you want and the think the still under the multifamily second would given lag And year to on for from that's decline you help to in help performance just XX% cadence construction your performance? maybe that to of throughout multifamily to little maybe a your according starts. a see sales? guess, about thinking decline of the any then backlog that, data, in the assumption a basis guess, that I the sales versus sales in about full can just multifamily, kind the year, start us get to Bureau to quarterly stores dive I into projects bit Census

Peter Jackson

sort a mirror to in bit, everybody specific mean our markets this if what being go the say, right, in I thinking building. do of more the turn to build, what back available in a It's and the would I information. problem to the publicly around we're bit use able we business, rearview little you and of both you're is have terms multifamily about

we're However, expected is late seeing kind in throughout right I now didn't. it XXXX, of the downturn that thought what think might hit XXXX,

the think projects I get completed. pretty at to multifamily people trying aggressive were

during So through nice you'll in thought every the seeing starting quarter, fourth we turn than we business the in little down it better actually but quarter that of year, QX in saw deviations a progresses. the a for definitely those declines normal really X sales in Still standard of as the margins see business. both a levels pull and business. sort just at anymore. above performing multifamily year Meaningful It's not good

David Rush

of only overall remember, add, our just would I XX% business. it's

been the constructed would The same other Conference, multifamily that it's thing XX there. to months cost add I players had the all to there of challenge is And to at is the time. multifamily a Housing addition market XX over of were coming at Harvard in the all capital last we were and

solving positive for digestion is population. in housing to long-term multifamily demand bit look you a when that of a that at curve the again, for need equation. cost the of So people just addition capital what there's and and outlook the multifamily like very But in what little single-family, satisfies

of we're And capital XX% long of business. the positive we'll the do know today. some still But on our or very to cost there again, -- business. manage at we have the challenges So term,

Collin Verron

wanted And the project maybe about beyond tailwind a pipeline guys. of looking talk in the touch the size and XXXX you from be projects Can to for you're just pretty XXXX? then just . to benefit I continues meaningful to you productivity, which on

Peter Jackson

get One Yes. ability we kind scale, across little are initiatives benefit best through is do single of can practice our our of productivity of in The is how and camps. chunks automation best productivity X the in The productivity how can improve the practices. every a technology location. then to enterprise and XXX-plus and locations, our through we it take

and that working technology the So improving But more improving automation to throughput on would truck service, A labor things XXXX. in is we're customer of hour. manufacturing it those per the times the get outline environment falls X turnaround lot camps. for also around automation using in

Operator

We'll Zelman. go next Adam Baumgarten with to

Adam Baumgarten

for market capacity at competitors truss, the ramp as products you look If well? manufactured are we up like seeing your

Peter Jackson

we're their But mean scale-wise, XXx, XXx Xx, little. I Sure, a size.

know it. adding X we markets, X with deal if So in they're certain or plants how to

David Rush

have existing we automation. you some our We've I own. automation. differentiation over $XXX level other Over the locations would tell some just throughput locations, it's invested level of XX% we actually million the of tables have is plants. plant has Every adding not in improving of already of the

lead there's to do So lot extend of focused ways we're and as that plant physical on building so, can different well. a without our we

Adam Baumgarten

improved about by then sell more M&A point And just given thinking willingness acquisition you to environment, at outlook? targets seeing the this the are

Peter Jackson

gotten better. a it's Yes, little

of sellers. market was that knowing of between around environment step the off think a the and I buyers valuation And back the having and people disagreements was not M&A not the to of and sort just where one bottom the holding that created things uncertainty was kind direction of of.

I a think that's down calmed bit.

So or are have Each readily a year, farther unusual this for going deals business the more that on unicorn. unique. optimistic to kind the base accepting of and the what also say -- I the thing we're People bit commodity easier. now for they forward, the makes valuation numbers. easily conversations impact for is of would a a are gotten little away one improved that's but one we've more

Operator

Ketan to now go Capital BMO Markets. We'll with Mamtora

Ketan Mamtora

to bit in is is sales, I can much if kind sort you're I challenge. bit Peter, down, how seeing QX. about talk way pointing margin of a is a little down you're it think normalization? to any you of flat mean was talked But weather a about you being sort more. EBITDA curious about but versus weather-driven to quite of there of what

Peter Jackson

Yes. The weather modest. is

X think terms a are X I anticipating headwind. terms of what to in we it's of in days

the basis. So basis deal. a year-over-year business, on a and pretty that's exception both general trending got component, you've a that huge with healthy on of In not

So I think talking point that's a it of lapping positive. we've What the you about. year-over-year are seeing, though, and is I what to think been out it's fair

think heard negotiating back it, environment, to a would with down regardless to seen a expect curing for And again, a very more in still of multifamily normal the little you're talk getting in line but supply of of more scenes, the back terms a in adamant that margins. chain I've business normal the settling pretty I performance going bit this me behind we just normalization about the seeing have forward. still that you've of good are normalizing competitive been and what And the very level. we things business, that strong year-over-year in terms number, of

David Rush

the I buy from And the foot home. seeing traffic. more a apt actually they would national seeing are that are are perspective, customer more add just foot increased a sentiment traffic importantly, biller, customers to

closings -- of looking, mortgage I ability and is gaining percentage available is the traction So with inventory monthly feel and like payment job great to to a up done their to people that. demand they've match

mortgage would where to drive need where the Fed an demand from we arena customer is in of builder helping Now little the to the help a them. the be mortgage rates get that to nonnational cost

good that national to the when the have So done be the we environment. that job what so, but off but get the less in builders that existing we is movement, a first sidelines expect

Operator

to Instructions] move Baird. [Operator next Manthey with We'll Dave

David Manthey

product out to value-added categories a the different product those But forward than years X basis. here on was delta X, have X margin just X between as moved up. you discuss the it broadly we to I the next between and Is X? ago? thinking normalize can I'm commodity go both and differential assume

Peter Jackson

to fair that's say. Yes,

You're seen terms Board improvements across We've right. the of in margins.

add but referred and around Dave differentiation extended increase Some our have average hour, [indiscernible] inflation to value and commodity. put $XXX-plus simply Those the I a for our its also the to to contributed our would has worth the to hour bigger on cover driver of productivity from commodity. investment productivity million as board a add certainly very type seen team incremental efforts of cost, between that an and man doors we point our value of per improve and we've has to internal metrics differential why

Operator

with McCanless next to go We'll Wedbush. Jay

James McCanless

question is on the my outlook R&R. So for

other what national single digits low up specific bit feel people the are see a say, markets, . driving acquisitions are do expecting. you some of think, in actually can Or than like growth above Is forecasters little I that what those you expecting? better, probably I'd that?

Peter Jackson

thanks Jay, the question. for

We There's into pro-remodel with kind For too, there's it R&R of do I and DIY everywhere. kind of specific. X R&R R&R. Retail. And falls market don't camps. us, then us, think And it's

a a I going there's national have that never don't for are them big possibly lot some is why is happen what that's of we versus and like what difference headwind and believe little guys So to of a cetera. appliances, items for in sell us, we think et ticket sold the

to So little is in that that product the and why have of different we of fact why a might have expectation. the a kind customer different different believe -- we kind country I of group a different offering parts focus we

David Rush

have. taken of that's Also, I availability others to it than component lean well, as advantage different might capacity into think, a and

Peter Jackson

small kind to that player in just current have little the to if And easier us do we this on it's a of a such it focus we're little that [indiscernible] grow environment. in overall we for market segment, ability a bit. that

James McCanless

one other And question. quick just

think of sales Maybe you and called those now digital all million why the in about what more feel think bit year. of I like terms wanted would new is -- incremental you talk look out, a that, for guidance kind like going guys, talk why little $XXX I like, you about incremental what to Dave, that's this sales just to you please? this and that look

Peter Jackson

teeing Jay. up you for me, for Thank Perfect. that

just and There's to tools benefits team our [indiscernible] doing paying it with launch. we're to a like it, we're customers But we IBS right in takes we're really And to how the market product time. see product XXXX. do and week that training as I it about probably by intelligently it first hockey the the we'll out our off show to know why sales our We're doing the market. you'll the Then preparation it in stick a our -- by then lot And we IBS, And explain market. a digital be sure at time. making year. starts launch. of rolling get market will customers. it in the all week, excited Next And of efforts later that's part said next momentum, more

Operator

Davidson. D.A. with Yinger Kurt to next go We'll

Kurt Yinger

stick margins I back these. tools maybe about How and sales first year half recognizing just the cost to the you in incremental you're the of with that impact attached the there. could digital kind are the talk kind it's fully XXXX of rolling think that should to about was we the and I wanted hoping and sales? weighted, rollout those

Peter Jackson

thanks Kurt, for Yes the question.

and already is we So to associated digital the consistent years. with the included the past be we're what the few the expect been pull-through the over costs numbers. pretty the and rollout It's largely support tools in development, The even is answer sales selling. with short the really spent

from -- an of probably So material Again, to have it, right that is the modern based through picks there's one were necessary It's customer really will incremental and a of terms to could if level of eye deltas. to customers this pulled digital that's to that the but the big being all being going it for radar we anybody, think to on increase The think experience. only out. service there's have support able model tools. on no built new no be really don't that enough what make sure utilize really on to potentially sales We even the if the we like that incremental in thing just about I infrastructure going close see that quickly. other happen, keep we're is wallet you're that hit share really we've these up eye

Operator

Research Ramsey Thompson move Steven to with now We'll Group.

Steven Ramsey

guess, landed Wanted lands can basis installation grow of Day, it on of there you an and absolute total expectation Investor where in for first, sales. to on the that at XXXX, estimated then is thinking I that XX% a which last installation business? about is XXXX sales the percent sales, year? where as the at an and that base hold

Peter Jackson

year. fits of Thanks for XXXX as a today. of in our labor Installation lot for question. our strategy very for it nicely do last solving billion pain customers' markets points. insulation a material definitely in it the point We focus $X.X sales into is successfully did related We

who grow in at in focus But doing fruit level our also we both markets. M&A. done looking installation expanding do the organically always utilize playbook already our those their and that developed that not we're effectively, and fit today can To low-hanging people are of the installation we profile we install new we're inorganically. looking that an installation in to put products our some are together is that The access past. and So that into And we people doing that best people grow markets markets. to through for markets the it business could that is already well have

today. those we're at And during it So good the levers already most focused be there pull will we're for going then to the going of things on all year, part. the QX and be but from it in will starting

Operator

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

Jeffrey Stevenson

Are you pricing millwork, which as . benefited supply-driven several gains deflation last years? year EWP this in such from expecting and categories the any price

Peter Jackson

supply that too more than that I Well, of deflation. forward. don't saw call part year chain I of see more for it normalization we'd would that in And we know I would significant last the going already the much EWP.

challenged they're think we still lot I of with that costs are. all a inflationary operating

reduce be price. significantly expect don't they're I to So to able that going

But for. me wouldn't I increases think into quite more expecting even where year. hoping inflation right if price surprise than it that the now it's is holding we're going cause it is and frankly,

Operator

will conclude question-and-answer to that well your thank you participation. as event. gentlemen, session today's today's We and as for want Ladies

and have time, this day. at a disconnect may wonderful You

Builders FirstSource (BLDR) 22 Feb 242023 Q4 Earnings call transcript