Good morning, ladies and gentlemen, and welcome to the ADENTRA third quarter 2023 results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, November 9, 2023. I would now like to turn the conference over to Ian Tharp. Please go ahead. Thanks, Alan, and good morning, everyone, to those joining today as we discuss ADENTRA's financial results for the third quarter of 2023. With me on the call are Rob Brown, ADENTRA's President and CEO, and Faiz Karmally, Vice President and CFO. ADENTRA's Q3 2023 earnings release, financial statements, and MD&A are available on the investors section of our website at www.adentragroup.com. These statements have also been filed on ADENTRA's profile on SEDAR+ at www.sedarplus.ca. I want to remind listeners that management comments during this call may include forward-looking statements. These statements involve various known and unknown risks and uncertainties and are based on management's current expectations and beliefs, which may prove to be incorrect. Actual results could differ materially from those described in these forward-looking statements. Please refer to the text in ADENTRA's earnings, press release, and financial filings for a discussion of the risks and uncertainties associated with these forward-looking statements. All dollar figures referred to today are in U.S. dollars unless stated otherwise. I'd now like to turn the call over to Rob Brown. Thanks, Ian. Good morning, everyone. I'm pleased to share details of ADENTRA's financial and operating results for the third quarter of 2023. My initial comments will focus on our key financial and business highlights for the quarter, with an emphasis on sequential trends we saw between the second and third quarter of this year. Faiz Karmally, our CFO, will then provide additional details on our Q3 results, with an emphasis on comparing our third quarter results with the same period a year ago. I'll finish off our prepared remarks with our outlook. Beginning with sales activity in the third quarter, volumes were steady and similar to what we experienced in the second quarter of 2023. However, we continued to see product price deflation among most product categories in the third quarter, and this resulted in a decrease in sales of 5% going from Q2 to Q3 of 2023. Worth noting, there was one less selling day in the third quarter as compared to the second quarter. Adjusting for that, on a sales per day basis, we were down -4%. That decline attributed entirely to weaker product pricing. Our gross margin percentage in the third quarter improved sequentially from 20.4% in Q2 to 21.2% in Q3. The third quarter gross margin performance of 21.2% is consistent with what we achieved the same period in the prior year. It also marks our tenth consecutive quarter with a gross margin percentage above 20%. The stronger gross margin percentage is primarily the result of lower inventory write-downs and inventory cost improvements. From an operating expense perspective, we continued to tightly manage costs, excluding the impact of one-time accrued trade duties. Expenses were lower compared to the same period in the prior year and also lower on a sequential basis from Q2-Q3 of the current year. Recall that in our previous outlook statements, we noted that third quarter adjusted results were expected to be similar to what we achieved in the second quarter of 2023. Our adjusted EBITDA for the third quarter of $51.8 million came in stronger than the $46.1 million we posted in Q2. Adjusted EBITDA margin of 9.3% for the third quarter was our best quarterly performance since the third quarter of last year. With respect to adjusted earnings per share, the $0.93 of adjusted EPS we achieved in Q3 exceeded our expectations, primarily driven by the stronger Adjusted EBITDA, as well as a tax recovery in the quarter. Our operating results again drove strong cash flows from operations and continued to demonstrate our ability to generate significant cash flows during periods of reduced economic activity. Similar to prior quarters, cash flow generation came from both the predictable conversion of Adjusted EBITDA to operating cash flow before changes in working capital and from the release of working capital. The cash generated has been deployed in accordance with our plan. In Q2 of 2022, having recently acquired Mid-Am for $274 million using our credit facilities, we stated our objective to focus on debt reduction. Since the second quarter of last year, we've reduced debt by over $285 million. Over the same period, we've returned almost $40 million in cash to shareholders in the form of share repurchases and dividends. The business's proven ability to generate strong cash flows and pay down debt were supportive factors in our board's decision to increase the quarterly dividend by 1 cent to CAD 0.14 per share or CAD 0.56 per share on an annual basis. This represents an 8% increase to the dividend. As we advance through the remainder of 2023 and into 2024, we continue to monitor the impacts that changing economic conditions, such as inflation and higher interest rates, can have on our business. I'll provide more details on our business outlook before we wrap up today's call. I'll now turn the call over to Faiz to review Q3 2023 financial results in more detail. Faiz? Thanks, Rob, and good morning, everyone. I'm going to provide the details of our financial results for the third quarter of 2023 and outline our financial position at quarter ends. Again, I'll remind those listening that any dollar figures Rob and I are using today are in U.S. dollars, unless we state otherwise. Starting with consolidated revenue, we generated sales of $558.7 million in Q3 of 2023, which was a decrease of 15.3% or $101 million compared to Q3 of 2022, which was a period of unusually high demand and increasing product prices. The year-over-year decrease is comprised of approximately 2/3 product price deflation and 1/3 lesser volumes due to the translation of our Canadian sales to U.S. dollars for reporting purposes. On a regional basis, sales in our U.S. operations were $516.5 million, which was 15.4% lower than the corresponding quarter in 2022. The decrease reflects both lower product prices and volume. Third quarter sales in our Canadian operations were CAD 56.5 million, which was 12.3% lower than Q3 in 2022. The year-over-year change in Canadian sales was primarily related to product price deflation and to a lesser degree, from lower volumes. Turning now to gross profit, we earned $118.3 million in the third quarter, a 14.9% decrease as compared to Q3 in 2022. This change primarily reflects lower sales, as previously described. Operating expenses for the third quarter of 2023 were $100.9 million, which is a year-over-year increase driven by accrued trade duties of $15.5 million. Excluding these trade duties, Q3 operating expenses decreased by $5.6 million year-over-year to $85.3 million. This decrease was attributed to lower people costs, which include a reduction in variable compensation, headcount, and lower premise costs. Operational expenses were well controlled, despite the inflationary pressures prevalent in the economy over the last 12 months. Moving now to Adjusted EBITDA. Q3 2023 Adjusted EBITDA was $51.8 million, a decline of 21.5% that was primarily driven by lower year-over-year gross profit and partially offset by the decrease in operating expenses, excluding the accrued trade duties. As a percentage of sales, our Adjusted EBITDA margin was 9.3% for Q3 of 2023, as compared to 10% in Q3 of 2022. Finally, Q3 profit was $8.1 million, a decline of $21.8 million from the same period in 2022. This decrease was primarily driven by $15.5 million in accrued trade duties, which we previously disclosed would be recorded in the third quarter. An increase in finance expense of $3.7 million, partially offset by a $12.6 million decrease in income tax expense. On a per share basis, basic profit was $0.36, as compared to $1.28 in Q3 of 2022. After adjusting for the accrued trade duties and outlook expenses, adjusted basic earnings per share was $0.93, as compared to $1.32 in the same period last year. Looking now at our cash flow for Q3. Operating cash flow came in at $59.1 million, which was $28 million lower than Q3 of 2022. $33.2 million of the Q3 cash flow was generated from the continued reduction in non-cash working capital. Turning now to our balance sheet. Our strong cash flow generation enabled us to reduce debt by a total of $49.6 million in the third quarter. We exited Q3 in a solid financial position, a leverage ratio of 3x, and unused borrowing capacity of over $425 million. Our capital allocation strategy remains intact and prioritizes the continued reduction of debt, funding organic and acquisitions-based growth, and providing incremental total returns to shareholders through our dividends and opportunistic share repurchases. With that, I'll pass the call over to you, Rob. Rob? Thanks, Faiz. I'll conclude my comments this morning with our outlook and details on our strategy to continue building the long-term value of ADENTRA. In the near term, we continue to expect that inflationary pressures, as well as higher interest rates, will have a negative impact on economic activity. This in turn is expected to result in reduced product demand and could lead to a continuation of softer product volumes and pricing. In the third quarter of 2023, our sales were down by 15% compared to the same quarter in the prior year. We expect fourth quarter sales to be down similarly on a year-over-year basis. As for 2024, there are a range of forecasts in the market regarding the expected performance of new residential construction, repair and remodel, and commercial building. There's much speculation regarding when the Fed and the Bank of Canada might consider loosening interest rates, which would provide a boost to construction markets after an extended period of rapid tightening to combat inflation. While we can't predict when that will happen, we remain confident that our business is well positioned for the long term to capitalize on extremely strong fundamentals in the repair and remodel residential and commercial construction markets. From a repair and remodel perspective, demand should be supported by an aged housing stock in the U.S., where the median age of a home is over 40 years, and by U.S. move-up buyers trapped in their homes by legacy low interest rates, opting to improve their current residence in place. On the residential construction side, a decade of under-building in the U.S., combined with demographic changes where millennials are now the largest cohort, should provide longer term demand for housing. In the meantime, we continue to demonstrate that ADENTRA is adept at managing our business and cash flows effectively, regardless of market conditions. Our size and scale, together with diversity in our product categories, our broad customer channels, and multiple end markets served, provides important stability that balances exposure to any one geography or segment of the building products industry. With that, I want to thank you for your time this morning. I'll now turn the call back to Alan to provide instructions for the Q&A period. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press star one on your touch tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. If you would like to withdraw from the question queue, please press star two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Yuri Lynk of Canaccord Genuity. Your line is already open. Good morning, guys. Hey, Yuri. Just a little more color on the price declines. If I had to guess, I would have thought that volumes would have been the larger contributor to the revenue decline in the quarter. So, is there a specific product category or categories that's driving that? And more importantly, where do you feel we are in that cycle of prices coming off the peak? Yeah. So and it has been a little bit of a different tale of the tape through the year. The first half of the year, with the sales decline year-over-year, was really more 2/3 volume, 1/3 price, and we're seeing in the second half a reverse to that. There's been general price decline across most categories, Yuri. I would maybe carve out the door category as having been more resilient in terms of pricing discipline. But other categories, and particularly products that are imported, are down. A significant component of the imported product being down is just ocean freight embedded in product cost. That has normalized from when containers were very high cost versus where they are today. In terms of, you know, when does... When do we find bottom on pricing? That's, you know, hard to predict. It's been a fairly, as I've said before, orderly decline to this point in terms of month-on-month step backs, but, you know, it's been fairly consistent in terms of its occurrence, as well. So I think, you know, tough, tough, tough one to call, but we continue to find our way into, I think, a little better volume situation to help offset. Yeah, and then just on the volumes, I mean, continuing to slide a little bit year-on-year, and the economic data in Q3, we know with where mortgage rates went, was, I think, probably pressuring activity across the housing ecosystem. So, I mean, why wouldn't volumes continue to decline well into 2024, just given the late cycle nature of your business mix? Yeah, I think that, you know, into the early part of the year, that's something we've got our eye on, of course. But when we look at the overall, you know, health of the end markets that we're in, and we look at, you know, what channel partners are saying, for instance, in repair and remodel and home improvement, they're, you know, talking more about a flat to low single digit environment for the coming year. We keep our eye, as I'm sure you do as well, on projections with respect to the NAR's. So there is some deceleration expected around, again, repair and remodel. What we're most, I would say, bullish about is the recovery of single family housing, which has been hit the hardest. And we're seeing signs we think of that emerging for 2024, which we, you know, have a significant participation in that, in that channel. The commercial channel, which is the balance of our business, above 20%, remains, as we've described before, fairly mixed, with decent activity levels. Nothing really I would call out there specifically. Okay, that's good color, Rob. I appreciate it, and it was nice to see the margin performance in the quarter. Good job. I'll turn it over there. Sure. Your next question comes from Hamir Patel of CIBC Capital Markets. Your line is already open. Hi, good morning. Rob, could you comment on how the partnership with Lowe's is evolving and, you know, any opportunities you see there to grow the home center business? Yeah, that they are a tremendous partner to our, to our company. They are our largest customer, but across ADENTRA, ADENTRA sales, that's about a 15% concentration. So, manageable but important, I, I guess I would put it, that way. You know, our relationship with Lowe's is unique in that we're a vendor managed partner, where the millwork aisle is basically turned over to our company to manage. So, you know, we like to say we're managing a store within a store, where we're doing everything from determining what products should go into that aisle, when it's replenished, doing all the sourcing, globally, and even stocking, you know, the stores, with our, with our own staff. It leads to a very predictable business, which is really nice to have, because we are still in an industry that's got some cyclicality, of course. What I would say about Lowe's is there are periodic line reviews that occur from time to time. Again, as a VMI vendor that's managing aisles, that's usually a number of years apart, as opposed to every year, which can be the case in other categories. We went through a line review recently, and all of our stores were renewed. So we handle about a third of Lowe's stores across North America, and we're, you know, pleased to continue to build with them. In terms of how do we grow with Lowe's, I would think of that as more stable in terms of store count, as I just described. And then other places that you can grow are the introduction of new products into stores, and we do have new products that we do introduce from time to time that provide some upside as well. Great. Thanks. Thanks, Rob. That's helpful. And just turning to the M&A side, what's your appetite for acquisitions in this current housing backdrop? And are you seeing more opportunities come your way? You know, we're always active hunting. The focus in the current year, as described in the opening comments, was very much on reducing debt in a more uncertain economic time. We feel really good about what we've done with the balance sheet because we were heavy on inventory, and we made a concerted effort to bring that down to where it is today in about 80 days. And we've released a lot of cash and managed to pay down, pay down debt. Now, we've had falling trailing EBITDA at the same time, so the leverage is still in, in the range that we're comfortable with, but it's at the higher end of that range. So we're going to be active looking at M&A, but we will be very measured about size of opportunity that we take on and make sure that we're being responsible with the balance sheet. But we do have ongoing, you know, conversations underway, as you would expect, because it is meant to be an active program, not a once in a while type of activity for our business. Fair enough. That's, that's all I had. I'll, I'll turn it over. Thanks. Your next question comes from Nick Corcoran of Acumen Capital. Your line is already open. Good morning, guys. Most of my questions have been answered, but maybe just on the margins. You highlighted your prepared remarks that margins have recovered to levels seen in the third quarter of last year. How sustainable do you think the margins are at current levels, and is there anything that might put pressure on them? I think we've already come out of the period where we had the most pressure. We feel good about the margin at this point, Nick. As I mentioned, we really questioned where we were at in terms of inventory right now. We have a bit of feedback on the line here. Which we checked through the process of reducing our inventory. So the inventory write-down component has dissipated, and then we're just into better cost of inventory now. So that's allowing us to put more points on the board as it relates to the margin. So you know, we feel good about the performance you just saw. We feel good about that continuing for now on a gross margin basis. Thanks. That's a good color. I'll pass it on. Your next question comes from Zachary Evershed of National Bank Financial. Your line is already open. Thank you. Good morning, everyone. Hey Zach, morning. So Nick covered gross margin, so let's move to OpEx. Some really good cost control there excluding the trade case. Could you give us more color on what goes into that? And if you can hold to that level, if sales continue on their current trend. Hey, Zach, good morning. Faiz here. I can give you some color on the operating expense run rate. So yeah, you're right. Once you normalize out the trade duties I mentioned in my remarks, our operating expenses, and this is as it shows, just so we're talking about the same number here, as it shows, you know, on the MD&A in our section two. Those operating expenses normalized were about $85 million. I think I've mentioned on previous calls, but you've seen in our results over the last number of quarters, that expense run rate was maybe more like 90 million, you know, and that may be, maybe a little more, plus or minus. You know, the reduction in the quarter, there's a number of things there. I would describe some of them as maybe more one, one time, but some of them as maybe more, permanent. You know, we did reduce people costs during the period, you know, a combination of some headcount as well as, as I mentioned in my prepared remarks, some variable compensation. We did decrease premises costs, you know, which included, consolidation of two of our facilities. We're utilizing today, just much less, offsite storage than we had previously, just given the significant reductions in the amount of inventory we're carrying, which, you know, you would have seen the first couple of quarters. So I think a lot of that is sustainable. Zach, you know, it's—I don't know if it's the $85 million going forward, but I do think we've made a bit of a step down in terms of that run rate you've seen over the last number of quarters, and it's probably trending, you know, towards the high 80s, as an example, you know, at least for the next, next couple of quarters here. That makes sense. Thanks. And then would you be able to comment on where you see the breakdown of the 15% decline year-over-year for Q4 in terms of volumes versus price? Will it be pretty much in line with what we saw in Q3? Yeah. Hey, Zach. I don't have the perfect, perfect answer for you in terms of the, you know, the price versus, versus volume. I mean, I can tell you early on here into Q4, no change from the trend we described, really the last couple of quarters, where we are continuing to see pricing declines across most product categories, month-on-month. Now, that is low single-digit, right? It's kind of ones and twos in terms of a%. So, you know, if that continues on until the end of December, you can, you know, you'll do the math and you'll, you'll have an estimate there. But as Rob mentioned in his remarks, right, right now, that's a little bit tougher to predict as well. Gotcha. Thanks. Just one last one. We've heard from you about the home centers demand, kind of maybe flat to low single digit. What are you hearing from your customer contacts in pro dealer and industrial markets for 2024? I would say over the course of the last month, it's been maybe a little bit more cautious, Zach. I mean, everybody wants to predict the future and none of us can, so we're making best guesses. But that comment I made around more of a flattish to low single digit environment seems to be a fairly common theme in our discussions with pro dealer customers in particular. On the industrial side, remember, that's a very disaggregated customer base. There's, you know, we've got tens of thousands of customers, so it's not easy to form up a consensus, I would say, as it relates to that group. But we're not seeing any kind of sales behavior that I would describe as different between pro dealer industrial at this point. That's helpful. Thanks. I'll turn it over. Your next question comes from Ian Gillies of Stifel. Your line is already open. Morning, everyone. Hi. Hey, good morning. Two questions, I guess, as it pertains to the interest rate environment. First, previously, I think you stated you'd be willing to go to 3.5x net debt to EBITDA if the right M&A opportunities presented themselves. Given where kind of the rates have gone and acknowledging you have some hedging in place, does that number move lower now, or do you feel the need to change those bands, just given the cost of capital? Money costs a lot more these days. We agree, so that would obviously leverage, no pun intended, into the discussion for us. You know, comments we've made in the past that relate to going a little higher have always been accompanied by with a very clear pathway to pay down debt over a short, shorter period of time, which we've delivered to this point when we have been on the upper end of the leverage. But obviously, all of the deals that we've you know done have always been very creative to the company. The higher you know higher borrowing rates changes that equation a little bit, but you know we will be sensible thinking that through. As from my earlier answer, you know, we're still at the upper end of that two-three range where we think we wanna be, sustainably. So we're gonna be pretty thoughtful about what we do with M&A going forward as it relates to overall debt to EBITDA. That, that's helpful and, yeah, very useful. The other question I had, I mean, there hasn't been a huge swath of deals in the building product space. But in general, based on what you're seeing through your pipeline or perhaps just through discussions, has the realization come that valuation multiples for acquisitions may be lower, call it in future years, the prior decade, just given some of these changes in interest rates? Or do you think that's still working its way through the system? It really does vary by seller. I think that there is a very firm grounding, though, in terms of trailing EBITDA numbers and, you know, understanding what those look like coming out of a very go-go period of the pandemic of 2021 and 2022 for building products companies. So, yeah, I don't think that there's a specific answer for every seller out there, but we are getting more realistic conversations around sustainable earnings. Okay, perfect. That's very helpful. Thanks very much. I'll turn it back over. Your next question comes from Fernando Torrealba of Cormark Securities. Your line is already open. Hi, thank you. It's Fernando on for Jeff Fenwick today. I just wanted to go back a little bit into leverage. If I remember correctly, back in May, the interest coverage ratio covenant was amended from 3x down to 2.25, until March of next year. And I'm just wondering, when we get to March of 2024, does the covenant automatically revert back to the old 3x, or should we expect to see a different covenant altogether? It reverts back. Gotcha. Thank you so much. That, that's all for me. Ladies and gentlemen, as a reminder, if you have a question, please press star one. There are no further questions at this time. I would hand over the call to Rob Brown for closing comments. Please proceed. I appreciate that, and thanks everyone on the line for joining us and for your interest in ADENTRA. Please do reach out if you've got further questions to Faiz or myself or Ian, and we hope everybody has a great day. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.