Good day, and welcome to the Doman Building Materials Group Ltd second quarter 2022 financial results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ali Mahdavi. Please go ahead. Thank you. Good morning, everyone, and thank you for joining us this morning for Doman Building Materials' second quarter 2022 financial results conference call. Joining me this morning are the company's Chairman and Chief Executive Officer, Amar Doman, and Chief Financial Officer, James Code. If you have not seen the news release, which was issued after the close of markets yesterday, it is available on the company's website as well as on SEDAR, along with our MD&A and financial statements. I would also like to remind you that a replay of this call will be accessible until midnight on August 19th. Following management's presentation and commentary of the second quarter results, we will conduct a question and answer session for analysts only. Instructions will be provided at that time for you to join the queue for questions. Before we begin, we are required to provide the following statements regarding forward-looking information which is made on behalf of Doman Building Materials Group Ltd and all of its representatives on this call. Remarks and answers to your questions today may contain forward-looking information about future events or the company's future performance. This information is subject to risks and uncertainties and may cause actual events or results to differ materially. Any information regarding forward-looking statements is made as of the date of this call, and the company does not undertake to update any forward-looking statements. Please read the forward-looking statements and risk factors in the MD&A as these outline the material factors which could cause or would cause actual results to differ. The company will not provide guidance regarding future earnings during today's call, and management does not anticipate providing guidance in future quarterly or interim communications with investors. I'll now turn the call over to Amar. Thanks very much, Ali, and good morning, everybody. Thanks for joining us on today's call. On the back of a solid first quarter with record results stemming from strong pricing which started to normalize late in that period, we were complemented by steady demand. The second quarter started off as what I would qualify as expected. Our expectations were that we could see pricing normalization caused by macroeconomic headwinds triggered by interest rate hikes and concerns around demand slowing down and overall risks of a downturn in the housing and construction markets. This trend was exactly what we experienced going into the second quarter, with downward pricing being the theme as we worked through inventories in the period. Given the continued downward pressure on pricing going into the second quarter, we prudently managed working through our inventories and protecting gross margins to the extent possible. Mid-quarter, we started seeing signs of pricing stabilization at levels which are very healthy for our business. The market demand for our products remained robust, which sets up well in a stable pricing environment with less price volatility, normalized margin levels, and robust market demand in our key markets. Despite some of the industry-wide challenges around pricing and demand dynamics during the quarter, our sales reached CAD 871 million. Our recent acquisition of Hixson Lumber was a major contributor to our revenue growth in the quarter, and our integration efforts at Hixson Lumber continue to be carried out as planned. I am both pleased with and very proud of our financial performance during what I continue to consider a challenging quarter, specifically from a pricing trend perspective, where we have had to be extremely responsive to industry-wide price volatility while ensuring that our first-class level of service remains on point. As a result of our collective efforts, our revenues amounted to CAD 871 million. Our gross margins were challenged per my earlier commentary on inventories and pricing dynamics to just under 12% or CAD 103 million. Our adjusted EBITDA amounted to CAD 52.1 million, and our net earnings came in at CAD 21 million. Lastly, we paid a quarterly dividend totaling CAD 0.14 per share. Looking ahead, we are cautiously optimistic as we believe that the pricing environment and market demand is nearing an equilibrium at healthy levels while we continue to manage our costs and always look for growth opportunities. Our balance sheet optimization strategy is also tracking well with nearly CAD 100 million of debt reduction over the past 12 months, which is a key priority for us, and we look forward to having a solid, growth-friendly, and future-ready balance sheet for opportunistic acquisitions. A little bit of color on how the third quarter was started off. We continue to see a healthy level of activity, and pricing trends seem to be leveling off at what we would consider healthy levels. However, there are still macroeconomic-driven factors that could stir up volatility, and we are monitoring and managing inventory levels closely to ensure we minimize any impact to our financial performance. As always, we remain confident in our ability to work through volatile markets diligently while serving our customers' needs with the highest level of service. We remain very excited about our growth profile and the overall prospects of the business. We have built a solid, diverse, and resilient business in North America with a broad and growing footprint, which we are extremely proud of. With that, I would like to ask Jay Code, our CFO, to take over and provide a review of the company's second quarter 2022 financial results in greater detail, and then we will open up the call for any questions you might have. Jay? Thank you, Amar. Good morning, everyone. Sales for the quarter ended June 30, 2022 were CAD 870.7 million compared to CAD 756.8 million in the comparative period in 2021, representing an increase of CAD 113.9 million or 15%. The increase is largely driven by contributions from our June 2021 acquisitions. The company's sales by product group in the quarter were made up of 77% construction materials c ompared to 76% in the same quarter last year, with the remaining balance resulting from specialty and allied products of 20% and other sources of 3%. Gross margin dollars decreased to CAD 102.7 million in the quarter, compared to CAD 131.2 million in the same period of 2021, a decrease of CAD 28.5 million. Gross margin percentage was 11.8% in the quarter, a decrease from the 17.3% achieved in 2021. The company's margins were impacted by the Q2 declines in construction materials pricing, which drove the lower overall margin percentages for the quarter relative to 2021. Expenses for the quarter were CAD 67 million, compared to CAD 47.9 million for the same period in 2021, an increase of CAD 19.1 million or 40%. As a percentage of sales, expenses were 7.7% in the quarter, compared to 6.3% in 2021. Distribution, selling, and administration expenses increased by CAD 14.6 million or 41% to CAD 50.6 million this quarter versus CAD 36 million in 2021, largely due to the inclusion of a full quarter's operating expenses from our 2021 acquisitions. Recent inflation pressures have also contributed to higher expenses during the current quarter. DS&A expenses were 5.8% of sales in the quarter, compared to 4.8% in Q1 2021. Depreciation and amortization expenses increased by CAD 4.4 million or 37% from CAD 11.9 million to CAD 16.4 million. Finance costs for the second quarter were CAD 9.6 million versus CAD 6.5 million last year, an increase of CAD 3.1 million, largely as a result of additional finance costs related to our 2026 unsecured notes, which were issued on May 10th, 2021, and partly due to higher interest rates on the company's variable rate loan facilities. Second quarter EBITDA was CAD 52.1 million, compared to CAD 90.4 million in 2021. The decrease is largely due to the impact of the previously discussed construction materials pricing declines going into and throughout the quarter. As a result of the foregoing, Doman's net earnings in the second quarter of 2022 were CAD 20.7 million versus CAD 53.1 million in the same period last year. Turning now to the statement of cash flows. The significant comparative factors affecting our year-to-date operating activities were largely related to improved working capital performance, partly offset by lower net earnings. Net cash flows from operating activities, including non-cash working capital changes, improved by CAD 127.7 million versus last year. Moving to the financing section. The company generated CAD 5 million of cash from financing activities, compared to CAD 643.1 million in the same period in 2021. In the first six months of 2022, the company borrowed an additional CAD 43.2 million on its revolving loan facility, compared to additional borrowings of CAD 280.2 million in 2021. The year-over-year decrease in net advances from the revolving loan facility is partly a result of our focused efforts to reduce inventory volumes and partly due to construction materials pricing declines during the current period. Additionally, the prior year comparative period included the use of the revolver as partial financing for our 2021 acquisitions. Shares issued during the quarter generated CAD 618,000, compared to CAD 81.6 million in 2021 as a consequence of our public share offering in May of last year. Scheduled repayments relating to our non-revolving term loan consumed CAD 1.3 million, which was consistent with 2021. The company was not in breach of any of its lending covenants during the six months ended June 2022. Dividends paid to shareholders during the six-month period totaled CAD 24.3 million compared to CAD 21.8 million in the prior year's first half. As a reminder, the company updated its dividend policy for the fourth quarter of 2021, resulting in a quarterly dividend increase from CAD 0.12 to CAD 0.14 per share, beginning with the dividend paid on January fourteenth, 2022. Payment of lease liabilities, including interest, consumed CAD 12.2 million of cash, compared to CAD 11.6 million in 2021. The company's lease obligations generally require monthly installments, and these payments are all current. Investing activities consumed CAD 2.9 million of cash, compared to CAD 500 million in the same period in 2021. Representing the purchases of property, plant, and equipment net of proceeds from disposition this year, whereas the prior year comparative period included proceeds paid for our 2021 acquisitions. This concludes our formal commentary, and we would now be happy to respond to any questions that you may have. Thank you. Operator? Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. Please ensure that the mute function on your telephone is switched off to allow your signals to reach our equipment. Again, star one to ask a question. We can go straight to Steve Hansen of Raymond James. Yeah, good morning, guys. Thanks for the time. Amar, just curious about how you're feeling about the U.S. footprint nowadays. I recognize the macro backdrop's a little bit volatile, but Hixson's been under your belt for a period of time now. How are you feeling about, you know, that broader position that you have today and whether it's, you know, you would like to continue on expanding in the future? Yeah, we're feeling really good about it. 13 months in, I mean, look, we all know what's going on in the macro markets, but certainly the strength of the business unit down there and the geographical expansion that we've you know moved into is excellent. The team is excellent. The team now employed is excellent, and we'll be adding many through strategic acquisitions down there, despite what the market does like we have for years. We're certainly into new territories and business has been strong and our customers down there in the areas that we're in are still quite strong. I think you know we'll have a bit of a slowdown coming up, as we all know, for who knows how long, but certainly right now the momentum is excellent and we couldn't be more pleased with the acquisition. That's great perspective. Thanks. Just curious how you feel about inventory positions on both sides of the border now, and in your prepared remarks, you talked about getting those right sized, but are you at levels now where you feel like you're in a good position to manage the sort of the ongoing volatility. Pricing, of course, has continued to bounce around and even be stronger of late. Just curious in the context of the activity versus pricing. Yeah, we're in good shape on inventories, meaning that we're right sized now as we head into sort of, you know, the fall coming up and we'll start to reload for 2022. The balance sheet's never been stronger. We're in good shape. We started to, you know, strategically push down our inventories in certain categories. Not everything, of course, 'cause we're busy. As you can see, our sales numbers are up. We embarked on that a couple of months ago, and our team's done a great job of reducing and being careful of, you know, kind of selling three, buying one where needed as the market resets and we go into new levels more on the wood product side. The allied side on our CanWel distribution business has been very strong and busy. We're still on allocation on certain items, so believe it or not, even in the environment that, you know, you read in the papers, there's still a lot of product items we're having trouble getting, just due to supply chain issues. Inventory, to answer your question, Steve, are in good shape. We'll push it down a bit further in third quarter, then start to build up a bit in the fourth. Okay, great. Just lastly, if I may, is just how do you think about the margin progression from here? Has the bulk of the hit been taken in the context of the recent market or how do you feel about it next quarter too? It has. We took a lot of medicine in the second quarter as evidenced there. Sales up, margin down. I mean, SYP dropped over 40%. I mean, the other species did almost the same. It was another hammer. I think we managed very well. You know, obviously still very positive. A lot of free cash flow came out, so managed a pretty rough storm again, this time better prepared with less inventory going in, et cetera, et cetera. As we come into the third quarter, we should start to get back into our normalized margins and for the rest of the year. Great to hear that. Thanks. Thanks, Steve. Our next question comes from Ian Gillies of Stifel. Morning, guys. Morning, Ian. There's been some discussion around margin already, and the last few years have obviously been abnormal. As we think with Hixson being rolled in, and in the context of history, now looking forward, do you think margins on a normalized basis are a bit better than they were, call it, prior to that 2020 period with this new larger business and a larger operational footprint and economies of scale and so forth? Yeah, it's sort of like, you know, give me a normal lumber market and I can answer that. It is really difficult to navigate through what we've gone through in the last 26 months. It's been crazy town. For us to, you know, say and come out, as long as we have, call it a steady market, in lumber, plywood and OSB, the Hixson margins and our margins are gonna be normal, and they'll be in that sort of 14%-ish band again. With these wild ups and downs, you know, it's just. It hasn't been happening through COVID. As we start to emerge out of it like we are now and things settle down, those gross margins will recover. Again, I can't predict the volatility. We've given up on predicting the lumber market a long time ago here. Certainly those normalized patterns in Hixson will strengthen the overall gross margins. Obviously, with the amount of volume and top line they bring in, it lifts us up. No, that's helpful and acknowledged around it. That's especially around just when you go to ply lumber price. Amar, this one may be for you and maybe for Jay, but as you look through the rest of the year and if we assume the lumber price is kind of where it is today, do you think you get continued working capital release from here? It was obviously very, very strong in Q2. Do you think you get a bit more through Q3 and Q4 based on what you know today? Hi, Ian, it's Jay. I'll take that one. Yeah, certainly we benefited from a focused effort that we initiated in the second quarter. You see that in the operating cash flows in these results. Seasonally, we're going to continue to harvest further working capital cash as we drive that down through to, you know, usually the low point is in that November range, and we expect the same seasonal pattern this year. Okay. That's helpful for me. I'll turn the call back over. Thanks very much, guys. Thanks. The next question comes from Zachary Evershed of National Bank Financial. Good morning, everyone. Thanks for taking my questions. Thanks, Zach. I'm hearing you on gross margins, tough to call given the volatility in lumber. I guess the flip side of that is how flexible are your SG&A expenses? As pricing pushes the top line down, how much pressure will there be on operating leverage? Yeah, I mean, just like when it goes up, you know, we do benefit from it. When it goes down, it stings us a bit because you still need someone selling lumber if it's at CAD 1,800 or CAD 800, right? We don't have a lot of variable there. Where our variables are would be on our freight and logistics, things like that. Treating plants, you know, we can kinda lean up as volumes are, you know, drying up in certain regions. If they do, we can also add there. That's a little more elastic, but the rest of it's pretty fixed. It's hard to, you know, chop bodies out just due to the commodity volatility. Makes sense. Good color. About 30% of your sales in the quarter were with a single customer. What are you hearing from them in terms of end market demand and their inventory levels? You know, it's interesting, despite all the bad news that we read, you know, I think, you know, 2023 might be a bit softer on takeaway, but we're busy everywhere. You know, Canada's been a little bit slower because there was excess inventory in the system last year, speaking of the treated, but the building materials side in Canada has been good. The takeaway on in California and the West Coast has been strong. Hawaii, steady as she goes. And of course, Houston's been very strong on volumes all the way through this as compared to last year. When we look at Q3 2021, we hit the wall volume-wise, price collapse, everything, and then of course, things started to pick up in Q4. Here we are in Q3, and the volumes are good. We had a decent July. You know, August is starting out okay. Really, the customers, we have not seen this drop-off that we expect if you read a newspaper today. Great. Thanks. I'll turn it over. Thanks. As there are no further questions at this time, I'd like to turn the call back to Ali Mahdavi for any additional or closing remarks. Thank you, operator. Thank you again everyone for joining us for this morning's call. If you have any further questions or follow-ups, please feel free to reach out to myself. That concludes today's call. I'll hand it over back to the operator to wrap things up. Have a great day. Thank you, ladies and gentlemen. That does conclude today's conference. We thank you all for your participation, and you may now disconnect.