Greetings, and welcome to the Doman Building Materials Group Q1 2023 financial results conference call. At this time, all participants are on listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ali Mahdavi, investor relations. Thank you. You may begin. Thanks, operator, and good morning, everyone. Thank you for joining us today for Doman Building Materials Q1 2023 financial results conference call. Joining me this morning are Amar S. Doman, Chairman and Chief Executive Officer, and James Code, Chief Financial Officer. If you have not seen the news release which was issued earlier, 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, May 26th. Following management's presentation, we will conduct a Q&A 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 that may cause actual events or results to differ materially. Any information regarding forward-looking statements is made as of the day 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'd like to now turn the call over to Amar. Thanks, Ali. Good morning, everybody. Thanks for joining the call. Let me begin by highlighting some of our key financial metrics, followed by some color on our operations during the Q1. Then I'm gonna hand the call over to Jay Code, who can review the numbers in further detail. Let me start by briefly discussing our Q1 results and what we are seeing in the market and how supply and demand looks as we push through into Q2. We are pleased with our Q1 results. However, we continue to monitor inflationary and interest rate concerns and if and how they may have an impact on our business. Our financial and operational performance in the Q1 is a testament to our ability to work through volatile markets and our team's track record on managing the business through similar cycles. Throughout the quarter, we remained laser-focused, as always, on margins and optimizing our balance sheet. The strength in our Q1 results came from the combination of the impact of our strategic acquisitions, steady volumes in all our markets, which resulted in strong revenue performance in the quarter. Our ongoing cost management focused on operational efficiencies and successful integration efforts enabled the company to realize strong gross margin and EBITDA margin performance. Simply put, we optimized the use of all the levers available to us in our resilient business model to maximize margins. During Q1, consolidated revenues amounted to CAD 609 million compared to CAD 851 million in the same period in 2022. The decrease in revenues is largely due to the impact of construction materials pricing, which peaked in the comparative period in 2022. Our treated wood business continued to deliver strong performance during the period due to increased demand and volumes coming from consumers both in Canada and the U.S. I am both pleased with and very proud of our employees on both sides of the border for their hard work and attention in serving our customer needs with the utmost attention to quality and service. As a result of our collective efforts, I am pleased to report that for Q1 our team delivered revenues amounting to CAD 609 million, gross margin remaining strong at 16.1%, CAD 98.2 million, EBITDA of CAD 44.8 million, and our net earnings came in around CAD 15 million. Lastly, we paid a quarterly dividend of CAD 0.14 per share in the quarter. While lower on a year-over-year basis due to the lower pricing, our top-line results are demonstrative of the continued strength of our business platform in Canada and the States. I'm extremely pleased with our financial performance, which has resulted in the continued successful unfolding of our overall growth strategy. Although the economy is performing fairly well, we continue to see the risk of general economic headwinds manifesting in inflation, increased interest rates, along with price volatility in certain product categories. We remain focused on adapting and performing during these uncertain times, which is familiar territory for our team as we focus on growth and overall cost management. Looking back at the quarter and looking ahead, we saw some evidence of these headwinds, which we are cognizant of and the potential impact on our performance. Despite the current market environment, as always, we remain confident, focused, and disciplined on closely managing our costs and servicing the needs of our customers with the highest level of quality and service as we have done in the past. With that, I'd like Jay Code, our CFO, to take over and provide a review of the company's Q1 2023 financial results in greater detail. Then we're gonna open up the call for analyst questions. Jay? Thank you, Amar. Good morning, everyone. Sales for the quarter ended March 31, 2023 were CAD 609.1 million compared to CAD 851.3 million in the comparative period in 2022, representing a decrease of CAD 242.2 million or 28.4%. The decrease is largely due to the impact of lower construction materials pricing, which generally declined since reaching a peak in March of 2022. The company's sales by product group in the quarter were made up of 75% construction materials compared to 81% last year, with the remaining balance resulting from specialty and allied products of 21% and other sources of 4%. Gross margin decreased to CAD 98.2 million in the quarter compared to CAD 132.6 million last year, a decrease of CAD 34.4 million. Our gross margin percentage was 16.1% in the quarter, an improvement from the 15.6% achieved in Q1 last year. Expenses for the quarter were CAD 70.5 million, largely in line with the CAD 70.7 million expended in 2022. As a percentage of sales, these expenses were 11.6% this quarter compared to 8.3% last year. Distribution, selling and administration expenses decreased by CAD 1.1 million or 2% to CAD 53.4 million this quarter from CAD 54.5 million last year, largely due to the company's ongoing efforts to execute on cost saving opportunities. As a percentage of sales, DS&A expenses were 8.8% in the quarter compared to 6.4% in the prior year. Depreciation and amortization expenses for the quarter increased by CAD 896,000, or 5.5% from CAD 16.2 million to CAD 17.1 million, largely due to the impact of foreign exchange on the translation of our foreign operations. Finance costs for the quarter were CAD 10.6 million versus CAD 8.4 million last year, an increase of CAD 2.2 million, largely due to the higher interest rates on the company's variable rate loan facilities, which were partially offset by significantly lower average balances for these facilities in the current quarter. Our Q1 EBITDA was CAD 44.8 million compared to CAD 78.1 million in 2022. The decrease was largely attributable to the lower sales and gross margin dollars driven by the previously discussed year-over-year decline in construction materials pricing. Doman's net earnings in Q1 were CAD 14.9 million versus CAD 42 million in 2022, a decrease of CAD 27.1 million. Turning now to the statement of cash flows. Operating activities this quarter consumed CAD 76.3 million, a significant improvement compared to the CAD 125 million consumed in Q1 2022. The main contributor to this improvement in operating cash flows was our stringent working capital management, partially offset by this quarter's lower net earnings. Operating activities before non-cash working capital changes generated CAD 38.1 million in cash compared to CAD 62 million in 2022. Changes in non-cash working capital consumed CAD 114.4 million in cash compared to CAD 187.1 million last year. The decrease in cash consumed by non-cash working capital largely resulted from our ongoing efforts to optimize inventory volumes while maintaining the highest standards of customer service. Additionally, last year's higher construction materials prices resulted in significantly higher average unit costs for inventory and trade receivables at March 31, 2022. Turning now to financing activities. This quarter, we generated a total of CAD 77.4 million from equity and debt stakeholders, compared to CAD 107.9 million in 2022, with the year-over-year decrease largely attributable to the company's ongoing debt reduction strategies. Scheduled repayments of our non-revolving term loan consumed CAD 667,000 consistent with last year, and payment of lease liabilities, including interest, consumed CAD 6.5 million compared to CAD 6.1 million last year. The company's lease obligations generally require monthly installments, and these arrangements are all in good standing. We borrowed an additional CAD 96.2 million on our revolving loan facility this quarter, compared to CAD 127.2 million last year. The year-over-year decrease in net advances from the facility is largely a result of the previously discussed stringent working capital management, resulting in the significantly lower facility utilization this year. Shares issued in the current quarter generated CAD 625,000 compared to CAD 632,000 last year. The company also returned CAD 12.2 million to shareholders through payment of dividends, largely consistent with Q1 of 2022. We also note the company was not in breach of any of its lending covenants during the quarter ended March 31st, 2023. This quarter, we invested CAD 1 million in new property, plant and equipment compared to net investments of CAD 2.2 million in Q1 2022. This concludes our formal commentary, and we'd now be happy to respond to any questions that you may have. Thank you. Operator? Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. If you'd like to ask a question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Hamir Patel with CIBC Capital Markets. Please proceed with your question. Hi. Good morning. Good morning. Amar, one of your treated peers in Canada is seeing exceptional growth in the utility pole business and the outlook in that category looks for, you know, perhaps 20% growth for two years here. Is that a market when you think about future growth opportunities, you know, either organically or through acquisitions that Doman might look to expand into? I mean, at this point, we're focused on, you know, our residential category, which we're experts in. If opportunities come up, we'll take a look, but certainly, you know, we don't, we don't really play in the industrial market. It's not really our world. Okay, fair enough. Just on the residential front, I know we're seeing signs of more residential density changes, playing out in Ontario and expectations of changes, here in BC later in the year. Do you think that could be meaningful for your Canadian business, you know, if it drives more formations, away from multifamily? Yeah, we do. We also, you know, after we've seen, you know, the last two or three years, both sides of the border, you know, extreme housing activity, you know, the decking and fences, as mentioned, in the past, always come in a little bit later. We're seeing some of that happening now. Obviously, lumber pricing being down, call it 60% year-over-year, obviously reflecting in our top line. You know, cheaper lumber is good for the consumer, we're starting to see good action there too. You know, I think some of those formations so that you mentioned will contribute to that, but also there'll be a bit of a backlog still on the decking and fencing activities. Great. Thanks. Thanks, Amar, that's all I had. I'll turn it over. Thanks. Our next question comes from the line of Steve Hansen with Raymond James. Please proceed with your question. Yeah, good morning, guys. Amar, could you speak to the margin profile a little bit? Like how and where did you manage to achieve the margin profile that you did? It's quite strong relative to past quarters. Is it a regional issue? Is it a mix issue? Is it a combination of both? I mean, how do you ascribe it, and ultimately, what do you think about the balance of the year? Yeah, you know, I think we're back to call it a normal pattern. When you looked at our gross margins, you know, in the last couple of years, they're all over the map a little bit because of that extreme volatility we had. With that in the rearview mirror now, you should start to see our gross margin profile smooth a little bit. They'll still be within a band, but, you know, that was a good quarter for us. Nothing special was in that quarter. Obviously, the lumber market was pretty flat. You know, just good operational efficiency, showing what we can do as a new company after the Hixson acquisition as well, but also just focusing on what we do and getting the noise out of the market, I think, started to demonstrate what the company can perform like on a margin basis. Okay, that's great. I just I'm thinking back some time now, but I used to always think of 14.5-15 as sort of the target range, but it sounds like it could be a little bit higher with Hixson sort of blending in better. Yeah, it could. You know, there's never a straight line with gross margin, but, you know, that's in the neighborhood. You know, is this sort of, you know, a higher watermark for us? It was, you know, definitely good. You know, we'll move around with the lumber market a little bit, but we really shouldn't move too much once we have, like I said, sort of, some sort of a footing on the lumber market, we should be in this band. Okay, that's helpful. How do you feel about the balance sheet today from a working capital standpoint? It sounds like you leaned it down intentionally and strategically. How do you feel about it relative to the activity levels you're seeing out there? Is it in the right spot? Do you feel like you're lean? How do you think about that? Yeah, Steve, it's Jay here. We started on these efforts back in March of 2022 to lean out inventory. From those efforts, we have learned a lot, and we're actually running the business with less working capital now than we ever have relative to revenue. You know, frankly, we're finding that we can service customers with carrying less inventory and still managing fulfillment rates very well. It's working for us, and we can see ourselves going forward continuing that. Amar, did you wanna comment? Nope. I think that's the right answer. We're being able to turn faster and run more with less. I think also transportation snafus don't seem to be there, and supply chain issues are a thing of the past. We can get stuff quicker, we can turn stuff quicker, and that's all, again, all that supply chain and rail car stuff, that's all in the past. For us now, if we can get it faster, we can turn it faster, and that's great for the balance sheet. No, that's great to hear. The rails do seem to be operating on a more steady rhythm lately, which is great. Just maybe lastly, and I'll turn it over, is just, you know, how do you feel about the broader growth o pportunity set in front of you, Amar. You know, you've done some strategic M&A here in recent years. Of course, you have a long history of that. You know, in terms of the opportunity set today as it stands, is the pipeline reasonable? Are you even looking? Where do we sit? Yeah, right now we're always, you know, in discussions. You know, these things don't happen overnight. Sometimes they take years in negotiations and in relationship building and that kind of stuff. You know, we'll just carry on the path that we're on. You know, we're not afraid of acquisitions. We're not afraid of the economy. We're experienced operators, so we'll be able to focus in on a value opportunity more than anything is what we look for in our business than try to grow it. When we see those things line up and it makes our metrics, we'll step in in any kind of an economy to buy a business that makes sense to glue into Doman. Okay. Very good. Appreciate the time guys. Thanks. Our next question comes from the line of Paul Quinn with RBC Capital Markets. Please proceed with your question. Yeah. Thanks very much. Morning, guys. Just on, if I look at Harvard's leading indicator on Remodeling Activity, and they've got that coming down sharply in mid-2023 here. Do you find that's a leading indicator for your business? You know, how do you expect or what's your feeling around R&R business going forward here? Yeah. I mean, for us, their business is quite different. You know, they're selling sheet goods and higher end, you know, hardwoods and things, laminates for your kitchens, that's not really our stuff. On the overall sector, Paul, more towards your question about that, we're not seeing the demand drop off in our products. In fact, just because I think there was so much not done, even though there was a lot done during the pandemic, there were decks where, you know, the pricing was too high. Now you can buy a deck for, call it, 60% less than you could, you know, a couple of years ago. That's driving activity. There's been a lot of damage on the West Coast, which is, you know, it's unfortunate but very good for our business in California. When the sun came out in California, our business is just booming there. It's not just damage. There's repair and remodel, there's pent-up demand. Our volumes, including Texas, are extremely strong. Even though the top line's off, it's not representative of the volumes, and the pickup that we've had in North America. That's good. Just on... Just help me better understand this, your growing sort of pressure treated business. Is there an index? I mean, Random Lengths covers pressure treated, is there something that you look for that gives indications about how that market's doing? You know, if you were in my seat, how would you gauge the strength of that business overall? Yeah, I think you look at a few things. Number one, you know, is that repair and remodel market, but also, you know, home starts matter. I always say after strong home starts, people start to add their decking and fences, sort of those mass areas where you've got track homes and people choose and select a custom deck or a fence. You know, frankly, if you've got a pet or a child, you're gonna have a fence immediately. The deck you're gonna price out. You know, composites play a good part. We distribute a ton of composites with our partners. Frankly, you know, lumber will always be your joists and also your most cost effective product in the backyard. You know, for us to gauge demand, we've gone through several recessions, Paul, so I can just tell you as an operator, we don't see demand fall off in pressure treated. People stay around their home. Now with people not transferring mortgages, we see more of that. That's why, you know, home listings aren't happening. People are still gonna probably now stick with their home and the low mortgages if they're locked in. That's good for our business 'cause they're gonna hang around the house and do something. All right. Thanks very much. Best of luck. Thanks, Paul. Our next question comes from the line of Zachary Evershed with National Bank Financial. Please proceed with your question. Good morning. It's actually Nathan calling in for Zachary this morning. We're seeing a pretty wide divergence between cash lumber prices and futures. What's your take on that? Perhaps what does that imply for activity and demand that we'll see over the summer months? Yeah, we don't focus too much on futures here, Nathan. You know, we just run the business mostly on a cash basis really, and play it that way, if you will. The disconnect from what we've learned a little bit, it's a new contract and it's just a little bit sloppy and it feels disconnected to cash for whatever reason. It's a smaller contract now, as you know, and I think the market's just sorting through that a little bit. Futures in lumber are notoriously not correct, with cash. We don't put a lot of stock in what futures are doing to cash, I guess, long answer to your question. Appreciate the color on that. Just pulling on that inventory thread that you were talking about before. Like channel partners take similar actions during volatile macro times where inventory is kept at bare minimum levels. What was your playbook then, and how are you reacting to it now? Yeah. You know, as Jay indicated, you know, we just talk about current really and what we're doing, and that's operating with leaner inventories, turning faster. You know, it's just we can get stuff quicker as I mentioned, so we're able to be more agile right now for our customers. I can tell you to fill in the second part of that, our customers are doing exactly the same thing. Just in time, they're only buying, you know, sell one, buy one, sell one, buy one. Everyone's sort of got this bubble of fear, I think, on them of just where interest rates are going, the whole economy. Having said that, our less-than-truckload business spills right into that strategy. We call it LTL in the business, and people are buying less than truckloads. That's when our distribution side really kicks in and has. For us, we're carrying less, the pipeline's carrying less, which could be when you see curtailments come. You know, we're not fortune tellers here, but, you know, if more and more of these curtailments come, you're gonna see a good spike in lumber just due to everybody running too lean now. A bunch of production comes off, and then that demand is gonna go up because nobody has a lot of material stacked up anywhere. Thanks. I'll turn it over. Our next question comes from the line of Ian Gillies with Stifel. Please proceed with your question. Morning, everyone. I'm just curious, given you have a view into both. Do you get a sense that pressure treating or pressure treated decking starting to maybe capture some market share back from composite given the relative pricing differences? Yeah, I think it does. It's hard for us to gauge that, Ian, but I'll tell you that, you know, again, if you go out and price the deck today, you know, the composite is still usually three to four times. A lot of the composite gets used in, you know, smaller places or industrial places where, you know, it's a big commercial thing, so, or a small piece of your deck or a little dock. Lumber is still, you know, the big volume mover. Of course, you're underneath your joists. You know, your fencing is in composite. You know, it's all lumber. You know, we believe that, just the whole decking market continues to grow and people continue to do more unique things in their backyard, create bigger outdoor space, more decks, more outdoor living areas. That's just good for the business in general. We play both sides of it. We distribute the composite or the lumber. You know, whatever the customer wants, we've got. That's helpful. Then in the U.S., it's a little easier to get a sense of what the home builders are doing. In Canada, it's a little more challenging. How much of a sense do you get that they're slowing down based on, I guess, anecdotal evidence and so on and so forth? Yeah, I mean, I think we all read the same housing start numbers. Us talking to some of our pro dealers, our box partners, our volumes are actually moving the needle up right now compared to 2022, which we did not forecast, quite frankly. It's not relative or it's not apparent, I should say, in our top line due to the lumber pricing that's way off from last year. Our volumes are trending higher in almost all regions, that's right into May. There's activity going on. Again, California spurted late, California is extremely busy for us. Of course, the midsection of the U.S. is very, very busy. We're not seeing it. We're not seeing a fall off or a collapse. In fact, we're seeing the volumes tick up. Got it. Do you have a sense of timeline on when you'd like to have resolution to the small notes you have due this year on the balance sheet? You know, we had our board meeting, yesterday, we discussed that. We'll have a strategy for that. To us, it's, you know, it's CAD 60 million. It's not a real material part of our debt stack. We've got, you know, a lot of different strategies available to us that have been presented to us. Anything to add there, Jay? No, just that of course, as you know, it's maturing in October. We do have a little bit of time. As Amar says, lots of options open to us, including using our asset-based loan, the revolving loan facility, to pay that down with, you know, ample availability at this point and projected. Perfect. Thanks very much. I'll turn it back over. Thanks, Ian. There are no further questions in the queue. I'd like to hand the call back to management for closing remarks. Thank you, operator. On behalf of the Doman Building Materials team, I'd like to thank you for joining us today, and we look forward to speaking with you again on our Q2 2023 conference call. That concludes today's call, and I'll hand it over to the operator to wrap things up. Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.