Greetings, and welcome to the Doman Building Materials Group Second Quarter 2024 financial Results conference call. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question-and-answer session will follow the formal presentation. You may press star one at any time to be placed into question queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Ali Mahdavi, Investor Relations. Please go ahead. Thank you, operator. Good morning, everyone, and thank you for joining us for Doman Building Materials second quarter 2024 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 on Friday, 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 twenty-sixth. Following the presentation of the second quarter results, 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 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 will now turn the call over to Amar. Great. Thanks, Ali. Good morning, everybody, and thank you for joining us on today's call. On the back of the first quarter, which was in line with our expectations, the second quarter was similar when considering the pricing environment, increases in interest rates, and the slowing North American housing market. These factors, combined with the ongoing concerns of a possible recession, have cooled consumers' demand, putting downward trends on materials pricing for the second quarter of 2024. To note, Southern Yellow Pine is off 30% year-over-year. As a result, during the quarter, not dissimilar to our disciplined approach on tight inventory management, our customers also remained conservative and replenished only when needed, keeping inventories light. During the quarter, we saw more price stability in Canada across all wood products. However, in the States, lumber prices, which had risen slightly in the first quarter due to supply tightness, have since pushed back down as changing expectations for the timing of federal monetary policy easing resulted in weaker lumber demand. Overall, despite the various macro headwinds and headlines that have influence on our markets and ultimately on consumer spending, we're encouraged with the continued level of activity we experienced during the quarter, resulting in modestly lower sales when compared to the same period in 2023. These trends continue to exist in our day-to-day activities. However, our focus remains on what we can control to ensure we maximize margins and free cash flow generation. Our team's focus on optimizing gross margin performance, combined with our constant efforts on overall cost management, were key contributors to our second quarter results. However, the slowing in the construction market was a key factor in the lower sales on a year-over-year comparative basis. Our financial and operational performance in the second quarter is a testament to our ability to work through volatile markets and our team's track record on managing the business through similar cycles. Our ongoing cost management, focus on operational efficiencies, and successful integration efforts will continue to enable the company to optimize gross margin and EBITDA margin performance. Put all of this in the numbers, our revenues amounted to CAD 690 million. Despite market conditions, gross margin remained solid at 15.7%, or CAD 108 million, adjusted EBITDA of CAD 50.6 million, and our net earnings came in at CAD 17 million, and we paid a quarterly dividend of CAD 0.14 per share. Looking ahead, we are cautiously optimistic as we navigate through what seems to resemble volatile markets, while we continue to manage our costs and always look for growth opportunities. Balance sheet optimization strategy remains a key priority as we look forward to having a solid, growth-friendly, and fire-ready balance sheet for opportunistic acquisitions. During the second quarter, we successfully renewed and amended our existing revolving loan facility, extending the maturity date from December 6, 2024, to April 30, 2028, while all other material terms, including the maximum available credit of CAD 500 million, remained unchanged. As always, we remain confident in our ability to work through volatile markets diligently while serving our customer needs with the highest level of service. We remain 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 James Code, our CFO, to take over and provide a review of the company's second quarter financial results in greater detail, and then we're going to open up the call for analyst questions. Thank you, Amar, and good morning, everyone. Sales for the three-month period ended June 30, 2024, were CAD 689.8 million versus CAD 710.7 million in 2023, representing a decrease of CAD 20.9 million, or 2.9%, largely due to the impact of the previously discussed slowing in the construction materials market, which was partially offset by contributions from the Southeast Forest Products acquisition, which closed in March of 2024. Our sales in the quarter were made up of 76% construction materials, consistent with Q2 last year, with the remaining balance resulting from specialty and allied products of 20% and other sources of 4%. Gross margin dollars were CAD 108.1 million in the quarter, versus CAD 121.2 million in 2023, a decrease of CAD 13.1 million. Gross margin percentage was 15.7% in the quarter, compared to 17% last year. Expenses for Q2 were CAD 75.1 million compared to CAD 72.5 million in 2023, an increase of CAD 2.6 million or 3.6%. As a percentage of sales, expenses were 10.9% compared to 10.2% in the prior year. Distribution, selling, and admin expenses increased by CAD 2.3 million, or 4.2% to CAD 57.5 million from CAD 55.2 million in 2023, mainly due to broad inflationary pressures and the addition of Southeast related costs. As a percentage of sales, DS&A was 8.3% compared to 7.8% last year. Depreciation and amortization expenses increased slightly by $312,000, or 1.8% from $17.3 million to $17.6 million, driven mainly by purchases of property, plant, and equipment related to the Southeast acquisition. Finance costs for Q2 were $12.6 million, compared to $10.5 million for the same period in 2023, an increase of $2.1 million or 19.8%, largely due to higher average net debt versus the comparative quarter and slightly higher interest rates on the company's variable rate loan facilities. This quarter's EBITDA was $50.2 million, compared to $66 million last year, a decrease of $15.8 million or 24%. EBITDA for the second quarter of 2024 was impacted by non-recurring acquisition-related costs of CAD 371,000. Adjusted EBITDA before these non-recurring costs was CAD 50.6 million, compared to CAD 66 million in the same period in 2023, a decrease of CAD 15.4 million, or 23.4%. The decrease in adjusted EBITDA was mainly due to the previously discussed overall reduced gross margins in the quarter and an increase in expenses due to the broad inflationary pressures. Net earnings for the quarter were CAD 17 million, compared to CAD 29.2 million in 2023, a decrease of CAD 12.2 million, or 41.8%. Net earnings for Q2 2024 were impacted by the previously discussed acquisition-related costs of CAD 371,000. Adjusted net earnings before these non-recurring costs were CAD 17.3 million, a decrease of CAD 11.9 million, or 40.9%, due to the foregoing factors. Turning now to the statement of cash flows. The following activities accounted for changes in cash in the first six months of 2024. Operating activities before non-cash working capital changes, generated CAD 68.9 million in cash, compared to CAD 85.8 million in the first half of 2023. The decrease in operating cash generated was largely a result of the previously discussed lower net earnings due to the slowing in the construction materials market. Changes in working capital consumed CAD 127.8 million versus CAD 92.5 million in the first half of last year. Overall, financing activities generated net cash of CAD 93.9 million from equity and debt stakeholders, compared to CAD 8.8 million in the comparative six-month period in 2023. Shares issued net of transaction costs generated CAD 701 thousand of cash, compared to CAD 609 thousand last year, and the company returned CAD 24.4 million to shareholders through dividends paid during the period, largely in line with the same period in 2023. Payment of lease liabilities, including interest, consumed CAD 13.5 million of cash, consistent with last year. The company's lease obligations generally require monthly installments, and these payments are all current. The company borrowed CAD 132.2 million from its Revolving Loan Facility during the first half of 2024, compared to CAD 120.5 million in the same period in 2023. The year-over-year increase in net advances from the revolving loan facility is largely due to the previously discussed working capital changes, resulting in the company's increased facility utilization. We note that the purchase price consideration for the Southeast acquisition in March 2024 was funded by the company's cash on hand and therefore had no impact on our loan facility usage. We also note the company was not in breach of any of its lending covenants during the six months ended June 30, 2024. Finally, we invested a total of CAD 67.5 million in cash in the first half of 2024, which included the Southeast acquisition, as well as ongoing maintenance CapEx, net of proceeds from dispositions. This concludes our formal commentary, and now, and we'd now be happy to respond to any questions that you may have. Thank you. Operator? Thank you. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star one on your telephone keypad. One moment, please, while we poll for questions. Our first question is coming from Matthew McKellar from RBC Capital Markets. Your line is now live. Hi, good morning. Thanks for taking my questions. First, can you maybe just talk about what you're seeing in terms of the landscape for acquisitions and maybe what your sense is of how seller expectations might be trending? Yeah, for sure, and, thanks for the question. You know, we are seeing more opportunities in the acquisition market, as, you know, things have normalized coming out of COVID, and we've had some, you know, runway now behind us post-pandemic, so we're starting to get back into the strike zone. Of course, you know, we consummated the Southeast acquisition this year, and we are working on others all the time. So, the environment is healthy now, I believe, for further M&A activity for our company. Great. Thanks very much. And then maybe next, it's been about a year since the tragic fire in Hawaii, I think. Could you maybe provide some color on how your business there has evolved over the past year? And maybe just talk around your expectations for how business trends through the balance of the year, given the pace of rebuilding activity you're seeing. Yeah, you know, Lahaina is slowly coming back. We've supplied the first school that was rebuilt immediately under sort of a, you know, a hustle order, if you will, to get done. There are some construction coming up with some small apartment buildings that we are contracted to supply, but, you know, no boom in Hawaii, so things do move slowly down there. You know, very tragic, but we'll have a lot of years of rebuild coming out of that, again, through tragedy, sadly. But Lahaina will be a good spot for us both on the electrical side and the wood side, as the years and permitting starts to unfold. Okay, thanks very much. And then last one for me. Could you maybe just speak to what you think the implications for your business might be if we see a Canadian rail strike? Yeah, I think, you know, on our side, we've got pretty good supply, even by, you know, via truck, if that happens, but that would certainly give lumber a shot in the arm in Canada. So if that happens, and we're starting to see SPF creep up, as I know you follow it. So you're seeing it creep up in the cash markets. Everybody's underbought. You know, could happen here, so that will certainly impact the SPF market immediately. And I think we're gonna be okay on the supply side, but heading into fall, you know, it might balance a little bit, depending on how long it goes, but certainly it wouldn't hurt the lumber market at all. Thanks very much. I'll turn it back. Thanks. Thank you. Our next question is coming from Yuri Lynk from Canaccord Genuity. Your line is now live. Hey, good morning, and thanks for taking my questions. So overall, I know that pricing has been a big headwind, but just curious as to how volumes are faring and your expectations for the second half based on what you're seeing so far. Yeah, I think the volume trends will be, you know, continue to follow Q2, you know, flat to off a few percent. It's just a little sluggish. We had some pickup down in Texas with the hurricane that hit Houston really hard and the associated areas. So we did have a volume pickup there, obviously in our fencing items and some decking items for sure. But really, we see this sort of flat, boring pace for the rest of the year, on pace with Q2, with some pricing appreciation on the lumber side is what we're forecasting internally. Kind of came off the bottom a few weeks ago. Thanks. That's very helpful. And just briefly looking at the SG&A line, you've been delivering on the cost containment front. It was just a bit higher this time around, and I understand that partly reflects Southeast, if not mostly. So just curious as to whether there was anything else there that was one-time in nature, or if that's a good rate, good run rate for the business going forward. Yeah, that's. Yeah, it's Jay here, Yuri. That's correct. That was almost 100% driven by the acquisition of Southeast Forest Products in the quarter. So you could expect to see a similar number going forward, of course, keeping in mind that there is some seasonality to SG&A with us. We tend to ramp up some costs in the summer months, and then back off a little bit in the slower, colder months of the year. ... Okay, that's all very helpful. Thank you, guys. I'll turn it over. Sure. Thank you. As a reminder, that's star one to be placed in the question queue. Our next question is coming from Ariana Milin from CIBC Capital Markets. Your line is now live. Hello, good morning. Last quarter, you had mentioned that regional volumes were a bit weaker in Canada. Did you see this persist in the quarter? Yes, we did. All across Canada, volumes were a little bit weaker. We have seen in the third quarter a pickup, kind of mid-July into now in the east and in the west. So it's a bit of a late start, for whatever reason, but the volumes have picked up again. In Canada, we don't see a runaway strong volume third quarter, but certainly it's healed and recovered from that sluggishness of Q2 here in Canada. Okay, thanks. That's helpful. Then how do you see treated lumber prices faring in the South during the second half of 2024? Yeah, I think better than the first half. We're seeing that uptick slowly come now, but no runaway market. You know, no crystal ball here, but we certainly bottomed, I believe, three weeks ago. And it's sort of just depending on the item or dimension that you're looking at, whether it's four by four or, you know, certain different items have more strength than others. But, you know, it's still just a—it's not a good lumber market, as we all know. It's just oversupplied, and if we hear of some more curtailments, I think that's what's going to steady to up the market even a little bit more. But right now, it's just firmed up from where it was, and yeah, it's better. It's not good, but it's better. Okay, fair enough. Thanks. That's all I have for now. I'll get back in the queue. Thank you. Thank you. Next question is coming from Zachary Evershed from National Bank Financial. Your line is now live. Good morning. Thanks for taking my question. Amar, following up on your curtailment comment, could I get your thoughts around sawmill cost curve versus current pricing levels? Where do you think the floor is? Yeah, I think right now, Southern Yellow Pine is just profitable, and SPF is still looking like it's printing in the red for the major sawmillers. So there's still, I think, some pain there. But I think it's getting closer to break-even costs, which is good and bad. You know, the good news is that's good for those great suppliers of ours, but the bad news is it may allow them to keep cutting, which will kind of put a lid back on the price. So a double-edged sword a little bit there, but, you know, we're thinking that we still want higher lumber prices and healthier lumber prices and healthier sawmills. So the trend is still better for all of us involved, and I think they're around those break-even levels to answer your question. Gotcha. Thanks. And so it's really that difference in cost to produce that's driving the bifurcation between SPF and SYP? Yes. I'm not sure if you're gonna be able to disclose, but with Southeast, what's your rough split across commodities in the portfolio now? Yeah, I mean, Southeast is purely treated lumber in the two new markets, of course, Indiana and Arkansas. And for us, you know, we talked about buying this business, you know, kind of midway through here the season. So we don't, you know, we don't have any forecast to disclose really on, on that acquisition. But, you know, we can tell you that it's really a 2025 strategy as we start to reset and go after a whole bunch of different customers that we've already been talking to, for next year. And, and starting to bring in our volume buying strategies before we brought in our chemical pricing to get the synergies that we've talked about. We've integrated the computer systems in under 60 days, and the team did a great job at Doman Lumber to do that. Now we're looking forward to expanding the margins and growing the business into, again, a pile of new markets for us, which we're very excited about, but a lot of that's gonna come next year. That's a helpful color. Thanks. Then just one last one for me on, AZEK. Did that new contract change anything, bring in new business or exclusivity? Yeah. So, AZEK for Canada, we're partnered with AZEK down the U.S. West Coast, and we have a great partnership there. Up in Canada now, we're adjusting to the AZEK brand for our composite materials. It's gonna be a strong brand for our Doman Building Materials division here in Canada, and we're very excited to be partnered with, you know, call it one and one A. Trex is one, AZEK's one A, and growing rapidly. We're very excited about 2025 and the composite materials that we're gonna be distributing across the country here. Thank you very much. I'll turn it over. Thanks, Zach. Thank you. Next question is coming from Ian Gillies from Stifel. Your line is now live. Morning, everyone. Morning, Ian. I think it was exactly a year ago this quarter where you talked about gross margins being in that 14%-16% range. We've obviously gone through a very volatile commodity price market. Do you see any reason maybe to update that view or change it? Because they've generally been quite strong. Yeah, we think that's the neighborhood, and, you know, it just depends on the severity of the volatility of the lumber markets. That's gonna move that around a little bit. Now that we're, you know, through that Covid gyration stuff, you know, this is our neighborhood. And again, the base price obviously being stronger benefits Doman, and if it's weaker, it weakens our gross margin dollars as evidenced here in Q2. We're starting to see the market pick up, but again, that is the neighborhood. I don't think we would adjust that. Jay, would you agree? I would, I would say so. And keeping in mind the 17% in the comparative for last year, that was sort of a high watermark for us, where, where everything kind of lined up perfectly from a gross margin perspective last year. So at 15.7% for this quarter, we're, we're very satisfied with that performance, and it's. It should be pretty typical going forward. That's helpful. And then as we think about the remainder of the year and the working capital release, do you think it's similar to prior, what I would call normal years, or is there gonna be anything unusual because of some of the commodity fluctuations through the first half of the year? No, Ian, we think that's it should be a pretty typical pattern that we'll see in the second half of 2024. Nothing unusual there. You, you get a little bit of timing difference on when it releases, but, we expect that trough on working capital to, as it always does, come, come about in the November, December timeframe, and no reason not to think it will be a typical pattern. Okay. Thanks very much. I'll turn the call back over. Thanks, Ian. Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to management for any further closing comments. Thank you, operator, and thanks everyone again for joining us today. Should you have any other follow-up questions, please feel free to reach out to us. That concludes today's call, and we look forward to speaking to you again on our third quarter conference call. Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.