Good afternoon, ladies and gentlemen, and welcome to the Beacon second quarter 2021 earnings conference call. My name is Mei, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be conducting a question-and-answer session toward the end of this conference. At that time, I will give you instructions on how to ask a question. If at any time during the call you require assistance, please press star followed by zero, and a coordinator will be happy to assist you. As a reminder, this conference call is being recorded for replay purposes. This call will contain forward-looking statements, including statements about its plans and objectives and future economic performance. Forward-looking statements are only predictions and are subject to a number of risks and uncertainties. Therefore, actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, those set forth in the Risk Factors section of the company's latest Form 10-K. These forward-looking statements fall within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding future events and the future financial performance of the company, including the company's financial outlook. The forward-looking statements contained in this call are based on information as of today, May 6th, 2021, and except as required by law, the company undertakes no obligation to update or revise any of these forward-looking statements. Finally, this call will contain references to certain non-GAAP measures. The reconciliation of these non-GAAP measures is set forth in today's press release. I would now like to turn the call over to Mr. Binit Sanghvi, Head of Investor Relations. Please proceed, Mr. Sanghvi. Thank you, Mei. Good evening, and welcome to our fiscal Q2 2021 earnings call. With me on the call today are Julian Francis, President and CEO, and Frank Lonegro, Chief Financial Officer. Our prepared remarks will correspond with the slide deck posted to the Investor Relations section of Beacon's website. After management's prepared remarks, there will be a question-and-answer session. With that, I will now turn the call over to Julian. Thanks, Binit. Welcome to Beacon. It's great to have you on the team. I will now begin on page four of the slide materials, which focuses on our second quarter continuing results. We had one less sales day in the second quarter of 2021 compared to the prior year quarter, so I'll refer to the results on a sales per day basis for better comparability. Our team delivered impressive results in the fiscal second quarter, achieving record sales and adjusted EBITDA. Sales were up approximately 12%, and adjusted EBITDA more than tripled on improved gross margins and operating cost leverage. In addition, we successfully closed on the divestiture of the Interior Products business, which sharpened our focus on exteriors. We continue to be very pleased with the team's execution in the past several quarters and believe that Beacon's performance is a result of their hard work supporting our strategic agenda. Let's discuss the key highlights from the second quarter. Demand continues to be strong. Residential roofing sales increased 21% compared to the second quarter last year. Re-roofing and new construction activity continued to be strong and rebounded well in March after weather impacted many markets in February. The positive housing market fundamentals were also a tailwind for complementary products demand. Encouragingly, non-residential improved sequentially from the first quarter and turned positive year-on-year in March. Price execution delivered solid gross margin improvement. The strong residential market underpinned a favorable environment for the successful implementation of a price increase in February. Similar to August of last year, we quickly and thoroughly implemented our February shingle price increase. The execution of the price increase created favorable timing benefits, which positively contributed to gross margin. Second quarter gross margins of 25.3% exceeded our expectations. We continue to see inflationary pressure across most product categories, but we're also confident we can capture additional pricing opportunities to more than offset cost headwinds. Productivity gains and cost discipline have generated substantial operating leverage. We continue to be proud of our team's ability to manage costs during the past four COVID-impacted quarters. One of our central goals as a leadership team is to aggressively manage costs in all demand environments. The significant operating leverage that we experienced in the second quarter demonstrates this commitment and the progress we've made towards improving our cost structure. Labor and fleet productivity initiatives are showing results, evidenced by the fact that Q2 adjusted OpEx dollars increased by less than 2% year-over-year, despite the double-digit increase in total net sales. Lastly, the past few months have been transformative for Beacon. We focused the business portfolio, created significant financial flexibility, and have assembled a new leadership team. First, the divestiture of the Interiors business returned us to being a focused leader within the exterior building products distribution. Approximately 80% of our continuing business is now within residential and commercial roofing. These are very attractive markets, as more than 80% of roofing is classified as repair and replacement, with the majority of that spend being non-discretionary. Secondly, we've restored financial flexibility through a combination of debt pay-down from the proceeds of the divestiture and a series of refinancing transactions that will be finalized this month. The results are a stronger balance sheet, lower cash interest, a net leverage of 2.9x at the end of the quarter, half what it was a year ago. We now have ample ability to invest in value-creating growth opportunities going forward. Third, we filled key leadership positions bringing talent and new skills to our team that will drive our organization performance to the next level. We have announced the appointment of Christine Stroh Reddy as General Counsel and Corporate Secretary, Sean McDevitt as Chief Human Resources Officer, and most recently, Jonathan Bennett as Chief Commercial Officer. The capabilities that these individuals bring to Beacon are essential to our desire to innovate, deliver growth, improve operational performance, and drive shareholder value. Next, please turn to page five of the slide deck. In recent quarters, we provided updates for each of our four strategic initiatives. These initiatives remain central to our improved sales growth, operational efficiency, and profitability. Our approach is systematic, and our plans measurable. There are also additional benefits which are more qualitative, yet play an important role in adding value for customers and differentiating us from competitors. Let me begin with organic growth. Our sales and operations team have thousands of interactions with our customers on a daily basis. We are focused on improving both the number and the effectiveness of these interactions. We continue to invest in sales training programs, marketing, and value-added tools that improve our team's ability to manage existing and new customer relationships. We've established targets for our sales team, including the number of interactions daily, and we know that meeting these targets strongly correlates to driving overall company sales performance. Through the first half of fiscal 2021, we have maintained the accelerated pace of customer contact set in 2020 and are confident that it will continue to be a driver of our organic growth. Our industry-leading digital platform. Digital is a clear differentiator in the marketplace for Beacon. I'm pleased to report that adoption rates continue to rise and now make up more than 15% of net sales in March. This compares to a run rate of 11% for exterior product sales during the final months of fiscal 2020. As mentioned on previous calls, we have continued to leverage the customer adoption rates that accelerated during the early COVID environment and are confident our current year and long-term growth trajectory will enhance our leadership. Digital is a great example of how a sharpened post-divestiture focus is paying dividends for growth. Our organization is now devoted to developing exterior products offerings on the platform. Next, moving on to our On-Time and Complete network. Our OTC strategy leverages the density of our branch network in larger MSAs. We operate in 58 distinct markets and have more than 250 branches participating in OTCs. The OTC provides four key benefits. First is improved customer service, as we have greater flexibility to deliver from the branch with the best combination of product and service to support the customer's needs. Secondly, a lower cost to serve. Since we can optimize across a network of branches, we get reduced delivery time and mileage, improving labor efficiency and reducing fleet costs and emissions. I'm pleased to report that we have reduced hours per delivery by 5% and reduced gallons of fuel per delivery by 4% in the second quarter compared to the prior year period. Third is reduced inventory levels. We previously indicated we can permanently reduce our inventory by $50 million-$100 million as we optimize across our OTC branches and remain confident that we can hit that target. Fourth, we can accelerate our talent development. Our OTC creates opportunities for our people to explore a variety of roles at Beacon and build increasing levels of responsibility, allowing them to build fulfilling careers at our company and reach their full potential. I want to update our branch operating performance targets. I've talked extensively about our focus on the bottom quintile branches and our goal to significantly improve their operating performance. We've developed a diagnostic tool and a reporting cadence that places emphasis on structural change to ensure that improvements are sustainable. We shared in our prior earnings call that we achieved more than $20 million year-over-year bottom-line improvement in fiscal 2020, and now expect at least $30 million year-on-year improvement from the lowest quintile branches in fiscal 2021, up from the previous guidance of $20 million. We continue to see results from this initiative and remain on track to deliver on our target. Each year, we will continue to focus on driving sales and operating improvements to bring these branches over time up to at least our company average. To summarize, the strategic initiatives continue to gain momentum and are delivering measurable results. The divestiture of the interiors business has allowed us to focus on improving the performance and productivity of our exterior branches and driving growth in our core business. I'll pass the call over to Frank to provide a deeper focus on our second quarter continuing results. Thanks, Julian. Good evening, everyone. Turning to slide seven, we achieved over $1.3 billion in total net sales in the second quarter. We had one less sales day in the second quarter of 2021 compared to the prior year quarter. I will speak to our sales drivers on a sales per day basis for better year-over-year comparability. Strong demand within our residential roofing end market drove sales higher than we had anticipated in our previous outlook commentary. Weather disruptions impacted a number of our markets in February, which was followed by a rebound in March, a reflection of the strong fundamentals underpinning residential demand. Our continuing business finished with a strong 12% daily sales growth for the quarter, with approximately 40% due to price and approximately 60% due to volume. Residential roofing sales were up nearly 21%, a robust demand for new construction and repair and remodeling. The February shingle price increase also contributed to the residential revenue growth. Non-residential roofing sales were down less than 3%, as declines not only continued to narrow, but also finished the quarter with a strong March. This uptick, which has continued into April, has us cautiously optimistic that the worst is behind us in commercial roofing, especially as we begin to cycle last year's COVID-impacted comparables. Complementary product sales increased 11% in the second quarter. Keep in mind that our complementary product category has approximately 80% residential and 20% commercial exposure. Complementary benefits from the residential market tailwinds, including demand for key products such as siding, lumber, windows, and doors. Our non-residential product offering within complementary is primarily waterproofing, which like the broader non-res category, was down year-over-year. Our complementary products are distributed through our branch network and share overlapping customers with our residential and non-residential roofing businesses. Turning to slide eight, we'll review gross margin. Gross margin improved to 25.3%, or 270 basis points year-over-year. The strong year-over-year increase was driven by favorable price cost as well as favorable sales mix. Price cost was positive by approximately 230 basis points in Q2 due to the successful implementation of our August and February price increases and favorable timing. By comparison, we experienced 70 basis points of year-over-year price cost benefit in Q1. Favorable product mix in the quarter also contributed to the year-over-year margin lift as we experienced stronger sales of our higher margin residential roofing products. There have been additional price increases announced across a broad range of our products, including the April shingle price increase mentioned by Julian. We are approaching those increases with the same level of rigor and execution we demonstrated in our approach to the August and February price increases. Now shifting to our operating costs. Under Julian's leadership, we have made measurable progress in operating efficiency, and it will continue to be a focus at both the corporate and local level. We are leveraging many of the changes we implemented in response to COVID and are capitalizing on the opportunity to apply those principles in a stronger demand environment. Our second quarter results demonstrated our focus on managing expenses in times of growth. Adjusted OpEx was $278 million, a $4 million increase compared to the year-ago quarter, mainly due to higher incentive compensation. Recall also that we had one fewer payroll day this year versus the year-ago quarter. This less than 2% increase in adjusted OpEx we experienced in this year's second quarter, combined with double-digit sales growth, yielded a 180 basis point reduction in our OpEx to sales ratio year-over-year. This operating leverage is a testament to the dedication of our field leadership and the thousands of tireless Beacon team members delivering value for our customers every day. We continue to focus on the elements of our business that we can control, and improving productivity within our largest cost centers, including labor and fleet, is a major focus for Beacon. As you can see, we generated a 21% increase in sales per hour worked year-over-year. This key productivity measure demonstrates that we are becoming more agile as an organization and our productivity initiatives are gaining momentum. In terms of other operating costs, we continue to benefit from reduced travel and entertainment spending, which remains well below historic levels. As mentioned previously, we would expect a portion of these expenses to come back over time, but they are unlikely to return to historic levels as we continue to leverage greater sales effectiveness and operating efficiencies. As we go forward, we will continue to implement improvements throughout our organization as we fully embrace a continuous improvement mindset. Turning to slide nine, we will review our financial flexibility. Upon final adjustments, we expect the divestiture of the interiors business to yield net proceeds of approximately $750 million. We have already used approximately $600 million of this amount to reduce gross debt, which we have paid down by $1.4 billion year-over-year. As many of you know, we have been effectively absent on the acquisition front the past few years, dedicating our substantial cash flow to reducing our net debt leverage. We are pleased to report that we have surpassed our 3x target, achieving net debt leverage of 2.9x trailing EBITDA as of March 31st, well ahead of our expectations. This represents a reduction of more than 3x versus where we were just a year ago, and the lowest level since the 2018 Allied acquisition. We launched a comprehensive refinancing in April that will significantly change our debt portfolio. Upon closing in May, our weighted average maturity will be nearly seven years. We will have no meaningful debt due until 2026, and our cash interest will be about a third lower on a go-forward basis. Even with $200 million of additional debt paydown anticipated in the current quarter, we will have liquidity of more than $1 billion, giving us ample ability to invest in our core business. To wrap up, we're very excited about our performance in the second quarter. We have significant momentum as we enter the most important part of our year, and we are laying the foundation for Beacon to become a leader in our industry. With that, I'll turn the call back to Julian for his closing remarks. Thanks, Frank. Before we turn the call over to Q&A, I want to update our fiscal 2021 outlook. Please reference page 11 of the slide materials. In April, we continued to see strong sequential demand improvements and even stronger growth year-over-year versus a COVID-impacted prior year period. The housing market continues to provide tailwinds for both repair and replacement and new construction markets. Residential roofing demand and the residential exposed areas within our complementary products will continue to benefit from these fundamentals. Commercial builder segment continues to improve, and we would expect activity to follow, continuing the positive trends that we have seen in March and April. We've implemented our April shingle price increase with the same level of rigor as the August and February residential roofing price increases. Our sales growth in Q3 will reflect the positive contribution from our August, February, and April increases, as well as several smaller increases within other product categories implemented during the past several months. For our fiscal third quarter ending in June, we expect total sales growth of mid to high teens, reflecting our continued confidence in the underlying demand in residential markets and an improving outlook for commercial. Our emphasis remains on pricing execution and operating efficiency as we enter the construction season. We expect a meaningful year-to-year gross margin increase of approximately 200 basis points to around 25.8% in Q3. For the full year, we now expect growth in the low double-digit range, assuming no additional supply chain disruptions. We are now targeting fiscal 2021 adjusted EBITDA between $560 million and $585 million, which represents a significant increase from the outlook we provided on our Q1 call. While uncertainties continue to exist, this outlook reflects our expectations for a combination of strong sales growth, gross margin gains, and favorable operating leverage. More broadly, there are many levers within our control as we continue to execute on our strategic initiatives. We will build upon the gains we've achieved in the first half of the year and look forward to a very successful 2021. With that, operator, we're now ready to open the line for questions. Ladies and gentlemen, if you wish to ask a question, please press star followed by one on your touch tone telephone. If your question has been answered or you wish to withdraw your question, press the pound key. Each caller is limited to one question. First is Mike Dahl from RBC Capital Markets. Your line is now open. Hi, this is actually Chris on for Mike. Thanks for taking our questions. First, let me just touch on the success of the April price increases. Any way you could maybe provide additional quantification of how much of that announced pricing was realized, and then what your thoughts are on relative pricing power for the summer increases announced? Thanks for your question, Chris. It's still early in terms of the execution of that. It's not as though we throw a switch and everyone moves up at the same time. There's plenty of opportunity for us to continue to see improvements. I think that our prepared comments indicated that we still believe that in this environment, we're going to be able to more than offset the cost inputs. I think that it should be accretive overall. Again, it's still early on from our perspective in terms of the execution. There's multiple. We saw it across residential shingles. We've seen it commercial increase. We've seen increases in other exterior products. There's multiple things going on in April, quite frankly. Chris, it's Frank. To your point around the summer increase, obviously, we're aware of the manufacturers, and what they put out there. We have not made our announcements yet. Understood. That makes sense. For my follow-up, I was wondering if you guys could maybe provide a bit more detail on the monthly cadence embedded in your third quarter guide. If April was up 40% year-over-year, it would imply that you're expecting some moderation down to potentially high single digit, that seems fairly conservative. Just wanted to get your bit of thoughts on that. Yeah, sure. You'll remember that we're really on comps versus last year. April was the bottom of the market last year as COVID impacted, and we sort of locked everything down and the market changed. I think we saw sequential improvements last year as April continued. Obviously, we saw that also continue through May last year and June last year. I think more of what you're seeing in terms of our outlook is rather improving last year until the comps get harder as we go forward. I don't think it's a diminution in any of thing we see in the market. It's more the base off which we're calculating the improvement from prior year. Got it. Makes sense. Thank you. Next is Brian Biros from TRG. Your line is now open. Hey, good afternoon. This is Brian on for Kathryn. Thank you for taking my questions. On the non-res environment, can you talk about what you're seeing specifically in the Northeast region around New York and Boston? Kind of seems that region is about back to pre-COVID levels for certain companies based on some of the conversations that we've had with our contacts. I guess I wonder if you guys are seeing the same thing up in that region. Brian, thanks for the question. Obviously, again, we're really coming off the base of last year, and obviously the Northeast was the one that was hit most dramatically, not just in April, May, but through most of the year. From Philadelphia up through Boston was really impacted by COVID last year. Are we seeing a significant improvement in that market? Yes. Clearly we are. Now, it's difficult to really get a handle on the specifics on a market-by-market basis. That is a particularly strong area for us in the commercial construction arena. We like our position up there. I think we are benefiting from the recovery. I still think overall, as we've said, the markets have been down year-over-year so far in commercial buildings across the country. I would say that we are becoming a little bit more optimistic at this point in time than we have been previously on commercial. I think we're starting to see more activity. There's also a longer build cycle in commercial. I still think there's going to be nowhere near the type of improvement we're seeing on the residential side because of the sales cycle and the build cycle is so much longer. Understood. Maybe just on the resi side from the demand, I guess, is there a way to parse out if there's any kind of weather demand impact from all the numerous weather events in the quarter, and if that was a material driver or if it was just general overall better environment and the pent-up demand? Yeah. We certainly saw impact from last calendar year's hurricanes that hit the Gulf. Also some of that has continued to come through. Obviously, the southern part of the U.S. gets less impacted by cold weather in the winter. We certainly have seen that come through. If you were referring to weather that we've seen this year, we've not seen anything come through yet. I would say it's going to be really difficult to tease that out this year from the underlying demand that we see from new construction and general repair and replacement anyway. Certainly, we expect to see continued roofing activity, building construction activity from the storms we saw last year, both in the Midwest and in the Gulf Coast. Thank you. We have our next question from Michael Rehaut from JPMorgan. Hi, good afternoon. This is Elad Hillman on for Mike. Thanks for taking my questions. First, Q2 gross margins were significantly higher than you'd guided last quarter, and it seems like a lot of it was driven by price cost. Maybe you could talk about where you saw the greatest areas of upside relative to your original outlook. Yeah, I think it was largely on the residential side to your point. We went through the August price increase. We learned a lot in terms of our own execution there, and you're seeing us apply that in February, and you'll see us apply that in April as well. I'd say it was largely on the residential side. Again, we approached the increases on the commercial and the complementary products with the same level of rigor and execution. As Julian and I said in our prepared remarks, the end markets there, depending on whether you're on the res or the non-res, are a little more receptive or a little less receptive to the price increases. I think I'd keep your focus on the residential piece. Got it. Okay. Thank you. That's helpful. Just moving over then to, kind of on shipments more or on volume. If resi sales were up 19% this quarter and sounds like pricing was quite positive, ARMA shipments were up 27%, I was wondering how your purchasing activity kind of compared to ARMA shipments this quarter and how that compared to sell-out trends. Yeah. We were essentially perfectly aligned on what we bought with ARMA, which is consistent with essentially where we've been the last couple of quarters. Remember, the manufacturers have us all on allocation. I don't think you're going to see huge shifts in terms of market share on the purchasing side. I think you should expect that to continue. As Julian and I have talked about this, our belief is the manufacturers are pretty much running full tilt. You could expect something $40-ish million per quarter. Obviously we're looking for our fair share as a result of that. Yeah, we purchased very much in line with that. In terms of your question around residential asphalt shingles specifically, our volumes were up 14%. That's what we call the out-the-door volume. That's what we ship to our customers. Hopefully that gives you a little bit of a flavor. The difference between the year-over-year revenue and that volume number's a combination of price and mix. Great. Thank you. We have our next question from Keith Hughes from Truist. Your line is now open. Thank you. We've talked a lot about price increases in residential. I guess my question is the pricing and complementary, I think some of those products are going up a lot too. If you could talk about that and what the price cost dynamic looks like in that segment. Sure. I'll touch on that, Keith. I think the price cost dynamic across all of the categories today is positive. Whether it's the residential non-shingle categories that we participate in, there has been a lot of activity. There's probably a little more noise in those numbers. There's some mix. There's some regional specific categories in there. Generally speaking, price cost has been positive across all those categories as well. Okay. Thank you. Hey, Keith, just a little bit of detail might be helpful for you. If you think about our overall price cost of being plus 230, you should handicap that as sort of residential being above that and commercial and complementary being positive, but below that. That's the year-over-year delta you're saying, correct? Price cost in the quarter year-over-year. Correct. Okay. All right. Thank you. Oh, just one quick one. There was a commentary on 60% volume, 40% price. Was that referring to a segment or company-wide? That wasn't really clear. Company. Company-wide. Okay. Thank you. Next in line is David Manthey from Baird. Your line is now open. Hi, this is Quinn Fredrickson on for Dave. Just wanted to talk about OpEx sequentially. Obviously, really strong performance here this past quarter. Sounds like you're expecting a lot of the productivity programs to continue. Just are there any step-up in expenses outside the typical seasonal increase that we should be aware of? I know that you added some headcount this past quarter. Do you feel you have the capacity to meet demand, with what you have now or will you look to add more? Thanks for the question, Quinn. Look, this time of year, we ramp hiring pretty significantly as we go into the year. I think along with, not just others in the construction industry, but others across the entire economy. It's certainly difficult to get all of the help we need on the days we need it. I don't think that is translating into lost sales in this demand environment. I think we're able to get what we need. We do have a little bit of flexibility, but it certainly is challenging to add all of the heads you need on the days you need them. We're certainly making progress and we're certainly adding. I'd also tell you we're not adding as quickly as our sales are growing. We do expect to see leverage from the entire organization and believe, like I said, as you correctly said, that our productivity initiatives are yielding great results for us. The weird dynamic for us in Q3 is going to be the year-over-year because we're lapping the COVID quarter where we had, obviously, a lot of focus on both temporary and permanent cost reductions last year. Just factor that into your model. To Julian's good point, we're very focused on continuing to generate labor productivity. The sales per hour work measure that he put in place is really continuing to drive management behavior in the field, and it's being quite helpful. Keep in mind that we will be adding cost back in when we have sales growth year-over-year of mid to high teens as Julian guided to. That certainly brings with it some cost pressure as well. Right. Thank you. Then just a final question. Just wanted to ask about the digital progress that you guys made this quarter. Just anything you would call out with that ramping as quickly and also with adding some new leadership focused on that, just any key goals or metrics that we should be focused on from here? Thanks for bringing that up. Look, we've seen a step change this calendar year as well. We'd set an aggressive target, a sort of 10% run rate in September last year, which we hit as a total company, was slightly higher on Exteriors, slightly lower on the Interiors business. But we've seen another step change this year. And to go from sort of 10% to doing 15% of sales in March through that channel has been really encouraging to us. I think it's starting to yield great benefits. Like I said, it's clearly a differentiator. It is something we're going to continue to focus on. I think the talent that we're bringing into the organization is going to have an increased focus on that. Our marketing team is being built out. We're focusing on our ability to generate more through that. Our sales force is incented to do so. We think it's an incredibly powerful competitive tool, as well as a great convenience and aid to our customers. We continue to believe it's going to be a significant portion of our growth agenda over the next several years. Thank you very much. Next is Phil Ng from Jefferies. Your line is now open. Hey, guys. Congrats on a really excellent quarter. Frank, last quarter, I believe you mentioned free cash flow conversion is roughly about 60% of EBITDA. Is that still a good way to think about things? Then with a much-improved balance sheet now, can you highlight some of your big priorities in terms of capital deployment? Julian, if I heard you correctly, you were talking about investing for growth. Is that going to be more on the M&A side or organically? Hey, Phil. Thanks for the question. I think that 60% handle for free cash flow conversion to EBITDA is still a good number. The refinancing, as that takes hold as we get into next year, that should be helpful to that number, assuming all other things equal. Capital allocation clearly is a threshold question for us now. We haven't even closed the refinancing transaction, we're just getting to these leverage levels, which open up a fair amount of opportunities for us and, again, active conversation, which I would say is across the board. We're looking at everything from M&A to shareholder returns, as well as paying back additional debt. We've got all those options on the table. In terms of the overall M&A focus, the way that Julian's thinking about it is largely a market-by-market focus. All battles are fought locally at the end of the day. We've got to make sure we've got a good competitive position in the best markets. We'll be looking at it from that perspective. We are staying true to our knitting. We know what we're good at in terms of residential and commercial roofing. We'll likely stick to our knitting in those places. We are looking at the product portfolio. In some places, we offer some of those complementary products and have a leading market share there. In other places, we're just not as penetrated. We'll be looking at it from that perspective, too. That's really helpful. Julian, since you've embarked on this improving the performance of these underperforming branches, you've been getting $20 million-$30 million of improvement each year. One, is that a sustainable level? When we think about OpEx leverage going forward, is there a good way to think about it? Appreciating you got some of these costs coming back, have you guys been really diligent in terms of how to manage that? Yeah, look, certainly, I've been thrilled with the progress we've made on those lower quintile branches that we've talked about. I've always deliberately talked about the lowest quintile. We will always have a lower quintile branches, however good they're performing. This is going to be a continuous improvement initiative that we're going to drive the business towards. I think obviously, as I joined the company 18 months ago, I saw significant opportunity there. The initial guide was sort of $30 million-$60 million over a timeframe. I'd be lying if I said that all of this was due to our improvement initiatives. Clearly, the market's giving us some tailwind and giving us some opportunity. It's also highlighting the opportunity we really have to drive efficiencies. I think that, as I've said a number of times now, we've built a diagnostic tool that we review very frequently to focus attention on our lowest quintile branches. We see steady improvement in many of them and dramatic in a few. I think that as we start to improve a lot of these branches, it gets harder and harder. I would expect that to be diminished to some degree over time. I really do think that it's been somewhat transformative to really think about this and get that focus. I do think that improvements in those branches and continuous improvement across the entire company is not only possible, but likely. Okay. Super helpful, guys. Thanks a lot. Next is Ryan Merkel from William Blair. Your line is now open. Hey, guys. Thanks for taking the question. Frank, you mentioned that the OEMs have you on allocation. Just what are lead times today? Are we really looking at next winter when these OEMs will catch up? Yeah, I haven't seen any meaningful push-out of lead times based on where we were last quarter. As I think I've mentioned, and Julian's mentioned a number of times to both analysts and investors, the manufacturers are hand-to-mouth. They're shipping everything that they are making, and with the exception of the slow season, so-called our fiscal Q2, we would expect to ship everything to our customers that we receive from the manufacturers. We think we're going to be in this environment certainly through 2021. 2022, assuming the demand environment holds, we get a little bit of storm activity, we get a decent winter, this thing could hold for a couple of years. We're excited about the opportunity that this environment presents to us, and you're obviously seeing the execution on both the gross margin and the OpEx side, which is really helping deliver the EBITDA margins and getting those on the trend that we are looking forward to achieving. Yep. Yeah, the pricing environment is clearly very good, and it sounds like it's going to continue. On non-res, you mentioned that you think the worst is over. Just what are you seeing? Is it re-roofing jobs that were delayed coming back? Is new construction coming back? Just talk about the profile of what you're seeing there. Sure. Thanks, Ryan. On the commercial business side, when you think about it, clearly right now you've got re-roof that's coming back. That's something that's obviously really hard to delay. The building owners and the managers, they're going to put on a new roof if they have to because there's damage or leaks, or it's aged out. I do think we still see a little bit of an air pocket in some areas of the commercial construction market. New construction almost stopped. Stuff that was in process really slowed down. I don't think anyone was really thinking about how they were going to put up new office buildings in the last six months. I think people have been managing that. There's sectors of the construction market that have withstood this probably better. Data centers, warehouses, that type of category has remained quite strong all the way through. All of those still have roofs on them, obviously. That's been good. I think it's a little bit of a mixed bag. I look very closely at the Architecture Billings Index, that finally went above 50, I think, in the last report. I think there's sort of green shoots on the new construction site. As we keep saying, a good chunk of our business is non-discretionary, so we're going to see it continue. I think that we're now probably a little bit more positive about the new construction market, but it's a long cycle in commercial construction. It's not the sort of 60, 90 days in residential. It's six months to a year or longer. Great. Thanks. Next question is from the line of Ketan Mamtora. Your line is now open. Thank you. Congrats on all the progress. Very impressive. Maybe to start with, I'm just curious how much of the February price increase on the resi side was there in your January to March quarter, the fiscal second quarter, and how much of it is left to be realized in the coming quarters? Is there a way to think about the cadence of the April price increase? Yeah, Ketan. In terms of the timing benefit, the timing benefit is going to last somewhere between 60 and 90 days as you replenish inventory. The actual price itself benefit, we did a really good job in February, learning from August, to ramp the entire branch network up quickly so that we were able to implement the price increase very quickly across the branches. More quickly probably in February than we did in August. I believe what you'll see in April, we will ramp that or have ramped that more quickly than we did in February. We are learning a lot as we go and implementing those learnings as we apply each price increase. The speed with which we are able to achieve the price increase is getting better. Understood. That's helpful. Coming back to capital allocation, you said all options are on the table. I'm just curious, with the strength that you all are seeing, by the end of this year, your leverage will be significantly lower than what you have right now, which is below your target. Is there a way you think about building cash cushion absent any opportunities? Another way, do you have a leverage target in mind below which you think, absent M&A, you need to return cash to shareholders? Again, thanks for the question. as Frank said, we're not yet closed with the refinancing. We've certainly got all options. We're going to discuss this with the management team and obviously with our board of directors with regard to how we should think about that. we'll be getting back to you with more specifics as we get later in the year. Ketan, one final point on that one. we set up the refinancing, one of the things that we did was created an initial draw on the ABL revolver, which gives us the ability to, in essence, prepay without penalty some debt while maintaining liquidity and additional dry powder. we've tried to set up a mechanism to make sure that we have the ability to deploy capital when the options are decided and the opportunities present themselves. Got it. Appreciate the thoughts, and good luck in the back half of the year. Thanks much. Next is Garik Shmois from Loop Capital. Your line is now open. Hi. Thanks for taking my question, and congrats on the quarter. Just given the magnitude of the gross margin improvement and the improved outlook going into 3Q, just how should we think about gross margins? Maybe a little bit more long term, do you think this level is sustainable when we look out into next year? Thanks for the question, Garik, and thanks for the sentiments. Certainly, we've been impacted positively on the gross margin side by the price increase and our ability to pass through those price increases and improve our price-cost position. Clearly, the market's giving us some tailwinds to do that. I think we're also improving our capability in this space. I think that this is the thesis that we had maybe 18 months ago on how the market was going to shape up. Our margins had been compressed because of an interesting dynamic where you had asphalt inflation and a declining market where we got squeezed in the middle of that, and our thesis was in a better market will improve our margins anyway. It's difficult to tease out one from the other right now, but I do think that we've got the ability to sustainably improve our margins from where they were certainly 18 months ago. Obviously, we've seen the benefit over the last the last 12 months of a strong market where we've been able to do that. Fundamentally, when you think about a lot of the things that we've put in place and our ability to continue to sustain and in fact improve our margins, we think that there's plenty of opportunity to do that, whether it's through our private label business expansion, whether it's through our digital initiatives, whether it's through improving customer service and creating value and selling that value of the Beacon Operating System that we're developing here. We think there's a lot of ways that we can do that. I think that we're in a great place. Certainly, we've got some tailwind behind us. I think we're executing very well. Behind all that, we're also learning a lot about how to operate better in this environment. Obviously, from where we were two years ago, the ability to pass through increases and take the opportunity to improve our margins is something that's radically different now than it was back then. Yeah, for sure. Let's follow up questions on, you talked about inventories and allocation, obviously, on the residential roofing side. It's pretty well known by now, but can you speak to your inventory positions in complementary and as we get into the season, given the strong demand environment, is there any risk of stock-outs that are material? No, I don't think so, Garik. On the residential side, let me just walk you through. On the residential side, there's a couple elements to the inventory build there. When you see the dollar values in the 10-Q, some of that is just increasing cost of goods sold because of the manufacturers, and some of it's volume given the dynamics of February. We feel like we're in a good position from a shingle basis as we get into the busy part of the season. We're looking for every load we can get of additional shingles to make sure that we can serve our customers. We feel good about where we are right now. The commercial side, again, Julian gave you a more cautiously optimistic view of the second half. We have inventory there and orders in place to make sure that we can fulfill that demand and feel the same way on the siding. A lot of the windows and doors are obviously special order. We feel good about siding, and we feel good about the lumber. That's just a side product that we offer to our customers as well. We have a very active supply chain group. They're doing a great job in working with the manufacturers to make sure we understand exactly what the timelines are and making sure we communicate those with our customers. Right now, and you heard Julian say in his prepared remarks around the guidance that, assuming we don't get anything additional, that we feel like we're in good shape to support the guidance we put out there. Great. Thanks for the help. The one thing I would add, Garik, is that, and Frank referenced in my prepared remarks, we did say, absence any significant supply chain disruptions. We have seen in pockets some supply chain disruptions. We think those were tied to the February weather that hit Texas and caused some outages down there in some of the raw material supply lines. That's trickling through right now. It's not significant, but given the demand environments, those tend to ripple pretty quickly through to the front end of the supply chain right now. Next is Joseph Nolan from Longbow Research.Your line is open. This is David MacGregor. I hope you can hear me okay. Good afternoon. I wanted to start off by just asking you about the online sales program, and you talked about a 15% increase, and you made reference to the digital opportunity when you were talking earlier about gross profit upside. I'm just trying to get a sense of, given that it is a premium profitability revenue stream, how does that gap versus the walk-in business play out? Is this a leverageable revenue stream from a margin standpoint? Secondly, as well, just as commercial comes back, how do you think about acceptance among commercial contractors for your online? Do you think that you can continue to maintain growth with that segment of the market as well? Thanks for the question, David. There was a lot to unpack in that question, so let me start with. Sorry. No, that's fine. First of all, we're up to 15% from 10%. It's not 15% growth, it's actually we've gone from 10% to 15%, so 50% growth in that channel, and that's significant, obviously. Let me be clear. We do not charge different rates for the products through any of the channels. We have an omni-channel approach. It is not that. We are able to make sure we capture the full basket. Often when we see people either walk in to our branches or place orders over the phone, sometimes what we find is that items are left off their list. They forget it should've been 10 boxes of nails and screws and six vents, and they leave some of those things off. Online, we are able to better capture that. We see that as an opportunity to make sure that we're giving better service, make sure that the customer doesn't have to go out and make another run to a local store to pick up those items. Obviously, it's a better basket size for us. But also often those tend to be good margin products as well. Secondly, we see online our inability to offer our private label products differentially. We create templates for our customers to make the ease of ordering simple for them. We certainly want to make sure that we're positioning our private label products, which have higher margins differentially. There is a sustainable, we believe, difference between the two. Not because we charge different rates, but because the mix is different, the basket size is different, and it's a more complete order. As we see this channel grow, we do think that it's a meaningful difference. As importantly, if not more importantly, we think it's a real competitive differentiator, certainly against our largest competitors, but even more so against some of the small fragmented customers around the country. If you're a one or two branch local distributor, I just don't see how they can afford to build out the type of capabilities that we have. We're able to leverage those capabilities across 450 locations. Obviously the cost becomes manageable for us. As a competitive dimension, we think this is also very significant opportunity for us. We are certainly not satisfied with 15% of sales going through this channel. I would love to see it much higher. Yeah. What about acceptance amongst commercial contractors? How do you feel about that as that category comes back? Generally commercial contractors are larger, more sophisticated businesses than the residential commercial contractors, in terms of their operations. In some cases, we're able to sort of tie into them through EDI, API. Actually, we think it's a significant opportunity to be well-positioned with them as well. We see no issues there whatsoever. Good. There's a follow-up question. I guess, just you addressed earlier the whole notion of OEMs and the allocation that they've got distributors on right now. I guess, as you think about capacity, sort of ARMA capacity, what's your best estimate on the growth in ARMA capacity over the next 12 to 24 months? Are you seeing capacity announcements or just maybe gradually grinding away at de-bottlenecking, but just to what extent do you think we could see incremental capacity brought to market next 12, 24 months? I think you're best off asking my suppliers that question, to be honest. I think they understand the market dynamics. I'm sure they're working hard to, as you said, de-bottleneck. I think a lot of the supply tightness right now is also associated with the capacity that was taken out at the start of COVID. Everyone sort of reacted by taking out that production to make sure the cost structure was right. The rebound in demand, I think caught us all unawares. I think that the supply tightness you see is that. I came from the manufacturing side. You've always got sort of 1% to 2% improvement in productivity every year. You're trying to run the lines quicker. I'm sure they're all working on that. It ends up being a regional game. Shingles particularly don't ship very far. Right. Even if someone puts it down, it's a local market supply and demand situation as opposed to a national solution. Mm-hmm. Thanks, Julian. That concludes the questions. Now, I would like to turn the call back over to Mr. Frank Lonegro for his closing comments. Actually, it's Julian. Thank you, Mei. Thanks everyone for joining this evening. We appreciate your support. Certainly as we continue to face the pandemic, we hope that certainly our employees, customers, suppliers, and investors are all keeping safe and healthy in these continuing challenging situations. Again, thank you for listening. Thank you for your interest in Beacon. Have a wonderful evening. This concludes today's conference call. Thank Thank you for participating. You may now disconnect.