Good afternoon, ladies and gentlemen, and welcome to the Beacon third quarter 2021 earnings conference call. My name is Nye, and I will be your coordinator for today. At this time, all participants are 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. As a reminder, this conference call is being recorded for replay purposes. This call will contain forward-looking statements, including statements about the company's plans and objectives, identified by the fact that they do not relate strictly to historic or current facts, and often use words such as "anticipate," "estimate," "expect," "believe," "will likely result," or "may." 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, 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 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. All described by law. The company undertakes no obligation to update or revise any of the forward-looking statements. Finally, this call will contain references to certain non-GAAP measures. Non-GAAP measures are 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. On 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 and management's prepared remarks. There will be a question-and-answer session. I will now turn the call over to Julian. Thanks, Binit. Our fiscal third quarter results are outstanding. At the s ales increased approximately 21% as revenue grew across all three product categories. Adjusted EBITDA was more than 75% higher on significant gross margin for the quarter. We continue to be thrilled with our team's execution. Beacon's performance is a result of every employee's hard work serving customers and living our values. I will begin on page four of the slide materials and discuss the key highlights from our third quarter continuing results. Demand trends remain strong. Residential roofing sales in the quarter last year. New construction demand continued to be strong. The positive housing market fundamentals also provided a tailwind for our team to drive complementary product sales up 35% compared to the COVID-impacted prior year period. Our price execution across all product categories delivered strong gross margin improvement, a critical focus area for us over the last 12 months. Inflationary pressure across most product categories. In this environment, it's critically important to stay ahead of the cost curve. With cost increases across a number of product categories 60 days apart, our focus has been on driving great execution at the branch level. Third quarter gross margins expanded to 27.6%. We expect to see cost pressure to continue, but are confident that we can execute to capture additional pricing to offset the headwinds. Our actions in fiscal 2021 have positioned us for growth. These include assembling a new executive leadership team, optimizing our inventory levels, and investing in new capacity to meet the anticipated growth. Let me touch briefly on each of these. Four, we restored financial flexibility through a combination of debt paydown and a series of refinancing transactions finalized in May. The results are a stronger balance sheet, lower cash interest 0.4x at the end of the quarter, less than half what it was a year ago. We now have ample ability to invest in value-creating growth opportunities going forward. As a leading distributor, our customers to reliably deliver high-caliber service in any demand environment. We have proactively invested in inventory to ensure we are able to meet anticipated demand as we see it develop in local markets. Our backlog metrics are strong and continue to grow. For example, open orders, a key metric of future demand, is up significantly both year-over-year and sequentially at the end of the third quarter. Our growth and transformation story has allowed us to attract highly talented C-suite leaders, bringing the team new capabilities in human resources, legal, and us for the future. These individuals bring great talents to Beacon that are essential for our desire to innovate, deliver growth, improve operational performance, and drive value for stakeholders. Our positioning for growth, we have commenced investment in greenfield capacity, including two locations opened so far in fiscal 2021 and one additional location to be added before calendar year-end. These us to meet additional demand, but also allow us to further optimize our branch network and deliver more value to our customers. We will also deploy resources and our financial strength to add M&A of reviewing acquisition opportunities. Our pipeline of potential targets is growing, and we are actively evaluating tuck-ins that are actionable, a good fit, and available at the right price. We will be disciplined in our approach to inorganic opportunities. The final item I'd like to highlight from our third quarter is the progress we've made related to our diversity, equity, and inclusion goals. Of particular note is that we announced the winner of the first annual Female Roofing Professional of the Year Award to Stephanie Pouse. Stephanie leads Brahma Roofing & Construction based in Windsor, Colorado, and is a powerful advocate for women and a role model to anyone who wishes to inspire young people. It is individuals like her and all our nominees that inspire the most skilled and talented people to join our industry. Let me summarize by saying that the confidence we have in our growth plan is underpinned by our team's demonstrated ability to react to a rapidly changing environment and to execute at a very high level simultaneously across multiple critical initiatives. Please turn to page five of the slide deck. As we have done in prior quarters, let me provide an update on our four strategic initiatives. These initiatives remain central to our improved sales growth, operational efficiency, and profitability. Our approach is systematic, our plans measurable, and progress tangible. Most importantly, our customers benefit from these initiatives as they are designed to make us more efficient and easier to do business with, as well as differentiate us from our competitors. Let me begin with organic growth. As we've discussed on previous calls, our sales and operations team have thousands of interactions with our customers on a daily basis. Our plan has clearly defined initiatives focused on improving both the number and the effectiveness of these interactions. We continue to invest in developing our sales team and providing value-added tools that improve their ability to manage customer relationships. One example is our investment in pricing capabilities. We have implemented tools and training to support enhanced pricing execution at the local level. Advanced analytics are allowing our team to develop value-based pricing models that are responsive to local market conditions and allow Beacon and our customers to realize value from the partnership. Next is our industry-leading digital platform. Digital is a clear differentiator for Beacon. Our adoption rates continue to rise, and we have nearly 50% more active users of our online platform in the third quarter compared to last year. Digital sales are trending around 14% of net sales in our fiscal third quarter and continue to grow. We are expanding our digital offering in value-added ways. In recent months, we announced a partnership with Estimating Edge, a provider of detailed construction measurement and project management software for our non-residential customers. We've recently integrated EagleView, a roof estimation tool, into our PRO+ platform. This gives customers access to high-resolution aerial images for measurement, which saves them time and money while minimizing the need to access the roof directly, supporting safety for their employees and convenience for the homeowner. 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. 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. In this supply-constrained environment, we've leveraged our OTC network to ensure product availability issues are minimized for our customers. The second benefit is a lower cost to serve. Since we optimize across a network of branches, we reduce 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 more than 4% and reduced fuel per delivery by nearly 3% in the trailing 12 months. The third benefit is inventory levels. We previously indicated we can permanently reduce our inventory by $50 million-$100 million as we implement our OTC initiatives and remain confident that we can hit that target. One example is our state-of-the-art Houston hub expected to open later this year. It has been designed from the ground up for speed and efficiency for our customers. Its prime location, large warehouse capacity, and centralized dispatch center allows us to optimize our inventory position across the fifth largest MSA in the country. The fourth benefit is that we can accelerate our talent development. Our OTC creates opportunities for our people to explore a variety of roles in the field. This way, we have better retention and development of talent in our logistics and field operations. Finally, I want to update our branch performance operating 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 continue to accelerate our progress and now expect at least $40 million year-on-year improvement from the lowest quintile branches in fiscal 2021, up from the previous guide of $30 million. We will continue to focus on driving sales and operating improvement to bring these branches over time up to at least our company average. In summary, our strategic initiatives continue to gain momentum and are delivering measurable results. Our new leadership team is energized and focused on accelerating our growth and profitability, creating meaningful improvement in shareholder returns. I'll pass the call over to Frank to provide deeper focus on our third quarter continuing results. Thanks, Julian. Good evening, everyone. Turning to slide seven, we achieved nearly $1.9 billion in total net sales in the third quarter, driven by strong sales and price execution across all three product categories. Roughly half of our 21% growth came from volumes as demand for our products continued to benefit residential tailwinds as well as significant growth in our non-residential end markets. Residential roofing sales were up over 18% on robust demand from our new construction customers. Our largest national home builders were up more than 40% as the housing fundamentals continue to drive new housing starts. We also saw regional strength in repair and remodeling as homeowners continued to take advantage of rising home equity values, low interest rates, and a number of secular trends, mainly work from home, millennial household formation, and de-urbanization. The April and June shingle price increases also contributed to the residential revenue growth. Major storm-related activity was down year-over-year, impacting our volumes mainly in the Midwestern states. We estimate that our residential shingle volumes were down approximately 10 percentage points during the third quarter due to lower wind and hailstorm activity as compared to the prior year. Non-residential roofing sales were up more than 16% compared against the COVID shutdown trough in the year-ago period. We remain optimistic that non-residential activity will continue to improve. Complementary product sales increased 35% in the third quarter. Keep in mind that our complementary product category has approximately 80% residential and 20% non-residential exposure. Complementary benefits from the residential market tailwinds, including demand for key products such as siding, lumber, windows, and doors. Siding sales, for example, were up more than 30% in the third quarter. Lumber had substantial price growth year-over-year. Turning to slide eight, we'll review gross margins. Gross margin improved to 27.6%, or 380 basis points year-over-year. The supply-demand environment remained conducive to the team's successful implementation of two price increases in the third quarter. Similar to the prior price increases, we quickly and thoroughly implemented our April and June shingle price increases. The execution of both price increases created favorable timing benefits, which also contributed to gross margin expansion during the quarter. Our private label sales increased approximately 30% year-over-year, providing gross margin enhancement. Price cost was positive by approximately 390 basis points in Q3. We experienced 230 basis points of year-over-year price cost benefit in Q2. Product mix was slightly unfavorable in the quarter due to the significant growth in the non-residential and complementary product categories. Shifting to our operating costs. Under Julian's leadership, we continue to see measurable progress in operating efficiency and remain focused 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 third quarter results demonstrated our focus on managing expenses in times of growth. Adjusted OpEx was $309 million, a $52 million increase compared to the year-ago quarter, mainly due to volume-related expenses and higher incentive compensation. We are proud of this performance given the unusually low comparable in the prior year. You may recall that we took significant and proactive cost reduction measures, including furloughs, salary cuts, reduced work weeks, the near elimination of overtime, travel, and entertainment, as well as reducing the truck fleet to curb fuel and repair costs. We continued to ramp headcount sequentially in the third quarter to meet the seasonal peak in activity. It is worth noting that headcount was up less than 6% compared to an increase in volumes of approximately 10%. Our Q3 adjusted OpEx to sales percentage improved by 10 basis points year-over-year as our team members managed both our fixed and variable costs with discipline. We continue to focus on the elements of our business that we can control. Improving productivity within our largest cost centers, including labor and fleet, is a major focus for Beacon. As you can see, we generated nearly 50% improvement in sales per hour worked compared to the start of the pandemic and are even more productive than the third quarter of last year. This key productivity metric demonstrates that we are becoming more agile as an organization and our productivity initiatives are continuing to deliver value. Going 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. As we discussed on our second quarter call, the divestiture of the interiors business yielded after-tax net proceeds of approximately $750 million. These funds, plus balance sheet cash and cash flow, have allowed us to reduce gross debt by approximately $1.7 billion year-over-year, consistent with our commitment to restore financial flexibility to our company. During the third quarter alone, we reduced gross debt by $460 million as compared to the end of the second quarter. As a result, we lowered net debt leverage to 2.4x trailing adjusted EBITDA as of June 30th, well below our 3x target and ahead of our expectations. What a difference a year makes. In addition, our comprehensive refinancing during the third quarter significantly eliminated refinancing risk, as we have no meaningful debt due until 2026. At current debt levels and interest rates, you can expect go-forward cash interest to be $50 million lower than the trailing 12 months. Importantly, our strong liquidity position of more than $1.4 billion as of June 30th provides ample ability to invest in the growth of our core business. As Julian mentioned, we will be deploying capital to accelerate our growth. This includes investing in our inventory to ensure we can effectively and efficiently meet future demand in an inflationary environment with supply chain volatility. As you can see, our third quarter inventory is typically our peak level and positions us to meet the seasonal demands of our customers. This year is no different. If you account for the impact of recent manufacturer price increases, our inventory balance is right in line with the 2018 and 2019 non-COVID comparables. Adjusted operating cash flow was $125 million in the quarter, reflective of strong earnings and higher inventory levels. One housekeeping item, GAAP operating cash flows were adjusted in this view to account for items related to the sale of our interiors business. We've included a reconciliation table in the appendix in this presentation, so you can tie this out. We believe the adjusted view provides the best view of the operating cash flows of our continuing operations. In the coming quarters, we will be looking to use our financial flexibility to invest in both organic growth through the addition of greenfields and inorganic growth by starting to execute on our growing pipeline of tuck-in targets. To wrap up, we're very pleased with the performance in the quarter. We are well-positioned to finish our fiscal year strong, and we are poised for growth in the coming quarters. With that, I'll turn the call back to Julian for his closing remarks. Thanks, Frank. Before we turn the call over to question and answers, I want to update our fourth quarter outlook. Please reference page 11 of the slide materials. As we look to the fourth quarter, demand remains solid. For our fiscal fourth quarter ending in September, we expect total sales growth in the mid-single-digit range. Keep in mind that this guidance is within the context of an extremely strong fiscal fourth quarter in 2020 that also benefited from a snapback in demand caused by the severe COVID-related shutdowns. It's also worth noting, we expect storm demand this quarter to be meaningfully below the prior year quarter that included the impact of windstorms and hurricane-related demand. Last week, we announced an early September price increase that we expect to implement with the same rigor as our prior increases. Our fourth quarter margins will reflect the positive contribution from the announced increases over the last three quarters. As a result, we expect a meaningful year-to-year gross margin increase of approximately 180 basis points to around 26.9%. We expect fourth quarter adjusted EBITDA to be between $190 million and $205 million, bringing the fiscal 2021 full-year adjusted EBITDA to between $635 million and $650 million. This is a substantial increase from the outlook we provided on our Q3 call and for the full year represents more than 60% improvement over fiscal 2020. While uncertainties continue to exist, including the ongoing threat of COVID, this outlook reflects our expectations for a combination of higher sales, gross margin expansion, and continued cost discipline. Looking further out, we continue to have strong fundamentals in both new construction and the replacement market. In new home construction, the well-documented under-building of the last decade has created an undersupply of housing in the millions of units. Our home building customers continue to try to meet this demand while managing the impact of lot, labor, and material constraints. These constraints have led to elongated construction cycle times, but appear to have limited impact on the demand side. Residential roofing demand will also continue to benefit from the multi-year repair and replacement cycle from housing stock built more than 20 years ago. Bear in mind that more than 90% of re-roofing demand is non-discretionary. Both our residential and complementary products business will benefit from these trends. Regarding non-residential demand, commercial builder sentiment continues to improve. This is a positive trend that we have seen since our fiscal first quarter, and we would expect it to continue as it gradually benefits from the macros. The Architecture Billings Index is a good proxy for future demand, and it has been climbing. As we look forward to the coming quarters, we have confidence in our team's ability to execute at a very high level. We are poised for continued growth, and I thank our more than 6,000 team members for their effort. I am excited about our progress towards achieving our full potential and believe we are strategically and financially positioned for growth as we help our customers build more. With that, Nye, we are now ready to open the line for questions. The first question is from Kathryn Thompson with TRG. Please proceed. Hi. Thank you for taking my question today. In terms of the outlook, I know you gave it for your Q4, but thinking beyond that with the gross margin expansion guidance that you give and outlook beyond it, how much of that expansion is from pricing actions from 2020 versus 2021? How much of it is just being able to focus and stick to your knitting now that you're really an exteriors-focused firm? Other factors that we should take into consideration, like a mix or an easement of some of the headwinds that we've seen from supply chain. Thank you. Thanks for the question, Kathryn. We've been very pleased, obviously, with the overall progress we've made, and I think if you go back two years, we said we thought there was margin compression due to some of the impact of a declining market and pressures from asphalt. We've seen, obviously, that turn. We've seen this demand-related inflation come in, and we've shown our ability to execute really strongly in the marketplace to recover those cost increases that we've seen. I think as we go forward, we would anticipate that this repair in our margin is certainly somewhat sustainable. Certainly over a period of time, we would expect things to fluctuate plus or minus depending on timing. We certainly feel that the value we generate from the services we provide are incredibly powerful for us to realize gross margin for and pricing. In terms of the overall sort of mix as you highlighted, I think when you think about being able to stick to our knitting, as you said, I think that is incredibly valuable for us. I also think initiatives that we've put in place, including private label, are ways for us to continue to expand. We talked a little bit about my prepared remarks, the investment we've put into pricing. I think that's another area where we see opportunity to continue to refine our local market initiatives and capture value in the marketplace. Hey, Kathryn, the only two things I'd add would be digital obviously is a nice play for us. It's got a little bit of margin enhancement there. The work that we're doing on pricing broadly, but also specifically to the underperforming branches has been really helpful this year as well. Those types of things are more structural in nature and not transitory depending on which way the pricing happens to be going in any given time. Thank you very much. Thank you, Ms. Thompson. The next question is from Mike Dahl with RBC Capital Markets. Please proceed. Good afternoon. Thanks for taking my question. I wanted to ask around inventory. I know you say it is kind of relative to not the COVID impacted periods a year prior. At the same time, you are seeing sequential increases, and I think there's a comment in the release on the slides about investing in inventory. It's been a tough environment to do that in. I just wanted to ask about how you're thinking about your inventory levels today and where they stand relative to normal. If you're at a point where given some potential slowdown in volumes given the tough comp in the upcoming quarter, will you look to continue to rebuild inventory levels? Thanks. Thanks for the question, Mike. I think in Frank's prepared remarks, he commented that third quarter inventory tends to be our annual peak. Obviously, in this environment, when we've got an allocated situation on some product lines, our bias has been to ensuring that we've got the product availability to serve our customers. That's been very important. It's been something that we've really focused on, and we think that we've continued to take the opportunity to rebuild and replenish where we can. Certainly on an annual basis, you would expect it to fluctuate with the seasonality of the businesses we're in. We're also committed as a leadership team to ensure that we're managing it at the right levels on an ongoing basis. I think just in this environment, I would tell you that certainly my bias and Frank's bias has been to err on the side of having more rather than less inventory, given the current situation, the demand environment, and the supply chain disruptions, quite frankly. The supply chain disruptions on the non-res side have been pretty substantial, and we act as a little bit of a shock absorber for our customers. Having a little bit more inventory during that period of time helps us do that and helps us be a better supplier to our customers. Great. Thanks, Julian. Thank you, Mr. Dahl. The next question is from Ketan Mamtora with BMO Capital Markets. Please proceed. Good afternoon. Congrats on a strong quarter. Maybe going back to the branch performance improvement that you've talked about, you are seeing more of that and you are in year two. Now you're expecting over $40 million versus the prior estimate. Can you highlight one or two things where you are seeing kind of more opportunity as you work through that? As you look ahead, kind of talk about what is the further room for improvement on that side. Thank you. Hey, Ketan, it's Frank. Thanks very much for the question. When we turned the page into 2021, we mentioned that we thought there was a lot of room this year on gross margin and pricing and sales, and that's actually bearing fruit. It's coming through exactly the way that we thought it was going to come through, which obviously creates some operating expense leverage there as well. When we stand back and look at our analytical charts inside the company, and we look at the performance of the underperforming branches relative to the remaining branches, we still see a huge opportunity really across the P&L. Whether it's sales, gross margin or OpEx, there is still a ton of opportunity there. Julian will tell you that in two years, we've already hit his initial target, and that just means we're going to raise the bar. We're going to continue to work on this initiative, and we're going to expand it across the company in other ways. For example, a large branch may be performing, but may not be performing at the potential that we think it has. We're going to run that same diagnostic tool across the company, and we see tons of value still coming. Understood. Thank you. Thank you, Mr. Mamtora. The next question is from Phil Ng with Jefferies. Please proceed. Hey, guys. Congrats on a really good quarter and really strong execution. Frank, I guess your guidance for the fourth quarter for mid-single-digit sales growth, that's a noticeable deceleration. Can you talk about if you saw any pull forward in Q3? Just given the strength you're seeing in non-res and complementary, appreciating you got tough comp in resi, I would have thought the demand profile might have been a little better. It'd be helpful to kind of parse out how much pricing contributed to Q3. Thank you. Sure thing. I think in terms of the Q4 guide, the mid-single digits that you mentioned, it's a strong comp, as one of your peers mentioned a few moments ago. July finished up consistent with the guide that we gave. What I think you're going to see in the quarter, if you want to parse it out, I think the complementary business will be the higher growth, and then non-res and res will be in that low- to mid-single digit range. I don't necessarily see pull forward. I see more elongation. You heard in Julian's remarks talking about project life cycle expansions. You're hearing that from a number of the different home builders. We're seeing it in our business as well. We don't see this as any question around demand. It's just the ability to get things done. Remember that it's not just shingles as an example that can get in the way of a project completion. It could be cabinets or paint or carpet or anything like that. It could be fasteners in a particular project instead of the actual membrane itself. There's a lot happening in those supply chains right now. As Julian mentioned, we're going to err on the side of inventory. The storm hangover that Julian mentioned is real. We saw that. We called it out in the quarter. It'd be great if we could have had a strong hail season. We didn't. It'd be nice if we get a nice hurricane season as well. We feel good about the quarter, and we feel good about the multi-year demand run that you heard Julian talk about. In your volume question around the quarter, and I think that's an important question, what we said was of the 21% growth, about half is volume, and half is price in the aggregate. If you break it down by line of business, the resi side was more price than volume, and the non-resi and the complementary side were more volume than price. All positive across the board, just inflections there that I thought you might enjoy having some color on. Thank you. Really appreciate it. Thank you, Mr. Ng. The next question is from Trey Grooms with Stephens. Please proceed. Thanks. This is actually Noah Merkousko on for Trey Grooms. Again, just want to echo congrats on a strong quarter. Very impressive top line. Really seeing growth across all segments, but I wanted to dig a little bit more in the non-res side. We've seen a lot of leading indicators improve, and it sounds like some of that volume is finally starting to come through. I was wondering if you could break down if you're seeing more repair and replacement activity or new construction, and then just your thoughts on that, and market demand as we go into next year. Thanks for the question. To start with, just to frame what we're seeing in the non-residential construction market, and I'll pass it over to Frank. The supply chain disruptions that started early in the year, and to some degree, were triggered by the weather events that hit Texas back in February, when there were a lot of plant shutdowns on the supply chain, have been real, and they've been continuing. We've had a lot of disruption in terms of project life cycle. The ability to get one product may be just fine, but the ability to get a full set of products that you can use to complete a job has been much more challenging. While we've seen the overall demand improve, the ability to get product onto a job and completed and off, and then restock in a reasonable time has been a real challenge for us. Again, this goes back to what we said regarding the stocking of inventory and how we act as a little bit of a shock absorber. Trying to assemble a full job packet has been a real challenge. We've not seen any specific area pick up. The new construction side is clearly improving. I referenced in my prepared remarks the ABI, the Architecture Billings Index, which is what we follow, that's clearly an indicator of future demand for new construction generally. That has been improving quite markedly. I think that's good that we're starting to see bids coming through. On the repair and replacement side, I think we're seeing perhaps a little bit of growth overall, but they're sector specific. I think on government-related work, schools, hospitals, and then warehouses, we've seen continued demand, and that's been very positive. In some of the retail and office, we're seeing a little bit less and a little bit more caution. We continue to see that, and I think I said that on the last call, where sector-specific markets are improving probably more rapidly than some others. That's the overall backdrop. I'll let Frank add anything that he feels is necessary. No, I think you covered it great, Julian. Only maybe data point would be, if you look at kind of the year-over-year by geography, you'd probably see some additional growth in areas that were the hardest hit last year in COVID that are beginning to reopen. Thanks. That's super helpful, guys. I'll leave it there. Thank you, Mr. Grooms. The next question is from Truman Patterson with Wolfe Research. Please proceed. Hey, good afternoon, everyone, and thanks for taking my question. Just wanted to understand on your residential sales volumes, it sounds like they were up mid-high single digits in the quarter. I'm just hoping you can discuss how much incremental inventory load-in you all had during the quarter and really trying to balance this with industry ARMA shipments, as well. Any color you can give us there would be helpful. Sure, Truman. Yeah, good question on ARMA. We are in this allocated environment as I am sure you all are very familiar with. We bought right in line with ARMA as you would expect us to. No one is saying no to their allocation these days. They want to make sure, like we do, that we all have inventory when our customers need it. We still see the strength in demand. We did sell less than ARMA, which is obviously one of the reasons why we built the inventory. The inventory is really a combination of both units and price, given the manufacturers' cost increases passed through to us. If you look at us on a two-year basis, which I think is an important thing to do, remember that last year, 2020, we monetized inventory pretty significantly, and what you generally monetize are the things that move the quickest. In our world, that generally is shingles. If you look at Q3 2020 against Q3 2019, the inventory, again, we were down about 25% in terms of units. If you look at us this year against last year, we're up about 30% in units. Again, you've got to look at it on a bit of a longer-term view to get a good understanding of where we are from an inventory perspective. Okay. Yeah. That's exactly what I was trying to parse out there. It seems like sales out the door are kind of in line with the market. That was it. Thank you. I couldn't tell whether you were making a statement or asking a question, honestly, Truman. Look, I told you, we sold less than ARMA, and we built the inventory. We feel like we're in a really good position given where things are, especially in the inflationary environment. We kind of expected some hailstorms, didn't get it. We didn't expect necessarily a late cycle price increase, but now we're delighted to have some inventory to be able to sell it into the market at a market price at a lower cost. We feel like we're in good shape there. Thank you, Mr. Patterson. The next question is from Garik Shmois with Loop Capital. Please proceed. Great. Thanks for having me on. Given the balance sheet and the significantly improved cash position, you've spent the last two years de-levering and focusing very strongly on operations. You touched on this a little bit. On the M&A side, you're starting to kind of sniff around a little bit more than you have in the recent past. Just, Julian, Frank, if you guys can provide maybe a little bit more on what you're looking at from a high level and what the opportunity set is there. Thanks for the question, Garik. Yeah, obviously, we'd said we would be absent from the market while we were fixing our balance sheets. Now that we've done that, we feel that we've got the company in a great spot. We're executing at a very high level at the branch level. The team's really come together. We can now turn our focus back to real opportunities in the marketplace to grow. The way we're framing it is the way we framed our strategy. We're going to continue to focus on the core business. We're going to continue to be incredibly disciplined with shareholders' money, and we're going to look at great opportunities to continue to grow. It's really about tuck-ins. It's really about local markets position and how we can add and strengthen to our position on a local level. That's really where the M&A opportunity lies for us inside of our core business. Obviously, in a market like this where valuations have been elevated, we're going to have to be incredibly disciplined and pick the right markets, pick the right targets where we think we can bring significant value. The work we've done to improve the business over the last two years is really going to reap benefits as we look at acquisition targets. We understand now what value we can bring. We can bring our digital, we can bring our sales knowledge, we can bring our pricing expertise, we can connect new branches we've acquired into our OTCs. We really feel that we've got a great new thesis that we can deploy now in really value-accretive ways through M&A. Obviously, the big thing here is we fixed the balance sheet. We've got a great business that's performing very well. We're going to generate a ton of cash. I think that our shareholders want really for us to deploy that in ways that create value for them, and that's how we're coming at it. Got it. Thanks again. Thank you, Mr. Shmois. The next question is from Keith Hughes with Truist. Please proceed. Thank you. I guess the question on residential, you talked about some of the comps in the prior year. If we go back to fiscal fourth quarter 2020, what were units up year-over-year in that period that you're going to be comping against? Let me ask a clarifying question, Keith. Are you saying what was our growth in 2020 over 2019 in our fourth quarter? Yeah. I have and I don't know if you've adjusted some of your numbers. I have a 6% revenue growth for residential products in the fourth quarter of 2020 over 2019. I don't know what the unit number is. Can you talk about the unit number? Yeah. My recollection is we sold 8 million shingles in the fourth quarter of last year. I'm ballparking you, by the way. Which was up pretty significantly, call it maybe 600,000 units or so on a year-over-year basis. I'm going 2020 against 2019. Okay. that's- 600,000 asphalt shingles, which is a component of residential. Right. It was 6% because I'm not following. If you think about the market as a whole, Keith, last year. When you look at ARMA shipments. ARMA shipments, I think, last year were, in our fiscal fourth quarter 2020, were around 44+ million squares. I think that was the biggest shipping quarter. I think the shipments from the manufacturers was pretty much everything they could produce. I think there was also de-levering of their inventory. I think that the channel was also de-levering inventory. Demand was so high at this point last year. I think we exited the quarter with pretty much everyone out of inventory. I think the situation was such a strong snapback, and the demand was so high that literally everything shipped from the manufacturers. I think they shipped all their inventory, and I think that the channel also shipped all its inventory. It's difficult to repeat that because you can't get the inventory shipments because everyone's been struggling to get any inventory as well. I think it's a really difficult comp, but it's also so difficult to parse it out into the different elements that I think you're looking for. Your 8%- Thank you. If you want clarity on that one, your 8% number that you mentioned is correct against Q4 2020 against Q4 2019 asphalt shingle units. Okay. All right. That's what I need. Thank you. Thank you, Mr. Hughes. The next question is from Ryan Merkel with William Blair. Please proceed. Hey, guys. Just want to go back to the July commentary. Am I right that residential volumes are negative year-over-year, and that's your guide? If I have that right, what's driving that? Is it lower storm demand? Sounds like there's some elongated projects. Yeah. Essentially what you just said is what we said in terms of putting the guide together for Q4. Okay. I guess what turns the volumes back positive again, because the compares keep getting harder the next couple quarters. Yeah, I think that's fair. Obviously, continuing to see new housing construction stay strong. We believe the demand is there to support that. The supply chains will get back into equilibrium over time. The R&R piece of the equation, I think, will continue to benefit from the housing cycle back in the early 2000s that you heard Julian mention in his prepared remarks. I think there's still a lot there. The comps do get harder. I do think the pricing environment is going to continue to be conducive for us to pass things through. Is it going to be five price increases in 13 months? Probably not. We're going to continue to leverage that. We feel like we're in good shape. When I look at Q4 and you look at the home builder commentary and others' commentary, they just talk about the difficulty in getting projects done in as rapid a fashion as they've been used to. That ultimately will solve itself as the supply chains continue to get back to balance. Ryan, I'll add to this. Our business is not asphalt shingles solely. We are a supplier of a lot of different products, there's multiple. As we said, the storms this year are below a kind of a five, 10-year average. We would expect to see that to return to normal. We think that as the supply chain disruptions that we've seen on the commercial side of the business go away, as that gets repaired, we can see more growth in that area of the business. Our siding business and our complementary business, as Frank said, has been strong. We continue to see that facing into new residential construction that we see growth for, we see a long runway of growth in that area. The other piece of it that we hinted at but haven't mentioned, the replacement cycle on roofing is about 20 years. That's give or take. If you go back 20 years and you look at what the builds were, we're entering a really positive cyclical period of strength in the 20-year-old roofs. I think that what we're going to see is as that starts to filter into the marketplace. We've got the 1.5 million-2 million starts, single-family homes back in the 2001-2005 time period. I think we're going to see continued growth in the repair and replacement market. I just think that we've got a really good cycle going here. We've got on the building of new homes. We've got a great replacement cycle. We've got an easing supply chain challenge on the commercial side, and we've got weather-related demand that we think is slightly depressed this year and will return to normal over a period of time. We're pretty bullish on the future for all of our businesses right now. Very helpful. I appreciate it. Thanks. Thank you. Thank you, Mr. Merkel. The next question is from Kevin Hocevar with Northcoast Research. Please proceed. Hey, good evening, everybody. Quick question on the guidance. In most years, the fiscal fourth quarter is the strongest quarter of the year. Even when it's not, it's pretty close to the third quarter. The guidance implies a pretty large step down in EBITDA from the third quarter to the fourth quarter. You earn $229 million in the third quarter, guidance of $190 million-$205 million in the fourth. I guess that's a bigger step down than we usually see from the June to the September quarter. I'm curious your thoughts on why that would be the case. Normal seasonality has to probably look at pre-COVID, not post-COVID, at least for a few quarters for us. I think if you look at the sales guide that we gave, you're gonna see normally you would see weather and geography are quite helpful in July, August, and September relative to April, May, and June. I think the COVID comps from the prior year and the hail differences in Q3 are certainly impacting that normal one. Think about more of a flat to down slightly on a quarter-over-quarter basis with less resi mix. You're gonna lose a little bit on the top line. The gross margin that Julian quoted in his guidance would tell you that you're gonna lose a little bit on gross margin. We're gonna fight tooth and nail for every dollar we can get on the gross margin line, which hopefully can help us a little bit there. On the OpEx side, again, we've got some work to do. We had a hard comp last year in the mid-16s. If you do your math on the guide there, it's in the mid-17s. We're gonna continue to look for every dollar there as well. Something with a two handle feels pretty good given the environment that we're in, and we're gonna continue to scratch for every dollar. Okay. Thank you very much. Okay. Thank you, Mr. Hocevar. The next question is from David MacGregor with Longbow Research. Please proceed. Yeah. Good afternoon, everyone, and congratulations on all the progress. I guess, how are you thinking about your free cash flow conversion in the context of your 2021 guidance? Just from, I guess, from an earnings standpoint, as you think through into 2022, where's the lowest hanging fruit now in terms of further cost reductions? You've accomplished so much already, but I'm just trying to get a sense of, from this point forward, how we should be thinking about what are the most accessible opportunities from the standpoint of further cost reductions. Thanks. You really asked two different questions in there. Let us tackle both of them. The first one on free cash flow, and then the other one on cost reductions. The business, as you have seen in the last six or so quarters, has a tremendous ability to generate significant free cash flow. You've heard us talk about a long-term 60% free cash flow conversion of EBITDA. That assumes a bit of neutrality in working capital, as you've seen on the inventory build side. It hasn't necessarily been neutral given the environment that we're in. It just delays the realization of some of that free cash flow. We still feel good about that long-term 60% type of a number. It may even be a little bit better given the fact that we've done the refinancing. You heard me mention the lower cash interest cost going forward. We feel good about that one. We also have to be attentive to our customers and make sure that we have the inventory that they need in periods of demand. In terms of the OpEx, I'd say it's across the board. The incremental margins that we're generating right now, I think we've thrown up two 40s in the last couple of quarters and a 30 this quarter. We're continuing to leverage the fixed cost and being judicious about adding variable costs in as volumes are there. I think we did a good job of that this quarter, adding less than 6% headcount on 10% volume. That feels pretty good. I'd say it's more around leveraging what we have and making sure that we minimize the cost of growth. Yeah. I'd add, David, that as we've learned so much about running the company as we've come through COVID and had to face crisis and make tough decisions going through that, we see tremendous benefit from the network of branches that we have, and really optimizing them. Taking the learning once and deploying 450x across our network is a huge opportunity for us. We've focused because we certainly felt that we had to on the lowest performing quintile of branches that we had. As Frank hinted to, we're starting to broaden that perspective. There's no branch we think can't get better. We're looking at all elements of how we can deploy this new learning that we've had. What does a great branch look like going forward? How can we benchmark across our own network and make sure, like you said, we're deploying it once? We think there's still a lot of runway in terms of operational excellence at the company. We think that both deploying that through our branches, but also leveraging some of the capabilities we have in terms of the OTC. We don't think we're anywhere near mature on that approach to how we leverage the marketplace either. We see, again, a lot of opportunity to continue to leverage this. We also want to make sure that we're managing the cost side of it carefully as we do this, and we'll continue to be disciplined in how we do that. That being the case, there's $40 million a year from the OTC networks and from the, I guess some of these underperforming branches. You upgraded that number from $30 million to $40 million this quarter. Is that a sustainable rate? Is that how we should be thinking about 2022 as kind of a $40 million rate, or was there something that made this year kind of special and it might be a little bit less than that going forward? Yeah. We're going to look at this on an annual basis. We delivered over 20 in 2020. We kind of restacked the branches based on their performance in 2020, created the new goal, which we thought was going to be about the same as 2020. We've now upped that twice from 20 to 30 and 30 to 40. We're going to continue to push through the finish line and do everything we can. The recipe of success on the underperforming branches is going to be different every year. The population's going to be different every year. I think the important thing is it's an enduring strategy. There will always be a set of branches which are kind of lower on the totem pole, so to speak. We believe that we can get more operating profit out of those branches. Whether it's going to be a combination of doing more on the sales side, it could be a product mix change. It could be something on the gross margin side, the OpEx side. There's going to be value every year. It's something that we're going to reset every time we come out with our final year earnings and give you guidance for the following year. We're going to set targets. We're going to manage it just as tightly as we have been that has delivered the value that you've seen so far. Great. Thank you very much. Thank you, Mr. MacGregor. The next question is from Deepa Raghavan with Wells Fargo. Please proceed. Hi, good evening, everyone. Thanks for taking my question. Strong positive price cost spread here, Julian. Is there a meaningful difference across residential or non-residential businesses? That's one. Are you able to push pricing in non-res as strongly as in resi, just given that non-res is witnessing nascent recovery? Thanks for the question, Deepa. We've seen progress across all of our categories. We've seen price increases across all of our categories as well. We've certainly executed very well across every single category. It's difficult to quantify it on a case-by-case basis from a product line, just because the timing of each of them, the timing that the jobs ship on commercial jobs is a lot different from when they're priced. There's a little bit more noise in the commercial side. I've been incredibly pleased, and I think our execution over the last six months or so has gotten better and better across all of these categories. Deepa Raghavan, I think if you look at the positive 390 price cost in the quarter that we mentioned in the prepared remarks, you should view resi as being more favorable than the corporate average on price cost in both the commercial non-res as well as the complementary, while both nicely positive on price costs are just less than the residential and less than the corporate average. All of that blends together to the 390 that you heard. Got it. No, that's helpful. How long do you think this inflationary situation continues? I think you're better off asking the manufacturers than you are us right now on that question, Deepa. I think that the market remains good. Clearly, we are seeing a settling out, and I think that the supply chain disruptions that we've spoken about likely abate over a period of time. I think that we've had a good run here, and I think that we continue to see opportunities. We continue to see opportunities to maximize our pricing dynamics across the business without necessarily getting into price increases from the manufacturers either. We think we're building capabilities, we're building models around this. As I said, we're really focused on executing at the branch level, making sure that we get paid for the value we provide, and we remain competitive in the marketplace. We deal every day at a local level with customers coming in who have the ability to make a choice of where they buy the product from. We want to make sure that we are that choice, and that we get paid appropriately for the services we provide. Deepa, we haven't seen the best out of non-residential, clearly. That's still coming back. On the residential side, when you think about the sheer number of homes that are going to be required over the next 5 to 10 years for all the household formation that's believed to be coming, combined with the under-investment in that area over the last 10 or 15 years, it gives us a real good feeling for a multi-year play. We look at the home builders and their base price increases year-over-year, and the new order price is higher than the current closing price, which tells us there's a fundamental support there. As we begin to receive price increases from the manufacturer, that gives us the confidence that we'll be able to pass that through. The economy's still not clicking on all cylinders, so we feel like we're not yet out of the tougher part of COVID and look forward to the opportunity to run on all cylinders. That's great color. Thanks very much. Appreciate it. Thank you, Mr. Raghavan. The next question is from Michael Rehaut with JPMorgan. Please proceed. Hi, this is Maggie on for Mike. Thanks for sneaking me in here. On 3Q growth margins, you pointed to timing benefits and cost-effective procurement as being tailwinds. Can you talk about how long those benefits last? Well, sure. We've mentioned a couple of things in the quarter that were helpful on the price cost side. We mentioned that there was a little bit of a headwind on mix, just given the differential growth rates and gross margin rates there. When you look at two price increases in a quarter, there were certainly some timing benefits and inventory profits, so to speak. To me, when you look at Q4, we're guiding to 180 basis points of gross margin benefit. I think that the price cost will be higher than that, and the mix will be somewhat negative. That'll tell you that we continue to see positivity in price cost in Q4. Okay. Thank you. Thank you, Maggie. The next question is from David Manthey with R.W. Baird. Please proceed. Yeah, I'll take my questions offline, guys. Thanks. Thank you, Mr. Manthey. That concludes the questions. I would like to turn the call back over to Mr. Francis for closing remarks. Thank you, Nye. Thank you, everyone, for joining this evening. We certainly appreciate your support. Really, the last statement I would make is that we hope that the employees, our customers, our suppliers, and all the investors are staying safe at this time. It's clearly a challenging time still. We're incredibly proud of the results in our fiscal third quarter. Again, I want to thank all of our employees for delivering such great results for the company. Thank you all, and good night. That concludes the Beacon third quarter 2021 earnings conference call. Enjoy the rest of your day.