Good day, everyone, and welcome to the Builders FirstSource First Quarter 2024 Earnings Conference Call. Today's scheduled call is scheduled to last about one hour, including remarks by management and the question and answer session. In order to ask a question, please press the star key followed by the number one on your telephone at any time during the call. I would now like to turn the call over to Heather Kos, Senior Vice President, Investor Relations for Builders FirstSource. Please go ahead. Good morning, and welcome to our first quarter 2024 earnings call. With me on the call are Dave Rush, our CEO, and Peter Jackson, our CFO. The earnings press release and presentation are available on our website at investors.bldr.com. We will refer to the presentation during our call. The results discussed today include GAAP and non-GAAP results, adjusted for certain items. We provide these non-GAAP results for informational purposes, and they should not be considered in isolation from the most directly comparable GAAP measures. You can find the reconciliation of these non-GAAP measures to the corresponding GAAP measures, where applicable, and a discussion of why we believe they can be useful to investors in our earnings press release, SEC filings, and presentation. Our remarks in the press release presentation and on this call contain forward-looking and cautionary statements within the meaning of the Private Securities Litigation Reform Act and projections of future results. Please review the forward-looking statements section in today's press release and in our SEC filings for various factors that could cause our actual results to differ from forward-looking statements and projections. With that, I'll turn the call over to Dave. Thank you, Heather. Good morning, everyone. Thank you for joining our call. Our resilient first quarter results reflect our differentiated product portfolio and scale, our team members' consistent focus on executing our strategic priorities, and our operational efficiency initiatives. As we expected, a weakening multifamily market and higher mortgage rates, driving affordability challenges, were headwinds to start the year. Despite these micro challenges, we built on our successes and drove growth through our value-added products portfolio and our industry-leading digital platform. We are committed to advancing innovation and delivering exceptional customer service as a trusted and preferred partner to our customers. We are focused on executing our clear strategic pillars, as shown on slide three. Our investments in value-added products, install services, and digital solutions are driving organic growth, delivering greater efficiency and empowering the next generation of home building. For those who are new to the BFS story, value-added products include manufactured components such as trusses, READY-FRAME, and wall panels, as well as windows, doors, and millwork. Through our value-added products and install services, we help meet our customer needs, such as reducing cycle times, addressing labor constraints, and improving home construction quality. With our digital tools, we are providing our customers with a more efficient and cost-effective way to manage the construction of their homes that will increase existing customer stickiness, win new business, and improve our operational efficiency. We remain committed to innovation and continuously seeking to do things better. We have a robust set of operational and productivity initiatives and are focused on leveraging our scale and fixed cost while delivering the highest quality products and services to our customers. We are deploying capital in a disciplined manner with a proven M&A strategy and a track record of buying back shares at competitive prices. Working alongside the best team in the industry, I am confident that we will continue to compound long-term shareholder value and achieve our strategic priorities. Let's turn to our first quarter highlights on slide four. We continued to deliver strong margins in Q1, reflecting our end-segment diversification, focused execution, and differentiated product portfolio and scale. Our gross margins of more than 33% reflect a higher mix of value-added products, including multifamily trusses, and our ability to manufacture more efficiently. We expect the multifamily end segment to progressively normalize over the course of this year, and we continue to see some normalization in core margins. Moving to slide five. We're off to a strong start on our strategic initiatives. Our full digital product launch at the International Builders' Show in February was an exciting milestone. At a high level, our digital tools do three things: one, solve customer pain points. two, make it even easier to partner with us and our suppliers. And three, help us gain incremental business from new and existing customers. It's a win-win, and we're excited about how everything is going so far after the launch. We focused on operational excellence and innovation and using playbooks of proven best practices to increase our safety, efficiency, and wallet share with customers. One area where we're using playbooks is with our installed services business. Our install sales increased by 17% year-over-year as we leveraged our capabilities to help customers address labor constraints. Additionally, we drove $40 million in productivity savings in Q1, primarily through procurement and SG&A initiatives. We believe prudent expense management leads to maximum operational flexibility. This includes optimizing our footprint and balancing cost reductions against future capacity demands. We will remain disciplined managers of discretionary spending no matter the operating environment. Early momentum in Single-Family has slowed as persistent inflation has cooled short-term expectations for interest rate reductions. However, low existing home inventories and pent-up demand provide an environment where growth has continued to build. Builders across the board are having to navigate affordability issues and challenges with the regulatory environment, land development, and infrastructure. It's evident that the large national builders have done a good job of utilizing specs, reducing home sizing, home sizes, and providing interest rate buydowns to assist buyers with affordable options. Smaller builders are more likely to benefit from rate cuts. We are staying in close contact with our customers of all sizes to maximize our business in the current environment. As we have detailed on prior calls, multifamily became a headwind in Q1 as our activity levels and record backlogs have declined versus the prior year. It is important to note, however, that multifamily remains a strong contributor to gross margins and EBITDA, even at current levels. Turning to M&A on slide six, we continue to target attractive opportunities while remaining financially disciplined. In the first quarter, we completed two deals with aggregate 2023 sales of roughly $36 million. In early February, we acquired Quality Door & Millwork, a leading distributor of millwork doors and windows in Southern Idaho. In March, we acquired Hanson Truss, which further strengthens our value-added position in Northern California and Nevada. Last week, we acquired Schoeneman's Building Materials. Schoeneman's manufactures trusses and distributes building materials in the Sioux Falls, South Dakota area. We are excited to welcome these talented new team members to the BFS family. M&A and organic investments have increased value-added products as a percent of our overall mix by 700 basis points over the past two years, and by 1,000 basis points if you go back to 2019. Our success with this strategy has been a core component of our improved margin profile through the cycle. We believe there is a long runway of M&A targets in our fragmented market, and we are pleased with recent improvements in the pipeline. Our disciplined approach to M&A includes increasing our market position in desirable geographies, extending our lead in value-added and specialty solutions, and enhancing customer retention. On slide seven, we provide an update on capital allocation. During the first quarter, we completed a $1 billion note offering, which brought us additional financial flexibility to grow organically and remain acquisitive while maintaining a strong balance sheet. In addition to the two tuck-in acquisitions, we repurchased $20 million of shares. As proven by our track record, we'll continue to buy back shares while allocating capital to high-return opportunities. We remain on track to strategically deploy $5.5 billion-$8.5 billion of capital from 2024 to 2026, as outlined at Investor Day last December. Now, let's turn to slides eight and nine for an update on our digital strategy. As the only provider of an end-to-end digital platform in our space, we believe BFS digital tools will be transformative for the industry and a substantial driver of organic growth. Our easy-to-use portal, myBLDR.com, seamlessly delivers our full digital capabilities to our customers. It is designed to create efficiencies for our team members and improve service for our customers by offering increased transparency and engagement in the home building process. Combined with our proprietary estimating and configuration tools, our customers will have more control over the entire building process. This will save time and money for both our customers and their clients while making the home building process more personalized. We were proud to highlight the full digital product capabilities at IBS in February. Our customers told us the new tools address an unmet need, and they were excited to use them in their businesses. Since launch in late February, we have seen orders on the digital platform go from nearly zero to over $60 million. In Q1, we had incremental sales of over $10 million. We remain confident in our ability to meet our targets of $200 million of incremental digital revenue by the end of this year and $1 billion by 2026 as we grow wallet share and win new customers. One of our digital tools, Build Optimize, uses advanced 3D modeling to identify construction clashes and resolve mechanical design conflicts before breaking ground. It ensures architects, builders, and trades are coordinated and building to the same plan. As a proof point of the advantages of using this transformative tool, we've seen interest from four large builders. One of these customers has used it in three markets and 13 communities across 34 plants. On average, we have identified 150 conflicts per plant. Resolving those conflicts before construction leads to job site time and cost savings. One of my favorite initiatives at BFS is acknowledging team members who go above and beyond. Ira Banks in Atlanta, Georgia, personifies this quality. Ira began with BFS in 1996 as a driver helper and rose through the ranks to operations manager, and now oversees our new Atlanta millwork facility in Dacula. Ira has the respect of his team members because he's willing to do whatever it takes to solve problems and add value for our customers. Recently, when there was no available drivers for an urgent customer delivery that had to arrive that day, Ira drove the box truck himself to take care of the customer. I'm grateful for Ira's drive to lead by example, a quality we find consistently in leaders across BFS. I'll now turn the call over to Peter to discuss our financial results in greater detail. Thank you, Dave, and good morning, everyone. Our first quarter results demonstrated the effectiveness of our strategy and operating model. We are maintaining our fortress balance sheet and prudently deploying capital to the highest return opportunities, which included acquisitions and share repurchases during the quarter. We are leveraging our sustainable competitive advantages and strong financial position to drive future growth and value creation for our customers and shareholders. I will cover three topics with you this morning. First, I'll recap our first quarter results. Second, I'll provide an update on our capital deployment. Finally, I'll discuss our 2024 guidance and related assumptions. Let's begin by reviewing our first quarter performance on slides 10 and 11. We delivered $3.9 billion in net sales, driven by growth from acquisitions of 1.9%, or partially offset by commodity deflation of 1.7%. Core organic sales, in line with the prior year, were driven by a single-family increase of more than 4% amid higher sales of early-stage home building products. From a geographic perspective, East sales were down mid-single digits, Central was flat, and the West was up mid-teens. As we signaled and expected, multifamily declined more than 13% as we lapped the prior year's strong comps. R&R and other also declined by almost 5% due to weakness predominantly in the Northeast from inclement weather. As we mentioned last quarter, inclement weather negatively impacted our operations in Q1 by roughly 3%-4% of our overall sales. Value-added products represented approximately 52% of our net sales during the first quarter, reflecting our strength and customer stickiness for these higher-margin products. During the first quarter, gross profit was $1.3 billion, a decrease of approximately 5% compared to the prior year period. Gross margins were 33.4%, decreasing 190 basis points, mainly due to a timing shift in product mix toward lower-margin, early-stage home-building products, as well as margin normalization, particularly in multifamily. SG&A increased $22 million to $926 million, primarily attributable to acquired operations. As a percentage of net sales, total SG&A increased 50 basis points to 23.8%. The team has done an excellent job managing SG&A, and we stand ready to leverage our fixed costs into the growing market. Adjusted EBITDA was $541 million, down approximately 14%, primarily driven by lower gross profit and higher operating expenses. Adjusted EBITDA margin was 13.9%, down 240 basis points from the prior year. Adjusted net income of $327 million was down $83 million from the prior year due to lower gross profit amid higher and higher operating expenses, primarily due to acquisitions. Adjusted earnings per diluted share was $2.65, a decrease of 11% compared to the prior year. On a year-over-year basis, share repurchases added roughly $0.29 per share for the first quarter. Now let's turn to our cash flow, balance sheet, and liquidity on slide 12. Our Q1 operating cash flow was approximately $317 million, down $337 million compared to the prior year period, mainly attributable to lower net income and an increase in net working capital. Capital expenditures for the quarter were $90 million, and free cash flow was approximately $228 million. For the last twelve months, ended March 31st, our free cash flow yield was approximately 6%, while operating cash flow return on invested capital was 22%. Our net debt to Adjusted EBITDA ratio was approximately 1.1x, while base business leverage was 1.2x. In February, we completed a $1 billion private offering of 6 3/8 senior unsecured notes due 2034, which enables a maximum financial flexibility to grow organically and remain acquisitive. Excluding our ABL, we have no long-term debt maturities until 2030. At quarter end, our total liquidity was approximately $2.4 billion, consisting of $1.7 billion in net borrowing availability under the revolving credit facility and approximately $700 million of cash on hand. Moving to capital deployment. During the first quarter, we repurchased roughly 100,000 shares for $20 million at an average stock price of $202.67 per share. Since the inception of our buyback program in August 2021, we have repurchased 42.2% of total shares outstanding at an average price of $70.42 per share for $6.1 billion. We have $980 million remaining on our share repurchase authorization. We remain disciplined stewards of capital and have multiple paths for value creation to maximize returns. Now, let's turn to our outlook, which we are reaffirming on slide 13. For full year 2024, we expect total company net sales to be $17.5 billion-$18.5 billion. We expect Adjusted EBITDA to be $2.4 billion-$2.8 billion. Adjusted EBITDA margin is forecasted to be 14%-15%, and we are guiding gross margins to a range of 30%-33%, which is in line with our long-term normalized expectation. Our recent margins reflect above normal multifamily performance. On top of our greater mix of value-added products, along with the disciplined pricing required to offset increased operating costs. We expect full year 2024 Free Cash Flow of $1 billion-$1.2 billion. The free cash flow forecast assumes average commodity prices in the range of $400-$440 per thousand board foot. Our 2024 outlook is based on several assumptions and includes an expectation for improving Single-Family growth. Please refer to our earnings release and slide 14 of the investor presentation for a list of these key assumptions. As you all know, we do not typically give quarterly guidance, but we wanted to provide directional color for Q2, given the ongoing interest rate uncertainty and the geopolitical situation. On a year-over-year basis, we expect Q2 net sales to be down low single digits to flat, as Single-Family growth is offset by expected Multifamily headwinds. Year-over-year Adjusted EBITDA is expected to be down high teens in Q2, primarily given the impact of continued Multifamily normalization. Turning to slides 15 and 16. As a reminder, our base business approach showcases the underlying strength and profitability of our company by normalizing sales and margins for commodity volatility. This helps to clearly assess the core aspects of the business, where we have focused our attention to drive sustainable outperformance. Our base business guide on net sales for 2024 is approximately $17.6 billion. Our base business adjusted EBITDA guide is approximately $2.4 billion at a margin of 13.5%. As I wrap up, I want to reiterate that we are confident in the near term outlook, our exceptional positioning to execute our strategic goals, and our ability to create shareholder value in any environment. With that, let me turn the call back over to Dave for some final thoughts. Thanks, Peter. Let me close by summarizing how we're set up to drive long-term profitable growth by executing our strategic pillars. We believe we are the unquestioned leader in addressing our customers' pain points through our focus on customer service, value-added products, and install services. Our industry-leading digital innovations are bringing greater efficiency to home building and will win us new customers and grow wallet share along the way. Our robust Free Cash Flow generation is funding disciplined capital deployment that will maximize returns and compound long-term shareholder value. We have a proven playbook for growth during complex operating environments, and we'll keep working to be the best and deliver excellence every day. Thank you again for joining us today. Operator, let's please open the call now for questions. Absolutely. At this time, if you would like to ask a question, please press the star and one on your telephone keypad now. You may remove yourself from the queue at any time by pressing star two. And once again, that is star and one if you'd like to ask a question. We'll pause for just a moment to allow questions to queue. And it does appear we have our first question from Matthew Bouley with Barclays. Hey, everyone. Thank you for taking the questions. I'll start out on the second quarter. I'm wondering what's implied in the second quarter gross margin. It seems that you're kind of, you know, moving into that full year range of 30%-33% in the second quarter, but correct me if I'm wrong. I know we're talking about normalization in both multifamily and the core. So within that second quarter gross margin, can we say that the over earn in both multifamily and the core is entirely rolled off or not yet entirely rolled off? So would there be sort of more to come beyond the second quarter? Thank you. Good morning, Matt. Thanks for the question. So the margins that we're seeing are really in line with what we were expecting. The multifamily business, specifically, I think outlined it a couple times, but for everybody just to restate it, we'll continue to normalize. We'll continue to go down over the course of the year. We think that sales will continue to decline back towards normal, and we'll continue to see margins, as a percentage, return back to normal as the year progresses. So, not over, but very much in line with, with what we were expecting. You know, margins, it, there, there's a couple of things going on. We've talked about margin normalization being between 30% and 33%. We think that's an accurate forecast. Just keep in mind that normalization in this instance would assume normal starts, which we're not quite back to yet. But that said, our guide for the year is still within that range. We've seen some good things hold on longer, and we think that's gonna sustain us to be able to get to our guide for the year on margins. But it's performing about like we expected. It's not a surprise in terms of where the margin levels are. Okay. Thank you for that, Peter. Secondly, the multifamily revenue impact, you know, clearly it's quite concentrated in the manufactured products. You know, I see multifamily was down 13% in Q1. It looks like you have one more, I think, tough year-over-year comparison in multifamily here in the second quarter. So I guess within the second quarter guide, is the assumption that multifamily is down sort of, you know, more than it was in the first quarter? Would that imply that Q2 is sort of the low point for multifamily year-over-year with lesser declines in the second half? Or should we assume that we should look for kind of a consistent headwind for multifamily declines through the balance of the year? Thank you. Yeah, it's the latter. You should expect a consistent decline from multifamily throughout the year. It's a long lead time product category. We've got pretty good visibility to what we're expecting to see. There's certainly a bit of slippage from one month to the next in any given period. But I think what we're seeing and expecting in multifamily is another big decline in Q2 and a sort of consistent year-over-year decline throughout the end of the year. We'll, of course, update you as we learn more. Perfect. Thanks, Peter. Thanks, Dave. Good luck, guys. Thank you. We have our next question from Mike Dahl with RBC Capital Markets. Morning. Thanks for taking my question. I want to ask, you know, I guess it's effectively a follow-up there. When we think about what's implied for the second half, if we look at the 1Q results and the 2Q directional color, at the midpoint, it requires double-digit top line growth and kind of 15% EBITDA margins, and the high end would be kind of like mid-teens top line growth and a 16% EBITDA margin. That, you know, both of those, just given the multifamily declines, your comments just now about further normalization and gross margin, it kind of seem difficult. So maybe you can help us there. I guess it's a roundabout way of asking more directly, when you look at that full year guide, is there a point in the range that you, you think you're leaning more towards at this point, like midpoint or lower or midpoint or higher? Maybe just help us understand how that's evolved. Morning, Mike. Thanks for the question. In short, we're really confident in the forecast, the way it's laid out. That guide is something that we put out there and feel good about reaffirming. The growth that you're talking about is already happening. So I think it came through in some of our materials. I think there's maybe this expectation that our whole business moves in the same way in the same quarter, and that's really not what we're seeing here, right? You're seeing the early parts of the building process, the lumber, the truss, the stuff that hits the job site early after the start, doing great. We're growing, the momentum is building. There's certainly some headwinds we're dealing with. I mean, we, we talked a little bit about that, and I'm sure we'll talk more, but the business is performing very well in that category. We've not yet started to see the tailwind, the uplift from some of the later building process products, right? The doors, the millwork, that are also good for us. But we have every confidence that that's coming, that that's gonna continue to be a good tailwind for us. There are, of course, a lot of questions about what the overall market in Single-Family is gonna do, a lot of questions about interest rates. But again, let's not forget, there's a lot of demand out there. There are a lot of confident homebuilders, there are a lot of good units and good production momentum going on, and we're participating. We're not concerned about, you know, delivering based on everything we're seeing today, but we do have to digest multifamily. You know, I think we've been very transparent about that. It's working like we expected, and things are, you know, playing out. So yes, the back half of the year needs to be growing, but again, we're seeing good momentum that we think will pass through on the early stage products. We're seeing good growth in categories that we've leaned into, value add, install, and we continue to be active in M&A. So certainly a lot to be confident in. We're happy with the business and not shy about what we're seeing for the rest of the year. Yeah, the only thing I'd add is, I echo the overarching demand profile continues to be strong. I think, the timing of when they actually execute the buy is kind of what is a little more volatile than the expectation that they will execute the buy. And, that's part of it, but our builder customers are still indicating that they're seeing that demand, and, they're expecting the similar trajectory that we've forecasted for ourselves for the back half. Okay. Got it. Thank you. And then shifting gears just to capital deployment and maybe specifically the buyback. I mean, you've got plenty of liquidity, your leverage is low. The buyback was really just nominal this quarter for the first time in a while. You know, what can we take away from that, and maybe anything more specific about how you envision deploying capital through the year? Yeah, we're. You're right. We're sitting on about $700 million in cash, plus all the capacity in the ABL. Lots of cool M&A popping, right? I mean, we've done a couple of small deals so far, but we're sitting on a bunch of dry powder and excited about what the opportunities look like. We'll have to see how they play out. But at this moment in time, you know, we're ready to take advantage of the opportunities that are gonna present themselves. That's kind of how you should read that. A little bit of a slow start to the year, but we're feeling good. Great. Thank you. Thank you. We have our next question from Trey Grooms with Stephens. And everyone, I also want to touch on the guidance, believe it or not. You know, you guys mentioned—well, first off, you reiterated the full year. You mentioned that multifamily is going about as you expected, and clearly, you guys have been very vocal about your expectations and kind of the pullback there in multifamily and the impact it could have. But you know, clearly, the 2Q guide is lower than what I think most were kind of modeling or expecting. You know, but with you reiterating the full year guide, is it fair to say that you know, kind of overall, the 2Q is kind of tracking as you would have thought? Any surprises there, or maybe even any areas where, you know, it's coming in better or worse than you would have expected as we've moved so far through the year? Yeah. Thanks, Trey. What I would tell you is, multifamily, in specific, some of that backlog is getting extended. So where, you know, at one point in time in the year, I may have thought more of those jobs would finish quicker, they're spread out. It's actually a good thing. It kind of smoothed that transition for us, in one way. The other thing I'd tell you about multifamily, our team has done a great job, going after pseudo-multifamily, smaller multifamily projects. Customers they haven't typically, gone after that are helping also transition that. Hadn't started yet, but we're seeing a lot of good momentum in that space. Things like assisted living versus a four-level apartment complex. So smaller jobs, as you take them by themselves, but added up, it'll help the transition. Single family is kind of operating the way we expected it to. There's been. It's never retracted below a level. It's a build, and it's a continual build, but at the end of the day, is it as steep of a build as we would like? Of course not. It's not as robust as we would like ever, but it's steady, and it's there, and it doesn't retract. That's an important factor, is it is a build, even as it's a slower build than we'd love to see. And, you know, we're adjusting as we need to, to those market conditions. The only thing I might add is, there's nothing in what's happened that is a surprise to us in terms of the variable. All the variables, I think we've accounted for. There are a couple of variables that were, I would say, bigger headwinds than we anticipated. I think that weather thing has certainly thrown us a curveball. It'll bounce back, but that's been a tricky one to navigate, particularly regionally. I think what builders have done to build homes more affordably, whether it be size of the home or complexity of the home, there's some variability on that as well that we've been challenged with. But again, we're, I think we're in line, and we're doing what we said we were going to do despite those variables. Yeah, and I, I would add, you know, a good indicator for me is always our truss backlog. Our truss backlog is at healthy levels. It's continuing to build. That's an indicator for us of what's to come, and that, you know, if, if that was starting to slack off, I might get a little more worried, but it's, it's where it needs to be for us to be in a healthy situation. Got it. All right. Well, thanks for all that, color. I appreciate it. And, you know, hearing that you're very confident in the guide and being able to reiterate it is encouraging. So we appreciate it, and thanks... Good luck for the rest of the quarter. Thanks, Trey Our next question comes from Rafe Jadrosich with Bank of America. Hey, good morning. It's Rafe. Thanks for taking my question. I wanted to ask on the commodity pricing in the first quarter. It was deflationary, but when we look at, I think OSB prices were up, lumber prices seemed kind of flattish sequentially. So can you just talk about what you're seeing there? Either is it from a mix standpoint, or how is the competitive environment evolved, and, like, how do you expect that to go going forward? Morning, Rafe. Yeah. So I would tell you right up front that commodities are where the war is happening. That's where the fight is. You know, it's where, historically, you've got the most aggressive players, you've got the most dynamic, pricing, the volatility of it. I think what you're seeing in the numbers is really just around timing. There's a little bit of, you know, shift in terms of when we saw the, OSB run versus when we were feeling it. You know, that'll come through at different points during the year, but I would expect, sort of us to be pretty much done with the bad news around the prices of commodities. What I will say, though, is while we saw the run in OSB, that's starting to walk back, and we saw a much smaller run on lumber, and that's walking back as well. So I think you're seeing that mood of the market recognizing higher for longer and trying to triangulate on what that means to commodity prices. But again, that's not our game. We don't play the, you know, commodities up, commodity down bet. We're continuing to run product just in time, move it quickly, price appropriately, get paid for what we do. That our strategy hasn't changed at all in that category. Got it. Okay. Very, very helpful. And then just on SG&A, there was some de-leverage in the first quarter. How should we think about that going forward here, especially as if sales turn in the second half of the year? And then just remind us of the base in terms of incentive comp from last year. Do you have an easier comparison there, and how do we just think about leverage versus what you've done historically? Yeah, so SG&A, we saw a couple one-timers come through in Q1 that hurt us a little bit. You know, some of it was, we had some credits last year that we didn't repeat this year. I wouldn't... From my perspective, and take it for what it's worth, I wouldn't read too much into it. I think our consistent discipline around expenses will keep us in the ranges that you'd expect. Summer months are always our best leverage months, right? Q2, Q3, so you'll see that come through. In terms of the Base Business, I guess I would say there isn't much of an adjustment, maybe minor, on the bonus side. I think really the storyline around the year-over-year bonuses is that we gave ourselves, as you've seen, a more challenging target and plan for this year. Our performance is more in line versus vastly outperforming that target, so you will see a pullback in the total amount of bonus dollars just by nature of that performance, which you'd expect. I think that shareholders, management, and the board is all in alignment on that one. So that'll be a bit of a tailwind versus the prior year, just from a dollar amount perspective. Yeah. The only thing I'd add is our highest variable cost obviously is our labor, and the field and the team have done an exceptional job keeping labor as a percent of gross profit, which is our key metric, right in line with our operating, you know, within the parameters of what we set for ourselves in this level of sales and activity. And our tools for managing that cost are as good as they've ever been in my 25 years with the company. So, you know, the key factor for us in managing SG&A is how well we manage our labor down at the field level, and they've done exceptional at that, since the beginning of the year. Thank you. It's very helpful. We have our next question from Keith Hughes with Truist. Thank you. The question on the windows and doors segment, it was down 2%. You talked about some product costs declining. Can you talk about that a little bit more, which product, and is that selling prices declining or inputs? Any kind of details would be great. Well- Morning, Keith. Good morning, Keith. If you recall, Keith, this time last year or in the first quarter last year, we were just coming out of, you know, normalization of the supply chain. Windows and doors were getting delivered timely again, and the national builders' focus on completions in that first quarter was at a higher level just to catch up. That kind of was the pig in the python for us last year in higher millwork and window door sales in the first quarter than normal. I would tell you this first quarter was normal, so we had to roll over those numbers from last year, where it was a bit more tilted towards completions, where this year was more normal with respect to completions. There has been some deflation in the category, and specifically, I think with, with millwork, on the millwork side, you know, and that's affected it modestly. I think we saw pretty close, our volumes did exactly what we expected our volumes to do, and it was more, along the lines of some of the deflationary impact, along with rolling over that higher degree of completions last first quarter. That really explained the difference. Okay. Thank you. We have our next question from Adam Baumgarten with Zelman & Associates. Hey, good morning, guys. Can you talk about what you're seeing from a non-commodity pricing perspective and, and maybe specifically on the manufactured product side? You're talking about customer pricing or vendor pricing? Your pricing to customers. It's, as you would expect and why we play in those categories, that is less price sensitive on the manufacturing side because, once you get locked in with a designer and you get locked in with somebody who's gonna meet delivery schedules and whatnot, that becomes a more important factor. Now, as commodities have fluctuated and the fact that they're a component of manufacturing, that affects the price as commodities go up or down, and they've been going down for lumber slightly. You know what we've been able to do is offset some of that with our efficiencies, that we've been able to gain throughout since the merger with our automation investments and our continual improvement in actual board foot per labor hour produced. It has been a nice offset to some of those challenges. But it, as a whole, value add continues to hold in there better than commodities, which, of course, is in line with our strategy. Okay, got it. That's helpful. And then just on that 3%-4% impact from weather you saw on 1Q, how should we expect that to be recouped? Is it, you know, mostly in 2Q, or is it gonna span over a few quarters? Well, I was happy to say Q2 up until Houston got buried or flooded out. Generally, it takes about a quarter to a quarter and a half to catch back up. It doesn't, unfortunately, just whipsaw back the other direction, but that's probably a reasonable way to think about it, three or four months. Got it. Thanks. Best of luck. Thank you. Our next question comes from Stanley Elliott with Stifel. Hey, good morning, everybody. Thank you for the question. Can you all talk a little bit about what you're seeing on the, on the services piece? You know, some very strong numbers up 17%. Is this kind of reflection of your efforts to take it into new markets? Is this existing, you know, more services with some of your existing customers? And, and then I guess secondly, how should we eventually think about this as either an attach rate or pull through on, you know, on some of the other things you're doing on the manufactured side? Yeah, I would say all of the above. We had a strong install base. We did $2.5 billion in labor and materials installed in 2023, so we had a nice base to work from. And our initial focus, as you would expect, was on the products that we're already good at in one market and leveraging that platform to other markets. And it's the products that we're most familiar with and the products that we distribute every day. So, we've got off to a great start. A lot of that increase is from existing markets that are already doing install, because those are the ones that had the base to work from. But we developed really nice playbooks, and we've had really good interest, which has been pull interest. It's people reaching out, "I want to get into this business. How do I do it the right way?" Versus us saying, "Hey, you need to get into this business," which is what, in my role, in my seat, that's what you want to see. And, you know, we've got really good people, really good plans, and we just think it's the next, you know, evolution for us as a company in solving our customer pain points. And doing it methodically and in a way that we don't make mistakes, that's key for me, to do it the right way and make sure that, you know, what we're generating is customer value-added solutions. Curious, kind of tagging on that, if you're willing to share, are you seeing more of this uptake with, you know, some of the smaller builders, some of the more national builders? Just trying to kind of get a sense for the flavor there. It's a little-- it depends on the product category, first of all. But the national builders certainly like the install solution wherever they can apply it. The custom guys like it, but they're a little more specific to millwork or a little more specific to install windows, probably not so much install framing, right? So, it's a really good play for the national builders. They seem to like that the best, but there are applications for both segments. To Dave's point, we do see a higher level of adoption of our value-added products at the larger players, just generally. Yeah, and, you know, install is the natural evolution of the value add. It's the next—it's the next part of value add. Not only do you get the, the components delivered to the job site, but you actually install the components that are delivered to the job site. That's, that's just a natural evolution of doing more for our customer. Perfect, guys. That's it for me. Thanks, and best of luck. Thanks, Stanley We have our next question from Collin Verron with Jefferies. Hey, good morning. Thank you for taking my questions. I just wanted to start on the gross margin side of things. You talked about the shift in timing toward early-stage home building products being a gross margin mix headwind. Can you quantify that headwind, either sequentially or year over year, and how it compares to the headwind you're seeing from multifamily normalization? And just following up on that, how you're thinking about that mix through the rest of the year, just given what you're seeing in starts, backlogs, and conversations with your customers? Good morning, Collin, thank you for the question. I'm not sure I can give you the breakdown necessarily exactly what you're looking for. What I can tell you is on the mix side, you know, it's an expectation that we're going to see a trend back to normal mix. I don't think that's much of a stretch, right? So what we're seeing right now is more of our growth being in the pure commodities and the trusses, and the relationship between just those two categories biases it towards the commodities. And commodities, like I was saying before, is where we've had the most aggressive normalization. We've seen it across the board on the gross margins, right? We've seen gross margin normalization. We've talked about it a lot. It's not just Multifamily, it's Single-Family, too. Matter of fact, this quarter, the bulk of it was Single-Family normalization. Much of that is the mix, but a good chunk of that is also just what we've been messaging over the last year, and that's, we have seen this normalization play out. We've seen it across the business, and this year's margins are, when you peel back that Multifamily stuff, a step down from where they were. That was why we were so adamant last year that our, you know, mid-thirties Gross Margin numbers weren't gonna hold on because we were seeing it play out. But that mix will certainly be a tailwind as we regain the, you know, later stage building products. But we have, again, the lapping from the prior year. So that's why our guide is, in that 30-33 range, because we think that those three variables will play against each other, and we want to try and give you the best insight possible to where we'll end up. Okay, that, that's helpful color. I guess I want to pivot towards the M&A pipeline. It sounds like it's pretty robust. Any color as to the size of potential deals out there in the market and what those potential targets look like from a product offering perspective? We won't get that precise, but I think our strategy has not changed, right? The way we look at the market, where we're successful, where we can add the most value, are all variables in the discussion. But I think that, you know, there are always a million rumors about what may or may not trade. I think for us, it's imperative that we stay disciplined and we stay focused. What's exciting is, as it stands today, we see a lot of assets out there that fit that screen, and now we just got to see if we can get them across the finish line. Okay. Thank you for taking my questions. Thanks. Our next question comes from Tyler Batory with Oppenheimer. Thank you. Good morning. Question on the competitive environment. Are you seeing some of the smaller players out there maybe trying to get more aggressive to take market shares? Is that having an impact on your performance and on your business? Well, what I would tell you, Tyler, is not any more than usual. You know, again, where we differentiate ourselves is in the value-added solution and the value-added space, and that's for a reason. Anybody can do commodities, anybody can deliver lumber. It's hard to differentiate yourself in a straight distribution model. So we do see competition in that arena for sure. You know, we try to leverage our relationships with those customers, where we do other stuff for them and very well, and use that as a way to continue to maintain share on the commodity side versus just getting into a price war. So we do see competition in that regard. We choose to compete where we want to compete in that regard, but we'll always do a high percentage of lumber. We're good at doing lumber. We're good at meeting schedules and making sure the lumber's there when the customer wants it, and we get recognized for that, and where we get that recognition is where we play. But in short, a lot more competition on the commodity side than the non-commodity side, and our reputation on the value-added space carries us a long way. The only thing I'll add, and I think it might be embedded in your question, is share. You know, I think one of the variables that we struggle with is what's the real share number? Generally, we would use single-family starts as a proxy for the market, and then we would compare our sales against that. In general, that's a really tricky thing right now because I think there are some meaningful differences between a start unit and a sales dollar. Homes are smaller. The costs of those homes and what being put into them are simpler and cheaper, and we've seen some not insignificant cost reductions or pricing reductions in terms of what we're getting from our vendors and what's selling into the market. You know, whether it be commodities, which is the obvious one, but also, you know, EWP or millwork or any of the other ones we've talked about. Those all represent sort of gaps or deltas between those two units of measure. And then you layer on a little bit of the timing-related stuff, whether it be, you know, how complete these homes are and what we're selling or the weather or whatever, it certainly has made that whole discussion and that analysis really challenging. But back to Dave's point, I think the only place we think we've maybe struggled or battled is in that commodity, the low end, where smaller competitors are more willing to get down and dirty. Okay. Very, very helpful. And then a quick follow-up on the R&R side of things, down 5% in the quarter. I think weather probably impacting that. You know, what are you seeing here in the second quarter? You know, there's a lot of differing views on the R&R end market out there. Just share your confidence in terms of your growth outlook this year in that end market. So as it relates specifically to the first quarter, we're higher concentrated in R&R in the Northeast. In the Northeast was the set area of the country for us that was more greatly impacted by weather. I think 20-23 days had serious weather in the quarter. That's where we felt it. In general, you know, I think R&R will be... it's kind of a two-edged sword, right? The bigger projects are facing some of the same kind of cost of money pressures that you know the small custom builder is facing. But the regular, you know, smaller projects, I think, are gonna be along the same line as what you would expect. Okay. That's all for me. Thank you. Thank you. We have our next question from David Manthey with Baird. Thanks, Dave, Peter, good morning. My first question is on the digital. So the revenue uptick is good to see. Could you share with us any data on the number of net users today versus a year ago or the end of last year, just to give us an idea of how that's ramping? And then, is there any prototypical customer type that's implementing the system, or is it just based on personality and choice? Morning, Dave. Yeah, we're excited about digital. I don't, unfortunately, have user numbers. I might be able to get them for you, but I don't have them off the top of my head. It's going up. We're seeing that. There were, gosh, I don't know what it was, 500 or 700 leads that we took out of IBS. We've got a lot of customers as we do our adoption and our rollout around the country that are coming on board. It while most of them are mid to smaller-sized builders, the profile I think that you're talking about are those that are leaning into digital and technology to be able to make themselves more efficient and more professional and better with their customers. I think you've got, you know, sometimes it's generational. Candidly, sometimes it's not. It's just the mentality around leveraging tools, to take waste out of the job, make the job go quicker, connect with the homebuyer a little bit more easily, more visually. But it's such a, in our opinion, it's such a compelling tool. It's got so much that can help the builder just get a little bit better every day. You know, that game we're all trying to play, creating efficiency, making it more transparent to the builder, to the trades, and to the homebuyer. So that... those are the types of customers, the ones that really take advantage of technology to do that, that we're seeing early. But in general, I think our digital tool has become, is increasingly becoming the new way of doing business just because it's so easy. It's you know very modern, it's very smooth, and so far, so good. We're excited about the ramp-up trend and how it's been progressing so far, early days. What I would tell you juices me the most was the traffic we had at our booth at IBS. I have never in my 25 years with going to IBS and seen the kind of excitement and the kind of traffic that went through our booth, primarily because of our digital platform and showing what, capabilities that it was going to present. The other thing I would say is, think about it, if you're a smaller builder, 50-200 homes a year, you don't have the ability to invest in technology for yourself, to get this to the level of platform that we're developing. What we're doing is leveraging our ability to make those investments, develop that platform for our customers of that size, so that they can play in that space and be efficient without having to make a huge upfront investment themselves. So that's the rationale behind why we developed it and why we think it'll be appealing to our customer base. And if IBS is any indication, we hit it right on the head. Okay. Thanks, guys. In the interest of time, I'll just pass it on. Thank you. Thanks, Dave. We have our next question from Jay McCanless with Wedbush. Hey, good morning, everyone. So my first question, Peter, I think you called out some, some pretty positive sales trends for the Western U.S. Could you talk about how that's, that's trended in April and May, similar pattern to what you saw in 1Q? Morning, Jay. Yeah, pretty similar. You know, I think that the, you know, West got hammered out of the gate, and they bounced back really nicely. You know, a little more stable through the other two regions, but yeah, I think that's been pretty consistent. We've got to see how this whole weather thing in Houston plays out, but for the time being, it's pretty good. Okay, thanks. And then, kicking the lumber question, especially some of the more commodity goods, a step further, is this a function of not only higher mortgage rates, but was there an oversupply of commodity lumber in the system to start the year? Just wondering if this is all rate-driven, or if there are some other mitigating factors we need to be monitoring. We didn't see a lot of unusual behavior in the market, no. You know, tough for us to see that from others' perspective, but it's a strong... I would say generally a strong and a stable market, so I don't know how people made bets with regard to where stuff was moving. Okay. Okay, great. Thanks for taking my questions. All right, thanks, Jay. We have our next question from Ketan Mamtora with BMO Capital Markets. Thank you. Peter, just one question. You've talked quite a bit about margin normalization and Multifamily. On the core organic, the Single-Family piece, do you think at this point we are sort of towards the end of that normalization? We are midway through. How would you characterize that? And are the competitive dynamics in that side of the business, you know, changing at all, given sort of pressure on EWP prices, given where lumber is today? Just curious to get your thoughts. Thank you, Don. So yeah, I would tell you that we're closer to the end in terms of how we expect margins to normalize. We're still below normal in terms of volume, so that's a pressure-filled environment. It's always very competitive, always has been. We expect it always will be on the commodity side. But that now needs to be a battle cry that we rise to, right? And it's something we've done for years, and we feel good about. There's an expectation that the little player will always be more competitive, and we think that'll continue to play out. But by and large, I think margins have performed well. There's certainly been some aggressiveness from certain vendors, but in most cases, it's in response to past moves. More of a normalization, more of a rebound back, you know, a mean reversion, if you will, rather than uh-oh, we're in trouble, we need to do something dramatic. Does that make sense? It does. Thank you very much. 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