Welcome to Masonite's second quarter 2023 earnings conference call. During the presentation, all participant lines will be in a listen-only mode. After management's prepared remarks, investors are invited to participate in a question-and-answer session. Please note that this conference call is being recorded. I would now like to turn the call over to Rich Leland, Vice President, Finance, and Treasurer. Thank you. Good morning, everyone. We appreciate you joining us for today's call. With me here this morning are Howard Heckes, President and Chief Executive Officer, and Russ Tiejema, Executive Vice President and Chief Financial Officer. Also joining us today for Q&A is Chris Ball, our President of Global Residential. We issued a press release and earnings presentation yesterday, reporting our second quarter 2023 financial results. These documents are available on our website at masonite.com. Before we begin, let me remind you that this call will include forward-looking statements. Each forward-looking statement contained in this call is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Additional information regarding these factors appears in the section entitled forward-looking statements in the press release we issued yesterday. More information about risks can be found under the heading Risk Factors in Masonite's most recently filed annual report on Form 10-K and our subsequent Form 10-Q, which are available at sec.gov and at masonite.com. The forward-looking statements in this call speak only as of today. We undertake no obligation to update or revise any of these statements. Our earnings release in today's discussion includes certain non-GAAP financial measures. Please refer to the reconciliations, which are in the press release in the appendix of the earnings presentation. Our agenda for today's call includes: a business overview from Howard, followed by a review of the second quarter results from Russ, and then Howard will provide some closing remarks and will begin a question-and-answer session. With that, let me turn the call over to Howard. Thanks, Rich. Good morning, and welcome everyone. Beginning on slide four, I'm pleased to report that Masonite delivered strong financial results in the second quarter, executing effectively against a mixed macro backdrop while making continued progress on key strategic initiatives. Net sales in the quarter were $742 million, down 3% year-over-year, as macroeconomic conditions continue to suppress demand in our end markets. Adjusted EBITDA of $118 million was equivalent to last year, despite lower volumes, with margins improving 50 basis points to 16%, due in large part to the ongoing execution of our 2023 playbook initiatives. Year-to-date operating cash flow hit a record high $218 million for the six months ending in June, thanks to the outstanding work our teams are doing to optimize working capital levels across the company. As noted in the press release issued yesterday, we are excited to announce that we will host a virtual Investor Day on September 19th to discuss the growth opportunities we are targeting over the next several years, the execution of our Doors That Do More strategy, and our long-term financial objectives for value creation. I encourage you to add this event to your calendar and refer to our press release for details on how to register. Moving to the business and operations highlights for the quarter. As expected, we saw weaker demand in Q2 compared to last year due to double-digit declines in both housing starts and RRR activity. During the quarter, we were encouraged to see early signs of an uptick in U.S. new home construction. While the scale and durability of this trend is still to be determined, we believe first half volume trends are likely to continue throughout the year, with new construction-related demand stronger than we originally expected, offset by softer than expected demand in RRR, resulting in volumes down low to mid-teens for the year. As the industry moves through this economic cycle, we remain laser-focused on taking action to optimize our performance based on factors within our control. Price-cost management is one of these important levers that we are using to preserve margins in a soft market to effectively coil the spring for accelerated margin growth when demand strengthens. Our global sourcing team is aggressively pursuing cost reductions on freight and raw materials to help offset ongoing inflation in overhead wages and benefits. In addition, I'm pleased to report that we are also on track to capture the cost benefits from our previously announced restructuring actions and the Endura integration synergies that we projected at the beginning of the year. Speaking of Endura, the business delivered an excellent quarter with margins improving year-over-year. The team is doing an outstanding job, and we remain confident in the value this acquisition will bring to both our customers and our investors. We continue to optimize our manufacturing footprint in North American Residential business with the closure of another legacy plant, our second this year, and the opening of a new hybrid facility in Texas. These moves reflect our ongoing strategy to modernize and reshape our network to deliver a superior level of service that differentiates us in the market. I will talk about this in more detail in just a moment. Overall, we're very happy with the performance in the quarter. We improved margins, we generated formidable cash flows to fund our capital allocation priorities, and we remain confident in our ability to deliver our full-year outlook. Now, let's turn to slide five. Earlier this year, we presented our 2023 playbook, which includes a number of margin opportunities and growth initiatives, as outlined here on the left side of the slide. Today I'd like to highlight one of our significant growth initiatives centered on enhancing value for our customers with superior service.... During the quarter, we opened a new hybrid production and distribution center in the Dallas metropolitan area. This facility was launched in collaboration with channel partners as a result of joint business planning focused on optimizing our collective supply chain. Consistent and reliable supply is one of our strategic pillars and an area where we continue to raise the bar. In addition to pre-hanging and finishing doors at this site for the retail channel, we are leveraging the space to pilot a new make-to-stock program for the wholesale channel. This program will allow us to fill orders for full pallets of high-moving SKUs in just three days. This is less than half the time it would take to fulfill a request through the traditional make-to-order process. This hybrid facility and new quick ship program is a great example of how we are leveraging supply chain optimization to improve service, and using strategic investments and reliable supply to create win-win opportunities together with our channel partners. Dallas and the South Central region are high-growth housing markets and an ideal place for both Masonite and our channel partners to benefit from these capabilities. My congratulations go out to the sales and operations teams that brought this project to life, and my sincere appreciation to our business partners who are embracing and benefiting from our Doors That Do More strategy. I'm pleased with the progress we're making on all of our growth initiatives, and I look forward to discussing them with you in more detail at our upcoming Investor Day. I'd like to turn the call over to Russ to provide more details on our second quarter financial performance. Russ? Thanks, Howard. Good morning, everyone. Let's turn to slide seven and start with a review of our consolidated financial results. Second quarter net sales were $742 million, down 3% from last year. In line with our original expectations, we saw a 15% decrease in volume, as well as a combined 2% decrease from unfavorable foreign exchange and component sales. These were partially offset by an 8% benefit from the Endura acquisition and a 6% increase in AUP. The volume decline continues to reflect soft end market demand in our North American and U.K. residential markets. Year-over-year, gross profit decreased just 1% to $178 million. Gross margin improved 40 basis points to 24% on strong execution of our cost management initiatives. Selling, general, and administration expenses were $99 million, up 9% year-over-year due to the addition of SG&A from Endura. Second quarter net income was $48 million, compared to $59 million in the second quarter of 2022. The decrease was driven by higher non-EBITDA costs, including increased depreciation and amortization, higher interest expense, and costs associated with previously announced restructuring plans, all partially offset by lower income tax expense. Diluted earnings per share in the quarter were $2.16, compared to $2.58 last year. Adjusted earnings per share, which exclude restructuring costs, were $2.30. Adjusted EBITDA was $118 million, consistent with last year. Adjusted EBITDA margin, however, improved 50 basis points, which, like gross margin, was driven by excellent cost management. On the right-hand side of the slide is more detail on factors that contributed to the solid delivery of Adjusted EBITDA in the quarter. The combined benefit of volume and AUP remained favorable, as carryover price and positive mix was enough to offset volume declines. Material costs overall remained slightly unfavorable, despite reductions in inbound freight. Factory and distribution costs also had a net negative impact on Adjusted EBITDA in Q2, as cost management and continuous improvement initiatives only partially offset the substantial impact of volume deleveraging and wage and benefit inflation. Our operations team remains keenly focused on implementing further actions where possible to align costs with current production volumes. SG&A had a positive impact on Adjusted EBITDA, primarily driven by savings from our restructuring actions. You will see on the acquisition line that Endura contributed about $10 million to our consolidated results. As Howard mentioned, the Endura team delivered a strong second quarter. Despite experiencing similar end market softness that impacted our core North American residential business, Endura delivered an Adjusted EBITDA margin in the mid-teens, up 50 basis points year-on-year, due to cost management and steady progress on unlocking synergies. Moving on to slide eight, let's look at highlights from the North American Residential segment. Second quarter net sales were $585 million. This 4% year-over-year decrease was driven by an 18% decline in volume and a combined 1% decrease from unfavorable foreign exchange and lower component sales, partially offset by 5% AUP growth and a 10% lift from the Endura acquisition. Constrained end market demand and customer inventory adjustments largely accounted for the volume decline this quarter, with a balance attributable to our purposeful decisions to prioritize margin over unit volume. Adjusted EBITDA in the quarter was $118 million, down 6% from last year. Adjusted EBITDA margin remained above 20% despite dilution from Endura, as our 2023 playbook initiatives fully offset the impact of meaningfully lower volumes. Endura delivered great results in the quarter. The team is slightly ahead of plan in delivering the expected $8 million in annualized synergies, and they continue to focus on maintaining their customer service and product innovation edge in the market. During the quarter, we also began the nationwide rollout of our Masonite Performance Door System at retail. This best-in-class exterior fiberglass door system uses patented Endura components and is 64% better at keeping air and water out than the leading competitor. This is the second nationwide retail product introduction this year, following on our barn door launch in Q1, is a great example of how we are executing on our strategy to drive product leadership and mix shift in the North American residential market. Now turning to slide nine and our Europe segment. Net sales of $66 million were down 11% year-over-year, driven by a 9% decrease in volume and a 2% decrease in component sales. Adjusted EBITDA was $3 million in the quarter, with an Adjusted EBITDA margin of 4%. Margin was down year-over-year, primarily due to volume deleveraging, particularly in the higher-margin exterior door business. In Europe, we do most of our business in the U.K. market, which continues to experience high single-digit inflation and steadily rising interest rates. Our sales decline there was generally reflective of overall market dynamics. New home completions were down 11% in the quarter, with RRR activity tracking down 9% for the full year. We took some limited price increases in Europe in July to offset inflation on material costs, wages and benefits, and overhead, and we continue to carefully manage price cost. The housing and RRR markets are both forecasted to grow modestly in 2024 as consumer confidence and the cost of living stabilizes. In the meantime, our sales and marketing teams are focused on a new wave of customer engagement activities aimed at improving Masonite's share of wallet and offsetting current overall market softness where possible. Moving to slide 10 and the Architectural segment. Net sales increased 16% year-over-year to $88 million, driven by a 24% increase in AUP, partially offset by a 5% decrease from lower component sales and a 3% decrease in volume. Adjusted EBITDA was $7 million in the quarter, up from break even in the prior year and up $2 million sequentially from Q1 2023, driven by carryover price and a particularly favorable mix of high AUP project work in the quarter. Overall, this business continues to benefit from the hard work that the team has done to manage price cost, stabilize our supply chain, and optimize our processes to drive both efficiencies and customer service improvements. In Q1, we announced the initiation of a formal review of strategic alternatives for the Architectural segment, and that review remains in progress. A number of outside parties have expressed interest in acquiring the business, and divestiture remains an option for us. We will continue to keep you informed as we move forward through this process. Let's turn now to slide 11 for a summary of our liquidity and cash flow performance. At quarter end, our total available liquidity was $637 million, including $317 million in unrestricted cash. Net debt was $788 million, resulting in a net debt to Adjusted EBITDA leverage ratio of 1.8 x on a trailing 12-month basis, down from 2.1 x at the end of the first quarter. Cash provided by operations was $218 million through the end of the second quarter, compared to $34 million in the same period of 2022. As Howard noted earlier, this significantly higher cash generation is being driven principally by strong execution of our enterprise-wide working capital reduction program. Year to date, capital expenditures of approximately $58 million continued to track with our full year outlook. Year to date free cash flow was $160 million, positioning us well to achieve or surpass the upper end of our outlook for the full year. During the second quarter, Masonite repurchased approximately 159,000 shares of stock for $14 million at an average price of $90.58. We also repaid $9 million of long-term debt in the quarter, in line with the amortization required under our Term Loan A. With that, I'll turn the call back to Howard for closing comments. Thanks, Russ. In summary, I'm very pleased with our financial results for the quarter and with the great work our teams are doing to prioritize and deliver improvements throughout our business. Execution of our 2023 playbook is effectively supporting margins and enhancing our long-term competitive position with an optimized manufacturing footprint, deeper engagement with our channel partners, and expanded consumer access to our best-in-class products. There's more to come. We continue to invest in our Doors That Do More initiatives to fuel growth, differentiation, and category leadership, and we look forward to sharing updates with you about continued enhancements to our business in future quarters. Right now, demand in our end markets is constrained but consistent with our original outlook, and we remain confident in the medium and long-term secular tailwinds that underpin demand for our products. Our solid first half gives us confidence in the full-year financial outlook initially shared with you in February. As we work through the back half of the year, we expect that end market performance will continue to depend heavily on the macroeconomic environment. We believe that our 2023 playbook positions Masonite for optimal performance in both this year and next. We are taking advantage of a significant opportunity to rightsize our working capital, and year-to-date have delivered the highest level of cash flow since Masonite became a public company in 2013. Finally, we hope that you'll join us for our 2023 Investor Day, scheduled for September 19th, where Russ and I will be joined by other Masonite leaders to give you a deeper insights into our business, our strategy, and our plans for growth over the next several years. Now, I'd like to open the call to your questions. Operator? Thank you, Mr. Heckes. If you would like to register a question, please press star one. If you're using a speakerphone, please lift your handset before entering your request. We ask that you limit yourself to one question and one follow-up. Ladies and gentlemen, as a reminder, to register a question, press star one on your telephone at this time. One moment while we poll for questions. Thank you. Our first question comes from the line of Trey Grooms with Stephens. Please proceed with your question. Hey, good morning, everyone. Good morning, Trey. Hi. Good morning. Good morning. Hey, good morning. First I wanted to, kinda touch on the volume trends. You know, Howard, I think you mentioned, first half volume trends should, should continue through the balance of the year. You know, with the, the uptick that we've seen in, in some of the, single family housing start data and also, you know, some of the more positive commentary we've, we've been hearing from home builders, you know, at, at what point would you, would you guys expect to see a, a benefit from that, or maybe an uptick in, in your volumes going into single family? Yeah, Trey, this is Howard. Great, great question. We're certainly encouraged by the recent uptick in, in U.S. single family housing starts. It's a positive trend. As we've said many times, the midterm and long-term secular tailwinds for demand for our products are strong. It's a matter of pegging when that's gonna hit, right? Keep in mind that in the first half, single family housing starts were down 21%, and there's more doors in a single family home than in a multifamily home, and so we need that single family home to uptick, as you said. That's an encouraging sign. The flip side of that is we think RRR is gonna be weaker than we had originally projected, but consistent with what we saw in the first half. When I said we expect second half volumes to be consistent, it's sort of that new home construction's better than we expected going into the year, and that'll be strengthened by single family starts, certainly. RRR, slightly worse than we expected going into the year. Volume's really very consistent with how we expect the year to play out. It's just a matter, as I said, Trey, of at what time is that gonna flip for us? Third, late third, fourth quarter, first quarter next year. A little difficult to peg, but we think the playbook is right to allow us to deliver optimal performance, and we're very confident in the long-term tailwinds. Got it. Thanks for that. Then, you know, I, I think maybe you touched on it just a little bit, but any color you could give us kinda on the, you know, your thoughts on the channel inventory levels out there as we're kind of, you know, progressing into maybe the seasonal, slower period, but also ahead of what maybe could be a, a better demand picture next spring? Hi, Trey, this is Chris- Sure, I'll let Chris take that one. He's... Yeah, Chris is closest to that, so go ahead, Chris. Yep. All right, thanks. So, Trey, on that one, just as a reminder, our business is pretty evenly split between the RRR side as well as new construction. On the new construction side, which is mostly our wholesale business that services that, we see the inventory position is relatively balanced. Obviously, there's some green shoots happening in the near term here, but as we look forward and we look at where we're sitting at today, we think we're in a very good position to provide that reliable supply and make sure that we're able to capture that demand as it returns, as Howard discussed. On the RRR side, which is more of the retail side of the business, we haven't seen a correction. There has been obviously a weaker trend on RRR than what we had expected coming into the year, but as you look at our back half guide, we've contemplated some inventory correction potentially happening, so we still think, kinda back to the earlier comments, the year is largely playing out as expected, and we think that, you know, our guide reflects that. Got it. That, that's super helpful. I'll pass it on and look forward to hearing from you guys in September. Thank you. Thanks, Trey. Thanks, Trey. Our next question comes from the line of Steven Ramsey with Thompson Research Group. Please proceed with your question. Hi, good morning. Maybe to follow on the, the RRR outlook being lowered a bit, can you talk to order of magnitude there, and if that's solely from the retail channel or if that includes any wholesale? Yeah, Steven, good question. The primary RRR business is driven through our retail channel. Of course, wholesalers participate in that channel as well, but they're more focused on new construction. When we say worse, we're talking about worse than the projections we had to start the year. We're not expecting RRR to get any worse than it is now. It's just slightly worse than it was. Remember we said that we thought new construction would be down 20%, and we thought RRR would be down high single digits. What we found is that new construction is sort of down now mid-teens, and RRR is down maybe low double digits. The flip... Our business is slightly skewed toward RRR, so it flipped a little bit, in how that mix is playing out, but generally, that means volume is at as we expected. This isn't a big, meaningful shift, but there is a flip between RRR and new construction. Okay, helpful. Then on the Texas facility, which I'm sure more of this will be fleshed out at the investor event, but a couple questions there on, are you projecting margin out of the plant to be well in excess of the legacy plant it is replacing? Could you walk through the components, order of magnitude of that difference? Ultimately, are volumes expected to be well in excess of the plant it is replacing? Yeah, Steven, it's Russ. I'll take that one. I, I wouldn't necessarily think about this facility as focused on a, a financial or margin play necessarily, as focused on a service play, right? It's a hybrid facility that has the ability to both hold inventory to execute on this make-to-stock program that we've talked about with some of our key channel partners in that region, as well as do door fabrication work that could be absorbed from other sites. It's not being absorbed necessarily from the plants that we have announced closure for. This is more about concentrating in one large facility where we can more efficiently service our, our customers in that area with inventory that we can turn on a rapid basis. It's supporting our channel partners' growth in a key growth market. I wouldn't view this as being meaningfully accretive or, or dilutive from a margin point of view for Chris's NA Res business. That's great color. Thank you. Thank you. Thanks, Steven. Our next question comes from the line of Tim Wojs with Baird. Please proceed with your question. Yeah. Hey, guys. Good morning. Hi, Tim. Hi, sup. Hey. Hello. Maybe just, you know, kinda on the pricing side, I know that you're still kind of benefiting from some of the carryover price last year, you know, specifically in well, I guess across all the businesses. You know, kind of what are you seeing in the market, you know, around pricing? How should we think kind of the back half into 2024 should kinda look from a price mix perspective? Yeah, thanks for the question, Tim. Obviously, price cost management is really an important part of our operating philosophy. We've talked about it consistently for quite some time. As I mentioned last quarter, or really, we, we protect and manage price in inflationary markets, and we protect and manage margin in deflationary times. Really, it's important to know there's, there's no one-size-fits-all solution here. We're managing price cost very tightly by product, and by segment, and by geography. In some cases, that means we're, we're gonna walk away from business with less strategic customers that's focused sort of solely on finding the cheapest door. When given the choice for us between lowering our price and lowering our margins in order to retain volume, which is generally counter to that price cost philosophy, we're generally gonna choose to maintain and grow our margins, which is this notion of coiling the spring for volume recovery. It's important to note that the, the value homeowners ascribe to doors, which is more than they're paying today in many cases, we wanna capture that value for us and for our channel partners. We think we're bringing more value through our Doors That Do More strategy, including things like this service proposition with our new hybrid facility in, in Texas. It's a, it's an interesting environment, obviously, today, but we are committed to our price cost management philosophy and protecting those margins to coil the spring for when, when demand returns. as I said earlier to Trey's question, the mid to long-term secular tailwinds for this market are gonna be significant. Okay. Okay, I mean, I guess, just to clarify, I mean, are you seeing, like, incremental price pressure in the market, or is it just, you know, just overarchingly, you want to kind of, you know, make sure that you kind of optimize price for, for, you know, by, by product and by segment? Well, you can imagine, Tim, in a cycle like this, when demand is soft, we have a lot of competitors, some bigger national competitors and some smaller regional competitors, and they all choose to behave a little differently depending on the circumstances. I think it varies a bit by sort of by customer and by region and who is there to, to supply them. Again, really not a one-size-fits-all. I can't say that broadly we're seeing across the country pricing pressure, but there are certainly pockets where we have opportunities to, to lower our price in order to retain volume, and in those cases, we generally choose not to do that. Okay. Okay, understood. Then just Russ, maybe kind of flipping to free cash flow, I mean, really good performance, you know, here in, in the quarter. How are you kind of thinking about, you know, the free cash flow through the year? I'm gonna try to squeeze one more in now that I think about it. Just Endura, I mean, the profit contribution there looked to be better, at least that we modeled it maybe versus expectations. Just kind of how do you expect that Endura business to kind of trend for the rest of the year? Thanks. Okay, so let me cover each of those two pieces in order, Tim. First of all, with respect to the cash flow performance, we are very pleased. The business is responding very well to some very purposeful initiatives that we put in place earlier this year to specifically manage working capital. Of the $160 million of free cash flow that you've seen from the business in the first half, which compares to a very modest use of cash in the first half last year. Over $90 million of that is driven by working capital improvements. Those strategies that I talked about, they're not just about inventory resetting to more normalized levels now that supply chains are starting to heal. It's across all areas, harmonizing our payment terms, where we strategically place inventory in the network so that we can run, and still maintain very reliable service levels with leaner levels of inventory on the balance sheet, and then also, harmonizing, our AP terms. We think that this is a multi-year effort, and with multi-year results. If I just step back and, and give you, maybe some context around the level of improvement we've seen from a working capital ratio point of view, when our working capital peaked, call it middle of last year, our core working capital, which we define as receivables and inventory, less trade AP, so setting aside accrued expenses, it, it peaked at almost 25% of trailing 12-month net sales. We ended the quarter with that at roughly 21%, and we think that there's probably a pathway to trend that a little bit lower, even by the time we get to the end of the year, and then improve it further across 2024 and 2025. That's why I, I commented, as I did during the prepared remarks, that that progress and the strong execution the team's demonstrated, that, that leaves us pretty confident that we're in, in a position to hit, hit or even exceed the top end of the $220 million-$250 million of free cash flow guide that we provided earlier this year. Turning to Endura, the team's doing a really nice job, as we commented on, around managing cost in an environment where they are also seeing volume pressures that the broader North American Residential market is. They're working very quickly on some of the synergy realization. It's running slightly ahead. Now, there's some seasonality in that business also, right? I wouldn't necessarily expect that that business is gonna deliver mid-teens margins through the balance of the year or even for the year in its entirety. But the fact that they're performing as they are in what's a really difficult macro backdrop for the North American res business broadly is very encouraging to us. Longer term, we're only that much more excited about how the development routine between the door and the system evolves. You know, Howard made a comment the other day that stuck with me, and I've seen it myself, too. It is really cool to watch how the product development teams between Endura and Legacy Masonite work together. Because one was all about optimizing performance of frame components, the other was all about optimizing performance of the door slab. You put the two together, and you're seeing light bulbs go off in new ways. We think that only improves the long-term value realization opportunity from this asset, particularly in the exterior door margin. Okay. Awesome. Thanks for the color, guys. Good luck on the rest of you. Thanks, Tim. Thanks, Tim. Thank you. Mr. Heckes, we have no further questions at this time. I would now like to turn the floor back over to you for closing comments. Thank you, Christine, and thank you all for joining us today. We appreciate your interest and your continued support. This concludes our call. Christine, will you please provide the replay instructions? Thank you for joining Masonite's second quarter 2023 earnings conference call. This conference call has been recorded. The replay may be accessed until August 23rd. To access the replay, please dial 877-660-6853 in the U.S., or 201-612-7415 outside the U.S. Enter conference ID number 13739973. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.