Good day, and welcome to the Q4 2022 UFP Industries, Inc. Earnings Conference Call and webcast. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Dick Gauthier, Vice President of Investor Relations. Sir, the floor is yours. Welcome to the fourth quarter 2022 conference call for UFP Industries. Hosting the call today are CEO, Matt Missad, and CFO, Mike Cole. Matt and Mike will offer prepared remarks, then the call will be open for questions. This conference call is available simultaneously in its entirety to all interested investors and news media through our website at ufpi.com. A replay will also be available at that website. Before I turn the call over to Matt Missad, let me remind you that today's press release and presentation include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the company's expectations and projections. These risks and uncertainties include, but are not limited to, those factors identified in the press release and in the filings with the Securities and Exchange Commission. I'd like to turn the call over to Matt Missad. Thank you, Dick, and happy Fat Tuesday, everyone. Thank you for joining our fourth quarter and year-end 2022 call. It was a banner year with a record $9.6 billion in net sales. I know some of you are wondering why I couldn't cobble together another $400 million to make it an even $10 billion to hit our 2027 goal five years early. It is something I will work on. For the incredible year, our UFP teammates deserve all the accolades. I want to thank each one of them for working so hard to provide excellent products and services to our customers, which in turn allowed us to break records and to reward our teammates with well-deserved bonuses. We were also able to add over $60 million in year-end bonuses and other extra compensation to our hourly and production teammates. It is truly exceptional. Now I feel a bit like someone who finishes a delicious meal and says, "This is the best meal I have ever eaten." He immediately thinks, "Is that as good as it will ever get?" Well, we certainly don't think so. While we enjoy and celebrate positive achievements, we're constantly looking to improve. We are creating new recipes to make sure that the future can be savored even more. I'm pretty sure you didn't join this call to celebrate 2022 or to do meal planning for the future. You're far more interested in what's going to happen in 2023 and beyond. We have reviewed countless forecasts, predictions, opinions, and pure guesses which seem to change frequently. It is difficult to find a consensus, but here is where our leadership team stands today. New home construction is likely to fall 15%-20% from 2022 levels. Interest rates will move probably up during the first half of the year and maybe down in late Q4 or early 2024. Government will continue to borrow and become an even larger portion of total domestic spending. As an aside, we should probably send our grandkids a thank you note for this funding. Other data points are less clear. While we believe we are likely already in a mild recession, the question is how it will end. Will the economy have a hard landing, a smooth soft landing, or a soft landing with the wheels up, which will definitely leave some marks? Will consumer spending continue or have the effects of inflation curb individual spending power? Since we cannot control these external factors, the UFP team is poised to do what it always does: execute our plan and continue to position our company for even better success in the future. We have accumulated a significant amount of capital during the last two years and are well-positioned to take advantages of opportunities we expect to see. We will stay operationally aggressive and fiscally conservative, using our balance sheet to support our growth and value creation. Our unique business model allows decisions on cost containment, staffing, and inventory levels to be handled by those closest to the action. We don't wait for events to make decisions. 2023 may be a turbulent year. We will adjust quickly as needed to be efficient in our operations while being nimble in pursuing growth. Let's review segment performance and outlook. In Retail Solutions, as a value-added manufacturer, seller, and self-distributor, our products provide solutions for the DIY consumer as well as the professional contractor. Our new President of Retail Solutions, Will Schwartz, has hit the ground running. It is our largest segment by sales volume, and it has significant opportunities for creating synergies and scaling new and existing products. Our Deckorators product line has moved up to number three on the 2023 Lifestory Research most trusted brand list. While we are pleased to be moving up, we are focused on becoming the best and staying there. The recently added capacity in Mineral-Based manufacturing will allow us to launch additional new products which utilize our patented technology, which is already a favorite among installers and homeowners for its aesthetics, durability, and sustainability. The number of Deckorators-certified professional installers has grown, and they have become enthusiastic brand advocates. Our ProWood and Sunbelt units are utilizing our Performance Formulations chemical company to grow fire retardant-treated lumber sales while developing new and improved preservatives to position our future growth. We continue to work with our customers to enhance our value proposition and to expand our industry-leading market position. UFP-Edge siding, pattern, and trim products are excellent as our custom coating capabilities as well as Thermally Modified Wood product offerings are well-received. The financial performance was disappointing in 2022 due to delays on automation equipment not being delivered and installed in a timely fashion. We are looking for significantly better results in 2023 from this unit. Our e-commerce platform continues to grow and serve our customers with direct fulfillment on many of our manufactured products. Our Retail Solution strategy is simple. One, provide innovative new products and solutions. Two, find and harness opportunities. Three, select and build the right brands. four, utilize our national reach, purchasing expertise, and distribution network to provide the best customer value. The outlook for retail in 2023 is generally steady for Repair and Remodel. Big Box is forecasting flat unit volumes and are expected to take share from other retailers. Independent retail is predicting flat to down somewhat. The first quarter will be difficult to compare against 2022, but we expect easier comparisons in Q2 and Q3. Moving on to construction. Our President of Construction, Patrick Benton, did an excellent job leading his team to record 2022 performance. The results were impressive and the group has already adjusted to the lower trend line in new housing, both in site- builds and factory- builds. Mike will provide more details on trends, but this is the area where costs will be most difficult in 2023. The forecast for housing starts is in the range of 15%-20% below 2022 levels. Our balanced approach serving multifamily as well as single-family helps position us well in the markets we serve, which also tend to be the more resilient markets in the country and which continue to gain population. We are well-positioned to meet anticipated market needs and will continue to adjust to the actual market conditions going forward. Overall starts around the 1.3 million rough estimates still provide ample opportunities for us to produce a strong year with a good ROI. We've noticed that multifamily continues to show strength in many markets, and the build-to-rent investments by equity funds may help bolster the housing starts numbers. Factory- builds is expected to have a trend line similar to site- build, barring more interest rate changes. Factory-built housing is still the most affordable option, and our factory-built customers are predicting a better back half of 2023 than the first half. RV may take longer to recover, although it is not a big portion of our business. Our product innovations in RV may help us gain share even with the smaller market size. The outlook for concrete forming and for commercial construction is solid for 2023, with some new infrastructure projects coming online. We will be adding additional laydown yards for concrete forming in 2023 to serve both new markets with better growth prospects and to expand our capabilities in existing markets. Overall, for construction, we will rely on our experienced management team to guide the business through any uncertainty and still produce strong results. UFP Packaging sure seems like a better, more fitting name to me than UFP Industrial. We hope you agree. Scott Worthington and his team have streamlined their segment, creating more focus and speed, and have generated enthusiasm both with the customers as well as with the packaging team. We have many runways and diverse end markets to pursue, such as durable goods, appliances, light and heavy equipment, agriculture, moving and storage, automotive, furnishings, horticulture, and glass. The packaging industry is very fragmented, and our very modest market share leaves tremendous opportunity for growth. The recent acquisition of Titan and All Boxed Up creates a connection to corrugate conversion and printing and gives a great touchpoint with existing and new customers. Increasing our design, engineering, testing, and analytical capabilities has helped create more opportunities to bring solutions to customers who value that level of expertise and creativity. Adding increased capacity in steel and other materials creates improved value propositions for mixed material packaging. We expect to expand these capabilities in our markets. PalletOne has also performed very well and will continue to expand its national footprint utilizing existing UFP locations where practical. Again, while there will be economic challenges, the long-term outlook for UFP Packaging remains strong. We will continue to invest in automation, innovation, and acquisition to advance our goal of becoming a global packaging solutions provider. From an economic outlook, we expect some runways to grow while others are flat to down. Our conservative estimate overall for UFP Packaging is flat to down 3% in units. Our international team is focused heavily on extending our packaging solutions to multinational customers. The corrugated capabilities in India and Australia, our Strip-Pak branded products in the Asia and other markets, and pallets and structural packaging in Mexico, Europe, and other end markets enhance our total product offerings. Our international sourcing and sales efforts create worldwide supply capabilities for both our domestic and foreign customers, which we will also be enhancing in 2023 with new technology. Some other areas of interest are, in the new product space, sales for the fourth quarter were $164 million, and for the year were $736 million. Both numbers exceeded our targets. While we beat our targets in 2022, we need to do better and have created a target for 2023 of $795 million. We know the world is moving faster, and we need to stay ahead. The best way to add lasting value is to provide the consumer with a product that meets an unmet need. Our investments in the Innovation Accelerator assists speed to market for new product ideas by rapid iteration and faster scale and synergy. Our recently launched Innovate Fund is very actively seeking late-stage development or early-stage commercialization projects. The best opportunities will fit within our enterprise and can be scaled broadly and rapidly throughout the organization. The goal of this innovation team matches our internal company theme for 2023. We need to innovate to dominate. In purchasing, the lumber market has been trending up slightly since the beginning of the year, but does not appear to have the same movement or volatility as a year ago. We expect that the mills will better manage the supply side, and unless there is unexpected high demand, we don't anticipate the same levels of the lumber market we saw in 2022 or 2021. This will likely cause revenues to be lower even on the same level of unit sales. UFP Transportation has invested to improve our delivery costs and efficiencies with new technology and new leadership. Shannon Evans, our new VP of Transportation, has instituted several changes already and will bring improved performance to this profit center. We are excited for her vision to take shape. Human capital. While the typical unemployment numbers remain low, the U-6 index is over 6%, and the workforce participation rate is below historical highs. Finding applicants is getting easier, yet finding those who wish to work hard in our industry remains a challenge. We know others face similar challenges, so we seek to be an employer of choice, in part by providing significant rewards to our teammates when we perform well. We balance our workforce among segments to ensure easy transfers from areas which are seeing a slowdown to those that remain strong. We also expanded recruiting efforts to areas that are unfamiliar with UFP and may not have understood the breadth of opportunities offered by our company. Those who start at the ground floor and work their way up with training, mentorship, and practical experience provided by the company. All who want to work hard to create a better life for themselves and their families are welcome and encouraged at UFP. I'd like to turn it over to Mike Cole to review the financial information. Thanks, Matt. Good afternoon, everyone. Our consolidated results this quarter include a 10% organic unit decrease as demand dropped in our factory- build business units as well as our retail segment. These decreases were partially offset by a substantial gain in our concrete forming unit, while volume in our packaging segment was flat. An EBITDA margin over 11%, despite the volume decline, reflecting the overall stability of our packaging segment. Operating cash flow for the year of $832 million, up $320 million over last year, resulting in a strong balance sheet with $1.8 billion in liquidity, including a net cash surplus of about $280 million, and an exceptionally strong 35% Return on Invested Capital for the year. Now I'll walk through the financial statements for the quarter in more detail, starting with our sales by segment. Retail segment sales decreased by 2% due to a 9% decline in organic unit sales and a 2% drop from the transfer of certain product sales from our retail to our construction segment. These decreases were partially offset by a 2% unit contribution from acquisitions and a 7% increase in selling prices. As expected, we faced tough unit comparisons this quarter compared to last year as our Sunbelt, Outdoor Essentials, and UFP-Edge categories each experienced a significant drop in volume. Organic volume of Deckorators was down modestly while our ProWood organic volume was flat year-over-year. Sales from the packaging segment increased 1% due to an increase in selling prices. Organic units were flat as we were able to offset a decline in volume to certain customers with market share gains. Our team continues to focus on enhancing our mix of value-added products that offer solutions to our customers' packaging requirements. As a result, value-added sales increased to 76% of sales in Q4 compared to 71% last year. This strategy continues to benefit our gross profits and margins, which I'll review shortly. Our change in organic volume includes gains from $35 million in sales to new customers, $21 million of sales to new locations of existing customers, and $31 million of new product sales. These gains were offset by declines in sales to other accounts. Our construction segment sales decreased 11% due to a 16% organic unit decline, offset by a 3% increase in prices and a 2% increase due to the transfer of sales from Retail. The overall organic unit decline resulted from a 27% decline in site- build, a 12% decline in factory- build, and a 2% decline in commercial. These declines were offset by a 21% increase in concrete forming. The increase in our overall pricing is primarily due to our site- build business unit, which continues to work through its backlog of orders. Moving down the income statement, our fourth quarter gross profits decreased by $14 million, or 4%, comparing favorably with our 9% decline in unit sales. New products and enhancing our mix of value-added product sales continue to be key strategies to improve margins across all our segments. An increase in new product sales contributed $10 million to gross profits, and value-added sales increased to 68% of total sales this year from 65% last year. By segment, Retail's gross profit decreased by $5 million compared to last year, primarily due to a drop in unit sales combined with unfavorable cost variances. Packaging's gross profit increased by $7 million, primarily due to our value-based selling initiative and favorable changes in product mix, including new products. Construction's gross profit decreased by $16 million. The overall decline was due to the organic unit decreases we experienced in our site- build and factory- build units, as well as unfavorable cost variances we experienced in our site- build unit due to its drop in volume. These decreases were offset by gross profit increases in our commercial and concrete forming units. Continuing to move down the income statement, our SG&A expenses increased by nearly $5 million. The components of the increase include an $18 million increase in wages and benefits, and a $2 million increase in travel costs, partially offset by a $15 million decline in sales and bonus incentives. Sequentially, our SG&A fell from $214 million in Q3 to $183 million in Q4, primarily resulting from a decrease in sales and bonus incentives and bad debt expense. Finally, our operating profits decreased $26 million, driven by decreases of $22 million in international, $14 million in retail, and $4 million in construction, which were partially offset by increases of $7 million in packaging and $8 million in corporate. It's important to note that the drop in international is partially offset by a $9 million decrease in earnings attributable to non-controlling interests presented farther down the income statement. Moving on to our cash flow statement. Our net cash flows from operations for the year was $832 million and consisted of net earnings and non-cash expenses totaling $844 million, compared to $655 million last year, and a $12 million increase in net working capital since the end of 2021, compared to a $143 million increase last year. We measure our cash cycle to assess our working capital management, and it increased to 66 days this year compared to 57 days in Q4 last year, primarily due to a four-day increase in our receivable cycle and a four-day increase in our days' supply of inventory. Our investing activities for the year included capital expenditures totaling $174 million, including expansionary and efficiency CapEx of $71 million. Due to long lead times for equipment, the amount was at the low end of our anticipated range for the year. We invested $176 million on previously announced acquisitions, including the December purchase of Titan Corrugated and its affiliate, All Boxed Up. Finally, our financing activities for the year included $59 million of dividends, $96 million of share repurchases, and debt repayments of $41 million. With respect to our capital structure and resources, at the end of December, we had $281 million in net cash surplus compared to $51 million in net debt last year. Our total liquidity was $1.8 billion, consisting of surplus cash of $559 million and availability of $741 million under our revolving credit facility and $535 million under a shelf agreement with certain lenders. The strength of our cash flow generation, conservative approach to managing our capital structure, and prudent return-driven approach to capital allocation has provided us with an abundance of capital to grow our business and also return to shareholders. We'll continue to pursue a balanced and return-driven approach across dividends, buybacks, capital investments, and M&A. Specifically, our board just approved another quarterly dividend of $0.25 a share, representing a year-over-year increase of 25% over the March payment a year ago. We have a share repurchase program approved by our board of directors and have their authorization to buy back up to 2 million shares. In the past, we've repurchased shares to offset the effect of issuances resulting from our employee benefit plans and at opportune times when our stock price falls to predetermined levels. We anticipate CapEx of $200 million-$225 million next year. Priority continues to be given to projects that enhance the working environments of our plants, take advantage of automation opportunities, drive strategies that have strong long-term growth and value potential of new and value-added products. Lastly, we continue to pursue a healthy pipeline of acquisition opportunities of companies that are a strong strategic fit and enhance our capabilities and competitive position while providing higher return margin, return and growth potential. I'll finish up with comments about our outlook for next year. We believe lumber prices have normalized and anticipate prices will now follow a seasonal pattern consistent with historical trends and demand. This will impact our overall sales levels when compared to the elevated prices we experienced last year, which we passed through to our customers. We're currently planning for a mild U.S. recession of fairly short duration in 2023, impacting the markets we serve as follows: housing starts of about $1.3 million, a 15%-20% decline impacting volumes in our site- build and factory- build units. Remodeling activity and Big Box same-store sales growth that is flat with 2022 impacting volume in our retail segment. Overall industrial production in a range of flat to slightly down with mixed results by runway impacting our volume in our packaging segment. With respect to profitability on a consolidated basis and based on our 2022 results of operations and business mix, we believe our incremental operating margin is 15%-20% of net sales. In our 10-Q and in our 10-K, we mentioned a variety of key factors that may impact our decremental margin and encourage you to consider those as you evaluate expectations of our future results. In light of the impact of the cooling housing market and softening economy, I'll leave you with some additional information on recent trends in our sales and operating profits. In Q4, after a strong October, our results trended down in November and December. Most recently, our year-over-year sales in January were down roughly 18.5%, and year-over-year operating profits fell by about 37.5%, which we believe is in line with the outlook information we just provided. That completes my review of the financials, Matt. Thank you, Mike. I'd like to open it up for any questions that you may have. Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment while we compile the Q&A roster. First question will come from Julio Romero with Sidoti. Your line is open. Thanks. Hey, good afternoon, Matt, Mike, and Dick. Thanks for taking the questions. Hi, Julio. Mike, you might have just answered this with your, with your ending comments on the trends in January, but if you could maybe just talk about, I guess how demand has been trending on the residential side. You know, there's been some optimism, just given the mortgage rates coming down somewhat in January. You know, have you heard anything or seen anything that has maybe indicated any change in demand or activity levels through January or February? Yeah. What I'd say, Julio, Mike can probably dive into a little more detail with it, but what I would say is that it's going to be a little bumpy. I think there's been the rate changes have gone down and come up a little bit. I think it's consistent with the trends that Mike outlined. It's kind of where I would say we are today. Okay. That makes sense. I guess if you guys could talk a little more broadly about the rebranding of the Industrial segment to Packaging and maybe touch on the Titan Corrugated deal and how you see that fitting into the segment. Sure. Yeah. I think the UFP Packaging name, I give the team a lot of credit for that. I think several investors talk to us about the name UFP Industrial. What does that mean? What is involved with that? The more descriptive, informative name is UFP Packaging because that really describes what that segment is doing. They are providing packaging solutions to customers, utilizing the design engineering capabilities, the creativity that we have, and also the ability to provide mixed materials. The goal is to take more of each customer's share of their spend on packaging materials. We added the labeling company a little over a year ago. The corrugate is an area that we have been involved in, both in Australia and in India, and we've looked at it extensively in the U.S., and we found a really good company in Titan Corrugated to help drive that business going forward. There's a lot of synergies with our customer mix, both customers that we have that utilize their product, as well as customers that Titan has and All Boxed Up have that we did not have. It will expand our customer reach as well. I think the whole notion of packaging at this point is we're going to drive more sales. We're going to be a more complete supplier to those customers. Got it. I'll circle back with any follow-ups. Thanks a lot. Thank you, Julio. Thank you. One moment for our next question. That will come from the line of Kurt Yinger with D.A. Davidson. Your line is open. Great. Thanks. Good afternoon, Matt and Mike. Hey, Kurt. Hey, Kurt. Just wanted to start off on retail organic units in Q4. you know, I know you talked about some of the different business lines, but could you talk about maybe what was perhaps disappointing there in terms of the Q4 performance and what gives you confidence into 2023 that you can hold volumes kind of flattish there? Yeah, I don't know that there was anything necessarily disappointing. I think we expected to have tough comps. I think there is somewhat of destocking that's going on and somewhat in the channel, and so that contributed to softer sales in Q4. But we're pretty optimistic for retail for 2023. And not only because of the unit sales, but also because of profitability. Last year for retail was particularly tough. The dealing with the lumber market that did what it did, falling from well over 1,000 to, you know, levels that were, you know, getting quite low more recently. Yeah, it was a tough year for them to battle, and we do so much treated lumber that it was really tough for the segment. We're optimistic for a much, you know, maybe not as good in terms of overall sales dollars because of lower lumber prices, but much better in terms of profitability. Okay. I guess you stole a little bit of my thunder with the next question. In 2021 and 2022 as well, you know, we've seen swings in lumbers both ways, but it seems like the headwinds on the downside have been more meaningful than perhaps the benefits on the upside. Do you feel comfortable with the idea that segment gross margins the last two years are perhaps below what you would consider normalized for that business, potentially, you know, double digits going forward? I think if you're talking about retail-. Yes, exactly. what I would say, Kurt, is, yeah, I think, I think you're looking at it correctly. I think the, the rise and the rapid decline of the market and the extended declines of the markets from those high levels definitely compressed margins. I think, a little more balance in the lumber market definitely will help us there. I think Mike is right in the outlook from, you know, a unit sales. I know the Big Boxes announced very, very recently that, you know, their trends aren't as strong as they originally thought, but I still think kind of a flattish kind of market for them. They, they plan to take share from others, and I think they'll be successful in that initiative. Got it. Okay, that makes sense. Just lastly, on the decremental margin side, I mean, at least historically, we've kind of thought about lumber fluctuations specifically and how they impact sales being fairly neutral on profitability. I recognize that perhaps the last two years have been a little bit unique from that perspective. Does that statement in the decremental margin range, you know, apply to, I guess, the sales headwinds that you expect from lumber prices being lower on a year-over-year basis? Yeah, it does, Kurt. There's a lot of moving parts in that decremental margin disclosure, right? But one of them is lumber prices and what lumber prices are gonna do to the sales, but also what it's gonna do to the cost line in our overall profit per unit. We try to be thoughtful running different scenarios with all those different factors in mind. 15%-20% with the current mix looks, you know, looks like a good range. Okay. Okay, sounds good. Thanks for the details, guys. You bet. Thank you. Thank you. One moment for our next question. Will come from the line of Stanley Elliott with Stifel. Your line is open. Hey, Matt, Mike, Dick, thank you guys for the question. Hey, Stanley. In the packaging business, you guys have definitely have, you know, really, kind of expanded the capabilities of the group. How quick from like, conversation time to, you know, when you actually get POs in your hand and start to put new products to work out there, just trying to see kind of what level of, you know, opportunities, I guess, within the, within the course of the year we might be able to see, as well. Yeah, it's a good question, Stanley. I'd tell you it never happens as quick as we want it to. I think unlike some areas where if we're just adding on products to an additional customer or an existing customer rather, it tends to be a little bit of a shorter timeframe than if we're going in and providing a new value solution for a new customer to really help take cost out of their operation or to make something better for them to really bring them value. Those tend to be longer duration sales efforts, but the results of those tends to be greater. Great. You know, I appreciate the additional color kind of on the quarter-to-date. With the uncertainties, I guess, in the market, you know, how quickly can you guys pivot to restructuring if, you know, if we're not really in a kind of a mild recession, if it's worse than that? Conversely, kind of maybe some of the levers you all have to pull for some additional growth to continue to take share there too. Again, really good questions. I think our decentralized model enables us to react very quickly to the conditions that occur in each of the locations that we serve. As I mentioned in my comments, we really don't look for an event where We're not like a tech company where we do, like, a mass adjustment. Each entrepreneur that runs our operations is making those decisions on a day-to-day basis. I think we can react very, very quickly as we've proven in the past. I think Mike pointed out very well that the capital we've accumulated will allow us to take advantage of opportunities that we expect will happen here in the near term, particularly if things get tougher for others. We're well positioned to weather the storm. Obviously, nobody wants one, but we also are well positioned to take advantage of growth opportunities and take market share. Perfect, guys. Thanks for the color and best of luck. Thank you. Thanks, Stan. Thank you. One moment for our next question. That will come from the line of Reuben Garner with Benchmark. Your line is open. Thanks. Good evening, guys. Hey, Reuben. How are you? Maybe you gave some helpful color on what the year may look like from a volume perspective by segment. Mike, just given the way you're kind of discussing the decremental margin, can you give us a sense of what, you know, if lumber prices do just kind of act normal seasonally, what kind of pressure that puts on pricing and thus the top line for modeling purposes? If it's obviously higher or lower than where it is today, we can make adjustments. Any kind of color you could give. It's obviously been a volatile couple of years, so to help square it up for us would be great. Yeah. Because of the change in the, in the mix and becoming more value-added, lumber is becoming, you know, less and less of a component of sales, right? But having said that, the 18.5% decline to us in January is a, you know, pretty good barometer for, you know, what the effect of lower volumes and the effect of lower lumber prices can be on sales dollars. When you look at lumber prices in January a year ago, they were up over $1,000 a [audio distortion]. Now they're obviously, you know, half of that. January is a, you know, could be a pretty good representative month of lower volumes and lower prices from lumber. Perfect. Sorry, I was stuck on mute. My follow-up would be on the retail business. You mentioned destocking. We were at the builder show, saw you there a few weeks ago. It sounded like some encouraging, at least initial green shoots about what the spring could be like for both retail and housing. When you say the destocking in the channel, are we to a point where, you know, from here, there's more upside than downside? Like, what does the channel look like relative to maybe normals pre-COVID? I think what I would tell you there, Reuben, it's very product specific. I think for the most part, the retailers are managing their inventories. I think their outlook, their forecasts have adjusted, and I think that's how they adjust their inventory levels. I would say, you know, again, we can't predict what's gonna happen going forward, but if the current trends and the outlook continues, I think it'll still be a very stable, good year with retail, and we should perform better than we did a year ago, simply because of better execution and better structure and not the roller coaster of the lumber market. Okay, great. Thanks. Congrats, guys, on the strong close of the year, and good luck in 2023. Thank you. Thanks, Reuben. One moment for our next question. That will come from the line of Jay McCanless with Wedbush Securities. Your line is open. Hey, good afternoon. Thanks for taking my questions. Hey, Jay. Hey. Hey, guys. Really good deceleration in SG&A dollars from 3Q to 4Q. Is that level probably something closer to what the run rate, quarterly run rate is gonna look like in 2023 with lower lumber prices? Yeah. The drop from Q3 to Q4, Jay, was pretty much driven by the lower profitability we had in Q4 relative to Q3. Much of our comp is variable based. Sales incentives average about 5% of gross profits. Bonuses average about 17% of pre-bonus operating profit. With those numbers, you can kinda figure out from quarter to quarter roughly, you know, what the sales and bonus incentives are. The way that I typically think about it is if you take the current quarter, which is most representative of our cost structure, you remove bonuses and sales incentives, and then the core SG&A to me kind of it runs more, you know, flat, building in some inflation, of course, but and whatever other, you know, adjustments we may need to make to headcount and other changes in the cost structure. From there, you model in based on gross profits and pre-bonus operating profit, what sales incentives and bonuses can be. That's pretty much why they fluctuate so much from quarter to quarter. Got it. The year-over-year increase in the gross margin percentage, would it be fair to say that the majority of that is just based on the larger percentage of value add from the in this year versus last year? Or are there some other things we need to think about with that gross margin percentage growth? Yeah. Looking back at the year, I think we talked a lot about retail. Retail was low. The gross profit percentage within retail is low. It has been for the last two years with the volatility of prices and having all that variable price products. We expect better there for retail. Looking back at packaging, you know, packaging had a great year. Most of that is, you know, value-based selling, sales mix, and all those positive changes that in the business we feel like they're structural changes. Maybe some part of that though is, you know, falling lumber prices for some part of the year and just kind of the lag that you get with pricing. The big change we think is gonna occur on the site-built side. On the site-built side, you know, there's a very strong market conditions, and then for much of the year with lumber prices falling, and those prices are held fixed, the gross profits within the site-built unit were really strong. If there's one area that's gonna normalize that's the most prominent within that decremental margin, it is the site-built area. Then retail is a helpful offset to that. Okay. Good to know. The last question I had, I think you said concrete forming was up, and I don't know if it was up 21% in just net sales, or if that was 21% higher in volumes maybe. Is that a trend we should expect to continue? Are you finally starting to see some benefits from the highway bill and some of the other infrastructure things that were announced, I think, a year or so ago? Yeah. I would say, Jay, we're starting to see some impact from some of those projects. Many new infrastructure, public works type items are being funded, so that's a benefit. I think the team has done a great job of really growing. They've built up personnel and these additional locations we talked about are gonna help drive more sales. The push there continue to be more value added, continue to provide that service to the customers and expand our geographic reach. We're very optimistic about the growth trend line for concrete forming. I think the money that's being invested is starting to show up, but I think that's a small part of it at this point. Yeah. concrete forming and commercial too, really have a great opportunity to be a helpful offset, just like retail on that decremental operating margin. There's room for further improvement there. Got it. All right. Well, that's all I had. Thank you again for taking my questions. Thanks, Jay. Thank you. One moment for our next question. That will come from the line of Ketan Mamtora with BMO Capital Markets. Your line is open. Thank you, and congratulations on a good 2022. I also want to highlight all the progress you guys have made in improving the disclosures, both in the release and also in your prepared remarks today. Congratulations. Thanks, Ketan. Um- We wanna make your job easier. Thank you. Maybe to start with, first question, coming back to the retail side. Now, is it possible to, you know, provide some context as to how the sell-in is looking versus, you know, sell-through from, for some of your customers? We talked about inventory stocking earlier. I'm just curious, you know, as we start 2023, is that more or less matching at this point or not yet? Yeah, I don't have great visibility into that, Ketan. I think if you follow the retailers' sales numbers that they're providing and what. They'll have a better feel for what is in inventory in their variety of distribution centers and their stores. What we tend to do is try to match up our deliveries since we can ship store direct, we like to be able to do that. We'd like to see more movement through of our sales, and we try to match those with what the store sales are. I think we tend to be closer at that on most of our main product offerings. Some of the more specialty items that go through a distribution center, it's a little more difficult to quantify. Got it. That's, that's helpful. Mike, can you talk a little bit about what you guys are targeting in terms of new product sales for this year? Yeah. In terms of the number of $795 million or the specific products or both? Both. If you want to highlight sort of couple of things. Obviously, you've got you know, lot of different things coming through, but maybe just a couple of things you may want to highlight. Yeah. I normally don't provide the disclosure on individual new product items, but what I can tell you, just kind of general categories, obviously the Deckorators product line that called out some items there. Using that technology, there are other building products items we've been working on and hadn't really had the capacity to be able to pursue those. Now that we have added capacity, we can pursue some of those other product lines. That's one category I would say. The other on the packaging side, some of the things that we've acquired as well as some of the things that we provide, Strip-Pak, for example, there's a number of items there that will help drive that new product sales. Got it. No, that's helpful. Mike, when you talked about January trend, I just wanna make sure I have the right numbers. You talked about sales down 18 and a half percent, and I thought I heard you also talk about an EBIT number. Did i catch that right or I did not? Operating profit. Just straight operating profit, not Adjusted EBITDA. Operating profit was down 37.5%. Sales were down 18.5%. Got it. Mike, is it possible at all, just directionally, to talk about how, you know, the three segments performed, you know, within sort of the numbers that you just gave? Yeah, I think that's probably good color. I mentioned the high lumber prices that January last year versus January this year, right? That 18.5% would present a very conservative look at sales if you use that going forward. In any event, those high lumber prices allowed retail to make quite a bit of money in, last year. Retail dropped the furthest in January. It was because they had, they had low cost of lumber buying in Q4 and selling into a much higher market, January, February, March of last year. Retail was the biggest drop. Site- build was next in and, or excuse me, Packaging, still getting used to that, held its own pretty well. Got it. That's a helpful color. I'll turn it over. Thank you. Thanks, Ketan. Thank you. One moment for our next question. We do have a follow-up question from Kurt Yinger with D.A. Davidson. Your line is open. Hey, thanks. Just two quick follow-ups. First, on the UFP Packaging business, I mean, the gross margins continue to be very impressive. Do you think the recent results there are sustainable or perhaps something you can even build upon this year within that kind of assumption of flat to perhaps down 3% on volumes? Well, Kurt, it's a fair question, but it's not one that I can really answer. I would say that they have opportunities to increase value add, I think that's a direction they're going. As we talk about all the time, there's still sticks and panels business that's being done that, they're trying to convert that to more value add. That's definitely a margin enhancement. Some of the other things on the sales side are more difficult at this point to kinda quantify. Okay, that's fair enough. I guess sticking with the Packaging Segment, I mean, over the last couple quarters, pricing there has almost completely kinda decoupled with trends we've seen on the lumber side. Is that how we should think about the pricing element going forward, or do you expect the year-over-year lumber deflation in 2023 will start to show up there to a greater extent? Yeah, I think there may be some compression due to that. I would say overall, the value that's being added is added, Mike pointed this out before, the value of the lumber as a percentage of the total sale has gotten less due to the other value that we're adding, through our design, engineering, and packaging solutions team. I would say that we would expect the vast majority of that value add to remain. Got it. Okay, thanks for that, Matt, and good luck here in Q1, guys. Thank you. Thanks, Kurt. Speakers, I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Matt Missad for any closing remarks. Thank you again for spending time with us today. I know many of you are headed off to celebrate and maybe have your own personal Mardi Gras, so we'll hope that all goes well. We know that 2023 is not forecasted to be as good as 2022, but as the professional eater I referred to in the opening knows well, it would still be a very good meal. We're confident that we can create the new best year ever in the next few years. We have all the ingredients, the people, the products, and the passion to create an even better recipe for future success. With a little cooperation from the economy and less intervention from those who create more problems than they solve, I am confident that our team will innovate to dominate in 2023 and beyond. Have a great day. Thank you all for participating. This concludes today's program. You may now disconnect.