Good day, and welcome to the Q3 2023 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. Richard Gauthier, Vice President of Investor Relations. Please go ahead, sir. Welcome to the Third Quarter 2023 conference call for UFP Industries. Hosting the call today are CEO, Matt Missad, and CFO, Mike Cole. Matt and Mike will offer prepared remarks, and 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 webcast 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 will now turn the call over to Matt Missad. Thank you, Richard, and good morning, everyone. We appreciate you joining our Third Quarter 2023 Earnings Call. The third quarter demonstrated that structural changes we made in the business have also created structural changes in our operating margin. As we look at a more normalized, pre-pandemic style economy, we are focused on structural enhancements to our business to secure our spot in the value chain, to drive profitable growth, and to create more shareholder value. The financial results of the third quarter were in line with our overall internal forecast, and we are grateful for the skill, experience, and hard work of our team. We know we have more work to do and more opportunities to drive positive change and our results. As always, we continue to face uncertainties in the economy, and in recent weeks, we saw a slowdown in different parts of our customer base. We felt those effects more acutely in our packaging segment. Our earnings of $2.10 per share exceeded our internal forecast, and EBITDA margins remained above 11% in spite of lower sales volumes in a slower economy. We have accumulated a $900 million war chest to take advantage of the opportunities we expect to come our way when acquisition targets have higher interest expenses and more normalized sales environments to contend with. And while we might be tempted to force capital spending like a drunken sailor, I'm reminded of the words of Chandler Bing, who said, "You have to stop the Q-tip when there is resistance." So we will continue to be prudent and patient in our capital allocation and follow the path to the best return for our shareholders. Return on investment remains our guiding principle. Rather than going in-depth on financial performance, which Mike will cover later in the call, I would like to look at some of the macroeconomic indicators that affect us, review the expected impacts to our business units and segments, and share a few opportunities for investing in our future. First is interest rates. I'm not sure if there are too many cooks in the monetary policy kitchen, but it appears to me that instead of treating interest rates like slowly simmered pasta sauce and having patience, the cooks got anxious and made microwave ketchup instead. We will have to wait and see what happens next and react accordingly. In housing, along with the rise in short-term rates, mortgage rates are now pushing 8%, and a vast majority of homeowners have existing mortgages of less than 3.5%, which makes it difficult for many homeowners to justify a move. Single-family home sales have been resilient, in part due to the lack of existing home resales. Inflation and consumer debt. Inflation remains elevated as policymakers seem to prefer adding cost to consumers by making energy costs and all related consumer costs higher. Naturally, this slows the economy and hurts all consumers, particularly those who can least afford it. This contributes to the all-time record high credit card debt. Now, in February 2023, we advised that 2023 would not be a smooth year, with business slowing in the second half and perhaps a rate drop in Q4. Our team executed their plans and has performed well under the circumstances while investing in innovation and value-added products. I now believe we were off on our prediction by six months or so, and that the slowdown will occur in 2024, and rate decreases are more likely to occur then as well. We are used to facing uncertainties and are not afraid. Our teams will walk this road together through the storm, whatever weather, cold or warm. With these factors as a backdrop, let's look at the individual 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 brand consolidation around three product families is taking shape, and I believe will not only improve our focus in each of these categories, but will also help with new product development, value-added product mix, and better target the marketing spend. In Q3, ProWood sales were in line, and margins maintained a similar trend to the second quarter, which is better than a year ago, but still well below our reasonable margin targets. The team continues to strengthen its focus on building the ProWood brand and using its performance solutions chemical team to create better treatments and enhance the performance, appearance, and durability of its products. Deckorators, again, had solid results in the third quarter, and has an exciting plan to expand its product offerings when new capacity comes online next year. Finally, the UFP Edge business unit is underperforming today, but has made substantial changes in structure and go-to-market strategy, which we believe will build success going forward. Big box retailers now expect that 2024 will see unit volume declines in the area of 2% to 5%, with a rebound expected in 2025 and 2026. Regardless, we will pursue our strategy to provide innovative new products and solutions, to find, expand, and harness new products and service opportunities, to select and build the right brands, and to utilize our national reach, purchasing expertise, and distribution network to provide the best customer value. In construction, the site-built business unit performed very well in Q3, again, in a down market. While our order files remain solid at present, we expect a softer demand in Q4 and during the first half of 2024. Most site-built facilities are working their normal shifts now with little overtime. With a desire to be different and better, we continue to innovate and create competitive advantages with efficiency and supplying the most value-added solutions. Our new facility in Chicopee, Massachusetts, is now in operation and will be a model for future efforts at automation, efficiency, and innovation. Factory-built is still impacted by low unit volumes at the customer level. The business unit is taking the opportunity to drive new products and solutions to both the manufactured housing market, as well as taking share in the RV market. And the construction segment will rely on our experienced management team to guide the business through any uncertainty and to continue to produce strong results. On the packaging side, structural packaging has seen softer demand from many of its customers in the past quarter. They will be consolidating product manufacturing, rationalizing capacity, using automation to drive more cost-effective manufacturing. In addition to manufacturing efficiencies, we expect to improve engineering, sales, and marketing as we drive a holistic approach across the packaging organization, rather than continuing to have each facility be a jack of all trades. Our sales efforts include leveraging our design expertise nationally and even globally, to provide better solutions for our customers. PalletOne has felt pricing pressure as a result of an oversupply of used pallets. Higher interest rates and storage costs will hurt some competitors who have high inventories and are highly leveraged. 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 the global packaging solutions provider. From an economic outlook, we expect some runways to grow while others slow. Again, we are driving more rapid change in packaging to align our production with demand, as well as providing, combining product manufacturing in fewer locations to gain efficiencies. On the international front, during the third quarter, our international team completed the acquisition of Palets Suller in Spain to further its quest to be the global packaging solutions provider. Other areas of focus and value include new product sales. New product sales for the third quarter were $176.5 million, and year- to- date were $548.7 million. We are running behind our annual target of $795 million, due in large part to the lower level of the lumber market pricing. We are beginning our annual review of new product sunsetting and plan to raise the bar for continued inclusion as a new product. Innovative new products are critical to our future success, and we want to ensure that we are utilizing our capital on the best new opportunities. Secondly, growth has become more focused on strategic runways, and we continue to evaluate the best opportunities, whether they are M&A transactions or organic growth projects. M&A pipelines are not as robust, but we still believe the opportunities for good targets at reasonable values will become more achievable in a normalized economy and with rising future tax rates. Third, in addition to dividends and share repurchases, capital will be deployed to drive more automation, more innovation, and providing better work environments in our facilities. Fourth, human capital. The U-6 unemployment index was up to 7% at the end of September, versus 6.9% at the end of June. We expect more applicants will be in the marketplace in the next quarter as well. We continue to train and educate for more skilled positions, as well as automating more manual labor functions. We are investing in our next generation of leaders, like the September graduation of 14 UFP Business School students, and the October graduation of 14 students in our advanced leadership program, all of whom will help us ensure that talent levels can match our strategic growth plans. Now I'd like to turn it over to Mike Cole to review the financial information. Thank you, Matt. Our consolidated results this quarter include, first, the 21% drop in sales to $1.8 billion, consisting of a 12% reduction in selling prices and a 9% decrease in units. The decline in selling prices is a result of the drop in lumber and more competitive pricing in certain business units. Second, a 24% drop in adjusted EBITDA to $208 million, and an adjusted EBITDA margin of 11.4%. Our adjusted EBITDA margin continues to stay well above our minimum target and pre-pandemic levels. We believe our team's commitment to grow our portfolio of value-added products and our market-focused management structure continue to contribute to the structural improvement in our margins. Third, a trailing twelve-month return on invested capital of 24%, nearly 2.5x our weighted average cost of capital. Next, a $178.9 million improvement in operating cash flow to $712 million, as lower volumes and lumber prices reduced our investment in net working capital. Finally, a balance sheet that continues to gain strength with a net cash surplus of $682 million this year, compared to $128 million last year. By segment, sales in our retail segment dropped 16% to $711 million, consisting of a 9% decline in selling prices and a 7% decline in unit sales. Given more challenging market conditions, our unit sales held up well this quarter, driven primarily by our ProWood and Deckorators business units, which each experienced slight declines. Our unit sales to big box customers were up 1% for the quarter, while our business with independent retailers, which we believe is more closely correlated with new housing starts, dropped by 22%. Our retail operating profits increased to over $45 million this year, a 57% increase from last year. Last year, our retail segment, which has a sales mix heavily weighted toward variable-priced treated lumber, was adversely impacted by sequential trends in Southern Yellow Pine prices that dropped from nearly $1,200 per thousand at the beginning of April to almost $500 at the end of Q3. Fortunately, we haven't had the same challenge in 2023. At the beginning of this year, we indicated our retail segment was well-positioned to report an increase in operating profits for the year. The strong performance so far has resulted in a $22 million year-to-date increase, and we believe retail is well positioned to build on that progress into Q4. Moving on to packaging. Sales in this segment dropped 23% to $450 million, consisting of a 16% decline in selling prices and a 9% organic unit of decrease. These decreases were partially offset by acquisitions, which contributed 2% to unit volume. With respect to selling prices, customer demand continues to be softer than we expected, which has contributed to more competitive pricing. As a result of these and other factors, operating profits in our packaging segment dropped to $41 million, a 46% decrease from last year, resulting in a decremental operating margin of nearly 27% this quarter, as we've continued to see volume and competitive price pressure. We expect these trends to continue into Q4. Turning to construction. Sales in this segment dropped 25% to $584 million, consisting of a 12% decline in selling prices and a 13% decrease in units. As expected, the unit decline was due to our Site Built and Factory Built businesses, whose units declined 15% and 8%, respectively, resulting from a decline in starts and industry production. Lower volumes and more competitive pricing caused the operating profits in our construction segment to drop to $70 million, a 37% decrease from last year, resulting in a decremental operating margin of nearly 21% this quarter. Given the higher interest rate environment, we anticipate the pressure on volume and pricing to continue into Q4. As we manage through this cycle, each segment continues to focus on executing our strategies to grow our portfolio of value-added products, and we're pleased to report an improvement in our year-to-date ratio of value-added sales to total sales to 68% this year from 62% last year. Similarly, our year-to-date ratio of new product sales to total sales improved to 9.6% this year from 7.3% last year. We're confident these efforts will not only help us maintain the structural improvements in margins we've realized to date, but enable further improvements in our EBITDA margins over time. We're also mindful of our cost structure in this environment as we ensure the company is appropriately sized relative to demand, while still providing the resources needed to execute long-term strategies that enhance our ability to offer value-added solutions and drive innovation. Our SG&A expenses came in under plan and declined nearly $19 million or 5% this quarter, primarily due to lower bonus and other incentive expenses and a reduction in bad debt expense. Sequentially, from Q3 to Q4, we anticipate a typical seasonal reduction in SG&A as we move into the slower part of the year and our variable and incentive costs decline. Moving on to our cash flow statement. Our cash flow from operations was $712 million, a $179 million improvement over last year as our investment in net working capital declined as a result of lower volumes in lumber prices. We anticipate further reductions in net working capital in Q4. Our cash cycle for the quarter decreased to 62 days this year from 63 days last year, due to a slight improvement in our days supply of inventory. Our overall receivables remain healthy, with over 94% current. Our investing activities included $131 million in capital expenditures. Our expansionary investments are currently primarily focused on four key areas. First, expanding our capacity to manufacture new and value-added products, primarily in our structural packaging, protective packaging, and Decorators business units. Second, geographic expansion in our core businesses. Third, achieving efficiencies through automation. And lastly, increasing our transportation capacity as we continue to transform this function from a cost center to a profit center. We also spent $52 million to acquire Palets Suller, a leading manufacturer of machine-built pallets in Spain, that gives us an attractive runway for future growth. Finally, our financing activities included returning capital to our shareholders through almost $50 million of dividends and more than $62 million of share buybacks so far in 2023. Turning to our capital structure and resources, we continue to have a strong balance sheet, with $682 million in surplus cash in excess of debt, compared to $128 million last year. Our total liquidity was $2.2 billion, consisting of surplus cash and availability under our credit facility and a shelf agreement with certain long-term lenders. With respect to capital allocation, we continue to pursue a balanced and return-driven approach between dividends, share buybacks, capital investments, and M&A. Specifically, our board approved a quarterly dividend of $0.30 a share to be paid in December, which represents a 20% year-over-year increase in the quarterly rate. The share repurchase program our board approved in July provides us with authorization to repurchase up to $200 million worth of shares until the end of July 2024. Since the approval, we've repurchased almost 212,000 shares at an average price of $97.87, resulting in $179 million in remaining authorization. We continue to plan for capital expenditures of $175 million to $200 million this year. Finally, our balance sheet allows us to continue to pursue a pipeline of M&A opportunities. We'll continue to target companies that are a strong strategic fit and enhance our capabilities and competitive position, while providing higher margin, return, and growth potential. That's all I have on the financials, Matt. Thank you, Mike. Now, I'd like to open it up to 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, press star one one again. One moment while we compile the Q&A roster. Our first question will come from the line of Julio Romero with Sidoti & Co. Your line is open. Thank you. Hey, good morning, Matt, Mike, and Richard. Thanks for taking my questions. Good morning, Julio. Good morning. Hey, so I wanted to maybe start on the packaging segment. Can you maybe expand on the comments you gave earlier about structural packaging seeing some softer demand? Any particular trends you can dig into, particular customers or verticals where you are seeing the drop-off? Was there maybe a particular catalyst aside from the broader uncertainty that's maybe causing that? Yeah, it's a good question, Julio. I think where we're at is i t's kind of varied across different customer bases. It's just a general slowing, which I would target as more of an economic, overall economic slowdown. There's some of the customer bases that are still doing very well. Many of them have just slowed, and it's nothing fundamental or structural long term. I think it's just more general slowness in the economy. Okay, got it. And then, how is the initiative to pursue larger projects within packaging going? And maybe can you talk to when you expect the benefits of some of those sales changes you made to hit the P&L from a timing perspective? Would that be a 2024 event or maybe further out than that? Yeah, I think you'll start seeing some of that in kind of first quarter 2024, and the bulk of it will probably hit later in 2024. As you know, the selling process tends to take longer with these larger projects, but we're very optimistic that our team is going to obtain new business and additional business with our national customer base. So, but you probably won't see it until, like I said, first part of 2024, and the bulk in the balance of 2024. Okay, that's very helpful. And then just last one for me would be just on the balance sheet, you said you've as you said, you have a war chest of almost $1 billion in cash, but also you mentioned in an M&A pipeline that's maybe not as robust currently. So given the fact you guys have always invested prudently with ROIC in mind, you know, would you just continue to kind of build that cash balance if nothing changes o r does the cash balance allow you to maybe play in a larger sandbox from an inorganic growth perspective? Yeah, I think there's a lot of options available, and the challenge is, as we mentioned, is we want to maintain our prudence in how we allocate that capital. We have the ability to repurchase shares. And again, the way we look at it is trying to use the Return on Invested Capital as our guide. So whatever provides us with the best return, not just immediate, but longer term return, that's where we'll allocate that capital. We have a number of opportunities, and when we talk about the pipeline being smaller, part of that is due to us being more focused on the runways as opposed to looking at everything. The other part of it is, frankly, a timing issue that I believe is going to become a little easier as people come off of the pandemic highs in sales and profitability and kind of adjust to the new normal of what their future returns will look like as well. Then the last piece that I added was on the income tax rates, which will increase automatically in 2025, I believe. So those may help drive some of the sellers' decisions. Appreciate the call there. I'll pass it along. Thanks very much. Thank you. 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, and good morning, everyone. Good morning, Kurt. Hi, Kurt. Obviously, a lot of volatility from the impact and changes in lumber prices the last couple of years. But as you look across the segments and think about the normalization in pricing, kind of leverage, competitive pressures, and relatedly, gross margins, what kind of areas, whether it's segments or business units, do you feel like still have yet to bottom, and you're kind of waiting to see that inflect in a positive way? Yeah, the way we're looking at it, Kurt, is I would take an overall view. The sales are down pretty dramatically year-over-year. A lot of that's lumber market related. But the part that I take encouragement in is that overall, if we look at historical EBITDA margins, for example, we're at a much higher plateau than we've been in the past, and I think that's really our focus. We understand that markets may slow, the economy may slow, but being able to continue to work on our margins and keep our margins at a higher than historical level is really critical for us. And using the value-added product mix and focusing on those areas is how we're going to combat it. I'd also add that if you look specifically at the segments, you know, packaging has shown a little more softness relative to where they were. Housing starts are at a lower level, for sure, but we're still able to perform well at that level. You just never know what's going to happen with interest rates and what the economy is going to do on those factors. But our ability to scale up and down to meet whatever the actual demand is, I think is really going to be critical, and I'm really confident that our team can do that as well as anyone. Got it. Thanks for that. And then on, on retail volume trends, those were weaker than at least I expected. You know, Mike, I know you've touched on some color on kind of the different business units, but maybe you could provide a little bit more meat there, particularly around what's going on with Edge and what you think is kind of driving some of that underperformance. And sorry if I missed it, but in regards to expectations into Q4, how are you thinking about that segment? Yeah, there's no doubt that the Edge business unit is what contributed to us going difficult on the comparisons in the unit shipments this quarter. And they're going through, as Matt said, they're kind of going through a reboot process in that business unit, and we're confident in them long term. I do expect the trends that we saw this quarter for retail from a demand standpoint to continue. When listening to our customers talk about business in the near future, they're mentioning low single- to mid-single-digit declines in business. So I think, so I think there's still a little more to come there. And I mean, that's probably also true on the other business units as well, going back to the last question. Still probably a little bit of pressure on the packaging side, and then certainly with the higher interest rates, expect those trends to continue on the construction side, next quarter, too. Got it. Okay. And then just lastly, on Decorators, I mean, that's been a terrific business for you guys the past several years. As you look into next year with more capacity at your disposal, what are the key pieces to the strategy to continue to gain share in that category? Is it focused on the dealers and converting shelf space? Is it working with new contractors? How do you keep pushing that business forward? Yeah, it's a good question, Kurt. We rely very heavily on our certified professional installer base to be our best brand advocates. So, continuing to market the product to create more consumer awareness of the brand, is something that we're committed to. We also believe, and I alluded to some new products that we can make using the technology, that we're very excited about, which will certainly enhance not just short-term, but long-term growth potential of that product. So that's why the capacity is helpful, because we haven't really been able to launch new products because we've been utilizing the capacity for existing products. So those would be two factors that I would say are going to help drive it. We are getting more traction with some existing dealers, and I think there's still more big box opportunity to come as well. Got it. Okay, well, appreciate the color, guys, and good luck here in Q4. Thanks, Kurt. Thank you. 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. Good morning, Matt, Mike. Hi, Ketan. Good morning, Ketan. You know, maybe just to, you know, start, just stepping back here a little bit, I'm just curious to get your sort of, you know, big picture thoughts in terms of how some of these businesses are performing. I mean, if you look at the economy, you know, GDP is still quite strong, yet packaging is seeing some softness. New residential has held up relatively okay, yet, you know, the mortgage rates are at multi-decade highs. So can you talk to about kind of the puts and takes as you guys see it, in terms of, you know, are you surprised with how some of these trends have evolved, or anything else that you'd like to highlight? Yeah, that's a really good question, Ketan. And what I would start with is, we're probably being unfair to the packaging group in terms of how we look at it. Their performance is being compared to pandemic-era performance, which was off the charts. So I think if we go back and look at 2019 and before that, the packaging returns have still been much better than they were back then, and I think that's a fair trend line to look at. So while they're coming off of historic highs in terms of volumes and profitability, I think they still have settled in at a level that's higher than historical for us. So while we'll continue to push and prod and try to make sure that we're doing the best we can do, they still have reached a higher elevation on their structure, so that's a plus. On the construction side, the resilience of the housing market has been a pleasant tailwind for us, so I think that's terrific. And again, as we've talked before, the volume of housing starts, as long as it's at a reasonable level, we can still be very profitable and do very well. And it appears to me that it should stay within those ranges, at least at present, for the information we have. On the retail side, what I would say is, while some of the big box customers are predicting a, you know, maybe a 2%-5% decline in volumes for 2024, they also predicted a down volume in 2023. Our product mix has benefited, and our units are actually doing very well relative to what other products in the stores are doing. So there's a bit of an anomaly that we have to be careful of, and just because they're predicting down 2% to 5%, that may not be the same in our product categories. But I would tell you, Ketan, that it is a mixed bag, so to speak, and it's going to affect different markets differently. Overall, I'm still very pleased that we're at a higher level than historical in terms of margins on the sales volumes that we have. I think we're well positioned, as I said before, to adjust to whatever the economy tends to throw our way. Got it. No, that's, that's helpful. And then, you know, Matt, just one more from my side. When you look at the site-built business, and I understand seasonally, Q4 is always slow, right? That's just typical seasonality. But outside of that, are you seeing any signs of, you know, sort of things stabilizing at where we are, or are you seeing sort of further pressure? What are you hearing from your customers? And if you can touch on both the single family side and the multifamily side. Yes. So on the single family side, you know, I think there's a slight decline that's predicted. On the multifamily, from where we are, we're looking at pretty good order file through 2024, probably more softness in 2025. And so that's the macro view. I would tell you that in our markets, and as you know, we're not in all the national markets, so using national figures doesn't necessarily describe where we are. So I would tell you that the Mid-Atlantic area has been very resilient, still is, and Texas is still a good market. Upstate New York and Colorado are still kind of holding firm on where they are. So that's obviously subject to change, but I would expect there to be some continued softness on single-family starts or smaller homes, some way to make them more affordable, in the near term. Understood. No, that's very helpful. I'll jump back in the queue. Good luck. Thank you. Thank you. Thank you. 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. Well, thank you again for spending the time with us today. We really appreciate it. As Felix Cardo says, "Nothing good is easy," but our team is strong and has faced much bigger challenges in the past and overcome them. Thank you for your investment in us, and we'll keep working hard to ensure great long-term returns. Have a great day, and go Lions! Thank you for participating. This concludes today's program. You may now disconnect.