Good day and welcome to the Q4 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. Dick Gauthier, Vice President of Investor Relations. The floor is yours, sir. Welcome to the fourth 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, Dick, and good morning, everyone. Thank you for joining our fourth quarter and year-end 2023 earnings call. Like George Costanza, we stopped short of our goal for the year, but thanks to the efforts of our team, we posted the third best sales and profit year in our 69-year history. As we have described before, the best way to analyze our performance without the abnormal lumber market, supply constraints, and outsized demand from Q3 of 2020 through 2022 is to go back to 2019 and measure our progress. For 2019, we reported sales of $4.4 billion and EBITDA of $317.3 million, or a 7.2% EBITDA margin. We just completed 2023 with sales of $7.2 billion and EBITDA of $810 million and an 11.2% EBITDA margin. We began our new structure in 2020, and if we had predicted then that we would improve EBITDA by 255%, EBITDA margins by 156%, and that we'd grow sales by 164% in four years, we would have said those were lofty goals. But that's exactly what our team achieved. Like the Detroit Lions, who performed well but were disappointed at the end, we had a good year, and we know there are better years ahead. Our forecasts for 2024 are based on data which is inconsistent and not well aligned, which makes forecasting difficult. Nonetheless, our view for the year is as follows. We plan on a relatively flat demand environment overall with an expected range of aggregate unit sales from slightly down to slightly up. We plan for new home construction to be slightly up to slightly down in 2024. The overall market mix between single-family and multifamily is expected to be approximately two-thirds single-family. January 2024 housing starts were annualized 1.33 million and below expectations, with weather being a commonly cited factor. We saw repair and remodel trend down over the fourth quarter of 2023, but it is expected to be up slightly to down slightly in 2024. In January 2024, we saw a decline in units from expected, with weather, again, cited as a factor. The Purchasing Managers' Index trended down during Q4 of 2023 and is expected to be down 1%-3% in 2024. January 2024, however, saw an uptick in the index, bringing it closer to neutral. Interest rates are projected to move down in 2024, and the current expectation is three rate cuts at some point during the year. The federal deficit is expected to be $1.6 trillion in 2024, which will likely have an impact on capital markets. We can only acknowledge these economic forecasts and incorporate them into our plans and budgets for the next five years. While we are mindful of these macro factors, our focus remains on areas we can control. Regardless of market conditions, our attitude is to keep moving forward, to keep succeeding despite factors out of our control. Our goal in 2024 is to take the lessons from prior years and, as expressed in our internal theme, make it better. We had underperforming operations in 2023 that will improve or be exited. We have opportunities to reduce costs or improve efficiencies in each area of our business. From purchasing and manufacturing to sales, marketing, transportation, we will pursue actions that drive better bottom-line performance. As always, our goal is to create a stronger, more resilient company and build a strong team which can excel for many years to come. Providing long-term shareholder value is a requirement, and our teammates, who are also shareholders, are completely aligned in the mission. Of course, growth is central to our strategy. Whether through M&A or organic growth, we will aggressively pursue our runways. Acquisitions remain a key component, and we had several acquisition opportunities during 2023. Our international group completed an acquisition in Spain, but we were unable to close others primarily due to valuation challenges based on the target's hockey stick view of anticipated future performance versus our more muted and realistic view. On the organic growth side, we invested in several opportunities in 2023 and have several new projects planned for 2024 in new targeted geographic markets. The strong operations performance over the last three years has allowed us to build capital for growth, and if we are unable to acquire reasonably priced acquisition targets in line with our model, we will grow organically. Return on investment is the key to this decision. For example, our request for capital from our business units for 2024 totaled well over $350 million, which includes automation, technology, marketing, and new product capacity, as well as investments in markets where we have been unable to acquire targets at a fair ROI. We will stay operationally aggressive and fiscally conservative using our balance sheet to support our growth and value creation. Now let's review segment performance and outlook. We'll start with UFP 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 President of Retail Solutions, Will Schwartz, has worked well with his team to build on the success of the segment and outperform 2022 results. This 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 continues to gain recognition and trust in the marketplace. We are investing to grow capacity and to add additional manufacturing in the Northeast. In addition to expanded marketing efforts, Deckorators has sub-branded its mineral-based composite product offerings as Surestone to highlight the unique advantages of the patented technology. Expect some exciting new marketing efforts behind this technology and product line. Recently added p lus p lanned future c apacity in Surestone manufacturing will allow us to launch additional products too. The Surestone technology is quickly becoming a favorite among installers and homeowners for its aesthetics, durability, and sustainability. The number of Deckorators certified professional installers has grown to over 900, and they continue to be great advocates for the products. While we grow our Surestone technology, we also expect some consolidation in the wood-plastic composite space. Moving to ProWood and Sunbelt, those units are creating more synergies with treating efficiencies and preservative utilization and development. Our ProWood FR fire-retardant- treated lumber sales continue to grow. The PFS Chemical Development Company is moving into our Innovation G roup to drive more external sales as well as to accelerate the development of new formulations to preserve, protect, and strengthen wood products. UFP- Edge siding pattern and trim products struggled in 2023 as demand waned for the category overall and as we continue to transition to more value-added products from basic commodity-type products. We have restructured management of this business unit and expect substantially better performance in 2024 and beyond. We also believe there are opportunities to deploy our Surestone technology in this product category. Our e-commerce platform continues to grow and serve our customers with direct fulfillment of many of our manufactured items. We recorded online sales of more than $400 million in 2024 and will continue to grow out this capacity. Our Retail S olution strategy is simple: provide innovative new products and solutions, find, expand, and harness opportunities, select and build the right brands, and to utilize our national reach, purchasing expertise, and distribution network to provide the best customer value. The outlook for Retail in 2024 ranges from up slightly to down slightly for the year. A rebound is expected in 2025 and 2026. The big-box retailers expect to gain market share as they focus more on small professional contractors. In January, our Retail S olutions performance was down versus a year ago due in part to tougher weather conditions in many parts of the country. Moving on to the Construction segment led by Patrick Benton, the Site Built business unit remained resilient with a good mix of single-family and multifamily projects. While starts in 2024 are projected to be slightly up to slightly down from the 1.413 million actual starts in 2023, there is optimism for rate cuts later this year and a rebound in 2025 and 2026. Our balanced approach serving multifamily as well as single-family helps position us well in the markets we serve, which tend to be the more resilient markets in the country and that continue to benefit from in-migration. We are well positioned to meet anticipated market needs and will continue to adjust to the actual market conditions going forward. We also note that the build-to-rent market is growing, and when multifamily units are included, over 40% of all new construction is in rental units. We expect that higher interest rates coupled with a forecasted decline in rates in six to nine months may cause some multifamily developers to wait until later in the year to begin construction on their new projects. Moving to Factory-Built, the business unit is expecting a trendline similar to Site Built. We remain bullish on Factory-Built H ousing over the long term as it remains the most affordable housing option. Recreational Vehicles have been very slow but have worked through inventory in their dealer network and are expecting to see a modest upswing later this year. While RV is a small portion of our business, we have several products in our recreational pipeline to help us gain share and grow within the market as the industry recovers. We saw considerable improvement in Commercial C onstruction in 2023, and we are forecasting a better bottom-line result in 2024. This group has continued to balance manufacturing capacity and has consolidated manufacturing into four main locations domestically and one overseas. In the Concrete F orming space, we added new locations in 2023 to serve new markets that have stronger growth prospects or to expand our capabilities in existing markets. The results were impacted by the ramp-up of these new operations, but in 2024, we expect significant improvement in bottom-line results, more growth towards value-added products, and less focus on distribution of sticks and panels. Overall, our expectation for construction in 2024 is slightly up to slightly down. January housing starts were lower than forecast, so a back half of the year catch-up will be important to hitting our annual target. In the Packaging segment led by Scott Worthington, we have seen the biggest headwinds. Many of our customers have seen lower market demand, which means less demand for packaging. These customers are also evaluating costs in all areas and looking for concessions as the economy is more difficult. While we believe our value proposition is strong, we are not immune to these challenges and continue to seek less expensive yet still value-added solutions for our customers. The Packaging team is evaluating its internal costs as well and consolidating production in certain hubs, eliminating excess capacity, and focusing on manufacturing efficiencies with a lower level of overall production. Longer term, we have a diverse end customer market to pursue, including appliances, light and heavy equipment, agriculture, moving and storage, automotive, furnishings, horticulture, and glass. The packaging industry remains very fragmented, and our modest market share leaves tremendous opportunity for growth. 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. Our new steel packaging facility has added excellent alternatives for packaging heavy items and reusable applications. We continue to expand our mixed material offerings and specialty products such as Strip Pak to new geographies, both domestically and internationally. PalletOne saw a decline in volume in 2023. As large pallet pool operators right-size their inventories, they are relying more on used pallets. However, we expect a return to more normalized environment later this year. As a result, the second half of 2024 is projected to be stronger than the first half. This business unit is expanding its national footprint and is poised for strong growth in 2025 and 2026. 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. And we will be combining our research, development, and state-of-the-art testing capabilities into a central location in 2024. Overall, we expect unit sales to be down slightly in 2024 and to rebound in 2025 and 2026. On the international front, our team is focused heavily on extending our packaging solutions to multinational customers. The corrugate capabilities in India and Australia, our Strip Pak branded products in Asia and other markets, and pallets and structural packaging in Mexico, Europe, and elsewhere enhance our total product offerings. Our international sourcing and sales efforts create worldwide capabilities for both our domestic and foreign customers, which we will be enhancing with new technology, much like the TimberBase product that was launched earlier this year. Clearly, the overall economic outlook is mixed. While it certainly doesn't inspire unbridled optimism like the Odysseus lander's rocket ride to the moon, we aren't discouraged. We've been here before, and there's no team better prepared to create success. We can hear Jeff Lynne singing, "Don't bring me down," and we might add a twist, "You can't bring me down." Some other items of interest in our focus areas and departments are, first of all, new products. New product sales for the fourth quarter were $142 million, and for the year, were $716 million. Both numbers were below our targets for the year due in part to lower lumber market prices. For 2024, we have raised the bar on the definition of new products as we drive focus on more value-added products and services. For new products, we have increased the return on investment target. We've placed more emphasis on innovation and eliminated many products that were new to UFP but did not have a competitive or sustainable advantage. With the higher standard, we are lowering the forecast for new product sales to $510 million for 2024. We will still be marketing and selling the products which no longer qualify as new and estimate those items could sell up to $300 million in 2024. Our investments in the Innovation A ccelerator assist speed to market for new product ideas by rapid iteration and faster scale and synergy. We have seen several new products developed in 2023 and tested, which we expect we will bring to market during 2024. Our Innovation Fund has completed 4 investments in either late-stage development or early-stage commercialization projects. The team has several other opportunities in the pipeline as we fulfill our 2021 commitment of $100 million of investments for these types of projects over the next few years. Purchasing. In 2024, the lumber market is expected to remain within a trading range more in line with historical levels. The mills are bringing on additional capacity of more than 1 billion board feet in 2024. We expect that mills will manage the supply side by taking production offline at less efficient mills to match market demand rather than erode their margins. We note that in January, the lumber market has declined steadily. Transportation. During 2023, we invested in improved technology and worked to centralize our transportation functions to gain efficiency and reduce our overall costs. As with most major changes, the rollout of technology has come with some challenges which are being addressed, and we have also uncovered areas which will be improved by our new model. We expect to have the core systems fully implemented in 2024. On the human capital front, we note that the current U-6 u nemployment r ate at the end of January was 8%, up from 7% at the end of December 2023. We note that many of the jobs being created are in nonprofits, healthcare, and government. These factors help explain the current lack of growth in the manufacturing space. Our facilities are consistently evaluating staffing levels and production schedules to optimize our teams. We also balance our workforce among segments to ensure easy transfers from areas seeking a slowdown to those that remain strong. We make sure that we keep our strong performers on our team while de-emphasizing the need for temporary workers. We also continue to train, recruit, and hire to keep growing our skills and talent. We have a long history of promoting from within, and we augment this practice by hiring outside expertise and talent to help us improve. The UFP Business School continues to add unique opportunities for current and prospective employees to enhance their skills and knowledge and move up in the organization. In our quest to be the employer of choice in the communities we serve, we are honored to share bonuses and extra compensation with our hourly employees. These bonuses totaled over $53 million in 2023 as we continue to share performance rewards with all of our full-time teammates. In the marketing space, as we continue to grow our value-added product categories, we recognize a need to refine, enhance, and measure the effectiveness and efficiency of our marketing spend to ensure that we are driving sales in the most efficient manner possible. We are creating a small central marketing team to provide a more robust process, to provide data-driven and timely results to our leadership teams, and to better leverage costs with the marketing teams and our business units and segments. We have developed a five-year strategic plan which sets targets for sales of over $10 billion, not including material acquisitions. It also charts a path to higher EBITDA margins with a stretched goal of 12.5% EBITDA margin. 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 a 20% drop in sales to $1.5 billion, consisting of a 10% reduction in selling prices and a 10% decrease in units sold. The decline in selling prices is a result of the drop in lumber and more competitive pricing in certain business units. The biggest factor impacting our drop in unit sales is our calendar. It's important to note that in the fourth quarter of 2022, we operated with one extra week of activity due to the way our fiscal year-end works. One less week resulted in a 6% unit decline in the fourth quarter of 2023. Next, while adjusted EBITDA dropped 22% to $166 million, adjusted EBITDA margin remained well above historical levels at 10.9%. 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. Return on Invested Capital finished the year at almost 24%, more than 2x our Weighted Average Cost of Capital. Operating cash flow improved by $128 million to $960 million for the year as lower volumes and lumber prices reduced our investment in net working capital. And finally, our balance sheet continues to gain strength with a net cash surplus of $842 million this year compared to $281 million last year, providing us with flexibility to pursue financial and strategic objectives. Moving on to our segments. Sales in our Retail segment dropped 27% to $506 million, consisting of a 9% decline in selling prices and an 18% decline in unit sales. This unit decline was comprised of a 14% decline in volume with big-box customers and a 23% decline in volume with independent retailers. We experienced our greatest unit declines in our Edge business unit, which Matt discussed, and the outdoor essentials and building products categories of our ProWood business unit. In spite of lower demand and sales volumes, we're pleased to report a $2 million increase in our gross profit for the quarter, which was driven by our ProWood and Deckorators units as a result of pricing and operational improvements. Higher SG&A expenses contributed to a $4 million decrease in Retail's operating profits for the quarter. The increase in SG&A was primarily comprised of an increase in incentive compensation expenses. Moving on to Packaging. Sales in this segment dropped 21% to $414 million, consisting of a 10% decline in selling prices and an 11% decrease in units. As we mentioned last quarter, customer demand continues to be soft, and that's contributed to more competitive pricing. As a result of these factors, gross profits dropped by almost $49 million. The decline in gross profits was offset by a $10 million decrease in SG&A due to a decline in incentive compensation expenses. Operating profits in the Packaging segment declined more than $38 million to $43 million in total. Turning to Construction. Sales in this segment dropped 16% to $511 million, consisting of a 13% decline in selling prices and a 3% decrease in units. The unit decline was primarily due to our C ommercial and Concrete F orming business units. The decline in selling prices was primarily experienced in our Site Built and Concrete F orming business units and resulted in the $18 million decrease in our overall gross profits and operating profits in the segment for the quarter. 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 annual ratio of value-added sales to total sales to 68% this year from 63% last year. Similarly, our annual ratio of new product sales to total sales improved to 9.7% this year from 7.7% last year. We're confident these factors will not only help us maintain the structural improvements and margins we've realized today but enable further improvements on 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 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 on plan for the quarter and were $17 million lower than last year, driven primarily by lower bonus and sales incentives for the quarter. Lower incentive expenses were also the primary reason SG&A expenses dropped $67 million for the year. Before we move on from the income statement, we think it's important to assess the impact of our strategies and structure on our overall profitability by looking at our performance in 2019 compared to 2023. The metrics we focus on are gross profit margin, SG&A as a percentage of gross profit, adjusted EBITDA margin, and adjusted EBITDA growth to unit sales. Gross profit margin improved from 15.5% in 2019 to 19.7% in 2023. SG&A as a percentage of gross profit improved from 64% to 54% in 2023. Adjusted EBITDA margin improved from 7.2% to 11.2%. Our adjusted EBITDA growth was 4.5x greater than our unit sales growth since 2019. This track record gives us confidence our strategies are working and that continued execution of them will help us reach the long-term goals we highlighted in the press release and that I'll touch on at the end of my prepared remarks. Moving on to our cash flow statement. Our cash flow from operations was $960 million, a $928 million improvement over last year as lower volumes and lumber prices reduced our investment in net working capital. Our cash cycle for the year decreased to 63 days this year from 64 days last year due to an improvement in our receivables cycle, and our receivables remain healthy at 91% current. Our investing activities included $180 million in capital expenditures. Our expansionary investments, which totaled about $70 million, are primarily focused on four key areas: expanding our capacity to manufacture new and value-added products primarily in our structural packaging, protective packaging, and Deckorators business units, geographic expansion in core higher-margin businesses, achieving efficiencies through automation, and increasing our transportation capacity. 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 growth geographically and in new verticals they don't currently serve. Finally, our financing activities included returning capital to our shareholders through almost $68 million of dividends and more than $82 million of share repurchases. Turning to our capital structure and resources, we continue to have a strong balance sheet with $842 million in surplus cash and excess debt compared to $281 million last year. Our total liquidity was $2.4 billion, which includes cash of $1.1 billion and $1.3 billion in availability under certain long-term lending agreements we have in place. The strength of our cash flow generation, conservative approach to managing our capital structure, and prudent return-driven approach to capital allocation continues to provide us with an abundance of capital to grow our business and also return to shareholders through different cycles. We plan to 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 $0.33 a share to be paid in March, which represents a 10% increase from the most recent quarterly rate and a 32% increase from the rate paid last March. We currently plan to continue to increase our dividend annually at a rate that is aligned with our targeted long-term growth rate in earnings and cash flow. 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 more than 274,000 shares at an average price of $97.22, resulting in $173 million in remaining authorization. As a result of the growth and margin improvement opportunities we see, we plan to increase our total capital expenditures to an estimated range of $250 million-$300 million in 2024. Expansionary capital investments are expected to comprise $150 million-$200 million of this total. We plan to continue to invest at this elevated level in the future to capitalize on the higher-margin growth opportunities we see in each of our segments. Finally, our strong balance sheet continues to allow 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. I'll finish up with comments about our outlook for the year and our long-term goals. Looking into 2024, we believe the soft demand and more competitive pricing we're currently experiencing will continue into the first half of the year. But we're optimistic we'll see improvements in the back half of the year based on the current economic forecast, including the trajectory of interest rates. On a long-term basis, we'll continue to focus on executing our strategies to take advantage of the opportunities identified in our business units. Generally, those opportunities consist of growing our portfolio of sales of new and value-added products and investing in our brands, expanding geographically in our higher-margin core businesses, investing in automation and process improvements to expand capacity and enhance productivity, vertically integrating in certain businesses, and gaining market share with large customers through more strategic sales efforts in our unique capabilities and geographic footprint. As we effectively execute our strategies, we believe we can achieve our new five-year financial goals of a 7%-10% compound annual growth rate in unit sales, a 12.5% Adjusted EBITDA margin, and a Return on Invested Capital exceeding our hurdle rate on new investments while maintaining a conservative capital structure. That's all I have on the financials, Matt. Thank you, Mike. Now 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, press star one one again. One moment while we compile the Q&A roster. Our first question will come from the line of Ketan Mamtora with BMO. Your line is open. Thank you. Good morning, Matt, Mike. Good morning, Ketan. First question. First question, coming back to the Retail side, it sounds like UFP -Edge and ProWood is kind of where there is some weakness right now. As you kind of see your current trends, are you seeing signs of stabilization, or are those kind of volumes still under pressure? I know you kind of talked about recovery in the back half, but I'm just curious if activity is kind of stabilizing at these levels. Yeah, I think, Ketan, it's kind of tough based on just January results. As I looked at January, it kind of gives you a little bit of a headfake in the sense that there's some weather issues, and that's what we're hearing from the customer base. I'd like to think that it's stabilized, but it's always difficult to predict at this point. Fair enough. And then looking at more sort of longer-term targets, you've kind of based both on the unit growth and also on the EBITDA margin. Can you sort of talk about where you see the most opportunity within your three business lines, both on the top line and on the bottom line with margins and sort of revenue growth? Yeah, what I could tell you is I think each of the segments has good opportunities. I would say they're not uniform across all areas. As you look at the growth on Deckorators, for example, that's something we're excited about. We think a rebound in Edge is going to have a really good impact for us. If we move to packaging, I think there's going to be parts of that that are going to be challenged, as Mike mentioned, simply because of the amount of manufacturing that's either not happening now or needs to recover in the back half of the year. If you look at the protective packaging materials, we expect that to remain strong and to continue to grow. So kind of a mixture there. And then if you move along into the construction space, I would tell you that we've outlined what we expect for Site Built, either slightly up, slightly down on housing, and that's really going to help define what we're able to do there. The Factory-B uilt we walked through, again, I think that's kind of aligned with the housing market itself. And then the potential areas for growth, Commercial, and Concrete Forming, they both have room to improve. So we would look to see that being better in 2024 there. Maybe adding on to that too, there's one area that spans really all the segments, and that's investing in automation and driving efficiencies. And I think the capital ask in that area was nearly $100 million for next year. Got it. No, that's helpful. I'll jump back in the queue. Good luck. Thanks, Ketan. Thanks, Ketan. 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 Yinger. Good morning. It looked like kind of the first sub-20% gross margin in packaging since early 2021. I'm curious how you would kind of describe the pricing environment between pallets and maybe more structural packaging offerings. And how does that impact your view on potentially getting back to 20%+ gross margins over the next couple of quarters? Yeah, I think that's a really good question, Kurt. What I would tell you is I think what we're seeing in the marketplace is just a lot of pricing pressure, as we alluded to it, from the standpoint of when companies aren't as busy, they tend to take a look at their purchasing and try to drive a little more value there. We still think long-term we can exceed that range. And as we predicted, the first half of the year is going to be a little bit more of a struggle than the second half will be more of a rebound. So if that tends true, then obviously that will help us and everyone else in that space. So that's kind of hinging on what happens with the economy. Got it. Okay. And then in construction, I mean, the total starts have been, I guess, a little bit mixed, but single-family has been pretty strong. And I guess I'm curious if you've kind of seen that in your order flow in some of your Site Built facilities. And then as we look at kind of the sequential tickdown in gross margins, is that primarily seasonal factors or perhaps some normalization in Site Built coming off the capacity-constrained periods of 2021 and 2022? Yeah, I'm going to say it's probably more of a cyclical as opposed to a seasonal effect. As you look at it, and just to use January as kind of a data point where the market was a little slower, it drives those numbers differently. A year ago, the selling prices were significantly higher. So I think you're going to just kind of see that trend through, again, going back to the first half of the year being somewhat sluggish and then picking up in the second half. Got it. Okay. And then you talked about some consolidation in the wood-plastic composite space. I was hoping maybe you could, I guess, talk a little bit more about that comment and how that impacts your overall view of the growth opportunity in Deckorators, kind of balancing out wood-plastic composite versus the opportunities in Surestone going forward. Yeah, that's a really good question. I think the way we look at it is we have the Surestone technology, which we're very, very high on, and we see that as having a bright future. Wood-plastic composite certainly has its place in the marketplace. And the comment that I'm making has more to do with the amount of capacity that all the wood-plastic composite manufacturers have added over the years. And there's a number of smaller participants in the market that I think will have to make some decisions. And we obviously look at the whole marketplace and try to figure out what makes the most sense. We're comfortable with our position. It was just more of a market observation that I think there's probably too many people in the mix on the WPC side. So we expect that to change. Okay. All right. Thanks, Matt. Appreciate the color. I'll turn it over. Thank you, Kurt. Thank you. One moment for our next question. That will come from the line of Stephane Guillaume with Sidoti. Your line is open. Hi. Good morning, Mike. Good morning, everybody. My first question is, in the Construction segment, could you provide insight into the pricing trends across the four business units? Are there any deviations within these units indicating a divergent price movement compared to the others? Yeah, I would tell you, I don't think there's anything that jumps off the page at us to say that there's a difference or a divergence, at least at this point. It just seems to be general market conditions. Okay. You recently announced the launch of TimberBase. How should we think about it coming online and what it could mean for growth for UFPI? The TimberBase, Mike can probably talk about the TimberBase product and what he's seen so far. Yeah, TimberBase, for those of you that haven't heard of it, it's our online trading software. We bought that last year. The team's been working on upgrading the software and enhancing the functionality of it. Last year, our outside sales, I think, in that trading group, so the external customers and not our domestic plants, was about $60 million. Over the next five years, our plan is to grow that platform by $100 million to about $160 million in sales. So we have pretty robust growth opportunities, we feel like, there. And the software is pretty key for getting us there. All right. Thank you so much for the color. I'll jump back in the queue. Thank you. Thank you. One moment for our next question. That will come from the line of Stanley Elliott with Stifel. Your line is open. Hey, good morning, everybody. Thank you for the question. Could you all talk about it sounds like most of the markets are kind of flat-ish, up or down a little bit, and it kind of seemed to imply maybe a little bit of a pickup in the second half with some of the residential markets improving. Is there anything you could share from a seasonality perspective, first half, second half, anything along those lines as we're trying to think about how 2024 will unfold? Yeah, for sure. We see the first half of the year being more difficult. You've seen us, I think, at the end of Q3, we talked about things softening up, pricing becoming more competitive. We saw that into Q4, like we said. At the time, we said we saw that continuing on into the early part of 2024. We still feel that way. We think that the first half of the year is going to be tougher comparisons with last year. But we're optimistic that with rate reductions, etc., the back half of the year could be easier comparisons, and we perform a little better. And then in terms of kind of the Surestone in the mineral base, you've added some capacity here. It sounds like you're taking the technologies and putting into newer products. How are you all right now sitting in terms of the capacity for that product category? Will we need to end up adding some additional capacity here in the very near future, just given how it sounds like the ramp in the product has been going? Yeah, that's a great question, Stanley. So what we're looking at, we completed some capacity expansions in 2023 that we had announced prior. We're actually accelerating some investments. We mentioned a facility in the Northeast, and we're going to be doing that this year as opposed to it was originally a 2025, 2026 kind of opportunity. We were pulling it forward because we have seen it ramp quicker, which is terrific. And so we're going to well, we have the capital. We're going to deploy it, and we expect to have that facility up and running by early 2025. Then lastly, for me, just in terms of kind of lumber prices, you'll mention kind of range-bound here. In that sort of environment, do you all get much pricing for the individual businesses, or is that kind of more flat-ish in line with how the end markets might end up performing? Yeah, I think we tend to look at it more as a pass-through, Stanley. So whether it's lower, higher, we're more concerned with how quickly it moves one direction or the other as opposed to the absolute level of it. So I think the takeaway message ought to be is if the market remains low, that probably the sales dollar line is going to be lower. Actually, I find more interest in the lumber prices. I'm sorry. I was going to add on to that. I find more interest in the lumber prices in terms of what it's telling us about demand. And so I think the prices having dropped as far as they have and continue to drop in January just indicates an overall soft demand environment. Thanks so much, guys. Appreciate it. Best of luck. Thank you. Thank you. One moment for our next question. That will come from the line of Jay McCanless with Wedbush. Your line is open. Hey. Good morning, guys. Thanks for taking my questions. Morning, Jay. Morning. So the first question I had just to and thank you for the expanded disclosure and the new targets that you talked about in the release. Just to benchmark going forward, where do you think your cost of capital is now? And maybe since you're wanting us to look back at 2019, maybe what was your cost of capital back then? Yeah, good question. We take a look at that every year. I would have said back in 2019, it was probably 9%-9.5%, with interest rates being what they were back in those days. We were definitely sub-10%. Now, I'd say that more like 10.5%-11.5% cost of capital, again, based more on what interest rates have done. Okay. And so when I think about the timing of increasing the targets in terms of unit volume and the EBITDA versus what looks like a soft first half of the year, I guess, what was the motivation or the impetus to increase those targets now versus maybe waiting till later in the year when you had a better sense of where 2024 was going to go? That's a really fair question, Jay. But what I would tell you is kind of goes with our philosophy of there's going to be certain economic challenges over the next five years. And I certainly am not smart enough to predict when those are going to happen. So we look out ahead and we say, "Five years from now, where do we want to be?" And we believe that those are very realistic goals for us. There may be bumps on the road getting there over the next five years. And I think the first six months of this year is part of it. But that's not going to deter us from the goal of getting to these targets. Okay. Thank you, Matt. And then, Mike, last question for me. It sounds like the customer health is still pretty good. It sounded like DSOs were improving. Anything you're seeing on late pays or delinquencies, just given some of the softer demand out there that we should be mindful of? Yeah. I mean, anytime you come into a slower cycle like this, it's always something to be concerned about. I think our teams do a really outstanding job of staying on top of the receivables. So when I look at our aging, while there's always going to be something that's out there that can surprise you, I think with the diligence we have on it and the current state of how they look, we're in really good shape. And I don't see anything material in there. Okay. Thanks, guys. Appreciate it. Thank you, Jay. Thank you. One moment for our next question. That comes from the line of Kurt Yinger with D.A. Davidson. Your line is open. Great. Thanks for taking my follow-ups. You talked a little bit about consolidated manufacturing in certain business units. I guess I'm curious how you're thinking about balancing that versus the expectations for a rebound in some of your markets over, call it, the second half of the year and into 2025. Looking back at 2021 and 2022, getting the labor was a challenge. I think in certain parts, you were challenged from a capacity standpoint and packaging. Just curious if you could talk about kind of the mindset of operating efficiently and making sure you're managing costs and what's a challenging, at least, first part of the year versus those growth expectations and some of the challenges we've seen over the last couple of years. Yeah, that's a really good connection, Kurt. I think the way I would look at it is our teams have done a great job by bringing together automation, increasing the capacity at existing facilities, and in the packaging space in particular, utilizing more of a hub-and-spoke model where they're able to process a lot more product in the same footprint. That's due to a lot of different factors, but not the least of which has been the investment in automation and technology. What we've actually done is increase the capacity over what it was in 2021, 2022 without increasing the footprint. We think we can do just as much volume in a smaller footprint and do it more efficiently. So that's why we feel good about being able to say, "Hey, we're going to take some things offline because we don't need them, and we'll consolidate them." That's still part of an ongoing process. Almost regardless of what the economy is doing, we have to keep doing that with that technology and innovation spend. That will continue to help us be a low-cost producer. Got it. Okay. And then I guess just specifically on the Site Built business, if we do see lower rates stimulate additional new construction activity. How are you thinking about potential expansions in that business? I mean, we've seen quite a bit of consolidation in recent years. Seems like there's been a structural improvement in the margin profile. I guess would just love to hear your overall thoughts on organically expanding your presence there. Yeah, our Site Built team has a pretty aggressive expansion plan. So we're going to, again, look to the markets where we see in-migration or we see growth as opposed to those areas where people are moving out of. So the Mountain West area is an area that we're focusing on. Again, there's more areas in the Southeast. If you kind of follow the map of housing starts and where they're growing the most, that's where the team is looking at expanding our presence. So we expect to see more of that in 2024 and beyond. Got it. All right. Great. Well, good luck here in Q1, guys. Thank you. Thank you, sir. 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 Matt Missad for any closing remarks. Thank you again for spending the time with us today. In 2024, we know we're going to have to work smarter and harder to be successful. We will continue to allocate capital wisely, mixing current return to shareholders with growing longer-term value. Whenever we have challenges, I rely on our experienced leaders who have been through many economic cycles. Like the late Toby Keith, I like to think that although I am not as good as I once was, I am as good once as I ever was. Fortunately, I'm surrounded by our great team of leaders and teammates who, with their incredible talent, will continue to drive success and make it better in 2024. Thanks, and have a great day.