Builders FirstSource, Inc.

good day and welcome to the builders first source fourth quarter 2022 and year-end earnings conference call today's call is scheduled to last about one hour including remarks by management and the question and answer session in order to ask a question please press the star key followed by the number one on your touchstone phone at any time during the call i would now like to turn the call over to mr michael nice senior vice president investor relations For builders, for source, please go ahead, sir.

Thank you, Brittany, and good morning, everyone. Welcome to our fourth quarter and full year 2022 earnings call. With me on the call are Dave Rush, our recently appointed CEO, and Peter Jackson, our CFO. Today, we will review our fourth quarter and full year results. The earnings press release and investor presentation are available on our website at investors.vldr.com. We will refer to several slides from the investor presentation during our call. The results discussed today include GAAP and non-GAAP results adjusted for certain items. We provide these non-GAAP results for informational purposes, and they should not be considered in isolation from the most directly comparable GAAP measures. You can find the reconciliation of these non-GAAP measures to the corresponding GAAP measures where applicable and the discussion of why we believe they can be useful to investors in our earnings press release, SEC filings, and presentation. Our remarks in the press release, presentation, and on this call contain forward-looking and cautionary statements within the meaning of the Private Securities Litigation Reform Act and projections of future results. Please review the forward-looking statement section in today's press release and in our SEC filings for various factors that could cause our actual results to differ from forward-looking statements and projections.

With that, I'll turn the call over to Nick. Thank you, Mike. Good morning, everyone, and thanks for joining our call. Before we get into the results, I'd like to thank the Board of Directors for the opportunity to serve as the CEO of Builders First Source and for trusting me to lead this great organization. I also want to thank all of the BFS field leaders and team members for their support, which has been inspiring. I come from a background in finance, having spent the first 18 years of my career in various financial roles from controller to CFO. Over my 23 years with BFS, I've been fortunate to have had a variety of operational roles, including region oversight, primary responsibility for both the ProBuild and BMC integrations, and most recently leadership of our enterprise-wide initiatives as EVP of our strategic management office. I believe my experience and industry knowledge will be a strong basis to build on our success of creating long-term value for shareholders. Now let's turn to the business results. Macroeconomic factors will undoubtedly continue to create headlines this year. However, with our exceptional and seasoned team, strong balance sheet, An industry-leading platform, we are in a great position to win in any environment. We have a field leadership team with over 30 years average experience in the industry. They have been through similar macroeconomic environments to the one we are currently facing today, which gives me great confidence in our ability to manage business changes with quick and decisive action as required. We have maintained very low leverage providing us with maximum flexibility to deal with any scenario, and we continue to leverage our footprint, our scale, and our product portfolio to out-compete in the market. Let's turn to our long-term strategic priorities on slide four for a moment. As we navigate a changing landscape, we see no need to alter our long-term strategy, and we remain focused on expanding organically in value-added products and services, driving operational excellence, continuing to build our high-performing culture, and growing through strategic tuck-in acquisitions. On slide five, you can see our continued emphasis on the strategic priorities was key to our record full-year 2022 net sales of $22.7 billion, and adjusted EBITDA of $4.4 billion. Top-line growth, value-added product mix improvement, and disciplined cost management resulted in our adjusted EBITDA margin increasing 390 basis points to 19.3%. The combination of increased profitability and share buybacks supported 81% growth and full year 2022 adjusted EPS. On slide six, you can see that we delivered a 6.6% increase in core organic sales, including nearly 21% growth in our higher margin value-added products. We're extremely pleased to deliver $123 million in productivity savings for the year, exceeding our $100 million target as we drive improvement across a variety of projects and leverage our BFS one-team operating system. We remain focused on the importance of controlling SG&A and other expenses. This includes efficient capacity utilization, ongoing optimization of our footprint, and balancing the need for variable cost reductions and future capacity. Importantly, we have rationalized over 30 locations during the last year while maintaining coverage and not exiting any markets. I'm extremely proud of how we continue to demonstrate our high-performing culture through improved safety by lowering our recordable incident rate by approximately 22% continue to invest in training, enhanced DEI initiatives, and improved employee benefits to better attract and retain high-performing talent. Turning to M&A on slide seven, in addition to our focus on profitable core organic growth, we continue to execute tuck-in acquisitions aligned with our strategy, completing six acquisitions in 2022. Although the M&A pipeline has slowed in the current macro environment, we continue to be inquisitive while remaining disciplined in our approach. We are committed to expanding our geographic footprint and key markets, with a particular emphasis on enhancing our value-added portfolio to better serve our customers, diversify our in-market exposure, and leverage our technological technology. door and supply in the fourth quarter, which expands our millwork footprint in the Phoenix area. And earlier this month, we acquired Noltex Trust, a five-location trust manufacturer providing building components to the single and multifamily markets throughout Texas. This tuck-in acquisition further extends our leading position in value-added products across the state. We're excited to welcome both Pima and Noltex with their longstanding customer relationships and track record of profitable growth to the BFS family. The still highly fragmented nature of our industry supports our ambition to invest $500 million in M&A per year on average for the next several years. Moving to slide eight, And looking at our capital allocation in aggregate for 2022, we deployed approximately $3.5 billion of capital towards organic growth investments, tuck in M&A, and share repurchases, and remain on track to achieve the goal we established at our 2021 Investor Day of deploying $7 to $10 billion from 2022 to 2025. We will continue to closely monitor our customer sentiment, which currently suggests a challenging year ahead. During the fourth quarter, we saw a slowdown in average daily sales, which has continued into the first quarter. Higher mortgage rates and affordability challenge continue to be headwinds. On slide nine, we outlined the benefits of our flexible business. currently experiencing. As we have discussed, we are actively managing the business as conditions indicate, and we are acting decisively wherever we see decelerating demand. Our focus is on effectively managing costs through our variable expense structure to Stepping back, we realize affordability has been an increasing concern over the past several years as home prices and rates have increased significantly. We are working to make housing more attainable by investing in value-added products, productivity, and digital capabilities to reduce cycle times and make home building more efficient. For example, in 2022, we invested approximately $125 million in CapEx supporting our value-added product growth and digital strategy. Going forward, we will continue to prioritize our investments in our fleet, value-added technology, and digital innovations. Together, these initiatives will help lower total costs, improve affordability, and allow more people to buy homes. We are committed to strategically accelerate our leading market position and deliver on our overall value proposition. And we will continue to execute while keeping our focus on providing the best possible service to our customers. Now let's turn to slide 10 to discuss our pioneering role in the digital transformation of the home building industry. We have a long-term commitment to investing in digital innovations and technologies that we believe will drive greater efficiency across home building and enhanced our product offerings. On the home builder software side, we are executing our development plan and integrating that with our BFS operations through our digital sales teams. We're excited to have reached a significant milestone in launching the pilot of our new myBLDR.com platform. This platform will introduce our home builder customers to easy to use digital tools to virtually design and build their homes. These include key capabilities such as plan intake and markup, home configuration, conflict identification, material estimating and ordering, and job site scheduling. In January, we began communicating this release at both our BFS national event and the International Builder Show. At both events, we received overwhelmingly positive feedback affirming the need for this innovative technology in our industry. We are launching the current MyBLDR.com capabilities to 40 pilot customers across four markets. This will allow us to assess, collaborate with, and provide new solutions to our customers in a way that aligns our BFS sales and operations teams. We will add new features with monthly releases throughout 2023, as we build and scale our end-to-end digital home building platform. The overall digital strategy remains on schedule, and we are on track to gain an incremental $1 billion in sales by 2026. Last month at our national event, we announced our inaugural BFS Hall of Fame class for 2022. the culmination of our annual employee recognition program and a highlight of our People First culture. These distinguished individuals represent the best of our frontline team members, but there is one person I would like to highlight today, Frank Loria. Frank is a fleet and compliance manager out of Southern California who has been with the company and its predecessors for an impressive 45 years. He oversees our fleet and machinery across 11 locations. Frank takes great pride in keeping everything running consistently and with minimal downtime. His manager emphasized, quote, Frank's knowledge of everything mechanical is simply unrivaled. On behalf of the leadership team, I want to thank Frank and the other Hall of Fame inductees for their tremendous contributions. I will conclude by saying that we have the best team to win in a challenging environment. I am confident in our strategies and our ability to deliver long-term results for our shareholders. I'll now turn the call over to Peter to discuss our fourth quarter financial results in greater detail.