Builders FirstSource, Inc.

Please stand by. Your program is about to begin. If you need assistance during your conference today, please press star zero. Good day and welcome to the Builders First Source first quarter 2025 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 phone at any time during the call. I'd now like to turn the call over to Heather Koss, Senior Vice President, Investor Relations for Builders First Source. Please go ahead.

Good morning and welcome to our first quarter 2025 earnings call. With me on the call are Peter Jackson, our CEO, and Pete Beckman, our CFO. The earnings press release and presentation are available on our website, at investors.bldr.com. We will refer to the 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 a 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. And with that, I'll turn the call over to Peter.

Thank you, Heather, and good morning, everyone. Given the current environment, I'm proud of our resilient results for the first quarter, which reflect the strength of our differentiated product portfolio and our continued focus on driving operational excellence. While macro and industry dynamics continue to be unsettled, we remain confident in our ability to navigate any challenges. We are a cycle-tested team that has withstood economic uncertainty in the past we will execute again by staying rooted in our strategy and focusing on the factors within our control. During these uncertain times, our role as trusted partner is vital as we help our customers address affordability challenges and increase efficiency. We are focused on the near term while laying the groundwork for future growth. As the market recovers, I'm confident we will outperform. As shown on slide three, our strategy remains consistent. We are focused on organic growth, operational excellence, and disciplined capital allocation. We are committed to advancing our strong foundation and driving value creation for our customers through investments in innovation. Our significant investments in value-added products, digital tools, and internal systems are cementing our leading industry position. Let's turn now to our first quarter performance on slide four. Our team's ability to drive resilient results, despite external headwinds, reflects our focus on execution, operational rigor, and customer success. Pete will expand on our results more later in the presentation. On slide five, we highlight key areas where we've been executing our strategy. In the first quarter, we invested $23 million in our value-added facilities to prepare for future demand in key markets. This included opening one new millwork location, expanding another millwork plant, and upgrading a trust facility. Adoption rates for our industry-leading BFS digital tools are steadily climbing each week, and we are garnering consistent, positive feedback from our growing customer base. I'm pleased that we realized $19 million in incremental digital sales for the quarter, bringing our total to $153 million since launch, despite the challenging environment that has persisted for our target customers. We achieved $17 million in productivity savings in Q1, primarily through targeted supply chain initiatives, more efficient trust manufacturing, and fleet management. We are focused on optimizing processes leveraging technology and improving supplier relationships to enhance efficiency. We remain disciplined stewards of discretionary spending and we are continuing to maximize operational flexibility. We increased our service levels to our customers with an on-time and in full delivery rate of 92%. Single family starts remain soft as builders manage the pace of construction amid affordability challenges inventory buildup, and increased economic uncertainty. As we expected and communicated previously, multifamily also remains a headwind compared to 2024. In response to lower volumes over the last year, we have taken steps to align capacity across our facilities, manage headcount, and control expenses. This continues to be an attractive and profitable business for us. Turning to single family, Builders continue to employ specs, smaller and simpler homes, and interest rate buy-downs to help buyers find affordable options. Our comprehensive product portfolio enables builders to optimize their costs while maintaining quality, and we continue to supply more lower-cost offerings in products like engineered wood, windows, and doors. We are standing alongside our customers to battle affordability challenges. and grow with them through the investment in our people, technology, and innovation. While critical for the long-term health of the industry, these actions mean less near-term sales and gross profit dollars for BFS. Ultimately, this positions our company to accelerate when starts increase and current headwinds begin to subside. Turning to M&A on slide six, We remain focused on pursuing high return opportunities that expand our value-added product offerings and advance our leadership position in desirable geographies. Over the years, we have developed substantial and proven muscle memory to grow through M&A and have a track record of successful integration. In the first quarter, we completed two acquisitions with aggregate prior year sales of roughly 5%. As a reminder, in early January, we acquired Alpine Lumber, the largest independently operated supplier of building materials and value-added products in Colorado and northern New Mexico. In February, we acquired OC Plus, a leading supplier of lumber, building materials, and installation services, with locations in Pennsylvania, Maryland, and West Virginia. In addition, we acquired Truckee Tahoe Lumber in early April after quarter end. Truckee Tahoe has built a reputation of excellence as a leading supplier of lumber and building materials in the Northern California and Nevada markets. We are excited to welcome these talented new team members to the BFS family. Our industry remains highly fragmented, and despite a slowing M&A environment, we are confident that our M&A capabilities will remain an important catalyst for our long-term growth. Turning to slide seven, our disciplined capital allocation strategy focuses on maximizing shareholder returns through organic growth, inorganic growth, and share repurchases. In the first quarter, we deployed over $900 million towards investing in the business, acquisitions, and share repurchases. Now let's turn to slide eight and discuss the latest updates on our digital strategy. With our BFS digital tools, we are focused on creating value for our home builder customers. and in doing so, further extending our industry leadership position and driving substantial organic growth. Despite the challenging market, we have seen continued adoption and growth with our target audience of smaller builders. Our sales team continues to increase digital tool usage, which will further drive customer adoption. Since launch in early 2024, we have seen more than $1.5 billion of orders placed through our BFS digital tools. of which $153 million were incremental sales from existing and new customers. We're pleased with our progress to date and expect an additional $200 million of incremental sales in 2025, bringing our total to $334 million at the end of the year. I'm incredibly grateful to lead such a talented and hardworking team that makes a difference every day. One great example is Del Mar Little Deer in Oklahoma City. who has been with BFS for more than 20 years. Delmar excels as a trusted partner to our customers who have relied on him both as a driver and now as a dispatcher to ensure that deliveries are accurate and on time. As a dispatcher, he has helped keep his location ranked among the best in the company for dispatch and delivery management efficiency. Beyond his technical skills, Delmar is a mentor to our drivers. His experience in the field allows him to guide them not just on routes and best practices, including safety, but also on ways to provide value to our customers. His leadership and calm demeanor help keep our team running efficiently, even on the most challenging of days. I'm proud of Delmo and our countless other dedicated team members who continually raise the bar in service to our customers and each other. I'll now turn the call over to Pete to discuss our financial results in greater detail.