Builders FirstSource, Inc.

Please stand by. Your program is about to begin. If you require assistance throughout the event today, please press star zero. Good day and welcome to the Builders First Source Third 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. We do ask that you limit yourself to one question and one follow-up. 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 third quarter 2022 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 in 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. With that, I'll turn the call over to Peter.

Thank you, Heather, and good morning, everyone. Over the past several years, we have transformed into a stronger organization powered by our leading network of value-added solutions, a relentless focus on operational excellence, and superior capital deployment. These strengths, combined with our scale and a team dedicated of exceptional customer service have driven margin expansion, reinforced our industry leadership, and extended our track record of success. By focusing on the factors within our control and leveraging our competitive advantages, we are competing effectively today and are well positioned to outperform our competitors as the market recovers. Let's turn now to slide four. Our third quarter results reflect the strength of our strategy and disciplined execution in a weak housing market. We continue to execute effectively and sustain healthy profitability despite a low starts environment, underscoring our operational disciplines and improvement since 2019. Let's take a minute to step back and talk about the market. Single family construction remains soft. Builders manage the pace of starts given affordability concerns, consumer uncertainty, and elevated new home inventories. Demand remains tempered despite Fed rate cuts in 2025. As a reminder, Q4 is one of our slower quarters due to seasonality. Our builder customers have addressed these challenges by offering smaller and simpler homes, as well as incentives, such as interest rate buy-downs. That creates an environment where there are less sales dollars per start, every start is more competitive on the affordability front. We are working closely with them, leveraging our broad product portfolio and bundled solutions to drive cost efficiencies while upholding the highest quality standards. In the multifamily market, activity is expected to remain muted through the year end, in line with our previous thinking. However, we have seen green shoots in quoting activity as our customers see improving financing As a reminder, our first sale tends to lag a multifamily start by roughly 9 to 12 months. We continue to view multifamily as an appealing and profitable business for us, supported by a substantial mix of value-added products and attractive fundamentals. On slide 5, we highlight some of the key initiatives under our strategic pillars. In the third quarter, we invested more than $20 million in value-added solutions expand our product offerings in key markets this included opening a new millwork location in south carolina and expanding our upgrading plants in seven states we remain disciplined in how we deploy capital our consistent strong free cash flow through the cycle gives us the flexibility to invest in organic growth pursue strategic m a and return capital to shareholders This capital deployment is strengthening our competitive position and driving long-term value creation. Operational excellence is crucial to how we run the business as we develop talent, improve agility, and embed technology into our operations. We generated $11 million in productivity savings in Q3, primarily through targeted supply chain initiatives. Turning to slide six, we are prudently managing discretionary spending. and maximizing operational flexibility. In response to lower volumes over the last year, we have taken steps to align capacity across our facilities, manage headcount, and control expenses. We are reducing variable costs today while also investing in needed capacity to ensure we are positioned to scale quickly with the expected recovery in demand. Year-to-date through September, we have consolidated facilities, including eight in the third quarter, while maintaining an on-time and in-full delivery rate of 92%. With our industry-leading scale, experienced leadership team, and a track record of operating proactively through the cycle, we are confident that we can continue to deliver exceptional customer service. Moving to slide seven, our disciplined capital allocation strategy focuses on maximizing shareholder returns through organic growth, M&A, and share repurchases. In the third quarter, we deployed over $100 million toward return-enhancing opportunities aligned with those priorities. Drilling into M&A on slide 8, we remain focused on pursuing acquisitions that expand our value-added product offerings and advance our leadership position in desirable geographies. We have developed substantial and proven muscle memory to grow through M&A and have a track record of successful integration. In the third quarter, we acquired St. George Trust Company, a trust manufacturer serving builders in southern Utah and southern Nevada. In October, we acquired Builders Door & Trim and Reisten Construction. Together, the two companies formed the leading provider of door and millwork capabilities in the Las Vegas area, closing a key product gap in the region and strengthening our ability to deliver comprehensive solutions to our customers. We've made 38 acquisitions. representing over $2 billion in annual sales since the BMC merger in 2021, the equivalent of a top 10 LBM player, demonstrating our ability to execute and integrate seamlessly. And with the industry still fragmented, we see significant opportunity ahead. We remain confident that inorganic investments will remain an important driver of long-term growth. Let's now turn to slide nine and discuss the latest updates on our digital and technology strategy. We are accelerating the adoption of our digital capabilities and deploying scalable, customer-centric solutions that will strengthen our operational agility and support long-term growth. Our BFS digital tools deliver meaningful benefits to our home builder customers and align BFS as a key technology partner in the industry. Despite the weak market, we have seen continued adoption with our target audience of smaller builders. Since launching in early 2024, our digital tools have processed over $2.5 billion of orders and over $5 billion of quotes, representing increases in excess of 200% year-to-date. Importantly, we're seeing that digital is not just about incremental sales. It's a catalyst for a broader company growth. The efficiencies and capabilities enabled by our digital tools, including artificial intelligence, accelerate the pace and elevate the precision of our quoting and sales operations. While it's evident that our initial business case around digital did not predict the timing of our outcomes very well, we remain convinced of the tremendous shareholder value that the digital tools will unlock for us. Continuing on the technology front, I'm pleased that we continue to make steady progress on our comprehensive implementation of SAP after the launch of two pilot markets in July. We've gained valuable insights from these initial pilots and will be applying those learnings as we prepare for the next phase. During Q3, we also successfully converted to SAP for our centralized accounting functions, as well as for all of our internal and external financial reporting. Although these conversions are never easy, we are working through the details and are excited about the growth and efficiency opportunities to come with this new software. Recognizing one of our incredible team members each quarter is one of the best parts of my role. Today, I want to spotlight Harold Fuqua, driver at our Lebanon, Tennessee yard, who recently celebrated 40 years with BFS. Harold is known for his dependability, strong work ethic, and love of the Tennessee volunteers. His dedication shows in his commitment. He's often at the yard before 4 a.m. and in the way he shares his experience. having trained more than 100 drivers over the years. He's also earned a reputation for driving over the region's toughest hills with skill and care. I'm honored to recognize Harold and so many others across BFF whose hard work and commitment continue to move us forward. I'll now turn the call over to Pete to discuss our financial results in greater detail.