Builders FirstSource, Inc. (BLDR) Earnings Call Transcript & Summary

Good morning. Welcome to Builders FirstSource Investor Day 2021. I'm Mike Neese, Senior Vice President of Investor Relations. Welcome to the Dallas area. For those of you who have come, we really appreciate the attendance at coming to our Investor Day. For those of you on our webcast, we look forward to hearing from you, we have a live chat feature for you to ask questions. Okay. A couple of housekeeping items. First and foremost, let's make sure we put the mute on our cell phones. Appreciate that. Two, restrooms are in the foyer; three, we have WiFi login password, we have a QR code. That should be all on your tables. The slides can be found on the website for those of you on the webcast. Safety is very important to us. If we have to evacuate, exit signs to the left, back, and to the right, stairs are in the back of the foyer. Okay. Let me direct you to the safe harbor and forward-looking statements of our presentation. Now let's get into the agenda. You all have copies of the agenda at your -- at the tables. A few seconds, I'm going to be introducing Dave Flitman. He'll be talking about the transformation in the homebuilding industry. Next, Mike Farmer, Lea Allah will talk about accelerating growth and productivity in our diversity and inclusion initiatives. We'll have a 30-minute Q&A from about 9:45 to 10:15. We'll take a 15-minute break. Snacks are here to the right. Again, restrooms are out in the foyer. We'll come back at 10:30. And Dave Rush, our integration head, will talk about our synergy efforts around the merger. Tim page and Nate Herbst will talk about our accelerating digital platform, really excited to hear from them. And then Peter Jackson will wrap it up and put a bow on these 20, 25 financial targets that we're going to leave you, and it's about growth. This company is about growth. And you're going to hear about it from all the leaders and we have several leaders who are not presenting in the back of the room. They are available during the break, during the lunch. And then we will head over to lunch around 12:00 -- let's call, it 12 o'clock, and we'll have lunch next door from 12:00 to 1:30. And then for those of you who can't make the facility tour, we do have a bus going to DFW and Love. For those of you who are going to our [ Capella ] facility tour, we're going to meet in the lobby at 1:40. 1:40, please bring your bags, luggage, all your personal belongings. Okay. It's my pleasure to introduce Dave Flitman, our CEO, to the stage.

Thanks, Mike. Good morning, everyone. We are thrilled to be hosting our first-ever Investor Day here at the beautiful Gaylord Texan in Grapevine. We're thrilled that you're with us. We appreciate everybody that's joined us here in the room this morning as well as the many that have joined us online through our virtual webcast. We've got an exciting agenda for you over the next 3 hours, so let's get started. We have 4 key messages that you'll hear about throughout the course of the day, not just for myself but from the rest of our speakers. First, we have a strong track record of execution with a very strong value proposition, underpinned by a differentiated platform and very strong focus going forward on customer-focused solutions for the business. We have 3 significant catalysts ahead in the business first. And for the first time ever, we're going to talk with you this morning about what we've defined as the BFS 1-TEAM Operating System, and that's how we're improving every aspect of our business. Second, we're excited about our digital transformation. We feel we're uniquely positioned in this marketplace to drive that transformation well into the future. And finally, we've been quite busy this year, and we are in the early stages of our sustainability and ESG work, and you're going to hear about that throughout the course of the day as well. Third, we've got robust and accelerating free cash flow generation coupled with what we've already demonstrated to be disciplined capital deployment. We believe that will allow us to generate above-market growth and profitability for many years to come. And finally, we believe BFS is at the heart of transforming the homebuilding industry, and that will lead us to compound shareholder value for a long time to come. When we were talking about the merger, putting BMC and BFS together. We felt we had a unique opportunity to differentiate both legacy companies. We spent a lot of time on the theory of the case. And coming away from that, we believe that we had the opportunity to create a platform that was highly differentiated with unmatched size and scale with the geographic footprint and reach that our customers not only needed but they were asking both legacy companies for. We believe that we could create a product and services portfolio like none other in this industry. And finally, and this was a hallmark of both legacy companies we had a drive and a hunger to innovate. And as I stand here just about 1 year since we closed the deal, I couldn't be more excited about what we've done, but importantly, the future of this great company. Watch. [Presentation]

We're clearly excited about our future. I get amped up every time I see that video. Hopefully, it did it for you as well. But I wanted to spend just a minute not just on where we're going, but the strength of what we have today and what we've built through this merger. We have a unique market position, and we believe we have differentiated and sustainable competitive advantages. And I just want to walk you through each of those quickly. First, we are a national leader and a consolidator in this industry with arguably the best balance sheet of anyone in the space. That's how we built this company, and we believe we will continue to drive that going forward. Second, we have an exceptional geographic footprint, and we'll talk about that in a few minutes. Third, we are an unmatched one-stop shop with innovative solutions and a product portfolio that exceeds 1 million SKUs today. Next, we will continue to invest disproportionately in the value-added capabilities that we've developed and have become the hallmark of our business. We believe that will continue to drive outpaced to share gains in the market and continue to enable us to expand our margins over time. Next, we have exceptional and expanding cash flow generation, as we've demonstrated this year, -- And we are reaffirming what we've already said, our long-term leverage target is between 1 and 2x. And finally, we have an experienced management team here that's quite seasoned, I would put up against any management team in any industry. And that confluence of factors there, we believe, have created a differentiated market leader that positions us for above-market growth and profitability well into the future. Let's look at it in a little bit more detail. We are clearly, today, the largest supplier of building products, prefabricated components and value-added services to the professional Builder space. Reaffirming what we told you last month, our guidance for the full year is to achieve $19.5 billion in revenue, approximately $2.9 billion in adjusted EBITDA and reaffirming our approximately $1.9 billion in free cash flow for this year. Importantly, we have transformed this company from its humble beginnings as an LBM distributor into a value-added solutions provider for our space. As you see on the left-hand wheel here, this represents the product mix for our base business. And just as a reminder, we have defined the base business to fix lumber prices at $400 per thousand. As you can see, the value-added portion of that base business is now 43%, and it's the fastest-growing portion of our company. You combine that with our specialty products and fully 2/3 of the company is focused on value-add and specialty capability. As you see in the middle wheel, we have great geographic balance across the country. And finally, on the right-hand side, I love our footprint. We now have 560 locations, importantly located in 39 states and 84 of the top 100 MSAs in the country. And a little-known fact is our geographic footprint now touches where 90% of the U.S. housing starts are for single-family. So we love our footprint and what we've built. Importantly, we are also benefiting from some favorable industry trends. And let me just walk you through this slide. As you see on the top left-hand portion, there is a 25-year trend of 30-year fixed mortgage rates. And as you can see over that lifetime of that slide, we are just now bumping off the bottom of historical low interest rates. Secondly, on the top right, you can see that household formations remain incredibly strong, driven by shifting demographics and a significant underbuild in the industry. Finally, on the bottom, both single-family starts and homes under construction importantly, will be at the highest level this year that they've been in the last 15 years. Single-family starts to exceed 1 million for the first time in that time period. And that compares quite favorably to what has averaged less than 750,000 starts for the last decade. And importantly, that underlying demographic shift and the strength of the demand means we believe that demand will continue for a long time to come. So said a different way, to make up what we believe is a $4 million to $6 million gap in underbuild over the last decade in this space. It would take sustained 2 million single-family starts for the next decade to make up that gap. So we believe those favorable industry trends will continue and provide a nice tailwind of growth for the future. So if you take what we've built and the strength of our platform coupled with those favorable industry trends that I just covered, we believe we're poised to capture significant market growth going forward. In fact, you can see in the left-hand wheel here, we now estimate about 10% market share in what is a single-family market of $150 billion and growing in single family. And importantly, on the bottom of that wheel, you see that over the last 3 years, we have grown more than 20% faster than the market, which has enabled us to capture share. Also, if you look in the middle of the slide, you see that we have relatively small percentage shares in both multifamily and professional R&R space, which we are working to grow in, in a targeted fashion. So we believe bringing all that together, we are highly confident that in the next 4 years, we will outpace market growth be it somewhere between 100 and 300 basis points on a consistent basis. So let's talk about how we plan to achieve that. At the heart of our company is our people. And central to their work is our mission, vision and values. And we spend an awful lot of time inside the company talking about this every single day. So I thought I'd take just a couple of minutes here and share with you our mission statement, our vision and our values. Our mission is to be the best supplier of building materials and services by having a people-first culture, both inside the company and outside the company in how we deal with our external constituents. That's very, very important. Our hallmark is exceptional customer service and providing those innovative solutions to create superior value, not only for our customers, but for all of our stakeholders. That mission leads to our vision, which is to make the dream of homeownership more achievable for everyone. That's a powerful statement. And as you know, homeownership is still the major pathway to wealth creation for many families across this country over the long term. And we're excited about that. Our people can rally around making a difference in providing homeownership for people across this nation. And that vision leads to our core values. The acronym for them is SPICE, and I'll just walk you through each one of them, equally important. First is safety. We absolutely, every day, make safety the hallmark of what we do in our company. Those inside hear me say quite often that if we can't keep our people safe inside our operations or at our customers' job sites, nothing else that we're going to achieve in our company even matters. I'm very passionate about that. And we'll talk more about it as the day goes on. People, and we already touched on this. We lead with the people-first culture, very, very important to our work. We're honest with ourselves and we're honest with everyone that we deal with outside the company, all those external stakeholders. Our customers are, obviously, core to what we do. We work hard to deliver exceptional customer service to them. But importantly, also partner with our customers to think about what the future needs to be, what solutions we need to create for them to solve their most difficult challenges and problems. And finally, excellence. It says on the slide that we challenge the status quo. And the mentality that we have is we have to get better in every aspect of our business every day. I often say the day you think you've arrived, it's game over. We have to continuously improve in all aspects of our business. We believe this is the baseline for how we're going to continue to outperform today and transform tomorrow. When we put the 2 legacy companies together, we thought it was important very quickly to align on a powerful strategy for the business, and you see it here on this slide. The beauty of it is that it's simple, it's working. And every team that we have inside the company understands quite clearly not only what they have to do to help us achieve the strategy, but importantly, what's required of them to deliver the underlying business results that we need to have. So I'll just step you through the 4 pillars of our strategy quickly. First, we will continue to drive outpaced growth in our organic growth in our value-added portions of the business. We're investing heavily to do that. We believe we have a long runway of growth ahead. Secondly, great companies get better at what they do each and every day, and they drive outpaced growth by taking that efficiency that they gain from that work and reinvesting a portion of that back into the company to fuel that growth. That's how we think about our second pillar. Third is to continue to build our high-performing culture, not only attracting the right talent to our company, but making sure that they feel like they have a career path and not just a job inside our company. And fourth and importantly, is to continue to pursue strategic tuck-in acquisitions. It's been the hallmark of both legacy companies. You already heard me say, we've got a fantastic balance sheet. We've got a track record of M&A, and we believe there's nobody better positioned in this space to continue to roll up the industry than us. So let's talk briefly about each one of these pillars. The first is organic growth of our value-added solutions. Obviously, single-family starts are very important to the company. It represents about 3/4 of what we do today. We believe we're well positioned to capture a disproportionate amount of that single-family growth going forward. And importantly, continue to focus on growing both our multifamily and professional R&R segments in targeted markets, as we've outlined that we're focused on. Second is providing those off-site solutions for our customers. We believe there's been a sea change in labor. It's going to be tight, not just today, not just tomorrow or next year, but for a long time to come. And our builders are looking for ways to get more efficient at their job sites every day. And our value-added solutions where we take work off the job site helps them deal with both of those challenges and operate more effectively. Importantly, we believe that will be a strong tailwind to not only growth but profitability for the company for a long time to come. We have demonstrated the ability to deploy capital to these solutions, and we will continue to do so. Continued investments in our mill work, both new equipment and automation to make sure that we have the capacity to meet the market demand. We're excited about our manufacturing components. We talk about it all the time. Year-to-date, we have 48% organic growth. We have more than 100 manufacturing locations across the country and about 90% of them today have some form of automation and we will continue to invest in that automation to make sure we have the capacity that we need and also it helps us deal with some of the labor challenges that we're not immune to in our own company. And finally, READY-FRAME, a small but important part of our portfolio, and we've worked aggressively over the past several years to extend that capability from the western geography where it was originated across the eastern part of the country. Year-to-date, we have a 31% increase in home penetration with READY-FRAME. So bringing all of this together, we believe we have a long runway of growth organically in our value-added solutions. Secondly, you heard me say earlier, the hallmark of great companies is continuous improvement, and we, obviously, subscribe to that. So today, we're unveiling for you for the first time, what we have outlined is the BFS 1-TEAM Operating System. And the best way to think about that is continuous improvement in 3 key areas of our business aimed at developing the right business processes and practices to drive continuous improvement. The first area is in building our people. You heard me speak already about the importance of safety, and we'll talk a little bit more about that over time. Training and development of our talent, making sure that we identify the right potential leaders inside the company, and they get not only the training, but the experiences job-wise that they need to prepare themselves for their next level inside the company. And third and importantly, when you've got an organization with 28,000 people, harnessing that power, keeping all your team members engaged every day is very important. And we do that in a number of ways. We have an annual employee engagement survey, and we support that with quarterly pulse surveys. And the point of that is to understand exactly what we need to be providing our people all over the company to ensure their success and they have the tools and the capability to deliver what we need them to deliver. Second is building excellence, and that's based on the Lean Six Sigma mentality. We have more than 20% of our 28,000 team members trained in lean mentality already today and understand those tools and capabilities and how to apply them. Customer service and providing the right experience for our customers is part and parcel to all of that. And finally, I believe, great companies drive that productivity on an ongoing basis. And we have targeted on an ongoing basis well into the future, 3% to 5% of annual productivity improvement. And again, you already heard me say that we will take a portion of those savings and gains and reapply them back into driving growth and fueling the future. And finally, if you do the first 2 of those well, building growth and driving excellence -- excuse me, driving excellence in building people, you will drive growth. Three key areas. There is commercial excellence. You'll hear more about that from Mike Farmer in a few minutes. But let me just say that a lot of people say sales growth is an art. We believe it's both an art and a science. There are disciplined processes and practices that are proven that we're applying that are also part and parcel to helping us drive our market growth. Second is innovation, making sure that we're getting ahead of the game versus our competition and understanding better than anyone, where our customers are going, so that we can provide the right solutions to them in the future. And then finally, mergers and acquisitions, continuing to roll up this industry is an important part of what we'll do in the future. We've had a lot of work so far this year. We've had a little merger going on. We've had some synergies to deliver. Oh, by the way, we've acquired 5 companies. But I want you to understand from me that we are still doing working in the early innings of our ESG journey. I'd like to highlight just a few points for you. First of all, green building is a priority for our team. And we have great supplier partners that supply products to us that are certified by the Forest Stewardship Council. That's important to us as well as many of the windows and doors that we sell, or energy star qualified. Importantly, from a product standpoint, we talked already about READY-FRAME. But what you might not appreciate is we have third-party independent verification that READY-FRAME applied to a 2,300 square foot home will save about 8 trees in producing the framing for that home. And importantly, it will also reduce the dumpster halls away from the job site by 2/3 versus stick framing. And finally, there's a lot less sawing and ladder climbing at job sites, so we have proven documentation at READY-FRAME improve safety at the job site by 60%. We already spoke about safety and the importance of the company. What I failed to mention is that over the last 2 years, we've made great progress in keeping our people safe, and we have delivered a 26% reduction in recordable injuries across the company. It's a journey that never ends. We're getting better, but we're not going to stop, and the goal is 0. We don't want anyone to get injured working in our operations ever. And secondly, on that row, there's a lot of things that I'm very proud of in this company, not the least of which is the servant's heart that I see all over the country as I fly around and visit our teams. They are very engaged in philanthropic work all across the country where they live in the communities that they work. You see a few of them listed here. I'll just highlight one, which is the leukemia and lymphoma society, where over the last 10 years, our team members have raised more than $5 million to support LOS, and we'll be honored this year to be 1 of the top 5 corporate donors across the country. And finally, we have a seasoned Board very experienced in the industry and a very strong governance process. We have an energized and excited and very experienced management team whose compensation is well aligned with shareholder interests. So we believe even though that we're in the early innings of our ESG work, it's an important work, and you can expect the first CSR report, corporate sustainability report, from our company in 2022. And along that theme, we're honored today to give you a gift. We will be planning 10 trees in honor of each of you who are attending either in person are virtually with us today. So thank you for being here, and thank you for participating with us. Our third and important pillar is to continue to build our high-performing culture. You heard me speak already about safety in the importance of our environmental and social responsibility. I'll spend just a minute on this slide and talk about the work we're doing around talent, making sure that we're acquiring the right talent, developing and equipping our employees for the future and making sure that we're holding on to that talent. This has been a challenge, not just for us, but for the entire industry. And so we've done some unique things in the last couple of years. First, we've worked hard to develop a strong military recruiting program. There are a lot of folks exiting the military every year. And what we find is they make fantastic employees. They come from a disciplined background, they're committed, they're hard working and then they come with high integrity. And so over the past couple of years, we have hired several hundred folks who are transitioning from the military, and we're very excited about that platform and building that out even further. We've reinvigorated our college recruiting program. We've got more than 700 designers. We've got a lot of technical work. So for us to show up in colleges and recruit has been meaningful, and we've also had great success there. Importantly, we've developed internal leadership development programs that make sense for our company in our space. It's a combination of classroom training and then sending our people back to the field to solve real-life problems to help make our company stronger. We're excited about that, and we continue to build out several levels. And finally, diversity and inclusion is very important. You'll hear from Lea in a few minutes about the important work that we're doing on the D&I front. And finally, and importantly, and I've talked about this already, pursuing accretive tuck-in acquisitions is the fourth pillar of our strategy. It's what we do. And importantly, our merger represented -- I'm not sure if you appreciate this, but our merger represented more than 60 acquisitions through the course of time. It's how this company has been built. And as you heard me say, there's no one better positioned to continue to roll up this industry than us. As we think about acquisitions, there's 3 key lenses that we look at potential targets through. The first is how does it help us, on the left-hand portion of the slide, expand our geographic scale, either getting increased coverage in an existing market where we might not have the right locations to cover the market or importantly, have the full suite of products in our value-added portions of the business to make a difference for our customers. Secondly is having leading positions in those markets, particularly where we go in where we haven't been or didn't have a strong position. A great example of how we did that this year is through the Alliance acquisition in Arizona, where we had a few locations, but we had less than 5% market share. That acquisition vaulted us to the #1 leading market position that encompasses the fastest-growing county in the United States. That's why that one made so much sense. Secondly is increasing our value-added products and capability. We do that all the time. A great recent example is the acquisition we did in California, Cal Trus, the largest component manufacturer in the state. We already had a presence in component manufacturing and together, we really can't be beat. And third is technology advancement. And you've seen us make 2 acquisitions this year Paradigm and Katerra's legacy assets, Apollo. We're going to talk more about that going forward. But I just wanted to provide some clarity on how we think about M&A going forward. On the right-hand portion of this slide, you see what the target pool looks like. The top portion are the larger opportunities. And listen, you have to be opportunistic about those. You can't really plan for big things coming your way. We keep an eye on that stuff all the time. But where we're focused is the bottom portion of this slide. We tend to fish where the fish are. And right now, we have over 1,100 targets in the marketplace, somewhere between $15 million and $100 million in revenue. That's been the hallmark of the company. That's kind of been what we've done here over the past number of years, and it's where we will continue to drive a disproportionate amount of our focus. Those targets represent -- those 1,100 targets represent $26 billion in revenue. So we'd be quite happy to acquire a disproportionate amount of those sales going forward. To just underscore how important M&A is, we're excited to announce our latest acquisition to you this morning. We have just closed on trust technologies in Western and Northern Michigan. They are a fantastic company with $30 million in trailing 12 months revenue, a highly profitable manufacturer of both roof and floor trusses in 3 locations that are importantly in the fastest-growing counties in the state of Michigan. You can see the one location that we had here, so it brings great value to our very small presence that we had in value-added components in the state of Michigan. Importantly, they have a very strong and seasoned management team that will be staying on with the company going forward. And so we're excited to welcome all 110 employees from Truss Tech to the BFS family this morning. So with that, as our sixth acquisition this year, we have acquired this year trailing 12-month revenues approaching $600 million for those 6 acquisitions. Importantly and finally, to put a bow around M&A, you know how excited we are about the digital transformation that we believe that we're at the center of. That started with the 2 acquisitions that we did this summer with both Paradigm and Katerra's legacy, Apollo, assets. With that, those 2 acquisitions, we believe we have developed the capability to have an end-to-end platform and create a digital marketplace for homebuilding over the course of time. Importantly, we have unmatched access to homebuilder plants. Coupling that with this platform, we believe we can create the right marketplace and put BFS at the center of that ecosystem going forward. Importantly, we see $1 billion of revenue opportunity over the course of the next 5 years. We're excited to talk to you in depth this morning about that strategy, and you're going to hear from both Tim Page and Nate Herbst in a few minutes about where we're taking that going forward. So given all of what I've just talked about, the strength of our platform, the strength of the strategy and how we've been executing it over time, the financial results that we've delivered over the last couple of years in our base business, again, with lumber adjusted at $400 is quite compelling. Over the last 2 years, we have a revenue CAGR of 16% in our base business. Importantly, in the middle of this slide, we have doubled our earnings performance with a 40% CAGR in the last 2 years. And while we've grown both the top and the bottom line through the great work we've been doing, improving the mix of the company, getting more efficient, driving merger synergies, we have improved the profitability of the business and adjusted EBITDA margin by 350 basis points. I would say -- suggest that's a strong track record of success that we expect will continue going forward. And with that credibility, we are excited to announce to you for the first time long-term financial targets in our base business. We expect to deliver over the next 4 years, a 10% CAGR on the top line of the business in sales, a 15% CAGR on the bottom line in adjusted EBITDA growth over the next 4 years, a 30% CAGR in adjusted earnings per share and importantly, a 50 basis point per year improvement for a total of 200 basis points in our base business and adjusted EBITDA margin. Given the strength of the cash flow and the leverage targets that I've spoken to you about, that means we will have between $7 billion and $10 billion of capital to deploy over the next 4 years. So let's look at these targets in a bit more detail in what they mean. On the top line, that 10% CAGR means we will take our revenues from what we expect to be $15.7 billion this year to over $23 billion in 2025. Importantly, we will grow our adjusted EBITDA by 2/3 from $1.8 billion anticipated this year to $3 billion in 2025. Our adjusted EPS will more than triple from an estimated $4.10 this year to over $12 in 2025. And that 200 basis point improvement in adjusted EBITDA margin in our base business means we will go from this year an estimated 11.2% to over 13% in 2025. And again, all underpinned by that $7 billion to $10 billion in deployed capital through the period. Now Peter, when he gets up in his piece here after the break, he's going to talk with you not only about the assumptions that go into these numbers but, importantly, the key initiatives that will enable these results. And so with that, we have an excited experienced management team. On the top row here, you're going to hear from many of our senior leaders throughout the course of this day. But in addition, we have many others in the room, our Chief Financial Officer. Each one of our 3 division presidents are here, our General Counsel and Head of HR as well as our Supply Chain Leader and a few others. So I encourage you, if you haven't met them, reach out to them during a break, sit down and have lunch with them and have a great chat. And with that, I'd like to introduce Mike Farmer. Mike is our President of our Commercial Operations, and Mike is going to talk to you about the great work that we're going to do going forward to drive an outpaced market growth in our value-added areas of the business as well as what we're going to do to get more efficient at what we do. Mike?

Thank you, Dave, and thank you for joining us here today. We're really excited about all the things we get to share with you throughout the session. I'm Mike Farmer, I lead our commercial operations, and I started with the company in 2006, and had some HR leadership roles and led HR for the company for about 10 years before moving into the operational and growth roles that I take on today. In a few moments, I'm going to have Lea Allah join me and talk about our diversity program that she's leading for the company as well. So today, I want to talk to you about a few really important things that we have in front of us. One, we've identified that we have significant growth in front of us still. Our merger is off to a great start here, and we're really excited about where we're heading. From the work we've been able to do this year, we're really happy about -- what we're more happy about is the culture we've been able to bring together. And Lea is going to talk some about that here in her session. But I couldn't be more happy with the way we've seen our 2 cultures come together. And so with that culture, we're able to drive significant growth. We've identified over $2 billion of opportunity that I'm going to walk you through here in a moment. We have a long runway with our operating system. Our 1-TEAM Operating System is going to continue to drive value pricing and our digital strategy to help leverage our position. We're going to talk about our continuous improvement that we're going to look forward to driving 3% to 5% annual productivity gains. And then finally, Lea is going to talk to us some about our commitment to our diversity and inclusion program. Our 1-TEAM Operating System is a very simple way for us to boil down the processes and discipline around our strategy for our team members within BFS. We -- I want to talk to you today about a couple of the real core building blocks of that. One is how we're going to build growth. Two is how we're leading innovation as a company. Three is our commitment to ESG. And fourth is how we're driving productivity through our operational excellence. So again, we're in the early stages of our growth opportunities here, and we couldn't be more excited about a few core areas. And the first area is our ability to capture growth through our synergies, so we've seen really -- as we brought our teams and our sales team together, have identified early on the ability to drive synergies with our sales team. One area that's really important is that bottom left box here, which is we've been able to drive our components growth by 48%. That is one of our core value-add products that we provide, and one of our really strategic areas that we spend a lot of time with our builders around. The next areas are building to get more from our existing assets. And really, a lot of that drives around our commercial excellence. We think we have a real big opportunity that will help us drive significant growth through both our commercial excellence and our sales teams, our ability to add shifts to our manufacturing plant and drive productivity, and growth through our automation. And we've seen significant productivity through our trust plans of 20% this year in a really busy year where we're scrambling for product, we were able to also produce productivity in this year, which we're really proud of. And then third, I want to talk about we're going to continue to commit to CapEx to be able to invest in growth as well as invest in capabilities, and I'm going to talk to you about really that value-add products CapEx growth that we're investing in, but also investing in new capabilities around pro remodeling, around having a more inside sales focus where we can help support our customers. And that pro remodeling business is only about 20% of our business today, and we have a lot of growth in front of that and really excited about what we can do to lay the foundation to continue to grow as an organization. Our commercial excellence is really that core to our ability to drive long-term growth. And I want to highlight a couple of key areas here for you. The first is our category management, our partnership with our strong supply chain team to really bring partnerships with our core partners that we deal with in the industry and suppliers and manufacturers and making sure that we have the right assortment and that we have the right products to take out to our customers. The second is that we have a real strong pricing program and that we have an understanding of where our costs are and that we can really bring that transparency to our local teams and make sure that we're getting paid for the value we're bringing to the supply chain. And then third is our sales operations, making sure that we have good market intelligence, and we understand what's happening in the marketplace and have that really fill in that circle with our sales operations team. And then third is -- fourth is providing that sales team productivity that we're utilizing the right tools and resources to get the most out of our sales team that we can. We have a lot of really strong professional sales members that are out driving business for us every day and being able to take these first 3 areas and drive support to them to help grow is really important. And then finally, is that sales analytics, which also gives us a significant amount of data to be able to not only leverage internally but communicate with our customers. And as we're out with our customers, we're able to sit down and talk about opportunities that we see together to improve process where we're making extra deliveries, or we see different products we can swap. And that's been very beneficial both on a national level, but also on a local level. Innovation is one of our core differentiators of the company, and we're really excited about what we're able to bring to the table here. Over the last several years, we have been the leader in off-site manufacturing. And that addresses a significant need in the industry around just labor shortages out there and speeds up the building process. There's been significant adoption over the last 15 years that the industry has caught on to. And really, some of the core benefits that we bring there are a 27% reduction in lumber going into a roof truss house versus a stick frame house. There's also 2.5 days saved by putting a roof truss on versus stick framing a house, which is significant and helps our builders improve cycle time. We also find that we're able to collaborate and cut waste with our builders by designing and bringing that process to the table. And then third, I mentioned this earlier, but I think it's really important that we've been able to grow 48% in our components this year versus last year. Another area that's a real differentiator for us is our design, and we've been bringing functional design to be able to help support our builders both in our local markets, but think about how we can support our national builders in a more efficient way, where they're building similar homes across our country and be able to scale both locally and nationally. And then finally, some of our product and service innovations. Over the past couple of years, we bought a company called [ Rainy ] who brings some different products to the table, specifically around floor trusses. It's really interesting for us that we're going to continue to explore. And then finally, one of our key value-add products, Dave mentioned earlier, is our READY-FRAME product, which is -- has significant growth but also some good ESG benefits I'm going to talk about. So READY-FRAME, we did an independent study here a couple of years ago that we found significant benefits for. The first thing is it's better. It's far more accurate and is -- the accuracy is down to 1/16 of an inch at the job site which makes it very easy for our builders to put together in a fast way. It's faster. It improves the cycle times by 26%. It's -- 25%. It's a significant opportunity to speed up the process. It's also safer. It takes labor off the job site. There's 39% labor, and there's also less saw and ladder time, which means there's less of those risky activities that need to go on. And importantly, it's greener. Dave mentioned earlier, it saves about 8 trees per home. When we put this together, it had saved over 460,000 trees since 2019. We're closer to 480,000. We have a ticker that we've added to our website to be able to track that for us as well. Most importantly, 18 of the top 20 builders use READY-FRAME today. So we've seen significant adoption with our core big builder business and really, really excited about when we're able to do moving forward. Now I want to invite up Lea Allah. I've had the opportunity to work with Lea for several years. We started working together back in 2008, and she's going to talk to you about our diversity and inclusion program.

Thanks, Mike, and good morning, everyone. I am Lea Allah. I am a HR Director in the Mid-Atlantic region of the East division. I've been with the company and in the industry for 17 years. I am also leading this charge for diversity and inclusion at Builders FirstSource. I'm pleased to actually talk about this investment. It is an investment of our people that will enhance our culture, our retention and the quality of work that we perform. If you look to the left of the screen, you'll see our current diversity statistics for our organization. In October of 2020, we conducted an organizational health index survey with over 9,000 of our members participating. In that survey, we found a high overlap and the desired values for both companies. Our culture is really aligned. We leverage the data to increase the efficiency for stronger results and more team member satisfaction. Our key focus areas that are established were communication, retention, engagement and development. In September of 2021, we conducted our diversity and inclusion survey. In that survey, we found the majority of our team members, they'll welcome safe and included. They felt valued as a team member. But importantly, they also feel committed to building a diverse workforce and workplace. One of our core pillars is driving a high-performance culture. One of the keys to how we do that is through the diversity and inclusion. We believe we can perform better with greater diversity. From that survey, we also found 4 key priority areas. Those are enhanced awareness, increased diversity of the workforce, improved and enhanced communication, and increase inclusion and engagement. Each of those identifiers have goals. They have action steps assigned as well as ways to measure for success and progress. Enhance Awareness, talking about additional training and enhancing management awareness. Increase Diversity of the Workforce, providing more opportunities for development for our internal team members as well as focusing our efforts on how we bring creatively other team members into our workforce, like our program with the military, where we're bringing in veterans. Improve & Enhance Communication. Here's where we empower our team members to provide feedback. We give clear communication across all levels of the organization so that we can also learn how to make that connection and continue to have that connection. And Increase Inclusion & Engagement. This is our culture piece. How do we continue to make people feel value, respected and heard? How do we empower them, how do we evaluate and improve? We think about things of compensation, benefits and other ways for retention with the organization. The results we see as a road map for our key focus areas and our development opportunities. How we continue to drive for more with the employee experience, here's where we leverage the feedback from our annual surveys. We'll have a survey releasing in 2022 that will serve as the baseline for the key focus areas around engagement, communication, retention and turnover. This will also align with our Net Promoter Score. Our D&I initiative road map, basically, we've continued this commitment to continue training. We have a commitment to training our organization throughout and continuously, we have released our diversity and inclusion first commitment to training, which is the diversity face-to-face module. We'll also have our second module releasing in January, consciously of becoming unconscious bias, and we'll have an additional targeted training being released at the end of Q1 specific for our managers. We have established our corporate and inclusion council. We are establishing our employee resource groups. Together, these teams will work to create, connect, communicate, advocate, measure and monitor progress upon the plan that we have. And back to Mike. Thank you.

Thank you, Lea. All right. Thank you, Lea. So I want to wrap up and talk a little bit about building excellence through our operating system and really driving that productivity through our business. One of the core areas that Lea mentioned was really our team members and how important they are to our success. So far, we've trained about 20% of our team members in Lean certified and really, we're continuing to increase that, and that's going to be an area that we're going to continue to aggressively grow. We've also seen significant increase in our productivity through our manufacturing, which I talked about earlier. And really, our goals, and we're going to continue to put out to drive 3% to 5% productivity annually. Finally, we've seen really significant growth with our customers, and we've seen a 15% improvement with our NPS with our national builders this year, which has been a really good thing given the growth that we've seen with those top builders. And then finally, we've really -- worked really hard to make sure that we're using innovation to really address our customers' needs and improve the process. And really, our reputation around -- for excellence is around -- our operational excellence is our competitive advantage. We've been delivering productivity through several different initiatives. The first one that we have done, and I mentioned this earlier, is that we've improved our board foot per hour in our truss plants by 20%, which also helped us increase our capacity, which has allowed us to drive that 48% growth we talked about earlier. Our millwork business, we've been able to improve our doors per hour by 6% and increase our capacity by 16%. It's another significant growth area for us in the value-add product category. Some of the things we're working on near term are really driving improvements in our fleet utilization. We have a very large fleet. And the more -- the faster we can turn around those trucks in our yards, the more we can deliver and the more productive we can be. We're also really focused on reducing our air rate and our manufacturing and our order entry, which will help us become more efficient. And then finally, using specific Kaizen events to reduce our inventory shrink, all underpinned by really driving that 3% to 5% annual cost productivity. Last thing around is really building our -- having our operating system around building our team and building our people. Lea mentioned this earlier that we do an annual engagement survey, and we're looking for 10% improvement in our scores annually to really make sure that we're doing what our employees think that we need to be doing to help them have a good work culture. We've really increased our communications through quarterly town halls and really communication to make sure we have clear alignment within the organization. We have consistent onboarding. That's something that's really important given the size of our workforce that we have people coming in and fitting our culture right at the beginning. And then we're continuing to invest in leadership development and sales training for our teams. And then we have that 10% annual safety improvement goal out there. Safety is one of the cores to our leadership and the most important thing that we need to be doing every day. Our people are really the core to us continuing to drive sustained results. With that, I just really want to leave you with a few things. We're really excited about the growth we have in front of us, that $2-plus billion opportunity that we're going to go after here and make sure we achieve. We have a long runway, and we're going to be driving that 3% with our 1-TEAM Operating System. We have that ability to drive that 3% productivity on an annualized basis, and we're going to continue to help our teams achieve that. We're going to keep our people safe and have that 10% annual reduction. And then finally, we're going to continue to outgrow the industry at a 10-plus percent annual growth rate on our value-added products. With that, I thank you, and I'm going to bring Dave and Lea back up to you go through our Q&A session.

All right. We're going to take a short break in a few minutes. But before we did that, we thought we'd open it up for questions on anything that I spoke about earlier or anything that you just heard from Mike or Lea. So with that, we'll open the floor for questions.

Just had a question, Dave, about the pro remodeling initiative you talked about. It's something that BMC had tried a few years ago. It didn't really seem to get much off the ground. Can you talk specifically about what more you're doing to get that 20% piece of your business much higher?

Yes. So it is an important but small but growing portion of the business. And as we talked about, we're targeting, [ Rob ], in a very targeted way in certain markets in certain portions of the business. Now we're leading with strength because legacy BFS had a strong R&R presence on the West Coast. BMC's focus was more on the East Coast. And as you might recall, we made an acquisition just before we closed the merger of TW Perry in the D.C. area. So we have several markets where we have positions of strength. We have an outstanding leader of our Pro R&R piece who had a number of years with Lowe's, 15 years or so with Lowe's, so he really understands that retail mentality. And what he's doing is taking that capability that we ceded either in legacy strength in certain markets or through acquisitions and trying to identify the right markets to take that model going forward. So we've got a lot of confidence, but we're not trying to do it everywhere. That's not our focus in the Pro R&R space. We'll play to our strengths in the right markets going forward.

Steven Ramsey, Thompson Research Group. On the 3% to 5% annual efficiency gains, how does that compare to the past few years for the company separately? And is that something that shows through the financials in a meaningful way? Or is it something that builds over time?

Well, historically, at BMC, if you recall, we had targeted something very, very similar. And we've got really good cultural alignment between the 2 organizations that we've got to get more efficient at what we do. And as you heard me say, those are hard targets, both on operational expense on the SG&A front as well as in COGS and driving that 3% to 5% is on the breadth of expenses. Now you won't be able to track that exactly to the P&L because we're reinvesting a portion of that back into growth of the company. The way I think about it is on an ongoing basis as inflation is roughly in that range. And our goal is to meaningfully offset that inflationary increase each and every year by getting more efficient at what we do and take that savings and drive growth. That's the simple way to think about it, Steve. Bob? You got a question -- I'm sorry, one more, and then we'll come up front.

Reuben Garner with The Benchmark Company.

Good morning, Reuben.

Historically, you guys have would talk about your technology in terms of helping smaller builders maybe compete with larger builders that had access to different software capabilities. Are the -- and I know we're going to talk more about this later, but just at a high level, are the Paradigm and Katerra acquisitions an extension of that? Or do you see the industry may be accelerating its adoption or use of technology going forward?

That's a great question. And let me just say upfront, we love all of our customers equally, right? We are focused on growing and partnering with all of them. But what we see is a unique opportunity here, and we do see a sea change coming, particularly on the digital front across the space. We talk a lot about millennials buying homes and driving a lot of the growth in single-family starts. They are also in the businesses that we're dealing with and are more and more comfortable with technology. We like to play offense. So the industry hasn't gone that direction largely yet. And that's why we thought it was very timely for us to drive that platform, build the capability and then help lead the industry down that journey. So that's the way we're thinking about it. We've got a question here in front.

Bob Robotti, Robotti & Company.

Good morning, Bob.

When you talk about even 48% growth in the components business over the last year, of course, that's a dollar number. Could you give us a volumetric kind of concept as to what you are? And then secondly, related to that, you did say READY-FRAME clearly is in certain ways next generation, and you've got 18 of the 20 top builders. What's the penetration rate on that? So even though they've tested, it is really more in the test phase, and therefore, the implementation and the adoption is still a long way of opportunity? And lastly, getting to $23 billion of revenues and 13% EBITDA margins, what's kind of the assumption for the adoption rate of component growth, READY-FRAME, those -- which would be key drivers, I would imagine, in the [indiscernible]?

Yes, so help me remember those as I try to unpack them. But that 48% is organic growth in components, right?

But that's a dollar measure.

That's a dollar measure. We really haven't broken down the volumetric piece versus price, but there's a significant portion of both, let's just say. And in this year, given the tightness in the supply chain, a proportion of that has been pricing. But rest assured, a significant portion is also volume growth with the rapid adoption that we're seeing all over the country. On the READY-FRAME front, yes, we're selling to 18 of the top 20 builders. But importantly, what we've seen is where we might have had just one geography with READY-FRAME we've seen great adoption as the builders have gotten more confident with the model and understood how that works not only for themselves, but with the frameworks. And so that's what we've seen an acceleration of growth in, not only just adoption with more customers but importantly, those legacy customers driving it more aggressively across the totality of their growth. And Peter will talk with you in the second session about the pieces that make up that top line growth and profitability here. So just if you don't mind holding that question until the second session, I think it will be answered. Thank you. Matt? Got a mic coming here.

Matt Bouley, Barclays. Same topic on the value-add adoption. Obviously, 48% growth, you've increased penetration this year. The question is, what do you do to sort of maintain that? What historically have you seen in terms of customers who've made that switch, do they ever go back? And I don't know, maybe we'll get more into this later with digital, but what are you really doing to kind of continue to push that after you've already had such a big uptake this year?

Yes, very good question. And so I'd say a couple of things. First of all, as strong as that growth has been, the market hasn't fully adopted. And I would just point to Texas, right, which has been a legacy stick frame market for a long, long time. It's just been in the last few years that we've seen that acceleration as the market has finally tipped and said, "These make total sense for us, right? It solves those labor and productivity challenges." So we've been growing very, very significantly off a very small base in one of the largest housing markets in the country. So we believe that will continue. And to the second portion of your question, well, our experience has been holistically as customers adopt this capability and get comfortable with it, these are extremely sticky products. They don't undo it in good times and in bad times because the value proposition is so strong, right? Regardless of the market environment, these guys have to be efficient at what they do. The labor challenges are real. They're not going away. So in any environment, them getting more productive at what they do, just makes total sense. Any other questions in the room? Anything off the webcast? Oh, we have one more? Sorry.

Just going back to components. I mean it's been very strong, obviously, for stick framing, shifting share there. I'm curious if you could talk about how you would characterize your success versus peers in that area, how you think you differentiate from some of those other competitors. And then also on the pricing strategy, could you just talk a little bit more about how that's evolved over the last couple of years? And on the slide, you touched on price harmonization with the merger. Just maybe put a little color behind that.

Sure. So on the first portion of your question, it was around component adoption, right? We believe components are here to stay and for a long time to come. And on the competitive set, there aren't many that have not only the geographic reach that we have, but the financial wherewithal to continue to invest. And what we -- the theory of the case when we put the merger together is that we would be stronger together because of the combined offering. And that is exactly playing out. Because what builders have seen is they've -- they really can't afford to deal with just the local suppliers anymore. When they have someone of our size and scale that can provide, not only the breadth of the offering that we have, but the consistent quality of products in all their markets. It gets very repeatable and very reproducible for them to deal with us. And that, we believe, is driving a lot of that accelerated growth that we're seeing since we closed the merger. On the pricing harmonization front, putting the right pricing package together for our customers has been what we've done historically. We found differences in the way we thought about that, and we worked proactively with our customers to harmonize that pricing over time. We feel good about that. We've done it not to our customers, but in partnership with our customers as we've gone through the merger. And our business has only grown with them. Other questions in the room?

I just wanted to verify the $3 billion EBITDA target by 2025. That doesn't include any benefit from M&A related to the $7 billion to $10 billion of deployable capital?

It does not.

Okay. And then second question, I know M&A is inherently unpredictable, but...

I'm sorry, the $3 billion does include. That's all in, including M&A. And Peter will break down the components of that in this second session.

Okay. Got it. Understood. And I don't know if I should wait for Peter's part on this follow-up. But I was just curious if you had a view on kind of what the whole expectation would be on how much of the $7 billion to $10 billion could go to M&A over time or like...

Peter will cover that in great detail here after the break. Anything on the web? Mike, from the webcast?

No questions from the web.

All right. With no further questions in the room, we'll take a break here until approximately 10:30. Thanks for your time. Have a good break. [Break]

Good morning, if everyone can take their seats. Just a quick reminder for those on the webcast. You can use the chat feature to ask a question, and we'll be monitoring those to get those questions in on the second Q&A session. It's my pleasure to introduce Dave Rush, who leads our integration efforts. And Dave, welcome to the stage.

Thank you, Mike, and thank you, everybody, for joining us today. SP02 My name is Dave Rush. I've been with the company 22 years. First 4 years, I was actually in finance and accounting. The last 18 though, I've been in operations. So that combination kind of served me well to lead the integration effort. And a lot of you are probably looking and going, gosh, I've seen that guy somewhere before but I can't quite put my finger on it. But a lot of people think, I look like this guy, the cowardly lion from Wizard of Oz. Thank you for laughing. It's nothing worse than intentionally humiliating yourself and not getting the laugh. So I appreciate that. Let's talk a little bit about integration. So when we got together and we decided to go forward with the name, we continue to be Builders FirstSource. We saw the natural connection between the one and the logo and kind of what we wanted to communicate to the teams about how we wanted to bring this thing together. So we came up with the mantra winning together as one. And it truly has guided all of our principles throughout the integration and it served us well. We got together about this time last year as an executive leadership team to do all the planning around the day 1 post-close actions that we needed to take. I was overwhelmed with the level of talent we had in the room, not only industry years of experience, but almost everyone in the room have been through massive integrations before already. It really gave me a sense of comfort that we were going to be able to pull this off. And I'm happy to report that we're on track to over-deliver on our synergy targets. And the first conversation I have with Dave was all around, I don't want you to see this integration result as just bringing these 2 companies together. What we need to do is we need to bring them together for sure, but in doing so, create a platform that we can then change the industry and grow and be the industry leader in growth and in innovation for our customers to find solutions. So building that platform for growth became more important to me than just day-to-day integration tasks. And so we've continued with that at the forefront. So the first thing we did is we took a cultural survey on both sides of all the employees. We wanted to understand what was important to them. What we were glad to see is 13 of the top 15 values all around teamwork, safety, customers, each company shared exactly, 13 out of 15, and I think there was over 30 that were options that they could pick from. That told us we were going to be more alike than different. That's a pretty good sense to have when you're entering an integration. Dave purposefully been sought to create the best of the best in the leadership team reporting to him. And we wanted to make sure both sides were represented. As it ends up, we have 6 legacy BFS and 4 legacy BMC in the direct report group today. 6 and 4, wasn't the target. It could have been 5 and 5. It could have been 7 and 3. We were going first for the best person available, but it did end up working out to a representative relationship. Similarly, at the field level, we have 10 SVPs representing 10 regions throughout the company. Those guys roll up to 3 division presidents, East, Central and West. And then, of course, you met Mike Farmer, who's President of our Commercial Operations. Now again, how do we come up with 3? Part of that -- and we went through several iterations, part of that was we wanted to be able not to only manage the integration in the company at $12 billion, but be able to sustain management of the company when we're at $25 billion. So even as we built the leadership team, it was with an eye towards growth. So when we got to the day post close, we knew that the anxiety level of the employees would be at the highest level of the first week after close. So our day 1 plan was built around trying to alleviate that anxiety. And the way you do that is through excessive communication. So early on, after we announced the leadership team, and we can present the leadership team as being equally represented, we communicated that to the field. Right after close, Dave did market visits at all our top overlap markets with the DPs. Similarly, at every significant overlap market, the DPs, the SVPs, the area guys would meet with our top customers. That was equally important because we wanted to protect the base business we had first, then focus on the synergies that we could create as a combined company. We also set up in each other's ERP the ability for a legacy OSR to sell out of the other company's ERP. That immediately created that teamwork, that sense of, hey, we are in this together. It doesn't matter, I can use the closest point shipping, still get paid, still get my customer taken care of, and that was a big step towards creating that alignment. We continually provided frequent integration updates. We tackled the tough topics early around benefits. What's my role going to be? Who am I going to report to? And all -- the honesty was all people wanted and it worked out right for us. In that program, we also have retention plans around our key market leaders. And we had a very successful way of retaining the key people we needed to retain. The fact that both companies have been through transformational even integrations in the recent past, served us well. To date, we've already successfully completed our ERP conversion pilot. And by the end of the year, we will have converted 26% of the markets that we have to convert on the ERP front. And as I said before, we are ahead of our synergy target. Let me get into a little more detail there. When we got together with the executive team, and we were all familiar with integrations. We set aggressive goals for ourselves. It was in a somewhat turbulent time, if you recall, with COVID supply chain challenges. There was a lot of things we had to consider. And we set an aggressive goal of $140 million over the integration period of 2 to 3 years. I'm happy to report that we're tracking $140 million as of the end of this year. So a full 12 months ahead of schedule. Where we've been able to achieve those synergies has been through leveraging our scale and direct spend, even within our benefits. We've done a good job of eliminating redundant people costs. And then we've consolidated the footprint where it made sense within our markets, all within a rapidly growing market. So actually, footprint consolidation could be higher, but the market did not dictate that we go as fast because we needed the capacity, but it's a nice insurance policy down the road 10-plus years when -- if things turn around, we have areas where we can still consolidate. So with that, I'm pleased to announce that we now are going to raise our synergy target to $160 million by the end of 2022. One-time costs, we estimate it to be around $115 million to $125 million. We're also tracking well below that number. So we've done what we needed to do with regard to synergies. So what have we done to create shareholder value? So what we feel like we've done with this merger is put together the top footprint in all the MSAs that matter in our -- in the nation. We've done so with the leading value-add product selection and lead with innovation, and we're going to be able to scale those solutions for our builder customers. All of that combined is going to create shareholder value. It's best illustrated on this slide. This is a slide that I borrowed from the deck where we announced the merger. In it, we had all the value propositions that we felt like we set out to do with the merger. I just decided to kind of do a report card on how we did. We wanted to be the premier supplier of building materials and services, protect our base in overlap markets. Well, to date, our base business has grown from $12.8 billion to $15.7 billion, and we have 24% core organic growth. I think we can check that box. We wanted to create value through our synergy. Well, we're not only performing at our synergy level, we're performing above and quicker. So I think we can check that box. We wanted to generate robust free cash flow. The target at the time of the merger was $700 million. We're on track to do $1.9 billion of free cash flow. We wanted to enhance our value-added product offerings. You've seen where components are up 48%, READY-FRAME is up 31%. We want to invest in innovation and be the leader in our space, value-added solutions for our customers. The acquisition of Paradigm and what Tim and Nate are going to show you in a few minutes is going to show you how we've done that. We want to continue to grow through M&A. We've done 5 deals now with the latest 1 and added over $500 million of revenue on a run rate basis as we've done this integration. So we've used the integration in a sense to create a playbook that we can repeat with smaller integrations down the road even as the transformational ones take a little more time and a little more complex. And we've done this and created unbelievable momentum with our employee base, and they're all excited about where the company is headed. So the people that we have are second to none. I get the advantage of seeing it across both companies in my role. I get to see it across the country in my role. We have bar none, the best people in the business. There's no question we're going to -- we're the nation's premier supplier of building materials and services. We've over-delivered on our synergy commitments. We protected and grown our sales base. And most importantly, to Dave's original vision, we created that platform for growth that I think will serve us all well into the future. With that, I'm going to turn it to Tim Page. Thank you.

All right. Good morning. And thank you, cowardly lion. It is really hard to follow a celebrity. All right, my name is Tim Page, and I'm the Executive Vice President of Digital Solutions for Builders FirstSource. I've been with the company for 10 years, and starting in finance and then moving into integration strategy and business development. Presenting this section with me is Nathan Herbst, a founder of Paradigm and now our Senior Vice President of Product Development. We're very excited to share our digital strategy with you today and share our plan of how we'll accelerate transformation within our industry. I'm going to start with 3 key messages I will further discuss throughout the presentation. First, BFS is uniquely positioned to drive digital transformation. Our recent acquisitions have given us a good starting point for technology, and we're going to continue to build innovative solutions that will put BFS at the center of a homebuilding ecosystem. And we believe that, doing that will drive $1 billion of incremental revenue within 5 years. The chart on this slide was completed by the McKinsey Global Institute, and it compares digitization across industries. Construction ranks 21st went up from the bottom and only ahead of agriculture and hunting, which we like to think of as hunters and gatherers. So there's ways to go in our industry in terms of technology advancement. Now for those of us that work in the industry every day or for those of you who have ever been involved in a new home construction or a large repair and remodel project, this probably doesn't come as a surprise. There's much better ways to build homes than the way it's done today. And we believe leveraging technology will help solve some of those problems. Beyond that, the lack of digitization has led to 40 years of stagnant productivity for the industry. The study also found construction to be 1 of 9 industries such as not have an established digital leader, and we believe the industry is looking for Builders FirstSource to step into that role. Builders FirstSource is perfectly positioned to drive digital transformation in homebuilding. We have the scale, we have the relationships, we have the technical expertise, we have an unmatched distribution platform and we have access to capital. Importantly, we're also touching 1/3 of the plans for U.S. homebuilding today. That's a huge asset for the company. We believe in a digital future, and we aspire to drive a revolution in more efficient homebuilding. Our vision is to create an end-to-end digital platform. That means solving construction processes that go from land development all the way to home life cycle management. And we believe digital disruption has to start by being the best at whole house design. What that means is leveraging configuration, estimation and visualization technologies to seamlessly connect the front-end sales process of a homebuilder with their back-end construction process. Our recent acquisitions of Paradigm and Apollo give us a very good starting point. We now have technology capabilities and the knowledge base of employees that will allow us to put BFS at the center of the future of homebuilding. The acquisitions accelerate our digital initiative. Paradigm, for over 20 years now, has been building digital tools that allow the simplification of configuration and quoting of building products. Where we're going with Paradigm is to leverage those capabilities to drive whole house configuration and quoting. That's a very big step forward for the industry, whole house configuration and quoting. Beyond that, Paradigm has capabilities in 3D modeling, in automated takeoffs and also in product catalog management, and those are very, very important requirements for delivering this digital vision. Apollo provides collaboration, workflow, scheduling as well as other preconstruction and job site functionality, all available and accessible through a mobile device. So those Apollo capabilities are very much complementary to the Paradigm offering. We believe that this digital platform will allow homebuilders to more efficiently connect with their home buyers and with their business partners for a more efficient building process. And what that means is faster quotes, easier access to materials and better alignment on projects. Digital will deepen relationships for BFS with builders by meeting their needs and then, of course, meeting their customers' needs and that will result in more customers buying more product from BFS. I'm going to stop there and turn it over to Nate. He's going to tell you more about Paradigm's capabilities and what he sees is the benefits of a combination with Builders FirstSource. And then I'll come back up and tell you more about our end-to-end digital platform strategy and how that drives shareholder value.

All right. Hello. I'm Nate Herbst. I'm one of the founders of Paradigm. Paradigm is now, as you know, a wholly owned subsidiary of Builders FirstSource as of August 16. Today, I'm going to talk to you a little bit about Paradigm, who we are today, a little bit about our culture, about our products and talk about the synergy that we're seeing between the acquisition between BFS acquiring Paradigm. So first, I get a lot of questions, maybe even had a couple of them from some of the people in the room today. Why did Paradigm decide that Builders FirstSource is the right place to sell the company to? What did you see in synergy? And what I'd like to talk about is early on in the discussions with Builders FirstSource, we had a very engaged senior leadership team that came up and visited with us with our leadership team shared their vision of how they saw the transformation, how they saw the opportunity in the industry and how we could be a part of it. We saw alignment with that vision and our own vision of where we saw the industry going after being in this industry for 20 years. It wasn't just that alignment that excited us. It was obviously also the access to resources that Builders FirstSource could bring to our vision. And it's not just financial resources. With the Builders FirstSource acquisition, we have access to suppliers that we wouldn't have had access to before, access to customers, builders, tens of thousands of builders that go through the BFS platform and as well as hundreds of thousands of digital plans, blueprints that are used on every single new home construction project. So we saw the synergy as a real opportunity. Tell you a little bit about us. Started in 1999. We have around 300 employees in North America. About 70,000 users use our platform. Now these are a lot of salespeople, people who are involved in selling building products out there in the marketplace. Very strong customer retention rate of our history. And you can see the last 2 rows on the left-hand side, we have a very strong position in the window and door market. That goes into the middle wheel, which is our software revenue composition. You can see that Omni is the biggest piece of this. We're going to talk about Omni in detail in a few slides. We also are going to talk about builder Omni and estimate, the estimating service, 2 really critical pieces to the digital strategy here. We've had a strong history of growth, as you see on the right-hand side of the slide, that's continued over our history, and we expect that to continue into the future. So it's not just the technology or the software that we bring to the table with the Builders FirstSource team. We also bring in the people, and it's the culture. And one of the questions this morning was, how do you retain people? How do you attract them? Paradigm's cultivated a culture that is attractive to technology workers over the last 20 years. We've been able to get some of the best talent and retain them in our company. It's not just technology experience that our staff has as well. As you can imagine working in this industry for this long, our staff also understands construction, residential construction, and that's new construction as well as renovation. Our staff works on very large projects for customers, very large enterprise projects, which is critical to the digital vision we have here. The scale of BFS, you've got to be able to handle it. Our software can handle billions of dollars in sales a year, which it does today through -- for our -- users of our software. And it also -- we have single customers that do well over $1 billion of their sales in our technology. It's got to be fast and secure. Our focus and vision has been around supercharging the sales users out there. We always knew that if we help people sell more product, we're a valuable part of the building industry. And we focus in on end users. So we make sure that the users love using the software while we help them perform their jobs better. The last box on this slide, I called the Goldilocks box. Paradigm is big enough to solve the digital strategies that we're pursuing here, but still small enough to be nimble and move quickly. So I'm going to talk about our first product here. So if you go back in time to 1999 when we started, this product Omni, it was called CenterPoint. And we saw a problem in the marketplace. Me and the co-founder saw that the complexities around configuring and selling windows were high. There's a lot of problems in it, a lot of friction. So just to give you a little understanding of that, probably many of you know, but when you look at a window, you could think, well, all windows are the same, not true. They're almost every single one is almost a snowflake. And the number of combinations that can be sold in a window are sort of stunning when you start looking at it. We have different dimensional attributes. We have different sizes, material types, colors. We have glass options that can differ, grills, screens, hardware. That's really complicated. And then you add on another factor, which could be regional factors. They could be building code or it could be by manufacturing limitations. And then you add on top the complexities of pricing these products. And it's astounding how much complexity was there. When we entered the market 20 years ago, a lot of the quoting process for windows and doors, it was done by a salesperson out in the field pulling out a catalog, looking in the catalog, trying to find a product in a lookup list, try to figure out that if product is available. And then many times calling the manufacturer and spending time on the phone with them. You can imagine how much friction that is. Our solution was, we'll build software that can take these complex business rules. We can bring them into our software, and we can make it easy for the salesperson to sell, and we achieved that. You can see that on the other slide and at the bottom of this one, very strong market share. Now it's not just configuration that helped us get here. It's also the ancillary services and products around configuration that make Paradigm really strong in this market. And to give you an understanding of what I mean by that, we have a very large consulting group that can help our customers get their software up to speed, get their product data into our software. And we also have tools such as BI tools that help our customers understand what's going on. You can imagine in a world of SKUs, windows are not SKUs. Each one, as I said, is almost a snowflake. Our software can help people understand what's going on in this complex selling in their data. We also built tools to help our customers maintain the hygiene of their product data. So you can imagine the complexity coming into the system, how do you make sure that the system is always at the highest quality. Tools like our safeguard tool uses artificial intelligence and can help our customers maintain that hygiene on the catalogs. You can see this has led to very strong growth. And one of the things that we're probably most proud of is that we have a very high Net Promoter Score. So if we go to our best-of-breed users and manufacturers of the system, the manufacturers that use it, we can see a 70 Net Promoter Score. So those of you who are familiar with Net Promoter Score, getting a 30 would be a really great score, getting a 70% is outstanding. This has led to us continuing to grow, as I said, the 300%. And even in the last week, we still find manufacturers that aren't on the platform. Last week, we had one of the top 20 sign on. So we're seeing that trend continue, and we expect that to continue into the future. The next product is Paradigm estimate. And to talk a little bit about it, we backed up a couple of years ago, and we said, what are the problems can we fix? What was like the configuration problem that we fixed in the first place. And we looked at the process that happens before somebody even starts in our software, before they start to order a product and quote it. The way that the industry works today is it's a takeoff process or an estimating process, and this is across the building industry. It wouldn't be unusual or surprising to go into a lumber yard and see somebody roll out a blueprint, bring out a ruler -- they still use rulers in many places, write-down dimensions and count the number of windows, doors and other products in it. That process, before we even get into quoting and selling the product, which I told you was still friction-based 20 years ago, that process took an hour or 2 and does take an hour or 2 for people to do. You can imagine it's extremely air-prone, and it relies on really critical people to make it function. So our solution to this was taking that process and building artificial intelligence using data scientists that can read the blueprints, vision analysis capable AI. And it can take a lot of the work and eventually maybe most of it away from the sales users out there in the field. This has turned -- excuse me, we also add into that as well, not just the AI. We also add business rules that can help the users know the regional differences such as, in this area, we might draw it as a 2 x 4, but it really should be a 2 x 6. This powerful combination of technology really has streamlined the sales process out there in the field. You can see in the right-hand corner there, one of the boxes, there's a quote from a user of it. Weeks of time, sometimes it takes the estimate, could be down to 48 hours or less. This is getting the sales teams doing what they should do, engaging with customers and selling product, and it's getting quotes out faster, which is competitive. Now you can also envision in a digital world, if you can't estimate it, you can't quote it and you can't sell it. Estimate does more than just windows and doors. This problem is bigger than just windows and doors. It's for every product on residential construction. It could be roofing, we do roofing, siding, flooring, endless concrete, electrical components, there's an endless amount of opportunity for this product to go and that's where it's going right now. The next product I want to talk about is builder Omni. So I shared the story about what we learned about the window and door industry endless number of combinations out there. When we looked at what the builders needed, we saw the exact same problem. They have to engage with the home buyer and try to get them through a very complex set of options, maybe almost an endless set of options. It seemed like a perfect fit for our Omni technology that we've built. We took our omni technology, and we put it together with a 3D visualization, photorealistic visualization that allows a consumer to be at home while working with their builder and visualize what the kitchen would look like, wall colors, flooring colors or the exterior of the house, see different sidings with different roof and different windows. This is obviously something that the consumers want, the homebuyers want very badly. It streamlines the process for the builders. This problem we're talking about in the industry isn't just for large builders, it's for small builders as well. And so we have a wide range of customer sizes that use it. In fact, last week, we did have a big builder sign on a 2,000-plus homebuilder, and we see a lot of growth in this marketplace. Now what's really important about this when we talk about the digital strategy and why we pulled this out on these slides is this gives us the ability to use technology to connect the different players in the industry together. We can connect the home buyer with the builder, with distribution and manufacturing, all in one system, and we feel that this is a really important piece of the digital marketplace in the future. 85 Net Promoter Score. I told you 70 was high, this is amazing. And of course, it is. People love it, and you're going to see that in an upcoming video. So to wrap it all up or pull it all back together, Paradigm sees great synergies in being acquired and being part of Builders FirstSource. Four months in, we're already seeing it. We've hit the ground running. We feel that the Omni platform, the builder Omni platform as well as the estimating platform are critical pieces to the future of construction and digital transformation of the construction industry. So I want to press play in a movie here in a minute, and it's going to share a little bit about what our customers think about the software, some users of it. And it's also going to show you some of it being used. And then Tim will be back on stage. [Presentation]

How about a quick applause for Nate. Great. Very good presentation. You're like the only one that does get to walk off to an applause, right? All right. Well, that video and those customer testimonials really underscore why we're excited about digital. On this slide, we've broken homebuilders into 3 different segments. And the question came up earlier about our focus on large builders versus smaller builders. And I want to just talk about that for just a minute. When you think about the large national builders, they've invested in technology, right? Their scale has allowed them to do that. And they've invested in solutions that help them run their businesses more efficiently. As you go down through these various segments, there's less adoption of technology. And when you get to that third segment there, what you see is, nearly 57,000 builders that are building less than 200 homes per year that really haven't done much in terms of adopting technology, it's really hard for them to build homes. Now there's a lot of numbers on this slide, but the one I want to focus on is down on the bottom right. Homebuilding is a very large market, with $150 billion of total addressable material spend. And we believe the digital winner will exercise a level of control over the biggest piece of that pie. Now when we think about our core BFS offering, the products we quote and sell every day in every market, it's really these product categories that are here in blue. And on the prior slide, you might have saw that they make up a total addressable market of $42 billion. What Paradigm's capabilities do is allow us to add other categories into our whole house takeoff. Our ability to expand a whole house takeoff gives us greater access to that total addressable market. The ones here in red are the ones that are in Paradigms tools today that we believe we can add in the near term. Over the longer term, there's other categories that we will add to our whole house takeoff. And it's these categories that get us up to the $150 billion of total addressable spend. So again, the blue products that are our core offering, $42 billion. When we add in the categories at Paradigm will give us near-term access to, that gets us to a total addressable market of $90 billion. And then, over time, we'll add other categories that will get us to the $150 billion of total addressable spend. Now that doesn't mean that we're going to ship all of these product categories, right? As the ecosystem owner, what we'd like to do is sit in the middle of this, and we believe the ecosystem owner will benefit from sending sales and some orders to third parties, right? So there are the stuff here that we would certainly ship on our own, opportunities to expand into other categories. But, ultimately, what we see is the ecosystem owner working with large manufacturers and working with other distributors to really build an integrated supply chain and homebuilding. So we're building a homebuilding marketplace, right? And in the center of this homebuilding marketplace is this integrated e-commerce marketplace. Over the course of this year, we've completed prototypes. We've received back user testing, and it's confirmed the market opportunity that an end-to-end digital platform will help solve problems for builders. So with that, we're now moving into development. And I want to quickly explain where we're going with our platform. The first module is home buyer experience. This provides a lead generation tool for homebuilders. Collaboration tool provides a consistent process for plan intake and markup. Digital Twin, or whole house takeoff is largely being what Nate talked about, with Paradigm estimate, allows us to take 2-dimensional plans to a 3-dimensional model for the precise measurement of the material requirements. Whole house configuration, this is what Nate talked about with builder Omni. This is where homebuyer selections come from a builder catalog. And with real-time pricing, we're able to feed that back over to the Digital Twin and complete that whole house material list. And of course, the whole house configuration also shortens the sales cycle. Job site management is where the schedule -- the construction schedule lives there. And that's also where our mobile functionality is acquired with the Apollo acquisition. And then home life cycle management is a longer-term opportunity, but this is really interesting because what home life -- by having ownership over that 3D model for the life of the home, that allows you to do things such as preconfigured renovation packages or post close add-ons. Think of a house that now wants to finish basement or wants a deck or over the longer term when it's time to modernize the home with a new kitchen, right? Having access to that digital model allows you to go there. So it's very important to note that our access to plans with our ability to complete a whole house takeoff and our supply platform is what will put BFS at the center of a homebuilding marketplace, okay? And in all of these modules create demand for that marketplace. Technology investment at scale is really lags in our industry, right? The time is now the technology has been advanced. And we believe that an end-to-end digital platform could have the most positive impact on homebuilding since the creation of the tree. Thank you for laughing. All right. So we believe that an end-to-end platform can create $10 billion to $15 billion of material labor and cycle time efficiencies for the industry. For homebuyers, they'll benefit from the visualization experience, understand the cost implications of their selections. Homebuilders will benefit from a better sales process, shorter design cycles and also that connection back to construction where they'll see productivity on the job site. And then our integrated supply partners will also see benefit from a lower-cost channel to market, the ability to influence potential homebuyers and other operational efficiencies. It's really homebuilder adoption that's going to monetize the platform, and we're off to a very good start here. And I mentioned that the acquisitions of Paradigm and Apollo have accelerated our digital initiative. And we'll see 1,500 starts coming through builder Omni in 2021. And that's well ahead of schedule versus what we had initially expected. We're also confident in our ability to deliver $1 billion in incremental revenue through digital. And that comes from faster quotes, which translate into higher win rates in our industry, increased wallet share and our ability to attract new customers. There's a number of ways that we believe we can monetize the platform for BFS. So in closing, BFS is uniquely positioned to be the driver of digital transformation and homebuilding. Our goal is to be at the center of the homebuilding ecosystem. And we believe that we're very well positioned to drive $1 billion of additional Omni channel revenue within 5 years. This is a very exciting time for our company and our industry. So thank you for your time and attention. I'm going to turn it over to Peter Jackson, our Chief Financial Officer.

Thank you, Tim. Thank you, Tim, and thank you for everyone who's come today. It's really nice to see familiar friendly faces in person, which I'm enjoying today. So those of you that I haven't gotten an opportunity to meet yet, I'm Peter Jackson. I've been the CFO of Builders FirstSource for the past 5 years. Prior to that, I spent my career working at some of the country's leading firms, building repeatable processes that generate profitable growth over time. And for the last 5 years, I've taken as many of those great ideas as I've been able to bringing them into the Builders FirstSource family to create that leading platform for our homebuilding industry. So with that perspective, I'll walk you through a few of my key messages today. Starting with the presentations you've heard so far today, you've heard our strategies, our structures and our initiatives that we're utilizing as the foundation for the company that we're creating and that we're running today. That company, which is a platform of the best geographies, the best product portfolio and the best operational and sales leadership in the industry. So what do you get when you combine the strategy with the best team and platform? You get tremendously profitable growth and success over time. What does the success over time lead to? Number 2, a strong and flexible balance sheet, generating robust cash flows. And we'll walk you through what some of those results mean to us over time. Most importantly, the creation of that cash flow gives us the opportunity to deploy capital. We do it in a disciplined way. We focus on organic growth, on M&A opportunities and on potential share buybacks into the future. Very compelling when you see the results as we get further into the presentation. Most importantly, our ability to sustain and grow a double-digit EBITDA organization and delivering tremendous value as we do it. So let's jump in. So as you look at our historical performance, you can see this presentation is based on what we call base. Dave talked to you about it before, to recap $400 per 1,000 as our baseline for all of the numbers. It takes the noise of commodity volatility out and refocuses on what you see on the left-hand side here. Our mix of product is really focused on value-add and specialty offerings. It makes up more than 60% of what we sell and an even bigger percentage of our profitability. While commodities are important. They're important to our customers, we're really good at it. We make good money at it. It's not the key driver of what we do. And you can see that on the right-hand side of the page. As you look at our sales growth, we have grown sales on a 16.4% CAGR over the last 3 years, leading to a 40-plus percent CAGR on EBITDA and and a 350 basis point improvement in our base business EBITDA margins. We have a P&L that's strong and that's growing and is generating tremendous benefits. What are those benefits you say? Well, the balance sheet for one. We have maintained disciplined management over our balance sheet and how we think about it. When I got here in 2016, we were coming off of 1 of the most transformational moments in our history. Floyd and Chad had orchestrated the acquisition of ProBuild, there was a lot of leverage on this balance sheet. And we committed to you and to all the other shareholders that we were going to drive that down and manage this company for the long term. The bet was worth it, and we were going to prove it out, and we have done just that. We've improved our credit rating. Our secured notes are investment grade. We've managed our maturities. You see we're over 8 years on our maturities for everything that's out there today. And we have done all of it with this mentality around running this business for the long term, that 1x to 2x leverage ratio is not talking about risk, it's talking about stability and our confidence that we can be successful in any market dynamic. The success is powerful in 1 particular way that I'm excited about, and that's capital allocation. Because that bulletproof balance sheet gives us the opportunity to leverage into other areas. In this case, we've deployed over $2.2 billion in capital in the last 3 years. Now the smallest component on there is our investment core organic, our growth, our internal operations. The reality is while we've made significant investments, it's fairly modest as a percentage of what we earn. What that allows us to do is to invest for growth, and to do more into the future. We've allocated and applied over $1.3 billion to M&A to improve our mix, our profitability and our competitiveness all over the country. And then lastly, we've announced not one , but two $1 billion share buyback authorization, the first of which will be completed in '21, the second of which we'll complete throughout 2022. Doing all of that with a disciplined approach with a leverage ratio within our stated range that makes us bulletproof and with a disciplined focus on both ROIC and total returns to shareholders. So as you see, we're committed to M&A. It's an important part of what we do. And while Dave walked you through the pieces of it, I'll recap just for a second. We're committed to geographic scale. The right products in the right markets, moving into those markets in the right way. Our value-added products that continue to give us the stickiness to improve profitability and the competitiveness that is going to power our growth into the future, leveraging that technological advancement and improving our industry-leading portfolio of solutions that make our builders better, that make them more efficient and more effective at what they do. So in the last year, we've executed 6 M&A deals. But that's nothing compared to what we've done compared to where we can go, this organization has a demonstrated capability to effectively acquire companies that create tremendous shareholder value. We've done it for a long time. We have teams that know how to do it well. You saw Ross, you've talked to folks today. We know how to execute M&A and we are committed to continuing to doing that over time. whether it be on opportunities like the Alliance acquisition, we were a distant market share player in the Phoenix market, the Greater Arizona area. We had a once-in-a-generation opportunity to work with to partner and ultimately acquire the alliance organization, a great team, leaders know how to make money, know how to compete and support their customers and their markets. Now they're part of our team. Our leadership in that market is unquestioned, and we're excited about what we can do with it, whether it be the growth of value add, whether it be the expansion of the product offerings, whether it be the increasing the sophistication of how they execute on some of the value that they already do are introducing new stuff. It is a tremendous opportunity for us and representative of what we can do when we arrive in a market. We believe we're the buyer of choice. We're not going to show up in these markets and talk to you about what's going to happen in the future or some event. We're going to talk to you about how we're going to win, about how we're going to help you win about how our resources are going to combine with your expertise as a seller to make sure your team whether you're retiring and riding off into the sunset or whether you want to be part of this for the long haul, your team is going to be successful because we're going to be successful, and we're going to help you get there. So everything I've talked about so far is really backward looking. -- talking about the history of the company and our success, our ability to create and sustain those double-digit margins. I'd like to talk to you a little bit about the future, which I suspect you might want to hear. The 2025 goals, and I'm going to start with revenue. So what you have here is our revenue bridge broken down into the key components. The core growth, what you'd expect. Single-family starts low to mid-single digits. The rest, multifamily, commercial, R&R, in that low single-digit range, a modest assumption. On top of that, you see our product expansion. That's the culmination of all the things you've heard about today. It's the expansion of value-add, trust, millwork, READY-FRAME. It's the expansion of digital -- It's that umbrella, that digital marketplace and our ability to take our already powerful relationships with our homebuilder customers, strengthening them, and making our customers more successful. That combination, 100 to 200 -- 100 to 300, apologize, basis points of growth on a CAGR basis, so annually in that range. And on top of that, $2.8 billion to $3 billion of increased sales from M&A. How do you get to that number, Peter, I'm glad you asked. We are going to invest $2 billion over the next 4 years in M&A, that's where that number comes from. Now we'll talk a little bit more about M&A, but I wanted you to understand that relationship in terms of what we've prepared here -- That is a 10% sales CAGR. And it generates some really nice results on the EPS bridge as well. So the core growth, that's a 50% increase on what we're doing today, driven by the numbers that I just guided you through. Operational excellence is a little bit interesting because while this is a net favorable number and an increase of 25% to our EPS, it also includes the investments that we anticipate making. Investments in the teams necessary to be able to ramp up to the scale that we envision, but also the IT investments that we are planning to make and we're already making that are going to create the underlying architecture necessary to support both our growth and our digital aspirations. Net savings, product expansion, again, walk you through that on the prior slide, the opportunity-driven box. Why did you box those Peter? Well, that idea is around maximizing shareholder value. You've heard -- many of you have heard me talk about how we decide how to allocate capital. At the end of the day, we want to optimize the way that we generate returns for shareholders. We know we can create favorable shareholder returns with M&A. We believe that we have an opportunity to buyback shares in an undervalued stock that is also going to create value for shareholders. We're going to find the right balance there through opportunistic and disciplined approaches to maximize shareholder return, and we'll balance that. For the purposes of this slide, for the model that you're seeing here today, that's $2 billion applied to M&A and $5 billion applied to share buyback. Again, that will likely move over time. But for the purposes of this model, we needed to give you some numbers. That's a lot of cash, Peter. You're right. It is. This is a company that generates a tremendous amount of cash. On the left-hand side, you can see our annual results and where we expect to generate $6 billion in cumulative cash flow over the next 4 years. That's a 100% net income to free cash flow conversion ratio. Now on the right-hand side, you can see that $6 billion, and it's augmented by 2 components. So today, we've got about $2 billion in debt. We make about $2 billion in base business EBITDA. Our 2025 numbers have $3 billion in EBITDA, giving us $1 billion of available capacity for debt if we want to maintain our low end of the band, a 1x leverage ratio. So that's the $1 billion there. If we decide to go to the 2x leverage ratio, that's an additional $3 billion of deployable capital that we know how to put to work. However, it is not in any of your numbers here. That $3 billion remains over here in my back pocket. So your numbers that you have, just to clarify, $7 billion of deployed capital, $2 billion on M&A and $5 billion on share buybacks. In summary, I want to recap our guidance here. This is a 10% CAGR on sales growth, driven by modest market share assumptions and modest market assumptions, compounded by the work we're doing in digital and expansion and the expansion of our value add. Adjusted EBITDA increases by all those factors in revenue as well as our increasing mix, our merger synergies, which we continue to execute on, and the cumulative benefit of both operational and commercial excellence initiative. I walked you through the EPS bridge. So you saw the components there. But again, $2 billion of M&A, $5 billion of share buybacks at a 1x levered subject to the opportunities that we perceive in the marketplace and our focus on optimizing returns for shareholders. And then lastly, 50 bps a year of EBITDA margin improvement. That's a sum total of [ 200 ] for those of you doing math at home, [ 200 ] for those who are looking at this and thinking about who we're going to be into the future. So we are an 11% based business EBITDA business today. We envision ourselves as a 13% EBITDA business into the future, and we believe we can maintain and sustain and grow those double-digit margins as a result of the combined benefits of the initiatives and the projects that you see us outlining here today compounded by our success in building an industry-leading platform. So I assume that you like these numbers, I like these numbers a lot. But I also assume that you are a group of hard nose investors who are going to tell me, well, I've heard this before. I've heard it from your peers before. So I'm going to offer you this slide. Where do you consider us as a peer of the homebuilding industry or distributors or the broader industrial distribution space? I'm going to tell you today, we have demonstrated superior performance in sales growth and EBITDA dollar growth and an EBITDA margin expansion than all of them. And our sincere opinion that over time, as the investors recognize what we have here, our multiple will rerate in an appropriate way, creating yet another layer of value and shareholder value creation for all those that hold our stock. I could not be more excited about what we're seeing here. So to recap. We have an industry-leading platform positioned to grow and to do it with double-digit and increasing margins. We use those cash that cash to continue to sustain and strengthen our balance sheet that we will appropriately leverage in a disciplined and structured way to deploy capital, also in a disciplined way, an opportunistic way to maximize shareholder value. To sustain and grow our double-digit margins, and to create returns for shareholders. I could not be more excited. And with that, I'll turn it back over to Dave.

Well, we hope we left you excited. And hopefully, our passion has shown through today. We've been a lot of places in the last 2.5 hours, and this is where the CEO comes up and ask for your investment. But before I do that, I've got a story to tell you. I love talking with our customers, and I get the opportunity to do that all the time. Recently, I had a conversation with a top 5 national homebuilder who historically had taken his business and split it between both legacy companies. And the reason he did that was neither company had the combination of the product portfolio and the geographic coverage that they needed to serve their needs nationally. Made total sense, it was a source of frustration for me, and I know it was for the BFS folks as well at the time because business kept moving around. But importantly, in a recent conversation with him, he came to me and he said, "Dave, you guys have built the platform that we have needed for a long time." And what you've caused us to realize is that we have actually outgrown a lot of our legacy supplier relationships. And through the course of the conversation, he finished by asking me a question, and his question was, what do we need to do to be a better customer for BFS? We need more of what you guys bring to the party. And so hopefully, that underscores -- we feel great about ourselves inside. It gives me great satisfaction to hear the external validation that we are absolutely on the right track here. And so in terms of wrapping up, I'm going to take you back to where we started. You've heard a lot of various pieces today. Let me bring them all back together through the advent and what we rolled out here of the BFS 1 team operating system. Three key pieces to that, building our people, building excellence across the company in everything that we do; and building growth. That is our mantra going forward, and we have sustainable disciplined processes and practices around that. We've got a strong track record of execution, an extremely strong value proposition on a differentiated platform. We've got significant catalysts ahead. We've talked about the operating system. You heard in great detail much more so than we've ever unveiled before, what is at the heart of our digital strategy and why we're so excited about that. We talked about the early innings of our sustainability in ESG work, which is very important to the company going forward. Importantly, Peter has wrapped up with a lot of detail around our robust free cash flow generation and the disciplined approach we have taken and will continue to take to capital deployment going forward. And finally, we believe we are transforming this industry, and we're in the early stages and have a lot of runway ahead. In particular, we've identified that and underscored it with 10, 15, 30 and 50 basis points target that we talked about today. And we will deploy in next the 4 years, somewhere between $7 billion and $10 billion of capital. So thank you for joining us today. But more importantly, we'd love to have you along for the journey. As we outperform today and work towards transforming tomorrow. Thank you very much. With that, I'd like to ask the folks on the second session back to the stage, and we'll finish by opening up for questions as we did in the first part of the day.

Matt Bouley, Barclays again. Thanks for all of the details today. Very helpful color. On M&A, kind of looking through the tea leaves, you're talking about adjacencies as well looking at that sort of future products slide within the whole house takeoff. Is that sort of messaging that there is an incremental change in how you're thinking about M&A that adjacencies are now becoming closer to the forefront? Or should we think that we still in the near medium term that you're still kind of closer to the core of what you've done in recent years?

Yes, it's the latter, Matt. We're going to stay core to what we've done historically. We spent a lot of time talking about fishing where the fish are in those adjacencies. And importantly, the way we think about M&A, we talk a lot about our national scale and how important , but the battle was really won on a local market basis, having enough scale and the right product portfolio to serve those customers locally. And we still have opportunities there. We just announced another great acquisition here this morning that kind of underscores that. So we think we have a long runway. Not saying we won't go after adjacent products in time, but we don't feel compelled to do that now because we have such a long runway of growth with the strategy that's working today. And then just a little bit more in context on the digital platform. That marketplace will the create opportunity for us to transform the industry by bringing those products in as part of our portfolio, not necessarily have to own or manufacture those products, but allow them to be sold through our platform. And that's really the way we're thinking about that in time.

That's helpful. Quick follow-up on that. We took a hypothetical situation where commodity prices were elevated. Obviously, your guide assumes $400. Does anything change around your capital deployment philosophy, do you hit the gas pedal harder on any of those priorities of organic growth, M&A and buyback in a situation where there continues to be sort of a cash windfall?

Yes, I'll take a stab at this and flip it to Peter for any color. We've taken the opportunity this year. Commodities spiked in the spring. We saw that. We've taken a portion of that capital that we generated through those oversized prices, and returned that to shareholders this year. We thought that was the right thing to do. But importantly, that afforded us the opportunity to continue to gain strength in the base business and gain confidence in our future. That's why you saw us come back and announced last month, the second $1 billion. And so we're going to be opportunistic on that, but we will be appropriately aggressive at returning capital to shareholders as we've demonstrated over the course of the last 4 months.

Yes, I guess I would add, we do a lot of modeling around the directions that you can go with this. We model all the different markets, the different dynamics with commodities, as you can imagine, and looking at it in a way that gives us both confidence in where we are headed and where we can go, but also the optionality in what each of the alternatives might present, again, with that focus on maximizing shareholder value with our decision making.

Got a question. This is Brian Gerber with Buffalo Funds. Regarding the digital strategy. When I -- beginning of the presentation, I would have asked you who do you want to grow up to be you want to emulate I might have said Autodesk. After the presentation, it's, do you want to be Amazon Marketplace? And with that, where do you see the revenue sources 3, 4, 5 years from now? Is it going to be $1 per seat at the builder in every sales office? Is it going to be $1 per seat at every supplier in the food chain? And will it be a marketplace as well that you get 3% of the value of a house that isn't delivered on your trucks?

So to the first part of your question, I'll take that. We want to be ourselves. And we see a great opportunity here to be leading edge in a digital transformation that is not only needed in this industry, but we believe we're uniquely positioned to lead. And you heard me say earlier in my comments, I like to play offense a lot more than defense. And so instead of waiting for that evolution to happen, we're leading edge out in front of it, and we're going to drive that transformation. Tim, do you want to take the second part of that?

Yes, related to the sales, the revenue growth of $1 billion It really comes from 2 places. The majority of that comes from being able to push product to pull product, I guess, through the BFS distribution platform. So when you get into the details, the average amount per home of the BFS core product is $36,000. When we sell to a customer today, we don't recognize that full product. We don't see all of that full wallet share. So part of this is we believe the digital platform will allow us to get greater wallet share with our existing customers. Now beyond that, if you think about customers we don't sell today, you have the opportunity to get the full $36,000 of core product growth. And then when you think about the products that we don't sell, we'll never touch, for example, there's a lot of products that went to the marketplace that we'll expect to gain a commission on. So some type of commissioning when a third party makes the sale. Beyond that, we'll see growth in licensing revenue, and we think there's other ways to monetize the platform. For example, the R&R sales that I talked about with the home life cycle management, for example.

Dave Manthey with Baird. Thank you for putting this on. This is a great presentation. I appreciate it. Similar question, I was going to ask the same thing in terms of the revenue sources. It seems like this is a combination of regular way business, some pass-through, maybe some subscription fees. Nate, when you showed the chart going from, I think it was $23 million to $45 million that subscription fees, is that correct? And so $1 billion doesn't really equate to that because it's apples and oranges meet, is that correct, first off?

Yes. That is apples and oranges. And that is a combination of services and licensing fees in that chart those on the right.

Okay. But -- so 2 questions. One, all the functionality that you presented today, are those products readily available, fully functional, fully scalable today? Or is that something that will be developed over the next year to 3 years? And then second, related to that question of regular way business plus pass-through plus fees. Is it safe to say that because of that combination, in aggregate, this will be a higher margin. Just directionally, it will be higher margin than the core business because of that makeup?

Yes. I'll take the first part of that, and then you want to comment on the second part. On 1 of the slides I showed -- I showed a platform that showed land development through home life cycle management. And on that slide, you could see some colors on there that indicated what capabilities we received from the Paradigm acquisition and what capabilities we receive from the Apollo acquisition. So we've started to fill in some of those capability needs. So we do have functioning software, paradigm estimate, paradigm Omni, et cetera, -- But what we're now looking at doing is we have product road maps on all those various modules that we're going to build out and link that our current capabilities into.

So there is a lot of heavy lifting that we're working on now investing in the platform that was focused primarily on millwork. Great capability, been in a fairly narrow product focus. And now we're investing and developing that will take us a bit of time. The best way I can think about the way this is going to evolve in the future. If you think about it today, we may get asked from a customer to do the design for roof trusses, right? We do that, we give them an estimate and they either buy from us or they don't. In the future, having access to those home plans and being able to produce that digital twin, think about digitally how easy it becomes for us to not only " the roof trusses", but the floor systems and the wall systems and hand that over to our customers. And we believe that visibility and that ease with which it will become to do business with us, will make it much more easy for us to sell the portfolio of products that we offer today and maybe some that we don't in time. And I'll let Peter address the second part of your question on profitability.

Yes. So the margins, when you look at the growth, a big piece of what we're doing is in that value add and the digital. That combination, those are the 2 biggest components of the product expansion bars on those waterfall. What we talked about -- talked about historically is 12% to 15% range for our incremental EBITDA. When you talk about incremental sales I think that we're probably at the high end of that range in that number in terms of what our expectations are in terms of both the leveraging of that value-add growth as well as what John been talking about today on the expansion result of digital.

Steven Ramsey, Thompson Research Group. Can you discuss the implied capital intensity in the next few years to bridge EBITDA to free cash flow, thinking about working capital and CapEx? And how much more is needed on both of those items as you expand and grow?

That's probably for you.

It sounds like it. Well, I think that the important thing to think about as you're looking at our models and what we've committed to is that it's all in. So our expectation is that while historically, we've been in that roughly 1.5% of sales as our CapEx is the starting point. We're in that probably 1% to 2% range, but it will depend on the year. There's certainly investment required to do what we're talking about here, whether that be greenfield, IT, you're talking about incremental equipment, tractors, automation equipment, all of those factors are all included in here. I mentioned on an operational excellence section is that there's an included expense associated with the work we want to do on IT. There's modernization opportunity there and our ability to be at scale, moving at the speed that the digital guys are moving at is critical that we do some work behind the scenes as well. But again, that's all included in the cash flow guidance that you received here.

Robotti at Robotti. I guess I'm really greedy you've made me an awful lot of money over a period of time. Thank you so much. But your base assumption is that single-family home starts are going to be up high single digits to low double digits, so 10%. So if you're projecting a 10% revenue growth isn't that really just in line with the market and you have also projected a 10% revenue growth on the value-added products, if you're doing 10% growth across the board, it seems as if you're not increased the penetration on the value-added products side of the equation. So how do you reconcile those numbers?

Yes. I think maybe the message got a little distorted in there. So it's a 10% CAGR. And I think what you were outlining is a 10% cumulative. If you look at low to mid-single-digit single-family growth over a 4-year window, those are different. Low to mid-single digit. Low to mid-single digit.

That's 4 year projection for growth in single family.

But let me flip it on this year a little bit. That's a pretty modest market share growth, market growth, right, compared to some of the items that Dave outlined in his overall market environment, the demographics, there's tremendous opportunity for more, but we don't need that to deliver these numbers. If we get that, these numbers are going to look far better than what you're seeing up.

Said a different way, Bob, we're highly confident in the projections we put forward today.

And the other item is you do say the presumption of $400 a board foot for lumber or lumber products. How do you think about that from the point of view of what's the price point you need for those products, for those producers to increase capacity right? Because if tomorrow, the lumber people all went out and built huge amounts of capacity then the price won't be $400 and that kind of could upset your assumption here. So how do you think about that end product because that's going to make a determination whether $400 is not...

Yes, we're not going to project where the prices may or may not go, Bob. But I will tell you that there hasn't been a lot of capacity added in lumber for a number of years. We don't anticipate that happening aggressively. We've seen forward projections on lumber in terms of what it would take or how some of our suppliers think about that. But they really need to sustain a higher level of pricing to be able to justify reinvestment economics for these large-scale plants, right? We just -- We just haven't seen that. In fact, in the last -- since the last recession, there's been a lot of capacity that's come off-line, and that's why things are as tight as they are, given the strength of the other underlying demand. And we expect that's going to continue for a while.

And for your model, I would say you can load we make money when commodity prices are low, and we make a lot more money when commodities are high. Just insert that into your model further.

And what the drives value [indiscernible] the higher that goes actually the more that we were saving is in new [indiscernible].

Very true. No question. Other questions in the room? Like there's 1 over here.

J.J. Gordon from McKenna. Thanks for a wonderful presentation and a really long-term minded in your thinking. I have 2 questions for you. First is, you mentioned a little bit on alignment and compensation earlier on. And can you just elaborate further how the leadership team maybe is expanding alignment or compensation around this long-term vision and initiatives there? That would be sort of 1. And the second question would just be around capital allocation. You mentioned as well sort of the metric around from a financial perspective, IRR ahead of cost of capital. Can you expand on that at all, even using sort of the last 6 acquisitions as an example, just ranges around what you guys are underwriting from an IRR perspective?

Yes. Our compensation is aligned around growth and profitability, both on a short-term basis and a long-term basis. You might suppose, over time, with the ramp-up of our efforts around ESG and sustainability, we may work some metrics in there through the course of time on how the management team is compensated, but they've been very good alignment with our shareholders there. Do you want to take the second one?

What was the second one?

Sorry, compounded questions. Just 1 of the lines in the presentation is around IRR being ahead of cost of capital. Can you sort of elaborate even sort of quantifying maybe perhaps the baseline, how you think about cost of capital? And then also using maybe a range of what you underwrote over the last year of these 6 acquisitions, sort of how the gap, if you will, from what you're seeing out there, just to give a sense of what you guys are underwriting?

Sure. Yes. The M&A space is certainly dynamic. If you look at the opportunities that we're pursuing they're pretty independently analyzable, right, whether there's an exposure to a desirable market, an increased exposure to value add, certainly differences in the EBITDA multiple our EBITDA margins have been reflected in the multiples. We -- internally, we're in that sort of 10% to 11% WACC in terms of our threshold about where we looked at our results and used some third parties to make sure we'll be an objective. Our goal is obviously to be far in excess of that and looking for ways to ensure that we're accounting for assets that we're pursuing in a way that is is in consideration of some volatility in commodities, making sure they're playing on the base business mentality, but also recognizing our competitive opportunities, right? The synergies that we think we can drive. Those individual analytics are run through our internal M&A team that really focuses on a standardized approach in terms of the construct that allows us to consider those individual factors and coming up with the payoffs that we think we can drive with synergy opportunities sort of be in that part that we have to manage going into the future, but all with that mentality around integrating them. We don't do this as conglomerate as a group of stand-alones. These are becoming part of the family, taking advantage of the opportunities that are available to everybody under the BFS umbrella.

Is this working? Reuben Garner with Benchmark. You guys have gained a tremendous amount of share over the last 18 months and I think your scale as a combined company has played a big role with how tight the supply chain is. Do you guys view that as a risk in the near term going forward if constraints ease? Or do you still see it as an opportunity? You've picked up some new business and provide value to your customers and you can grow from your new base?

Yes. Well, first of all, we don't take anything for granted. We're appreciative of our customers and the confidence that they've shown in us premerger and certainly, post-merger, as you point out, Reuben, we've gained some share. We see a long runway for continued share gain. We showed the slide that shows in the overall aggregate of single-family, we're about 10% market share, growing quickly and outpacing that importantly with the value-added portions of the business, which is clearly our strategy. Even though we continue to penetrate the market, we're seeing more and more adoption of these offerings all over the country. And we think certainly within the time horizon that we've spoken about here today, there's ample share gain opportunity for us ahead.

[ Jay Destor ] from Sunstone Capital. Dave, just following up on the market share question before. I guess Tim had a slide that showed the addressable market for BFS right now is about $42 billion. Using your sort of base revenue this year of $16 billion, plus or minus. Are those numbers comparable in terms of -- that would indicate sort of already, I don't know, roughly whatever 1/3 or so. I wonder if you can comment sort of if I can compare $16 billion...

That is considering the products that we sell broadly, as Tim showed on that slide where we've got fairly significant penetration in the market today. What it doesn't address is the opportunity that Tim spoke about in digital, where we're actually expanding our addressable market through the work around whole house design and bringing in some of those other products through the portfolio.

The only thing I would add to that is that there's clearly a core of where we do every product in every market. There are many markets around the country where we may offer a product that's not widely available nationally. We do fantastic at. So that's part of what we tried to take out in the materials that you saw from from Tim and from a Nate to sort of hive it down into that real core that we feel confident pushing everywhere. But there's a pretty substantial ring around that, that we've sort of already proven an ability to widen our aperture in terms of how we serve customers. It's just more regionally dependent.

It's Ryan Frank with RBC Capital Markets. A question on paradigm. What percentage of your customers use kind of the full suite of products versus just 1 of them? And then what is the biggest sticking point to get more customers to kind of switch into the full suite of products?

I can answer that. Thanks for the question. I don't -- we've got -- you saw on that wheel, we have a lot of products. We have ERP products. We have in-home renovation selling products. So we really don't see a scenario where 1 customer would use all of our products. So that -- we don't track that metric. But in different segments of our business, like, for example, in a manufacturer, we'd like to see them use more of our ERP products up to a certain point, like we're not trying to displace the large ERP players in the market. So it really depends on what market segment that the company is focused on. On the builder side, Builder Omni is a least common denominator. So is the estimating business. That's why we showed both of those. It adds value to the builder of all different sizes. It also can be used the estimating product in the lumber yards as well.

[Indiscernible] The big sticking point to get someone to use kind of the estimate or if they only use Builder Omni or do -- does everyone use both of those?

I think the question is, what's the barrier for somebody to use Estimate if they're using Omni. There really isn't a barrier. We built the product so that they're pretty easy to get going, especially estimate with existing business practices out there. Part of that is like what I shared with you earlier, we're really not competing with much more than paper and rollers in some of these cases on the estimating side. Going from Omni, that does require a builder to maybe think differently about how do they engage with the home buyer, but we're seeing a lot of builders see that as a big opportunity going forward.

And I would add to that to just say that our observation and why we were so excited about Paradigm is we couldn't answer that question with a good answer, meaning there is really no reason why people aren't adopting estimate and homebuilder omni especially given all the things we want to add to it, what they lacked was exposure to homebuilders and general contractors and we know some people who have a lot of that.

Matt Bouley, Barclays again. I'm appreciating the slide that home construction is only slightly more advanced than hunters and gatherers. And as you just said, there's a lot of rulers and notebooks out there. But clearly, a lot of builders use software. It's not maybe total -- a little bit of hyperbole to say it's all rulers. So I'm curious if you can go over mechanically, You have a typical small builder that has some set of software, maybe it's not totally integrated. And apologies, I'm not the smartest on this topic. But when you take paradigm or builder omni, how do you kind of break into what they already do? Can you kind of integrate with what they already have? Or is it an attempt to replace everything they have? How does a typical customer, how do you kind of bridge that gap?

Well, I think that's a great question. Why to summarize that a little bit like customers -- some of the -- some of these builders out there already have software. So how does this fit into the equation? We're hitting an area that is not well solved today. These problems on estimating and visualization is a new area that we feel we can be dominant and really strong in. The builders don't have solutions that work and sell these problems. So a couple of examples. You saw the video earlier, those -- 1 of those builders there, it's a good sized builder, they do have software. But what we provide was an experience that's superior around engaging their homebuyer and they're willing to leave the other software on the site and use ours to engage with the consumer. That's what that's the place that we wanted. That's the value we wanted to provide. So we think that it could be complementary.

Got it. No, that's helpful. And then just thinking about investing along those lines. I guess the guide back of the envelope suggests the multiples that you're using in the M&A portion of the guide doesn't suggest Paradigm type multiples. So just number one, confirming that's the case that the guide does not assume additional software M&A. And then what do you need to do in terms of organically investing behind software?

Yes. So the first part is accurate. It doesn't assume significant investment there other than organic. And as we spoke about earlier, Matt, we've got a great platform here to build. Connecting Paradigm and what we bought from Katerra is part of that development work, but importantly, extending that platform more broadly across the portfolio. in connecting, for instance, estimating to the design work that we do, right, for our customers today. That's the essence of the development work that we have underway now and that you'll see us continue to invest in aggressively here over the next 12 to 18 months.

And just to support that mathematically, it's embedded. The costs associated with the acquisition and what we anticipate the build-out will be was included in both the initial purchase model as well as the current model you saw today.

Dave, We've got Bob just hold on for just 2 minutes. Appreciate it. We have a couple of questions from the webcast. Paradigm has been around for 20-plus years and penetrated windows and doors. But if the opportunity set is so large in the whole house, why hasn't this product suite or competing offerings already scaled in other product categories, what have been the impediments and why will these change? From Mike Dahl of RBC.

Yes. Well, I don't want to speak for Nate, but maybe I can just paraphrase a little bit of what you heard from me earlier. And the thing that was exciting for him and certainly exciting for us was we got access to a great platform. And what we brought to date was the access to the market that he didn't have. He spent 20 years in his company building a fantastic platform and a fairly narrow focus from the standpoint of what we do around millwork. And so what they were doing was perfecting that capability in a very narrow product set. The other thing, of course, as Peter has already said, we bring the investment that I think might have been somewhat limited in legacy Paradigm to continue to build and invest and grow this thing to scale very quickly. So those are the 2 pieces I think we brought to the table. Nate?

I think that answers it really well. I think the 1 other thing that should probably be added though is homebuilder Omni is a very new product. Take it to market over the last 2 years.

Yes. And I think it's not just a new product that's not doing something that everybody has done before. And with that, there's the change that I was talking about. But you combine that together, like I said in the presentation, I feel like it's a powerful combination.

So we're just about out of time. Maybe Mike, 1 more question or so to wrap up.

Yes. You talked about increasing the leverage from 1x to 2x for additional buybacks, can you further clarify how you will make that determination?

Yes. So certainly not just additional buybacks. It's capital. it's where we perceive the opportunity to create shareholder value if that additional risk is worth it, then it's certainly available to us. But we're going to continue to run a disciplined balance sheet and we have a substantial amount of capital to work with at 1x levered as well.

Those are all the questions from the webcast. Turn it back over to you, Dave.

Great. Just a short wrap up. I just want to extend a heartfelt thanks and appreciation for your support and certainly for those of you that have traveled to be here in the room. We're excited about our future. This is the end of our formal program. However, we look forward to having lunch with many of you and the executives you see here as well as those scattered in the audience are happy to answer your further questions here over the course of the next 1.5 hours and then we'll take a tour of our large and exciting millwork facility there in Coppell. So thank you very much. Appreciate your time and energy.