Good day and welcome to the Builders FirstSource's Fourth Quarter and Fiscal 2015 Earnings Conference Call. Today's call is being recorded and will be archived at www.bldr.com. It is now my pleasure to introduce Ms. Jennifer Pasquino, Senior Vice President-Investor Relations. Please go ahead, ma'am.

Thank you. Good morning and welcome to the Builders FirstSource fourth quarter 2015 earnings conference call. Joining me today on the call is Floyd Sherman, Chief Executive Officer of Builders FirstSource; and Chad Crow, President and Chief Financial Officer. A copy of the slide presentation referenced on this call is available on the Investor Relations section of the Builders FirstSource website at www.bldr.com. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. Any reproduction of this call, in whole or in part, is not permitted without prior written authorization of Builders FirstSource. And as a reminder, this conference call is being recorded today, March 4, 2016. Builders FirstSource issued a press release after the market closed yesterday. If you don't have a copy, you can find it on our website at bldr.com. Before we begin, I would like to remind you that during the course of this conference call, we may make statements concerning the company's future prospects, financial results, business strategies, and industry trends. Such statements are considered forward-looking statements under the Private Securities Litigation Reform Act of 199, and are subject to certain risks and uncertainties which could cause actual results to differ materially from expectations. Please refer to our most recent Form 10-K filed with the Securities and Exchange Commission and other reports filed with the SEC for more information on those risks. The company undertakes no obligation to publicly update or revise any forward-looking statements. The acquisition of ProBuild closed on July 31, 2015, the closing date. As a result, ProBuild's financial results are only included in the company's GAAP financial statements from the closing date forward and are not reflecting the company's historical financial statements. We have, therefore, provided supplemental financial information of the combined company in this press release that is pro forma or adjusted to include ProBuild's financial results for the relevant periods prior to the closing date. The company will discuss these pro forma adjusted results on this call. We've provided reconciliations of non-GAAP financial measures to their GAAP equivalents in our earnings press release and detailed explanations of non-GAAP financial measures in our Form 8-K filed yesterday, both of which are available at our website. At this time, it is my pleasure to turn the call over to Mr. Floyd Sherman.

Thank you and good morning. Welcome to our fourth quarter and fiscal 2015 earnings call. Before I give a brief recap of the 2015 results, I want to provide an update on the integration and progress against the cost savings initiatives outlined when the acquisition of ProBuild was announced. And then I'll give a brief recap of 2015 and turn the call over to Chad who will discuss our financial results in more detail. After my closing comments regarding our outlook, we'll take your questions. Let's begin our discussion on slide 4 with an overview of the key benefits of the ProBuild combination. On July 31, 2015, we completed the acquisition of ProBuild, one of the largest distributors of building materials to professional builders, contractors and project-oriented consumers in the United States. The combination creates a clear industry leader with expanded growth and margin opportunities. We believe that the benefits of the acquisition include increased scale and diversification, enhanced cross-selling opportunities for value-added products, better customer penetration, and projected $100 million to $120 million of targeted annual cost savings before one-time expenses. Now that we're a few months past the acquisition close, I'm eager to share with you an update on our integration efforts. We're very pleased with the progress of the integration efforts thus far. We're making great strides in combining our organization into one company. All aspects of the integration, including system conversions and facility consolidations, are in full swing and progressing as planned. Management and operating teams are collectively driving our business goals. The company has achieved several key milestones to date in the integration process, including closing 12 of the planned 18 overlapping locations, completing ERP conversions at 16 locations, including our Dallas-Fort Worth market, with seven more in process this month, and transitioning all associates…

Thank you, Floyd. Good morning, everyone. I will first discuss the current quarter of pro forma adjusted sales results on slide 9. As a reminder, we have reflected pro forma adjusted figures to include ProBuild's financial results prior to the closing date and normalized for onetime integration, closure and other costs. For the fourth quarter, we reported pro forma net sales of $1.46 billion, down 1.1% compared to pro forma sales for the fourth quarter of 2014 excluding the impact of closed locations. Total sales volume grew 7.1% over pro forma sales for the fourth quarter at 2014 that was offset by 8.2% as a result of the negative impact of commodity price deflation on our sales. Sales volume grew 8.1% in the home building end market and 3.8% in the repair and remodel end market. This growth was largely in line with new single family construction and repair and remodel market growth. Immediately following an acquisition of this size, concern exists that either integration destructions or customer reaction would impact sales in the short term. I am pleased that has not been the case as our volume growth [indiscernible] with market growth this quarter. From a product mix standpoint, our value added product categories made up a higher percentage of overall pro forma sales as our prefabricated, components, windows, doors and millwork categories accounted for 38.6% of adjusted sales in the current quarter compared to 37.6% in the quarter – fourth quarter of last year. Our lumber and lumber sheet goods declined as a percentage of sales from 33.8% in the fourth quarter of 2014 to 31.7% this quarter. Our other building products and services categories were up slightly compared to last year. Our pro forma gross margin percentage was 26.3%, up approximately 150 basis points from 24.8% last…

Thank you, Chad. I remain very positive about the future of Builders FirstSource. While global macroeconomic unease has recently weighed on the homebuilding outlook, I believe our industry remains on a trajectory of steady but positive growth. We expect to grow profitably and realized our synergy cost savings. Our company is well-positioned to be the building supply company of choice for builders around the country thanks to our geographic reach, enhanced product offerings, national manufacturing capabilities, and superior customer service. Our focus will be to leverage our national scale and sales capability to grow faster than the market with the focus on profitable growth and value-added products. These strengths, our scale and the potential leverage provided by the synergy savings combines to make a Builders FirstSource that is greater than the some other parts. We've demonstrated our ability to reduce debt again this quarter and are committed to continuing to reduce leverage through annual pay it flow generation. Our integration efforts with ProBuild are progressing as expected and I attribute this success to the great associates that I have the pleasure to work with every day. To all the associates, I'd say thank you. I remain convinced that the combination of Builders FirstSource and ProBuild will create value for our shareholders and customers alike in the years to come. I'll now turn the call over to the operator for Q&A.

Thank you, sir. [Operator Instructions] Over to Andrew Casella, Deutsche Bank.

Hi, guys. Thanks for taking the question. I guess within two parts of this question, can you talk about I guess the genesis of the exchange offer, was this company led or was this led by bond holders. And I guess the second part of the question would be why do the exchange versus potentially use some of what looks to be a pretty big sum of liquidity, substantially buy back bonds in the open market and just reduced cash interest overall instead of just – or being a few percentage points on cash carry?

Yeah. To answer your first question, it was company-generated and really just looking to take advantage of where the bonds were trading and the arbitrage between those two. To your second question, we were able to do this fairly quickly without using any liquidity and got a little bit of interest savings and brought the debt down some. But to your point, as we get deeper into the year, we might very well look to reduce debt and other matters which could include paying down debt with cash flow and the liquidity that we have.

Got it. And when you think about total liquidity, I mean, $700 million seems to be higher than what you would need for working capital swings. I mean, what's kind of the way you think about minimum liquidity and therefore kind of that dry powder to go after, whether it's market mispricings on your bonds or whatnot for debt reduction?

Yeah. That's a good question and a subject that gets bandied around here a lot. I do feel very comfortable with the amount of liquidity we have. To some degree, everyone in the industry is still licking their wounds from what happened over the last five to seven years. And so it's hard to know – you never really know how much liquidity is enough, right? But I do feel good about our liquidity level. I do think we have some excess liquidity to play with to improve our capital structure. But we're probably going to wait until we get deeper into the year in the spring selling season before we take any action that would use up some of our liquidity.

Got it. And then just, again, just housekeeping, how much left of that basket do you have left to do those exchanges?

Well, we didn't use any baskets. We really just used the four times secured debt ratio as part of the secured notes. But as far as that calculation goes, I think there's maybe another $50 million or so.

Right. That's helpful. And then just thinking about synergies, this is a question on slide 5. When we look at that $45 million of incremental cost savings, how should we think about that running through the numbers during the year? I mean, is it going to be front-end loaded? How should we kind of model that?

The $45 million should be spread fairly evenly. So, the good chunk of that was changes that went into effect January 1.

Got it. And then to your comments, opportunistic transactions, if you could just elaborate a little bit what would that be – what would that constitute size-wise? What would you be comfortable kind of taking down if the opportunity presents itself?

Well, that goes back to how much base liquidity do we think we need. And to be honest, I just don't – I don't have the answer for that yet. That's still kind of a work in process.

All right. Got it. And then just final question, I apologize if I missed it. What is the CapEx expectations for the year? And then if you could just repeat what you had said on the integration cost and when those are expected to be realized.

The CapEx this year will probably be somewhere around $90 million, $90 million to $100 million. The one-time integration cost that we expect to incur in 2016 is about $30 million.

Got it. Thanks so much and good luck. I'll get back in the queue.

We'll go next to Drew Lipke with Stephens.

Yeah. Good morning, guys.

Hey, Drew.

Good morning.

First question I had, on your gypsum, roofing and installation sales, we did see those down 2.6% for the second quarter in a row. That's in a bit contrast to some trends that we've seen from others, just curious what are you guys attribute that to and sort of what's going on there?

I think some of it, some of it we saw some softening in the pricing in the marketplace for us. Lot of the commercial projects, I think a lot of people started getting concerned whether there was going to be a gradual slowing down in that particular area. The competitiveness I think really affected some of the pricing. We're seeing that coming back. The roofing really – we didn't have any really good hailstorms to help us that we had in previous years and I know that sounds pretty catalyst a way to put it, but hailstorms are very, very good for the – for our roofing business and particularly in the areas that we have very strong roofing sales. It definitely affected the year-over-year comparison, but those are the main reasons.

Okay. That's helpful. And then, as it relates to ProBuild sales specifically, I mean, overall you guys are tracking pretty in line with the end markets. I'm curious what are you seeing with ProBuild's standalone specific sales? How are they tracking and sort of what steps are you guys taking to allow ProBuild to better compete in the market?

I think their tracking pretty close to ours. I think we've discussed in the past, prior to us acquiring ProBuild. Their strategy was more going after margin and maybe walking some of the lower margin business, was this in some ways in contrast to some of our strategy and as you know, our mix of large national builders was historically higher than ProBuild. And so we've simply acquired them. We've loosen the range a little bit and told them, hey, with the changes we're making to their cost structure, we should be able to sell the large homebuilder profitably and so we've loosened the range a little bit to let them go after some of that business that prior to us acquiring them than they may have passed on.

Yeah. I think you could really see the effects of that as we've been accelerating since the acquisition was closed, the fourth quarter in particular. We saw a really good improvement in the sales on the ProBuild side and we were able to overcome a very, very tough commodity deflation effect. And we look at on a quarterly basis, the commodity effect we had with negative 100 – it cost us about $121 million in sales. So, that will give you some indication of the strength that came back in the other parts of our business and certainly the ProBuild locations are contributing strong to that.

Okay. That's helpful. Then just last one from me, we've yet to see it in the census data, but it sounds like the unseasonably warm and dry weather we've seen year-to-date has allowed a lot of builders to close the gap on [indiscernible] completion. I'm curious, are you guys seeing that year-to-date? And I appreciate the initial Q1 commentary that you gave. But I was just curious what you're seeing there. And then as a follow on to that, what are you seeing in terms of the competitive environment around sort of pricing as we sort of kick off spring season?

I think we are seeing that so far in our first quarter. As I've said, I think our sales are going to be up 6% to 7% and that's facing another pretty stiff commodity deflation headwind. And so that should be a good indication that we have seen some acceleration in this quarter.

We're really pleased with the way things are progressing in the quarter. There's a lot of – we're seeing good activity out on the job sites. Still very active in homebuilding. The biggest problem issue that we still face is labor out on the jobsite. It probably – if you look at completions versus starts, you can really see that. So, that's the only thing that's really hold – that I can see that's holding anything back, but we're really pleased to see the way the quarter is going right now.

And on your second question about pricing, I mean, pricing is still tough. It's still very competitive out there. When you look at where we are from a starts level, we're still well below any sort of normal building environment. So, it's still pretty tough from a pricing standpoint.

All right. Well, that's helpful, guys. I appreciate it. Thanks and best of luck.

Thanks, Drew.

We'll go next to Mike Dahl with Credit Suisse.

Hi. You have Anthony Trainor filling in for Mike. Thanks for taking my question. Congrats on the quarter and congrats on the progress.

Thank you.

My question – yeah. My question – on slide 5, you have the estimated run rate cost savings. So, relative to, I think, the expectations you laid out, on 3Q, it looks like the actions taken to date are probably running $5 million light 4Q versus what you're expecting last quarter. And then on the flip side, it looks like your year one expectations are now $90 million versus $80 million last year. So, I was wondering if you could talk a little bit about whether the – maybe the sources of the change and how much timing played a role in this?

Well, as you can imagine, there's a lot of moving parts. We've got a lot going on from an integration standpoint. And so yeah, I think we said in the third quarter might be around $85 million. We're being probably a little conservative. We got the range back at the $90 million to $100 million where have had it originally. The biggest moving parts is largely on the ERP conversion efforts, the cost associated with that, and then a little bit of give and take on the some of the employee-related cost, relocation, severance, retention bonuses things like that.

Thanks. That's helpful. And as a follow up on the ERP, could you talk little bit about what the result is of once you switch over to the new ERP systems and kind of how much of a difference that – how much of a change that makes to your ability to manage the cost savings?

Well, the $100 million to $120 million cost savings that we laid out were, for the most part, independent of ERP conversions. Now as we get deeper into the conversion process and as we said before, this is going to be – it could be a four or five-year process to get through all these. And we went through a similar process at Builders over the years as we grew through acquisitions. But as you get everyone closer to being on one ERP system, the savings you can generate and the efficiencies you can gain just by really having real-time access to consolidated information to manage your inventory, to manage your credit, to manage your payroll and your overtime cost and then reduce head count in the back office, as you get everyone on one system just as far as APE payroll, all the back-office functions are much more efficient. So, some of those savings we will realize beyond that two-year window as we get more and more of the company on to the same ERP system. But it's really just an overall efficiency in having real-time consolidated information at your fingertips to run the company.

Great. That's helpful. And then, shifting gears here a little bit to the value add penetration, nice progress there. Could you talk about – is this still coming – the increased ventures, is this still coming at the legacy FirstSource side of the business or how has the sales synergy started applying the techniques on the ProBuild side of the business? How is that progress going?

Still progressing well on both fronts, and I think we will continue to see that. Labor is still an issue out on job sites. And so, I think the builders will continue to demand the [indiscernible] components. A lot of our capital spend that we have slated for 2016 involves expanding that opportunity on the ProBuild side. We've got some facilities that were increasing the capacity on through additional equipment and automated equipment. We're relocating some facilities to increase capacity and opening a couple of new truss and panel facilities. And so, it's something we'll continue to work on. It's not something you can turn around in a month or two, but we're putting a lot of effort into that, just like from the Builders FirstSource side we've done for the last decade.

Great. Thanks.

We'll go next to Rob Hansen with Deutsche Bank.

Thanks. I just wanted to kind of return to the leverage topic here. How much of a seasonal draw should we expect to see in 1Q or 2Q and then how much debt do you want to pay off in 2016, right? I think you mentioned $80 million of free cash flow. Should we expect all of that to go straight towards debt repayment?

I think we may speak out at the maybe $150 million, $175 million out on the revolver and it's peaked during the year. And then obviously, we'll see that comes back down towards the end of the year as the building season slows. To answer your second question, I don't know if I'd say all of the $80 million to $85 million of cash flow. But certainly a significant portion of it, I would expect to be used to take some debt off the balance sheet.

Got it. Okay. And then can you just give us maybe some sort of stats or something that we could kind of – you could maybe quantify in terms of being able to sign up new builders on to the value-added products side of the business or maybe some sort of anecdotes or something like that?

I don't – we don't have anything like that handy, Rob. I can work on pulling something together for you. We don't have anything like that at our fingertips right now.

Okay. And then just on the 8% volume increase, obviously aside from lumber, right, like what other categories do you feel that the most on that volume piece?

That's going to be your manufactured products and probably the millwork side of the business, I would say will be the top two.

Okay. And then you mentioned the new truss and panel facilities, where are those going to be? I know you guys have been thinking about the California market as an opportunity. Is that – are you kind of looking there more to?

Yes. That's where one of them is going in.

And then there's another one up in the Northeast where we got a pretty good expansion project under way.

All right. Well, I appreciate it, guys. Thanks.

You bet.

We'll go next to Matt McCall with BB&T Capital Markets.

Thanks. Good morning, everybody.

Good morning.

Good morning.

So, let's see. Chad, you talked about the Q1 guidance held up 6% to 7% in the face of a pretty stiff commodity headwind. Can you quantify what that expectation is from a commodity headwind perspective?

Yeah. Bear with me here one second. If prices stay where they are today, we estimate that that could be somewhere around the 6% or 7% negative impact on our sales in the first quarter. And then that comparison gets easier as we go on through the year. If pricing stays where it was today, I think by the end of the year, it would be somewhere around a 2% or 3% negative impact on full-year sales.

2% to 3% per year. Okay. And then – so we're not – you talked about in the deck commodity price deflation, but then in the gross profit commentary, you talked about improvement in pricing. So, when you think about – you quantified the commodity price, but can you talk about pricing and the net impact in other categories? I think Floyd answered the Q4, the gypsum and roofing installation, the pricing was softer. But can you put some numbers behind the impact? And where does that show up in the bridge on page 10?

I'm sorry. It's not page 10.

Yeah. Page 10. Well, I'll speak from a quarterly standpoint for the fourth quarter and our margin. I estimate that the commodity deflation obviously impacts our top line, and so it robs some gross margin dollars from us. Now, we do get a rate improvement as prices are falling, as you know, so I estimate the net impact on gross margin due to commodity deflation was about $15 million to the negative if you're trying to bridge from Q4 last year. And then all the other non-commodity-related products added about $28 million of gross profit dollars. So the net of those two would get you to your $13 million change in margin quarter-over-quarter.

Okay. Okay. Let's see, the D&A number you gave was a little lower than we expect. Has something changed there, or did we just model it poorly? We had $98 million in depreciation, $32 million in amortization. We were at about $9 million a year for new CapEx. What did we – [indiscernible]?

No. You didn't model it poorly. But we – after the hand-to-hand combat of going through all the purchase accounting for the year-end audit and getting it all finalized, we ended up putting more to goodwill than the amortizable and tangible assets than we have thought. So that's probably where your difference is coming from.

Okay. And then a similar modeling question, the share count was a little bit lower at 109 million. Is that the right way to look at it going forward?

No. I think it's going to be little higher than that.

Yeah.

Let's see here.

It's going to be around 113.

Yeah. I think on a fully diluted basis, it will be somewhere around 113 million, 114 million.

Okay. That's it for me. Thank you.

You bet.

We go next to John Baugh, Stifel.

Thank you. And Floyd, Chad, Jennifer great start to the integration and year. I was wondering there was a comment in there about incrementals I think you made, Chad, this 15% to 20%. I guess two questions on that. One, how is deflation playing with that number I guess in the first quarter, how do you think about that for the balance of the year? And it seems like a fairly high number overall at least I've seen ProBuild would be of lower incremental than that. Was that just a vast assumption that maybe you could discuss the incremental between ProBuild and Builders FirstSource? Thank you.

Well, I'll discuss the incremental in total. Yes, when your period of commodity deflation, your incremental is going to be higher because you're generating more margin dollars on a lower sales number essentially. So, it's just the way the map works. Your incremental are going to be higher. And so that's a primary driver as to why that's in the 15% to 20% range and not in the typical 12% to 15%. And then I also think we'll probably get a couple of million dollar benefit in the quarter for lower fuel prices. So that's adding to it as well.

So, Chad, you think more 12% to 15% as commodity deflation evens out or just closer breakeven for the balance of the year?

That's right.

Great. Thank you. Good luck.

Thanks.

We go next to Nick Coppola with Thompson Research Group.

Hi. Good morning.

Good morning.

Just to start with a high level question, can you just talk more about your expectations for end markets in 2016, particularly given that economic uncertainty out there? What are customers telling you, and what are you looking for, for the year in terms of new construction and R&R activity?

Was your first question on margin? Market?

No. End market expectations.

Okay. In my opinion, I think we're going to see more of the same. I think we're going to see somewhere in that 8% to 10% growth in single-family starts. I think repair and remodel will still hang in, in that 3% to 5% range. The oil will impact some markets, but we've got plenty of other markets that are not impacted by oil that are showing some great strength. And so, in my opinion, it's going to be more of the same. It's probably similar to what we saw last year. I don't know what your perspective is, Floyd.

Yeah. I think we're also going to be seeing, I think, more movement to the starter home. Certainly Horton with their Express line is definitely showing a lot of strength in this area. I think there are other builders who are following along in the same line. Right now, I think we are seeing it as a steady improvement. We've got the traditional markets in the Southeast. They're still going very well. The Texas market is still very healthy for us. Houston, while it's down 10%, 12% right now, but that's mainly in the upper-end home. We're seeing still a healthy growth in the lower-priced, middle-priced homes in Houston. The Dallas-Fort Worth market, San Antonio or Austin market. They're really, really going strong. The other parts of our country, West Coast, North West, looking very healthy at this point as is the North East. So, I don't see all the pessimism that seems to be prevalent in the press. I think, job growth is looking well. And I think, we're seeing, certainly, more jobs being created in the middle to higher income levels. And so, we feel good about this year. As Chad said, 8% to 10% improvement in housing. I'll take that every year. And I've seen nothing out there, even on the horizon that causes me to feel that we're not going to see that again this year in the improvement in housing.

Okay. That's helpful. And then second question here. You guys have closed some branches post acquisition. So, can you just add some color about what those markets have looked like? How has volumes trended in those markets? Were there any disruptions in that kind of thing?

I've heard of minimal disruptions.

No disruptions.

Yeah. I know people look at us and kind of what cock their eyes when we say minimal to no disruption, but that's the truth of it. We are operating very well. Our people have come together extremely well. We did a very good job of preplanning and then the execution of our integration plans and go-to-market plans. So, from our view point, things couldn't be going better.

Yeah. And it's a credit to the guys in the field and the markets where we overlap. They have really come together and are working as one unit to making sure the customers – there's no customer disruption and whatever we're doing whether it's an ERP conversion or a facility consolidation. The guys out in the field have really done a great job.

And really worked well at supporting the customer from the best and closest location which is working out extremely well for us. And so we've been able to provide and keep up a very high level of service to our customers.

Okay. That's great to hear. Thanks for taking my questions.

You bet.

We go next to Will Randow with Citigroup.

Hey. Good morning and congrats on the progress.

Good morning, Will.

Thanks, Will.

Just I guess these points have been hit on, but just a couple more point and follow ups. When you look at regional demand, what markets are you seeing I'll call it incremental strength versus weakness? And kind of implicitly what I'm asking is taxes has kind of allowed the builders or building companies in general to outperform relative to new home sales pace. How do you think that trend shakes out as we go forward and again what are kind of the strong regions versus the weak regions?

I really can't say that we have any weak regions. All of our regions are at this point are meeting or exceeding my expectations and for what we have set for our budget this year. I guess you could say, is Houston as strong as it was last year? No, but it's far from being a disaster or a problem area. The other markets in Texas is very good, Northeast very good. The Florida market, Georgia, the Carolinas all operating well. We're having some issues in the Vulcan with the – in the Dakotas, but they're also very close to budget. So not enough below it to make me have any real heartburn. Our business in Alaska, still strong, California going very well, as is in the Northwest. So there's always going to be, and when you have 450 locations, you're always going to have some that are lagging for one reason or another, might be a little behind, but then other locations within that general geographic large market state makes up for it. And so I would say Florida and the Carolinas probably are the strongest areas in terms of building health right now, but Colorado certainly would fall in that classification as well. Our business in Colorado looks really, really good at this point. So that's the best way I can answer you. I wish I could tell you that I had problems, but I don't.

And just more pointedly in terms of the California locations you do have particularly in SoCal. There's been some concern about Builders' absorption rates are, if you will, same-store sales volume. You haven't been seeing any sort of slowness in activity in those markets. Is that what you're viewing?

I guess maybe our people aren't reading the press or whatever. But now we're – things are going very well right now in the California markets for us.

Okay. And then, on the operating leverages, it's been asked a couple of different ways. But you talked about a 15% to 20% conversion to EBITDA rate for the first quarter. Excluding some of the headwinds you might get from either lumber inflation or deflation through the year and excluding synergies, how should we be thinking about modeling the operating leverage through the year? And then, obviously you provided the synergy piece and we can figure out where lumber runs.

Yeah. I think excluding all that and just on the base business, you're going to be somewhere in that 12%, 14%, 15% range.

And just the last thing on free cash flow conversion, meaning from net income net of free cash flow conversion, what pieces – so you're thinking about outside of the standard working capital and incremental run rate. I think you had actually run the tweak down the ratio as a percentage of sales and obviously gave CapEx guidance. Anything else we should be thinking about in terms of the dropdown of free cash flow?

Probably just $3 million to $5 million or so of taxes. And then, make sure you got the one-time cost in there of about $30 million.

Okay. Perfect. Thank you and congrats again.

You bet. Thanks.

We'll take one additional question from Jay McCanless with Sterne Agee.

Hey. Good morning, everyone. The first question I had, on that 6% to 7% sales growth target that you gave for 1Q 2016. Could you tell me, one, which number you comp it against in the prior year? And also, does that 6% to 7% include the effect of lumber deflation?

If you look at the presentation deck, we're [indiscernible] on the $1.284 billion...

Okay.

...Q1 2015 sales. And yes, that includes the expected impact of deflation.

Okay. You guys include it. Okay. Second question I had, on stock comp, what should we model for the year?

That's a good question. I have to get back to you on that. It's still a work in process for Q1.

Okay. And then, the last question I had and I apologize if I missed it, did you guys give a target for 1Q 2016 what we should expect for the SG&A ratio?

No. But I think we probably gave you enough to back into it.

Okay. All right. Thanks, guys. I appreciate it.

Okay. Thanks, Jay.

And due to time constraints, that was our last question. I'd like to turn the call back to Mr. Sherman for any additional or closing comments.

Okay. We appreciate everyone joining the call today. And we look forward to updating you on the progress of the integration and of our business initiatives in the months ahead. If you have any follow-up questions, please don't hesitate to give Chad Crow or Jen Pasquino a call. And thanks for joining us today.

And that does conclude today's conference. Thank you again for your participation.