Good afternoon, ladies and gentlemen, and welcome to the Beacon First Quarter 2023 Earnings Call. My name is Bethany, and I will be your coordinator for today. At this time all participants are in listen-only mode. We will be conducting a question-and-answer session towards the end of this call. At that time, I will give you instructions on how to ask a question. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the call over to Mr. Binit Sanghvi, Vice President, Capital Markets and Treasurer. Please proceed, Mr. Sanghvi.

Thank you, Bethany. Good afternoon, everybody, and thank you for taking the time to join us on our call today. Julian Francis, Beacon's Chief Executive Officer; and Frank Lonegro, our Chief Financial Officer, will begin with prepared remarks that will follow the slide deck posted to the Investor Relations section of Beacon's website. After that, we'll open the call for questions. Before we begin, please reference Slide 2 for a couple of brief reminders. First, this call will contain forward-looking statements about the company's plans and objectives and future performance. Forward-looking statements can be identified because they do not relate strictly to historical or current facts and use the words such as anticipate, estimate, expect, believe and other words of similar meaning. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, those set forth in the Risk Factors section of the company's 2022 Form 10-K. Second, the forward-looking statements contained in this call are based on information as of today, May 4, 2023. And except as required by law, the company undertakes no obligation to update or revise any of these forward-looking statements. And finally, this call will contain references to certain non-GAAP measures. The reconciliation of those non-GAAP measures to the most comparable GAAP measures is set forth in today's press release and the appendix to the presentation accompanying this call. Both the press release and the presentation are available on our website at becn.com. Now let's begin with opening remarks from Julian.

Thanks, Binit. Good afternoon, everyone. Let's begin on Slide 4. The team executed well in an uncertain environment to start the year, delivering record first quarter net sales and cash flow. Average selling prices were up high single digits year-over-year. This, combined with acquisitions, more than offset lower volumes. Daily sales increased approximately 1% year-over-year, slightly lower than our initial expectations given well-publicized weather and non-residential contracted destocking in the quarter. Residential volumes were down compared to a strong prior year comparable as we expected. And markets with higher exposure to new residential construction remained weak during the quarter. In particular, Texas, one of the largest single-family new construction markets in the country contributed to the decline. Storm exposed areas such as Florida showed growth during the quarter due to the volumes associated with the rebuilding from Hurricane Ian. And it's important to remember that 80% of our sales come from repair and replacement activity. Non-discretionary demand from reroofing end markets showed resilience during the quarter. As we had expected, non-residential volumes were down. We believe largely as a result of continued destocking at the contractor level as opposed to a decline in end market demand. Commercial roofing supply chains continue to ease, and we are seeing normal lead times on the majority of products. Our complementary products business benefited from the acquisition of Coastal Construction Products in November of last year. We are pleased with the performance of our new waterproofing division, and it represents a significant growth opportunity for Beacon. Growth in our siding products also contributed to the higher complementary sales year-over-year. Gross margin reflected the inventory profit roll-off that we expected in a mostly stable price environment, and we recorded our second highest first quarter adjusted EBITDA in history. We also delivered strong first quarter cash…

Thanks, Julian, and good evening, everyone. Turning to Slide 7. We achieved nearly $1.7 billion in total net sales in the first quarter, up a little more than 1% on a per day basis year-over-year as higher average selling prices combined with the impact of acquisitions more than offset lower organic volumes. Total reported net sales were up more than 2.5%. As a reminder, we had one additional selling day in the 2023 first quarter versus the prior year. As I'm sure you are aware, we had winter weather and precipitation in large swaths of the country during the quarter, especially in March. In the aggregate, price contributed approximately 9% to 10% to revenue growth, while organic volumes per day were down 12% to 13%. Acquisitions, including Coastal Construction Products are performing well and contributed more than 4% to daily net sales year-over-year. Our backlog, which remains weighted toward non-residential orders continue to convert in the quarter and continued to come down from its peak in the second quarter of last year, while it remains approximately twice what it was before COVID. Residential roofing sales per day were lower by approximately 1% as higher year-over-year prices in the high single-digit range were offset by low double-digit volume declines in part from lower shipments in regions with higher exposure to single-family new construction. It should also be noted that the prior year quarter was a record first quarter of shingle comparable. And while our residential volumes were down, we compare favorably to industry volumes, continuing a trend that started approximately four quarters ago. Non-residential roofing sales declined by 9% on a per day basis, driven by the lower shipments as destocking by our customers was partially offset by higher prices in the mid-teens year-over-year. Complementary sales per day increased 21% year-over-year…

Thanks, Frank. Please turn to Page 11 of the slide materials. Before we head to Q&A, I'd like to update you on our expectations for the remainder of 2023. We continue to expect overall market demand to remain healthy, albeit lower than the last two years. We expect new residential construction to be down significantly, but the overall sentiment has improved through the first quarter. Residential reroofing end markets will be down, but total volume will be better than pre-pandemic levels, supported in part by the 20-year reroofing cycle. Given all the storm activity in Q1, we now have higher confidence in our assumption of a return to the 10-year average storm demand. We continue to see the non-res markets about flat. However, our volumes will be down year-on-year as contracted destocking, which was more than originally anticipated. For the second quarter, we expect total sales growth to be approximately 3% to 5% year-over-year and slightly better than the April pacing of 2% to 3%, given the record comparable month a year ago. Keep in mind that the second quarter of 2022 and 2021, we reported 28% and 21% net sales growth, respectively. We recently announced a shingle price increase effective later this month corresponding to the manufacturer's announcement. Our expectation is that our team will execute with the same discipline and rigor as we have in the past, and we expect realization to reflect local market conditions. We expect gross margins to be in the mid- to high 25% range, which is down relative to the record prior year quarter, which you will recall had significant inventory profits. Our full year expectations remain unchanged. We continue to expect net sales growth in the range of 2% to 4%. This includes contributions from acquisitions previously announced. Regarding gross margin, we…

Thank you. [Operator Instructions] Our first question comes from the line of Kathryn Thompson with Thompson Research Group. Please go ahead.

Hi. Thank you for taking my question today. In your prepared commentary, you acknowledge that your May shingle price realization would be based on local market conditions and – today with – heavy material producer earnings releases, we saw that a wide variability in terms of residential, some markets recovering like Houston and other markets, like Salt Lake City still lingering. Could you give more color on market by market in terms of what you're seeing with resi trends and how that impacts you? And then – on the resi side – and then on the non-res side, really more, how are the mega projects that are sort of pervasive in the market? What is Beacon's role in these type of projects? And can you work with companies like Samsung for these mega projects? Thank you.

Thank you, Kathryn. Obviously, a lot of – to unpack in the question. So let me start on the residential side and the market by market. I think as we said in our prior call and certainly in our communications, it's a very different year – this year than we've seen the last couple of years when the market conditions were pretty common across all of the markets. So we have seen differences so far this year, and I highlighted them in my prepared remarks. Texas has been down. Florida has been up. We've seen obviously significant weather across the country. Obviously, California was weak in the first quarter, but we would expect that to recover quite strongly, given all of the weather – they had the rain that fell, the snow that fell, that certainly we are seeing that start to return. So we would expect to see California to be strong. And the – I think that what we're going to see is Texas recover. I mean the sentiment on new residential construction has improved. We saw some significant weather activity in Texas. So I expect that to be an improving market. We saw – we've seen Florida hit by both weather as well, as more recently – as well as the activity obviously from Hurricane Ian last year. We expect to see some carryover in the Upper Midwest from some of the markets and the storms that happened there last year. So broadly speaking, I think we're going to see decent markets in the larger areas of the country where there's a lot of shingles that are moving. And so broadly, I think it's going to be okay. There are a couple of markets where we're seeing continued weakness, but they're generally smaller markets. And so we…

Yes, that's super helpful. Thank you very much.

Thank you. Our next question comes from the line of Mike Dahl with RBC. Please go ahaed.

Hi. Thanks for taking my questions. On the resi side, specifically, obviously, there's been a few periods of kind of inventory management and destock across distribution. Where do you stand in terms of residential shingle inventory today? Are you still destocking? Have you started to restock at all given some of the storm demand? And just kind of tying into that, you disclosed the sales per day in April in total. Could you split out where resi stood on sales per day?

Yes. So, hi, Mike. It's Frank. On the inventory piece on the volume side, forget about dollars for a minute, but on the volume side, we were down significantly on a year-over-year basis on shingles. Think about something in the kind of high teens, low 20s percent volume. When you think about on a sequential basis, we did start to build some inventory in the quarter. And obviously, when you think about storm markets, as an example, in some of the recovering markets that Julian talked about, you're going to see us add product in those markets. At the same time, where we have markets that are on the softer end of things, we're likely going to continue to shape some there. And then on the non-res piece, again, as we look at the contract destocking, that will probably allow us to be stocked a little bit in the second quarter as well. So I wouldn't expect huge moves on inventory in the aggregate, but you will see some geographic changes and some line of business changes. In terms of April, your question, yes, we did give you the sales per day, up 2.5%. When you break it down, we were, overall, up on price, about 4% and down low singles on volumes. Shingles were effectively flat, just a sort of fractionally down. So overall, the resi and the complementary side were favorable because of the continued contract of destocking that you heard Julian mention. The commercial volumes were down in the mid-teens. So overall, commercial was – with the addition of price, was down in the mid-single digits. But you're seeing the resi and the comp piece, which is largely residentially exposed do quite well.

And I'd emphasize, Mike, that last year's April was a very, very strong month. So to see that type of relatively flat number on residential shingles in April, I'd say, it was an extremely positive sign for us.

Yes. For sure. All right. Thanks, Julian. Thanks, Frank.

Thank you. Our next question comes from the line of Marius Morar with Zelman and Associates. Please go ahead.

Good evening, gentlemen.

Marius, how are you?

Good. Thank you for taking my question. I was just wondering, we've had a few large storms over the last two months. Is there – do you have any insight into how much these storms are going to contribute to demand, how meaningful they are?

Yes, I'd be happy to touch on that. Obviously, it's still early. So these things tend to build over time, and we'll see it. But we came into the year saying that we expected a return to the 10-year average storm demand, which is always our planning assumption, and we sort of base it on that. That represented a tailwind to us this year because last year's storm demand, we think, was well below the 10-year average. I would say that we've seen a very active storm season through the first few months of the year. We've seen it – we've seen some in the Midwest. We've seen certainly some through, as I said, Texas and Florida, more recently. And then as everyone hopefully will remember, the California storms, the rain that inundated California and the snowstorms, that will inevitably lead to some additional demand. So while we don't have a complete view today, we do think that as of today, we would be very confident that the storms that we've seen through the first few months of the year are going to lead to, at least an average storm year, and we're probably biased with eight months to go to the upside rather than the downside relative to that sort of 10-year average.

Marius, when you look at the insurance claims data, what you'd see is a bit of a bell curve where the second and the third quarter are your really meaningful insurance claims quarters and the first and the fourth quarters are lower than that. But when we look specifically at the first quarter, I mean, we're up nicely over the 5-year average there for the first quarter. Again, there's just so much that has to happen here in the second and the third quarter, which is the big hail quarters. We did see some storms in April, which obviously is going to help us as we progress through the second. But I think to Julian's point, we're more confident in the planning assumption. There's always risk in every planning assumption you put into your guide, but we feel more confident in that planning assumption now that we've seen some early storms.

Okay. That was very helpful. And then on commercial, any way you could maybe quantify the size of the destocking by the contractors? And then do you have a sense of are we getting to the end of that? Or how long do you think it's going to take to play out?

Yes. I mean, in the Q4 call, we called contractor destocking, and we thought it would last through the first half. So we feel good about our recognition of the issue and our telegraphing of the issue. If you think about it in terms of where our internal targets were relative to where we ended up, we were probably a little bit understated on how much contractor destocking happened in the first quarter in maybe 3, 4, 5 percentage points on the non-res side specifically. We do see that lessening as you go through the second quarter, literally month over month over month. We would see the single-ply element of things finishing destocking earlier than the insulation or ISO piece of things. But we do internally have that going pretty much through the end of the second quarter and then obviously, getting back to where the end market demand and our sell-through look very much the same.

Yes. And just to round that out, I think that when you think of the supply chain disruption that really impacted the commercial product lines pretty dramatically during the last couple of years, I think everyone was being defensive and taking what they could get their hands on and holding it. And I think what we're seeing now is that supply chains normalize. I said in our prepared remarks that we now see the vast majority of products in that size on what we would call normal lead times. People are now working through their inventory as we talk to the contractors. They tell us they are doing exactly that. And so we would expect, as we said in our last earnings call – on the fourth quarter earnings call that we would expect it to deplete in the first half of the year, and we still remain with that type of guidance.

Very helpful. Thank you.

Thank you. Our next question comes from the line of Trey Grooms with Stephens. Please go ahead.

Hi. Thanks for taking my question. This is actually Noah Merkousko on for Trey.

Hi, Noah.

So I want to touch – hey. I wanted to touch on the pricing. You've announced the price increase for May. I guess, does the 2Q sales and margin guidance contemplate – does that bake in any traction on that increase? I know it's going to probably vary by market. And then just a quick second part. Can you compare your best markets and your worst markets in terms of pricing? And are you seeing any competitive behavior today?

So I'll let Frank into some of the quantification. I'll start with the second part, first. So as we've said, we believe that we called for relatively stable pricing, and that's what we've seen. If you think about what happened in the fourth quarter of last year and now the first quarter, we've actually had a pretty weak demand environment and we've seen stable pricing broadly across all markets. We've seen, obviously, some of activity out there, but I would characterize it overall as a pretty benign environment. I think everyone's really in a place where we see the inflation that is hit on the manufacturer side. We've seen that pass through. We've seen the inflation that's impacted our cost structure more broadly in wages, inflation, rents, all of those things. I mean, I think it's a really important time for us to ensure that we're making sure that we can capture that as it's passing through. I mean these are things that are not impacting just Beacon. And we believe that overall, it's an environment in which price stability has been important for us.

Yes. On some of the quantification and then the, I guess, the overall competitive landscape, I mean, we have been talking about inventory destocking in the channel on resi, for example, for two or three quarters now, and then you saw demand overall – out-the-door demand in the first quarter being lower than year-over-year. And in all of those situations, the pricing held up sequentially, which would give you some indication of where prices are holding. When you look at the gross margin guide for the second quarter, let me just start from the top on that one. So the mid- to high 25s versus the 27.6% last year. Last year, remember that you had the follow-on from the January, early February increase plus the April increase. And remember that those were of a magnitude that the industry hadn't seen maybe ever, but certainly in a really long time in the double-digit range. So you've got the cycling of those inventory profits, which will be at least 200 basis points just from that alone. And we've got a little bit of mix help this quarter. And then we do have some late quarter help from that May increase again, market by market. And the fact that it's mid-May in terms of its announcement, we've got items under contract we have to give certain notice to, et cetera. So I would see it more blended between the second quarter and the third quarter rather than a whole lot of impact in the second quarter by itself.

Got it. That's really helpful. Thanks guys. I'll leave it there.

Thank you. Our next question comes from the line of Philip Ng with Jefferies. Please go ahead.

Hi, guys. This is Maggie on for Phil. I guess if you can just talk about the pace of greenfields, we've seen that step up in the first quarter and you have another, I think, 10 planned for this year. So maybe if you could just talk about how that factors into your full year guide and maybe any margin implications as those are getting ramped up? Thanks.

Sure. I'll give you a little bit of color on it. I mean as we announced that we were sort of returning to a commitment to the greenfield program last year at the beginning. I would tell you, it took us a little while to get the team stood up and get activity going. So if you looked at last year, the bulk of our greenfield activity happened later in the year. We're going to spread that out a little bit more evenly this year, but we're excited about the fact that we're able to pull the trigger on a number of these in the first quarter. We want to keep up that pace. We would expect to see a relatively similar pace quarter over quarter over quarter. So you might see 5, you might see 4. Hopefully, we can get a couple more done in the markets that we feel are really important to us. But this is a long-term commitment. This isn't a, we're going at it now, and then we're going to shut it down if we get to 15. This is something that we believe when we see the opportunity to get great locations in markets that we believe are underserved, where we can make a good return on the investment, we're going to take that opportunity to do that. Overall, in the first couple of years, certainly, the greenfields are dilutive to margin. Obviously, we put some capital in there. They need to ramp up their efficiencies and get going with the sales, so they are dilutive. It's relatively small in terms of the total company. But it's certainly not a zero impact. Our goal is to get them to profitability breakeven and to sort of full operating levels as quickly as possible. In some markets, we've been able to do that in as little as 12 months. On average, we think it's probably about three to five. But we work really hard every day to try and shorten the cycle so that it has a more positive impact on the company sooner.

Great, thanks so much.

Thank you. Our next question comes from the line of Garik Shmois with Loop Capital. Please go ahead.

Hi Thanks. I was wondering if you could speak a little bit more on the supply chain on the residential side. Are you sooner expecting to see any change there just in light of some of the restocking that you mentioned and some of the stronger storm demand? Will you be in a situation in which supply gets tight again or just the underlying dynamics on the new residential and on the reroofing side kind of offset…

Sure. Thanks. Thanks, Garik. So it's interesting because I think what we're seeing is a more normal pattern of sort of supply and demand, getting away from what we saw over the last couple of years when not only was it really tight. You had this sort of very mild winters and the typical behavior of both the sort of demand side and the supply side, just really out of whack on the residential side. I think what we've seen is a fairly normal, maybe a little bit more aggressive destocking in the fourth quarter of last year. A fairly normal start to the year where you've got some winter. So I'm assuming that the manufacturers were able to run assets, build inventory. Many of them have committed to holding more inventory than they had historically. So I would expect them to be able to build some of that inventory over the last few months. We typically see a lower first quarter demand ramping up through the second quarter into kind of the late summer, early fall season where it gets really – that's where the heaviest demand is. And that feels about how this year is going to play out. I think the wildcard in all this will be – it's much more regional in terms of demand patterns this year than we've seen over the last maybe three or four years, even longer than that, where it's been fairly uniform. So I do think you're going to see the Southeast, for instance, picking up in Hurricane Ian demand, the hail storms that hit Florida. I think Florida is going to be probably tight. I think we've seen other areas of the country where the plants servicing those areas have been maybe a little bit underutilized, and we'll see that cascade through the country into those demand areas. So I don't see the total demand environment being above the total supply environment. So I don't think anyone's going to forecast shingle shipments in 2023 north of 160 million squares that would sort of tap out mat and shingle production. So there's going to be available capacity, I think what we're going to see is regional tightness where you've seen significant storm activity. But as we know, the manufacturers are able to turn down their assets fairly efficiently. And I think we'll see a fairly balanced environment overall with probably some regional tightness and some regional opportunities for us.

Garik, I'd follow the storms and I'd follow the new resi exposure versus the R&R exposure, and you'll get pretty close to where it's going to be tight.

Okay. It sounds like a plan. Thanks.

Thank you. Our next question comes from the line of Truman Patterson with Wolfe Research. Please go ahead.

Hi. Good afternoon guys. And Julian, I enjoy you spicing up the call with some baseball references. So I hope you're not a Cardinals fan this year. Question, it's been a rough season. You all have been talking about the kind of price stability in the channels and everything, especially on the commercial side. I'm trying to understand, have you seen any sequential moderation or pricing competition there from the OEMs on the non-res side? I'm really just trying to understand with – you mentioned lower volumes in 4Q, and it looks like 1Q volumes were down maybe 20% year-over-year, including the destocking. So trying to understand some of those dynamics.

Look, Truman, as we said throughout the prepared remarks and in our Q&A session here, pricing has remained relatively stable sequentially in a demand environment that has been relatively wide open. I wouldn't say we've seen no competition. I'd also tell you that it is nothing above what I would call normal. I haven't seen anything that suggests to me, either from an OEM standpoint, a distributor standpoint, a contractor standpoint, it's a pretty benign environment from that standpoint. I mean, obviously, we only are able to control our pricing. We intend to be very disciplined around this. We intend to be very controlled about it and be very thoughtful. And look, I feel pretty good about the call that we made three months ago on what we expected to see for this year.

Perfect. Thanks guys.

Thank you. Our next question comes from the line of David MacGregor with Longbow Research. Please go ahead.

Yes, good evening gentlemen. I wanted to ask about new stores. And just from a strategy standpoint, how are you thinking about targeting your resources towards new markets versus existing markets, targeting new openings within existing OTC networks, how you manage the cannibalization? But if you could just talk about that, that would help us.

So our – hi, David. Our branches in the OTC markets are network, as you know. So there's no real cannibalization. We do develop a map of deliveries, and we understand what revenues and what deliveries ought to really belong to the new branch versus the existing branch, just honestly for the customer service element of things and the efficiency element of things. I mean we can do it better from a branch that's a lot closer rather than having to run a truck 50 or 100 miles from a further way branch. The aperture in terms geographies is pretty wide. I mean I think we said at Investor Day, we had 60 or 70 target locations out there. It's as big now as it was then. We've already deployed 20 into the environment. So it's very much a market-by-market and a local cultivation of where we need to be, where we need to create kind of local leadership in that particular market. We know where we're underpenetrated and where we want to be more penetrated. So there's a very thoughtful exercise that we go through. I'd say that the ability to find lease space today is a lot easier than it was a year to two years ago. It's still tight in some places, but it's much easier than it has been in the past. So we're being pretty thoughtful about how we do that. So what we do when we open one is in the pro forma, let's say, that there's sales that really belong to that new branch, we may put $1 million and just transfer that over into the new branch, which gives them a head start. But it's not cannibalization and it's not new capacity into the market. What we're trying to do is to look for the white space in between our branches so they can support one another with inventory and trucks and people and ultimately service the customer better and drive sales.

And can you speak to the expected impact to your OpEx this year just from the new store program.

Yes. So in the – if you think about the quarter itself, so let's just use Q1 as an example, the OpEx side of greenfield specifically was about $5 million. And so we'll cycle last year's greenfields as we go throughout the year. Obviously, you heard Julian talk about the number that we were going to deploy this year. The cadence is going to be difficult to predict with a level of accuracy. But I think if you're in the kind of mid- to high single-digit millions on a year-over-year basis, you'll be in the right neighborhood.

Thanks, Frank.

Thank you. Our next question comes from the line of Michael Rehaut with JPMorgan. Please go ahead.

Hi, guys. Doug Wardlaw for Mike. I just wanted a little bit more insight on the first quarter and market demand. Obviously, you guys stated that storm were a little bit heavier than you anticipated. I just want to know if you guys could break out some more trends you saw within the quarter outside of weather being a little bit heavier.

Yes. So if I broke down the quarter – the first quarter year-over-year by line of business, the dailies on resi were down 1 – a little over 1% as you saw in the prepared slides. I mean that's really a combination of pricing being up high single digits and daily volumes being down low doubles. There really wasn't any M&A impact in the resi side. The acquisitions there were fairly small. So I mean I think the trends were exactly what we expected. It was largely a new construction story, not an R&R story. There's obviously a little bit of discretionary R&R that might get impacted by higher interest rates. But the big story was new res. And you heard Julian talk about some of the markets there. On the non-res side, down about 9% or so on a daily basis. Again, that was probably 3, 4, 5 percentage points higher than what we had originally expected given the extent of the contractor destocking. I think we called contractor destocking. We may not have called the magnitude all that well and no real M&A in that environment either. We are seeing volumes continue to be negative, but less so as the months go by that destocking will come to a conclusion at the end of the second quarter. On the complementary side, it's largely the M&A story there. The bulk of the 21% or so dailies there was because of the Coastal and the Whitney acquisitions. So we're seeing that LOB perform quite well with Coastal. We're excited about the waterproofing platform that we've created. Siding did well in the quarter as well. That was up nicely on both the vinyl and the fiber cement side. The only thing that was really the drag in that particular line of business was lumber and specifically lumber price. I mean you can look at the future and see what the drag is there. So hopefully, that gives you some color overall.

Yes. I'd go to the prepared remarks we said. I mean we called the markets in – at the end of our fourth quarter call. And we said, look, we know new residential construction markets are going to be off substantially. We don't forecast themselves. We look at consensus. So the consensus there was probably off 20% plus. When we've talked about the residential reroofing markets, we said, look, it's largely non-discretionary, but at the margin higher interest rates are going to cause less housing turnover and housing turnover causes reroofing as well as inspections are done and insurance requirements are met. So we would expect that to be down a little bit. We said commercial markets would be about flat. As Frank and we've said multiple times now, we probably underestimated the contract of destocking, but we've called that. And we said that storms would return to their sort of 10-year average, which we feel pretty good about now given everything we've seen in the first quarter. So in terms of our overall planning assumptions, we think we've been pretty good at sort of articulating what assumptions we've made in order to hit our guidance. And we feel right now, as we sit here, pretty good about that. April felt really good coming out of probably a weaker first quarter that was impacted by weather and some destocking. But overall, we're really confident about where we stand for the year. And like I said, reiterate our feelings on what we can produce as a company.

Great, thank you guys.

Thank you. That concludes the questions. Now I would like to turn the call back over to Mr. Francis for his closing remarks.

Thank you, Bethany. Well, my closing really was – I just mentioned it. I said I think that at all, we feel pretty good about the macro environment. We think the company is performing well. We want to thank our employees for the work that they've put in over the last several months to start the year on a really positive note. We've just delivered record sales for first quarter, a record cash flow for the first quarter, the second highest EBITDA number that we've delivered in the first quarter as well. So we feel pretty good about it. We have multiple paths to growth, as we've demonstrated. In a lower demand environment, we were able to grow sales. And we've got multiple paths, we believe, to margin expansion. And with that, we will be disciplined about our capital deployment, looking at M&A, acquisitions and reinvesting in our branches to improve our overall customer service. So we're excited. We thank you for your interest in Beacon. Have a wonderful evening.

That concludes today's conference call. I hope you all enjoy the rest of your day. You may now disconnect your lines.