Good day, ladies and gentlemen, and welcome to the Q1 2013 Universal Forest Products Earnings Conference Call. My name is Andrew, and I will be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would like to turn the call over to Lynn Afendoulis, Director of Corporate Communications. Please proceed, ma'am.

Thank you. Welcome to the Universal Forest Products First Quarter 2013 Conference Call. Hosting the call today are CEO, Matt Missad; and CFO, Mike Cole. Matt and Mike will offer prepared remarks, then we'll open up the call for questions. This conference call is available simultaneously and in its entirety to all interested investors and news media through a webcast at www.ufpi.com. A replay will also be available at that website through May 17, 2013. Before I turn the call over to Matt Missad, let me remind you that today's press release and the presentations made by our executives include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, those factors identified in the press release and in our filings with the Securities and Exchange Commission. At this time, I would like to turn the call over to Matt Missad.

Thank you, Lynn. Good morning, ladies and gentlemen. We really appreciate you taking the time to listen to our first quarter 2013 earnings call. Before we get started, we would like to express our heartfelt thoughts and prayers for the victims and their families in this week's tragedy in Boston. Boston is a great city, and I'm sure they'll bounce back stronger than ever. I'll start the call by congratulating and thanking the wonderful employees of the Universal family of companies for a very good first quarter. Our team has buckled down, focused on improving profitability, and they are succeeding. Even more encouraging is the fact that we can and will do better. In reviewing our business metrics, we have to recognize the big impact of the lumber market on our metrics. Our sales were up 21.3% versus last year, and unit sales were up slightly by 2% versus 2012. As we go through by market, retail building materials was down, both in dollars and units. The same-store sales of our products are down versus 2012 at the big-box retailers. We believe that much of this difference is related to weather, which was much better for DIY projects in 2012 than this year so far, but we are hopeful that unit sales will increase as the weather improves. Our industrial sales were up 20% for the quarter; and unit sales were up 5%, primarily as a result of our acquisitions. We believe that the overall industrial market was down slightly in the first quarter, but we continue to gain share and have in fact added over 300 customers in the first quarter. Manufactured housing sales were up 43% to $89.9 million for the quarter. Unit sales were up 8%, primarily due to gains in the distribution business and some increase…

Thanks, Matt. Before I review the financials, I want to point out that the higher level of the lumber market had a significant impact on our key numbers this quarter. Lumber prices were up 43% on average, as Matt mentioned, which impacted not only our sales levels, but also our working capital, cash flow and the ratios like margins. Starting with our income statement for the quarter. Overall sales increased 21% due to a 19% increase in prices and a 2% increase in units. Unit sales increased as a result of business acquisitions and results vary quite a bit by market. Our sales for the retail market increased 5%, which was comprised of a 15% increase in prices, offset by a 10% decrease in unit sales. We believe the decline in units was due to poor weather this quarter compared to very good weather in the first quarter of 2012. We continue to be optimistic that we'll grow unit sales to the retail market for the year because of the share we gained through the proposal process for 2013 business, in which we added well over 100 stores to our portfolio. Our sales for the manufactured housing market increased 43% due to a 35% increase in prices and an 8% increase in units. By comparison, industry production of HUD-code homes increased 3%. And we believe modular home production also increased during the period. Our unit sales increased greater than the markets due to share gains in our distribution business, in which we continue to add new product lines. Our sales for the residential construction market increased 43% due to a 21% increase in prices and a 22% increase in units, resulting from a strong increase in housing starts again this quarter. While increases in commodity costs may be a new…

Thank you, Mike. We'd now like to welcome any questions that any of you may have.

[Operator Instructions] Your first question comes from Steve Chercover, D.A. Davidson. Steven Chercover - D.A. Davidson & Co., Research Division: With lumber prices, I think they're probably at their peak, and your improving efficiency. Do you think the margins are going to continue to get better through the year? Or, I guess, SG&A -- or pardon me, cost of goods as a percent of sales will decline?

I think that's our hope. And as long as we keep going down the path we are and the pricing remains stable, then yes, that would be a reasonable expectation.

There's a fair amount of operating leverage in the business, Steve. So as unit sales grow, we expect to be able to pick that up in the margin. Steven Chercover - D.A. Davidson & Co., Research Division: That's what I'm hoping as well. And then SG&A, clearly, was -- that's where you beat me in a big way in the current quarter, and I apologize if I'm kind of multitasking. But do you expect it to kind of ramp up as your sales ramp up, or is it going to stay at kind of a constant percentage of sales?

It actually should remain fairly constant, I would think. We may need to add a little bit, depending on how much we grow. But it will be less than the rate of growth of sales, we think. Steven Chercover - D.A. Davidson & Co., Research Division: And is the share price for any kind of incentive compensation incorporated into that SG&A line?

Yes. Our bonus accrual and our sales incentive accruals are both in those, in that line item. Steven Chercover - D.A. Davidson & Co., Research Division: So assuming that share price appreciates, we could see a little bit of a headwind there.

Well, it's tied to profits, but...

Yes, very little is directly related to the price of the shares.

As profitability increases and gross profit increases, sales compensation and bonus both should increase. That line item in the income statement should be one of the line items that has the most operating leverage associated with it, the most fixed cost. Steven Chercover - D.A. Davidson & Co., Research Division: So but we're not going to see it kind of -- well, it will take some time, obviously, for your sales to ramp up to kind of 2006 [ph] levels. But at that stage, we were running in more in the 60s to 70s, as opposed to say, upper 40s. It will take a while to get there, obviously.

Correct.

Absolutely. Steven Chercover - D.A. Davidson & Co., Research Division: I guess that would be a nice problem to have. And then, finally -- sorry, as I said, I was multitasking. Mike, you're drawing on your revolver or taking on some debt to fund working capital. But by year end, will that reverse itself, you'd be pretty much debt free again?

Yes, this is our -- thanks for pointing that out. This is our peak time for working capital. So now through June, into July, and then that will start coming down pretty rapidly from August through December. Steven Chercover - D.A. Davidson & Co., Research Division: I mean you don't necessarily have to be debt free. We're not going to hold you to that. But if anything, we might see the year-end debt lower than 2012 since it looks like we're on track.

Yes, because we expect to be -- we expect profits to be good and cash flow to be good. So if the lumber market continues to rise, that would be a factor towards working capital being a little higher. But if the lumber market stays where it's at, we expect operating cash flow to be very good. Steven Chercover - D.A. Davidson & Co., Research Division: I mean, the futures market seemed to indicate that it's going to come down a bit. I mean is that your view as well?

It's going to be a bit of a bumpy ride here. It will bump up and down within a trading range, we think, for a while here. And then after the end of the second quarter, we'll see it return more to normal levels again as long as there isn't any great increase in demand. Steven Chercover - D.A. Davidson & Co., Research Division: So maybe I could ask you one kind of left-field question, then I promise I'll relinquish it. Are you guys in the -- of the belief that we could be in for a lumber super cycle?

That's a great question. I think right now, the supply side of the chain is ahead of the demand side of the chain, which has been a switch from 3 or 4 years ago. That's why you're seeing some higher prices. The so-called super cycle, I guess we're going to have to let that play out and see what it looks like. But certainly, the supply side of the chain is ahead of the game.

And your next question comes from Ethan Steinberg, SG Capital.

A couple of questions. I'm still trying to get familiar with a couple of things. The 2% unit in the quarter growth, I would love to understand the cadence of that through the quarter, and particularly, how the anniversary-ing of that big-box customer affected that unit growth for the quarter.

I probably can't give you the details of that, but I can tell you just generally, from the big box standpoint, their unit sales are still down year-over-year for our products.

Okay. And I guess, what I'm just coming at as I look at -- is there a way you can guess or give us some sort of sense qualitatively of what the unit pressure optically was on that 2% versus what it felt like coming out of the quarter when I assume weather is a little bit better, or how much weather impacted it? And how much that 1 customer might have impacted it, if the 2% is much understated to sort of what intrinsic or end demand would be for you guys?

Well, it'd probably be helpful to talk about just the retail market rather than the overall. Because the 2% reflects -- with 2% increase reflects the overall business. So retail was down in terms of units, 10%. We feel pretty strongly like that was weather. We picked up, like I said, well over 100 stores with retail customers for 2013 business. So we're looking at every bit of expectation that unit sales will grow because of those share gains for the balance of the year. I guess, to add a little more color, if lumber prices stay flat, if weather wasn't a factor and we were looking at the whole year, I would have had an expectation that units in retail would have been up maybe 5% from the share gains that we had.

Okay. Even with the 2 months of pressure from the 1 customer?

Yes, yes.

Yes.

Is the weather any better now?

Up north, we're still sitting in some rain. And we're still waiting for summer to -- spring actually to hit, but we expect that will happen in the next few weeks.

And most of the share -- I guess, to add a little more color. Most of the share gains we picked up were in the Northeast and in the Midwest where weather has definitely been a factor.

Okay. But yes, I guess it just speaks to the unit growth rate could really accelerate as you get into warmer weather. And given the comparison that you had in the first quarter, would still get the 2%. Is that fair?

That's fair, a good way to look at it.

Lumber is actually down quite a bit since the beginning of the year, depending on which product you look at. But on average, down quite a bit. What do you think that impact would look like today if you had the same quarter? Is that going to help or hurt the P&L?

Yes.

Ethan, I'm not sure I understand the question. You say, lumber was down quite a bit since the beginning...

Lumber prices are today, have come down quite a bit since the end of the quarter.

Oh, end of...

I'm just trying to understand is that going to -- would that help or hurt -- what would that do to the same quarter you just reported if lumber prices were down here or came down in the quarter?

Well, it depends on the manner of how the market moves is probably more important to us than the fact that it does move. We prefer a kind of a stable lumber market or a steadily rising market. A rapidly falling market's not good for anybody in our position. But as long as it's manageable and stable, we'll be fine with it.

Okay. And just the -- the other person asked an interesting question. So the SG&A dollars, if they stay -- do you think they can stay pretty stable in dollar amounts?

Yes, they will adjust relative to the profitability due to our compensation structure. So as profitability improves, you'll see that increase. But the fixed portion of that definitely will remain much more stable.

Okay. Now are there any big comparison issues that help or hurt the volumes over the next few quarters or through the rest of the year that I should ask about?

I think you hit on the main one for us, which is what's going to happen in the DIY sector.

Right, okay. But it sounds like that's actually pretty healthy if it would have been up 5 without the weather, is that...

Correct.

And your next question comes from Robert Kelly, Sidoti. Robert J. Kelly - Sidoti & Company, LLC: Just a question on your 2% unit growth, but gross profits were up in excess of that unit expansion. Is there some read-through to industry pricing discipline? Is it starting to get better, the increase in lumber? Is it providing more stability as far as your ability to get price from your customer?

I think that's a never-ending process. We're going to make sure that we can pass along our price increases. And as you know, we have a lot of different moving parts depending on whether it's a fixed-price item or a fixed add or type item. So you're seeing a little bit of the confluence of those types of items, Bob. But I think overall, the customers do understand that prices have gone up and they understand that costs have gone up. So at least the discussion is occurring, and there's generally more understanding about it. Robert J. Kelly - Sidoti & Company, LLC: Okay. Well, that's encouraging. I mean at this point in the cycle, cost recovery is still going to be a challenge, but it sounds like things are getting a little bit better on that front.

We sure hope so. Robert J. Kelly - Sidoti & Company, LLC: Okay. As far as the delta, I mean I think I get as far as the SG&A dollars, they're pretty fixed until you see a material volume increase. What exactly is the delta for that compensation piece, the profitability? I mean what should we be building in for that number if -- based on our profit assumptions in the out-years?

I guess all I can point you to is if you look at how our ROI bonus program works, it's pretty well detailed in our reports. And if you try to take a look through there, you can probably peg it fairly accurately. It's a little more complicated than I'd try to tackle on the call. Robert J. Kelly - Sidoti & Company, LLC: Okay, fair enough. And then just one final one with your capitalization is solid. Your competitors, especially the smaller independents, not necessarily the case. Have you seen the stress increase amongst your competitor base with lumber shooting up and volumes starting to recover a little bit?

Yes. One of the things that we are seeing is a little more credit pressure, in particular, with the vendor community. Obviously, we're in a very good situation, well capitalized. And we're seeing some of our undercapitalized competitors are having trouble with credit limits now and not being able to buy the material that they need. It's not a widespread issue yet, but -- and obviously, our hope is that their costs will increase, and they'll make that a little more difficult for them to compete with us.

And there are no further questions at this time. So I would like to turn the call over to Matthew and Michael for closing remarks.

Well, once again, we'd like to thank you very much for your interest in our company. We continue to look forward to reaching our goals and rewarding all of our shareholders for their investment in our company. And as we enter the spring selling season, I'd like to remind you that whether it's a home improvement project, a cosmetic enhancement to your outdoor living space or simply an investment for your family, buy UFPI. Thanks, and have a great day.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.