Good day, ladies and gentlemen, and welcome to the Universal Forest Products’ Q3 2016 Earnings Conference Call. At this time all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, today’s conference call is being recorded. At this time I would like to turn the conference over to Lynn Afendoulis. Please go ahead.

Thank you and welcome to the Universal Forest Products Incorporated third quarter 2016 conference call. Hosting the call today are CEO, Matt Missad; and CFO, Mike Cole. Matt and Mike will offer prepared remarks and 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 November 19, 2016. Before I turn the call over to Matt Missad, let me remind you that yesterday’s press release and today’s presentation 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, and good morning, ladies and gentlemen. Thank you for joining us this morning. The people of the UFP family are impressive and they continue to build on record-breaking results. Sometimes they make it look easy but we know better. They work hard, they roll up their sleeves to meet and exceed goals, whether for safety, production, sales or anything else they can measure which adds value. To quote a guy named Wayne, “they don’t take breaks, they just break records.” Thanks to them the third quarter continued the trend of beating 2015 for the best third quarter in company history. Running quickly through our focus areas, net sales for Q3 were a record at $826.7 million, up 8.4% over 2015 as we saw good growth in the retail and construction markets, which was offset slightly by a very small decline in industrial sales. We did notice a softness in industrial sales during July and August versus 2015 which we believe has been impacted due to durable goods orders declines, strength of the dollar against foreign currency as well as our continued focus on driving more value added products and less commodity. We continue to analyze this area to make sure we aren't losing ground. Next, we look at our profitability. Gross profit for the quarter was 14.3%, down 20 basis points from Q3 of 2015 due in large part to a higher lumber market. Net earnings were $27.8 million for the quarter and earnings per share were $1.36, up from $1.26 in the third quarter of 2015. Year-to-date net earnings are up over 30% over 2015. Now, we've talked in the past about how difficult it would be to beat the last half of 2015 and I'm very proud of the effort that our people put forth…

Thanks, Matt. Before reviewing the financials I should briefly address the impact of the lumber market this quarter. Overall year-over-year lumber prices were up 10% and Southern Yellow Pine prices, which represent our highest volume of purchases were up 20%. As a reminder, commodity lumber prices impact not only our cost of inventory, but also our selling prices and working capital. I'll start the financial overview with the highlights of our income statement. Our overall sales for the quarter increased 9% resulting from a 5% increase in unit sales and a 4% increase in selling prices due to the lumber market. Reviewing by market, sales of the retail market increased 15% resulting from a unit increase of 9% and an increase in selling prices of 6%. Our growth this quarter was driven by our sales to big box customers which grew by 20% over last year and new product sales which grew 19%. Our sales to the industrial market decreased 1% due to a decline in unit sales. We believe this decline is due to a general softening of demand and as a result of our operations being more selective in the business that we take attempting to focus more on value added sales opportunity. We believe we continue to take share of targeted business and added almost 200 new accounts and almost 50 new locations of existing customers this quarter. Our overall sales to the construction market increased 10% due to a 6% increase in units sold and a 4% increase in prices. Within this category our unit sales increased by 9% to residential construction, while sales to commercial construction grew by 4% and manufactured housing grew by 5%. Moving down the income statement we’re pleased to report our gross profit. Our third quarter gross profit increased by 7%…

Thank you, Mike. Now I'd like to open the line up for any questions you may have.

[Operator Instructions] And our first question comes from Steve Chercover of Davidson.

Thanks. Good morning everyone. So I guess my questions are basically on the idX acquisition. And I think I understand how the custom millwork piece fits in with your manufacturing. But it's not so clear to me how the logistics and warehousing and inventory management fit in, so I guess the first question is will you keep it?

Yeah, I think there's a number of opportunities that we see with the idX acquisition. As you pointed out on the manufacturing side, the sourcing side, we think there's a lot of ways that we can work together to help one another, particularly on the design and the development and the project management pieces, we expect to learn an awful lot from them and that we can apply to our other operations, kind of help take us further into the value added product mixture. And then finally with respect to the distribution, we will definitely keep the majority of their locations, and we’ll let them operate their business because they've been successful. But we're also going to continue to look at ways to improve that, and we think there are some opportunities there. But we'll be getting into those over a relatively mid term period rather than immediately in the next twelve months say.

All right. So is this the catalyst to get you inside of buildings?

I think what it does is it creates an entirely new product arena for us, Steve and as we look at it we're excited about that opportunity. It's also something that is transferable to other customers than the ones that they currently serve that we have contacts with. So I think there are some great opportunities for us to share both customers and products and we expect them to help us as I mentioned before with innovation.

But where would it lead to things like residential cabinets and HVAC electrical or it's going to be more on the very high end non commodity I guess furnishing?

Yeah, I really wouldn’t see it at least for us getting too heavy into the residential space. There may be some products and some features that I think will translate well to our retail customers. So you may see some of the things that will take their great design and engineering efforts and we’ll be able to take those and move them more mainstream through our retail customer base.

And then just two more please. So should we model in any accretion for idX in Q4?

I think our original thought was that we wouldn't expect much of an impact from them in Q4. And then we've talked a little bit – and publicly talked about what their EBITDA contribution would be for 2017, and that we’re comfortable with that model.

Yet, which was like 25 to 28 with 6 million in depreciation.

Correct.

And I don’t think you ever mentioned the purchase price. But it would be fair to assume a high single digit multiple kind of consistent with your own multiple?

Yes, actually hopefully a slightly better than that if you base it on 2017 EBITDA.

Yeah, the purchase price excluding cash purchase is about $150 million. And it’s in the cash flow statement, under the business accomplishments.

Oh, I should have just asked. Thanks Mike. Thank you both.

Thank you. And our next question comes from Michael Conti of Sidoti.

Good morning. Yeah, just to add with the idX acquisition, just maybe just talk about the seasonality of the business and I guess what the revenue growth rates were in prior years just for modeling purposes.

Yeah, I think there definitely is a seasonality aspect to it. Typically I would say mid November to probably January timeframe, tend to be their slower time period. Right now it’s probably one of their busier time periods so. And then with respect to historical, they've shown steady growth over the years. Obviously the downturn had an impact on them but they've been able to grow their business steadily over the last seven years or so. And we expect their growth to kind of continue in line with the rest of our company's expectations.

And then, Mike, can you just talk about, what stuck out to me, was on the SG&A side? Obviously, you are doing all those investments, which brought that up. But I guess that core $62 million, is that a good, I guess, proxy to use for the fourth quarter? And then, I guess, specifically going into next year, how should we think about that core SG&A number?

Yeah, the $62 million is -- was kind of our target that we talked about in previous quarters for the business excluding idX and finished right at about that number. I think that’s a pretty good number for Q4 as well with just kind of qualifying that Q4 is the quarter where we true up a lot of our actuarial reserves and go through that year end process. So sometimes the number can move and be a little more volatile in Q4. But I think that's a reasonable target for Q4. Looking forward into 2017 I would expect this inflationary type increase on the core SG&A number.

Okay. And then last one from me. Can you just break out on the industrial side how much of the volume decline was due to weak demand versus just being selective?

Yes, it's really hard to answer a question like that. There are just so many products and so many customers that we serve. You could really see though that the weak demand is coming through because I can see the new sales that we've added from the 50 new locations we’re selling to from existing customers and I can see the 200 new customers and the sales that were contributed from that. So the balance is just lower demand from existing customers. End of Q&A

Thank you. And I'm showing no further questions at this time. I’d like to turn the conference back over to Matt Missad for closing remarks.

Once again thank you very much for your time this morning. Our goal as a company is to achieve the highest possible approval rating from our shareholders and you know we will continue to give an incredible effort to achieve that goal. We also would like to ask our stakeholders for a little assistance in creating as positive a work environment and an economy for our people. Apparently there is an event happening on November 8 with lots of candidates vying for your vote. And whether you believe that one candidate should be disqualified or the other candidate is unqualified, or if you believe that free speech is free but free speech depends on who the speaker is, remember that the right to vote is important and we hope that you will exercise your right and support candidates who you believe will support policies that don’t increase our costs and which promotes freedoms of individuals and businesses. Thank you again for your support. Have a great day.

Ladies and gentlemen thank you for participating in today's conference. This does conclude the program and you may all disconnect. Have a great day everyone.