Good day, ladies and gentlemen. And welcome to the Third Quarter 2017 Universal Forest Products Earnings Conference Call. 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. [Operator Instructions]. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference Ms. Lynn Afendoulis. Ma'am you may begin.

Good morning. Welcome to the Universal Forest Products Incorporated third quarter 2017 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 17, 2017. 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, everyone. We appreciate you taking the time to listen to our third quarter 2017 conference call. As we have discussed all year with our team, we have to learn it, earn it and then own it. So far in 2017 we have done a lot of learning. We are improving on earning. And heading into Q4, we need to own it by finishing 2017 strong and positioning ourselves well for 2018, and we are on track to do that. There were several highlights from the quarter which featured record quarterly sales and profits for our third quarter at Universal. However, the most valuable highlight of our third quarter was the exceptional selfless performance by all of our UFP family members who while being pummeled by hurricanes, earthquakes, flooding and fires, managed to keep our operations in business and take care of the needs of not only our customers but also their co-workers. The outpouring of support from the UFP family was outstanding. They are our heroes and I want to publicly thank them for the spirit and the culture that makes UFP a truly special place. I am honored to be on their team. They contributed to the overall results from the UFP family of companies which as we stated before were terrific. We posted sales of 1.1 billion, up 27.7% from 827 million in 2016. This included unit sales increases of 22%. Year-to-date sales were 2.83 billion, up 450 million from a year ago and each of our market showed double-digit sales increases. Moving to profitability, although our gross margins were down 60 basis points to 13.7% due primarily to the rapid rise in the lumber market and the higher level of the lumber market. Gross profit dollars increased 23% in line with…

Thanks, Matt. I will start with the highlights from our income statement. Our overall sales for the quarter increased 28%, resulting from a 22% increase in unit sales and a 6% increase in selling prices due to the lumber market. Our 22%-unit sales increase was comprised of 15% growth from recently completed acquisitions and 7% organic growth, which was up from 4% organic growth in Q2. Breaking down by market, sales to the retail market increased 16% resulting from a unit increase of 12% and an increase in selling prices of 4%. The Robbins acquisition completed earlier this year contributed 7% to year-over-year growth. We were pleased to see organic unit growth come in at 5% this quarter and improvement from last quarter when organic growth was flat. Our sales to the industrial market increased 59%, driven by a 54% increase in unit sales including 43% from recent acquisitions and an increase in selling prices of 5%. Again, organic unit growth of 11% this quarter surpassed Q2 when organic growth was approximately 8%. Our overall sales to the construction market increased 16% due to an 8% increase in units sold driven by our residential construction and manufactured housing businesses along with an 8% increase in selling prices. Organic unit growth was 7% this quarter was the same as Q2. Moving down to the income statement, our third quarter gross profit increased by almost 23% exceeding our 22% increase in unit sales primarily due to acquired operations and a favorable mix of value added products. Continuing to move down the income statement, SG&A expenses included approximately 12.4 million of accrued bonus expense which was flat compared with Q3 last year. The remaining 80 million in SG&A is 2 million lower than Q2 and in line with the expectations we discussed last…

Thank you, Mike. Now, I would like to open it up for any questions you may have.

[Operator Instructions]. And our first question comes from Ketan Mamtora with BMO Capital Markets. Your line is now open.

Good morning, Matt and Mike. And congratulations on a strong Q3. I mean organic volumes were pretty strong in all the three segments, particularly in industrials. Can you talk about which particular end markets within that or regions drove the strength?

Yes, I think we probably don’t look at it so narrowly Ketan, on more of a broad perspective, I think we’re seeing good positive strength in each of the markets we serve, probably with the slight exception of agricultural boxes, not quite as strong as it’s been historically. But all the other areas the end markets that we’re seeing good positive growth.

Okay. And then when I think about M&A, is it more likely that you guys are more interested in something which is more of a bolt-on type or more open to larger acquisitions. And again, I know you talked about it in your prepared remarks, but kind of any sense of which areas look most interesting to you guys at the moment?

Yes, I think what we’d like to do is try to find those tuck-in or bolt-on type acquisitions that fit our current product offerings or add to our geographies and our reach, current products, we also want to find new opportunities for either new products or services which complement what we are doing today. And we always remain open to larger acquisitions that are either in our current core or adjacent to our core. And the challenge that we see quite frankly right now is valuations that tend to be a bit of a problem. We are very return on investment focused as you know, so we need to make sure that whatever acquisitions we do, enable us to earn a return on that investment.

Got it. That’s helpful. And last question from my side. Again, you spoke about it briefly in your prepared remarks. But can you talk about the progress that you all are seeing at idX, whether it’s in terms of getting those orders that were delayed earlier or anything else that you all have done to kind of get to that target? And do you think that 25 million to 28 million is still on the table and could be probably possible in 2018 or may be 2019?

Yes, I think as I’ve said back in February, we saw at that time that 12 to 18 months was kind of the pushout cycle for hitting their targets of 25 million to 28 million. I think what they’ve been doing a really good job of as we’ve been going after some of the synergies that we anticipated weighting on. So, they’ve done a really nice job of going after those areas of cost savings, there’re also doing facility consolidations and trying to come up with more efficient ways. So, I think that’s what’s been the driver so far. This tends to be their busier time of the year as well. So that we expect that to be stronger. And again, while the retail markets going to have its share of challenges, we still see a lot of opportunity there and their diversity in their end markets has really helped them too. So, I would say over the next 12 to 18 months, and if you go back to last February, moving forward, well that’s the timeframe we’re still comfortable with.

Our next question comes from Steve Chercover with D.A. Davidson. Your line is now open.

So just a couple of quick ones from me. I’m wondering first-of-all if you could give us a sense of the impact of the hurricanes and earthquakes or other acts of God, like either on a revenue basis or maybe just in terms of lost operating days.

Yeah, I think that we are very fortunate and as I said before it's truly attributed to our people that we didn’t lose as many operating days as we might otherwise have lost. I think what we’ve seen is that there is some of our customers weren’t able to get back over as quickly. So, there was certainly some delay there. Orders on certain of the retail type products are actually much higher than normal going into the hurricane, things like panel products and other things that you might expect. So as people tried to prepare so we saw a sales increase, we also saw some margins squeeze as a result of this abnormal supply and our desire to keep pricing down in those areas that were affected. So, I can’t put a dollar figure on it Steve but I think what we kind of view overall is the short-term is a little short-term pain but there is a long-term pick up as the rebuilding occurs. So that’s our outlook on it.

Thank you. I guess what I was trying to get a sense was I mean you guys -- it imposed noise you guys played through it and could have even been perhaps even a wee bit better but we’ll see a tail in the benefit.

Yeah, I think you’re right. I think we would -- probably the volumes were a little bit higher and margins were lower.

Got it, okay. And then I’ve been doing this for a while so I checked back to 2002 and this is the first time in 15 years that your Q3 results have been equivalent to Q2, there has been a couple of times where they’re close. Is it fair to say that iDX is starting to demonstrate how it will offset some of the seasonality even if it's not full blown hitting its stride?

Yeah, I certainly think that’s part of it Steve and I don’t want to over emphasize the impact it's certainly part and I think as we talked before the lumber market struggles in Q2 I think probably held Q2 back from being as good as it should have been. So, I think Q3 was really good and Q2 wasn’t quite as good as it should have been. I think that’s the way I would look at it.

Got you. Can you tell us what the 18 million expansionary CapEx was for?

It’s for a variety of different objects, a lot of its new products related. Some of its catastrophe expansion for value added products that are on a growth change. Some of it is some plant consolidation, so it's really kind of across the board. Automation is also another area of emphasis for us.

Very good. And I guess a kind of follow-on to that and then I’ll stop. Looks like you’ve got some capital allocation decisions to make in the near-term which is a nice problem to have. So, you can just help us understand the priorities.

Yeah, I think obviously the first priority is growth, whether that’s at organic or acquisition, obviously we wanted to return something to the shareholders, our dividend policies, there is obviously a big part of that. Share repurchases when they made sense. And again, we think we have ample opportunities to improve our automation, so you may see little more CapEx dollars as well going forward.

And our next question comes from Dan Jacome with Sidoti. Your line is now open.

Two very high-level questions. What trends are you seeing on the manufacturing housing side? I think you did some paneling for them, I know the RV market has been pretty strong. Just curious on the manufactured housing. And then also very high level, if you care to speak on it, I mean do you think Amazon could ever get into the retail lumber yard business. It seems like they’re trying to do everything and it’s something I do get questions on. So just curious about those two items. Thanks.

Great. Let me take the MH item first. It’s a little easier for me. So, the manufactured housing, we’re definitely seeing some improvement there. The FEMA has actually increased their orders. So that would be more, be due to the weather-related issues. So, we expect that to get us a short-term boost for the next quarter or so. And then longer term I think what we will see is kind of continued slow growth in that market. So that’s a positive sign. RV, well we’re not as hugely dependent on RV business. That still seems to be strong. So, we see overall manufactured housing as being solid. And moving on to your second question, which is, is Amazon going to dominate the world. I don’t really like to try to take it, a back as to what they will or won’t do. I think we feel very good about our position in the marketplace and what we do. And since we are more of a manufacturer, distributor and hopefully and innovator, the retail channel will kind of take care of itself. So, we don’t view Amazon’s participation as a threat. And quite frankly, I think the service and the other aspects definitely push forward, you need to have brick and mortar at some point in the chain in order to make it effective. So, if they are going to do this, they’re going to have to invest in brick and mortar in order to make it work.

Okay. And then I guess I’ll ask one more, I’m not sure if you saw the acquisition by LPX, I think they’re buying a technology that is used in the EWT process. Just curious if you saw that or maybe have some thoughts on how you guys feel about all the inputs you have in your asset base for what’s being used to make EWT because its likely EWT will be bigger part of your business five years down the road?

Yeah, I’m not familiar with that I’m sorry Dan but you know.

Is on the flame retarding side, you know some of the materials that are used for that.

With the flame block product, that’s a product that we have marketed over the years, it's not been really anything new but I do think if you look overall at the fire-retardant market, that’s something that we would expect to see that increase a little bit as we go forward in a lot of areas more urban infield type projects are going to require that kind of products. So, we have a variety of fire retardant products that meet those needs. So, we’ll be active in the market as well and I think EWP generally there is lot of opportunities for it and I don’t know it's going to take more share than it has today but I just think it’s a good stable product line.

At this time, I’m showing no further questions. I would like to turn the call back over to Mr. Matt Missad for closing remarks.

Well once again we’d like to thank you for joining us on our call this morning. We truly appreciate your interest in our company and believe that we have an outstanding team committed to driving performance and increasing the value of our investment. And while some of you are thinking of Halloween and sweet treats, we are thinking more practical and slightly longer term. So instead of a little piece of candy, how about a Christmas gift of lower taxes for all. Thanks, and have a great day.

Ladies and gentlemen thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everyone have a great day.