Good morning, and welcome to the Builders FirstSource First Quarter 2012 Earnings Conference Call. Your host for today's call is Mr. Floyd Sherman, Chief Executive Officer. [Operator Instructions] 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, April 20, 2012. The company 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, management 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 1995 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. We have provided reconciliations of non-GAAP financial measures to their GAAP equivalents in our earnings press release and detailed explanation of non-GAAP financial measures in our Form 8-K filed yesterday, both of which are available on our website. At this time, I will turn the call over to Mr. Floyd Sherman.

Thank you, and welcome to our first quarter 2012 earnings call. Joining me today from our management team is Chad Crow, Senior Vice President and Chief Financial Officer. I'll start BY giving a recap of the first quarter, and then 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. Sales for the first quarter of 2012 were $219.4 million, an increase of 34.7% when compared to the first quarter of 2011. This marks our third consecutive quarter with year-over-year sales growth greater than 20%. Our sales growth continues to outpace construction activity as actual U.S. single-family housing starts were up only 16.8% compared to the same quarter last year, and U.S. single-family units under construction actually decreased 5% over the same period. Commodity lumber prices for the current quarter were, on average, relatively consistent with those during the first quarter of 2011. When combined, these factors indicate we continue to achieve significant market shares while not sacrificing gross margin performance to achieve our market share gains. The momentum we gained in the last half of 2011 carried over into 2012, enabling us to continue to improve our financial results. Our sales in the current quarter represented our highest first quarter sales since the first quarter of 2008, and our sales per single-family start of approximately $2,100 with a high watermark for the company. I might point out that we have also improved our sales per start performance in each of the last 3 quarters. Our market share with all classifications of builders, including the large national, regional and local builders, continued to grow, and we continue to open significant numbers of new customer accounts. In the first quarter of 2012, we sold to approximately 350 new accounts, which amounted to a sales dollar increase of 36% when compared to the first quarter 2011 new account sales dollars. Our adjusted EBITDA was a loss of $2.1 million, a $7.6 million improvement over the first quarter of 2011. These dramatically improved results were only made possible through the tireless efforts of our employees who continue to fight to make the most out of any and all construction activity within our markets. Our results certainly would seem to indicate we are getting close to achieving positive EBITDA performance, another major accomplishment delivered by what I believe is the best team in the building materials industry. I'll now turn the call over to Chad who will review our financial results in more detail. M. Crow: Thank you, Floyd. Good morning, everyone. For the current quarter, we reported sales of $219.4 million compared to $162.8 million for the first quarter of 2011, an increase of $56.6 million or 34.7%. The increase is primarily due to increased sales volume as commodity prices for Lumber & Lumber Sheet Goods were on average comparable over these periods. Breaking down our sales by product category, Prefabricated Components were $43.5 million, up approximately 41% when compared to $30.8 million in the first quarter of 2011. Windows & Doors increased 30% to $49.7 million. Lumber & Lumber Sheet Goods were $66.4 million, an increase of 38.1%. Our Millwork category increased 21% to $21.4 million and Other Building Products & Services were $38.4 million, up 37.2% when compared to $28 million in the same quarter last year. Our sales mix was fairly consistent to that of the first quarter last year. Our gross margin percentage was 20.6%, up from 19.3% for first quarter of 2011, a 1.3 percentage point improvement, which was primarily attributable to our ability to further leverage fixed cost against increased sales volume. Selling, general and administrative expenses were $50.9 million, up only $4.2 million or 9.1% from the same quarter last year despite a 34.7% increase in sales. As a percentage of sales, SG&A expense decreased to 23.2% in the current quarter and 28.7% in the same quarter last year. For Q1 2012, our salaries and benefits expense, excluding stock comp expense, was $31.1 million or 14.2% of sales compared to $26.6 million or 16.3% of sales in the first quarter of 2011. Office G&A expense decreased $700,000 in the current quarter, primarily due to reduction in professional services while delivery expense increased $600,000, largely due to higher fuel prices and increased sales volume. Interest expense was $13.1 million in the current quarter, an increase of $7.2 million from the first quarter of 2011. This increase was primarily due to interest associated with our new term loan combined with a $3.1 million noncash fair value adjustment related to stock warrants issued in connection with the term loan. We recorded $174,000 of income tax expense in the first quarter of 2012 compared to a $17,000 income tax benefit in the first quarter of 2011. We recorded an after-tax noncash valuation allowance of $7 million and $8.1 million in the first quarters of 2012 and 2011, respectively, that related to our deferred tax assets. Absent this valuation allowance, our tax benefit rate would have been 36.3% and 38.4% in 2012 and 2011, respectively. Loss from continuing operations in the current quarter was $19.1 million or a $0.20 loss per diluted share compared to a loss of $21.1 million or a $0.22 loss per diluted share in the same quarter last year. Excluding the fair value adjustment for stock warrants and the tax valuation allowance, our loss from continuing operations was $0.11 per diluted share for current quarter. For the first quarter of 2011, our loss from continuing operations was $0.13 per diluted share, excluding transaction costs and the tax valuation allowance. Adjusted EBITDA was a loss of $2.1 million for the first quarter of 2012. As Floyd pointed out earlier, this is a $7.6 million improvement when compared to a loss of $9.7 million in the same quarter last year. We continue to manage our working capital efficiently as our working capital expressed as a percentage of sales improved to 9.8%, down from 11.1% for the first quarter of 2011. Our accounts receivable days held steady at 33.4 days while our inventory turns improved to 8.8 turns compared to 7.5 turns for the first quarter of 2011 and our accounts payable days were slightly higher at 30.4 days. Our cash used for the current quarter was $17.2 million. Of this amount, $2.4 million was due to an increase in working capital and $1.7 million related to capital expenditures. The remaining $13.1 million was cash used to fund operations and cash interest for the quarter. We ended the quarter with cash of $129.6 million and net liquidity of $94.6 million after giving effect to the $35 million minimum cash requirement contained in our term loan agreement. Our liquidity at the end of the quarter was better than anticipated due to our improved P&L performance combined with our efficient use of working capital. We still feel the liquidity discussion in our most recent 10-K reflects reasonable guidance regarding our near-term liquidity needs. To summarize, we expect our cash usage for fiscal 2012 to be in the range of $45 million to $55 million and to end 2012 with cash of $90 million to $100 million and liquidity of $55 million to $65 million after deducting the $35 million cash requirement in our term loan. Our first quarter was stronger than we had forecasted. The one quarter does not a year make and we are therefore not prepared to revise our liquidity guidance at this time. In addition to the $129.6 million of cash, we also had $15 million in restricted cash at the end of the quarter, of which $1.6 million was included in long-term assets. Restricted cash consists of $14.1 million used to collateralize letters of credit outstanding under our letter of credit facility and $900,000 as collateral for other casualty insurance obligations. I'll now turn the call back over to Floyd for his closing comments.

Thank you, Chad. We are very encouraged by our first quarter results and expect the momentum we have gained to continue to reflect positively on our 2012 financial results. We remain optimistic about the long-term health of our industry and our ability to position the company to take advantage of further improvements in housing. The recently announced April opening of our general Texas distribution facility in our entry into the greater Austin market is a perfect example of our optimism and positioning of the company for continued growth. My sincere gratitude goes out to all Builders FirstSource employees for their ongoing dedication and commitment to see the company return to profitability. I'll now turn the call over to the operator for Q&A.

[Operator Instructions] And we'll take our first question from Rob Hansen from Deutsche Bank.

I just had a question on the 350 new accounts that you've signed up. Now, are these -- are you beginning to see new builders spring up at all or are these existing builders who just gained some market share essentially?

A combination of both. Some of them are new builders that are -- that have entered into the business and others are new customers for us. But that -- formerly we're doing business with other competitors. So it's a combination of both.

Okay. And what have your customers told you that you're doing differently and that's why they've switched, the ones who have switched. M. Crow: I can comment on that real quick. From discussions I've had with some of the new customers, most of it seems to be service related. I think they just value our service and have had service issues with some of our competitors, and that's the comments I've gotten, and Floyd, I don't know if you heard anything different. M. Crow: No, I think that's a pretty good summary of what we're hearing.

Okay. And then on your -- the expansion into Austin. Do you think you'll see any other opportunities like this and have you booked at any other markets where you think you can expand? M. Crow: Yes, I think there will be, as we have said in the past, if we can expand markets that are contiguous to our current market that we're operating in into where there is a -- certainly a migration of customers that we're currently doing business with to enter into new markets and would like to see us provide them with materials and services. We're going to look real hard at that and there are several situations that fall into this category that we're looking at right now. I really don't -- it's very premature to say whether we'll be doing any more near-term expansion, but we certainly are looking at it where we can leverage off of existing facilities.

[Operator Instructions] We'll take our next question from Howard Weinberg of UBS.

Could you guys go back and talk about those new customers that you mentioned and I may have missed it on the prepared comments, but could you talk about what the incremental sales were from those customers and just sort of give us some perspective of what organic customers are doing versus the new business that you've been winning?

The new customer sales would make up less than 5% of our total sales for the quarter. But nevertheless, it is a significant number for us, and it's usually a number that continued to grow then during the course of the year because from the time you do get credit approval and get a customer set up until you actually begin supplying with materials, a lot of that may push -- the process may start in the beginning of the quarter, but it's halfway through the quarter before you start making any meaningful shipments done. So this -- while the number may be small in view of the total sales for the quarter, it's still nevertheless, is an important part of the future growth of the company. M. Crow: And Howard, Floyd did say in his prepared comments that sales to new customers were almost $5 million in the first quarter.

Okay, and sorry, Chad, I missed that. Regarding your gross margin, certainly the 1/3 -- 130 basis points is great but with continued -- how should we be thinking about this going forward? You guys had almost 35% growth in sales, 130 basis point improvement in margin. Could we start seeing the expansion from here or should we think it's going to be stabilizing from here? And if you could just comment and give us some insight on how to think about the sales leverage. M. Crow: From my perspective, it's, to some degree, it's unchartered waters for us. I mean, the sales gains we've been achieving the last 3 quarters, I don't remember and I've been here a long time. I don't remember seeing anything like it. And this recovery -- this recession and recovery is obviously unprecedented. It's really hard to predict what might happen as we continue to go through this housing recovery. Sitting here today, I feel like we have a ton of momentum, and I see no reason we can't maintain the sales growth we've been achieving and maintain the sales per start that we've had the last few quarters but again, it's a little bit of unchartered waters for us.

And Chad, we're a pretty aggressive group of people, and I think we have a very, very aggressive sales team out there working for the company. And yet, we are greatly exceeding even our expectations of what we're going to be seeing. We saw it all during the last half of 2011. It's carried into 2012 and we don't see any slowdown in the current time with the weight of sales gain.

Beyond the sales gain, it sounds like I think you commented on the last question that the sales gain really came from service rather than competitive pricing, but I'm just trying to go back and drill down on the sales leverage. I mean, obviously, it's a distribution based model, which if you're going to get incremental sales I'm assuming you have a relatively high percentage of fixed costs that need to be leveraged. So as these incremental sales, I mean, could we see margin, I mean, are you guys thinking margin could be up several hundred basis points?

I would like to see them up several hundred basis points, but it's going to be tough to keep raising the margin especially -- typically, you would expect to see some margin give-up as you dramatically increase your market share. However, so far, we have not seen this. And we certainly are doing everything possible to see that we continue on our current pace. To raise it several hundred basis points in the near term, I think that would be extremely difficult, and I certainly wouldn't -- could not support that. M. Crow: No, I think, we would, like Floyd said, we would have to have an improvement in the pricing environment to get a 200 basis point improvement this year. And that's going to really take a real major improvement in the construction activity and especially in the area that we operate in. Homes under construction is what we sell into and that starts and permits are really a precursor of future business to come. Units under construction is really the measurement of construction activity, and we're going to have to see a major improvement in that in order to really be able to start elevating our pricing, I suspect.

Our next question comes from Sean Boyd of Westcliff Capital Management.

Just a couple here. On the quarter, can you talk a little bit about if the quarter had any -- if we had any boost from kind of opportunistic inventory buys, help [ph] business product that we're able to get out there?

The -- we certainly made some significant inventory buy in the commodity areas, which are the framing materials and panels -- structural panels in the fourth quarter. Our buys were really scheduled to protect what we do with some long-term pricing agreements, some 60- and 90-day pricing agreements that we were entering into, as well as what our anticipated level of business would be. We dramatically overshot our anticipated sales levels, which meant that we were back into a replenishment mode before quarter end. And prices started moving up during the course of the quarter, especially in the last 45 days of the quarter. And so our replacement costs was slightly higher, so it did affect our margins somewhat on the back half of the quarter. But we again began looking at and protecting ourselves going into the second quarter, and the -- and it's really a good thing that we did because we have seen significant increases in the commodity markets since the last few weeks of March, and I think going into now, April. The prices of lumber and OSB are up anywhere from 8% to 11%, 12%. And I think that we may see a continuation of that trend as the quarter progresses. Right now, we have protected ourselves. We, again, if our sales force overachieves again, we're going to find ourself back again into replenishment and that diminishes somewhat of the benefit that you got from your buys. But I think right now, I think we have a pretty good handle on the commodity and the inventory side of our business.

Got it. So to be clear, in both of those cases, you ended up -- actual sales came in higher than what you originally forecasted and what you originally budgeted for in terms of purchases?

Yes, that's quite a bit [ph].

And the other thing I want to think about here is, just from a quarter-to-quarter perspective, whether we have seen the housing starts numbers on a national basis kind of calm down a little bit. And -- so any thought you can get us as to your own view of what you're hearing from the stores, from the different locations, from a bottoms up standpoint, do you feel like we've robbed the June quarter at all?

The feedback we're getting from our people in the field, and they of course are in contact daily with the builders in all of the various markets. Builders are still very optimistic. They certainly see an improving climate out there. No one is saying that -- there's -- the lid is coming off, but everyone feels that the year will be better than certainly we saw in 2011. The optimism that's out there now is higher than where I personally feel it may end up. I'm more in the area of 5% to 7%, 8% improvement in single-family, coming through the construction -- units under construction phase. I think the feeling of the builders is at probably somewhere in the 10% to 12%, 14% increase. So it's a much healthier atmosphere out there but far from being something that you would say is a robust.

Got it. And compared to a year ago, that's also a very different outlook. A year ago, builders weren't expecting 10% to 14%.

Yes, and the feeling is now people are saying they really believe that there will be a continual improvement in the level of activity and it's not -- no one -- I really have not heard any comments, the negative comments of saying well, it's getting ready to fall back or is going to fall back, that the housing isn't going to sustain itself. So I think that's very, very encouraging.

Got it. Okay. On operating expenses, if I can jump to that for a second, a little bit higher than I would have anticipated. At the $51 million level, is there -- is that the kind of level we should think about is going to the rest of the year? Or do we have anything in particular that hit in the March quarter that perhaps is not recurring? Can you help us on the operating expenses here? M. Crow: Well, when you do get into the first quarter, we do get hit with a few extra expenses. For example, employer payroll taxes, we get reset on that. So if you're comparing, say Q4 to Q1, that's going to be a difference. That was probably about $1.5 million increase in Q1 over Q4. And as the year progresses and we cap out on some of those employer taxes, you'll see that number come down. Another item that hit the P&L in Q1, we have a use-it-or-lose-it vacation policy. If you don't use your vacation, by the end of the year, you lose it. But we're required to accrue it on the front half of the year, and then you'll see that accrual come down. So that was another $1 million in expense in Q1 that you wouldn't have seen in Q4 as well. So those are couple of the larger items I can think of.

And then you've got the fuel cost increase. M. Crow: Then obviously fuel, yes, because of the higher fuel costs and the increase in sales volume. So there were a few expenses in Q1 that were higher than you're going to see in the back half.

Okay. And so we've got $2 million, $2.5 million there. Okay, helpful. And also on the interest expense, if I could, when you backed out... M. Crow: I would like to point out Sean, our business traditionally is going to run about -- on SG&A side, total expense of 65% fixed, 35% variable. We actually flexed better than that. Our SG&A salary, wages, commissions. The commissions are going to vary directly with your increase in margin dollars since we pay a percentage of gross profit. We actually had a very positive flex with the increase. As Chad pointed out, I think our total SG&A was up about 9% against the 35%, 34.5% increase in sales. And so when 35% of your -- under normal circumstances, 35% of your SG&A dollars are going to be variable, directly variable with volume, I think we had a very, very efficient cost control in the first quarter in spite of some unusual expenses.

Yes, now I hear you on that. And honestly, if you look back to the last couple of years, you've shown that, right? We haven't had great years, but we've had slightly good -- 11% growth last year, 3% a year before and yet you guys kept the SG&A very flat. So that's why I'm asking the question. I figured there was something variable in there, but at the same time, you've really done a good job keeping that fixed over the last... M. Crow: Yes. We've now gotten to the point, especially with that type of volume increase, you got to start adding in more drivers, you have to start adding in more yard personnel, other service support personnel out in the operation because we had really reduced our FTEs, which is a full-time equivalent from our high, we dropped from a little over 8,800 FTEs to where we got down into the mid-2,500s. And now, we're gradually creeping back up. At first, we were able to push that and we got a little bit better recovery in the last portion of 2010 and 2011. But we've had to start adding people back now.

Got it. Okay, last one for me. Interest expense, when you back out the fair value of stock once you're -- if you -- we look at -- we're at about $10 million a quarter, is that the appropriate level to think about for the rest of the year? M. Crow: Well, if you include amortization of debt discount and debt issued cost, that's probably close, but cash interest will be about $37 million for the year.

[Operator Instructions] We'll take our next question from Philip Volpicelli from Deutsche Bank.

This is Sean Wondrack on for Phil. Good sales growth this quarter. As one of the last gentleman had mentioned, weather was historically warm during the first quarter this year, and I'm not sure if you guys were able to quantify it, but do you have any idea how much of the impact on organic sales weather was during 1Q?

We really don't think it had that much of an effect on us. We don't operate in the Northeast quarter or the Midwest where the former winter reflected an improvement in the building activity. In the Southwest, Southeast, traditionally, they had been good building periods in the past and they were again this year. I think there was minimal affect I'll say, certainly less than 10%, maybe 5%, we may have had an advantage with weather. But in talking with our folks and just observing what was going on, that's the most I would attribute to it.

Okay, that's helpful. And then also, I apologize if you mentioned this earlier. Did you outline any CapEx guidance for fiscal 2012? I know you guys have kept it at a very low level. M. Crow: Yes, we have and there'll be a little more this year than last year. I think this year, it's probably going to be, I would say in the -- about $8 million. About $5 million to $6 million of that is continued buyouts of equipment leases and then we've got some capital improvements we're doing in some of our manufacturing facilities, so -- but we're thinking about $8 million this year.

At this time, it appears there are no more questions. Mr. Sherman, I'll turn the call back over to you for closing remarks.

Okay. We certainly appreciate your interest and tuning into the call. And if you have any questions and any follow-up questions that you'd like to ask, don't hesitate to give either Chad Crow or Marcie Hyder a call here in Dallas. We'll be glad to try to answer the questions for you.

This concludes the Builders FirstSource conference call. You may now disconnect.