Floyd F. Sherman - Chief Executive Officer, President and Director M. Chad Crow - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Member of Proxy Committee

Scott Justin Levine - Imperial Capital, LLC, Research Division David Neil Williams - Williams Financial Group, Inc., Research Division Trey Grooms - Stephens Inc., Research Division John F. Kasprzak - BB&T Capital Markets, Research Division Philip Volpicelli Robert J. Kelly - Sidoti & Company, LLC

Good morning, and welcome to the Builders FirstSource Third Quarter 2013 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. As a reminder, this conference call is being recorded today, October 25, 2013. 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 explanations of non-GAAP financial measures in our Form 8-K filed yesterday, both of which are available on our website. It is now my pleasure to turn the call over to Mr. Floyd Sherman. Please go ahead, sir. Floyd F. Sherman: Thank you. Good morning, and welcome to our third quarter 2013 earnings call. Joining me from our management team is Chad Crow, Senior VP and Chief Financial Officer. After I give a brief recap of our third quarter, I'll 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. Our trend of improving financial results continued as our topline growth and gross margin increased helped us achieve positive net income and positive cash flow in the current quarter. As we have previously stated, our focus has been on increasing market share while expending gross margins. To that end, our third quarter sales were $402.9 million, an increase of 38.1% when compared to the third quarter of 2012. This marks the eighth consecutive quarter of year-over-year sales growth above 30%, and shows our sales growth is still outpacing the increase in residential construction activity. Our gross margin percentage increased to 23% for the current quarter, up from 19.8% for the third quarter of 2012. This margin increase was accomplished in spite of the continuation of a very competitive pricing environment, and was largely due to better customer pricing, an increase in sales volume and a lower rate of material cost inflation. I'll now turn the call over to Chad who will review our financial results in more detail. M. Chad Crow: Thank you, Floyd. Good morning, everyone. For the current quarter, we were reported sales of $402.9 million compared to $291.8 million for the third quarter of 2012, an increase of $111.2 million or 38.1%. We estimate sales increased 29.6% due to increased sales volume and 8.5% due to price. Breaking down our sales by product category, Prefabricated Components were $83 million, up 47.8% from $56.1 million in the third quarter of 2012. Windows & Doors were $84.4 million, up approximately 37%. Lumber & Lumber Sheet Goods were $137.5 million, an increase of $40.2 million. Our Millwork category was $37.4 million, up 33.5%. And Other Building Products & Services increased $12.1 million to $60.6 million. From a sales mix perspective, Prefabricated Components were 20.6% of total sales, up from 19.2% in the same quarter a year ago and represents our highest mix of this category since the fourth quarter of 2008. Our gross margin percentage was 23% in the current quarter, up 320 basis points from 19.8% in the same quarter last year. We estimate our gross margin percent increased 280 basis points due to improved sales price and 40 basis points due to increased sales volume. On a sequential quarter basis, our gross margin improved 230 basis points. Turning to SG&A. Our selling, general and administrative expenses were $72.3 million, an increase of $13.7 million or 23.3% from the same quarter last year despite the 38.1% increase in sales over the same time period and shows we continue to leverage our operating expenses very well. For the current quarter, our salaries and benefits expense, excluding stock compensation expense was $46.4 million or 11.5% of sales compared to $35.6 million or 12.2% of sales in the third quarter of 2012. This increase is primarily related to higher sales commissions and additional staffing needs to service our increased sales volume. Delivery expense increased $1.3 million and other general and administrative expenses increased $1.4 million, both a result of increased sales volumes. Interest expense for the current quarter was $7.5 million, a decrease of $3.1 million, which relates primarily to our recent refinancing. For the current year quarter, interest expense included $6.7 million related to our outstanding senior secured notes due 2021 and $600,000 of our amortization deferred loan cost. Interest expense in the third quarter of 2012 included $4.7 million related to our current loan and $4.5 million related to our floating rate notes due 2016. In addition, interest expense in the third quarter of 2012 included a $700,000 noncash fair value adjustment related to stock warrant issued in connection with the term loan and $200,000 of amortized deferred loan coasts. We recorded a $129,000 income tax benefit in the third quarter of 2013 compared to $33,000 of income tax expense in the third quarter of 2012. We recorded a $3.4 million reduction of our tax valuation allowance in the third quarter of 2013 versus a $4.6 million increase in our tax valuation allowance in the third quarter 2012. Absent the valuation allowance, the effective tax rate would have been 25.8% and 37.6% in the third quarters of 2013 and 2012, respectively. As of the end of the third quarter, our gross federal income tax NOL available for carryforward was approximately $270 million. Our income from continuing operations was $13 million, or $0.13 per diluted share, compared to a loss from continuing operations of $12.3 million, or a $0.13 loss per diluted share, in the same quarter last year. Excluding the facility closure cost, the fair value adjustment for stock warrants and the tax valuation allowance, our income from continuing operations was $9.2 million or $0.09 per diluted share for the current quarter, compared to a loss from continuing operations of $6.5 million, or a $0.07 loss per diluted share, for the third quarter of 2012. On net income for the third quarter of 2013 was $12.8 million, or $0.13 per diluted share, compared to a net loss of $13.6 million, or a $0.14 loss per diluted share, in the same quarter of 2012. Adjusted EBITDA was $23 million or 5.7% of sales for the current quarter compared to an adjusted EBITDA of $3 million or 1% of sales in the third quarter of 2012. For the current quarter, we had positive cash flow of approximately $25 million, which resulted in liquidity at September 30 of $211.5 million consisting of $50.4 million of available cash and $161.1 million in borrowing availability under our revolving credit facility. We had no borrowings during the quarter under our revolver. Operating cash flow was $29.7 million for the third quarter of 2013, which included a $14.5 million reduction in working capital. Our new senior secured notes due 2021 require interest payment semiannually in June and December. Therefore, our third quarter 2013 operating cash flow does not include an interest payment pertaining to these notes of approximately $6.7 million, which is included in accrued liabilities. Operating cash flow was negative $11.1 million in the third quarter of 2012, and included $4 million related to working capital build. Capital expenditures were $4.8 million in the third quarter of 2013 compared to $5.2 million for the same quarter of 2012. We expect capital expenditures in the fourth quarter of 2013 to be approximately $8 million and expect 2014 capital expenditures to be between $15 million and $20 million, as we continue to invest in our fleet and truss, panel, door and window capabilities. I'll now turn the call back over to Floyd for his closing comments. Floyd F. Sherman: Thank you, Chad. Despite the challenges we still face within the industry, such as the historically low rate of housing starts, availability of credit for homebuyers, shortages of skilled construction labor and the competitive pricing environment, we believe the demand for housing continues to strengthen and the outlook for continued industry improvement remains positive. We saw our financial results accelerate through the third quarter, and are optimistic regarding our outlook, taking seasonal differences into account for the remainder of the year. I'm extremely pleased with our recent financial performance and know it would not have been possible without the dedication and hard work of all of our employees. I'll now turn the call over to the operator for Q&A.

[Operator Instructions] And we'll take our first question from Scott Levine. Scott Justin Levine - Imperial Capital, LLC, Research Division: So we heard you say there, Floyd, at the end that activity accelerated throughout the quarter. Just looking for maybe a little bit more color, doesn't sound like the recent turbulence in mortgage rates has had any real impact on your business. But if you could just provide a little bit more color. And also maybe a little bit more color by region within your footprint, which markets are looking the strongest or maybe weakest on a comparative basis? M. Chad Crow: We really haven't seen the positive that you've seen a lot of the homebuilders refer to. Our business thus far this quarter has remained fairly consistent with the way it ended in the third quarter. And then our guys are really optimistic about what they're seeing for the remainder of this year. Now, I will say that if new home orders were slowing, it would take several months for that to trickle through -- to impact our business, so maybe there is a pause coming but we haven't seen that yet. As far as weaker or stronger markets right now, certainly, Texas is still one of our stronger. Nashville, Tennessee is strong. The Charlotte, Baltimore, Washington markets are performing well. And everyone's up, obviously, on a year-over-year basis. I would say right now, the -- still the most challenging would probably be Alabama and Atlanta to some degree. Floyd F. Sherman: Yes, I -- just to add to what Chad had said, we see the same reports that you do from the public builders. While the contract signings maybe show -- are showing a decrease in the rate of increase over the prior reporting quarter or on a year-to-date basis, they still are ahead, obviously, of last year. The backlogs are still very healthy that the builders are showing. If you do your math, it's anywhere probably from 5.5 months to 7, 7.5 months of backlog. The -- it's still -- we're still seeing a good flow-through as the builders are pushing to get the homes turned over. The -- and so we feel confident and good about our fourth quarter. I think the builder -- what we're starting to hear is that they're slowing down on the price increases. They're also starting to come back in a little bit more in the way of incentives to get people, to get contracts closed out. But still, nothing like what had been done in the past. So, overall, I think what it's saying is that on a national basis, single-family starts probably are going to come in somewhere around 625,000, 630,000 for the year. It's still a nice improvement over last year. And it's -- we're taking market share. We continue to build our market share, and I think our performance in the field is certainly helping keep our rate of sales up as compared to what maybe is now being reported by some of the builders as to their sales performance. Scott Justin Levine - Imperial Capital, LLC, Research Division: Understood. And one follow up as well, I think you mentioned 8.5% price increase in the quarter that I think is down sequentially from 17.5%. If you could just comment on competitive trends versus what's going on with lumber pricing in terms of what you're seeing out there on the pricing front. Floyd F. Sherman: From a competitive standpoint, we're still seeing very, very competitive conditions in the field. The -- everybody is very attuned to the commodity markets. We're starting to see -- OSB has leveled out and we're not really seeing a lot of volatility right now in OSB. We've done, I think, a good job of protecting ourselves for the remainder of the quarter. Lumber, however, is a little bit different case. There's more volatility. There's more upward push to the lumber pricing. And the -- and we would anticipate as we look towards through the first quarter of next year, that we will probably see a continual inflationary curve to the lumber commodity side of the business. And people are going to take that into account in their pricing. And as we've said, overall, it's a lot better for us when we have high commodity prices so long as that pricing is stable. The -- but we've -- I think we've done a very good job of covering the volatility that we've seen this year, and I think our margin performance reflects it. And I think people in the industry are getting, I think, a lot more sensitive to making sure that their pricing is more reflective of the commodity prices that are out there.

And we'll go next to the line of David Williams. David Neil Williams - Williams Financial Group, Inc., Research Division: I wanted to ask you a little bit about the margins. You were clearly well ahead of where we thought you guys would be and a little surprised at how well those came in. But if we think about the 280 basis points that you've gotten off the pricing, how much of that is sticky? And we can expect that to go forward? And then, maybe how much of that is just capitalizing on a onetime event? And then, maybe what are you seeing on pricing across-the-board maybe on the different products or group of products? Is there anything specifically that you could point to on -- maybe the Prefabricated Components you're getting better pricing on or anything of that nature? M. Chad Crow: If you look at commodity prices, during the third quarter, they didn't behave all that differently than they did in the third quarter last year. We actually saw inflation during both those quarters. I think the bigger difference is how prices were behaving heading into the quarter. Heading into Q3 of this year, prices were falling quite sharply. And this -- that did allow us to benefit from some pricing that had been set towards the end of Q2, that didn't ship till Q3. And so during that period there, we were able to lower our average cost a bit. And this is, obviously, the opposite of what we've been facing in the last 1.5 years or so with the commodity inflation. I will also say, however, that the rapid fall in prices heading into the quarter left us with an average cost on hand that was above the current market because it takes a little longer for our average cost to catch-up. And our sales force did one hell of a job of quoting prices based on on-hand cost when the temptation would've been to price off replacement at that time to avoid risking losing some business. So, my hat's off to the those guys for helping us manage through that volatility. But all that's just part of the puzzle. Obviously, and there are several other factors that can impact our margins. As we stated in the release, our margins are up 320 basis points quarter-over-quarter due to price but breaking out the components of that price can be difficult. The competitive environment, changes in sales mix, obviously, the commodity inflation or deflation, and then our inventory cost position going into the quarter has a lot to do with it as well, as Floyd just alluded to. So all those things play a part. I will say going into Q4, you're asking about how sticky that margin is. We'll see a seasonal slowdown. We would expect to see a seasonal slowdown in the business. So from that standpoint, I think maintaining 23% margin will be difficult. And commodity prices are behaving a little different now heading into Q4 than they were in Q3 although they're still relatively stable. So I would expect Q4 margins to be lower than they were in Q3, but also certainly higher than they were in Q4 of last year. I think that it's going to fall somewhere in between there and it's just a little early yet to pin it down any more than that. David Neil Williams - Williams Financial Group, Inc., Research Division: Perfect. And then maybe on the -- on any of the products, are you seeing better pricing in the Prefabricated Components or the Window segments yet? Or has that really begun to flow-through? M. Chad Crow: We saw some fairly nice improvement on the prefab margin this quarter. I would say that was the biggest change and that -- and the commodity lumber had the biggest improvement in margin. David Neil Williams - Williams Financial Group, Inc., Research Division: Great. Are you seeing any volume increases on the prefabs? M. Chad Crow: Yes. Floyd F. Sherman: Yes. David Neil Williams - Williams Financial Group, Inc., Research Division: Yes. All right, can you put a number around that, maybe? Floyd F. Sherman: Yes, our -- we saw an almost, what, 46% increase over the Q3 of last year. M. Chad Crow: Yes, it was up 48% quarter-over-quarter. I haven't done a price volume analysis on that specific category, but the 48% year-over-year is a good indication of the volume we're seeing. Floyd F. Sherman: Yes. It's heavy, the volumes are. And pricing. David Neil Williams - Williams Financial Group, Inc., Research Division: Great. And one more if I could here, looking at where we are on the southern starts and your dollar content into those southern starts, and of course, we don't have the September data yet, but kind of estimating that, we're up about 20% year-on-year in the dollar content and lumber prices were only up about 5%. So, to me, that kind of points that you're definitely gaining some market share and getting some deeper penetration, but is there anything specific that you could point to that maybe it's giving you the ability to drive that dollar content a little higher than maybe with just the pricing? M. Chad Crow: Well, I know just from recent discussions, there's quite a few small competitors out there that are still struggling from a liquidity standpoint. And really struggling to have the liquidity to grow their businesses like they need to. So I think that's been a definite advantage for us. Floyd F. Sherman: Yes, I think -- but I will continue to keep going back to the one factor, I think, that separates us from so many of our competitors, is the quality of our people servicing the business and the number of our people servicing the business. We're are able to take advantage of the improving market condition I think a lot better than any of our competitors. And we're doing a better job of servicing it. I think the builders recognize the quality of our services that we provide. Certainly, the install component of our business has strategically really helped us open some doors and improve the total mix of products going into our customers and I think all of those factors are what's really enabling us to drive our superior market growth and market share gain. M. Chad Crow: And I know in the Prefab category, I've also heard that lead times are getting extended with a lot of our competitors, and we're having folks come to us for the truss and panel because we can take the volume and our lead times are shorter, so that's obviously, helped us as well.

And we'll take our next question from Trey Grooms. Trey Grooms - Stephens Inc., Research Division: A couple of questions. Here on -- coming back to the margins, I mean, 23%, obviously, very strong and of course, you would expect a seasonal slow or pull back a little bit in that just from a seasonal standpoint, I mean. But outside of that, looking forward, say, fast forward to next spring, when demand should be better and we could continue to see higher sales numbers, is there any way -- any reason why we shouldn't -- why you couldn't perform in a similar or even maybe higher margin kind of fashion in that type of sales environment? Floyd F. Sherman: Yes, I think there's always a possibility that we can, but there's a lot of -- as you know, Trey, there's a lot of unknown factors that we have to deal with in this business, the volatility of our commodities, maybe the change in pricing attitude with your competitors and so forth. Do I expect or anticipate us having a better margin through the year, next year, than we have this year? Yes, I do. And we certainly are expecting that performance out of our people, and I believe our people will deliver it. But it's -- some of it is also a factor of how aggressive do we want to be in continuing to take market share at the rate that we have been taking because in a -- we're still in a very, very bad housing environment as compared to what we've historically seen from a construction standpoint. And any time you are increasing market share, price certainly enters in to and is a very important determinant of the gain that you might take on. And that's something that we monitor. We try to keep it controlled. We -- in the past quarter, we walked from, I think, a significant amount of business because it just didn't meet our pricing guidelines and requirements. And we're going to continue to do that, but I think next year, I'm anticipating a better year next year than we've seen this year. Trey Grooms - Stephens Inc., Research Division: Right. Yes, I understand there's a lot of moving pieces here for sure. Chad, on SG&A, as a percent of sales, again, very impressive. How do we think about this going into the kind of slower seasonal periods? And then also, kind of further out, looking to improve sales next year, I mean, would we expect this kind of a similar kind of percent of sales, SG&A number? Or how should we think about that as we look to next year as well? M. Chad Crow: Well, if we do see a slowdown in Q4 in business, we'll be able to pull back on the SG&A, the variable portion of it. So I still think we'll be able to flex that as we need to in Q4. And I really haven't changed my stance on OpEx going forward. I still think we can be somewhere in that 65% -- the 65% variable range on the increased sales volume next year. So if that is the case, I would anticipate that as a percentage of sales, we should still see that number tick down as our volume picks up. Trey Grooms - Stephens Inc., Research Division: Right, okay. And just on the prefab, highest mix since 2008. I would think that, like you guys mentioned, the demand for that part of your business would continue to grow and become more important as these builders get busier and busier, and labor becomes tighter. But where -- from a capacity standpoint, where can that go? Where can the prefab as a percent of revs -- I mean, where can I really go before you have to start thinking about putting on additional lines and that sort of thing? And then also, if you could comment on the expansion on the Windows & Doors? Floyd F. Sherman: I think the -- our truss and panel, I think we can get it up to, close to 25% of our overall business with not only the facilities that we have currently open, but we still have some mothballed facilities that we can and will open as the demand requires it. The trusses that we are building today and especially the wall panels that we're building today are, Trey, much more complicated and require a lot more production time than they did back in 2005 and 2006. There have been design changes, the local code requirements and so forth, the insurance requirements have really brought about some very significant changes in the component business. That will -- has taken away some of the output capacity that we have for our current plants, but I think we can get it up to about 25% of our business before we have to start either greenfielding plants or acquiring maybe some other unused capacity, some plants that might be out there available for us to acquire. But so -- they -- we have opened up here in the past 6 months 2 facilities and both of those have really gone up and running. They're doing well. The plants that were in those -- those areas of those plants were already operating at close to capacity, and that's the reason we brought those 2 plants up. And we'll do the same for the other remaining facilities. M. Chad Crow: And some of the CapEx that we referred to in the earnings release, does relate to additional truss and panel equipment, as well as door and window equipment. Some of that's replacement, some of that equipment's old, but some of that is also to add additional efficiency, getting some more up-to-date. Floyd F. Sherman: Yes. And at our window operation, we're definitely adding substantial capital dollars. There's -- probably $4.5 million will be going into that plant for capacity enhancements. They have -- they're operating right now at close to theoretical maximum. And we're anticipating another good year of expansion. That -- the window operation is doing very nicely for us, and we don't want to do anything to -- that might inhibit the continued growth of that part of the operation.

We'll take our next question from John Kasprzak. John F. Kasprzak - BB&T Capital Markets, Research Division: Chad, is $7.5 million of quarterly interest expense the right number to model? Or are some of those smaller items roll off at some -- in the near future? M. Chad Crow: That's probably the right number. I think we'll be about $30 million a year in expense and about $28 million of cash interest. John F. Kasprzak - BB&T Capital Markets, Research Division: Okay. And Floyd, is there a number you could give us around capacity utilization, say, in Prefab components where you guys might be running right now? Floyd F. Sherman: Yes, I would guess, overall, we are probably running now in the -- of our theoretical capacity, we're probably in the mid- to high 70s. John F. Kasprzak - BB&T Capital Markets, Research Division: Okay. And you guys are, obviously, running at a sales rate per start much higher than where we've been over the years and you've talked about market share gains quarter in and quarter out here. But you're -- also, your cost performance has been good and is trending better than what it was in previous upturns in the housing market. So on a similar level of starts, how much better will SG&A as a percent of sales be, do you think, than it was in the last cycle? M. Chad Crow: I think our best in '05 or '06 was around 18.3% of sales. I think we can get that down below 17%, somewhere in the 16s. John F. Kasprzak - BB&T Capital Markets, Research Division: Okay, great. And last question is, you've talked also about the competitive pricing environment, that's been ongoing, obviously. But you -- the press release also mentions margin improvement due to better customer pricing. Can you talk about that dynamic a little bit? M. Chad Crow: Well, I think some of it, as what Floyd already referred to, is where we continue to be more and more selective of the business we're taking. And we're able to -- as our results improve, we're able to kind of raise the bar as to what the minimum requirement is on pricing. So that's certainly some of it and I would say it does seem that some of our competitors are getting more price-conscious and being a little more rational, not to anyway, say, it's not still very competitive because it is. As Floyd mentioned earlier, we're still at a historically low level of housing and so it is still a very competitive environment. But I think we're starting to see it soften a little, and as you've all read, the homebuilders are getting price increases pushed through, which over time can give us a little bit of wiggle room as well.

And we'll take our next question from Philip Volpicelli.

My question is with regard to some of the mothballed facilities that you might still have or any ideas you guys might have in terms of either greenfielding or buying a weak competitor in terms of growth here. Clearly, the business has turned much strongly positive and you got $50 million of cash. Just wondering if that makes any sense to go out and do some M&A, do some greenfield or bring some more facilities out of mothball? M. Chad Crow: Well, we certainly do have the balance sheet now to start considering M&A and I would probably categorize it as that's where we are right now. We'll consider it if something attractive came along. We're not on a mission to just go out and start buying people, it's got to make sense. As far as mothballed facilities go, we do have a couple that we're kind of waiting to see how business kicks off next year, as to whether we reopen those or not. But we could certainly do that and have them up and running in a relatively short order, if the demand is there.

And those are production facilities or are they distribution facilities? Floyd F. Sherman: No, we've got a truss operation and we've got a panel operation that we're going to be looking at very closely. And probably, I would anticipate that we will be opening those facilities in 2014.

Yes, and then in terms of greenfields, is that something you guys are considering at all? M. Chad Crow: I wouldn't rule it out. We did a little bit of that last year as we expanded in Austin and Clarksville, Tennessee. So certainly, if there's opportunities to expand into adjacent markets or new markets, we would look at it. Preference, probably would be a little bit more related towards acquiring someone to get into a new market rather than greenfield.

Great. Got you. And how much -- I mean, what size would you be willing to spend, or I guess, the other way to ask is how much cash would you want to have on the balance sheet once you do it? Floyd F. Sherman: I don't think we have any real criteria for saying size. A lot of times, you can look at maybe a smaller operation and then their sales. They may be smaller because they haven't had the liquidity to really expand their business and to where -- but they have a facility that can do a lot more than they may be doing through that facility, or we might be able to add products to their mix that would really enhance their sales performance. So sometimes, the smaller guys will be more attractive maybe than a larger size operation. The -- a lot of it's -- I would expect most of our -- if you look at tuck-in acquisitions, which are really most important to us because we think any time we can enhance and take a larger market share of one of our existing markets, that will be long-term financially, more beneficial to us than going out and starting up in an all together new market that we can't fully support. The -- most of these acquisitions will fall somewhere probably in the $20 million to $75 million a year sale category.

And we'll take our next question from David Guarino.

I know a lot of questions have been asked regarding the Prefabricated Comps category. I was wondering if you could shed a little bit more light on how you guys forecast demand internally for that? Floyd F. Sherman: Our forecasting of forward demand is really based upon what we think the builders might be doing within the markets in which we serve. We get very little in the way of solid guidance from the builders as to what their building outlook is going to be. This business has traditionally over the years, always been a day-by-day situation. And then reacting to very, very short term demand forecast. So we -- you get pretty good at trying to anticipate the -- what the builders are going to be doing and where -- and consequently, how that may affect all the different products that we sell, and in particular, the components. Right now, an additional factor that is helping us with components and accelerating the use of the components is the shortage of really good trained experienced labor in the field. The -- especially for traditional framing. That gives rise to increasing the usage rate for trusses and panels, and it reduces the skill levels that are required out of the job site to build that house. And so we're seeing -- and you try to estimate what you think that, that conversion rate might be from traditional stick framing to component -- use of components, but it's our best estimate of the situation. We really don't have good, concrete for -- advanced forecasting from the builders.

[Operator Instructions] We'll take our next question from Robert Kelly. Robert J. Kelly - Sidoti & Company, LLC: You have said historically, your EBITDA margin flow-through should be 15% to 20%. If the trends continue to decelerate with respect to the new order book for the public builders and private builders, what are the levers you pull to maintain that kind of flow-through? This assumes, of course, lumber is relatively steady. M. Chad Crow: I think it's just really going to be more of the same. It's going to be managing the OpEx to what your sales volume is, and it's going to be pushing to get every last dollar you can on price. I don't know that a pause or a deceleration is going to really change that strategy. Robert J. Kelly - Sidoti & Company, LLC: Does the -- do you have enough visibility into their order book to make those OpEx changes quickly? M. Chad Crow: Yes, we can react fairly quickly. I'm not -- I don't -- I'm not going to say we have a lot of visibility, but as the business, if it we were to start to slow, yes, our guys are well-equipped. They've been through the drill before to kind of flex their cost structure. We use a lot of temp labor in our truss and panel plant that allows us to flex that as needed, and then a good chunk of our SG&A is variable, the delivery. And obviously, the salesman commission is variable. So, yes, we would be ready to flex that down if conditions warrant it. Floyd F. Sherman: We also run weekly FTE reporting by location, by operation. The -- what standard is and what your actual FTE count is. And that give you your guidelines and you can react fairly quickly to -- -- if there is a significant and a real trend in decelerating level of business activity. Robert J. Kelly - Sidoti & Company, LLC: Got it. You might have touched on this, the reason for the bump in CapEx 4Q and into 2014? What's driving that? M. Chad Crow: In the fourth quarter, we've got a couple of facilities we're relocating. And then as Floyd mentioned earlier, we're expanding the capacity of our window plant in Houston. And so, a lot of that equipment we'll be ordering this year to get it online next year. And then as far as next year goes... Floyd F. Sherman: And we've also had, Chad, we're putting some dollars into our truss and panel operations and into our -- the millwork area. And because of the lead times that are now being required on the equipment, we're having to put in the initial down payments in some cases up to 1/3 of the acquisition costs in order to get our place in the schedule, so we can get that equipment in and put into operation by early spring of next year. M. Chad Crow: Yes, we've got deposits we're putting down on that equipment as well as lead expansion for next year. And then, the rest of that will flow through in 2014, plus we have one more facility we're looking at relocating next year. Robert J. Kelly - Sidoti & Company, LLC: With the Houston window expansion, what's the new capacity when that's all said and done? Sales capacity? Floyd F. Sherman: Yes, the -- if you're asking what we will be able to get out of that operation? Robert J. Kelly - Sidoti & Company, LLC: Yes. Floyd F. Sherman: It'll be in excess of $100 million, annually.

And it appears we have no further questions at this time. So I will now turn the program back over to our presenters for any closing remarks. Floyd F. Sherman: Okay. We really appreciate your tuning in today, and following our company. The -- if there's any follow-up questions that you have, don't hesitate to either give Chad or Marcie Hyder a call here in Dallas, and we'll be glad to try to answer your questions for you. We hope you have a good day, and a very nice weekend. That concludes any of our remarks -- further remarks. So.

This concludes today's program. We thank you for your participation. You may now disconnect at any time.