Binit Sanghvi - Builders FirstSource, Inc. M. Chad Crow - Builders FirstSource, Inc. Peter Jackson - Builders FirstSource, Inc.

Michael Dahl - RBC Capital Markets LLC Matthew Bouley - Barclays Capital, Inc. Trey Morrish - Evercore ISI Keith Hughes - SunTrust Robinson Humphrey, Inc. Timothy Daley - Deutsche Bank Securities, Inc. Matt McCall - Seaport Global Securities LLC Alex Rygiel - B. Riley FBR, Inc. John Allen Baugh - Stifel, Nicolaus & Co., Inc. Jay McCanless - Wedbush Securities, Inc. Trey H. Grooms - Stephens, Inc. Kathryn Ingram Thompson - Thompson Research Group LLC Kurt Yinger - D.A. Davidson Companies

Good morning and welcome to the Builders FirstSource Third Quarter 2018 Earnings Conference Call. Today's call is being recorded and will be archived at www.bldr.com. It is now my pleasure to introduce Mr. Binit Sanghvi, Vice President, Investor Relations. Binit Sanghvi - Builders FirstSource, Inc.: Thank you. Good morning and welcome to the Builders FirstSource third quarter 2018 earnings conference call. With me today are Chad Crow, Chief Executive Officer; and Peter Jackson, Chief Financial Officer. A copy of our slide presentation referenced on this call is available on the Investor Relations section of the Builders FirstSource website at bldr.com. At this time, all participants are in a listen-only mode. Lately, we will conduct a question-and-answer session and instructions will follow at that time. Any reproduction of this call, in whole or in part, is not permitted without the prior written authorization of Builders FirstSource. As a reminder, this conference call is being recorded today, November 2, 2018. Builders FirstSource issued a press release after the market closed yesterday. If you do not 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, we 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 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. The company will discuss adjusted results on this call. 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. At this time, it's my pleasure to turn the call over to Mr. Chad Crow. M. Chad Crow - Builders FirstSource, Inc.: Thank you, Binit, and good morning, everyone. As usual, we will start with a brief update on our third quarter performance as well as our strategic growth initiatives. Then I will turn the call over to Peter who will discuss our financial results in more detail. Let's start on page 4. I am happy to report that in the third quarter, we delivered sales growth of 12.7% to $2.1 billion and generated a record-level $155 million of EBITDA. We grew our higher margin value-added product sales by nearly 14% as our team focused on executing our strategic plan and continued to provide value-added solutions to our customers to help mitigate challenges they face, including labor availability. I am also especially pleased with our team's responsiveness to a dynamic market and continuing focus on pricing discipline in a volatile commodity environment. Through their hard work, we are continuing our track record of strategic growth, expanding profitability, product differentiation, and value delivery to our customers. We successfully passed on commodity price inflation, which represented approximately 11.2% of the sales growth, while 1.5% came from organic growth, including approximately 3.1% in the single-family homebuilding end market. R&R and other was down 2.6%, largely driven by a slowdown in the Midwest where much of the economy is driven by the Ag industry. Turning to slide 5, our strategy to invest in manufacturing capacity is delivering results. Relative to our estimated overall organic growth of 1.5%, we grew manufactured products volume by double digits and total sales by 21%. Our platform provides us significant ongoing opportunities to increase both our overall market share and the penetration of our higher margin products, as evidenced by the 14% growth in our value-added product categories. Commodity prices declined sharply in the quarter, as framing lumber and sheet good prices ended the quarter down 26% and 16%, respectively, compared to the beginning of the quarter. As a result, our gross margin percentage improved as commodity cost declined relative to our short-term customer pricing agreements. Our team again demonstrated its ability to manage through the commodity price volatility and, at the same time, maintain a consistent focus on delivering value-added solutions to our customers. Our plans to expand our manufacturing and value-added capacity remain on track this year, including two new truss plants, approximately 10 new truss lines in existing plants, one new millwork facility and capacity additions to many locations. We are committed to continuing the expansion of our network of 57 manufacturing facilities strategically located across the country. With the continuing challenges being faced by our customers, demand for our labor-saving products should continue to rise, providing us additional opportunities for profitable growth, as evident in our results for this past quarter. Moving to page 6. With an overview of the macro housing markets, the outlook for new residential housing demand and activity remains favorable, as does homebuilders' sentiment. We have seen a recent easing in the rate of growth as builders and homebuyers adjust to changes in interest rates and shift in the mix of homebuyer demand. However, underlying demographic trends, household formations as well as employment and overall economic conditions remain supportive for ongoing growth in demand, which is what we continue to see in the market as well. The U.S. homebuilding industry has now reached a 12-month run rate of approximately 1.26 million annual starts, with approximately 890,000 of those being single-family starts, approximately 20% below the long-term historic average. Moving to page 7. As single-family housing starts over the next several years continue to move closer toward the 1.1 million historical average, we continue to execute our operational excellence and value-added investment strategy that will support further profitability enhancement and growth in revenues. We continue to develop our sales force and invest in our manufacturing and value-added facility expansion initiatives. These growth platforms provide us significant ongoing opportunities to increase our market share and increase the penetration of our higher margin products. In addition to capturing market growth, our value-added product growth and operational excellence initiatives underway are expected to generate an additional $100 million of profitability. Our plan to double 2016 EBITDA, as housing starts return to long-term averages, remains on track. This equates to an EBITDA level of approximately 50% greater than our current trailing 12-month figure of $473 million. These initiatives are expected to also generate over $1 billion in cumulative free cash flow from 2016 and deliver an EPS between $3 and $3.50. Our strategic plan prudently balances the deployment of cash into strategic investment opportunities and profitable growth and ongoing debt reduction to achieve our leverage target of 2.5 to 3.5 times EBITDA. Turning to slide 8, we detail our specific growth initiatives. Our existing core business strengths, including our national footprint, unmatched scale and manufacturing capability, and best-in-class sales force provides us with a platform to capitalize on growth in residential housing market and is expected to generate an incremental $250 million to $280 million in EBITDA as compared to 2016. We call this core growth. In addition to this core growth, we continue to expand our national manufacturing footprint and capabilities to grow our higher-margin, value-added products faster than the overall market. Our plans currently call for investing in 25 new facilities over the next four years, including the three facilities underway this year, expanding our nationwide footprint to serve a number of locations that do not currently have adequate access to these higher-margin products and where we see great opportunities to serve market needs with our customers. Our strategic plan also includes a set of operational excellence efficiency initiatives, including distribution and logistics, pricing and margin optimization tools, back-office process efficiencies, and information system enhancements that are expected to contribute between $65 million and $75 million in incremental annual EBITDA. Our project teams continue to make solid progress on these work streams, including for example our dispatch and delivery optimization, which has now been rolled out to over 100 locations. As a result, we are starting to see engine idle times decrease and on-road percentages increase, starting to deliver the improvements in overall fleet efficiency that we expected. Another example is our pricing model rollout, which is showing positive early results in the markets in which we have piloted this enhanced process. These projects when rolled out across 400 locations will offer significant margin expansion opportunities and will further differentiate our service levels and connectivity with our customers, providing economic and strategic value that is unrivaled by our smaller competitors. Based on results to-date, we are confident that the expanding benefits from our initiatives will, when scaled, generate the returns we have targeted. I will now turn the call over to Peter, who will review our financial results in more detail. Peter Jackson - Builders FirstSource, Inc.: Thank you, Chad. Good morning, everyone. As a reminder, we have included adjusted figures to normalize for one-time integration and other costs. We reported net sales of $2.1 billion, a 12.7% increase compared to the third quarter of 2017, including an approximately 11.2% benefit from commodity price inflation and an estimated 1.5% from organic growth. Our underlying sales volume grew an estimated 3.1% in the single-family new construction end market. And as Chad highlighted, our value-added products increased 13.9%, led by particularly strong growth in manufactured products of 21.1%. Gross margins of $522.8 million in the third quarter of 2018 increased by $63.5 million or 13.8% over the third quarter of 2017. Our gross margin percentage was 24.7%, up approximately 30 basis points from 24.4% in the third quarter of 2017 and a sequential improvement of nearly 100 basis points compared to the second quarter of 2018. The improvement in the gross margin percentage was attributable to a sharp decline in commodity prices during the quarter and from strong growth that our team drove in our high-margin, value-added products. Framing lumber and sheet good prices declined 26% and 16% respectively since the beginning of the third quarter. As we have discussed in our prior calls, commodity inflation causes short-term gross margin percentage compression when prices are rising and margin percentage expansion when prices are falling, due to the short-term pricing commitments we provide customers versus the volatility of the commodity markets. Our SG&A as a percentage of sales decreased by 80 basis points on a year-over-year basis. This reduction was driven by operating leverage and ongoing cost efficiencies. Interest expense for the quarter was $29.1 million, compared to $33.8 million in 2017. The reduction was largely the result of transactions the company executed in 2017 to lower our go-forward cash interest expense and further strengthen our capital structure, slightly offset by a rising interest rate environment. Net income for the quarter was $77.8 million or $0.67 per diluted share, compared to $45.4 million or $0.39 per diluted share in the third quarter of 2017. The year-over-year increase of $32.4 million or 71.4% was driven primarily by sales growth, mix improvement, and ongoing cost management. Third quarter EBITDA grew $32.8 million or 26.9% to $154.8 million. The year-over-year improvement was largely driven by these same factors. Most noteworthy to me, however, is the impact from our strategic value-added investments, which are expected to provide growing returns as our investments mature. Switching now to the year-to-date financial highlights, please turn to slide 11. The company achieved strong results this year-to-date in 2018, including 12.4% sales growth, 16.9% EBITDA growth, a $0.57 improvement in earnings per share, and a 0.7 times reduction in leverage, even after funding our strategic growth and capital improvement investments. I'm very pleased to report that value-added sales per day grew at a healthy 13% year-to-date. Turning to page 12, our free cash flow generation remained strong as we entered the last quarter of the year. Cash generation will continue to be supported by EBITDA growth and our continuous focus on working capital efficiency, which is estimated to run at approximately 10% of incremental sales. We will continue to invest in our business through capital expenditures at approximately 1.5% of sales. Our current NOL tax asset will shelter us from paying all but approximately $15 million to $20 million in cash taxes in 2018. As a result of the capital markets transactions we executed in 2017, our cash interest is expected to be approximately $95 million to $100 million in 2018. As we continue our systems integration work to support our operational initiatives, we expect one-time costs of $15 million to $20 million for the year. In total, we continue to expect to end the year within our free cash flow guidance of the $170 million to $190 million, albeit closer to the lower end of the range. The cash generated will be used to pay down debt and fund our strategic growth investments, and we remain confident that we will end the year with a leverage ratio below 3.5 times, delivering on a major commitment communicated at the time of our ProBuild acquisition in 2015. Given the seasonal pattern of working capital needs, we typically use cash in the first half of the year and generate cash in the second half of the year. Cash used in operations and investing in year-to-date was $67.3 million, including $76.8 million of capital investments. This remains in line with our expectations and with our annual guidance. We have continued to reduce our leverage despite the impact of commodity product price inflation on working capital. Our net debt to adjusted EBITDA ratio on a trailing 12-month basis as of September 30, 2018 was 3.9 times, representing a 0.7 times reduction from the third quarter of 2017. As we begin our seasonal working capital conversion, total liquidity at September 30, 2018 was ample at $448 million, consisting of net borrowing availability under our revolving credit facility and cash on hand. As we look forward with confidence in our team's strong execution and the solid underlying demand of the housing market environment, let me provide some color on what we see in our fourth quarter of 2018. For the fourth quarter, we expect sales per day to be up mid-single digits over prior year, with a little more than half coming from commodity inflation. Gross margin is expected to be up sequentially from the third quarter by 30 to 40 basis points, as we continue to see the benefit of declining commodity costs and the expansion of our value-added product categories. We also expect an effective tax rate of approximately 25% for the balance of 2018. Further supported by our continued focus on cost discipline and efficiency improvements, we expect EBITDA to grow between 20% and 30% over the fourth quarter of 2017. I will now turn the call back over to Chad for his closing comments. M. Chad Crow - Builders FirstSource, Inc.: Thank you, Peter. Our third quarter results demonstrate the alignment of our entire team around our strategies and customer value propositions and our ability to successfully manage through the commodity price volatility and other challenges effectively. It also demonstrates the value of our national footprint, unrivaled end-market diversity, and geographic reach, without which we cannot have achieved this record level of quarterly EBITDA or continue to generate such strong free cash flow for our shareholders. Despite the moderating market growth that we have seen recently, there continues to be substantial demand for new housing. We believe the market is adjusting its ability to satisfy this need with the right products at the right prices in the right places. We remain highly confident and enthusiastic about the runway that remains ahead of us and the value creation we will deliver from the consistent execution of our strategy. Our team remains focused on delivering exceptional value to the customers and strong results to our shareholders, and I thank all of our associates for their commitment as we build an even brighter future together. Before I turn the call over to the operator for Q&A, I want to take a moment and comment on the 8-K we filed this morning, announcing the passing of our colleague and dear friend, Morris Tolly. Morris joined BFS through the acquisition of the Pelican Companies in December 1998, almost two decades ago, and from that point on was instrumental in building the company we are today. From an operational perspective, he was the leader, the coach, the mentor and the friend we all leaned on to help pull together what was then a collection of acquired companies into the industry-leading team we are today. We will miss his keep-it-simple, commonsense approach to the business and his low-country witticism that made us all laugh hundreds of times. Our lives were all enhanced by knowing him, and we've all been blessed to work alongside him. He was just one of those guys. While Morris' passing caught us all by surprise, his leaving the company did not because I expected him to formally announce his retirement in the coming weeks, which makes his passing even that much more upsetting. Succession planning was well underway, and I anticipate an internal successor will be named very soon. Operator, we can now open the call up for Q&A.

Thank you. We will now take our first question from Mike Dahl with RBC Capital Markets. Michael Dahl - RBC Capital Markets LLC: Sorry for your loss. M. Chad Crow - Builders FirstSource, Inc.: Thanks, Mike. Michael Dahl - RBC Capital Markets LLC: First question relates to just the environment. Obviously, a lot of moving pieces, particularly around the lumber but also with some of these slower builder order trends of late. So, strong fourth quarter guidance. I know it's early but I was wondering if you could provide a little commentary even directionally on what you expect from 2019. Is the magnitude of decline in lumber prices and this relatively slower growth such that it will be, I guess, difficult to grow EBITDA in 2019? Or can you talk about whether you expect growth next year? Peter Jackson - Builders FirstSource, Inc.: Yeah, you're right. There are a lot of moving pieces right now and it seems like a lot of things are kind of in flux. But we do still feel like overall housing demand will grow, single-family demand will grow next year. Best guess now, maybe single family is up 4%, 5%. Time will tell, obviously. But it still feels like more of a pause, a speed bump, whatever you want to call it. So I would say sitting here today I expect single family to be up. Commodity prices. It's funny, two quarters ago we were talking about how high prices were and were we going to update our long-term forecast because what we've thrown out there would be a slam dunk at those prices. And now we're talking about are prices going to stay where they are today. I think what we can all agree is prices aren't going to stay where they are. And I think when I responded to the question two quarters ago, I said, yeah, that would be great but we all known prices won't stay where they are, commodity lumber prices, they just don't, they never do. So I would fully expect to see commodity price inflation. From where we are today, it's starting to feel like we've hit some lows. And we'll be dealing with some of the same things we've dealt with last year, transportation issues, things like that. So, yes, if commodity prices stayed where they were today all the way through next year, that'd be a pretty big headwind, but I really don't anticipate that's going to happen. And we're closing out a year that was probably the most volatile ever in commodity prices and I think we managed through it really well and we're producing a hell of a year. And so we'll deal with whatever cards are dealt us next year, but I would fully expect to see some inflation between now and then as we work through the rest of next year. Michael Dahl - RBC Capital Markets LLC: Got it. Yeah. It's been pretty wild. Peter Jackson - Builders FirstSource, Inc.: Yeah. Michael Dahl - RBC Capital Markets LLC: The second question, and either you or maybe Peter can take this, sticking with the commodity price inflation but asking more from a working cap standpoint. Can you quantify how much of a headwind you expect it to be to your 2018 results? And if lumber prices were sitting where they're at today, next year how much of a potential tailwind could you see to working cap from the lower commodity prices? Peter Jackson - Builders FirstSource, Inc.: It's a good question. I think that maybe the best way to characterize it is that at the peak we were seeing pretty substantial increases in both accounts receivable and inventories from the impact of inflation. I think that when we were looking at it in the third quarter, it was still probably $100 million to $150 million range of headwind that we were still burning through. We think we'll burn off a good chunk of that by year-end, sort of in line with the way that we generally would pull down accounts receivable and inventory. I don't really have a number for you off the top of my head for next year's cash flow results, but I think it's fair to say that we would see it as a tailwind. Again, to Chad's comments, so it's a little early to count any chickens on that just because of the volatility we've seen. Michael Dahl - RBC Capital Markets LLC: Fair enough. Appreciate it. Thank you. Peter Jackson - Builders FirstSource, Inc.: Thank you.

Our next question comes from Matthew Bouley with Barclays. Matthew Bouley - Barclays Capital, Inc.: Hi. Thank you for taking my questions. And I'll say we're all sorry for your loss over here as well. M. Chad Crow - Builders FirstSource, Inc.: Thank you. Matthew Bouley - Barclays Capital, Inc.: I wanted to follow up around the questions on the commodity price. And I think you just mentioned that you guys are confident around kind of a rebound there. So, just if we are in, I guess, this stable single-family volume environment here, I think you just mentioned 4% to 5% next year, and given housing is a big driver of lumber demand and you guys are obviously closer to the market and normal isn't really a word that you can necessarily apply to lumber, but at this point what's kind of your best guess, given supply and demand, around what kind of a normalized lumber price should look like into next year? Thank you M. Chad Crow - Builders FirstSource, Inc.: Oh, gosh. If I had to guess, I would say next year will be volatile as well. Probably not to the degree we saw this year. And I wouldn't be surprised if, by the time we end next year, average prices for 2019 are maybe 20% lower than they were on average this year. So I think we'll see inflation. I think we'll see volatility. But I would be surprised if average prices in total for the year are as high as 2018, but I still think they would be some pretty healthy levels. And again, that's obviously just – that's just a guess at this point. Matthew Bouley - Barclays Capital, Inc.: Okay. Understood. Thank you for that. And then, on the manufactured products business, the 21% growth, I think I heard you say double-digit on volume. Is there any finer point you can put on that volume versus price there? Because it's just – obviously, given what you mentioned around the market growth next year, I think it would just be helpful to understand your growth relative to the market and so how we can think about that into 2019? Thank you. Peter Jackson - Builders FirstSource, Inc.: So, I mean, we don't have any real market information that we feel comfortable banging up against. I mean, I think that when we talk about single-family, we have some high-level starts numbers, even that's tough given the changing size and profile of the homes that we sell into. We feel very good about our performance. We think we're at or above market. We think we're holding or gaining share as far as value add goes. Yeah, there's a good chunk of commodity inflation and pricing change in the number this year, but we're still solidly in the double digits for growth in the manufactured products, I think still in that double-digit range for consolidated value add, so clearly market share being taken in that space. I think it's consistent both with the investments we're making as well as the market adoption of that sort of labor-saving service that we provide in that space. So we feel like that is very healthy and I think consistent that we've seen pretty much all year and through last year. So we feel very, very good about the investments we've made and our continuing commitment to that space. We think our customers like it and it continues to get great traction. Matthew Bouley - Barclays Capital, Inc.: All right. Thank you for the detail.

Our next question comes from Trey Morrish with Evercore ISI. Trey Morrish - Evercore ISI: Hey, Chad and Peter. I also want to add my condolences to everyone else. We're all (30:16)... M. Chad Crow - Builders FirstSource, Inc.: Thank you. Trey Morrish - Evercore ISI: ...to hear that. So, I guess I want to start on the SG&A. You clearly had a lot of benefit to your top-line sales but the leverage that you saw in the quarter wasn't nearly as good as you saw it in the second quarter of around 80 basis points improvement this quarter versus 130 basis points last quarter, despite the much better top-line growth because of the lumber inflation. So, could you talk about, like, what happened in the quarter? Was there anything unique why it was a little bit less of year-over-year improvement in the third quarter relative to the second quarter? Peter Jackson - Builders FirstSource, Inc.: Sure. I think you hit the nail on the head. We did have a good quarter. Sales were up. We did see leverage. We're very pleased with that. But I think your point is valid. There are some components we are seeing in our SG&A results. Some of it's real obvious. We had better profitability, so we saw increased incentive comp. That's probably the biggest piece. Another one is we pay more commissions when we have higher gross margins. So, predictably, our commission rate went up a bit. There are also some, I think, underlying expense. I think the inflation environment we're seeing is – I think it's fair to characterize that it continues to be a challenge. We called out fuel in the Q, so you'll see that. I think that's a continuing headwind. There's also a couple of internal aspects with regard to insurance. I think healthcare continues to be a headwind for us. The costs there are real and something we're battling through. And then I would say that wage inflation is a broad-based challenge for us. I think we're doing quite a good job at managing it, but it continues to be something that we see on an annual basis. Trey Morrish - Evercore ISI: Got it. Thanks for that. And then more high level, labor constraints are definitely a – we think are going to be a challenge for the remainder of this cycle, even if you're going through a period of slower growth. Could you talk about, with your large footprint for manufactured product sales, how you expect that part of your business to evolve and develop over the remainder of this cycle? M. Chad Crow - Builders FirstSource, Inc.: Well, we're obviously making a lot of investments in that part of the business, the value-add side of the business, and expanding our footprint, and we will continue to do so. I do think the long-term trend is going to be less labor, less construction on the jobsite, and more done in plants or factories. And so, as we look further down the road – and I also think that labor is going to remain a challenge for the foreseeable future. So we're constantly investing in our truss and panel capacity, for example. And anywhere we can take some of that labor off the jobsite, I think that's where we're going to create the most value for our customers and create the most stickiness with our customers, and obviously that's going to result in higher margin. Trey Morrish - Evercore ISI: Got it. Thanks very much.

Our next question comes from Keith Hughes with SunTrust. Keith Hughes - SunTrust Robinson Humphrey, Inc.: Yeah. Two questions. One a bigger picture on multi-family. Are you starting to see some signs of multi-family, which has nationwide been in a little bit of a downturn here, start to pull back up for 2019? M. Chad Crow - Builders FirstSource, Inc.: It does feel like we may have hit kind of the low point. We'll see a lot of that's market-by-market as well. But I'm hopeful we've hit kind of the low point on that. We're investing a lot in our multi-family team and really trying to serve the multi-family business more from a roof truss and floor truss perspective primarily. And so, time will tell, but hopefully we're going to start to see some upside there. Keith Hughes - SunTrust Robinson Humphrey, Inc.: Okay. And two, there was a comment on interest expense being $95 million to $100 million, I think, for 2018. You're at $85 million year-to-date. I know you're paying down debt, but that's a pretty drastic reduction on a quarterly basis. I guess what's causing that? What are we looking at for the fourth quarter? Peter Jackson - Builders FirstSource, Inc.: Yeah. I mean, I don't know if I have a change in profile there. I think that there's a – when we look at the interest that we're incurring throughout the year, we incur more when we have our seasonal borrowing, which is coming down pretty rapidly right now. So I think, on a profile basis, our fourth quarter has relatively lower interest. Keith Hughes - SunTrust Robinson Humphrey, Inc.: Okay. So it's going to be... Peter Jackson - Builders FirstSource, Inc.: And nothing special is going on is the short answer. Keith Hughes - SunTrust Robinson Humphrey, Inc.: Okay. So it's going to be $10 million to $15 million, is that kind of what we're looking at for the fourth quarter? Peter Jackson - Builders FirstSource, Inc.: I think that's the squeeze, yeah. Keith Hughes - SunTrust Robinson Humphrey, Inc.: Yeah. Okay. Thank you.

Our next question comes from (sic) Nishu Sood with Deutsche Bank. Timothy Daley - Deutsche Bank Securities, Inc.: Hi. This is actually Tim Daley on for Nishu. Thank you for the time and please accept our deepest condolences for the loss. M. Chad Crow - Builders FirstSource, Inc.: Thank you. Timothy Daley - Deutsche Bank Securities, Inc.: So the first question, Chad, I was I guess hoping to better understand some of the commentary provided in the press release specifically around how the associates remained focused on developing close relationships with customers and have demonstrated this commitment in the third quarter. I don't think we've ever heard you use that terminology or language before to describe customer interaction. So, how should we be interpreting this? And does it signal any sort of change or, I guess, shift in focus on the sales strategy or kind of like its application of the sales force? M. Chad Crow - Builders FirstSource, Inc.: No, certainly not a shift in focus. I mean, we try to be in the back pockets of all our customers and that's where you're going to provide the most value in helping them actually build the house and be more than just a building products distributor. And so we're constantly pushing our guys to solve our builders' needs, solve their pain points. So, no, certainly not a shift in strategy. It's always been a strategy of ours, but it's something we continually harp on. Timothy Daley - Deutsche Bank Securities, Inc.: Understood. Thank you for that. And then I guess thinking about the – kind of as home price appreciation is starting to slow under rising affordability pressures, builders are losing their pricing power. So, how are you, I guess, keeping builders who are currently utilizing the manufactured products, I guess, away from switching back to cheaper stick framing under these new lower commodity prices? M. Chad Crow - Builders FirstSource, Inc.: Well, most customers who use those products recognize the value in it and there's a lot of components to the value. Structurally, it's a better built house, less jobsite waste, increased cycle time. So you may have a few that try to shift, but I don't think the dip in commodity prices is really going to trigger that. During the depths of the downturn when framing labor costs hit rock bottom and commodity prices were down, that's where you'd seen builders more likely to re-evaluate the cost benefit. But I don't think we're anywhere near that right now. Peter Jackson - Builders FirstSource, Inc.: And to add to that point, I think the labor constraint hasn't been alleviated despite some of the challenges you've outlined there. I think that, yes, we are – the homebuilders need to reset and be able to provide what the homebuyers really want. But that labor to build those homes hasn't magically appeared and it continues to be a great solution for our customers for that problem. Timothy Daley - Deutsche Bank Securities, Inc.: Got it. That sounds positive. So, I guess and then my second question, thinking about – obviously there's been solid growth in the kind of selling locations and the number of sales associates that you guys have active. So, what was that number in this quarter and I guess how are you thinking about the continued growth in these metrics over the next year? M. Chad Crow - Builders FirstSource, Inc.: Well, for the year, we've probably added somewhere around 75 – or added or internally promoted around 75 sales folks. That's a gross number. We obviously have turnover. I don't have the net number handy. But, look, that's a big push of ours is really to put a focus on developing our sales force, developing our general managers and developing our employees overall. And so, that's going to continue to be a focus of ours. Timothy Daley - Deutsche Bank Securities, Inc.: Got it. And then how about the growth next year, just any color or quantification you could provide, if possible? M. Chad Crow - Builders FirstSource, Inc.: Growth on sales force? Timothy Daley - Deutsche Bank Securities, Inc.: Yes. Correct. M. Chad Crow - Builders FirstSource, Inc.: I would imagine we'll be pushing for a similar number, similar to this year. Timothy Daley - Deutsche Bank Securities, Inc.: Got it. Understood. All right. Thank you for the time. M. Chad Crow - Builders FirstSource, Inc.: Thank you.

Our next question comes from Matt McCall with Seaport Global Securities. Matt McCall - Seaport Global Securities LLC: Thanks. Good morning, everybody. M. Chad Crow - Builders FirstSource, Inc.: Hi, Matt. Peter Jackson - Builders FirstSource, Inc.: Morning. Matt McCall - Seaport Global Securities LLC: Chad, really sorry to hear about your loss. M. Chad Crow - Builders FirstSource, Inc.: Thanks. I appreciate it. Matt McCall - Seaport Global Securities LLC: That maybe had a big impact on you, so sorry about that. M. Chad Crow - Builders FirstSource, Inc.: Absolutely. Matt McCall - Seaport Global Securities LLC: So, maybe talk about pricing for a second. You mentioned some pricing tools. The 11 points of price is actually a little better than I think you expected in the quarter, definitely better than we modeled. And then the Q4 guide even seems a tad better than we had expected. So, are the pricing tools helping there? Is there something else that's going on? Is there any change, or is this just kind of where you thought it would be? M. Chad Crow - Builders FirstSource, Inc.: Well, certainly the commodity prices moving in our favor helped. We saw margin improvement in all our value-add categories this quarter, which didn't surprise me. And the pricing tool we've piloted in three or four markets and we've seen some positive results. It's really a tool we've built to make it easier and quicker for GMs to do pricing, puts a little more discipline around it, provides us better exception reporting when pricing goes outside of some predetermined levels that we set and does some customer stratification for us. So it's really just adding a level of sophistication. And we have seen some good results and we're working towards rolling that out more next year. So I would say maybe I was slightly surprised by the overall improvement in gross margin, but it certainly wasn't out of what was in the realm of expectation. Matt McCall - Seaport Global Securities LLC: Okay. Okay. As we look out in the next year and we think about the impact of incrementally lower lumber prices and trying to keep in mind how to model that, what's the updated thought, given some of the things you just said, on the decremental margin that you'll face from falling lumber? M. Chad Crow - Builders FirstSource, Inc.: I don't even want to get into speculating that because I think to try to waste time right now trying to assume that prices are going to be where they are today all the way through next year, I just don't think that's a useful – it's not a good use of our time. I think I feel pretty good we're going to hold gross margins, improve gross margins next year. Commodities will be what they're going to be, and that's part of the business and we deal with it. And I think we did a great job this year dealing with extreme volatility, and we're going to continue to execute no matter what it brings. So we really haven't even run numbers yet because I just don't think the prices are going to stay where they are. Matt McCall - Seaport Global Securities LLC: Sure. Okay. That's fair. And I guess one last one. Peter, in the past, we've talked about some internal working capital initiatives. Working capital is a little better than we thought and lumber is likely going to help that. But what's the way to think about working capital? I know there was a question earlier about the impact of falling lumber and you're going to have a tailwind. But how do we think about it given maybe some of those initiatives on top of falling lumber as we move out into next year? Peter Jackson - Builders FirstSource, Inc.: Yeah. Fair question. I think that the work that we've done around working capital is more a matter of structural discipline and a continuing focus on it to make sure that it never gets out of control, and we're still in that 9% to 10% range. I think that there are some specific examples that I can give you of success stories on a location-by-location basis. The dynamics that I think is challenging for the quarterly metric or for the ongoing metric is the in-month ups and downs, the nature of what we hold for our customers, the nature of how we have product on the ground at different valuations for projects or specific ordering profiles. It's a little bit harder to point to a specific quarter or a trend move, but I do see the benefits of the organization in what we do on a location-by-location basis by that focus. And I'm not quite ready to change our guide on that, but I think it will be part of the tailwind that we see coming to the back end of this year. And as we look at the year-over-year comps for working capital use into 2019, I think we'll see it as well. It's going to be caught up in that deflation number though based on where we are right now. Matt McCall - Seaport Global Securities LLC: Okay. All right. Thank you all.

Our next question comes from Alex Rygiel with B. Riley FBR. Alex Rygiel - B. Riley FBR, Inc.: Thank you. Just one quick question. Was there an extra sales day in the fourth quarter 2017? Peter Jackson - Builders FirstSource, Inc.: Yes. I think that's the – fourth quarter is when we have our mismatch again this year. Alex Rygiel - B. Riley FBR, Inc.: Thank you. Peter Jackson - Builders FirstSource, Inc.: Sure.

Our next question comes from John Baugh with Stifel. John Allen Baugh - Stifel, Nicolaus & Co., Inc.: Thank you. Good morning and my condolence as well on Morris' passing. M. Chad Crow - Builders FirstSource, Inc.: Thank you. John Allen Baugh - Stifel, Nicolaus & Co., Inc.: I had a little higher-level question and it relates to the shift of value-adds in manufactured and certainly commodities moved all over the place and they impact margins when they do. But when you think, Chad or Peter, about what – the pace you're on of shifting your mix, what overall impact that's having to either gross margin or EBITDA? Any sense of how you're moving the needle through time? I'd love to just get a sense of that. M. Chad Crow - Builders FirstSource, Inc.: That's a good question when you try to drown out all the other noise that's going on. I think if we execute on our strategic plan over the next few years of expanding value-add on the company as a whole, gosh, I could see by the end of say 2021 or so kind of a permanent improvement of 40 basis points or so in our gross margin would be, I guess, a best guess off the top of my head. John Allen Baugh - Stifel, Nicolaus & Co., Inc.: Okay. That's helpful. And then, if we saw housing starts in 2019, say, flat or maybe even slightly down, I'm assuming your earnings might get impacted if that played out. But I'm curious as to how your free cash flow might react. And I realize you're not giving 2019 guidance, and that ties into the working capital question, which I know ties in the commodity price changes and all those things. But, again, from a very high level, I'm trying to think about the leverage targets you have in time, and obviously if EBITDA goes down, that, everything being equal, raises leverage, but I'm curious about the free cash flow component. M. Chad Crow - Builders FirstSource, Inc.: Yeah. Go ahead, Peter. Peter Jackson - Builders FirstSource, Inc.: Well, I would say that I think our guide is pretty consistent at least on the working capital side. I think that 9% to 10% of incrementals is a fair expectation for us. You hit the nail on the head. There's obviously a lot of noise in there with regard to deflation and the previous question about the work we're doing on working capital, but I think that's still a fair metric to use in your model. M. Chad Crow - Builders FirstSource, Inc.: Yeah. I would just add that in that type of environment... John Allen Baugh - Stifel, Nicolaus & Co., Inc.: So, Peter, just to be clear, that would decline, right? Yeah. Go ahead. M. Chad Crow - Builders FirstSource, Inc.: Yeah. In that type of environment, the cash flow would not be impacted as much as you might think because you do have the offset of working capital less taxes. And if things look like they're slowing down, we may delay some of the CapEx too. And so it's a bit of a silver lining in the business we're in. We do, as business is growing, use up a lot of cash and working capital and investing in things like that. But as things slow, we're able to release some of those items. So the net change in cash flow can be fairly minimal. John Allen Baugh - Stifel, Nicolaus & Co., Inc.: Correct. And then my last question then, and this sort of came up earlier, but if we had a no-inflation scenario that's not impacting your revenues, what kind of organic growth, real growth, does it take to leverage SG&A even just a little bit? Peter Jackson - Builders FirstSource, Inc.: Well, I think our guide historically has been that we think that there's about a 70% variable component of SG&A. I think that's fairly true. I think that – we're still very confident in the market. We think there's still a lot of opportunity there for us to grow. So we definitely don't see the existing market or the market we're looking at day-in day-out is a cause for concern, a cause for aggressive action to make sure we're getting in front of it. I realize that folks on the Street look at a decline of growth from 9% to mid-single digits as something well-nigh the apocalypse, but it still feels like a pretty healthy market for us. We're still feeling pretty good about our opportunities. So I think that we will continue to deliver along the lines of what we've been talking about over the past few quarters in terms of incrementals on working capital, commodities, SG&A. I think all those things are still holding true. M. Chad Crow - Builders FirstSource, Inc.: Yeah. I don't see the leverage of SG&A as really a step function. I see it more as linear, and every little bit of incremental volume we get helps. And as you know, it also helps the gross margin side of things as well with volume going through our plants. And historically speaking, the busier the builders are getting, the more they're building, the less focused they are on saving a nickel here and there and become much more focused on service. So, in my opinion, every little bit of volume helps. John Allen Baugh - Stifel, Nicolaus & Co., Inc.: Great. Thanks for answering my questions. Good luck. Peter Jackson - Builders FirstSource, Inc.: Thanks. M. Chad Crow - Builders FirstSource, Inc.: Thank you.

Our next question comes from Jay McCanless with Wedbush. Jay McCanless - Wedbush Securities, Inc.: Thanks. Good morning and please accept my condolences as well. M. Chad Crow - Builders FirstSource, Inc.: Thank you. Jay McCanless - Wedbush Securities, Inc.: The first question I had, and just going back to great numbers on the manufacturing product side and in terms of the adoption of panelization and things like that, I've always felt like the sticking point there wasn't the homebuilders but actually the framing subs. Can you talk about what types of discussions you're having with them and are some of them finally giving in to panelization and other type of projects because they just can't get the labor anymore? M. Chad Crow - Builders FirstSource, Inc.: Yeah. I think that's accurate. We are seeing more and more interest and more and more discussions with builders who historically have not used it, deciding now is the time to start trying it. Jay McCanless - Wedbush Securities, Inc.: And then, just wanted to ask also, with the sharp drop in prices over the last couple of months, is this something where there is an inventory problem inside the industry that's working itself out? Or is this more dislocation from people being worried about whether housing starts keep growing. What do you guys think has caused this sharp decline over the last two months? M. Chad Crow - Builders FirstSource, Inc.: To some degree, I almost feel like we're victims of our own actions. I think as prices start to fall, everybody gets a little more cautious on buying. And so, all of a sudden, everybody's gone from, oh, I've got to buy to cover my position because prices are rising, to sitting on the sidelines and waiting to see where things stop falling. And so, in a sense, we all start acting in concert and it ends up – and I think that's part of the problem. And I think at some point folks are going to say this thing's hit bottom and everybody is going to start buying again, and we all know what that's going to mean. It's going to mean prices are going to go up. So I think it's a lesser concern about – I mean there's seasonality involved for sure. But I think it's less a concern of the overall health of housing, as it is just people just trying to guess when the bottom is going to be. Peter Jackson - Builders FirstSource, Inc.: And I think you hit the nail on the head a little bit in terms of the industry-wide inventory levels. I think that that disruption we saw earlier in the year with regard to transport caused people to take safer positions. So, when it turned, there was enough wood on the ground and in the channel that people have been able to do what Chad talked about, which is just kind of wait it out a little bit, see what's happened, and it's corresponded with the seasonal decline in usage. And you sort of layer those things together and, yeah, I think it's structurally something we'll work through, and to Chad's point, it'll find its level pretty quick here. Jay McCanless - Wedbush Securities, Inc.: Good. And then the last one I had, the 3% growth you guys registered in single-family sales outpaced the national numbers for the third quarter. Can you talk about – I mean, and then that's something I know you guys typically do on a routine basis, but can you talk about, as we move into 2019 and if starts are flat or a little bit softer than people expect, do you think the value-add products that you have out there and some of the things you're going to be introducing will allow you to keep growing faster than the market? M. Chad Crow - Builders FirstSource, Inc.: Certainly, yeah, that's the plan. And I think, as I said earlier, I don't see all of a sudden having to go out of labor to build houses. And so I think that's going to continue to be an issue for the builders, and I think the builders are going to continue to look for ways to more efficiently build homes, build homes more quickly. So, yes, I think the investment we're making in the value-added products will allow us to grow faster than whatever the market is giving us. Jay McCanless - Wedbush Securities, Inc.: Sounds great. Thank you. M. Chad Crow - Builders FirstSource, Inc.: Thank you.

Next question comes from Trey Grooms with Stephens, Incorporated. Trey H. Grooms - Stephens, Inc.: Hey. Good morning, everyone, and like everyone else has said, I'm really sorry to hear about Morris. M. Chad Crow - Builders FirstSource, Inc.: Thanks, Trey. Trey H. Grooms - Stephens, Inc.: I just have a few kind of last-minute ones here, and thanks for squeezing me in. So, one is, I know you've touched on it a couple of different times on this call and, Peter, I know you just mentioned SG&A. You kind of reiterated that, I think, on the 70% variable component. Does that still hold true if we kind of fast forward into next year and you continue to add to the sales force kind of at the pace that you've done in 2018? It sounds like you're going to continue on with that next year as well. Does that same mix still hold true there? Peter Jackson - Builders FirstSource, Inc.: Yeah. I don't think there's a material change. Trey H. Grooms - Stephens, Inc.: Okay. Peter Jackson - Builders FirstSource, Inc.: It's always moving around a little bit, but yeah. Trey H. Grooms - Stephens, Inc.: Okay. Helpful. And then on the R&R piece being down 2.5% or 2.6%, I'm sorry if I missed it, but can you just talk a little bit about what's going on there, what's driving that? Is that expected to be down in the 4Q as well or just any color around that number? M. Chad Crow - Builders FirstSource, Inc.: Yeah. As I said in the prepared comments, that's largely in the upper Midwest, the Ag region of the country where the tariff wars that are going on have really started impacting some of the farmers and made them cautious about spending. They're a big part of the business up in that part of the country. And to a lesser degree Alaska, although Alaska is performing a little better than last year, still relative to national numbers that you see in R&R, still underperforming a bit. So it's primarily those two markets for us. Trey H. Grooms - Stephens, Inc.: Got it. Thanks. Sorry I missed that. And then with free cash flow, the target, $170 million to $190 million, expecting to come in at the low-end, I think that's what you guys said last quarter, too. But just wondering what was the driver of coming into the low-end. I understand the earlier part of the year when you had a big working capital draw with the higher lumber, but I would have thought it might be more of a tailwind with the commodity coming down and maybe might catch a little more benefit in the 4Q. Any just commentary around the direction there of going towards the low-end? Peter Jackson - Builders FirstSource, Inc.: Yeah. I'll be real candid that that type of cash flow forecasting for the year-end is always very challenging. We're looking at the numbers in detail and trying to dial it in. Part of it has to do quite simply with the burn-off of the – or the collection process around the sales and the burn-off of the inventory that we had earlier on in the year. I'm sure you can appreciate the fact that the averages look nice and easy, but down at the location level, it's a bit more challenging to see where's the wood, where are the receivables, and at what pricing, and then how are we burning it off. It's our best estimate. We're clearly going to shoot for more than that, but I think that $170 million is the right number for the guidance. But in light of that, we are still going to be below the 3.5 times levered number. That's a commitment that we are committed to and that we're looking forward to delivering on as sort of the final chapter in the ProBuild acquisition story. M. Chad Crow - Builders FirstSource, Inc.: And, Trey, it gives us a little flexibility if we decide to take some inventory position between now and the end of the year as well. Trey H. Grooms - Stephens, Inc.: Got it. All right. That's all I had. Thanks a lot. Good luck. M. Chad Crow - Builders FirstSource, Inc.: Thanks.

Our next question comes from Kathryn Thompson at Thompson Research Group. Kathryn Ingram Thompson - Thompson Research Group LLC: Hi. Thank you for taking my questions today. I've noticed a lot of focus on lumber, but if we could shift focus to more gypsum roofing and insulation products. It'd be helpful to understand what trends you're seeing there, particularly since you've had a few mid-year price increases in some of those categories, which is a little more – mid-year price increases are a little bit more unusual. But give your perspective on trends and what you're seeing in those types of products and if you have any thoughts going into 2019. Thank you. M. Chad Crow - Builders FirstSource, Inc.: Well, for us, it's a very small piece of our business, I would say, from a sales perspective. That's where we do a lot of our commercial and multi-family business, and so that's obviously been down somewhat for us. From a gross margin perspective, been relatively flat year-over-year. I would expect to see a little uptick in the overall business in those categories next year if we do start to see a little bit of a rebound in the multi-family side of things for us. Kathryn Ingram Thompson - Thompson Research Group LLC: And that's on pricing? I was really kind of focusing on just kind of what you're seeing from an inflation standpoint for those categories. Are you saying it's been flattish from a pricing standpoint for you? M. Chad Crow - Builders FirstSource, Inc.: Oh, no. Sorry. That was from a gross margin standpoint. So what price increases we have gotten, we've done a good job of getting those passed on. Kathryn Ingram Thompson - Thompson Research Group LLC: Okay. And just really focusing, once again circling back on the value-added manufactured products. And as you continue to develop this more and build momentum in that business, what types of customers – and really, kind of want to get a better sense of regions and types of projects you're seeing greater acceptance. And where do you think that business can be, not just next year, but two to three years from now as a percentage of your total sales? M. Chad Crow - Builders FirstSource, Inc.: Well, we see acceptance across all our single-family homebuilder categories, and certainly the multi-family side are big users. So those products aren't limited to national builders or custom builders. There's pretty good acceptance across all categories. As far as regions go, historically, components have been readily accepted in the Northeast, in the Northwest, a little less so in the South where you've traditionally had more labor availability, but that's changed. Those dynamics are changing. And so we're certainly seeing more acceptance in the Southern part of the country than we've had in the past. From a mix standpoint, gosh, we're going to continue to push. And anything we can do to drive down the pure commodity distribution business and expand the value-add side of the business, I think, gosh, we said it as a percent of sales that we can move that mix 1% to 2% a year that would be pretty successful in my mind. Peter Jackson - Builders FirstSource, Inc.: One of the challenges we've had on that point is that with the growth in commodities, it's sort of been hiding the fact that we have been growing our manufactured products quite well. But that will prove itself out over time. Kathryn Ingram Thompson - Thompson Research Group LLC: Do you have happen to have handy or off top of your head, when you look at the regions like the Southeast, which admittedly has been slower in acceptance, what that is as a percentage of your Southeastern sales, say, three to four years ago where it is today or is there maybe even a growth rate associated with that region, just to give a perspective on growth? Peter Jackson - Builders FirstSource, Inc.: Not handy. No. We can try and look forward to having some of that information in the future, but that's not something we've done in the past. Kathryn Ingram Thompson - Thompson Research Group LLC: Okay. All right. Thank you very much. M. Chad Crow - Builders FirstSource, Inc.: Thank you. Peter Jackson - Builders FirstSource, Inc.: Thank you.

Our next question comes from Kurt Yinger with D.A. Davidson. Kurt Yinger - D.A. Davidson Companies: Yeah. Good morning, everyone. And I know it's late, so I'll just stick with one. I'm wondering if you could talk about how you think about geographies to add new manufactured components capacity in 2019 and going forward, and if there's any one or two geographies that are particularly compelling at this point. M. Chad Crow - Builders FirstSource, Inc.: Well, it's largely the Western part of the country where we feel like we're under-represented in our footprint. I'd rather not disclose which particular markets we're talking about this for competitive reasons. But I would say a lot of it's largely the legacy ProBuild footprint where those products were under-represented. Kurt Yinger - D.A. Davidson Companies: Great. Thank you very much. Peter Jackson - Builders FirstSource, Inc.: So the one point I want to clarify to Alex's question earlier about the days, he asked the question and I was agreeing that we have a difference in days, but I've been pointed out that we think he might have said less days. It's actually more days in the fourth quarter. In 2018, we lost a day of sales in Q1, and we'll gain a day in Q4, full-year flat. So, just a clarifying point. M. Chad Crow - Builders FirstSource, Inc.: Okay. Thanks, Peter. We appreciate everyone joining our call today. Look forward to updating you on the progress of our initiatives in the quarters ahead. And if you have any follow-up questions, please don't hesitate to reach out to Binit or Peter. Thank you.

At this time, there appear to be no further questions. Mr. Crow, I will turn the call back over to you for closing remarks. M. Chad Crow - Builders FirstSource, Inc.: Yeah, we're done. We made our remarks. Thank you. Have a good day.

Thank you, everyone. This concludes today's teleconference. You may now disconnect.