Ladies and gentlemen, thank you for standing by and welcome to the Q4 2019 UFP Industries Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions]After a short pause, I will turn the conference over to your speaker, Mr. Dick Gauthier, Vice President of Business Outreach. Please go ahead, sir.

Welcome to the fourth quarter 2019 conference call for Universal Forest Products, now known as UFP Industries. Hosting the call today are CEO, Matt Missad and CFO, Mike Cole. Matt and Mike will offer prepared remarks, and then the call will be opened up for questions.This conference call is available simultaneously and in its entirety to all interested investors and news media through our webcast at www.ufpi.com. A replay will also be available at that website through March 21st, 2020.Before I turn the call over to Matt Missad, let me remind you that yesterday’s press release and today’s presentation include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the company’s expectations and projections. These risks and uncertainties include, but are not limited to, those factors identified in the press release and in the filings with the Securities and Exchange Commission.I will now turn the call over to Matt Missad.

Thank you, Dick and good morning, everyone. Thanks for joining us on a special lottery number day 02/20/2020. While we are more than halfway through the first quarter of 2020 and focused on our future performance, it is a good time to review the fourth quarter and year-end results for 2019.At the beginning of 2019, our goal was to be exponentially greater than before. And I am delighted to report that our team did an awesome job. They set unit sales records, EBITDA records, EPS records and during the year, a market cap record for UFPI. They certainly deserve a curtain call for their performance. Thank you, UFP Industries team.Mike will provide more financial details in a few minutes, but I would like to give a couple of highlights. Fourth quarter unit sales were up 6% overall. Sales revenue was $998 million for the quarter, up 1.2% from 2018. EBITDA for the quarter was up 12% to $70.9 million versus $63.3 million in 2018. Year-to-date EBITDA was $317.3 million versus $265.6 million in 2018.Earnings per share were $0.61 versus $0.50 in 2018. As you know, we use gross profit dollars per unit as a tool to measure performance, because it takes out lumber market pricing as a variable. We are very pleased to report that gross profit dollars grew by 14.2%, more than double our unit sales increase.2019 had many favorable trends with a strong economy and a more typical lumber market. Our managers operated very well in that environment. We also recognized that we have areas we can improve. In fact, as part of our new market structure, we have identified at least $20 million in annual improvements we expect to achieve over the next two years.These areas include eliminating unprofitable sales and products, improving project management and speed the market with new products, gaining market efficiencies through automation, specialization and consolidation and growing value-added sales more quickly.Now I’d like to discuss our individual markets, starting with the overall lumber market. During the fourth quarter, the Random Lengths Composite Index was up 4.8% over 2018, while the Southern Yellow Pine Index was down 12% from 2018. This trend has continued in 2020 thus far with the Current Composite Index up 7.7% over a year ago, and the Southern Yellow Pine Index down 17% from a year ago.Our year-end inventory levels were nearly $70 million lower than year-end 2018. The more stable lumber market did not allow as many pre-buy opportunities as a year ago. So we have reduced our investment in inventory ahead of the seasonal spring selling season.In the retail market, we saw excellent unit growth of 10%, while sales were up 6.9%. A few of the drivers were: One, the increased sales of our Deckorators products in decking and railing, which continue to take market share.Two, we also saw good unit sales growth with our big box customers as well as our independent retailers. We continue to drive our extended product line to independent retailers, but have only scratched the surface with these customers. Three, we are growing our ProWood fire retardant product called ProWood FR, both in the Midwest and the Northeast and plan to expand further in 2020. Fourth, the Outdoor Essentials line of outdoor products will be adding capabilities in more mixed material projects in expansion of our fence products.In the construction market, we also reported steady growth overall, with unit sales up 5%, led by a 9% unit growth in commercial construction and concrete forming. Our backlog remained strong for site built components, and we continue to add capacity in the markets we serve. Manufactured housing units increased 4% in Q4. We continue to promote value-added items and more sales per unit built by adding product lines to our offerings.Unit sales in the industrial market were up 2% for the quarter. We continue to rationalize our product offering by focusing more on designed, engineered and manufactured sales, while de-emphasizing fewer commodity sales. In spite of the lower growth rate, our overall profitability once again improved.In 2020, each of our segments will have a more dedicated focus on developing and implementing new products. We expect this concentration to result in a greater number and greater sales volume of new products in the future.New product sales were $110.7 million for the fourth quarter and $539.8 million for the year. We will sunset $126 million of 2019 new product sales, which establishes a base of $413.8 million from which to grow. We are targeting $475 million in new product sales for 2020. Obviously, we will continue to sell the products which we have sunset, they just won’t count as new product sales.A few highlights for new products include Dimensions project panels, which continue to gain traction in more locations. The Deckorators Voyage and Vault decking products and our Deckorators railing systems are growing well in our favorites of our certified installers and their customers. UFP-Edge accent boards as well as fascia, pattern and trim are expected to grow at a much faster pace in 2020.New products in the construction market include more complex and assembled component products available for our site built and factory built customers. We also have opportunities with new architectural products in the commercial and multi-family customer base.We expect to gain a larger share of total projects by adding some of these interior components to the products and services we already supply. In the industrial market, new products include more mixed materials, including steel, plastics and corrugate to solve customer needs and developing proprietary products to create new solutions in the transportation space.Core SG&A increased 7.4%, above our unit sales growth target. However, it declined as a percentage of gross profit to 56.3% compared to 59.9% last year. As you know, the fourth quarter has lower sales volumes, which also causes fixed SG&A to be a higher percentage.Production labor continues to be one of our biggest challenges. Recruiting and retaining employees is critical. We continue to look at better ways to meet the challenges our employees face from benefits to transportation and strive to become an employer of choice in the locations in which we operate. Our goal remains to provide our employees with solid long-term future with many opportunities for growth.In the fourth quarter, we added benefits, including performance bonuses and enhanced 401(k) match for our hourly employees. We expect this will help us continue to provide better opportunities for these employees. The opportunities for growth include the exciting new organizational structure we implemented on January 1st.This new structure organized by markets and business units instead of geography, will unleash the full power of our team to meet customers’ needs and position our facilities to get more in depth with the markets they serve. We believe this will help us grow faster and more profitably in the years ahead and will lead to better capital allocation and utilization. While our previous structure served us very well in getting us to $4.5 billion in sales, our new structure has the capability of getting UFP Industries to $10 billion in sales.Speaking of capital allocation, we are pleased that our Board increased our dividend by a prorated 25% and plans to pay a quarterly dividend going forward. We still maintain a principal capital allocation model with a goal being to maximize ROI, while providing the best total shareholder return over the long-term.Each of our segments has identified and prioritized their growth runways within their segments. Capital allocation decisions will be made on the metrics described above with priority given to proprietary value-added products and services and market expansion in new markets and consolidation in existing markets. We expect more significant acquisition activity in 2020 in our identified growth runways.Where acquisition opportunities do not present a reasonable ROI, we will look at greenfield and other methods to achieve our objectives. Including our typical acquisitions, we expect to achieve a unit sales growth of 4 percentage points to 6 percentage points above positive GDP growth and EBITDA growth in excess of unit sales percentage increase.Now, I’d like to turn it over to Mike Cole, who will provide more details on our financial performance.

Thanks, Matt. Starting with highlights from the income statement. Overall sales for the quarter increased 1%, with a 6% increase in units, offset by a 5% decline in selling prices. Unit growth was primarily organic and consistent with the results achieved in prior quarters.New products continued to be an important driver for our growth in gross margin improvement, especially for our retail business. We’re pleased to report new product sales growth of 16% for the quarter as we beat our annual goal of $525 million with nearly $540 million in sales, a 13% increase over last year.Breaking down our sales by market. Sales to the retail market increased 7%, resulting from another strong unit increase of 10%, offset by a decline in selling prices of 3%. Our unit growth was primarily organic and driven by a 14% increase in sales to our big box customers, including a 15% increase in sales of new products and a 56% increase in our Deckorators branded products.Moving on to the industrial market. Our sales to these customers declined 4%, driven by a 2% increase in units resulting from recent acquisitions which was more than offset by a 6% decrease in selling prices. Sales to new customers during the quarter were nearly $7 million and offset lower demand from existing customers, which resulted in flat organic growth.Given our higher capacity utilization, we continue to rationalize the business we take, seeking to maximize our sales of higher margin value-added products. This, along with lower lumber prices, has significantly improved our profitability, which I’ll talk more about in a minute.Our sales to the construction market increased 1% due to a 5% organic unit increase, offset by a 4% decline in selling prices. Within the construction category, unit sales increased 9% to commercial construction customers, 4% to manufactured housing and 3% to residential. Strong unit growth to commercial was primarily driven by idX in our concrete forming business in the Southwest.Moving down the income statement, fourth quarter gross profits increased by $20 million or 14%, exceeding our 6% growth in unit sales as our profit per unit improved. The overall gross profit increase was comprised of a $9 million improvement in retail gross profits and a $10 million increase in industrial. Favorable labor and overhead cost variances added $3 million to gross profits, but this amount was offset by losses on certain construction projects.Our gross margins increased 190 basis points to 15.8% this quarter. Referencing the last table in the press release, which reports our income statement as a percentage of sales based on last year’s lumber prices, we believe 80 basis points of this increase was due to the lower level of lumber prices this year.The remaining 110 basis point improvement was driven by favorable changes in product mix, organic sales growth and leveraging fixed costs and lower lumber costs on sales of products we saw with the fixed price.Continuing to move down the income statement, SG&A expenses, excluding bonus increased almost $6 million year-over-year, but was down almost $5 million sequentially from Q3 and was $3 million under our internal plan. Accrued bonus expense increased by almost $6 million year-over-year, primarily due to an increase in our bonus rate as a result of the increase in our return on invested capital.We continue to focus on lowering our SG&A as a percentage of gross profit, which mitigates the impact of lumber prices on sales and compensates for our favorable change in product mix. We’re pleased to report that our SG&A as a percentage of gross profits dropped from 60% last year to 56% this year. Driven by these positive factors, we’re pleased to report that again our operating profits increased by more than 2 times our increase in unit sales.Moving on to our cash flow statement. Our cash flow from operations for the year totaled $349 million and was comprised of net earnings and non-cash expenses totaling $259 million and a $90 million decrease in working capital since the end of last year. Working capital dropped this year as a result of selling through inventory we bought opportunistically in Q4 last year. Lower lumber prices this year have also contributed to the decline.We measure our cash cycle to assess our working capital management and for the fourth quarter it improved to 55 days compared to 61 days last year. Investing activities consisted primarily of capital expenditures totaling $85 million, including expansionary and efficiency-related CapEx of almost $31 million.Notable areas of spend in 2019 include projects to replace our capacity in South Florida, resulting from the sale of our Medley facility last year, expand capacity and enhance the productivity of our Deckorators decking product line due to favorable demand trends and share gains we’ve achieved, and several projects to expand manufacturing capacity to serve industrial customers and achieve efficiencies through automation.We’ve also spent $39 million so far this year to acquire Wolverine Wood, Northwest Factory Finishes, Pallet USA, and the remaining interest owned by our partners in United Lumber and Integra. Financing activities consisted of $38 million in net repayments on our revolver and $3 million in payments on other debt. We also paid over $24 million of dividends at a semi-annual rate of $0.20 a share, an 11% increase over last year.With respect to our balance sheet and capital structure, we had $5 million in a net surplus of cash at the end of December compared to $202 million in net debt last year. The strength of our cash flow generation and balance sheet provides us with plenty of capital to grow or return to shareholders.Consequently, our Board recently approved a plan to pay dividends quarterly instead of semi-annually and increased the quarterly rate by 25%. Our highest priorities for capital allocation are currently capital expenditures and business acquisitions based on the opportunities and the strength of potential returns we see. As a result, our targeted capital expenditure spend is $100 million next year.That’s all I have in the financials. Matt?

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

[Operator Instructions] Our first question comes from Ketan Mamtora with BMO Capital Markets.

Good morning, Matt, Mike. Congrats on a strong 2019.

Good morning, Ketan. Thank you.

Good morning, Ketan.

Maybe to, you know, start off I’d like to focus a little more on the retail side. You had a really good year. As you look out to 2021, what are you hearing from your customers in terms of you know, their demand outlook and as you get ready for the spring construction season, you know, some of it was driven by sort of the gains that you all saw in 2020 – in 2019, but as you look out, you know, as you kind of lap some of those volume growth, maybe just help us understand you know, sort of what kind of underlying demand trends you’ll are seeing?

Yeah that’s – it’s a good question, Ketan. So as we look ahead for the next couple of years, we still see that the repair and remodel projections are very strong. Our customers are very bullish on the market conditions. So, we expect the demand profile to at least be what it’s been you know, absent some other crazy stuff going on in the economy, and then we look at to that as a good steady growth pattern for us.We still see a lot of different opportunities, some of which I outlined, to take more market share and to get share gains, not only with big box, but with independent retailers. So, that’s a big area of focus for us. We’ve talked about that in the past, adding additional products and services to the independent retail mix to go along with our core product lines. So we see that as good growth. So, again, we’re very optimistic with that. We do know that some of the new Deckorators gains from last year, you’re right, will lap those probably in the second quarter, but we expect again to have continued share gains, both in big box and elsewhere. So, we’re still optimistic at this point.

Got it, that’s helpful. And then just remind us, Matt, what is the headroom you have in terms of capacity in the Deckorators line and ProWood?

Yeah. So, the Deckorators line, we are in the process of adding capacity, which will be online by second quarter and so we will have ample capacity for 2020-2021. With ProWood, we still have very ample capacity throughout the country. There are some areas where it’s probably a little tighter than others, but we feel very comfortable with our capacity there. We have plenty of room to grow with ProWood.

Got it, that’s helpful. And then you know, turning to capital allocation, you know, you touched on it, but I mean obviously, balance sheet is in a great shape. You said M&A pipeline is pretty strong. If you can just you know, talk about where you are seeing most opportunities, you know, talk about valuation a little bit. In the past, you’ve talked about you know valuations have been quite rich, so you’ll have been a little more conservative. And then you know, just finally, absent M&A, you know, how do you think about building cash on the balance sheet you know, versus returning cash to shareholders? Just like to get your perspective on that. Thank you.

That’s a mouthful of questions right there, Ketan. I’ll try to address them, but – so as you look at the M&A pipeline, it is a robust pipeline. And again, we do have a principal capital allocation model and it’s important for us not to overpay, because obviously it’s difficult to earn a return when you do that. So, we’ve been very selective with each of our business units and new segments, they are very focused on runways that they can drive their business growth through.So, we are targeting acquisitions in those runways to help us grow. If for whatever reason, we don’t think that we can get a reasonable return on those types of investments, as I mentioned earlier, the idea will be that we will either greenfield or come up with other methodologies to still go after those runways. So, we will utilize capital in what we hope is the most efficient way possible, but we are going to be dedicated to moving towards those runways and expanding our growth in that fashion.Having said that, we obviously – we don’t want to load up our balance sheet with a bunch of cash. There is no sense for us to sit on cash. We want to be very conservative in how we look at it. We like to have plenty of dry powder for acquisitions and growth, but by the same token, that’s one of the reasons why we looked at the dividend increase. We think that’s appropriate to return some of that capital to the shareholders. But I’m very confident that our team has identified some great uses of capital. It’s a matter of deploying it responsibly and properly over the next several months and several years, quite frankly. So we feel good about it today, but long-term, our goal is not to sit on cash.

Okay, thanks. And, Matt is it fair to say that growing in sort of the mix material side of industrial is still the most you know, kind of likely M&A growth area?

Yeah, I think that there is certainly part of that, there is also ancillary products and I think we continue to look, as I said, for proprietary new products, new solutions, things that are different and unique that we can bring to the market and we can scale them quickly throughout our network. We feel like we are positioned very, very well now to do that better than we could in the past. So that’s where our focus is.

Very helpful, thank you. Good luck in 2020.

Thank you, Ketan.

Thank you. Our next question comes from Steve Chercover with Davidson.

Thank you. Good morning, everyone.

Good morning, Steve.

Good morning, Steve.

So, first one just about lumber. You didn’t do a large pre-buy this year and now it’s rising sharply except for in the South. So, are you getting what you need, you know, elsewhere? And, you know, how does that dynamic kind of play through? I think the South is where you do most of the pressure treating, you’re getting. You know, is this conducive to a good year or this is how you’d like it to be?

Yeah. So, I think Steve, you’re very in tune to the lumber market, and we look at this, it’s really two different markets so far this year. The composite market, which if I look at kind of Canadian SPF and SPF in general, that has risen, but the southern yellow pine market has actually not been that strong. It’s softer and it’s well below SPF today.So, as you look at that, there wasn’t really a great buying opportunity. So we are buying for needs. One of the great things about our company, at least that I feel, is that we have the ability to source different products, we have the ability to substitute different products and so, we can buy different materials, substitute them in and give our customers the best value.I feel really good. Again, for us, the stable lumber market are slightly rising, slightly falling is not really a big concern. We look at that more as a pass-through type item. It’s the sharp swings that tend to be things that would cause us some pressure points for a little bit.But our goal right now is to utilize the products that we can at the best price point, provide that value to the customer. And as you pointed out, the southern yellow pine market is still set up very well at least at this point. So we don’t – we’re not really concerned about that and we’ll react as we always do to market changes.

So, just to summarize, the kind of parabolic rise in SPF is manageable, because so much of what you require is offset by the weakness in southern yellow pine?

Yes, I think that’s a fair statement.

Okay, great. And then, you know, I know you never blame weather for anything, but I think the weather in 2020 is far more conducive to both site built and presumably do-it-yourself projects. So, any early observations on the impact of a mild winter?

Now, you’re starting to try to get ahead of me, aren’t you? I think if we look at the last part of 2019, I think certainly having reasonable weather conditions was a good thing for us in Q4. And you know, right now, we try not to make excuses for it and we also – we do have to acknowledge sometimes it’s better than others. So, right now, I don’t really have a feeling as to what it’s going to be for the first quarter. I don’t see that spring has started early necessarily. So, still a lot of rain and other things in other parts of the country. So, I guess, we’re taking a wait and see approach on that, but I think we’re positioned well right now.

Yeah what I’m trying to get ahead of you, I just want to know, you know, the winning streak continue and my sense is, the answer would be yes. So – and finally, a quick question on the new structure. Does the focus on end markets as opposed to geographies make it more difficult to cross-sell?

No, actually I don’t think it does. I think the idea would be what we have is more specialization at the business unit and segment level. These facilities themselves are still responsible for their bottom line performance. They’re going to still focus on serving the customer and making sure the customer is taken care of quality manufacturing, delivery, all of those types of things.So, we feel very good about that. Different sales groups, different product experts will be able to sell to the same customers and be able to deliver it together still. But the whole idea is instead of having one individual salesperson try to learn and understand 30,000 SKUs, they now have the ability to specialize and focus and really be a great solutions provider for their customer.

And, sorry one other question on that line. The $20 million incremental profit opportunity, is that front-end loaded or is there low-hanging fruit? How should we phase that in?

Yeah, I think it’s going to be kind of pro rata throughout the year and it will be for this year and next year as we look at. These are things that we’ve just identified that we know we can improve on and I would say they’re low-hanging fruit, but it’s not – it doesn’t all happen in one quarter.

Okay, terrific. Thank you.

Thank you.

Thank you. Our next question will come from Julio Romero with Sidoti.

Hi. Good morning, everyone.

Good morning, Julio.

Hi, Julio.

I wanted to ask if you could provide the mix of value-added sales to commodity for the fourth quarter?

Yeah, it’s 70%.

I’m sorry, what was the number?

70% value-add.

Okay, excellent. And I guess within value-added, can you maybe talk about which product lines you see can continue to be outsize growth drivers in 2020 and what segment they primarily belong to?

Well, I think that’s a great question and we probably don’t have that granular level of detail, but I can just – I called out several items that I thought were areas that we can grow well. On the retail side, I called out Deckorators and UFP-Edge products. I think those still have great growth runways for them. In a factory built space, there is a number of items there in terms of additional items that we can increase our sales per unit built to the manufactured housing and the factory built marketplace.On the industrial side is those mix material areas whereby consolidating and improving design engineering and construction techniques, we can actually bring a way more value to the customers. So I still feel very good about the number of conversion opportunities there. So, that to me is a big growth area. And then additional products in the industrial space to go along to the same customers is something that we’re really pushing on at this point and we expect there to be some really good results there over the next several years. So, hopefully that addresses your question, Julio.

Yeah, that’s certainly helpful. And I guess just on the SG&A side, right, the SG&A, excluding bonus as a percentage of gross profit had a pretty nice step down for the year. Given the $20 million in annual improvements that you called out over two years, I mean, should we kind of expect that same step down or what do you think is maybe a good target for that SG&A percentage as a percent of gross profit going forward?

Yeah, that’s a terrific question. I think as we look at the SG&A in general, our goal obviously is to have our SG&A growth be less than our unit sales growth. I think for at least this year and probably part of next year, I don’t expect that to be reduced a lot as a result of our restructuring process. But I do look at us being able to leverage that more so that in the future will be a lower percentage. So, the areas of the $20 million that we called out, while some of that’s SG&A, a lot of it is not. So, I wouldn’t expect there to be a huge percentage change this year or next year, but it will be a steady decline as a result of unit growth.

Excellent. Thanks for taking the questions and best of luck in 2020.

Thank you, Julio.

Thank you. Our next question will come from Reuben Garner with Benchmark.

Thank you. Good morning, everybody.

Good morning, Reuben.

Good morning, Reuben.

So, let’s see, maybe gross profit. So, this year, you guys grew gross profit relative to your unit growth. I think, if my math’s right, roughly 2.5 times. I know there was a lot of drivers of that this year. How do we think about that metric as we move into 2020? I mean, can you sustain, you know, doubling your unit growth on the gross profit line or was there some – I know that lumber helped to some extent early in the year. What are the factors kind of puts and takes as we move into 2020?

Sure. I think as you kind of look at things, first of all, I’ll probably try to talk in terms of gross profit dollars and necessarily gross margin. So, if we look at gross profit dollars, our target as I outlined before, is we want our EBITDA growth to exceed our unit growth and I think that’s a fair way of looking at it overall. So obviously, the gross profit dollar growth needs to be in that range as well.I don’t know what we’re capable of doing at this point, it’s kind of difficult to predict. I wouldn’t say 2.5 times is kind of the new standard. But I would say that we would be disappointed if we don’t significantly exceed our unit sales growth with our gross profit and our EBITDA growth.

Okay, fair enough. And then on the organic growth side, a couple segments this year that kind of decelerated, industrial and, you know, manufactured housing within the construction space. How much of the deceleration that you saw in those two categories were UFP-specific, where you were maybe walking away from business? And how do we think about the growth in those areas as we move out 2020 and beyond?

Yeah, I think as you look at it, I don’t have the specific data to be able to tell you what the percentages are there, but you’re right, there’s two different aspects going on. One is, some of our industrial end markets slowed a little bit in 2019 and we expect that may continue, but the other part of our sales process there is, we were trying to look and rationalize some of the capacity issues we have as well as some of the challenges for, as I mentioned, commodity type sales, which tend to carry lower margins and if they’re not part of an overall sales strategy, those are things that we will de-emphasize.So, we might in fact sacrifice some sales dollars for better profitability and one of the things that I was very pleased about in Q4 was even though the sales growth was nominal at best, the profit growth was very significant in that market. So, I think that strategy is working. I think the team is doing a great job as they try to approach that and we expect to do more of that and we’re obviously looking for more end market headroom as well. So, I think they’ve got a good focus and then excited about what I think they can accomplish in the industrial side.

Okay, great. That’s very helpful. And then I’ll sneak one last one in. Mike, can you clarify what you said the growth rate was for Deckorators in the fourth quarter? And then do you have the numbers for the full year? And, I guess, what the total dollars of Deckorators revenue was for 2019?

Yeah. So the fourth quarter growth of Deckorators-branded products was up 56%. For the year, Deckorators-branded products reached $200 million in sales. Of that, I think about $155 million is decking and railing. There are other products – other deck accessory products that make up the other $55 million – or $45 million.

Perfect. Thank you. Thank you for that and congrats on the 2019 and good luck for rest of this year.

Thanks, Reuben.

Thanks, Reuben.

Thank you. Our next question comes from Jay McCanless with Wedbush.

Hey. Good morning, everyone. Thanks for taking my questions.

Good morning, Jay.

Good morning, Jay.

Good morning. So, the first one I had, Matt, going back to what you said about lumber prices currently with southern yellow pine down and the composite up. I mean, if you froze lumber prices at these levels and take them to the end of the quarter, do you think that could produce any type of gross margin expansion that we’ve seen from you guys over the last four quarters?

So, I guess, the only thing I would take a question with there, Jay, is kind of the same type of expansion. I think the profile would be very similar. I think if you’re looking at percentage expansion over prior periods or something like that, I wouldn’t use that as a gauge, but I would look at – is it reasonable to accept – to expect those kinds of overall gross profit dollars? Yeah, I would say that that would be more accurate.

Okay. So, expect the expansion in the gross profit dollars?

Yes.

Okay. So my second question – talking about the industrial customers, some of them being weaker last year. I was just wondering, are you seeing any impact from this coronavirus? Is it slowing down shipments domestically or for some of your international customers?

We haven’t seen that so much, Jay. What we are seeing is a lot more requests from customers who were buying things from overseas. There are two different aspects. One is the - I don’t know how much is attributable to coronavirus to be honest, but in terms of different duties and tariffs, we are seeing a lot more interest in buying domestic product, which may have been stuff purchased overseas before. So that’s actually creating an opportunity for us to sell more.

Yeah, it is a good news. And then on idX, I was encouraged to hear that you guys are seeing some growth there. I think, you know, as I get myself back into the company and learning more about it, can you guys talk a little bit about what you’re seeing in that fixed ring market and where you all are able to find growth? Because if you just look at the headlines on what’s happening in retail, it looks pretty dire. So, it sounds like you guys have found some ways to innovate and go to new channels. Could you give me a couple of minutes on that?

Sure. Yeah, I think that’s a – as you look at idX and retail store fixtures in general, that business has changed dramatically over the last few years and just in case, you weren’t aware there was a couple of competitors in that retail fixed ring market that went bankrupt last year that created some opportunities, but I think our bigger goal and push there has been to go to different end markets and to expand the target markets for our product. And that’s going well as we look at it. We’re still in a transition. Last year, we had a number of costs to basically consolidate facilities, change personnel, do that type of thing. So we just absorb those costs.But I think going forward with the new end markets, if you drive more on things like architectural type items, you look at things like banks and hospitality and multi-family, quick-serve restaurants, those types of areas where there is still very considerable growth opportunities, that’s where our focus is. And hopefully, over the next few years, you will start to see that take hold and we think that’s still a very good growth area.

It’s great to hear. And then the last one, just dumb question, but wanted to make sure we’re on the same page. When you think about GDP growth for 2020, are you guys assuming roughly 2% which is what I’ve seen from some of the other economists out there?

Yes.

Okay. Just want to make sure we’re all on the same –

Yes. And we are including acquisitions in that number.

Sounds great. Thanks again, guys.

All right, thank you.

Thank you. We do have a follow-up question from Ketan Mamtora with BMO Capital Markets.

Thank you for my – taking my follow-up question. Just one question. Are you all seeing more lumber coming in from Europe?

So, the short answer to that is yes, off of a very small base amount, but yes. And obviously, we are sourcing from all over the world. So, we might be one of the parties that doing some of that.

And is the price point significantly different from where sort of southern yellow pine is right now? And are the applications kind of materially different or is, you know, as you were saying earlier, you can substitute, you know, what’s coming in from Europe with southern yellow pine?

Yeah, I think there is a couple of different things. So the European spruce products, they are more an SPF competitive item than they are a SYP item. So, for us, our treated products still are species that can be treated such as southern yellow pine. So, it’s not really a substitute so much for southern yellow pine. So, I think – and I don’t think it’s price competitive necessarily with that. But there are applications where it does make sense and those are the applications that we look at and probably others are looking at that too.

Got it, that’s very helpful. Thank you.

You’re welcome.

Thank you. Speakers, I’m showing no further questions in the queue at this time. I would now like to turn the call back over to management for any further remarks.

Thank you. As you can tell, I’m very grateful and excited about our team’s exceptional performance. Their hard work and extra effort has put us in an excellent position to continue to succeed. I know most companies wouldn’t undertake such a major structural change when times are good, but our team is committed to staying ahead of the competition and continuously improving. It’s an exciting time at UFP Industries as we celebrate our 65th birthday, not by retiring, but by rejuvenating our structure and reenergizing our team for the next 65 years. Thank you again for your time today and have a great day.

Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.