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Doman Building Materials Group Ltd
You don't have any saved screeners yet
Good
day
and
welcome
to
the
Doman
Building
Materials
Group
Ltd.
Fourth
Quarter
2021
Financial
Results
Conference
Call.
Today's
conference
is
being
recorded.
At
this
time,
I'd
like
to
turn the
conference
over
to
Ali
Mahdavi.
Please
go
ahead.
Thank you,
operator.
Good
morning
everyone
and
thank
you
for
joining
us
for
Doman
Building
Materials
Limited
fourth
quarter
and
full
year
2021
financial
results
conference
call.
Joining
me
this
morning
are
Amar
Doman,
Chairman
and
Chief
Executive
Officer;
and
Jay
Code,
Chief
Financial
Officer.
If
you
have not
seen
the
news
release,
which
was
issued
yesterday,
it
is
available
on
the
company's
website,
as
well
as
on
SEDAR,
along
with
our
MD&A
and
financial
statements.
I
would
also
like
to
remind
you
that
a
replay
of
this
call
will
be
accessible
until
midnight
on
March
18.
Following
management's presentation,
we
will
conduct
a
Q&A
session
for
analysts
only.
Instructions
will
be
provided
at
that
time
for
you
to
join
the
queue
for
questions.
Before
we
begin,
we
are
required
to
provide
the
following
statements
regarding
forward-looking
information
which
is
made
on
behalf of
Doman
Building
Materials
Group
Limited
and
all
of
its
representatives
on
this
call.
Remarks
and
answers to
your
questions
today
may
contain
forward-looking
information
about
future
events
or
the
company's
future
performance.
This
information
is
subject
to
risks
and
uncertainties
that
may
cause
actual
events
or
results
to differ
materially.
Any
information
regarding
forward-looking
statements
is
made as
of
the
date
of
this
call,
and
the
company
does
not
undertake
to
update
any
forward-looking
statements.
Please read
the
forward-looking
statements
and
risk
factors
in
the
MD&A
as
these
outline
the
material
factors
which
could
cause
or
would
cause
actual
results
to
differ.
The
company will
not
provide
guidance
regarding
future
earnings
during
today's
call
and
management
does
not
anticipate
providing
guidance
in
future
quarterly
or
interim
communications
with
investors.
I'd
like
to
turn
the
call
over
to
Amar
now.
Amar?
Thanks, Ali
and
good
morning,
everybody,
and
thank
you
for
joining
us
on
the
call
today.
Let
me
begin
by
highlighting
some
of
our
key
financial
metrics
followed
by
some
color
on
our
operations
during
the
fourth
quarter,
and
then
I'm
going
to
hand
the
call
over
to
Jay
Code who
will
review
the
numbers
in
further
detail.
I'll
start
by
highlighting
the
efforts
of
all
of
our
employees
across
the
various
business
segments
during
these
continued
extraordinary
times
in
which
we
are
living.
Our
team's
steadfast
focus
and
attention
on
health
and
safety,
combined
with
solid
execution
on
all
business
fronts,
resulted
in
yet
another
strong
quarter
of
financial
results
and
with
some
of
our
key
financial
metrics
surpassing
previous
record
levels
on
a
quarterly
and annual
basis.
Overall,
I
am
very
pleased
with
how
our
growth
strategy
continues
to
unfold,
resulting
in
record
annual
sales
and
net
earnings,
while
remaining
focused
on
margin
protection.
The price
volatility
we
experienced
for
May
to August
subsided
in
the
fourth
quarter,
resulting
in
improved
gross
margin
levels
when
compared
to
the
third
quarter.
We
continue
to
see
robust
activity
in
pricing
in
our
markets.
However,
we're
also
very
mindful
of the
macroeconomic
backdrop
of
increasing
interest
rates
and other
similar
factors
which
may
impact
market
dynamics.
The
strength
in our
full
year
results
came
from
the
combination
of
continued
strong
pricing,
albeit
with
some
volatility
and
strong
volumes
in
all
of
our
markets,
which
resulted
in
full
year
revenues
exceeding
CAD 2.5
billion.
Further
our
ongoing
cost
management
and
focus
on
operational
efficiencies
enabled
the
company
to
realize
much
of
the
revenue
line
gains
to
the
EBITDA
and
bottom
lines.
We
are
very
proud
of
the
strength
of
our
financial
performance,
and
believe
that there
is
a
lot
to
be
gained
from
the
strength
and
momentum
which
has
resulted
from
our
successes
in
2021,
and
particularly
in
the
fourth
quarter
as
we
pave
the
path
forward
into
2022.
Despite
these
challenging
times
we
maintain
focus
and
discipline
on
servicing
the
needs
of
our
customers
with
the
utmost
level
of
quality
and
service,
while
working
through
a
highly
volatile
pricing
environment
for
our
wood
products
throughout
the
year.
In
parallel,
we
continued
our
pursuit
of
strategic
growth
opportunities,
which
resulted
in
a
significant
expansion
of
our
footprint
and
presence
in
the
US
market
through
the
acquisition
of
Texas-based
Hixson
Lumber
sales.
The
combination
of
these
efforts
resulted
in
revenues,
gross
profit,
EBITDA
and
net
earnings
reaching
new
record
levels.
As
a
result,
during
the
fourth
quarter
we
continued
to
experience
top
line
growth
posting
an
increase
of
60%
when
compared
to the
same
period
in 2020.
We
continue
to
see
robust
demand and
strong
pricing
resulting
in
once
again
achieving
excellent
fourth
quarter
results
with
revenues
increasing
60%
to
CAD 642
million,
gross
margin
at
13.8%,
or
CAD
88.7
million,
adjusted
EBITDA
increasing
to
CAD
37.1
million,
net
earnings
came
in
at CAD
11.6
million,
and
lastly
our
quarterly
dividend
of
CAD
0.14 per
share
was
declared.
We
are
extremely
encouraged
with
our
fourth
quarter
and
full
year
2021
results
and
continue
to
build
on
the
decisive
steps
we
took
earlier
in
the
year.
We
were
able
to
deliver
these
strong
operating
results
with
leaner
inventory
levels
in
certain
categories
while
continuing
to
meet
or
exceed
customer
expectations
of
product
availability.
Despite
the
daily
headlines
concerning
procurement
and logistics
issues
and
challenges
we
have
and
continue
to
maintain
pace
across
all
of
our
plants
and distribution
centers
on
both
sides
of
the
border,
and
we've
done
everything
we
can
to
provide
best-in-class
reliable
supply
and
service
to
our
customers.
Looking
ahead, despite
the
continued
volatility
in
commodity
pricing
around
the
world,
we
continue
to
be
healthy
in
premium
levels
combined
with
a
robust
demand
we
are
seeing
in
our
key
markets
driven
by
the
do-it-yourself
and
home
renovation
end
user,
we
remain
excited
and
optimistic
as
we
enter
the
New
Year.
We
remain
confident
in
our
ability
to
work
through
these
extraordinary
times
diligently
while
protecting
our
employees
and
servicing
our
customers'
needs
with
the
highest
level
of
service.
Lastly
let
me
touch
on
inflation.
We
are
certainly
in
an
inflationary
environment
and
there
is
no
shortage
of
economic
indicators
and
commentary
to
support
this.
We
are
also
seeing
this
in
our
markets.
However,
we
are
not
seeing
consumer
behavior
shifting
when
it
comes
to
their
spending
habits
and
patterns
when
it
comes
to
home
projects.
We
are
off
to
a
roaring
start
in
2022.
With
that,
I
would
like
to
ask
Jay
Code,
our
CFO,
to
take
over,
provide
a
review
of the
company's
fourth
quarter
and
full
financial
results
in
greater
detail.
And
then
we
look
forward
to opening
up
the
call
for
questions
for
everybody.
Jay?
Thank
you
Amar.
Good
morning
everyone.
Sales
for
the
year
ended
December
31, 2021
were
CAD 2.54
billion
versus
CAD 1.61
billion
in
2020
representing
an
increase
of
CAD 930
million
or
58%.
The
increase
is
largely
due
to
the
results
from
our
acquisitions
in
2021
with
the
balance
attributable
to
improvements
in
product
pricing
experienced
by
the
company's
legacy
operations.
Quarantine
related
activities
continued
to
drive
both
demand
and
unprecedented
price
escalation
through
the
first
half
of
2021,
before
reaching
a
peak
in
May
and
declining
sharply
until
August,
but
only
partially
offsetting
the
earnings
impact
of
the
pricing
increases
in
the
first
half
of
the
year.
The
company's
sales
by
product
group
in
the
year
were
made
up
of
74%
construction
materials
compared
to
65%
in
2020
with
the
remaining
balance
resulting
from
specialty
and
allied
products
of
22%
and
other
sources
of
4%.
Our
gross
margin
increased
to CAD
391
million
in
the
current
year
versus
CAD
256.2
million
in
2020,
an
increase
of
CAD
134.8
million.
Our
gross
margin
percentage
was
15.4%
during
the
year,
a
slight
decrease
from
the
15.9%
achieved
in
2020.
The
company's
margins
benefited
from
the
results
achieved
by
our
acquisitions
as
well
as
improvements
in
construction
materials
pricing
for
the
company's
legacy
operations
during
the
first
half
of
2021.
These
price
driven
margin
improvements
in
our
first
half
were
partially
offset
by
the
impact
of
price
declines
during
the
second
half
of
the
year,
driving
lower
margin
percentages
for
the
third
and
fourth
quarters
of
2021
relative
to
the
same
periods
in
2020.
Expenses
for
this
year
were
CAD
219.1
million
versus
CAD
157.8
million
in
2020,
an
increase
of
CAD 61.3
million
or
39%
due
to
factors
to
be
discussed.
These
expenses
amounted
to
8.6%
of
sales
in
2021
versus
9.8%
in
2020.
Distribution,
selling
and
administration
expenses
increased
by
CAD
50.9
million
or
45%
to
CAD
164.1
million
versus CAD
113.2
million
in
2020
largely
due
to
additional
expenses
of
the
acquisitions.
The
F&A
expenses
were
6.5%
of
sales
in
2021
compared
to
7%
in
2020.
Depreciation
and
amortization
expenses
increased
by
CAD
10.4
million,
or
23.3%
from
CAD
44.6
million
to
CAD 55.1
million.
Finance
costs for
2021
were
CAD
27.1
million
versus
CAD
15.7
million
in
2020,
an
increase
of CAD
11.4
million,
or
73%,
largely
as
a
result
of
the
additional
finance
costs
related
to
our
2026
unsecured
notes
issued
in
May
of
2021.
Our
2021
EBITDA
was
CAD 220.7
million,
and
adjusted
EBITDA
was
CAD
225.6
million
compared
to
EBITDA
and
adjusted EBITDA
of
CAD
142.4
million
and
CAD 143
million,
respectively,
in
2020.
The
increase
in
adjusted
EBITDA
of CAD
82.5
million
was
driven
by
strong
contributions
from
our
newly
acquired
businesses,
as
well
as
Doman's
legacy
operations.
Our
net
earnings
in
2021
were
CAD
106.5
million,
versus
CAD 59.6
million
in 2020,
an
increase
of CAD
46.9
million.
Turning
now to
the
statement
of
cash
flows.
The
significant
factors
affecting
the
company's
operating
cash
flows
in
2021
were
largely
related
to
significantly
improved
net
earnings,
offset
partially
by
changes
in
net
non-cash
working
capital.
Operating
activities
before
these
non-cash
working
capital
changes
generated
CAD
163.8
million
in
cash,
compared
to CAD
129.8
million
in
2020.
In
2021
we
made
a
net
investment
in
non-cash
working
capital
totaling
CAD
114.5
million
compared
to
a
net
reduction
in
non-cash
working
capital
of
CAD 34.4
million
in
the
prior
year.
Moving
now to
the
financing
section,
the
company
generated
a
total
of CAD
454.5
million
of
cash
from
financing
activities
compared
to
using
CAD
157.7
million
of
cash
in
2020.
This
year,
shares
issued
net
of
transaction
costs
generated CAD
82
million
of
cash
compared
to
671,000
in
2020,
largely
as
a
result
of
our
public
share
offering
completed
in
May
of
2021.
And
in
2021,
the
company
borrowed
an
additional
CAD
131.6
million
on
its
revolving
loan
facility
compared
to
net
repayments
of
CAD 83.1
million
in
2020.
The
significant
year-over-year
increase
in
usage
of
the
revolving
loan
facility
is
a
result
of
the
previously
discussed
increase
in
working
capital
investments,
as
well
as
utilization
of
our
revolver
as
partial
financing
for
the
Hixson
and
L.A.
Lumber
acquisitions
in
2021.
The
issuance
of
the
previously
mentioned
2026
unsecured
notes
in
May
2021
resulted
in
net
proceeds
of
CAD 316.5
million
of
cash,
while
scheduled
repayments
of
our
non-revolving
term
loan consumed
CAD
2.7
million,
which
was
consistent
with
2020.
We
also
note
the
company's
equipment
loans
were
fully
repaid
during
the
fourth
quarter
of
2021.
The
company
was
not
in
breach
of
any
of
its
lending
covenants
during
the
year
ended
December
31, 2021.
Dividends
paid
to
shareholders
during
the
year
amounted
to
CAD 42.6
million,
compared
to
CAD 42
million
in
2020.
The
company
updated
its
dividend
policy
during
the
fourth
quarter
of
2021
resulting
in
a
quarterly
dividend
increase
from
CAD 0.12
to
CAD 0.14
beginning
with
the
dividend
paid
on
January
14, 2022.
Payment
of
lease
liabilities,
including
interest,
consumed
CAD 23.6
million
of
cash
compared
to
CAD 24.7
million
in
2020,
and
the
company's
lease
obligations
generally
require
monthly
installments
and
these
payments
are
all
current.
Investing
activities
consumed
a
total
of
CAD 503.3
million
of
cash
compared
to
CAD 2.9
million
in
2020.
Investing
activities
in
2021
included
the
Hixson
and
L.A.
Lumber
acquisitions
for
total
cash
consideration
of
CAD 498.3
million,
whereas
2020
included
the
much
smaller
Island
Trust
acquisition.
Cash
investments
in
property,
plant
and
equipment
net
of
proceeds
from
dispositions
were
CAD 5
million
this
year,
compared
to
CAD 682,000
in
2020.
This
concludes
our
formal
commentary.
And
we'd
now
be
happy
to
respond
to
any
questions
you
may
have.
Thank
you.
Operator?
Thank
you.
[Operator Instructions]
And we'll
go ahead
and
take
our first
question
from
Hamir
Patel
with
CIBC
Capital.
Please
go
ahead.
Hi.
Good
morning.
Amar,
you
sounded
a
quite
upbeat
about
the
demand
that
you're
seeing.
I
was
just wondering
what
are
your
Home
Center
customers
planning
for
in
terms
of
volumes
this
year?
Are
they
pointing
you
towards
sort
of
volume
year-over-year
growth
or
kind
of
in
line
with
2021?
Yeah.
Pretty
much
in
line
with
2021
Hamir.
We
think
that,
and
listening
to
our
partners
in
the
big
box
channel,
certainly
would
be
very,
very
happy
if
we
get
those
levels
or
even
a
little
bit
of
a
bump
up
after
all
of
the
new
housing
that's
coming
in.
A
lot
of
our
product
lines
go
into
the
fencing
side,
the
decking
side,
which
come
post
are
usually
done
custom
after
a
home
is
built.
So
we're
pretty
excited
about
even
the
overhang
of
houses
that
are
completed
that
haven't
got
their
decks
and
fences
finished
in
all
markets
despite
what
housing
starts
do
as
well.
So
we
believe
along
with
our
big
box
workers
will
at
least
do
2021.
Okay.
Great.
Thanks
for
that.
That's
helpful.
And
just
turning
to
the
cost
side
in
terms
of
the
chemical
inputs,
what
sort
of
inflation
are
you
seeing
there,
and
what's
the
sort
of
lag
or
pricing
protection
that
you
have?
And
is
that
going to
be
[indiscernible]
(17:26)
hit
you
more
in
the
back
half
of
this
year,
or
should we
assume
pretty
much
immediate
Q1
impact?
No
impact
at
all.
We're
contracted
and
protected
right
through 2022.
And
as
we
reset
in
the
2023
in
the
new
contracts
we'll
pass
those
chemical
increases
onto
our
customer
base
next
year.
Okay.
And are
you
able to
speak
to
sort
of the
magnitude
of
chemical
increases
you're
seeing
for
some
of
the
major
inputs?
Well,
we're
not
having
any.
So
I
can't
speak
to
that,
and
we
won't
get
next
year's
pricing
until
the
fall
of
this
year.
And
we're
protected,
so
it's
not
really
on
our
worry
list.
Fair
enough.
And
just
last
question
for
Jay.
Could
you
give
us
an
update
on
expected
CapEx
for
2022,
and
are
there
any
larger
capacity
expansion
initiatives
as
part
of
the
budget?
Sure
Hamir.
You
should
think
about
CapEx
along the
lines
of
about
CAD 5
million
to
CAD 6
million
in
2022.
No
major
initiatives.
We're
continuing
to
implement
new
technology
as
part
of
the
Hixson
integration
and
unrolling
that
forward
through
other
US
operations
in
2022.
That's
probably
the
most
significant
project
on
the
horizon
unless
something
changes.
Yeah.
The
second
project
would
be
kiln
capacity
or
doubling
in
Plumerville,
Arkansas
at
our
saw
mill
there.
So
that's
going to
have
a
good
impact
for
later
in
the
year
as
far
as
us
being
able
to
hopefully
double
our
production
at
that
particular
facility.
Great.
That's
all
I
had.
Thank
you.
Thanks
Hamir.
And
we'll
go
ahead
and
take
our
next
question
from
Zachary
Evershed
with
National
Bank
Financial.
Please
go
ahead.
Good
morning, everyone.
Thanks
for
taking
my
question.
Good
morning,
Zach.
Given
the
shift
in
pricing
in
the
second
half
of
Q4,
we
were
thinking
gross
margins
might
come
in
a
little
stronger,
especially
with
how
fast
your
inventory
is
turning.
Could
you
walk
us
through
the
mechanics
and
timing
of
how
the
pricing
on
inventory
purchases
flows
through
to
pricing
to
customers
in
your
major
product
categories
again?
Yeah.
I
mean,
it
does
vary
a
little
bit
with
all
the
different
markets
we're
in,
and
of
course,
geographically
Canada
in
December,
you're
not
moving
a
lot
of
treated
lumber
or
November,
for
that
matter.
So
we
still
had
overhang.
That's
what
caused
that
kind
of
minor –
and
again,
we
feel
it's
very
minor
gross
margin
pain,
which
is turned
around
and
is
well
behind
us
now.
So
the
cycle,
we
like
to
try
to
say
it's
three
to
four
weeks
in
those
busy
times,
and
construction
season
is
in
full
swing.
It
obviously
gets
a
little
more
weighted
in
the
winter.
We
were
fortunate
that
the
weather
in
the
US
was
quite
favorable
to
building
all
the way
through
Christmas
a
little
colder
recently,
but
our
returns
have
been
good.
Our
margin
is
back
and
strong
and
our
volumes
are
high.
So
again, we've
had
a
very
strong
start
to
the
first
quarter
here,
and
here
to
see
a
nice
recovery
back
to
our
traditional
stronger
margins
and
all
of
that's
in
the
rearview
mirror.
That's
great
color.
Thanks.
And
then
I
guess
on
that
point,
we're
seeing
very
strong
cash
lumber
prices,
and
an
uptick
in
back
month
lumber
futures
across
the
board,
but
not
to
the
same
level.
What's
your
take
on
the
supply
demand
balance
and
where
prices
are
going?
And
what
are you
hearing
from
customers
in
terms
of
backlogs,
and
does
that
align
with
your
order
book?
Yeah.
There's
some
backlog,
certainly,
but
when
we
look
at
SPF
and
isolation,
which
is
the
futures
market,
it's
been
wounded
as
we
know
here
in
BC
because
of
transportation
railcar
shortages,
and
[indiscernible]
(21:22)
there
with
the
floods
that
tangled
up
a
lot
of
shipping
here.
So
the
rest
of
the
market,
when
you
look
at
an
[indiscernible]
(21:31)
they're strong
and
building
seasons
extremely
strong,
already
they are
in
the
states,
so
we're
getting
good
takeaway.
Spruce,
we've
got to
be
a
little
careful
on and
we're
being
very
careful
with
our
inventories
because,
again,
it's
more
of
a
not
is
there
enough
wood
out
there
problem,
it's
there's
no
way
to
get
it
to
market
right
now
problem.
And
West
Fraser,
you
might
have
seen,
has
gone
down
to
three
shifts
a
week
just
because
they're
piling
so
much
wood
up,
it's
sold,
but
they
can't
get
the
railcars
to
move
it.
So we're
a
little
careful
on
Spruce,
so
we're
watching
that
one
and
we're
behaving
very
responsibly
with
our
SPF
wood
piles.
That's
actually
a
great segue
to
my
next
question.
How
are
you
guys
navigating
the
freight
disruptions,
particularly
in
the
rail
space?
Yeah.
We're
using
a
lot
more
trucks,
we're
utilizing
different
mills
that
have
trucks
available,
more
Alberta
product
when
we
can,
but
everybody's
after
the
same
truck.
So
there
is
a
truck
shortage.
But
we're
going to
be
in
good
shape
for
spring,
we
don't
see
any
issues
in
our
inventories
as
far
as
having
any
holes.
We
should
be
pretty
good
here.
Again,
speaking
of
SPF
and
then
in
the
western
markets
Hawaii
and
the
Hixson
landscape,
we're
in
pretty
good
shape
with
exception, decking
is
tight
in
the
US,
but
we're
hoping
to
get
some
new
strategies
to
move
some
other
species
around
to
get
that
back
in
order
as
well.
But
the
demand
is
there,
Zach,
and
we're
going
to
be ready
for
a
good
spring
market
here.
That's
great
news.
So
you're
not
too
worried
about
sales
being
pushed
to
the
right
with
delivery
delays?
No, we're
going
to be
okay.
I
think
these
real
things
this happened
in
2018,
not
as
severe, but
it'll
solve
itself
at
some
point
and
the
cars
will
get
there.
Nobody
knows
when,
but
in
the
meantime
I'm
not
panicked
about
us
being
out
of
material
at
any
of
our
facilities.
We're
just
going
to
carry
lighter.
Thanks
for
answering my
questions,
I'll
turn
it
over.
Thanks,
Zach.
And
we'll
go
ahead
and
move
on
to
our
next
question
from
Paul Quinn
with
RBC Capital
Markets. Please
go
ahead.
Yeah. Thanks
very
much.
Good morning,
guys.
Just
a
question
on
outlook
for
Q1
here.
Last
year
you
generated
CAD 60 million
in
EBITDA.
It
looks
like
the
setup
is
pretty
similar
to last
year.
In
fact,
building
material
prices
have tracked
up
higher
earlier
for
Q1,
and
plus
you've
got
the
acquisition
of
L.A.
Lumber
and
Hixson.
Just
wondering
to how
you're
thinking
about
Q1
as
well
as
Q2.
Yeah.
It's
been
a
very
strong
start
to
the
year
from
all
angles,
whether
it's
volume,
pricing,
margin.
We're
having
a
very
good
first
quarter.
So
you'll
see
I
think
some
good
numbers
here
and
carrying
on
in
the
Q2
unless
there's
a
major
collapse
or
a
world
event.
We
think
first
half
is
going to
look
pretty
good.
And
looking
at
it
year-over-year,
not
having
Hixson
in
of
course,
last
year,
et
cetera,
they
go
on
a
pretty
special
first
quarter
here
as
we
navigate
with
nice
inflation
on
lumber.
And
more
importantly, the
margin
side
is
all
back
cleaned
up
and
looking
good.
Okay.
And
then in
the
release
you
mentioned
the
information
technology
strategy
at
Hixson.
What
is
that
and
what
are
you
doing
across
your
business
lines?
Yeah.
So
when
we
bought
the company,
there
was
some
more
older,
let's
say,
antiquated
technologies
there.
And
we
studied
that
in
our
due
diligence
and
we
put
it
in
the
DMSI
system
which
we
use
and
it's
called
agility.
We
use
it
on
the
west
coast
of
the
US.
We
now
have
an
operating
at
three
facilities.
We'll have
all
19
up
and
running
by
the
end
of
April,
and
then
we'll
go
into
the
sawmills
and
get
those
done
on
the
more
complicated
Hixson
lines,
which
will
help
us
achieve
a
lot
of
efficiencies,
real
time
information,
and
this
was
all
planned
for,
and it's
not
a
risky
one
going
in.
We
know
the
system,
we
use
it,
and
it's
a
much
newer
version
than
we
even
use
on
the
West
Coast, and
the
implementation
has
been
going
well.
Okay.
So
just
so
I
understand
it,
that DMSI
system
is
more
on
the
sales
side
or
it's
more
on
the
production
side?
It's
all
angles.
It
is
soup
to
nuts
system,
it tracks, it
tracks
every
piece
of
lumber
through
your
whole
manufacturing
process,
from
receipt
to
ship,
the
inventory,
VMI.
It
controls
everything
and
it
has
excellent
reporting.
We're
going
to start
scaling
all
of
our
plants,
pool
purchasing
on
supplies.
There's
a
lot
of
great
things
we're
going to
get
to
once
this
technology
is
deployed,
which
is
happening
now,
and
again,
it's
already
in
place.
And
Paul,
it's
Jay
here.
I
just want
to
let
you
know
too
that
that
system
is
being
utilized
in
California
cascade.
So
we're
very
familiar
with
the
product,
and
it's
working
well
for
us
in
California.
So
it's
not
like
it's
a
new
product
to
us.
Okay.
Great.
And
I appreciate
you're
still
probably
digesting
Hixson and
ramping,
but
what is
the
current
M&A
market
look
like
right
now?
Yeah.
We're
in
dialogue
as
always
with
different
opportunities.
And
we're
certainly
taking
more
of
a
blend
on
an
average
lumber
price
when
we
look
at
purchasing
a
business
today.
So
we're
being
conservative
as
we
always
are,
same
kind
of
EBITDA,
multiple
targets
that
we
look
at
being
responsible
to
our
balance
sheet,
and
we're
seeing
some
things
that
could
be
interesting
later
in
the
year
nothing
right
now.
Again,
to
your
point,
we
are
working
hard
on Hixson
and
all
the
other
divisions
because
we've
got
a
lot
of
volume.
It's
busy
and
challenging
with
pricing
levels
and
shipping
shortages.
So
we're
just
very
busy.
But
I
think
we
later
in
the
year,
we'll
get
focused
on
a
couple
of more
things,
but
we're
in
dialogue
on
a
couple
of things
Paul,
but
nothing
imminent.
Okay.
That's
all
I
had. Thanks
a
lot
guys.
Thanks.
Thank
you.
And
we'll
go
ahead
and
take our
next
question
from
Steve
Hansen
with
Raymond
James.
Please
go
ahead.
Yeah.
Good
morning,
guys.
Apologies
if
I
missed
it,
but
just
thinking
about
any
of
the
other
constraints
that
might
be
in
the
system,
how
is
the
people
situation
down
south
in
particular
at Hixson?
Are
you
in
good
shape
there?
Is
that
posing
any
challenges
on
in
terms
of
meeting
the
demand
you've
described?
Getting
a
little
bit
better,
as
people
are
coming
back
to
work.
It's
still
a
challenge
in
certain
regions,
but
not
where
it's
wounding
us,
and
of
course,
the
COVID
absences
have
declined
now,
and
it
looks
like
that's
behind
us
which
is
nice to
see
as
well.
So
nothing
that's
penalizing
us,
Steve,
to
answer
your
question.
Okay.
Great. That's
helpful.
And
just
to
follow
up
again
on
sort
of
the front
half
outlook
for
the
year,
I
think
you
described
it
as
being
a
very
special
first
quarter.
The
margins
that
we
saw
last
year
through
the
first
quarter
were
obviously
outsized
again.
Is
it
safe
to
say
that
those
are going
to
be
too
hard
to
reach
again
this
time
with
Hixson
involved,
or
is
it
still
a possibility
to get
up
to
those
same
levels?
Yeah.
I
think,
near
that
ZIP
code,
that
was
a
pretty
high
watermark
with
what
the
lumber
market
was
doing
last 2020
to
2021,
it
was
just
on
fire.
We're
here
it's
moving
up,
but
it's
kind of
been
in
the
ZIP
code
for
a
while.
So,
we
were
getting
some
extra
margin
on
that
rocket
launch
of
pricing
and
everyone
was
out
of
stuff.
This
year,
it's
different.
Everyone
has
material,
but
it's
priced
higher.
So the
margins
are
a
little
bit more
normal.
Having
said
that,
our
volumes
will
be
a
lot
higher
with
Hixson,
et cetera.
But
just
seeing
some
of
the
guys
on
numbers,
just
I
think
it
too
carried
away,
and
we're
having
fantastic
results
here.
It's
just
that
the
market is
too
high, I
think,
on
lumber
and
people
have
to
be
careful,
I
think
just
looking
at
their
research,
we're
not
a
sawmill
and
we
are
value
adding,
and
we've
had
the
one
bit
of
margin
paying
last
year,
we're
through
that,
and
we
should
be
back
into
our
traditional
margin
pattern,
Steve,
with
a
little
bit
of,
I
would
say,
extra
push
because
of
the
way
the
trajectory
of
the
lumber
market
is
today
on
panels
and
OSB.
Very
good color. I
appreciate
that. Thanks
guys.
Thanks,
Steve.
And
we'll
go ahead
and
take
our next
question
from
Yuri
Lynk
with
Canaccord.
Please
go
ahead.
Hey,
good
morning,
guys.
Just
housekeeping
issue
from
me,
for
Jay.
DS&A,
Jay,
it
was
down
almost
CAD 2
million
sequentially
to
about CAD 10
million.
Is
that
a
good
quarterly
run
rate
excluding
right of
use?
Yeah.
Yuri,
just
keep
in
mind,
seasonally
we
would
have
a
little
bit
of
a
decline
in
DS&A.
So
as
a
run
rate,
it
would
increase
a
little
bit
as
we
go
into
the
busier
season,
especially
in
Canada.
Got
it.
Makes
sense.
And
any
color
on
working
capital
for
2022
at
least
in
the
first
half
of
the
year.
Should
we
expect
continued
investment
in
working
cap
just
given
where
pricing
and
volumes
are?
Yeah.
Of
course,
it
really
depends
where
pricing
goes
for
the
balance
of
this
year.
We
put
together
a
budget
back
in
November,
December,
and
we're
already
wrong
on
pricing
on
that.
So
we
would
expect,
If
pricing
stays
at
these
levels,
then
working
capital
will
be
fairly
flat
year-over-year.
But
if
it
comes
off
to
more
historic
pricing,
then
we
could
pick
up
some
cash
with
the
decline
in
pricing.
That's
it
from
me,
guys.
Thanks.
And
with
that,
that
does
conclude
our
question-and-answer
session.
I would
now
like
to
hand
the
call
back
over
to
Ali
for
any
additional
or
closing
remarks.
Please
go
ahead.
Thanks
again,
operator.
On
behalf
of
the
management
team,
I'd
like
to
thank
you
for
joining
us
this
morning
for
an
update
on
the
fourth
quarter
results.
We
look
forward
to
speaking
to
you again
on
the
back
of
our
Q1
2022
financial
results.
That
concludes
today's
call,
I'll
ask
the
operator
to
wrap
up
the
call.
Have
a
great
day.
And
with
that,
that
does
conclude
today's
call.
Thank
you
for
your participation.
You
may
now
disconnect.