Good morning and thank you for joining us today for GMS' earnings conference call for the fourth quarter and fiscal year ended April 30, 2017. I'm joined by Mike Callahan, President and CEO, and Doug Goforth, CFO.

In addition to the fourth-quarter press release issued this morning, we have posted presentation slides to accompany this call in the investor relations section of our website at www.gms.com. Turning to slide two, on today's call, management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements address matters that are subject to risks and uncertainties, many of which are beyond our control. That may cause actual results to differ from those discussed today.

Examples of forward-looking statements include those related to net sales, gross profit, gross margin, and capital expenditures as well as non-GAAP financial measures such as adjusted EBITDA, adjusted net income, and base business sales, including any management expectations for fiscal 2018 and beyond. In addition, statements regarding potential acquisitions and future Greenfield locations are forward-looking statements as well as statements regarding the markets in which the company operates and the potential for growth in the commercial, residential, and repair and remodeling or R&R markets.

As a reminder, forward-looking statements represent management's current estimates and expectations. The company assumes no obligation to update any forward-looking statements in the future.

Listeners are encouraged to review the more detailed discussions related to these forward-looking statements contained in the company's filings with the SEC, including the definitions and reconciliations of non-GAAP measures. Note that references on this call to fourth quarter and fiscal 2017 relate to the quarter and year ended April 30, 2017.

With that, I'll now turn the call over to Mike.

Thank you, Rodney, and thank you, everyone, for joining us today. On our call, I will discuss our most recent operating highlights and acquisitions.

Doug will then provide details on our financial results and capital resources. After our prepared remarks, we will open up the call for your questions Now turning to slide number 3, fiscal 2017 was an exciting year for GMS.

It was marked by our successful IPO, record sales of $2.3 billion, and adjusted EBITDA growth of 36.2% to $188 million along with significant improvement in our leverage metrics. The dedication of our team, our national scale, and our differentiated service model, along with a proven acquisition strategy, are clear advantages attained over the past 46 years, which make us truly unique and form the bedrock of our success.

During the fourth quarter, we produced another period of record results, with net sales growing 16.7% year-over-year to $615 million, supported by year-over-year price gains in each product category, steady end-market demand, and the contribution of successful acquisitions. Furthermore, this represented double-digit gains in net sales for the 24th straight quarter.

In our base business, net sales increased 5.6%. Now normalizing for two fewer shipping days, our base sales increased 9% on the strength of higher end-market demand and share gains, which allowed us to outpace the market.

Acquisitions completed over the past two years contributed the remaining two-thirds of our net sales growth during the quarter. We made one acquisition in the fourth quarter, which expanded our existing presence in the Hawaii market, which I'll talk about in a minute.

Net income increased approximately 60% to $14.3 million during the fourth quarter, and on an adjusted basis, net income increased to $20 million or $0.48 per share. We were pleased with this progress and our ability to continue growing our business to deliver a 19.5% year-over-year increase in adjusted EBITDA for the quarter.

This reflected the strength of our national scale advantages and our tight cost controls. Both net income and adjusted EBITDA improvement reflect the combined impact of stronger operating results and our ongoing efforts to strengthen our balance sheet and improve our credit metrics.

Interest expense was $2.2 million lower year-over-year in the fourth quarter, largely due to our enhanced capital structure. In the fourth quarter, our leverage profile continued to improve, with our net debt to pro forma trailing 12-month adjusted EBITDA ratio standing at 2.9 times, providing us with the balance sheet strength to continue advancing our growth strategy.

Now moving on to multiple growth drivers on slide number four. Since fiscal 2012, we have made significant operational progress as demonstrated by increasing sales, expanding margins, and numerous acquisitions.

During fiscal 2017, we grew our base business sales by 10%. This was accomplished through a combination of cross-selling initiatives, new branch openings, price gains, and at the core, doing a little more a little better each day.

The pull-through factor from cross-selling initiatives was most evident in our other products business, which saw base business sales up 14% year-over-year. Additionally, our national scale provided us with exposure to many improving commercial and residential markets to help us outpace the market rate of growth.

As in recent years, acquisitions augmented our growth, with eight deals completed during fiscal 2017. Our progress is most clearly shown in wallboard, where we have expanded our market share of wallboard shipments to 14.7% as of calendar Q1 2017 as compared to 14.3% in calendar year 2016 and 8.6% in calendar year 2012.

Overall, these multiple growth factors are driving steady adjusted EBITDA growth and market expansion from national scale advantages and efficiently managed operations. During fiscal 2017, we produced pro forma adjusted EBITDA of $197.7 million compared [Audio Gap] to $150.3 million in fiscal 2016.

I am extremely pleased with our strong track record of profitable growth. Now turning to acquisitions on slide number five.

During fiscal 2017, our eight completed acquisitions added a combined $216 million of trailing 12-month net sales to our business on a pro forma basis. In the fourth quarter, we made the very complementary acquisition of Grabber's drywall and complementary products business in Hawaii.

And since the closing of this deal in early February, we have already begun to leverage our national resources to help the local team expand upon their deep customer relationships and grow our share in that market. Grabber and the other deals completed during the year build on our history of successful transactions.

We have the capital resources to continue executing on our robust acquisition pipeline while keeping to our target range of purchase price multiples and prudent leverage ratios. As such, we expect accretive acquisitions to continue to supplement our organic growth moving forward.

With hundreds of fragmented local competitors out there, we see many opportunities that fit within our objective to either expand our existing footprint in strong markets or enter into new markets. Now I'll turn the call over to Doug to further discuss our financial results and capital resources.

Thanks, Mike, and good morning, everyone. Beginning with fourth-quarter financial results on slide 6, our strong performance in the fourth quarter drove very positive results in our business.

This was a result of new business wins, accretive acquisitions, and solid demand led by our commercial businesses. Looking at our success on top line, we grew net sales 16.7% to $615 million with double-digit increases in each product category.

We increased base business sales during the quarter by 5.6% year over year despite having 2 fewer shipping days during the fourth quarter of fiscal 2017. After smoothing for calendar fluctuations and shipping days, organic sales grew approximately 9% and total sales grew approximately 20.4% in the fourth quarter of 2017 versus the fourth quarter of fiscal 2016.

Looking in a more detailed breakdown of base business and total sales growth by product, wallboard volumes increased by 11.1%, primarily fueled by acquired businesses. Our 1.5% base business improvement in wallboard volumes was up against a challenging comparison on two fewer shipping days, but also reflected slight deceleration in new residential and R&R activity.

Wallboard net sales increased 13.4% year over year, aided by a 2% year-over-year increase in wallboard price to just over $311. In our commercial-focused products, our ceiling sales increased during the quarter by 11.9% year over year, including a 6.2% increase on a base business basis, which is ahead of historical trends in this mature but very profitable category.

Ceiling grid volumes had another good quarter of growth and ceiling tile volumes saw good pullthrough demand from higher grid activity in recent quarters. Both ceiling grid and ceiling tile also benefited from improved year-over-year pricing.

Steel framing increased during the quarter by 28.9% year over year, including 11.7% on a base business basis, mainly driven by price gains and the benefit of acquisitions. Our investments in equipment, technology, and branch talent, including other product sales specialists to support expanded opportunities, helped drive higher gross profit dollars.

However, gross margin decreased slightly by 30 basis points to 32.7% for the quarter compared to the fourth quarter of 2016, primarily driven by higher wallboard costs, but it was still slightly higher than our expectations. Adjusted EBITDA increased 19.5% to $52.1 million during the quarter, partly reflecting the benefit of some modest SG&A leverage during the quarter.

Our adjusted EBITDA margin of 8.5% was up 20 basis points from the prior-year period. We expect to continue to grow our business based on our ongoing investments, particularly equipment, which will allow us to continue to drive additional EBITDA gains.

Moving to fiscal 2017 financial results on slide seven. Fiscal 2017 marked another year of progress for GMS.

We are extremely pleased with the consistent improvement across all of our major product categories in fiscal 2017, resulting in 25% growth in net sales to a record $2.32 billion. This produced a 36% increase in adjusted EBITDA to $188.2 million.

Our adjusted EBITDA margin expanded by 70 basis points to 8.1% and gross margin increased by 80 basis points to 32.7%, primarily driven by higher sales, better product margins, and product mix compared to fiscal 2016. We completed eight acquisitions to end the fiscal year with a presence in 42 states across 205 well located branches, representing a 10% increase compared to a year ago.

Looking at other product sales on slide eight. I'll just briefly highlight the continued momentum in our other products group, with net sales of 33.5% during the year and 13.9% on a base business basis.

This product category demonstrates the strength of our one-stop-shop solution of ancillary products for our customers. It also shows a significant pullthrough force of wallboard, ceilings, and steel framing sales along with price optimization efforts in certain products and retail showroom expansions and resets.

On slide nine, we expand on our gross margin performance. We have a very good gross margin profile which has increased 370 basis points since fiscal 2013.

Our gross margin has generally trended higher with overall rising sales. This is the result of our national scale, comprehensive product offering, balanced end-market exposure, and accretive acquisition strategy, which has given us a more resilient demand profile across multiple points of the cycle.

As a result, our ability to deliver solid gross margin performance is generally not dependent on rising wallboard prices or any one product in our portfolio. While our gross margin of 32.7% in fiscal 2017 performed slightly better than we had expected, we see the margin level as the appropriate target in coming years.

We expect to support gross margins around this level through ongoing price optimization efforts, purchasing initiatives to fully leverage our national purchasing power, along with disciplined cost controls. As such, we will plan to drive higher gross profit dollars on a stable margin to outpace SG&A investments and spend.

This will allow us to grow adjusted EBITDA while improving our adjusted EBITDA margin as a percent of net sales year-over-year. Turning now to our capital structure on slide 10.

At April 30, our net debt to pro forma adjusted EBITDA stood at 2.9 times, down from 3.1 times at January 31 and down nearly 1.5 turns year-over-year. Liquidity in the business remains strong, with $15 million of cash on hand and $239 of availability on our credit facility as of April 30.

Given the strength of our business over the past year, after the quarter ended in June, we took an opportunity to refinance our first lien term loan. We expanded the borrowing base by $100 million to $578 million and used the additional proceeds to pay down $94 million on the ABL facility.

We also extended the maturity by two years to 2023 and reduced the interest rate by 50 basis points, including our prior refinancing activity during the fiscal second quarter of 2017. Since our IPO, we've reduced our interest rate on our term loan by 70 basis points while expanding the borrowing base by $200 million.

This all-around improvement in our balance sheet and leverage metrics is a testament to our profitable growth strategy. Regarding cash flow, during fiscal 2017, our operating cash flow rose 40% to $67 million compared to $48 million in the same period last year.

Fiscal 2017 CapEx at $11 million remained well below 1% of sales. In summary, fiscal 2017 marked another year of tremendous progress for our company.

On a pro forma basis, sales have increased to approximately $2.4 billion in fiscal 2017, representing approximately 19.9% growth year-over-year. We believe we can continue to drive strong sales growth in fiscal 2018.

On our third-quarter earnings call, we noted that we expected gross profit margins to decline in the fourth quarter to approximately 32.5% from elevated third-quarter levels. Ultimately, fourth quarter gross margins were in line with our expectations at 32.7%.

As we calibrate our expectations for the first quarter of fiscal 2018, we expect gross profit margins to be somewhat below fourth quarter levels, as wallboard pricing experienced elevated levels of volatility early in the first quarter as the market responded to the wallboard manufacturers' announced price increase. In response to this pricing environment, we've taken action on both purchasing and pricing and expect gross profit margins to normalize in subsequent quarters of fiscal 2018 to the levels that are consistent with prior expectations.

Before I turn the call back over to Mike, I just want to take a minute to recognize just how much effort went into allowing Mike and I to share our fiscal year results today with you guys as well as earlier when we provided the range back in June when we did our secondary offering. We could never have achieved this without the support and dedication of not only everyone here in the Yard Support Center, but all of the accounting and operating teams throughout the country whose dedication made it possible.

I particularly want to thank the corporate accounting, subsidiary accounting, tax, FP&A, and internal audit groups for the countless hours and weekends that they've put in. And our Board of Directors, who have been extremely supportive throughout this process.

Mike?

Thanks, Doug. I agree wholeheartedly.

Thank you for the very positive accolade. It's well deserved.

Again, everyone, thank you for joining us today. During this first full year since our IPO, it's hard to believe that it's been a year, we hope that we have demonstrated that we are very focused on driving value for our shareholders.

We truly believe that we are well situated to sustainably produce above-market growth through our relentless focus on operational excellence and our customer-centric differentiated service offering. As we look to fiscal 2018, our strategy is unchanged.

With the continued dedication of our talented and highly motivated colleagues throughout the country, we plan to further solidify our position as a leading North American specialty distributor of wallboard, ceilings, and complementary interior construction products. Through our proven growth strategy, we remain confident in our ability to capitalize on solid demand trends and execute on our robust acquisition pipeline to continue to deliver strong performance in sales and adjusted EBITDA in fiscal 2018.

Given our position as a leading specialty distributor and our very strong capital base, we believe that we can accomplish this profitable growth in a lower-risk, more efficient manner as we look ahead. And above all, we sincerely appreciate your interest in our Company.

Operator, we are now ready to open up the call for questions. Thank you.

Hey good morning. Congratulations on a fantastic first year.

Gosh, lot of stuff today. I was hoping you could talk about other products in framing.

You know 30%-plus year-over-year growth, explosive growth. What's driving that and is that something we should kind of think persist.

And Doug, if you could just kind of repeat some of your commentary about wallboard prices being volatile, I guess it is 2% price realization. What does that look like into the back of the year?

Well, the other product growth is really the direct result of initiatives that we've talked about before. And I think we're just gaining more and more momentum not just relative to the retail showroom expansions that we've executed throughout the country, but really a focus at the field level with incentive programs and driving the importance of this other product as expanding and reinforcing the one-stop-shop concept.

A lot of our guys have put commission structures, incentive systems, and volume goals in place. So the whole other product category has really seen a lot of momentum.

And candidly, we still have a long way to go in terms of continuing to expand our retail showroom presence throughout the country. That's an ongoing effort, not just within our existing organic base, but also with the acquisitions, where there's a lot of opportunity there.

So the other product component I really am very excited about and so are people in the field. And we've got a dedicated subsidiary that really focuses on that whole specialty product category.

Hey Bob good morning this is Doug. In terms of pricing, as Mike said, we were up about 2% on a year-over-year basis, which is consistent with what we've heard from about other distributors in the space.

If you actually look at it on a sequential basis and compare it to our third quarter, which ended January 31st, which kind of lines up with the price increase, we are actually up about 3% from that level. And we think prices have stabilized where they are at.

Yes, I would agree.

They still remain pretty consistent with where we were at in the latter part of the fourth quarter, so still around that $311 level seems to be pretty consistent. And we think that we feel pretty optimistic that we believe that that could hold.

Got it, got it. You guys have taken a pause, it sounds like since acquiring Grabber in Hawaii on the M&A front.

You did a great job of getting net leverage down dramatically in a very short period of time. Not really talking about the quarter, but more strategically.

How do we think about GMS in the next 18 months in terms of what the pipeline looks like, capital allocation, and how you'll manage the balance sheet while pursuing M&A opportunities?

Well, speaking to the M&A front, I mean a lot of the focus in the fourth quarter I mean if you look at the overall year, we obviously had a significant number of transactions with eight acquisitions. But the really focus at the tail-end of the year was to make sure that we had the year-end close.

It's our first year of -- as a full IPO company, so there was a lot of focus dedicated to making sure we wrapped up the year right and integrated the existing acquisitions for the year back into the organization effectively. So in a way, we did downshift a little bit, Bob.

But I will tell you that on a current basis, it's kind of the same song, fifth verse. We still have a significant number of acquisitions in the pipeline.

We're having active dialogue in varying stages with a number of acquisition targets out there. And I would suspect that we'll be cranking the bus up pretty quick to get back out on the road and bring some of these transactions to fruition.

The next 18 months I would say it's steady-state. We will continue to expand via M&A.

Yeah, Bob, just to elaborate on that, I mean you guys know timing can vary. We may do one or two in a month; we may reel off one a month for 12 months straight like we did at one point last year.

It varies. But as Mike said, it's extremely robust.

It's consistent with where it was a year ago and the year before that. Price expectations by sellers are pretty much at the same level.

We haven't seen a change in that regard either. So, we feel really good about it and we're going to continue at that, as Mike said, that six to eight pace a year.

Got it. Well, you guys deserve a lot of credit.

Congrats for a strong finish to the year. Good luck.

Thanks, Bob.

First one, I think in the opening remarks, you mentioned that on the wallboard side, you may have seen some slight deceleration in residential and R&R. Could you just elaborate a little bit on that, what you were seeing, and whether or not that's continued into fiscal 1Q?

Well, I mean it's mainly on the multifamily side. And I think we are seeing fairly consistent with the numbers that are being reported out there start-wise.

As we've talked about before, new residential drives about -- we believe drives about 40% of the volume requirements for wallboard on a national basis. So, that's really what we were referring to, that we're seeing the same thing that's being reported in the numbers.

Okay, understood. And if we think about just some of the shifts that you were seeing in selling days, it looks like fiscal 1Q has got one extra selling day.

So if we think about just calibrating near-term expectations, base business growth adjusted for shipping days is 9%. Now you get the extra shipping day.

Should we be thinking that you are in the high single-digit to low double-digit range as a baseline expectation for organic sales in 1Q?

We don't give guidance, so a lot of that really depends on what you think, particularly wallboard, volumes are going to do. That's about 45% of our business.

What we will say and have said consistently, particularly on an annual basis as opposed to quarters, is if your expectation is that wallboard volumes as reported by the Gypsum Association are going to increase 4% to 6% this year, then our expectation is that we are going to increase 6% to 8%. So really, if you talk about near term on the quarter, it really ties into what your thoughts are around wallboard growth in that quarter.

Okay, that's helpful. And then the last one from me, you guys have obviously done a tremendous job of improving your gross margins, as you talked about, over the last couple of years.

Now it sounds like SG&A leverage really takes the baton from here as far as what's going to drive EBITDA margin expansion. So can you give us a little more detail about how you're thinking about how much you can leverage SG&A with what we should be thinking about a high-level EBITDA pull-through if gross margins are flat from here?

I want to circle back to the one point you made on gross margin. Mike and I are both, we are looking at each other at the same time.

We hit a previous peak of 33.5% and we are not setting that as a ceiling. So we continue to believe that we have some upside opportunity on the gross margin side through price optimization efforts, our Level IX pricing tool.

When we do these acquisitions, we are able to come in and put our tools in place to help improve those pricing as well. So we don't accept, while we may say on a near-term basis you should think about this business at least for the next couple years as a 32.5% business, that doesn't mean we are satisfied with 32.5%.

Now, specifically on SG&A, we've talked about it the last couple of calls that we expected that to accelerate in the second half of fiscal 2018 and we still do. But we haven't given any specific guidance in that regard as to what to model.

But we were actually a little favorable this quarter, slightly down last quarter, so it's clearly started to take hold. We've also got a variety of programs that we are working on in place, particularly on a national basis.

Just like we leverage our national footprint for wallboard, we are starting to do more and more of that with other products, particularly on the SG&A side. Fuel, fuel is a great example.

Historically, we've pretty much managed our fuel yard by yard. Within some of our divisions, they have more centralized programs, but we've recently entered into a national agreement with Mansfield, who is one of the largest fuel providers out there.

And they are actually headquartered here in Atlanta. And we are really excited about that.

We are a couple of months into that process, but we signed up with them to handle our fuel requirements throughout the country. And we believe we're going to see meaningful SG&A savings from that.

We've got a variety of projects going on like that, particularly on the logistics side. We have a logistic counsel that's been put together with representatives from all the divisions, and it's really the guys who were on there are really the best of the best within those divisions.

And the things that they are doing that and they are sharing that and we're starting to roll that out throughout the country, too.

That's helpful detail. Is it still fair to assume that you are targeting something in the low double digits as far as EBITDA pull through or leverage?

Yes, we were a little bit over 11% in total for 2017, which was down a little bit. But we expect that to accelerate.

Great. Thanks, guys.

Thank you Mike.

Thank you. Just kind of building on Mike's question, as you start the year, are we going to have a first quarter, given your gross margin comments, will we not see any EBITDA margin expansion in the first quarter as you ramp up these SG&A savings?

Or assuming the market we saw here in the fourth, will you be able to grow year over year?

For the full year, we expect to be able to get some EBITDA enhancement. But we've got some tough headwinds for the first quarter, as we alluded to in our prepared remarks.

Okay. So the SG&A savings will come as the year progresses is the goal.

Right. Well, I still expect in the first quarter that we're going to see some SG&A leverage there just like we had in the last two quarters.

But I expect it to accelerate even more in the second half of the year, particularly as a lot of these programs really take hold. It takes a pretty good while to come back to the fuel, it takes a while to convert 205 branches.

And then by the time we get those converted, who knows how many more we may have added through greenfields and acquisitions. So you have to be very thoughtful about that process.

Okay. And switching back to the gross margin to begin the fiscal year, the compression we're talking about here sequentially, is that driven by difficulty getting some pricing through, some drilling down some inventory, there was higher costs?

What's specifically driving that?

Well, I mean, it's competitive pressure.

Competitive pressure certainly on getting enough price to cover the increase in our costs after we've rolled through our inventory. So product coming in at a higher cost but we've already taken steps to address that to make sure that we hold our price really throughout the country.

And then also we optimize our product costs as we come in. We’ve been hitting that very hard since May.

Again, while we expect some compression in our gross margin performance for the first quarter, we expect to get back to normal levels very quickly.

This is fairly consistent with past experience, too. It's not.

Yes. And again, it's important to note: we are not talking about you're going to see some 25% margin number or something like that.

We're not talking about that. We are talking about you're going to see something -- we don't give guidance, but we expect that you're going to see something similar to what we were doing in 2016 -- fiscal 2016, particularly towards the latter part of the year.

And that you're also going to see the same type of ramp in acceleration that we saw in fiscal 2016, only even faster.

Okay. Because that year, you went up from first quarter to fourth quarter I think it was about 200 basis points on gross margin.

It was a pretty notable ramp.

For the full year, we ended up at 31.9%, but we started at 31.1% and ended at 33%.

Okay.

So obviously, we know how to address cost pressures.

Make some adjustments. Yes, yes.

Yeah. Okay, well, that's helpful.

Final question -- there's been a lot of controversy on the ceilings industry, as there always is. As you look at the competitive landscape now, has anything dramatically changed positive or negative versus what you would've seen last year?

No, I really can't say that there is. I would say that our – I mean our experience relative to ceilings growth has been significant.

You can see the volume numbers we've logged year-over-year, and our current activity level and backlog is strong. In fact, all of the manufacturers have announced a price increase to take effect in August up to 10%, which in the time that I've been here, which is knocking on 25 years.

I've never seen an increase of that magnitude. So, I mean fundamentally, that side of the business is still very robust and our commercial backlog and activity is very strong and it plays directly into that, of course.

So, I haven't really seen any seismic shift.

Well, I would, I wouldn't call it seismic, but it's definitely been very strong over the last two quarters. In the second half of fiscal 2017, our volume growth was about 9% for the second half of the year.

So, we saw definite acceleration. We talked about it on the last quarter.

There's a lot of activity, particularly on the commercial and the office space. But we've also got a lot of big jobs that we've benefited from.

We're getting a ton -- you know everything that's going on here in Atlanta, Keith. We're getting a ton of that business.

But it's not just in Atlanta; it's in markets throughout the country that you got a lot of different big projects going on, whether it's a stadium or a big hospital build or somebody's putting in a huge new office complex.

Okay. This was excellent, guys.

Congratulations. Thank you for answering the questions.

First off, I'm hoping you can help me understand the pricing mechanism you referred to that leads to the lower gross margin in the first quarter. I'm just not understanding how that -- how the mechanism flows through the numbers.

Well, I mean when we -- once we have received an increase from our manufacturers and we went to the market with the numbers, we made the appropriate adjustments in price. But as competitive pressures generated basically a tougher market environment for pricing and we made some adjustments in that.

And we were very active in pushing their price increase, but then had to make some midcourse adjustments based on where it settled in. So, in the short run, in the first month, we had some downward pressure.

But in the interim, we have since made some adjustments and are concurrently working from a purchasing standpoint to make sure that we can maintain our margins. So, I would call it a short-term noise going into the first quarter, but we're already beginning to see some positive trends in terms of recovery.

So, it's just the competitive dynamic. And as I said earlier, it's kind of consistent with what you see with every price increase.

You go out at X and then the number settles in at a certain level, which is where we are right now, and we feel like we're in a pretty good spot. I mean, that's kind of my response to it.

Yeah. I mean, I would add to that, I mean just using examples.

If our product costs went up $10 per $1,000, we've got to get at a minimum a $10 price increase. And in the latter part of the fourth quarter, we were unable to do that and that went over into May as well.

And we've since made adjustments and our margins have started to accelerate again, and that started in June.

All right, that makes sense. And second, if you look at your contribution margins in recent history, they've been in that low-double-digit range over the past couple of years.

But of course, there's acquisitions in there and so forth. X acquisitions, if you just think about how your model works and how you budget for it, if you didn't do any more acquisitions and things play out like you expected, and I know that's a big if, would we be looking at something more in the low to mid teens, all else equal?

Low teens? It's already in the low teens.

I was referring to the adjusted EBITDA contribution margin.

Right. You are talking about the actual percentage that we are reporting, like it was 8.1% for fiscal '17.

Is that what you're referring to it? Or the actual incremental growth, which was about 11%?

Yes, I was referring to the incrementals.

Right, the incremental growth. Even historically, the acquisitions really started, we really started to do those, I would say for the most part, in fiscal, we've always done them, but fiscal 2012 was when we really kicked it into gear, brought on some full-time acquisition M&A people, etc.

But we were actually doing those same low-double-digit incremental EBITDA even before we started to add the additional acquisitions. So our expectation would be even if the acquisitions slow down, or instead of 6 to 8 maybe you are only doing 2 or 3 a year, that we still should be able to put up at least low-double-digits incremental EBITDA.

Okay, all right. I was also wondering in terms of the, with the gross margin theoretically flattening out here for a while if there was some changes that you needed to make organically to get to that level.

And it sounds like you are making those changes and you feel you can get there regardless.

Yes.

Yes, I would agree.

Okay. Great, thank you.

So I guess I'm going to go back to the mechanics question of pricing. You said I think earlier that wallboard prices have settled around $311.

Where did they peak?

Our previous peak selling price was a little over $323 back in, over a decade ago.

Yes.

Well, I guess, I'm sorry, maybe I'm not clear. Yes, I'm more talking about the dynamic in the quarter again.

You said they've settled around $311. I'm trying to understand the adjustments you made.

Was there a shift in competitive pressures? I guess what I'm not able to connect is you had some competitive pressures; had a price cost impact.

You made some changes, I'm trying to understand those changes. Did the prices come in for you relative to where they started?

Did the competitive pressures ease? I'm trying to understand what mechanic or what move you can make to close that gap.

Prices rose throughout the fourth quarter. So the prices went up each month slightly.

But by the time -- but on the other side, we got our product costs are increasing and that's really throughout the quarter, too. It's not like while you have announced price increases come out for various times in January, it's not like all of that stuff hits in January or February 1.

I mean you got a variety of things going on there. You could have some pre-buy; you could be shifting your buys among different manufacturers to try to slow down -- who maybe haven't increased their price yet or are increasing it a lot slower than the other guy.

Or maybe you were able to take on some additional volumes, either through pre-buy or even during the quarter, to get some incremental incentives in that during the quarter before the price increases are fully implemented. But by the time you get down to the end of March, you are pretty much for the most part all the manufacturers have fully implemented their prices and it's kind of sorted out.

And at the end of the day, going back to that $10 example that I used, by the time we got to the end of the fourth quarter, instead of being able to recover the example of our increase in costs of $10 per $1,000, we weren't able to get that. Maybe we were only able to get $9 or $9.50 of that.

So what we've talked about all along is when we are unable to pass along those costs -- because we have competitive cost increase pressures, too: labor, etc. When we are unable to pass that along, we have no choice but to go back to leverage our national footprint and to go back to all the manufacturers and start making adjustments to get that down to where we are able to pass that price through because we have to get paid for our service.

I got it. Okay, I understand the adjustments now.

Did you quantify or can you quantify the price cost impact in Q4 and what you are expecting in Q1? I know you said and kind of gave some directional indication for Q1 gross margin, but can you talk about the dollar impact?

Well, actually for Q4, it was relatively minimal because we've said all along that the expectation was around 32.5%, which is consistent with what we have been doing. And we came in at 32.7%.

So we actually did a little bit better. So most of the headwinds were really in the month of April, so I'd say its minimal impact in the fourth quarter.

There will be a little bit somewhat more impact in the fourth quarter of this year is what we talked about. And that's why we specifically called it out in our prepared remarks.

Because I think you guys know, everybody that we've been working with for two years now since we started this process know that we try to be very thoughtful in the information that we've given you guys about the business, particularly what's going on. And particularly when you get to year-end.

Because it's year-end, it's relatively late for us to be announcing our earnings, etc., although pretty good for year-end. So what we mentioned to Keith was the expectation for the first quarter is I think that the gross margin percentages are going to look similar to what we saw in fiscal 2016, probably more along the lines of what was happening in the middle of fiscal 2016.

But that's where we expect we are going to land in the first quarter. And then from there, they are going to accelerate.

They already have started to accelerate.

Yeah, I think that's important, that we've already seen some significant adjustments. That's taking place now.

So the first month of the quarter had some noise and it's going to stabilize and move forward.

Okay. All right, and --

And it's not..

Okay. One just follow-up on that one.

When you talk about that normalized level, just to make sure I understand what it is, you were hovering I guess around 33% in the middle of last year. Is that the new normal?

Was that elevated 32.5%? Was it…

The 33% was elevated, Matt. So what we've said, and particularly on the third quarter call, was 32.5% was the current normal level -- normalized level.

And that's how you need to think about the business, at least for the next year or two. But we have previously hit -- again, on an annual basis, we've came in at over -- at 33.5% in our previous peak and we're not setting that as a ceiling.

We are also not saying that you're still not going to see quarters -- maybe you come out and we stumble a little bit and we have a quarter that's 31.5% or something like that. That doesn't mean that you're not going to turn around and see where we're going to have other quarters consistent with what we put up last year where we might be at 33.5% for at least a quarter.

But on an annual basis, at least for now, the way to think about the business is about 32.5%, a little bit above, maybe a little bit below, but around that range. And frankly, we think that's pretty darn good.

We're not satisfied with it, but it's pretty good.

Yeah, I would agree.

Okay, perfect. Thank you, guys.

Well, I would just say thank you again for joining us today. We are really excited about where we are and we look forward to reporting future quarters to all of you on the phone.

So, thanks again for your support. Thank you, operator.