For the full year of 2023, we repurchased nearly $1.8 billion of shares at an average price of $100.49 per share. As Dave mentioned, the Board approved the repurchase of up to $1 billion of common stock, inclusive of the approximately $200 million remaining on the prior share repurchase plan authorized in April of 2023. We remain disciplined stewards of capital and have multiple paths for value creation to approve an ability to deploy capital and deliver high returns. Now let’s turn to our outlook on Slide 13. For full year 2024, we expect total company net sales to be $17.5 million to $18.5 billion. We expect adjusted EBITDA to be $2.4 billion to $2.8 billion. Adjusted EBITDA margin is forecasted to be 14% to 15%, and we are guiding gross margins to a range of 30% to 33%.
Our recent above normal margins reflect a greater mix of value-added products, along with the disciplined pricing required to offset increased operating costs. As we move through the year, we expect both our gross margins and the multifamily business to continue to normalize. We expect full year 2024 free cash flow of $1 billion to $1.2 billion. The change from 2023 is primarily due to an expected $500 million year-over-year decrease due to working capital as we move from shrinking to growing sales. The free cash flow forecast assumes average commodity prices in the range of $400 to $440 per 1,000 [indiscernible] our 2024 outlook is based on several assumptions. Please refer to our earnings release and Slide 14 of the investor presentation for a list of these key assumptions.
As you all know, we do not typically give quarterly guidance, but we wanted to provide directional color for Q1. On a year-over-year basis, we expect Q1 net sales to be flat to down low single digits as we have lost roughly two days of sales due to inclement weather conditions at the start of the year. Year-over-year adjusted EBITDA is expected to be down high teens to low 20s in Q1 given the impact of extreme weather and continued margin and share normalization. We expect our sales to rebound as the severe weather conditions subside. Regardless, we remain optimistic for a healthy housing market in 2024. Turning to Slides 15 and 16. As a reminder, our base business approach showcases the underlying strength and profitability of our company by normalizing sales and margins for commodity volatility.
This helps to clearly assess the core aspects of the business where we have focused our attention to drive sustainable outperformance. Our base business guide on net sales for 2024 is approximately $17.6 billion. Our base business adjusted EBITDA guide is approximately $2.4 billion at a margin of 13.5%. As I wrap up, I want to reiterate that we are confident in the near-term outlook, our exceptional positioning to execute our strategic goals and our ability to create shareholder value in any environment to support profitable growth. With that, let me turn the call back over to Dave for some final thoughts.
David Rush: Thanks, Peter. Let me close by saying that we are focused on executing our strategic pillars. This focus, along with our close partnership with our customers to address their pain points is a competitive differentiator in our industry. We are the unquestioned leader in value-added solutions, which we believe are the most effective way to address labor and cycle time challenges. Our industry-leading digital innovations are bringing greater efficiency to homebuilding and will win us new customers and grow wallet share along the way. Our robust free cash flow generation is funding a disciplined capital deployment strategy that will compound long-term shareholder value. While 2023 was an exciting year, we are just getting started. Thank you again for joining us today. Operator, let’s please open the call now for questions.
Operator: [Operator Instructions] We’ll go first to Matthew Bouley with Barclays.
Matthew Bouley: Morning Dave Peter thanks for taking the questions. So to start off with on the gross margin, of course, exiting ’23 over 35%. I hear you. There is still some multifamily normalizing to come. But it looks like you’re guiding to volume growth, of course, in your single-family business this year, and I assume there’s some operating leverage there in your manufacturing. I think I heard Dave say that there’s another $100 million in productivity this year. And I don’t know if you’re assuming value-add mix would continue to rise, and that’s on top of everything you’ve done around automation and consolidating the industry and so forth in recent years. So my point is it seems like you’ve got a lot of tailwinds this year. I guess, where am I being too optimistic? And what’s kind of the cadence, timing of gross margins normalizing back to below 33%? Thank you.
Peter Jackson: Thanks, Matt. Your points are all accurate. I think that we’ve done a really nice job in the value-add sector. I think we’ve managed pricing in a disciplined way. We certainly have done a good job on productivity and continuing to execute in that category. And certainly, a portion of that hits gross margins, not all of it. What I think is continuing to happen, and I know this is a consistent theme from us, but we want to continue to be candid with investors. There is a normalization that we’re seeing in the core and there’s a normalization or maybe a recognition of a cycle in multifamily. Those are the two really big components driving the ongoing normalization that we expect in 2024. So multifamily, as we look at it, certainly a dynamic market, but there’s been a pullback, right?
A lot of multifamily units were put in the ground. Over the last few years, the backlog has been very full, very healthy, and we’ve done very, very well. There are clear signals both in the broader market and in our numbers that multifamily is normalizing. It’s pulling back, and it’s going to pull back pretty aggressively. We expect we’ll start seeing that in sort of Q1 based on the latest information, and it will hit us all year. So certainly, multifamily is a good business, but there’s a headwind there associated with that business shrinking. And we continue to see in pockets around the country, the normalization of margins in a competitive environment, right? We’re well below what we would consider to be normal starts, normal single-family starts in this industry.
So it’s competitive out there. And there are certain markets where we’ve had to get aggressive, and we’ll continue to do that to protect our position and to win in the market and to be the customer of choice. We don’t think it’s putting us outside of that communicated range for gross margin, but certainly expect that to continue to erode as the year progresses.
Matthew Bouley: Second one, I guess, sticking with the guidance, I think your end market growth kind of blends to maybe very low single digits and you’re speaking to base business growth of, I think, 7% this year, and I know there’s a couple of extra selling days in the second half. But my question is on your growth compared to the market. Sounds like you should start to get some of the digital sales to kick in later this year. But just could you kind of bridge us from where the market is expected this year to your sort of several hundred basis points of market outgrowth? And obviously, of course, how does the value-add growth kind of play into that? Thank you.
Peter Jackson: Thanks, Matt. You’re right. We are anticipating a fairly modest market tailwind this year, which obviously is appreciated, and we’ll put to good use. But we are challenging ourselves as an organization in a couple of key areas. A big one that we talked a lot about is digital. We’re really excited about what this product is going to do for us in terms of attracting and enhancing our relationships with customers, we think there’s real value there. So we’re putting that in our number. We also are continuing to invest as you see in value add. So we’ve got new capacity in the ground. We’ve got new equipment. We’ve got a new ability this year that we didn’t have last year to provide those types of high-value impactful products to our customers.
So we expect growth from that. And we’re certainly confident in our team. We’ve got — we need to be the best team in the industry, and we think we can win in the market. So those three things really kind of combined to give us the confidence to put out a number there that really represents share growth ultimately.
David Rush: I would just add, Matt, that conversations with customers are almost uniformly optimistic for the year. There are differences in when they believe that timing of that rebound will start, and that’s all obviously driven by the macro environment to a degree. And the digital ad that we’ll experience during the year will be more like a hockey stick. It will be weighted to the back half of the year as we continue to drive adoption and training throughout the organization and with our customers. But we’re excited about the year as a whole. It’s a little more difficult to pinpoint the exact point in time when we start seeing it in real time. But the long-term demand still is very, very encouraging.
Operator: We’ll turn now to Mike Dahl with RBC Capital.
Michael Dahl: Morning. Thanks for taking my question. Just a question on free cash flow. I appreciate your articulation of kind of some of those timing differences and the swings in working cap. And so I think as we move beyond 2024 because this represents kind of a lower-than-normal conversion for you. So can you just talk to — is it kind of timing through the year that — of how working cap has the ramp — has growth ramps? And then once we get to ’25, you still expect to get back to a higher, more normal conversion rate or any other moving pieces there? I think, would be helpful.
Peter Jackson: Absolutely. So you’re right, Mike. This is a light year for us. The way that the numbers show, the comp looked obviously pretty dramatic on a year-over-year basis. We’re down a little bit on the EBITDA number due to that multifamily step down. But the change going from a business that’s shrinking. And as you know, we spent off a tremendous amount of cash as the business shrinks to turn to an increasing sales environment. And we use working capital when we grow. That sort of turn for us showed large in the numbers. But that headwind that we would expect to see related to growth is generally going to be a little bit smaller in a normal growth year than in a turn year. The turn year is always a big number when it goes from one to the other. So we do anticipate it to be a little bit higher in a normal year. And as we laid out in our Investor Day, there’s a cumulative benefit that we expect to deliver on, and that commitment hasn’t changed.
Operator: We’ll turn now to Joe Ahlersmeyer with Deutsche Bank.
Joseph Ahlersmeyer: Hey, good morning guys. Congrats on the results. So is it right to think that if we’ve got the headwind from weather in 1Q, we’re going to be probably pushing those sales more into 2Q. I’m just trying to think about the phasing of sales for the remainder of the year.
Peter Jackson: I think that’s a fair assessment, Joe. Typically, what we see is it’s not an immediate snapback but a gradual snapback in the future quarters as they catch up. They don’t catch up all at once. But at the end of the day, we actually do feel like what we lost in the first quarter due to weather will ultimately pick up in the back three quarters of the year.
Joseph Ahlersmeyer: And then looking at your guidance for the all-in business and the base business, is it right to think about the commodity element of this as a full normalization of the multifamily? Are we getting sort of all of both the commodity normalization and market normalization in these ’24 numbers? And then maybe if you could just talk about going forward, the opportunity within multifamily kind of between the five and below units versus the much larger projects?
Peter Jackson: That’s right, Joe. These business reconciliation of those two components you mentioned is the last of the multifamily and the last of a little bit of the core not much left, which is nice, but that’s certainly a piece of it.
David Rush: And I would tell you, you’re exactly right; our sales teams that have focused on the larger projects partly because their customers are also looking for opportunities in the smaller projects that still qualified technically as multifamily or light commercial. We’re all focused on those opportunities and those will help us bridge that headwind a little easier for the rest of the year. But it still takes a little bit of time for those projects to get out of the ground. And the timing of that makes it a little difficult, but only focused on that opportunity.
Operator: We’ll turn now to Trey Grooms with Stephens.
Trey Grooms: Hey, good morning, Dave and Peter. Peter, you mentioned that there’s — you’re seeing some evidence of residential starting to turn around. And I think you noted seeing high single-digit growth in lumber and low single-digit growth in truss. I guess what’s the timing you’re referring to there? Is that since January? Just some color on the time frame there? And then secondly, is there any reason why truss would be trending slower than lumber? I mean I didn’t know if there would be anything going there from a mix standpoint or something? I would just assume value add would at least stay in pace with lumber or maybe outpace, just any color there?
Peter Jackson: Thanks for the question, Trey. So the time frame we’re talking about was 4Q. So it was a fourth quarter dynamic. I think the storyline here, and we talked about it a bit in the past, but for those maybe who haven’t heard it, what we sell goes into a start at a wide range of time lines, right? So lumber is generally very, very early. It’s not unusual to frame the first floor and then have maybe the trusses delivered. There is a very close correlation between framing and trust. No argument there. I think that in general, it’s indicative of the beginning of the turn. What’s also true is some of the later products, you go through windows and you got out to doors and trim, that’s later in the build process. And those are the products that you notice we didn’t talk about as being turned and in good position.
It’s very reflective of last year. At the end of ’22, you saw lumber and truss go down really hard. Lumber down a lot more than truss. So on a comparison basis, that’s part of the answer as well that lumber was down aggressively if you go back to the numbers for the fourth quarter of last year. So on a comp basis, it’s up a little bit more, but really because it was down a little bit.
David Rush: I mean, lumber and truss go hand-in-hand together, but value-added is more than truss. I think that’s the thing you get from the mind. So value added is later in the process.
Operator: We’ll turn now to Rafe Jadrosich with Bank of America.
Rafe Jadrosich: Hey, good morning, very thanks for taking my question. The last quarter, you provided a scenario framework for 2024 on different macro assumptions and then what that would mean for your earnings? Are you — should we still sort of be comfortable with that. So it starts tracking that 8% to 14% range on the single-family side and lumber is at $4.25 to $4.75. Would you still be looking for $2.7 million to $3.1 in EBITDA? Or has something else changed in the market where we should be thinking about upside or downside to those scenarios?
Peter Jackson: I think it’s fair to say that directionally, those scenarios are still indicative of how we think of the business. There haven’t been any real structural changes in any of the variables. It’s always subjective to a degree because the ending point for 2023 was a bit different. But generally, yes. No, I think that’s a fair way to look at it.
Rafe Jadrosich: That’s really helpful. And then just as you look at the gross margin guidance for this year, is it 30% to 33%. And it’s really in line with your long-term target despite single-family starts that are tracking below. I think the long-term assumption is $1.1 million. As we look forward here, if you have years where the starts are below that target, do you think you’ll be able to do gross margin kind of above 30%? Or is there something unique to ’24 that’s keeping it higher? Is that just because you still have some multifamily that’s flowing through?
Peter Jackson: It’s a really good question. I think confidence, our confidence this year comes from that normalization component. We still have some above what we consider to be normal margins in multifamily and in a couple of product categories in a few pockets around the country. We’re continuing to see that normalization. We’re continuing to see some of that compete back to what we consider to be a likely normal. That said, we’re obviously very good. It’s very strong, and we’re feeling very confident about our ability to manage it in the long term. At this stage, I think it’s hard to say that it’s an exact point of starts that correlates to an exact point in gross margins. I think we’re most comfortable talking about it in sort of ranges around normal. It feels like a range around margins. But right now, a lot of confidence that we can hold in that normal range based on everything we’re seeing.
