BXC - Earnings call transcript Q2 2018

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Operator

Good morning. My name is Heather, and I will be your conference operator today. At this time, I would like to welcome everyone to the BlueLinx Second Quarter 2018 Investor Relations Conference Call. [Operator Instructions] Thank you. Ms. begin can you Moore, your conference. Mary

Mary Moore

this Heather, joining us you, call. Relations earnings slides section and the company's found XXXX good you appreciate The for presentation and at We of everyone. release can for Investor conference be in morning, earnings Thank call website our www.bluelinxco.com. the quarter second

certain uncertainties presentation those including filings us Securities the and included call also Executive risks about O'Farrell, Susan but subject and and Officer. in operations cause on performance. to today I'll provided, Chief differ with and statements, Joining the to, limited release These and our identified Chief our you remind includes to actual in our future this statements Commission. that Officer; statements results are Mitch not forward-looking those Financial financial Exchange our Lewis, could from materially press that discussed are

of we of to of financial speak date this to I'll only statements measures. information. With Today's and new them as revise references presentation call also that, presentation, to Forward-looking Mitch. over the includes obligation non-GAAP the in no turn undertake light

Mitchell Lewis

Thanks Mary, and good morning.

Companies And opportunities more will the having ahead. pleased time to pleased into together to quarter the Companies. BlueLinx. over we're closed we the quarter today these had we improved from report another at this Creek, enjoyed we be acquisition We're rationale very XXX merger a the the days adjusted year's afforded two on the EBITDA, even in by for in good progress which of proven now basis transformative quarter, of days We're another assessed integration bringing posted the that our integration. again, the a A on approximately by prior acquisition, you for of our convinced also which just Cedar are began XXth We immediately once adjusted businesses, two quarter. update quarter, And pro forma improvement the that of pro net combination, XX%. deeply consecutive in forma sales on our the

comprehensive recall, As Significant combining across customers reach XXX presence A utilize at some of coverage, likely diversified attributes million anticipated east the calling opportunities, product sales to our the and among Rockies. a with geographic flexibility saving with annually, sales is long $XX we businesses opportunity to cost portfolio force improved can you of the quality key of associates competitors. growth may over every day, providing regional roster least deleveraging. include, for be of term geographic accelerated extensive an platform, of and extended sales and expanded significant the our high national growth; that direct breadth and the footprint our and customers; which largest on support financial

Companies, busy been to has the opportunities made integrate team costs. integration short April, dedicated well Our helping our to reduce of in a pleased as then you of we period since know as identifying let and progress that time. deal great a I'm to on executing And

into three opportunities categories. progress and indicated, great We're generally procurement. main chain making efforts. supply savings identifying our our chain, we've are Supply As efficiency cost we G&A, in

of quickly markets. in overlapping have facilities the consolidating begun We our process

legacy and to Worth, idle BlueLinx the into moved an center Atlanta recommissioned Creek facilities Des Dallas-Fort legacy in one enhance location. into Lubbock, chain supply efficient between the consolidated have equipment Cedar various We one location, fabrication facility Consolidated facility Moines distribution operations. BlueLinx in

customers and to products our which of delivering of trucks is This consolidated the to the delivering and yield realignment to to realize BlueLinx expect to overall the next an Little facilities the in effort Rock, into savings sales. have XX we end dollars additional Creek location, year. Similarly, our our the facilities typical will Little customers also on reduce days, fleet expect legacy route We expect three of products Rock. location we in diving of millions by process XX basically opportunity was Memphis. legacy approximately Memphis, the in Rock Cedar is We're of this Little optimization, that consolidate to in go road. to a between is the travels of miles Memphis. example type customers which A the the was

to to markets. are reduce are ERP facilities. We're trucks but more platform importantly, into we will enhanced savings our base this insurance the acting multiple in service reduced administrative We've spend, customer numerous one, and on from integrate our either of inventory facility offering HR support converting their senior our organizational now our process of the made realigning we consolidating also realize to not structure. fleet, on G&A scale, the of consolidate our We significant advantage and begun as necessary the to an Cedar We our have moving opportunities systems proposition. while closing into leadership mileage system, and taking system rationalizing our decision respective and costs, Creek economies including legacy identified

to of XXXX. completed from the expect by have the end We conversion one system ERP

realize key expected us we many growth Over in not also we and presence. weeks, approximate are $XX did working to as month This announced the synergies key million a brands geographic over of in We where achieve us previously we've share period. at we opportunity our savings we're our XX several an beginning our had accelerate that have to least markets last annual March, to ability that the XX in strategic products suppliers, would distribute offers from are individual spend includes over and sales the both. appreciative with to supplier consolidated with meetings of in that partners

able dive confident Our more date, achieve the as opportunities, synergy this us make into we efforts to details that of be to potential we will increasingly goal.

earlier that XXXX savings would indicated an with run rate million. of also exit annual We we $XX

we confident ahead will of achieve the very this timing, are this the and year. by that target now We $XX I schedule million end of in am

it cost these are the news than good synergies achieve to that originally other lower we appears estimated. is The that

of between have these has achieve synergies maintaining of we we in performance job on the We will process. a few we strategy, lowered in into Susan suppliers, seen to we stability range execute cost and done not by great our minutes, our integration team the a relative or details to $XX integration to that our million. financial expect dive significant during range $XX but any are BlueLinx as pleased So $XX market continue our customers, million associates. attrition have The original our million. now

two attrition in of the quarter attrition Companies second associate was than of actually XXXX, during period. independent in our the fact, XXXX lower same the the In combined

days for I associates high the our few our wanted prospects remain optimistic a value think well long-term conditions. generally spend for with but again these housing discussing second starts for looking and just single-family we regarding opportunity historically Many in all us view cover BlueLinx suppliers, somewhat few growth prognosticators softening housing to starts ahead. I inconsistent our housing up starts, The XXXX, We has quarter June period. BlueLinx the and the as customers the can our of numbers in remained market regarding States. saw bullish June. this the as United a and were been sentiment, generally of housing digit in which single-family and moments, single in customer's the next months. current for are correlated in understand supports are with

over For increase starts meet that starts annual approximately the annual housing long-term, to years. the single-family average the it's level XX%, by housing to important of current would XX to the remember single-family levels have from just past

So strong. the for single-family long-term housing prospects to appear remain

potential tariffs in the are an while consumer announced some our expect, on impact As demand. you uncertainty having trade product would and impact wars ultimately of categories, may pricing

generally our customers. increases to As price the pass distributor, on we

to that transformative we to will Creek our more typically material been our So will second second the as combination BlueLinx, product for inventory. provides a inflation emphasize with prove move increases XXXX, of be lower-cost through price want Cedar quarter point BlueLinx. performance has believe in we of benefit for the detail. inflection discuss I The impact short-term for an organization. quarter Susan, in

geographic scale supplier partners. the our of profitability markets our now, will across like work serve. engage BlueLinx provide Company, And our on earn for and fully quarter. customers strength chain to associates, team expanded our supply we every sales us turn hard to for provide continue the and well volume it will product to color and to you the offering we to our drive Susan, business, performance I'd who while help financial more Our expertise, positions day to over The increasing the in our footprint, entire strong value

Susan O'Farrell

results. with Mitch, to It's you good pleasure a Thanks morning quarter our today, and me second for business speak and to review everyone.

BlueLinx. for of was in completion April, acquisition the quarter the With second pivotal the Creek Cedar

our of has touched and made integrating to previously run least on main within past $XX over we the Mitch achieve initiatives As track on, of consolidation two Companies. one areas in month progress synergies our XX at great our quarter are We've timeframe. focus rate million with our been

million, annual the we to to second quarter of $XX at Xx of of profile X.Xx. representing With adjusted fourth to synergies preacquisition X.Xx XXXX, and our to quarter expect least level track year-to-date improvement our the on by performance, rate and run remain reduce significant on leverage

quarter. forma our excited Net will One you deleveraging. financial of to combined the long businesses I'm growth that our same the improved key our as were sales up results with of and million $XXX $XXX account support were for combining financial Pro flexibility last had Creek, attributes now XX%. the the or of is term up X, net period $XXX million, share on the year. sales, XXXX, million, if million take XX% versus $XXX it Cedar acquisition or January into which occurred

categories. During and volume to $XXX our increases charge commodity respectively of acquisition million. with the $XX on include step Gross XX.X% capitalize a of across coupled quarter profit able million one-time pricing and related structural were increased inventory product of we margin

primary that this million. performing performance improved strong cash-on-hand ended is since $XXX adjusted quarter. indicator to company of share EBITDA EBITDA or excess how our we our would adjusted And incurred continues When of gross have $XX equal $XX second expense to of XXX% one-time our expenses The quarter quarter million reported Adjusted quarter our quarter the of is pleased prior price we up the with which the was to expenses making the base increased million a due we $XX second million acquisition for associated stock acquisition, at charge expenses include we quarter, The to significant related of these was expenses. $X the this look $X and Excluding one-time the of during the loss impacted results, quarter. stock one-time and margin million, we XXth availability consecutive are the by million. net highest year. EBITDA. be XX.X% for of considerable XXXX EBITDA for rate which income net is compensation with Without adjustments the quarter the adjusted

As basis, one-time to On cost XX, inventory include sales we or Gross year-to-date were and we'll our acquisition up $XXX a $X.X profit and approximately the million step-up million. billion moved $XXX Page net sales were margin pro-forma $XXX $X.X XX%. $XX billion highlight up related of of million XX.X% Net million. performance.

the our year-over-year adjusting for that the $XX acquisition and included $XX both significant net for up points pro-forma up recorded the charge have year basis Again were million We this XX charges. year. of we adjusted first a respectively. and EBITDA $XX Adjusted these EBITDA had was half net million expenses, XX.X%. of from million stock-related gross of would million at income Excluding at and loss margin prior $XX

XX, gross $XXX rebar prices to growth. Page sales the Increased net the highlight panel higher million in along to quarter and lumber, moving with helped during drive our Now sales pro-forma lining performance. experienced and we'll sales margin warehouse pro-forma

in-line gross less gross offset margin up gross mix. Structural was our last product margin margins, year. which somewhat by basis favorable by impacted pro-forma XX specialty Our was with points was slightly by

few I sale to our old a us XX, of related real and items leaseback, mortgage the to its able want in to our estate enabled $XXX a to monetize estate In real Page tax Moving which through we to CMBS entirety. assets. were first quarter, pay of highlight million

$XXX properties integration $XX to $XXX which most our assets of the we focus we our to is immediate of our estimate to realization one still of our with our synergies, real de-lever company estate estate shifted million value be to provide additional and our have we own the we values is As believe supported remaining real million, approximately These from opportunities And think that with valuable million estate to third-party four for approximately value. gains are appraisal. growth, the the which times we of well well by ordinary quarter. positioned as end the book income about as be as recent real offset remaining our NOLs, totaled at opportunities federal should sales

will real-estate In rate is staying Cedar Creek certain reduced due fully Natalie XXX company, like the be our to the of contributions but Poulos line amount on seasoned now Investor transition against Our decrease them as conclusion to all acquisition over experience success Natalie BlueLinx. with days in focused internal primarily year-to-date and executive continued and Relations integration to to are taxes our be audit cash We made expenses. the finance ability second make our Mary to in wish and years ordinary second is Mary a progress to will quarter are due open know I'd acquisition to the The games we required XX financial hands Investors Relations. than non-deductible for we we will related her to Moore. significantly a effective begun tax and year-to-date capable of be use pleased X.X% meeting before with quarter for of has the of Heather, Natalie Mary. completing we thank certain we BlueLinx She activities. the that and continued the have team, well of since questions responsibilities income. little more as with performance of NOLs BlueLinx's her with

at reach outstanding hard entire at results to testaments to now thank our share like continued for for I'd BlueLinx's to efforts. Mary today, to at and are team have to our any able our their Investor for up questions of can work course we'd suppliers we You your like and The their Heather, open many contributions this And line and partnership. we may the time. thanks special customers bluelinxco.com.

Operator

line from Equities. Scott with Instructions] Mitchell [Operator And the Choice question comes first your of

Mitchell Scott

hear hear was It a want what case work with around. on synergy very work particularly line looks to stick attrition like quickly as so a of originally, really to great people the there, thinking that’s and to good It lack and in the getting we’re to great well. that

Mitchell Lewis

Thank you.

Mitchell Scott

might I synergies thought that on start of kind you frame question I help guys a would to going just it. sort are sort work the of of of that big picture some

a some have synergies cetera. we of two of and building on similar You synergy look we of realizable. quite But about a script. targeted deals little that could the describe bit the minute touch the but about you million pretty of or XX thinking other such I in maybe together the particular as companies large, million if and The et think size these their versus capture has sort sales products of percentage XX on great seen to two entities target that it Cedar BlueLinx be so versus distribution on the space that in relative wondering take way Creek total come a synergy XX million. is the basis about allowed They sort just are for to was or what

Mitchell Lewis

I first - if thing done if baseline to obvious overlap you we against the would that comparison look markets a if other I is you So the you have. thing say companies, the think - is first compared

have distribution where geographic a each from facilities XX right. radius a at other major we’re So locations large platform XX sitting approximately mile within of we

opportunity. So that obviously a a scale creates and Similarly of perspective very opportunity. step is overlay perhaps of the that our large creates an opportunities lot size a distributor dealer perspective tremendous distributor from to compared facility fleets from once wholesale creates it’s the

So a start there - if you clearly differentiator. that's

were had customers, to is very good time. with optimization. alluded we're was competitors passing all trucks We to and whole other the obviously second The which - this we were similar I going competitors each which route

up maximum sale value obviously associated where cost very incremental fill of to because the the you get for trucks opportunity with you that. So it’s that you a have have tremendous small variable

a sense. have So the creates Then where like that that is general major would cost have you lot a significant do make combinations got say of G&A I opportunity. this you what everybody

you the and that The more see customers of our percentage because is EBITDA total the for a One of would fact wholesale have have it's you the day suppliers. well I generally basis actually by consider our margins the both EBITDA. every that on things you challenged enabling otherwise and level we’re businesses that think to is distribution than

you to think well. I as that consider have So

Mitchell Scott

sounds sort granularly more kind walk I to case across better about but a little just cost even about could a achieve if bit perspective? I thinking made like through So guess little slide perhaps time wondered the about than from things buckets of the with on synergy perhaps it incremental there opportunities, a various a think that second of lower achieve. was And are it expected the comment to you

Mitchell Lewis

think in is we’ve laid each I quick something that time in what and that the there the some generally for take mean buckets. out, of buckets very each example So I of are

wonderful So elected who is to G&A just example, left the a quick. an a Creek so CFO retire. cost that’s now organization but He for Cedar

end we won't However ERP we be system integrating that's until as of the so talked we work. our XXXX - talked

route layout look So let’s you timing bucket talked then move from takes be that consolidated extent are it might your time locations when in a activity, going similarly about the ability everywhere on the faster facilities across a to shift and as company to two different together you are be faster the can opportunities. chain we The where would where XX you time. the to G&A that the supply for optimization have you say points you major look have perspective example at

just numbers. run the keep said on what million rate have we I year. do. million on and we all in more we you the to XX we to kind focus it's the was mean, to of over we’re And assured, do what why as color going Mitchell, Rest like focused of us, the that’s And really end wanted place. XX on much by of focus you would while So those really give you know full do always, months work hard we the to say XX

Mitchell Scott

That far. has my thus consistent experience with been

that to continues thinking and just the lease can hop forward great maybe of So perspective housekeeping annualized interest kind - from going runaway But be of sort expense help some Then business of about out an you capital hear then cast. the us kind and I’ll high-level? the items, to you off.

Susan O'Farrell

Yes.

as interests and we revolver, about if that of well there. our then think our in So interest goes the term and think course leases about our we loan as

So a got some see from think view, interest the come sales of you tax we've through. but point I there can nice

in on term filed go that the have LIBOR So plus runs making we loan $XXX previously. payments to have that we’re added with million, principal. that But we as we minimal at an

So approximately anywhere And the XXX the of point at time. million revolver million from in X% think runs depending then year. our XXX on this I'm to time

and have $XX about we but business. because over could is investments and X%, that are CapEx rate. contemplate are the we on up, at facilities as right we think a our leases lot And a coming in don’t to there capital fluctuation sheds thing gives it’s land. Overall year of look runs then back some so about I require course rates that key optic low million, think so large certainly interest And interest as and our capital favorable

and facilities years up CapEx we [$XX] could would on million. be investments could up million depending make be additional less the to So X or

we the So CapEx have overall. that business for it's size of still the fairly low

Operator

next Instructions] [Operator [indiscernible]. the line from question comes of Your

Unidentified Analyst

[indiscernible]?

Mitchell Lewis

dial Unfortunately or you or could call. understand we from be a like try may know your could again? hear I don’t different one not

Susan O'Farrell

All had number is the think. on line gross question little is background noise I about heard there margin we we a

Unidentified Analyst

now. Sorry, can hear you

Mitchell Lewis

we can now hear you. Yes,

Unidentified Analyst

at from possible how was So I sales to forma pro was it’s that if the XX% question price much inflation answer that? guess of regarding

Susan O'Farrell

mean overall you’ve our pass on we're that’s I the price very the Yes, the was price to effort inflation on day. about side certainly every market every able seen stories inflation the structural favorable the in run

and that had price so increases prices, increases. we commodity space the So as volume the well structural more of as in

On increases price too. also the specialty side we saw

Unidentified Analyst

all it quantify Is at it to wise? percentage possible

Mitchell Lewis

are a specific from areas structural that because a challenges have we specialty where is units. product, is unit for a kind - from we of The can where up tied of that you different basis we different of have easy being sold example products lots that standpoint a in it quantify get

you give You so can vinyl unit, have a have price carton, exact on basis. a struggle may may have piece you to of really a consolidated the and have we numbers volume siding versus that

Susan O'Farrell

the bring volume we product more bit adding are which businesses little as a specifically complicated. we mixes, together analysis the makes different a And together

have more consistent So might products have together for run bring into variety better wait rate, different overtime, and get volume calculation. we challenging that as but we of we should a as it's inflation a it into now there unit that

Mitchell Lewis

of just you relative to but XX% an starts have and single that details, start so those that housing gains. perhaps commodity go categories correlated we of is don't about volume maybe housing generally range lumber in for gain product highly that to grouping illustration example, family And X.X% we family for give into example is have we kind

So of that again, lot little helps is but a bit. there, in a noise there

Operator

[Operator Instructions] time. questions further There at are this no

Mitchell Lewis

Thank a in sharing the terrific results day. Okay. continued We with later quarter you interest year. look we support forward to BlueLinx and Have our to Heather. your third appreciate certainly and you,

Operator

This concludes today's conference call.

You disconnect. may now

BlueLinx (BXC) 9 Aug 182018 Q2 Earnings call transcript