BXC - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the BlueLinx’s Third Quarter 2020 Investor Relations Call. [Operator Instructions]Thank you. I would now like to hand the conference over to your speaker for today, Ms. Mary Moll, Investor Relations for BlueLinx.

Mary Moll

Thank you, Jay, and good morning, everyone. us BlueLinx’s joining earnings third you call. conference appreciate for XXXX the quarter We is the posted our release earnings The in www.bluelinxco.com. website Investors at of section

We on our presentation as well. a the referring The website will go call. available we through supplementary is presentation also be as to

Joining the are call Mitch Officer; Chief Executive us Kelly Janzen, on and Chief today Lewis, Financial Officer.

measures could statements. filings risks get you to from presentation in to that SEC. are includes risks to release that Today’s forward-looking reconciled earnings remind website. and results Mitch. I’d with the to to this their the and and also GAAP our our I’ll counterparts subject non-GAAP to section These our over like started, materials, Investors are the With differ and Before described those These we release are the statements that, the actual earnings reflected turn in and uncertainties references in our non-GAAP cause uncertainties statements. of discussed in presentation presentation materially described in the includes financial measures. call Those

Mitch Lewis

and good morning. Mary, Thanks,

and across And thousands the deeply ours. our as nation everyday of members at put of of we our families the While BlueLinx I the and their the for continue country and first third to had only always infected great of their spending lives with the hundreds BlueLinx to we business associates BlueLinx’s quarter. world. Its very risk first across know, the And we'll very associates safety and are virus. felt a the by results by in our will priority. time been this morning appreciative acknowledge number the responders created who daily incredible we be of our fortunate challenges ensure like to pandemic to of the put our safety would our discussing BlueLinx, top family. remain team small has well-being have impact extended

remind or diving to the half Before we operational important conditions quarter. beginning it's the and key paid an even the for took focusing initiatives our fully market and our everyone of enhancing targeted I performance during renewed significant efforts partnerships us us step investing back network, investments which present These in customers. latter a of distribution included suppliers, business from were that share, growth with as a broad centralized and benefit numbers, growth. the efficiency market actions favorable to considerably, positioned the into that product to These a think across our dividends the third the opportunities of to XXXX, drive unique that customers service on team grow we in logistics emphasis level in offer enabling operating provide strategic categories national driving improved to higher of

Additionally, share work had XXXX, we to and supply a began with chain. entire the of last year as fill to the we resulting of we experienced. conditions the proud to market the of dramatically these of of impact and ability in the good add the value to as recover started Organization to pandemic. the market customers measures. we quarter momentum immediately Then business react By to first the result mid-March, I'm suppliers our BlueLinx’s

market we past and pricing manage a closely place control manage In over hard capabilities. similar our protect to centralized immediately working associates, to of in capital process to control safety analytical We quarter, to and platform the a the our across liquidity. efforts and that purchasing we These our performance rigor put the improve. up our enjoyed robust material access on addition quarter, analyze the the we across rigorous as opportunities impact in initiated and work while and business. our approaching during third doubled to improvement receivables to year. to our second In we continue manage adding the the protocols and our efforts all conditions established sustain also efforts And these our more led we

we prices the fashion. Following pandemic margin in improvement EBITDA last of history second company year. in saw all reporting a in with the recovered strongest to market increasing with BlueLinx’s revenue and and gross coupled residential adjusted short-live would in significantly run-up housing the the a related base shock that has compared remarkable quarter its quarter, This historic our commodity resulted

BlueLinx, experienced. this quarter ever For was a like none we've transformational

sales were million. net $XXX Our

And million. in was rate XX.X% margin $XXX of gross of Our $XX gross we million. had resulting a profit EBITDA adjusted

$XXX through to year-to-date Perhaps liquidity the we annual to million, housing recession. And country million. million. market From before the robust have EBITDA third more of $XXX company, In fundamentally our and the quarter through the interest impact facility. adjusted expense. the the further term-loan EBITDA liquidity LTM haven't of was since quarter even level of $XXX while October, this enhanced great quarter eliminating availability million, importantly, reduce over third a capital Our significantly with ended a structure we our excess was covenant our third September leverage reducing our We explain. of the that some $XX with use our we seen to experienced the is leverage increased simple perspective, associated

in into today results illustrate than a a Kelly our is dive brought and company fundamentally to where our financial clearly level few into in flexibility more we numbers financial going new are current were We minutes, strong detail, third months how just the four having strength. she'll highlight business. a also quarter of different were ago, our

terrific, on also profit we that expanding We market. in enjoy. Structural were that above fact was ability think significant was were this driven it's to margin typically in at highlight While the by we inventory that quickly the did the important improvement And our rising its sold our selling cases, were I prices being products a the commodity to wood-based quarter by rising primarily capitalize costs. many also

continue last investment our gross the add Specialty our product and that and unabated third pricing the improvement analytics quarter, as to also trend in a year, value. margins during training over continues has continued We the

inventory commodity we In environment. acutely would in continue established commodities and that lower know, aware our Structural reduce were historical are run-up commodity experienced the third historic quarter October, quarter. several tightly on experienced have subside. more back is declining of we is mitigation levels managing the cyclical. strategies to we ultimately price nature margins than good that The news the which we Structural a third very to focus impact their And prices by the generating As towards in levels, falling we started

possible adjacent of our are of for the inventory to include exceed consigned gross we risk across exposure supply inventory chain will which October levels ensuring that of purchasing while Our levels the to These move continuing locations our are a our excess minimize levels our making customer short has keeping pricing, the Structural in And difference. strategies inventory quarter serve mitigation market increasing as XXXX. platform. times managing fourth to we less inventory, to as to in low margins base reduction and actually our month lead closely efforts now anticipate experienced

three by strategic our exceptional, that product There the in account BlueLinx focusing by this for which categories we that achieve ways advantage intend give a and primary increasing national share level. presence, competitive objective identifying local at by to the market was business months what is we brands our the are on in and the stage improvements third our imperative fundamental quarter set I organic ahead. in most about growth. While #X excited am is Today, opportunities

presence account footprint We national our our have recently our take which invested and of opportunity executive sales senior in national scale and the to to grow account leadership advantage creates with our customers. drive relationship geographic

brands opportunities market suppliers. with with excellent product efforts strategic share product in providing portfolio carry the reinitiation We've our enhanced of this that part footprint were enhance us enables supply northeastern to drive stores. SmartSide the national growth include recent by they Evidence with marquee chain do expansion announcement supplier extensive at our LP distribution to the growth our also that of effort and is country. level. assortment our of drive lost their to and additional partners the not of products for examples our Prime Additionally, customers key the our

Our in new share Hardy. market our Huber with and castles with old with markets adding increases relationship decking product expanded

like in time Siding, competitive categories own Another product these way we're is driving through skew inventory wholesale products providing by product we a and product can where our advantage of Vinyl strategic base. add just distribute to where engineered categories brand, [indiscernible], value import our top intensive that are our having line anticipate growth examples products, and customer Cedar label Great categories friendly. center private include, wood and we

share fix market loss We level. growth Cedar and opportunity locations also half Creek integrated we have during XXXX first proposition. our that. local that to lost share as of service at with first our We the the our We've step done to enhance from acquisition, market was significant

Now utilizing share cross-sell grow control we successes process that and recent teams and drive that local where appropriate. growth to company. to provides our and service get established new expanding to Examples internal products across rigorous markets, include best-in-class systematically investing in and our initiatives and assessing to market a back. expertise expertise of locations, relationships We've growth customer developing equipment strategies are the in

includes such as operational investing and and trailers accretive tractors, older also areas forklifts. are our investments modernizing are We're maintenance in resulting which our We replace improving reduced as in logistics, relentless our they and flow stock, cash updating immediately administrative fleet models rolling costs. efficiency. Many in

replacement us, This enhance are we've our planning to the operating reaction and There capital entered to baked being the the negatively constraints. we processes for pandemic the horizon, that for the social additional is during we're route structure performance our process acutely are through quarter, our on we into the are now proven on It's new a not risks of reengage fact, Well, we impact operating environment up enhancing month and automation tumultuous face. business. third may the company into and more tractors our optimization, administrative reduced the $X behind In we significant aware culture. and challenge. our efficiency opportunity that leases redesign. in remains We've merely throughout political and not now consolidations million that that is emphasis improving coming which of as cost and significant our

to as service in manner do leading we customers. everything continue operate assess to a to continue we industry our efficient more to will provide We

our incredible. and would our work remiss got brighter and make is be if simply I team In year and it determination, every reminded up team Kelly, rolled of past that BlueLinx I I the And it quarter that the experienced. to of extended and the am we is it clear just not joined the team fortunate support I on I'm a than the the to future our turn we confident we represent BlueLinx how seven to day, did hard is am enjoy to has their Before March, over stage ago. today, since it sleeves been set be Through I BlueLinx over third to almost quarter performance I years done. BlueLinx’s honored I'm family. The of them. testament company the how

detail. financial to The renewed our performance our will strength a like serve. Kelly, third third I the markets was now quarter customers inherent more and our getting commitment we you financial started. I'd transformative. walk that through quarter it in to And know in our are unyielding to who just over our we team, with turn And stability,

Kelly Janzen

Thank you, overview financial Mitch, now performance. good of I brief give morning third and the quarter everyone. will a

a Mitch the quarter in to compared net improvement points gross reported We third XXX to margin, XX.X%. related prior was of year $XXX sales As results. million $XXX the up period, record million with generated along when basis year-over-year mentioned, which of

end generation also million cash under of approximately of to availability ABL cash sustained from excess the This working along capital reported the and in improvement of last cash We of operating quarter. with on million led quarter and million over hand during the flow million provided that improvement year. of $XXX EBITDA activities as of management adjusted our $XX $XX strong $XX

Importantly, the to net the balance principal a of term-loan improved liquidity million of this October, eliminating covenant. $XX allowed leverage in reduction the for

sharply wood, the engineered were Third sales year-over-year metal not accounted very current period. and $XX sales, total for of what These base their comprised however, specialized as molding, We quarter. products rose links the Composite between mid-September demand in the and of indices million XX% commodities third products to per Index, at rebound quarter XX% levels prices insulation net and pervasive our extended the chain $XXX Index. our at which the nature. Composite for are $XXX and peaked at of throughout for quarter, supply the these to supply of the Many for increases throughout key Structural of along Commodity that markets given for would increase such at strong siding, second were housing, that sales net Mills whose unprecedented period. million of XX% Structural constraints net Specialty attribute products products includes random Panel $XXX with an theater, typically an and began prices base North sensitive end Lumber continuing are improved the Framing the American commodity

impact is ago more to typical of was products of oriented million sales quarter our The as estimate a $XXX well year. incentive net reduction an a a million, labor. the XX.X% sales gross increase sales typical. saw increased which of XX.X% such products of specialty a positive as current to which incentive prior Structural strand our market mix last the commissions was sales million averages. this included all The related discussed well increasing to overhead sales we results. of to and had year-to-date from by of margin metrics. offset expected includes as compensation, net million, incentive XX.X% similar Structural and XX% result, is variable quarter in lower disciplined mentioned. which margin the the remash $XX significantly in recent factor lumber, the which compared compared of the between the that range for year-to-date costs quarter. by that preceding additional $XX the a rate we We rebar improved to however, market few increase recorded the a margin to plywood, historical $XXX the last Structural given financial higher the market I $XXX commodity six was inflation just with Had between reflects comp been increase environment It up quarter strategy million, wood-based ranged basis $XXX increase the been also to continues $X the pricing due this compared coupled trend have variable the quarter products for our I average compared period gross contributed years. As year products conditions for year's quarter, million, year a of X% strong third to of moments in But the quarter Specialty the to of of was was of QX a during a an XXX the in and all have in We prior of have net compensation total XX% net of SG&A Structural resulting and been the as $X.X period to the points sales recorded margins of would quarters to of current This variable the net a approximates of gross products, from contributing When so million million million $X XXXX, impact increase structural more dynamics. on margin range catch prior year our result above significant QX sales on $X XX% an of primarily to and the million million. $XXX the commissions a of sales XXXX. $XXX increase incentive related million when also would year-over-year board,

taken and we continue year they earlier our reduction quarter, operating many to improved as the in efficiency. cost measures, of actions third of COVID-XX support the part During sustained the

believe of And XX.X%. XX of XX.X%. Our consistent third third months actual with margin quarter SG&A is the this improvement margin impact. is month also reflective commodity quarter was XX as margin This the than compared XX.X%, inflation points XXXX more given that margin the basis to first when XX of half of trailing which quarter SG&A ended trailing XXXX X.X% is and a we of an of rate rate XXXX third is typical the our

at As sales, net a be SG&A our we as SG&A of to percentage approximately fixed. variability our XX% look of the consider of we

Of many net in costs degradation significant course in these be our can sales event fixed the of reduced. of also

to net have of are positive generated pleased We third in income quarter the million. $XX

sale Our of Facility. net income approximately leaseback our of Denver including from X benefited items, million from involving non-recurring a million gain $X approximately a transaction

by increased on still income net items, million a non-recurring year-over-year $XX Excluding basis.

our however in we the were the million of For Federal last utilized $XX And at of the the XXXX. that incur expect results. end fully was same XXXX be million year, remaining year, it any period in and NOLs improvement $XX will financial tax didn't income we given that this approximately

sales outstanding XX days receivables X the to showed compared over year. our inventory by our around call the the With days result, how also discipline And in prior improving improvement an to to specialty of we over typically on products, faster which purchase quarter. than sales capital current structural And we current to continue this a as inventory. year am which year last have quarter. capital period. averaged sales trade a continued positively improve closed better last shift the control working to the days, around since pleased third collection earnings made As to during is of working the onset decreasing was significant turns our inventory. impacted our we that maintained on The days upon focus days earlier discussed management days of metrics especially year, XX managing as and our the mix our XX% we during prior I of inventory inventory then. pandemic, XX the our than led capital and also our how Days we manage working period changes

Third earnings increased million, available quarter debt. working which increase was of majority Cash closely flow was with cash managing the coupled significant down our operating capital. given by pay million year-over-year $XX the incredibly activities strong, to $XX to in provided

million borrowings end reduced and the by million was the quarter $XXX under XXXX, Creek. for And term-loan year-over-year, year. compared we've last quarter our million Our fiscal expense the was to Total at ABL the approximately year. quarter-end, Cedar since had third $XXX same expense $XXX been million our quarter-end, at amount million last year, the first million $XX quarterly third of has million to same balance of quarter were in since of reduced to the or $XXX compared interest the second debt by Bank decreased $XXX acquisition. last quarter-end the after acquisition of quarter XX% as $X.X quarter interest which the is lowest compared at

in availability from in great also we $XXX are cash our a liquidity excess on ABL. under hand We shape as perspective, and million had

Additionally, with led decline our the operating dramatic performance, to significant in generation has our a along cash leverage. overall

our leverage the a financing overall the and with X.X includes ratio balance ended of ratio again term-loan well term-loan the and ended EBITDA million, prepayment reduced reducing we to covenant adjusted the eliminating debt net made quarter net compliance $XX debt our to under overall quarter total the interest leases third October, And we while cost. and times. at Our that below which in our voluntary bank

a sheet And to our from sell capital commence filings we to perspective the September the over as allows registration you Jefferies and common an LLC, SX XXXX. to of sell allows have market sales to our supplement us million shares We form agent. to have is balance the are to that our until our may as our asset manage [indiscernible] statement, up offering as effective which stock, And of offering us SEC continuing structure. flexibility $XX equity seen closely followed committed market yesterday, acting with these

can corporate program we net may shares amounts general choose any sell timing Law indebtedness. capital as Because in The depend any to and will for and We Federal prices about of and the the limited variety Securities continues. which under restrictions, factors. repaying say program purposes, from expenditures, to making funding we're include a capital, use the offering. on of working of we sell As we what the might sales plan proceeds

our So you I'd read X-K. form our to supplement prospectus and encourage

margin. quarter, experienced. quarter was third is condition. the sales imagined think purchasing, discipline as time, operational our the us we At full prepared around rigor very sales the and the structural same majority remain tailwinds we execution, we don't our ensure combined, products, I of ended, was net maximize and and know take our excellence When quarter. could that focus that of the and to the Specialty adjusted market Through So inventory which sheet have products record of use But performance. and sales also the our what industry team balance do efficiency to throughout advantage net our of provided during around our which sales analyst I gross on operating strong the evident management, any these strengthen and BlueLinx provides actions we opportunistically EBITDA strong, liquidity our the related

in historical seeing to we the we returning balance us permanently the a While markets wood-based future. improved quarter October, leave for positioning sheet back commodity well with levels, started

Jay, Now, for to any questions. like line the open I'd

Operator

stand-by Capital. line of Instructions] a you. coming from Nokomis [Operator the from Q&A Hendrickson we the Instructions] Thank question We Brett [Operator compile have We while roster.

Your open. line is

Brett Hendrickson

Good afternoon. Can everybody hear me?

Mitch Lewis

Yeah, can you. we hear

Brett Hendrickson

thanks. Great,

on between to flow just excess rid thoughts? mean, ask, QX of piece cash excess What term-loan know thought more I now, like kind are but you of there the think know, -- of just with go was rates covenant availability it's to leave three think past, don't some years. light operations are on of I credit out debt to what know the X% a on because on that about you like going credit wanted you the availability I next million XX think either you'd together? it payments up all termed using I there's and the guys in a of I thoughts to variable the get interest in or your line just I Just your leave voluntary significant line. are around thoughts from your term-loan, about making are what the arbitrage so X.X%, for just to

would safe I your be get I'm to curious to of pretty it thoughts. think it just rid now. So hear

Mitch Lewis

on course, that so with sheet there's you moving quarter higher of just Kelly Yeah, transformed the away arbitrage ABL. that certainly a by benefit the we've the term-loan obviously, from business. utilizing know, of had, of the indicated, And we have balance interest as

So if we'll in And we'll watch quickly. we fourth it it into know, we're as direction move closely forward you move sense, very and makes the quarter. that, comfortable to certainly do that

Brett Hendrickson

question, them the I do the is to credit would think now extent a them But because look would would to Okay. need a do And better XX leverage world that what trailing that cap choose if you're for your about don't looks anymore. least used you've because difference them choose like. the similar all assume things whole even to rate, leaseback to months I landlord in it better of you sale from equal right? future do am come to thinking maybe I got that at you moderately that, moderately to

Mitch Lewis

long-term not two we're market proven where we've historically, me it, of our we sale the value you know, to as structure, our current decisions, sure I we've capital from that capital the years Well, shareholders. perspective. at the leaseback I'm obviously, for thoughtful last a all maximize about looked But, really as real is of over course, look, excuse think

continue at path. the we strategy and we everything, But you leaseback move haven't anything know, sale makes company a of to down today, for going to it as would forward. sense the So look announced course,

Brett Hendrickson

Okay, minds, need the it. filing at of really included surprised size and as guys, the think myself -- in don't given our were shareholders, I ATM you the some you I

industry So what was million, how to or of just million methodology one houses houses need, what was if I want made the million how a made $XX between the with to the $XX you was fast frame would out XX short multiple the came match need what the $XX with the is given behind million in be and $XX $XX million a shelf builders putting company that next of just that huge shocked the on was or months?

Mitch Lewis

The was I creating be -- appreciate sensitivity first know, long-term know, you you potential with Team again, the I And we our shareholder take And value. clear, our And Board, ATM. foremost, very the of our about question. into it's determines enables company what three seriously. the think structure Brett, about I And like over price look that September the price we're very the the don't stock Management market want fiduciary intent will Yeah. completely flexibility, for sole years discretion all what our capital certainly And to capital and And certainly ATM sell and in duty. the markets, again know that basically the aligned shares some the to obviously at appreciate next us until XXXX. our or we three years. obligation

specifically commit capital filed will sell we consideration sense ago. not So duration SX this shares we want to sense to to originally And the the amount we and course, of in shares all question. program. taking future. obligation relevant thought made perspective be we'd the into set about company the always answer made clear year We we to option factors. time We that under have this no line at just to selling from the that with a up your that a the But I and

that's know, about You that.

know, think we're think, do, where about Brett can you last years that I proven assure will going. maximize we're for future I the great the is which structure, ahead. two We made really what years very And, know, clear. I clearly you, to And be the and you to long-term trying continue pretty we've everyone in and with thoughtful case that capital the we're over consistent shareholders. we feel that value BlueLinx a and our about

Brett Hendrickson

for Thanks your time. Mitch. it appreciate Okay,

Mitch Lewis

you. thank Okay,

Operator

Thank from you. Knights]. a [Operator the coming We Castle [Dickstein question Instructions] of have line Shapiro from

open. Your line is

Dickstein Shapiro

‘XX both How -- do you forward? in expect going increase ‘XX ability margins we both What segments. in on the should to gauge

Mitch Lewis

guidance out things. it margins, give what So, to are relates couple a generally about don't start, as can I talk we to future would

start Specialty. Let's with

invest and perspective We that a from in margins invested enhance historically have pricing resources business. the have our Specialty to with to continue we

team set we monitor, from perspective. centralized a Specialty actually shown a to educate, So help the momentum up and that continue we've

the that are, margin continue Specialty perspective. strategy Of really focus accretive to, you keep to course, and you business is to going enhancement the know, mix know, the highly our that, products issues arise. know, on, for company pricing you emphasize our know, to always But you from forward are there a

side, for is, Structural marketplace. what the in know, historically, commodity good business incredible come the you related from a we've an run-up to off pricing the just On margins

we indicated that we think closely down that we monitoring are it. But now. see I coming

expect the kind So in quarter. that saw the not would course not the to now of we third we margins -- certainly normal be

and historically, some However, improves, you overall, demand, expect at able look you there. you that the logistic to margins as know, business enhance be product like move of opportunity as would market say of then you all typical margin would from our categories, we to of business as of know, and forward. efficiently have we the from administrative the overall operate to standpoint, of feel to be of classic it take opportunities to would I the and standpoint, housing entire lot with we continue advantage supply a the And a margin more

Dickstein Shapiro

and competitors, existing Thank including the for [indiscernible] you. it. you or bolt-on new and consolidation in Got markets? your

Mitch Lewis

that are The sense of some And look feel enhancing Specialty distribution are will wholesale for you you are, are company dozens and question we competitors, we in know, market highly business. regional, that a for is, accretive that prominent. always that our this like There answer in know, and the at dozens you would know, makes opportunities webinar. distributors. view the I some

well. I is wholesale I'm would to certainly that. years I the continue from that way continue BMC we'll perspective, so sure falling to theme that, view be looking the there's perspective was consolidation a And market BFS at that share continue you're it's example, on my will its as in there. the customers announced garner that as and market to a large find happened builders really our continuing merger and they expected opinion that will ultimately yes, distribution from for in ahead consolidate aware,

Dickstein Shapiro

what Got you know, about in you are people of seasonal What it. in slowdown. of, seeing today, seeing talk in demand? then of terms today And terms sometimes you're terms

Mitch Lewis

and really interesting you good know, it's, question. Yeah, it's

sense to our was – because make is couple inventories To -- disruption reasons, the is, the to things price Structural in think saw particularly what track was to commodity perspective, housing the And QX, customer from there's during the serves as squeezing you our the we during single-family sequentially because feel like of we a -- the volume which the that correlative, a back pricing. for right. as some went increase was led there's supply other inventory declines base saw price One their supply squeeze-out It we up of incremental look that it's it the quarter. in we that like volume. make and chain. interesting actually if One the we of really increases unit been

the are So as to fact certainly in the September. for margins We're we lower basis talked than quarter. saw October, compared about unit also back that seeing products roll third August, the are increase in example, we that Structural on a volumes we we October, experiencing in in

Dickstein Shapiro

much your very you thank Well, Excellent. time. Congratulations. for

Mitch Lewis

Thank you. much. you very Thank

Operator

you. are [Operator more questions at moment. no Instructions] there this Thank Speakers,

You may continue.

Mitch Lewis

for of interest fourth to forward look Jovan. the you, course, in we year. results continued next first quarter of BlueLinx. thank in Well, your Okay. you discussing And And, with thank our you quarter

you So much. thank very

Operator

for you call. Thank Ladies conference gentlemen, speakers. you, and Thank concludes joining. today's this all

now disconnect. You may

BlueLinx (BXC) 1 Nov 202020 Q3 Earnings call transcript