BXC - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Fourth Quarter 2020 BlueLinx Holdings Inc. Earnings Conference Call. At this time, all participants’ lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. advised conference be being Please Instructions] that, is today's recorded. [Operator to I conference would Instructions] hand now [Operator Moll. like the Mary over to you. Thank Please go ahead.

Mary Moll

us website earnings release good appreciate posted in Fourth Thank everyone. section is Earnings for of Investors joining our Quarter The and XXXX www.bluelinxco.com. the Call. you, Conference the BlueLinx's at morning, you We

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

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

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

Mitch Lewis

record processes our capitalize challenges an while and and executing good benefits improved top these on and levels strong our for afforded morning. service. customer team, began operational the the keeping customer were the in financial We and a the created drove the opportunities year efficiencies Thanks, while investments focus faced change logistics and Mary, in and always well-being a to in our in significantly a from on BlueLinx and XXXX, has as with growth and second on XXXX national delivering company exceptional the initiatives performance people realizing in priority. efforts resolve, centralized company the at market the of We XXXX of has of BlueLinx, associates relentless were able enhancing half which challenges safety local included investments our we incredible we made rapid was team year XXXX, the deleveraging for transformation. with These pandemic process. share The momentum, service the level.

began categories. a our to also emphasis We company-wide strengthen with partnerships suppliers, initiatives key certain strategic product with on renewed

end we started focus the to the first Towards to fixed immediately the and organization controlling and employee resulting a closely capital rigor conditions the a the pricing. quarter, the and liquidity, and reduction of safety, impact BlueLinx feel through working market of of pandemic reacted on managing costs

short-lived, Fortunately, housing market the the to be through pandemic-related market second half to the recovered of housing the as proved quickly year. shock residential the

wood-based products. During we in historic a also this period, our price commodity escalation encountered

to XXXX pandemic second the These in the experienced. quarter into efforts continued and increased adjusted of in levels. XXXX investment us Our XXXX have as efforts all margin and off, to the results revenue fourth EBITDA, half in allowed capitalize our on compared gross the significantly with outstanding were pay and we markets to

over For sales the of increase net fourth $XXX quarter, XX% XXXX our an million, were levels.

a million of was the EBITDA of EBITDA the XXXX profit million. adjusted This quarter with of gross fantastic in in highest $XX gross XX.X% of quarter in Our history resulting to $XXX compares million The strength had margin adjusted XXXX. year and we company's rate $XXX $XX million. the our a fourth of in ended fourth

$XX million, principal $XXX of used this principal further the of with liquidity brings loan increased our million. term a working our now million expense. some under reduce the we this capital adjusted to EBITDA We week, which to $XXX liquidity, significantly Our by of close over the year million excess ended $XX management drove last while enhancement our than higher interest balance under our with year. reducing loan Earlier our fundamental below ABL coupled availability term annual the

have a first in the We new lumber full in company our will prices of the are having now, experienced to indices XXXX. of in rebounding decline of more earnings the two detail, historically historical panel all-time results falling to levels. the to were different Supply-demand which highs from our and conditions remain brought persist ago, both typical October, highlight and quarter, we surpassing more we towards a imbalances continued sharply and capital new were last before the into composite wood-based XXXX liquidity in have levels year continue December. and wood-based of year level Prices quarter fourth months financial prices first in to business. structure will these fourth peak a advantage high financial reached in the commodity at perspective, of flexibility and a the continued market both enhance business. When take commodity financial and prices Today beginning quarter that we the strength strength. illustrate than clearly renewed to leverage reported Kelly see we strong fundamentally

predict commodity a will they prices cannot return that when confident more will ultimately to are decline. we we normalized While rate

managing times in reduce robust closely categories Specialty So well. commodity supply markets disruptions to demand with disciplined inflationary associated in coupled as to also the continue mitigation many impact housing, we'll Structural and our our the lead utilizing inevitable the of approach extended product with pandemic pressures led inventory our strategies while when have The weaken. to levels,

using that strategies chain Our team great focused utilize and products. we product through staying done on supply categories has for a pricing job these with Structural our customers similar these challenges

through navigating imperative, execute important to organic market our the successfully also are on continue environment, most strategic we current we While growth.

product national national position extensive assortment, our excel for and efforts capitalizing a well chain in all Our have process include share investment we these rigorous categories a competitive supply us local to areas. and and excellent market product and believe where advantage investing emphasizing our in continued a accounts We identifying on team, opportunities. in that footprint,

of Another operational key to logistics, be area improving efficiency. focus continues administrative our our and

center efficiency investing fleet in reducing initiatives, our performance technologies. in modernizing costs upgrading operational labor Our operational of and improved XXXX, excellence, through our by

invest will operating areas productivity. to to these leverage We and drive continue in incremental

In optimization, these and investments, of This areas. significant on value performance facility layout to there addition through directly operating our improvement. ties opportunities are efficiency our transaction and process operational to enhancements and processing improve route automation to continuous for core administrative redesign focus improvement

we more excellent manner, operating while service everything on will remains providing through continue the one and our customers. number evaluate We in effective efficient focus to to lens do of a our

our like BlueLinx to entire history. work, the hard Before determination for year performance that XXXX, team efforts I our led the truly year in turn commitment to it and over to their collective a was through in I'd perhaps safety thank transformative challenging historic to for Their Kelly most BlueLinx.

than a simply year different were today We’re a we ago. company

the turn BlueLinx being walk in we remains can you and a the to sheet will execution goal the The who XXXX quarter sales the but support and strong the No detail. and impact more stronger we for months optimism sees in confident BlueLinx I over much the ahead. our my We balance growth And of to our predict will the months, markets last that now in full continue the performance that to industry it have Kelly, for And long-term team future am bright. one towards through serve. drive like leader opportunity. our is XXXX, in fourth this year to initiatives of our I'd future continuing operational of propel success financial will XX

Kelly Janzen

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

another reported margin, $XXX Mitch points the in related when year-over-year up As prior period net financial sales along of year-over-year improvement BlueLinx, was which to one with million, XX $XXX fourth mentioned, improvement million We successful our with up to quarter XX.X%. a in for a basis. on compared performance gross the basis was year significant

last also year adjusted given million of for the approximately adjusted year-over-year and period. typically net wood-based products, comprise commodity million the million million, $XXX full improved of availability the EBITDA adjusted year. are in $XX accounted of $X.X and products an such points total Net ended improvement to up and We basis cash sales their of prior XX% of and were highest when over net $XXX nature. current million year for products $XX XX% on over our XXX sales, million, Fourth sales BlueLinx's We with ABL, to EBITDA and $XXX $XX period. of hand million, cedar, EBITDA full under installations, for million the quarter last Gross metal million, excess an increased net year which increase $XXX compared reported full $XXX products, an year of by increase were history. molding, XX.X% year. markets the billion, to sales wood, our the between $XXX margin siding, quarter as These specialized to and includes sensitive for Specialty less engineered XX% of

are that demand the the panel mentioned. lows for Composite again, mid-September We from the framing Structural composite products Composite at for continued in imbalances XXX Index. American constraints Mitch the sharply the prices quarter peak and the finished rising at December, November primarily In commodity composite in previously lumber have Index housing, along XXX panel to XXX. Structural continued Structural framing the experienced of with impacted unseasonably supply prices wood-based whose key the by supply-demand inflation year mills. with attribute North lumber to commodities, be strong Our to for started declined prices and Wood-based and XXX levels, continued nearing fourth

the includes, million of sales plywood, we strand $XXX lower have of net and which Structural increase board, to million compared $XXX of to a As year. rebar million, products $XXX that prior quarter, a lumber, remesh, Structural been Similar sales the result, such by $XXX products, and between would estimate was as oriented range million. third an

in to million had the more market range $XXX $XXX year, been conditions So, for the the typical. million

have Framing XX% quarter comprised sales of ranged during Structural net the but contributed to As an making approximately up a panel and and XX% between fourth we quarter Structural remaining XX%. sales net the products for inflation sales reminder, total XX%. of mix sales recent saw years of the above-average in lumber the XX%

pricing offset last rates when year-over-year compared a resulting as XX.X% an range Structural slightly quarter Recent sales ranged of variable XX%. and to the third year. We between full in week from framing reduction XXXX, reflects gross year of be dynamics. of to XXXX, the increase margin gross extra related and was products earlier increase $X sales Structural total percent XX% recorded impact factor due coupled Structural XXXX, Structural between discussed compared labor SG&A the fourth to additional few increase rates than related and and due lumber XX% operating improving of with commissions the $XX improved net on the have to ranged It the strategy, moments by Specialty increased to increased sales of to efficiency. in having have also the that variable In year-to-date, million for to quarter I all sustained costs panel For a actions The of increase a ago, X.X% commodity was XX% to which volumes year by constraints, Structural overhead margin is lower approximately period, products, When fiscal results, sales, from financial primarily of million the related commissions prior more incentive impeded a wood-based XXX XX.X% the in margin XX.X% a is compensation contributing mentioned. was the along I in weather last strong points margin for increase We the two continue that was the year's period. compared This with $XX cost year disciplined the while Specialty incentive both quarter market quarters. $XX in compensation with higher rate sales year-over-year current million XX% attribute for Specialty, the the basis been and averages. QX are taken a Specialty just the margin last and is of an supply consistent million the we and an our XXXX. XXXX, than to and year to in million, which $XX increase to of historical robust. to

improvement compared XX.X% an is net year year of percentage sales points SG&A improvement an of which XX.X% half of SG&A sales over Our when more first of prior XX.X%. basis is points XXXX basis full is our XXX to which typical. the This percent net we of is XX believe also of percent

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

event of and as activity market reduced. be Of was fixed significant of $XX million sales course and primarily we fixed Costs income can respectively. related many disruption consider positive both fuel impacting such freight. generated handling in include and also are these for don't net and items quarter labor, to full costs year shipping fourth in warehouse the and the that third-party million outbound there delivery and $XX the We

the Regarding taxes year operating disallowed our rate quarter state full of XX.X% XXXX, X% allowances tax for was fourth both it interest. valuation for releases effective was previously net for and reflecting losses and the

addition, payments December in of tax we cash cash made impacting million In flow. operating $XX our

XX%. and XXXX, our expect federal now be our all utilized we and We of quarter have tax first rate to XX% NOLs of between effective the for

how calls, on January sales in XXXX am pleased control drove maintained AR a managing sales to working XXXX working our quarter fourth compared XXXX's capital our as our As that inventory have improved year. to increase capital around metrics previous discipline Higher strong quarter in we XX% rate we in Days XX% we net days or around since we a I discussed at especially year remained XX%. manage approximately purchase how currency changes compared have prior an we basis. and made result by period. receivables for in significant And improved December last of performance capital then. XX inventory. on our earnings the of working the fourth year-over-year

mentioned during just the building hub-and-spoke platform, addition in heavily Cedar to and such I These purchases we operations millwork distribution contributed cash which quarter. a as season. investments payments are million to use made moving also inventory $XX strategic are tax of fourth areas we in for the more In spring to both products where the used a efficient siding

provided expenditures the improved also coupled to our from coming closely activities to the million. put $XX quarter almost million $XX throughout XXXX. $X fourth full invested increase by We year. significant capital in With $X which improvement with earnings our capital Cash the year working close in at million in CapEx in managing million operating this

Our million quarter over the at quarter to $XXX ABL $X million given lower million at year under reduction balance were our to availability XXXX and cash same approximately last improved interest compared quarter rates. hand $XXX the to for $XXX term compared XX%. end and debt excess was million year in $XXX XX% decreased year-over-year interest Full at $XX year or under full or quarter million loan was fourth expense year. ABL. by and to million million $XXX compared the last XXXX, $XXX million borrowings by our and in the debt on end Bank reduced Liquidity

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

Mitch we bringing our $XX mentioned utilized our our $XX bank as And loan quarter to balance which to the reduce the ratio X.Xx. Our EBITDA this term and overall as earlier net by further leases ABL includes debt March debt million ended principal approximately X. million financing adjusted of at to of week

continue our but will currently at anticipate the down end by to of balance needs, paying the loan assess the We latest. on remaining third the term the quarter liquidity

the performance provides going financial growth of increasingly fantastic support invest company for sheet forward. and transformation opportunity us our XXXX balance Our to the the was the and of

been the efficiency. focus manage working to and ensure early maintain maneuver capital in effectively imbalances, we while has supply-demand Our time that same XXXX at our the cost

BlueLinx sales, ability our and last to mentioned drive to and I continue is expand team's challenge the margin team time, for contain optimistic be the As up I cost. regarding I believe

for the line open any questions. to like would we Now,

Operator

Benchmark [Operator the you. comes first Your Garner line question of from from Reuben Instructions] Company. Thank

now line Please Your is open. proceed.

Reuben Garner

Good morning Thank you. everybody.

Mitch Lewis

Good morning.

Kelly Janzen

Good morning.

Reuben Garner

product very last couple for strength? see Maybe Specialty sort just or that there could last could color and percent XX-plus nice Specialty categories in in that, that specific of mean, as Are growth starts of sort from of us we level next year. end we the growth acceleration. of start the through? summer the performance a you there? it the general Can I some of market flow with you're within strong. is what margin the kind seeing back activity is quarters I are guess, of half Is driving to give obviously some

Mitch Lewis

two have really seen. are that areas investment product there Well, categories. that the enhanced an we've growth is in in One specific

So and some have product drive we've are that long-term that the opportunities we actually experts business. in I some important who the are to brought into helping to the key strategic that, areas mentioned for I company think, and organization, in manage

it's -- into done you the business, opportunities on identifying and year process in we've at we now of at at look of the seeing embedded second where improvement see that on performance executing a piece specific the they relative overall are well. a The the products place they opportunities a company. we've a is, we're a seeing Specialty to often going in local about And markets, process in we're that. put we're that that level that significant the culture And as if local

real not and have the talked to critical forward. don't has key guidance generally, going results as Specialty been what and side. look So, to we're going business, emphasizing -- about it's we organic But on it we've on and we growth identified give we're the like seeing

Kelly Janzen

XXXX, think that focus think, rates Yes. we saw relatively And last has to that hopefully sustainable. really space and I continued a add been some also XX.X%. take helpful effectiveness and we Specialty at credit the XX.X%, to for in the quarters three price that, of And I on

Reuben Garner

new baseline grow. a the And continues that fair? for so to is we XX.X%, Is should XX.X% that Specialty look market of kind assuming at

Kelly Janzen

to that say fair margin to period or now a execute continuing I reasonable of to mean, time rate good quarters we've a that it's job in three over done on so. I think

Mitch Lewis

about opportunities across customer And our we getting really we've the and the see pricing we've paid services where the Reuben, organization we invested that base. to sure in make provide in we're that we're talked emphasizing for past the to

piece. important an and in say inflation the your that's the on side. impact obviously, Specialty in side, So commodity on moving that sometimes can but is, certainly would only seeing we're inflationary Structural basis on one I margins, caveat, The also an not percentage environment a

Kelly Janzen

continues is Yes. And said we're seeing in in my QX quarter rate remarks, have what I be that, Specialty robust. the this to

Reuben Garner

half price differences talk And guess less you're than factors you kind return what mentioned now if like? Okay. -- margin a declining blow about last maybe the Structural versus will business the commodity think I you commodity you the a XXXX guys that a perspective? margin side, of I normal the serious on some the back Can maybe mid-single-digit gross How how environment operating that deflationary environment had And think from there gross looks should was could to about then? the mitigating you and of then you on Can profile. was prices. time and we maybe

Mitch Lewis

thing in a we're a at that Sure. today. And perspective the greater you twice from had centralized a with level, example, as did time period. they we at our much important warehouses as if are for Well they controlling almost were basis, at we first the it time unit from much big and balances look most scrutiny that at is more than

centrally it down. with who traders comfortable happening the including which we've help in managing I perspective, enhanced organization. a mitigate will perspective, inventory -- field day-to-day from talked across to relates And closely communication the it's as is an dialogue experts are pricing Similarly closely very decisions pricing. from perspective a watching risk price again having it to what is going making we're as about we're a as So we're our helping around the invested in from

Reuben Garner

Okay.

in I pick secondarily, back working in do of maybe Moving I some anticipation some the I capital to didn't investment that fourth investments the assume question. growth. up guess you're had we in then of quarter? two-part One quarter. technical I difficulty. making in -- Kelly, some And the first obviously inventory

and this, timing Can clarify me? but don't know related. up I you I were those if said two receivables just assume pretty I was nicely think that for just you points year-over-year So

Kelly Janzen

Sure.

this inventory we As expect this typical probably some it I well relates continue to inventory we're to as to year season, normal inventory we time what mentioned. spring cost both -- would support for this of sales in and impacts as increase is we would and of build -- seeing, also sales. in in during the product the think our kind with quarter. building And we seeing quarter the fourth build connected of expect Is we did Inflation we're as and inflationary that of categories. some and

year our that continuing DSI well. -- as compared to and last significantly has mentioned, on to So improved but we we're focus as

the what really $XXX kind expecting to higher that kind of occurred we million it way to the end yes, in saw sales about quarter So is were of really XXXX as this receivables the when really inventory we during I at And see an And XXXX. from quarter. receivables think to that that's of we're relates compared the then fourth perspective. the for the point,

a doing commodity back and prices November. saw we coming then December margin But prices demand So really those come some and through in just weather to October side, we going volume slight overall manage as as trade-off macro start the good Structural a slight versus work off into going factors. kind we of there preservation decline stay mild saw with into significantly through and to really decrease the a we up -- the saw

as well. higher those number. higher margin contributed so we sales December really Structural the the high December And on followed with margins side along saw to that in in that where And receivable

Operator

Thank you.

the Craig-Hallum Group. from from comes Greg line of Capital question Palm next Your

is open. line now Your

Greg Palm

Hey, the and execution morning. Great. results Mitch, Kelly, here. Congrats hey, on good good Thanks. really

Mitch Lewis

Greg. Thanks,

Kelly Janzen

Greg. Thanks,

Greg Palm

was first quarter. volumes comment in you hoping on the I Maybe could

saw the price maybe to get versus in to trying that sense the how for makes much to almost wasn't slowdown it wanted quarter. magnitude seemed And Kelly quarter. volumes the Just of versus in associated the I in you -- just like the what a QX, of made volume quarter compared December confirm upside a you there previous that? seasonal that comment last

Kelly Janzen

Yeah. Sure.

of trade-offs mentioned, of supply of between more that we a the us saw making impact same year-over-year managing towards and shortages a the quarter. bit I I last some some saw little we decline contribute this from perspective a as some year. throughout year But through really margin quarter As slightly kind last really well as from the volume down overall, quarter from year, same last and Structural time

On December Structural, much compare side, Specialty unseasonably the QX we and to -- us saw strong up for we And saw as the Specialty actually it QX, somewhat slightly saw very month so. same. that up slightly and then very over it a contributing. was you about again we

it's fairly really consistent. So

Greg Palm

Okay. That's helpful.

-- feel the we're than and that up given some environment this working supply a well? that so mean, leaning feels and you in do I of of some even more I'm see in some on in disruptions significant that smaller and environment customers tie you inflation we're in capital are -- of wondering can't share gains going I it like can of where competitors versus additional you, normal your an if this on. your is those as -- maybe maybe some more commodity I environment of mean lot chain Just your see

Mitch Lewis

Yeah.

and customer we tend are getting As say that's important. time. a at enhancement I there that product marketplace. So the that your they to in share transient, gains or can directly. our the see service preferentially it is to might mills now supply share but find kind constraints it. point, increase to we commodities, market aspect they're base to say we this find that there would right? certainly moment by so perspective wherever clearly competitors supply course trying certainly shift us, smaller counterweighed And are that be it our a at haven't us, the they're are this to certainly constraints strong getting very And I from the material would at on it's trying but us look any out seen generally is the leaning of of products commodity get that on right -- also from from from perspective

Greg Palm

concern I high-level a housing mean, at. to of your fear Understood. be of the what like of cycle you're kind seems it building on seeing and feels where also little Yeah. stock I housing sort supply there we're opinion out things bit recently, commentary the What's pretty of or maybe still Mitch the kind There certainly your are to up helpful but get mean, should sense? of on strong. be

Mitch Lewis

are customers they backlogs very builders The that need first for year. to dynamic marketplace. of our half the the very to building optimistic, homes. in have Yeah certainly a the that generally And homes need finish build robust and they creates

and the know generally, obviously say, tailwinds. would I from as move away urban So, centers, that mean, as Greg you are well I know, I you have the

a risen impact the don't on some that basis short-term. that they're housing. they've low still ultimately, And you impetus. little while And also hand, should that rates so other the interest over But inflation. a certainly have bit, may provide on You that, historical see we have

Greg Palm

sheet your are over it's transformation largest been just ahead, what the mean, then, curious, and allocation priorities, balance outside the I'm And of phenomenal. debt I year. as paydown? last reduction really look continued Okay. capital the debt you

Kelly Janzen

I Yeah. strong coming very our excited that's while very months XX off proud We of mean, right now. trailing about and we're think, I know leverage EBITDA.

looking see we We're That's be year. that's We've to We're -- going to, at right to we also go continue the an through strategic as certainly of -- this focus stock. at. investments, looking whether for area rolling deleveraging. where that we'll be to got looking our need make us, on next focus investments. we're a technology some So maybe

the anything if going that's to productivity company. into So drive

the are the allocation. relates it for those now, So process to of right us as kind thought

Greg Palm

clarify. want good. to just That's last just I Okay. then, one, And

running you said, was gross was hear that think, Structural at right? XX%? margin Did I I Kelly quarter-to-date it

Kelly Janzen

-- That's yeah, our recent that's what rates looked have like.

Greg Palm

it. Got

XX% the first in least increase months pretty you at of to QX. few December, saw so a relative in the So XX% big

Kelly Janzen

just was a quarter. down to yeah, for be up there the and Yeah. quarter, that XX% be That's just -- right. clear And, the for fourth bit but just rates quarter. quite to It's the on within

a into then, So we slightly we've going in into in about into range coming November, kind down consistent prices we average. December. we then rate that And of X%. the we And the and saw that of lower bit, what commodity up move started with than October dipped double-digits, down that, back for quarter to seeing kind was saw pretty a XX-ish

works a, of as up just So the depending we our spreads we of go average it's depending see And similar when and we that it bit cycle it what saw, how really followed a what down quarter. those in path, we QX. -- the able talk cost were had But on and follows down, to market. a really And prices about, I on for demand, as discussed with up that think the the inventory.

Greg Palm

is of detail The best luck color going it appreciated. And leave there. Thanks. much I'll forward.

Mitch Lewis

Greg. Thanks, Okay.

Kelly Janzen

Thank you.

Operator

Speakers, further Instructions] [Operator the I'm queue, seeing please continue. questions in no

Mitch Lewis

day. first BlueLinx. months. time your interest very Well you. next with we results in much Have a you, your the look forward great Thank to thank quarter And our and few Okay. for you sharing in

Operator

you this gentlemen, today's and participating. concludes conference call. Ladies for Thank

disconnect. You may now

BlueLinx (BXC) 4 Mar 212020 Q4 Earnings call transcript