BLDR - Earnings call transcript Q1 2020 | Builders FirstSource, Inc.

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Operator

Good morning, and welcome to Builders FirstSource’s First Quarter 2020 Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions]

Today’s call is being recorded and will be available at www.bldr.com. It is now my pleasure to introduce Mr. Investor President, Vice Sanghvi, Relations. Binit

Binit Sanghvi

Chad good Thank referenced Relations bldr.com. Financial Builders on Officer. Builders welcome Officer; on are the the A Investor copy slide call and First you, the Peter Quarter presentation Chief today me this Ana, the FirstSource With XXXX to Call. is section at Executive on the morning, of Earnings Jackson, Chief website Crow, of FirstSource call and Conference available

to that financial during other forward-looking we cause trends. and note subject the statements. course the strategies filed we of concerning filed XX-K Litigation call, publicly me differ Before are from statements begin, industry conference could the recent our obligation may any Securities are no and expectations. Private with SEC to the Reform update to this The more let certain which on considered actual or and the to Commission forward-looking Please reports statements Such company’s results, most revise Exchange Act materially risks statements those under refer and uncertainties, make of future risks. information company Form undertakes for prospects, business with Securities and results XXXX

this The will call. adjusted company results discuss on

available our We X-K equivalents financial release in of have non-GAAP filed provided press measures reconciliations yesterday, of GAAP our our Form are in of which measures non-GAAP on financial earnings to their and explanations both website. detailed

I will call now Chad the to turn over Crow.

Chad Crow

communities has the get values to We those frontline joining those through gratitude our to the also situation. by our responded upholding Builders of tirelessly take care have say team on FirstSource incredibly all. our our with that proud well-being to you our impacted customers to responders, am all of thank and worked to care who protect and health of for pandemic. by other, core how the thoughts each help COVID-XX I and us. the I’d first morning, like first workers, Good us this the are express

to actions offering. pay leading have debt, product and our closely an several through significant integrated we our customers operations, flow improve business, more cash our XXXX, For partner taken down years with expand up to optimize

While the period since way has This business through February, to additional our quarter an the phases has the first taking power effectively pandemic, demonstrated also business update history. us at point performance, to to as transformed fortify company’s the steps in COVID-XX economy initial by U.S. our unprecedented ahead. while in our the last uncertain pandemic the strongest entered our our allowed in of for solid

planned began the Last commencement of quarter the in I commencement and asserts before replacement. at the announced economy, – my in retirement impact our pandemic the to from XXXX

the Board rapidly economic stabilizes, the I the coming notified my of the landscape until have company the intention with more uncertainty of resumed evolving along operations. virus to situation and normal has stay Given market months, the

We are this company. emerging crisis stronger on from completely a all focused

update Before landscape actions have the we market discuss provide some and I’ll taken. an results, we on current

strongest the pandemic history. in we point I mentioned, company’s at As entered this our

As an customers focus critical to and we with health supply to paramount essential on continue safety. products business, a

and well-being partners, team We channel our where we prioritizing the communities operate. of are members, the

suspended, or open, states shrinking. of activities so have continuity. while of except counties were ability remained locations we our construction all but the have the do where list in that Fortunately, to maintaining operational states Nearly few is

swift local place teams practices, needed. dedicated have and with compliance implement as in action orders, We ensure monitor best to shifting

customer details access it regarding and do an delivery, our with helping quickly complement for the where with BFS easier face-to-face effectiveness. innovative of with Builder statements receive and business with make addition customers in their Customers connections many automatic contact. safety minimize and My all In the we to goal notifications download customers us making payments, our of account, investments the distancing our that being, are us place, we measures social portal. time physical to have in and This our protocols customer can first-class for overall put maintain includes technology service

Our business major performed again were We financial well our to quarter, March. success. quarter contributor and met month the in of during our value-add the products first expectations and the finished our once even strong, a

Looking factors like to for months. coming call I ahead, would several are there out the

existing customers under our complete construction. During worked vigorously the quarter, units many of to

valued am that keep critical our they a to the many provide projects teams with needed moving. able partner As proud I products customers to were builders, to

sales quarter completed softened have replaced projects. economic ended However, coming projects new as and declined conditions into the not fully home the and pipeline in April, the

end an a proactive steps to result, enhance air we to be in conditions of total including the we actions debt liquidity. the in will the market end of and liquidity, At have announced Last address recently of of abundance seven flow. softer years. of $X expect pocket million and liquidity, March, cash to activity. As of of taken what $XXX Out tapped we financial month, billion million the maturities month next construction an we we markets cash with flexibility, had total for our April $XXX debt the caution, significant no

can, spend; expenditures; resizing we capital; needed; include: limiting response operating in are while as minimizing approach reduced While maintaining added costs as protecting and an we we preserve mitigate On short-lived. ability to demand corporate capital balanced the and optimize in the jobs recovers. In profitability million Recall of initiative Board market. reducing we are delaying optimizing to efficiently management These the to of taking through are respond operational existing as growing a to expenses; on in downturn our helping cash many tightly side, we to and $XX and worst control as our be that will EBITDA believe XXXX, managing the excellence profitability impact operational senior process difficult, discretionary where working actions, locations enhancing COVID-XX, to while our and demand efforts a pay.

to across footprint. We prudent to will our a liquidity strong actions position nationwide maintain operate a and our take safety-first business with continue emphasis

economic and and of crisis the duration current our are to to we well prepared the extent through economy unclear, as keep succeed the begins While to company improve. it positioned navigate remains

to who now call turn quarter our sheet will review detail. will results the Peter, over more first I and balance in

Peter Jackson

streamline confidence billion Good this Chad. of you, in rearview our in during our structural We in business. morning I’m growth time. quarter considerations work quarter our is X.X%. of quarter the the with $X.X net supporting mirror another near-term point. will see proud core that I delivering the the first Thank important everyone. to of had first results as at review, elements sales customers in given we this and also I strong it communicate dynamic will highlight our help organic in team’s

it core heard a this believe me a term business there, from way growth the and quarter. excluding impacts, an days in You acquisitions, use our to new We net selling differences commodity new by organic are of underlying discuss we metric efficient right introducing is as performance sales.

total as Net increased Core mentioned X.X%. was I in sales organic growth X.X%.

to day inflation and past was over year minimal added net tuck-in X.X% acquisitions sales. selling additional one X.X% completed X.X%. price contributed Our the Commodity added and five

the and organic a Our products. per those value emphasis reflecting of those again way day the categories key basis on the on added of core product plan execution our continued led businesses and strategic

commodity margin. gross with product points lumber expectations The not year the deflation, and a XXX the our margin communicated decline which Last percentage lumber we to a due the previously to XXXX. result in Our strong our period goods line sheet compared recur and in experienced for prior did XX% was quarter. was in of basis normalization year, tailwind

we Amid price have mechanics and discussed of our has during cost our customers. experienced first please relative to price keep deflation on benefit all quarter recur and as short-term margin we benefit first not XXXX, expansion noise to related this that of continue in when of prior expected this to the the calls. the short-term mind margins XXXX. causes gross quarter We provide in the percentage dropped rapidly of COVID, did commitments Commodity

we before to Interest face of COVID-related $XX.X to period by the million increased million from markedly to commodity prior compared February in in expect results. impact inflation increased levels At expense our see modest same Commodity interruptions. XXXX we $XX will in costs of this QX point, last retreating the a year.

Excluding the was expense to interest million debt one-time lower outstanding related extinguishments, net by a impact year-over-year. balance down $X on of items debt

by million previously of the decreased end First The XXXX. driven normalization quarter $X.X decline the percentage higher gross in expectations. quarter the in our year-over-year to margin $XX our largely was EBITDA first discussed million representing of

under millwork again by customers X, evident business On our can Slide our our of that as relationships local complete national the in strength remained and with to units products of volume push the categories. customer estimated manufactured see was manufacturing combined driven scale value-added products – margin and of growth Higher strong you construction. XX% doors, in product sales X% total and quarter at windows,

on and broad earlier R&R XXXX to was Slide core in we first organic the broad-based largely in grew other market organizational we across growth the in growth thread new with regions. started single well. XX% is organic growth an X% improvements. improved X, A timing X% value-added On by organic in country. with our the estimated the that all quarter our Core construction growth end of other market end family products single as common when projects of implemented in due Multifamily family

Turning flow. balance on to first sheet and de-risk cash our X, Page me front-end liquidity address let

outflow of approximately we the free of an had During cash million. quarter, $XX

the build Chad reduction use taken the up quarter spending for in to around This cash year including CapEx point typically as half. clearly nature increased first is preserve unprecedented we cash low have seasonally shaping be cash and aggressive vigilance of a an working discussed, we is capital. first The action year cash significant in to as and and in the our second half in up flow

net working range. capital. basis, the focus leverage buildup our a down are and that On well acquisitions, the to yet prior of two The With XXst. the to pro year three and to for of fully net X.X quarter times X.X at let’s prior the current increase as due to our leverage, forma December end our environment. compared seasonal a of half partly reflected the backdrop, up and was from sequential resources funding and targeted is low normal capital ended structure times which the in closer on our a not as times Looking half we EBITDA,

debt spending beginning discussed recent already our made provided, in liquidity in cash recent the moves cash. to are so I’ll address out and the improve Since have measures, our of have preservation year, we the financing push transactions several maturities months. that to We additional access significant

off pay million ahead debt $XXX million issued from notes XXXX. of mature nature senior and of a we This plus opportunistic of use impact $XXX proceeds February, on in unsecured transaction that years XXXX, was now in in timing portion COVID’s to unfortunate existing the We matured of our notes. First that the economy. in XX XXXX

In in funds the notes. drawn we our to April, remainder XXXX, pandemic, proceeds the those and $XXX raised an million repay additional facility in response We left use credit XXXX senior to under revolving in the cash.

these transactions, representing have cash of than – approximately of in liquidity, $X increase million Following total $X quarter. billion since of the XX% million a the we first end greater liquidity $XXX including

structured average extension a since maturities our schedule three-year the full and in XXXX, balance but that, have We $XXX challenges of of have million amount in schedule the offering, in believe That interest the our Including of maturity our our sheet $XXX term year. We eight no a ahead. range be average weighted we the of years. due million cash to loan an to weighted beginning to $XX in XXXX represents the expect year almost recent maturity appropriately XXXX. until for bond face is we the beyond

to over available We covenants on revolver. us our we discussing have have worth no and $XXX million

are a flow capital draw down but to not at do time cash prepared so expectations. needed, reason on We our this free see to is additional do based

objective at this is cash. In primary preserve terms allocation, capital to our time of

CapEx. have hold investment acquisitions on plans We including growth put numerous and

of anticipated initiatives. originally capital had value-add our growth around we to recall, expenditures in invest you If total one-third XXXX

in – those of to some be that full for to spent been $XX year. has now range deferral the capital of growth the While projects, million with some of already $XX we the expect expenditures

coverage position, fortified ample the the developing have strong balance In and economic a our capital quarter navigate environment. have ended summary, we sheet further to effectively with

his I closing call will now the for turn Chad to back comments.

Chad Crow

Thank you, Peter.

have is prior it downturns, stronger through and much ago. We a today was than managed our decade business

value a top scale are the just our added of few XX of Today, products, vast customers largest density Our business. product our our national productive the local portion reasons. portfolio and which market more high-margin efficient, of across XXX MSAs the are and make

Our a end than our much we integrated ever long-term is more deeper of net and before. at target customers and with low leverage our the relationship have

much of are We lumber. more supplier than a

We just-in-time are delivering them labor maintain a many delivery partner savings building supply critical highly very of sophisticated valued streamlined a builders to chain. helping materials, and

today, evolving In we As history at environment. year and times I’ve point in several uncertainty the current rapidly in than we to prepared full are April, homebuilding mentioned our due the early guidance to withdrew address economic any our unprecedented market. better the

of Similarly, timing financial impact did previous not despite are goals, a economic we review under week in in targeted plan, outlook putting prior our COVID. our pandemic. regards communicated Our we until better to of the view long-term contemplate COVID-XX our have the XXXX also confidence long-range

COBIT lingering pace the economy unclear. the the of on remain duration crisis, and the regarding impacts recovery uncertainty the of The

prior other pace As March factors of to high sites down decline off orders mandate some combination April resulted strict including believe for complete This shutting move single-digit health in year to obvious reasons. tapered the construction local certain due percent organic place, during projects customers as core period. due I shelter through mentioned month the compared in this conflicting of to hurried for to and net a we by sales was the April. in We earlier, builders a

understaffing have delaying, critical production teams offices schedules. permitting government at and Our also some noted

the that limit as general complex that public and recent recommendations up virus. the the in orders guidelines, many home months uncertainty, will spread starts and there to prior pandemic factors home at have to significant begin weaken the some level pace construction more have to services. We builders buying backlog started our stay operational, precautions coming At a it reported And and social has months likely economic of logistics that accommodate of said, demand sites of new the That projects further believe to deferring these market activity. we are weakened the still ramp near-term make believe at become in new are home to distancing environment due completed the before products the of be will for again. essential base

into similar trust We the by in are the uptake two orders trends home past new panel encouraged have and sales in uptick reported in and and coming seen weeks our plants.

perspective, second to adjust for and challenging continue order, as operational business and From financial positioned an we’ll we are needed. our well a

many and Given assumptions. visibility of a depending the limited range of on a have on length severity the of future economic impact, forecast we sets internal

cash we are While lot and we the structure, that our will the be our contingency to our capital analysis positive remainder planning, scenario publicly position, cost our business excellence not XXXX. a able operational disclosing year believe produce for of our initiatives, free flow on full based of

ready adjustments remain quickly. We to make react and operational

balance sheet our align and liquidity preserve to continue strong costs will with flexibility. to will demand evolving We work environment our and the

to years have value-added the business for products choice in to building the and of months materials supplier We full our and confidence be come. in

recovery. diversified call Operator, enhanced in to –competitive during reach, with capabilities, geographic strong and thank customers Builders any communities like dedication would and the this open especially our we and team product time for environment. competitive customers partnerships their into I up are now manufacturing national Our advantage to market volatile unmatched, the can advantages FirstSource for company, the unwavering Q&A. offerings,

Operator

Thank we’ll Yes, with Matthew take And question [Operator Barclays. you. Bouley sir. now from a Instructions]

Matthew Bouley

so it’s Do categories that of to whether What for you market you – those how doing continue become of potentially you you the far seen thinking particularly reasons several are it’s on prefab about about Hey, can products sort sort well. take Thank taking talked value-added labor it think to guys construction bigger-picture less continue questions, prefab this over you. thinking take a have varies the components, can this more to Thanks know by for a adopted. prefab in share? several hope and could before, months. I wanted where but environment. more we’ve been good the in these Are where available everyone’s here dynamic share? morning. ask and I question next and or

Chad Crow

trend don’t going a that’s taking reverse. I It’s share. think Personally, to that’s been

will it continue share. to take think I

revert in a reversing. They where sites. could few builders I builders see require job their less think on the creates there back. I time job It it But the – general, it. see the value that on be don’t I it can people could and in trend guess efficiency sites. instances see requires less

Peter Jackson

the cycle I agree. grew last in value through add. We

there argument be there’s cycle was there that more a an the is during made, labor think than last – during was will to one. be I there or far availability this

confidence. there’s like and a rely So think for homebuilders on. the that reason This use I every and is product

Matthew Bouley

it. Got

That’s you cost this I continue could sort excellence but around taking in also that are actually on? of kind wanted you I ask terms guess And but timing of is, that you. what Thank my Okay. you then just understandably operational so, pause operational to can big-picture some about the secondly, helpful. Chad comment I thoughts, about pushing excellence, of then initiatives? in environment for hear those savings the What to XXXX? your thinking question mean of – of out the just what a in want made,

Chad Crow

operational the But full Maybe The intention growth I initiatives. no to is initiatives. of we’re wasn’t now, and on excellence on right initiatives Right excellence pausing M&A Yes. more have activity. operational our pausing clear. ahead now, on some we speed

Matthew Bouley

for Appreciated. Thanks guys. clarifying perfect. Thanks Okay, that.

Chad Crow

bet. You

Operator

our We’ll ISI. from now Evercore Trey Morrish next with question take

Trey Morrish

be How the today bit the could playbook to talk bit environment around a are to going Thanks sudden very uncertainty, last to around cycle of last little during just out hear little compared much nice you’ve you the do But a all view cycle? all the current you the also that to you’re what it’s we downswing? well downswing. as more. given sticking guys. is that so you’re challenging Chad, doing And pulled crisis much related how for financial

Chad Crow

great question. that’s Yes, a

out it very wasn’t the team is just been me that their field. our adjusting was And all, they of I XX% around, it thing the First of are but across around. has seasonality not guys where about for probably includes and that a good markets gosh, to one perspective bet, from for operations changes this, factor. seasonal the given demand That’s demand. like is the situations upper in year, way life just Northern – just a That’s in in huge of especially a them. a in

And so, that all the to. now, Right initiated And have to playbook it. because yet with we knows good those news an we the needed haven’t how honest, team deal is we have plays we experienced haven’t to ready. be

held remarkably Our up sales have well.

states and adjusted in time, close were for where but we like Now did back. those cost layoffs as opened we’ve been some things we period required folks able of structure, most a that bring up, back to temporary of to and our we’ve

being our to said, like. going the it’s that we we not crisis. in a structure cost is the will crystal the ball going be to be slowdown anything adjust coming don’t like look prepared and Personally, of last to think I what do Now this months, have anticipate accordingly. I

to shorter lived going be it’s much than that. think I

I are right the much think now. underpinnings different

like years We’re were not XX overbuilt ago. in we an position

position still were an we now. underbuilt argue could you fact, In in

a through, work bumps that that along there’s There’s some me lot to is be of of will but hope be way. to a level this short-lived. going still positive we’ll there things have the high give relatively that Now, unemployment

still some some of drive own. drive rates out think cities pandemic I space and some could wanting homebuilding. of people low. their additional Mortgage are big could That the

lot be years me So, to short-lived there’s gets ready hope years give ago. ago, got that and a that boatload XX we’ll as and react. like of this nothing things bad will a relatively If we’ve liquidity, be it as of XX demographics. the There’s

up compare manage next sheet few team, out got Will deemed said, quarters? business $X But very But ready that. will billion few think through us. got couple be pull to quarters able thus be presents to when Yes, got fortunate what the remarkably I, months that’s So business, as whatever a balance we’ve – to and be now, went experienced will coming far. economic a of we’ll and I rough I going – XXXX, you anything again. see we look, and been there right but now, as be of our through the like environment I current be, right liquidity, being it’s we’ve an we’ll well don’t held the we’ve and what essential there I we in in think playbook has to an

Trey Morrish

for with that, digits acting being guess, Okay, customer type you in least then color kind April and just acting in differently, thanks can spectrum at And private it’s that for I Whether that. down value-add, any you of types high whether the or differently? if core qualitatively. growth. organic you your public you’re seeing I’m talked builders talk about on got single of you wondering Any or can different provide could they difference build-to-order about there? versus

Chad Crow

It’s more based. regional

expect, Florida, Northeast, going been Georgia As hit on. region. opposite hardest. anything of down was would is, The they’ve other wouldn’t the They’re any you there more that around you gosh, know than and down the in up probably

plan first Our and up year. results on are prior so far

And and fallen kind in between reasons we’re the that. seeing so all those bookings are that are other the of two

shut So, operations much we really in a by haven’t builder and, pandemic type. more It’s difference down the seen really those is really a how geographical regions. difference

Trey Morrish

Okay. Thanks much guys. very

Operator

take with from Stifel. John our We’ll next question Baugh

John Baugh

Welcome you you. never Thank It’s like back, left. Chad.

Chad Crow

it’s great. Yes,

John Baugh

filling materially weaker that way, last bit. I first? Do open, wondering any few – on deferrals, little the you was or a on question to sort felt the then a actually you’ve areas remained of in the results a read have they’ve sort where obviously might been then the you it’s was If those you. is was of whether and on closed, they rebound those And through that front cancellations as I little would that. sort where Thank right pipeline in States secondly, from I on if where building sort of you have assume weeks. construction in is are curious I mentioned end. that last the

Chad Crow

I the still is your in demand but to is little it’s a states we couple of tough there of months. think assumption yet were we little as there of is bit think bit reopened. surge, where we Well, a see a closed, In pent-up correct. We think worst it’s some to Honestly of come whether next or got deferrals on, question cancellations. be both. I a the That’s

You’ve were How got filing unemployment pretty in the But the say strong. where XX million know. those are still people homeowners in potential that I for I now. our near-term? are many don’t of southeast, results can

and still We’re starts pretty these wish a cancellations. is tell I I of will to new think But new pipeline time think but answer, time But tell. be whether I going seeing I solid on the are construction. will deferrals both. some had or the of guess my it’s

John Baugh

But and your competitive to you’re understand. pull the positioned do as I trigger? going of you’d What seeing or timing-wise might going stance? now. where downturn. even there curious is fully obviously And Whether change correct, opportunities not sort would you it more take the to M&A landscape if you’re then this how be think to sort what of into

Chad Crow

times, incremental those have don’t there. we’ve lot think as debt. out took will Yes, In it been it a weapon. like than otherwise and liquidity opportunities have I lot king. is uncertain What of it. have wouldn’t I’d is clearly, concealed know. look this a I a not Liquidity But uncertain rather that need – do times, not need discussed, in and liquidity like. will create it, we

think there opportunities better once acquisition incremental out and there’s So going levels thing downturn, coming it. consider but need armed that to through is us have last this liquidity, I’ve don’t personally, because to learned I and out daters we’re the it’s

if I will, situations so will advantage of things out ample have take come some these think like, to will able And that liquidity to we they out. turn be

John Baugh

Thank good and Okay. you luck.

Chad Crow

you. Thank

Operator

with take next from Dahl RBC. now Mike question our We’ll

Chris Carril

– us Thanks seeing on taking pricing. for is the the Mike. start impact could for update going when an Hi, us My Just this just of timing could Chris you my any inventory the flush the questions. lower-demand your have – in on is to your you the question given Is lower you going on if of backdrop? way out help first in you’re there and results? net on light unlocked just of forward prices give

Peter Jackson

nature gross mean the of impact commodities Yes. I generally through in We the quarter takes Sure. pricing, two run-up middle will the is resetting pretty in but first sort of P&L of about that terms consistent. saw one the our flush pricing. quarters that margins, the quarter, of to on

through Now in back to this work potential got case, be again, still the inventory. that and because quicker, it you has went down to it up then little came a but

inventory we sure on We’ve disciplined about the distributor. our As of any been brought less the far that as year ago. to make didn’t still material changes said, cost inventory in levels, days of is amount get we’re that But inventory than behind it we a was demand. very

ground. on inventory So we the have

ground. has in that progress days the continuing made will to date made well performance keeping last keeping continue We year we our sort the think year last on to But managed. we have that in been that our of inventory I

think that that manage. pricing, manufacturers to of to I it I overall and commodity know go back a say would have that it both the for a ran down. offline lumber job and bit, good room capacity but lower. much much there’s taking OSB done lumber I don’t settled up

start seeing to again move. when demand perspective a really back things up prices to the ramp So, of as when, and homebuilding from matter a all, it’s if at

Chris Carril

saw performed relative into for question, you out, category. And break deeper how second value-added could can by product my of parts to company there helpful. was Got the mean, the could drill a just little business hoping it. average? I way you the April, then Thanks. I any in That’s specifically your trends Is you you

Peter Jackson

don’t definitely want into the we April. So, to down go weaves on

things I goes where trends to this start it of we’re future lot shelter mark is It’s from whatever it been the of digest a overall what to as you largely expect that that into question consistent pocket think going to call air about have place. transition the or us. the in

in orders really, going starts, us through to Chad starting know our – the permits improvement harder. to window to customers. already we’re that to like see to when said, get expect We’re you’d from it’s things But a the our we’ll characteristics sorry, monitor homebuilder and But normal going there’ll homebuilding to where customers around. the expect starts in communication, to have watch turn here be our

Chris Carril

Got it. Appreciate the color. Stay safe.

Peter Jackson

Thanks.

You too.

Chad Crow

Thank you.

You too.

Operator

Keith SunTrust. We’ll Hughes question with now take next from our

Keith Hughes

two One, to once us to your have bottom where take I will and inventories questions. right in for you. tick up right long direction, that see the homebuilder Thank sales, it are how your in start orders now?

Chad Crow

know answer there’s hard that, I fast that Yes. Keith. don’t to and a

this backlog. that continue little the I look is it’s the like range a be really couple good bit little that. on and the to at interesting a weeks through homebuilders a of of It It’s of a think we region, at, build in But dependent recent customer, a I couple that a bit of the of buffering a as one aspects think question. their or least of happens months. past, could there

construction. expand have contract of ability and under You sort this the to

there back to normal that long trajectory? little question initial that. I to or when And And of multiple a it bit We’ve gets bottom Are a look of we the bounced what lasts. think It’s normal, how shoots on indications started already that like. bit the some does does we’ve green it see little of that dips? orders. seen it a off continue

Keith Hughes

Okay.

period to will because lumber off mess question, get bit Is quarter? time, the sequentially competed this going get, in a little of hard be to once prices. that that. extra Or difficult? case margin It this Second the environment whole you a just from of started. Typically, tend pretty the so is fell second for away

Peter Jackson

Given how fast and I it time. probably it’s went down this back the latter again, up expect

Keith Hughes

Okay.

Peter Jackson

was it two. month Because a or

Keith Hughes

Yes.

Chad Crow

on in and just facilities just to expect there our where see the I’ll And volume a we add, we price get may working. little folks business coming to opportunities aggressive be the keep our through slow keep quarter, as more

fluctuation in commodity have any time would advantage prices So that gotten of around. the this the offset could – we from some

Keith Hughes

Okay. Thank you.

Operator

from We now with Davidson. will D.A. our take Kurt next Yinger question

Kurt Yinger

details. And might some goalposts morning, reasonable change to about everyone there. current a benchmark? on how variability declines then guys thanks I create there just wanted of the be margins, still kind double-digit that environment? there the to might the margin thinking decremental EBITDA you that’s on Or think and low trying a you with kind associated think just about downside I range. Do volume start the typically for we trying think and of maybe that and gross should on you maybe anything all Good Yes. to about target in is think

Peter Jackson

Yes. Kurt. Hey,

that’s on, recap other Yes. past. that a right maybe question. couple lot have great You’re that a particularly of of the in we than I about things useful detail know I we’ve don’t a talked

to tricky temporary. part The that in around thumb it’s being temporary. is gross SG&A see deleveraging, see declines. of a to degree, the particular impact downturn margin variable. the certainly a the variability expect situation on size will We in rule of volume correlate the to small in is The extent margins. this XX% The demand as we know demand in will We of as

critical extremely we because want may end. XX-day make keep a you let to and So, few away a some on you them There you have or that hard around are to retain go sure lost folks business to volume. that this to a are the slip some back more and XX in roles which ready in window recruit don’t we’re

goes bad see how good and versus down directionally business So to fall Sure. how the the is likely the or through to That that don’t a it much want do that’s just think get and business I in that I we a much be. to wrong. Yes. protect as appropriate. rescale us we time, question for down how of be it’s do for mark year. overall for question be range? could think Do net better good is it No, a could window worse? But it

Kurt Yinger

helpful. that’s Okay,

headcount profitability might around question. next It’s when on you some to at the kind You short-lived kind got certain for timeframe or to that point, permanent start do about business. into the of really of decisions, right, there more kind touched there actions how of a the of think downturn. you potential way any we and a that the leads where you “All perspective which from be? mean, kind these margin protecting balance my facility a something is of I relative even of to Is defer of say, but kind maybe taking

Chad Crow

Well, that’s most and question the also probably, right now. a great things struggling we’re the with

up well. been fortunate in really As I has said we’ve our far, very earlier, thus held business

to that expect decline. see We

be relatively decline. a still not months, currently it expect short-lived. I to years, relatively say, also short-lived, When We

to some a that, said, team as investing long to as got go so Many, willing just members in, our we folks. am be and a be many I as do. be of business ready in – for want not would let Peter these employees. want to And We’ve certainly key things of fairly to would them ride to believe our we keep – lot recover. when talented We the to things brief keep and thing do right employed, to out downturn people

little that’s right day, relatively few the that be assumptions a little we so if clear And accordingly. may and this we’ll to next under now, we’re we short-lived. more. question. that’s continue Every working downturn, adjust may a then months, And longer becomes and as learn the be the over be off But going weeks assumption it our tough

worked. to keep in in defer thing to in our to reduction And going is letting look people what long as hours and as get more like. – labor, want so can reduction business as there’s go, clarity far a be time there this on buying temp will permanently as we that there’s a there’s some a we overtime, anytime flows, order in reduction But

Kurt Yinger

All right.

on of then challenging something from lot you on Thank relative competitors? or you a perspective are the sense. with – to makes color That product? an associated competitive that your think your and side And you. in yes. or Any you. there some how how more backdrop of Thank the a your scale benefit potential just helpful. be liquidity And would order smaller of more maybe Okay, compared that do retaining kind about might customer front, is suppliers lastly, seeing approach, is who benefits any

Peter Jackson

billion going that on there can marketplace with anywhere So, I is $X the count the that in real liquidity, in I us. a we and clear guess, not one, think understanding are obvious you

owners because are. point, time think horrible boy, them. kind supporting countries I to of pass that cycle to continues are competitive in portal, of in you’re seems the And that really country I desirable to trying through of isn’t the operational some perspective, it with a And that continuing the reliability smaller it excellence position continuing services we to It’s Builders like one a to decide way and reins. our can’t, an when we’ll a this advantage. be to in when always to killing their sure better to us that dynamic that reiterated you’re from this react. over business able FirstSource continuity. this It’s an and parts in every come that sell great. having strength to talking offer work moment them. you’re is parts to where environment time, – a it them to invest Being area with again, group those good as that are a such Maybe how customers maybe continuing invest it to make – And that and to and are it’s of think earlier doing be situations others business about suffering of able down are partner own opportunities big may happen the their customers the other that offer think and that that Will those a hunker give with. in working

too don’t At this to looked It’s going much. what really it’s look to hasn’t know say little opportunities. because early like. it a are there So point, we like

Kurt Yinger

appreciate All right. that luck and in color coming the good Great, quarters.

Peter Jackson

Take Kurt. Thanks, care.

Operator

next Ramsey Group. Thompson take with Research now our We’ll question from Steven

Steven Ramsey

morning. the it Southeast albeit region? all Good it, start in percentage region coming then guess is I of the current with the only fronts, I I Southeast. new what on Is big XXXX? maybe from both thinking was of guess also sales that of with about strength, orders? activity the and that, strength the wanted to a And

Chad Crow

Binit pointing don’t not I strongest seeing it’s that something orders. for the Southeast just And as the now impacted been I of and orders they most the It’s was could probably impacted, later, with near of the they’ve – haven’t can right percentage been both No. the region you made out thought region. the there’s is have but have in of but when But sales not impacted much would new have of as kind the that the it’s you they maybe nearly me breakout now, strongest see we’re and existing as other – with discuss that’s the book might comment yes, that of a but the I markets country ends strength been. earlier. only us. you combination

Steven Ramsey

And do – is up continuing on April Great. you then in explain – of off that that you is March, work that into And played speeding or in taper does that driving can out? this how some see QX? maybe customer – what’s is

Chad Crow

were finishing that talking about basically had started. already been the Well, homes when we they’re customers,

completed. making pandemic. start were homes under course, spec buyer and got by development construction. we many of So on the on to But and really the created brakes sure They traffic builders the activity given new those see tap homes, new did slowed restraints units they lot

through April have demand trailed I of all pocket are that that So there’s yes, concerned months. still we we a mentioned mentioned April, earlier, pretty coming all, the kind and we’ll coming given as off. on. strong in how air my the they to going of what’s in work an results opinion, Still in But

Steven Ramsey

question, versus both And builders groups the builders? geographical to or talk difference the differences you And now? about last large maybe But biggest smaller Right. can one in right is being trend. kind challenged cash of health then diverging you talked the in collection of

Peter Jackson

Yes.

to overstate alluded I hard substantial. is to bit, It’s than Chad those It’s the of large pronounced seeing different and how not think less and nearly two regions small difference it’s – hard-hit it that’s little between the regional regions impact. indicators are. the think kind – the I those difference between a

been far were they year are The year. as collections, imagine, better have cash particularly as last good attention news our Now, as days and that. flow to this can than you paying is the the close we

seen decay today. So we have a not our in performance

are terms and staying are customers relatively indicators conservative But stress issues there. that and at modest happened of I what this in close. on to whenever delays of not the any any We about far our close have certainly think thoughtful staying seen so being it sales, decline or in are based being has there certainly point, we we

Steven Ramsey

Great. for color. Thank the you

Peter Jackson

you. Thank

Operator

with take We’ll from Wedbush. question Jay McCanless our next

Jay McCanless

taking good Thanks for my questions. Hey, morning.

Chad Crow

Jay. morning, Good

Jay McCanless

price decision you keep terms just I back you already to in being of about go your aggressive Are Chad, and more up making this what willing if some were that seeing price? volume push talking on want you of to to pocket is. air whenever So competitors being need to

Chad Crow

significant No, would drop-off demand. something we anticipate in I we really haven’t that seen It’s yet. just a if see seeing

Jay McCanless

related quantify still single-digit Northeast, areas ship much you it’s whether it’s like can’t how to could in something Michigan much the And those then if of that How I April. decline along all it of was or where that? something related wondering product, lines, or you high whether percentage points, to is the is

Peter Jackson

in numbers Michigan, in Washington; the I – like a same don’t Northwest, right? know of deeply difference where been It’s between they’ve those Yes. they’re Northeast, country. than they massive materially where the regions, rest an have as if exact you Pacific There’s most what don’t drum we Those impacted, shut I estimate. the the a described. seeing are down different again. substantial – you’re

yes. it’s say, I think So, fair to

Chad Crow

of I half think around can say it’s number. safely we that

Jay McCanless

color. my for taking Great questions. Thanks

Chad Crow

Thanks, Jay.

Operator

from question Bank. with Clarke Seldon next will come Deutsche Our

Seldon Clarke

for questions. you thank Hey,

situation was various think you a in Obviously, here is more moving to the of we housing heard in color more pandemic out a lot seek unclear. with us just short-term under impact the a from there’s is of far resiliency of where little medium-term you pieces else. fairly and unemployment crisis. optimistic give lot on there’s the a gives this But and just where here Maybe more so a before in confidence you between anything bit actually I we bit as given much still you So, color where little scenarios. sound than were just starts on where bit Can more about the little trending? what financial could were a

So just where out helpful. any on be would think you might take color starts

Chad Crow

our deciding But a now fleeing And know the renters what look, thing to bit time. earlier, metrics don’t to down I whole give you’ve last apartments just telecommuting I I monitor how we through I demand with a well own particular, have we’ve looks of is get of of And starts the this shocked and time folks But do what lot place productivity I’m said won’t ways those. that pleased be created the I to as it if working. to this home ready seen rehash a very, number is very went I’m think crisis than that road. yet. we space recently and – in seen doing for folks. at are know with in and at company, thankfully, our there’s some incremental different on going articles

out to thing this more our anymore a home, where it’s live we going I’m of don’t probably if go group little that expensive. whole from cheaper If suburbs, a people own. that’s to sticks, I “You space so have have near where maybe and to it’s say, And of downtown telecommuting what, create know working we the

could homes we that a decade had a ago. the think boost excess in provide I that inventory have road. the we And down just So, don’t

five think back be last That’s a just to point, to your years But obviously, underlying to not to can with get weeks go crisis. back there’s going still And back not got likely – very to I everything’s right people back be again, there’s we is the work. to lot that of going to going work through we’ve we the work, could to of unemployed able flush get saw strength to drag financial normal. now, lot talking we it’s going anyway. of to or folks It don’t we’re saying four out. be my I’m folks that and more it’s thing to the this Now work just if longer opinion well be And and this. that months. I’m like a

Seldon Clarke

this just versus of guess persists scenarios out ride of I is sort bit if a And given helpful. of to longer about a they than weakness term, how under would like and bit short – decremental your little of out willingness couple That’s a where margins this you kind shape longer-term quarters expect. how different little think over next you Okay. for weakness the do might the in

Peter Jackson

want don’t margins. to guidance certainly the We imply on

talked about I the decrementals to. sort think alluded in of has as the that when and incrementals past we’ve curvature

XX% to to hold – of on reiterate, And out comment worst-case turn a We’re I we people to be talking the the of low sort and digits, about a thumb. guess, if rule does then a bit little XX% than longer hold is double so down the about – little if should, more. to we scenario it happens we on

reset see worse at because level. Of appropriate a and need the be. lower on we’ll to would course, bit cost over time recover margins actions downside. that’s going levels to that little that they stabilized to But a it We’ll make where take to the

Seldon Clarke

time. the Okay, got it. Appreciate

Peter Jackson

you. Thank

Operator

with take Garner question We’ll next Reuben Benchmark. our from

Reuben Garner

morning, you. Good everybody. Thank

Peter Jackson

Reuben. morning, Good

Reuben Garner

I’m – any business? got sorry out out But huge trends R&R I So, uptick I that business, and of to I in a part not if your have know in activity you is it, of or call but seen part kicked of your the briefly. call any missed R&R

Peter Jackson

Not green there some headwinds. are all offsetting some Definitely, because shoots Yes. are good good news.

So, our uptick. the seen have little nice short businesses retail-focused answer more is some of a

the Line As San retail. XX in They’re Lorenzo well quite we know, in the own California. you brands doing

of of Unfortunately, have They’ve – parts brand doing well as Alaska, our hard. and hit whammy has market – well there’s really oil other our been the also. gotten COVID. the retail brand double we also country Some as Alaska in up a

being So, this. hurt certainly they’re by all

certainly there space, I So, well our but doing we’re with of couple think overall. weaker a in pockets performance that happy geographically,

Reuben Garner

second XX% capital X% working The incremental think, good I of revenue. this. know I was for is I the of then one And Is thumb, to luck current navigating helpful. different don’t That’s normal and brought rule of of or XXXX? me. up. dollar through detrimental guys, mix there every would drastically anything that know, about over the next, that the duration environment Thanks Thanks.

Peter Jackson

Thank you.

Chad Crow

difference. fairly real might But recent No Yes. Based have of a lower little end we X% Thanks, on the to the been consistent. towards Reuben. performance, XX%. in things think come I our

Operator

take Ryan We’ll our next Gilbert question from with BTIG.

Ryan Gilbert

guys. Hey, thanks,

Chad Crow

Hi, Ryan.

Ryan Gilbert

Or the in trend core The me first or single-family think in first the a backward-looking, question single some we from in to has by share you far? you aggressive impacted so that market quarter? that the did in COVID? – trended? as got has lose competitors Has extent more first April got competitor continued it’s the that seeing Or the in large is slower were starts. family quarter, – do Is than that but little organic in what little growth that’s a X%

Peter Jackson

Yes.

end that imagine, can of pay we you bit at strong the end it pretty we attention. a little really beginning had As and part, single-family numbers. of We close that is of our about XXXX. talked and caught quarter The the XXXX attention to a last tricky

personally is you’re just It took mathematical true we say to have believing are argue doesn’t a fair ring there number. comps. a the also and I isn’t it’s in think odd. a the doing. starts load boat that to February would hard some anomaly share that what at so I I of time numbers looking bit little some market tough

Is little feel felt bit we us, Sure, if to and we I last a a and think at bit, our from that it’s from swallow And and into COVID smooth yes, the QX it we’re well in if But only think demand net how – of this I how year, tremendous netted doing trying look of blew of it’s no business you – and by a doubt. amount that taken now year. little take we’ll mean competitors bit, were I share you the we to I we momentum be but for that little out going sort snuffed think really share. strength. by know some was starting about a having a position I that about but of I of we’re the of tough just we to the there people good good pushback dynamics, coming back? just out share think the position to QX, navigate our building over the share. through

Ryan Gilbert

you components and through can comment Yes, March totally structural understand. on then And and margins just late April? pricing for

Peter Jackson

of granularity component generally the in of individual aspect I the on a the some a manufactured XXXX. We products, that tailwind but categories. year-over-year say, of had don’t basis, has within product get we it it would into good certainly those

and value business. we a So, to a disciplined part on on where a category very of lot have year-over-year particularly it think to trended we’re little. table. healthy basis, that continuing have think I But strong we Margins in would pricing of a and it’s bring the stay our been

Ryan Gilbert

you. it. got Thank Okay,

Operator

to the presenters question-and-answer does over or our to session. conclude conference like And remarks. I’d for today’s turn back any that additional closing

Chad Crow

questions, you. quarter you joining out results. second once on you you, for or Binit have Thank Well, our forward look any if And to Peter. We follow-up to us today. thank again updating please reach

Operator

once all does conclude call. And participation. you thank again, today’s We for your that conference

now may disconnect. You

Builders FirstSource (BLDR) 1 May 202020 Q1 Earnings call transcript