BMCH - Earnings call transcript Q3 2017 | BMC Stock Holdings, Inc.

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Operator

Good morning and thank you for standing by.

You are joining BMC's Third Quarter 2017 Earnings Conference Call. This call is being recorded today, Monday, November 6, 2017. Carey Phelps, Director of Investor Relations for BMC, will now provide the company's opening remarks.

Carey Phelps

Thank you. welcome. and morning Good morning our Alexander, Mike Chief Officer. Chief this Officer, McGaugh, Chief Jim Operating Major, Financial are me our Peter Executive our With Officer and operating will XXXX. key After quarter discuss statements the third they priorities my and results for of our to or we have like our at to to print slide added is which that we ir.buildwithbmc.com. as from along talk, point available would a deck I follow for viewing website

available forward-looking These our have described the company's not a annual press some include that securities XXXX. yet section today statements private are the release, the and quarterly our subject Investor in review in the filings comments may of like risks is you Relations meaning If to within would as chance it statements with of to of had uncertainties I our of litigation reform SEC. to you act website. the the and remind

differ the from may way in material results actual call. Our a during described those

issued all to for income adjusted as which isolation Please adjusted forward-looking find adjusted the locations this EBITDA, any obligation In non-GAAP for this in appendix adjusted useful not will and our most relate will share. in undertake detail non-GAAP deck the should of data sales, measures GAAP information net on statements law. of any most income forward-looking our this related slide financial required expectation diluted refer posted In net net from release the why on of the EBITDA Peter. and greater to press the well adjusted update new investors. in measures. to We comparable informational measures slide earlier by release financial purposes financial adjusted and discuss not directly as morning of adjusted measures website. directly to the per These statements provide a based and margin, only, we unless as addition, financial adjusted and On measures is and reconciliations measures or section does to are revised company I are press provided call information non-GAAP will made circumstances this the deck for certain GAAP be it slide you reconciliation over data. discussion comparable in call At the to these GAAP measures the considered these additional believe in to we the turn point, today

Peter Alexander

start update to and look the backdrop results process service. After update throughout launched look newly detailed efficiencies expected to organization financial provide which system, to brief Thanks followed invite a operating quarter you to for to followed us. with a discuss Chief our Carey, going like a BMC our Operating joining remarks. and results drive Officer morning closing hurricane his high by better morning achieve Jim by I'm overview. Then, good at and with and off thank improvements a deliver McGaugh, level market a clear I'd our This Mike our at significant is my superior customer will

remained with employees breaking So, We market. the the homes. brought extremely with but The hurricanes. into along by from that that were about safely, from families, let's thankful Harvey their across Houston widespread displaced record the rains move our summer's devastation their last it caused impact Hurricane XXX through storm many are made

in to time. to go continue communities those tough the through out prayers and this thoughts Our managing

sales our Xth. storm, XXXX for Houston net As XX which were approximately business a the from locations September of for result XX% of August the days almost of six our closed afternoon accounted until

to on going storm our of related around nature pay them, of continue the shutdown. the we all employees Given tragedy the throughout

reopened. we begin to minimal there sustained obligations facilities damage fulfilling and we able six were existing only when Our contract

during In resulted avoid $XX the Harvey, did remain storm third back power lost facility approximately $XX all outages Houston quarter, as in couple storm and to Chronicle revenue process. and and added that on we the XX,XXX completely difficult that any the adverse BMC a our quarter to this and materials reduction in have Houston third specific between the will roughly homes of ready increase operating where work XXX,XXX magnitude store in resulted returned five the homes to to supplier hurricane the important of of lost an and be although restoration due market, a we related has handful operating destroyed weeks hours resources were opening in we're location of and in slow, capture legacy its increased the extended Georgia Irma, days the To According a that primarily million heels locations Despite one storm. ensure to and continue the demand, ramp our timing came either believe recent during the building successes. to few damage fortunate player in conditions. a largest for to and extremely We in record to focused and were closure adjusted which heavily Florida we operational While damaged. appropriate. contractors over South companies XXXX, we EBITDA. were result XX,XXX substantial normal, weeks. subsequent $X given in to have on key of additional been we have believe days, were million demand bit quantify. normal to sales volumes of first Otherwise a for levels nearly Hurricane road The decades of is rebuilding million and impacts

expanded gained improved cost X.X% and Ready-Frame day. operations in We per by grew from the million overall both and by X.X% net sales leverage. selling for share flow delivering cash XX.X%. adjusted EBITDA we and we Specifically, sales sales quarter. structural products earnings net category We our further our our components in grew by income, SG&A and traction in $XX We per

have as look to previously, enhance In value to for discussed competitive we our and continue position we addition, proposition. ways

strategies Our and strengthen significant potential us margin that higher portfolio the solid our to provides complete our with will implement specifically acquisitions ability growth strategic to believe we businesses. tuck-in balance pursue sheet with flexibility

in feature attract are multiple We active that we relationships mix value-added discussions look currently an providing and with updates of these customer products as candidates activities you to acquisition with bolt-on are able. we forward and as

believe of from albeit poised mix. active the adult to now solid, upward which market portion level means a and increasing industry with starts supporting broader shifts upgrades. and remain is fundamental market, Turning We to housing in an is mover homes positive. segments, of continue elaborate first-time view in trajectory remain single-family Growth its although coming notable smaller generally footprints that with this the some the growth entry less

In valuable labor that reported customers. to solutions the our innovative much no addition, show signs shortages of widely our more make which easing, only should

cash and manufacturing environment, backdrop, the bringing this our expect our Ready-Frame. tough provides of the continued strength solutions result cycle part customers times. in effectively category, a and into money, provide it facilities labor as job shorten solid components conversion off As site growth to we Taking see substantial of save of our structural in to we navigate work value to by driven

starts, Chemical higher stock near-term remain reviews organization. above combination service the today from starts. is gradual job our are and an side process homes our our in Chief from for will we forefront, anniversary increased Building Division third win. mix From environment great They want in every get by millwork these to place entry Dow a single-family quarter operational a the of at a rigorous EBITDA of Mike and few announcement beyond Products service, windows to to multifamily operations talk increased today's efforts Mike With XX-month to launched best us XXX and February people structural decline slower in success. the has we us and the of net merger, implementing mark our building points transaction day. results, level set due and to every of on industry. work who doors BMC McGaugh, those Mike back growth Leading the are as With committed joined what's to I'm been improve now and Operating recently supply to a efficiencies of proud maybe little and in very BMC. results. strong, operating components XX% tremendously about hardworking of Officer. a A compared to While customer being throughout continuing demand asked the and expected efforts. adjusted the to join two-year at safety excellence I one weeks action of into to adjusted the we team go have sales in new dedicated EBITDA our XXXX day our facilitate adjusted culture margins full-year unified to has up corporate out done customer define bit the trailing adjusted basis in jumped XX%, successful quickly system drive

it Mike. to turn I'll So, over

Mike McGaugh

be great today. here you with speaking to Peter. It's Thanks

found who that road As on and the have ago to up-cycle. with employees. about low an on found excitement continue is dedication in Peter and said, first well Across well-earned grow. BMC I our quality of I meeting was integrity, professionalism, I and and this industry level and expect the extended each respected for impressed prospects board, month also service. believe my my I outstanding the work capability months market. customers the employees I has by to teams gradual business BMC with I've for reputation and joined by a BMC spent eight our I of about overwhelming a the in ethic. it high continues drama our

environment, unmatched. a that balance to experience in strong in my a top culture Our with player BMC goal keep is this is a sheet and as

to most implement practices focus been and the merge has synergy two For identify best the the the each deliver predecessor past them and enterprise. planned across business at successfully the of from years, BMC new primary the companies,

has Peter gone said, transition and As the remarkably well. integration

goal in as innovation. act one delivering a today customer with of associates team class Our and service best shared

our to mirror, a in in operational enhance our productivity gain our in way time execution Now financial with on reducing build means focus company. increase will operations, the we improvement. laser flight service. do the a it's driving that This and and initiatives on on and a for excellence material several improvement, merger the focus costs marginally have leadership optimizing continuous business. key our we culture and delivering accountability, Nationwide, that customer efficiency, having Through strives we pivot we aggressive simplifying of believe culture will and rearview

to [career] our our Accelerating tactics. net use in addition to intend In goal value our in [ph] margin [ph] analytics to improve higher using and decision income of of investing purchasing, added program. categories, approach four making, excellence EBITDA reducing employing a our [rising] development, operational and improvements drive rigorous training our to growing we and with more through employees in costs enhanced

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On are reinvigorating in program. leadership the element development people, we of sales our training

response generation aggressive program train, our Our demographic. in has faces proactively this industry developed to an inspire of aging to BMC next associates. issue, and And hire comprehensive and an

use, automate markets, of more driving processes. and manufacturing trust shortage, to and process proven are to element process a in that we've our the migrated are able Many mitigate ways On their tools impact. now we piloting however, discipline We're tools single of manufacturing. to order seeking of automation. were of extended the industry use implementation these and the we're we performance. second improve a wide ERP fully currently to is In to around more turbo-charge logistics the technologies example use prior our to existence A process, automate merger, sales labor the our most to in of

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than Now, driven a we will ever, more company. be metrics

corporate waste, to use culture. improve cost, the We We're customer are rapidly way our we reduce service and is incorporating lean we seeing as do all aspects into already It increase decrease lean results yields levels. business. of

system in to we productivity company. our action is EBITDA. supplement project for The taking to we segment, our earnings value-added on continue on of and to the topline and our the BMC how operate growth expect growth we cost, growth it operating extended is customer horizon drive are industry. an products new and To We margin service cycle and in will our customer the higher service proactively enhance DNA efforts

many gave performance continuous from about hear market. of will strong driving and You'll be to BMC's of going years that ability an The This value. it us in excellence strength the to and People, our expected improvement. our focus long-term Jim? to service, the over foundation to shareholder a customer for grow invest culture great to be process us important for critical With is the come. is which and stock merger differentiator every and balance coupled with sheet will I'll call turn forward operational

Jim Major

Mike. Thanks

the reflecting versus the commodity increased this X.X% two one year. goods. estimate structural from strategies prices, for category net fact of third components the increased and net and quarter, X.X% execution we the X.X% this During our the sales lumber lumber had that selling day increased quarter in in We sheet completed progress from total X.X%, sales sales grew the by our growth earlier on year third X.X% increases from per quarter, trends we made price while further Total volume. the prior led that solid and day less sales rising acquisitions

floodwaters by In to estimated Irma have to replacement sales we our some the have in The million. and $XX less in decreased additional and are impacts negative have the by seen have that sales volume now of $XX doors net receded. short-term hurricanes from Harvey limited and need Hurricane passed smaller selling Houston projects, after one trim day, from was growth but interior to million uptick which impact

markets performance the Ready-Frame, As targets XXXX. $XXX quarter. and area. also million are confident in accelerate product $XX Pennsylvania in with this continued sales have and delivered framing as nicely ability known million success sales our Atlanta sales our whole of projects Eastern to starting larger the rebuilding. make our Northwest our we year Several added particularly where claims, is to the to to to this over sales. on recently million well solution mentioned, during as demolition Peter insurance housing expect to annually Texas, such XXX total Colorado net to we Central more deliver in in to-date, strong from our contributions Ready-Frame that Ready-Frame offering XXXX in throughout way contribute processing Pacific meaningful and Based remain Ready-Frame and makes by Ready-Frame $XXX for service million

margin the XX.X% reflecting $XXX.X to quarter, several X.X% our For to percentage third compared of gross increased the profit declined as to year ago million, but a impact our gross factors. XX.X%

applied unusual as approximately income. million we've of during quarter related catch of inventory during the created an XXXX with up rebate synergies that purchases agreements and to we purchase margin. on enhanced prior XXXX our half first $X mentioned gross suppliers first QX First, to benefit in realized were retroactively calls, the to These XXXX made

quarter up declined approximately larger sheet and lumber Second, a sales. while year, made XX gross total versus of margin goods this basis prior net our lower on category lumber the margins percentage points this

experienced doors contractors. Lastly, Georgia day occurred higher This net sales resulted reduced markets part multifamily one in of from impacts, decline sales the our in margin Texas category. and large a and selling sales less to from millwork primarily and hurricane combination a within X.X% windows and

we quarter, expect some seasonally same ahead in fourth we factors slower the As look these to remain to place. of

from levels. to above remain recede recent prior year. may prices the commodity well While are likely They

we to sheet sales from and goods sales and remain elevated. year-over-year expect As such, lumber mix growth our lumber

to and sales remain windows the believe multi-family a may in segment. also growth due slowdown in doors We millwork, subdued

litigation. last related XX.X% Selling prior-year SG&A to to XX% incremental near-term current for to increased quarter to as margin second reduces primarily improved expenses to same gross period. from mix sales administrative compared opportunity $X percentage the The health and our million the higher to the of in dollars to pending compared in costs, expect the year. percentage sales to profit during gross we acquired million quarters. sales of period X.X% realize and While related of the for $XXX.X net realized expenses relative what improvement to continue increased a we general and operations, as sales insurance third

of SG&A year. the percentage as our was a approximately expense, litigation than prior points XX lower sales Excluding basis

hurricanes quarter ago EBITDA less from line in third for X% of the is selling $XX.X served and expectation increased with partially net a million growth and one benefit a the were XXXX. year to ago. compared webpage the of costs IR our our expectations line $X interest ago. to million, million as per next on QX on the this As up our million but in come day, or productivity such of to and per with a integration Net in quarter Other updated year of continue which several expenses income share half Adjusted diluted benefits declines acquisitions, and year to these for full-year margin we've increased a to to discussed integration and have for million deck quarters. our in sales the a synergies response to offset the prior percentage focus year-over-year million rebates $X.XX third $X.X as by our diluted share $XX.X that million, line expense or items. volume on merger slide Adjusted calls, expense and merger pretax costs, has in as second gradual for expectations million see gross depreciation, $X $XX.X amortization for from percent our In $XX the including we as impact results SG&A improvement over $XX.X we was in catch-up posted we $X.XX quarter. XXXX income were was of expect

efficiencies earlier, and organization operating by to Cash on provided our product the time. to million initiatives coupled are deliver activities As grow value operating increased expected results added improved with driving customer this margin quarter additional our focus $XX.X XX growth higher and described million. productivity across to categories and Mike over improved increased

the benefits working unwinding of generally in $XX excess disposal quarter, million support expenditures assets. volumes primarily million cash expect vehicles cash in real proceeds capital aged of estate. from and to equipment replace purchases to we million fourth the $XX.X seasonal As realized quarter, to we increased operating we from sales flow to the enter Capital also and the totaled of and $X fund the during

total significant growth expenditures to equipment capital to used as $XX including in CapEx expected projects process $XX XXXX in Our capacity are millworks locations. million upgrades expansions million certain to fund such and of

several focus Following we growth XXXX recent years investments. from gradually of to capital elevated on spending, returns CapEx oriented expect delivering increased as decline we our

times Our total of And backed at the EBITDA derived at our availability asset liquidity X and times. the borrowing debt X under our of our XX-month finally, at our ratio range remained million of adjust was end adjusted target low September to $XXX.X very two approximately XX-month trailing our from strong September revolver. XX - it's primarily leverage at end

earlier, our process and said grow pursue applying higher Peter our growth our margin with disciplined significant sheet As space to flexibility and XXXX, and we forward product customer objectives. initiatives is provides categories in to into move while to a profitable our intend a to differentiator added value to M&A solid As continue drive year-end balance we head

growth housing strategies drive with us and will should positive to Mike, strategies. upward market result earnings ultimately net pursue continued shareholder and These that and remain Peter confident in trajectory controlled like in the EBITDA, growth additional its sales, value. a So continue provide I our and backdrop

the back turn that Peter call with remarks. for closing let some over So, to me

Peter Alexander

pleased our in disasters team's very even natural area. two quarter that impacted of our this the I'm face service directly Jim. Thanks with performance large

known customers service was to and ready the the our process. rebuilding outstanding strong stood team provide Our begin for as we're

the call in and and are unchanged initiatives addition, our product past goals serve in through standard builders future going and on to professional focusing choice at ourselves remain efficiencies mantra position highlighted back drive to and market. our operating on ways to solutions Our to the the remodelers again for in of and and customers. customer us and technology that we increases turn housing our the joining our you today. is we by us integration categories, earlier. efforts call to Operational cost use the become continue the be higher provider And one thank advance and higher-level I merger live Q&A for With we operator aggressively margin driving the like excellence to of take which residential will the as path for and portion moving in reductions the this success to

Operator

comes RBC with first the from with of Markets. question. Our Instructions] line Bob Capital [Operator Please question proceed Wetenhall your

Bob Wetenhall

the hoping lot a first the color on seems recent about challenging us did better demand goods, us step offsetting operating navigating kind how give segments? because pricing I to of for XXXX. of on thinking of you great terms Jim across was how more in all other was about you're but structural thanks activity about environment but us more hurricane on on could through on the really you're you And a like it gave is on sheet bigger a and is job incremental about the the material for think rebuild hoping what's segments, of environment it kind give I millwork given quarter, Congratulations detail just inflation. of off detail. for trajectory not two better those raw you what's could the growth BMCH going a components for in activity. lumber and and bit was you outlining of in sales little doors, I thinking and a way any could going hoping

Jim Major

the or entry and the mover with impact the move, consistent not while certainly for little bit down there come family. at of a quarters six a in is here segments. size the it's median shift, a you Bob, seen talked huge obviously, that, last of We've we single think level five and if more first-time about, construction cumulative I will, as mix there's homes out being

subdued to to don't we windows And doors may might. level little some those entry growth so, the of content relative is just starts larger them reality much still because homes grow, the bit a as millwork family as millwork simple be in have the and single expect while homes

in the windows and So hopefully out of terms that millwork you helps doors.

Bob Wetenhall

structural component. the about what And

Jim Major

Yes.

structural I because those portion be, entry volume would are in phenomenon builders, large favorably towards think in helpful say, their a generally, of homes by more builders components the process. Ready-Frame, level structural more prefabricated to built is construction I tend actually production predisposed products higher using components, that

Peter Alexander

Yeah. Bob, I would have probably say lends given well going one the demographic itself play It's of a does of the where pattern, you segment. smaller you entry on, in into lot have level this formats, well lot quite this really of product. Ready-Frame of estimating a replication the

So, about we feel very bullish it.

Bob Wetenhall

you it. of in relative very the is by tied with Colorado being you're to on it your successful quarter slowdown the Ready-Frame. where that, Ready-Frame? a guidance good with growth there to pace still in markets Got the market? rolling sounds other quarters Is track adoption you're very service fourth cited get other implied as though like and How northwest out and And

Peter Alexander

I say down wouldn't it. we're necessarily to guiding

early are They've really the they that three that comments, these They've it. markets The give and two those and that where of most markets us frankly, the being they're the encouraged on some more gone into of tapped capability never they're to most is three We markets coming for the new fold, seen cited those one. we on Jim after continue mature pointed probably we're and hadn't his it But grow think out a still I of Ready-Frame this mature two into markets in before. lot markets, and ceiling markets getting because comment. aggressively it. nicely, traction. faith the know demand great hope by the two

think ourselves on good I on about that. at numbers think look Ready-Frame. whether delivery our So, or proven very we've I year-over-year, I feel be you the quarter-to-quarter to guys

Jim Major

just little maybe Bob, bit And clarification, seasonal of is obviously of one Yeah. a point slowdown. there

the few As you QX the activity generally you QX, of into months new here, year. last go from see heading to starts less

Bob Wetenhall

approach How focused question translate just do final think how me, the you excellence this could just right for strategic through, more us of see the about on on talking And plays return we to invested out? it start When better way was about the should timeframe this this? we and from, CapEx, think not better really are to you maybe we provided excellence. the coming asking content Thanks, about you've trying mature. give the quarter, the take comments next Mike do operational as almost your some about how I'm execution. luck. a to operational focus with Great sounds you good really What's to will continue which and on about what was do years about renewed talking company some capital? margin I'm us, Peter which we to of three two like in technology, performance, lower over asking

Peter Alexander

we if into this culture, operational an better service. numbers. drive we're Bob, fact this my and to as short the and it we efficiencies We deeply going answer on for customer if pursue to a that better don't achieve is tell that time will never know don't

yet, and see to on it think how this. from how is sure have I full-on the as top is to not focus play numbers couple I'm out one. driving down over bottom I just up know numbers So, but the on triangulate years the this the Mike that, the the we'll of next I

Jim Major

the margins sales obviously, trying been incremental double we've just challenging Bob, seen in would from are to regard very because add. headwinds the we've and of has year deliver obviously in about I mix. digits this talked for that years that I low mean,

even margin my us here those if years, is bit this certainly incremental goals time. to over effort, operating of but create So, additional system protect not the an over in a element will help mind, multi-year next a little few of upside that self-help

Operator

you. Thank

question next Mike Dahl Our line from the Barclays. of with comes

Mike Dahl

of efforts a relates strategic about, to part as kind your wanted it so lower to help it guess, I the is ask to structure. cost I and some of question of far

continued On consolidation and that to deals how a yourselves. see not is go of should renegotiate the net and many and what message as among far customers terms may the our had going among while home balancing, at? you and is for better out back How of your week customer side, what at homebuilders the builder you time, announcement are their bigger so suppliers that of is looking negotiate scale, that large to part we we and about balance more trying same there last merger the to you're as you're we're effect terms, some better think

Peter Alexander

Peter. effect. any anticipating real negative it's Mike, not I'm

by both that's because the of premise trying to I begs beyond providing both back think just to think, relationships supporters thesis be material our of merger solutions we with I of the and merged and companies provider, we're last the really we're site. them it Ready-Frame the are particularly job to this of had that I'm heartened huge tremendous week. the

forward. is there goods So, positioned it consolidation that look you them even to going with front it - and with forward the customer, they but quite whether a does company two, is those they or your us positions are if right going is things we to and combined quite lot separate well I with end, of be where, to whether constructive you've do forward, very are and if the on discussions further good pretty think this well together, relationship proven you're going

Mike Dahl

Ready-Frame And of that you're meet of to next kind then demand, the more the rebuild would I the of opportunities. see extent uniquely and of Ready-Frame. around one given the question think some that you my To positioned is some that

or or the specifically are had habitat whether rebuild of insight local doing as you've if the process. that, any to give ground conversations a employing to help some your type rebuild, So, what builders it's, could around builders, with Ready-Frame to together potentially company tool like with rebuilding help you're what on that conversations a organizations that with us you any as

Mike McGaugh

Yeah.

storm You're talking specifically about the two areas?

Mike Dahl

Yes.

Mike McGaugh

Yeah. where Mike. even shortage a probably I'll is Houston situation labor for answer This a tighter. you, tight you've got that in got

away. pent-up got require to rebuilding that's You've demand going right

Houston. there's shorten is at a in on the really nearly uniquely footprint in a labor, lesser, on the the I is quite not and because think in building product for material do in that going well cycle in can command portends Harvey wasn't think and southern Ready-Frame areas I this concentration we're only Jacksonville, anything times of and do think place. it was of in impact and Florida there Houston, probably where so were it lot the forward Florida we we're our positioned a market we're that the this South taking where really really one. rebuilding state with heavily there level entry I impacted. less control Georgia, one to hurricane and there in more And Florida

Mike Dahl

be believe. just here to quarter, Jim, from of said the one a as here, trajectory think pretty term If so, around how then expectations margin just too to the that? I not around And comments expecting fourth this last or it difficult for I that's margin gross but near flat to we clarification, a the I be we XQ frame look and exceed sequentially levels focused just XQ should be think should your XQ may we you

Jim Major

Yeah.

remained have prices elevated quite lumber here. I think

coming I think down slightly. after even last [indiscernible] week

to we're like prices asset lumber, what in that the fair restrained So, gross may see that I a comments still expect seen the of convey profit a just some we've selling recent again, inflation margin we here the continue try we're high at. there dollar see to what to to think percentage growth in year-over-year, gross and because fairly sales mix quarters, coming the but we bit going given year-over-year of be from elevated was

Operator

you. Thank

Robinson from of next line Hughes SunTrust Humphrey. question Keith Our comes the with

Keith Hughes

basis in talk mentioned you about had the industry there? compression lumber on of release within XX the going points about you can segment, what's question, First goods margin

Jim Major

inflation. we fundamentally even our margins still that overall we're mixes down it's rate down and mix points. news the our again, category in the just that basis, it The business. overall category a growth generation quite report, percentage XX decline, four because margin for significant were sales basis achieving the lowest the saw that year-over-year XX% increase that is certainly gross profit portion our cost good from of a dollar on The we meant an basically category. that again gross at gross elevated the within It's commodity margin in there of XX% is, But top the line, with was that basis relaying comment or XX Yeah. that that point

Keith Hughes

impact the mix the margin of Are you is saying about points that business? basis XX lower

Jim Major

decline I category point the the for No. a the the gross then apologize. actual impact secondary margin was you within secondary if - just The and decline margin mix will, is XX percentages. basis headwind, the overall gross

Keith Hughes

segment, We a products with nothing The of products in is and saw quarter. lot process changed. going on going that nothing you the in segment would there of mix and just the passing basis, has through the the of but there's higher on XX that prices

Jim Major

package. [indiscernible] No. traditional It's don't primarily finding We so. believe

Keith Hughes

And your fourth the what and the into 'XX, a is the in the takes you the comments cost, time. will of quarter, for we're months just that quarter through long lead passing today, given know on ended. - cycle we're Will understand, from to first that over that little build higher winter which margins

Jim Major

US a predict to less, that was a have final and relative I nearly the guess mean news. elevated a final were on duty what to market I to week duties started that or a decision little expected off may and people announced trade their last in was little less certainly It's government bit notable right bit been the little hard the week now. sort of decision the

there. So, trade I'd now, to very fresh little be it's and stabilize trade decision whether right continue a quite QX that off to or off or given clear hesitant will market is not the predict

Keith Hughes

come on want stabilization back you've expect up we you would got of fairly If margins any to, way quickly?

Jim Major

basically that points category. category year-over-year within within if recall XXX off the That decline year-over-year in about margins you half the that the I within second basis we this was category, quarter. guess, in quarter, cut were

say get less it fourth be margin of first So, still the elevated there I think, an but within portion quarter margin quarter, could beyond because remains gross total into percentages our to decline the category, it's overall mix. sales you about as some the headwind

Keith Hughes

do call yet? the to it that system, is too on that have you near-term for BMC or soon question program metrics any Final operating

Peter Alexander

benefits external too it's you hundred on of for on up a this to impact few that few point data we a I as thousand it's all common think try I that dollars. to business to a a Keith, our put are wins soon out a most thousand of and any customer to Certainly, in adds like significant And cumulative we're metrics. at here, and sort time continue scoreboard Mike the to nature number business. sure, leverage there mean, lot you, that turns, and file. obviously know rolling this things as hundred to the and of of the speak said, long a I'm industry are ERP look additional really the metrics a covering being full of ones of working the capital time, key to common on

Operator

Thank you.

Our next Thomson with Research line the question from Nick Coppola of comes Group.

Nick Coppola

up is maybe Can selling will you you hurricanes volume labor talk what about back out and if look impacting but and two it? those of shortages So, how by days. X.X% volumes year-over-year, impacted like is

Mike McGaugh

your been we to impact, I back closer I volume I second growth guess if you think impact, so was on items. don't repeating shortage? the question, the mind, labor those to the about X% when And have apologize, it you roughly and X.X% without would two to hurricane day X.X% that to X% add

Nick Coppola

items just to labor two about at point? understand of was for then kind excess shortages and governing think this I guess you hoping growth you volumes maybe how I

Mike McGaugh

our day for question force to hour more be builders hour, it the professional complaint in quickly tour portfolio. pretty I this, now, builder right think the can't a than it get in of us. good of to to is it labor day, labor of well plays the shortage is but build enough stuff week week think We're to labor and shape I our probably to continues with get

Peter Alexander

start time elongate. that, from continues data some seen to we've certainly, the completion period to And Yeah.

data to I completion few there. a lag last six tenths close start think out given of time shortage saw between adding the months have I year, to we labor each to was point and that

Nick Coppola

And and helpful. opportunity, you then bit that, long color wanted to term of more the talk think hurricanes potential as how would size any about the further well timing rebuild about and be a little just

Mike McGaugh

significant because seeing probably size Yeah. more on any address the Harvey and of I'll not really just of Again, yet the We're recovery. uptick market. Irma the

their I think and adjustments, seeing hand claims checks, fourth back checks yet quarter. not this really it materially ties in insurance the in people to claims getting we're

lot magnitude almost month heavily in the the you'll building XXXX to cycle inserted to that damage two it's of think XXXX. of I homes of XXX,XXX damaged, a where is robust. going see the a and in that's like of be upside But a one given pretty already market XX,XXX XX,XXX you've destroyed

Operator

Matt Securities. comes question line Seaport next of Our Global Instructions] the with [Operator from McCall

Matt McCall

digit target, to this about had we the about today, couple you based next maybe you like know but vis-à-vis shift. today. mix we're of given various today, for that multi-year, I that but that of longer-term takes system takes operating on We've what also on and aware number some reasons, EBITDA and I what So look of in last is together, haven't Based new you years, understand haven't year know we what know to all and kind try low tie talked talked hit does the puts the year. this that margin. puts double Jim, incremental the

Jim Major

I get you comparables second here. more that certainly as by challenging obviously, tough were quarter out always think the a you next lap is of start but would quarters, the to it I the market year, to that specific that created predict lot lumber call to of

here there So, it to never, about get recent than better seven prices towards say if but would start it's doesn't longer-term been than our market the I feel here is but go certainly Certainly, comparables. any lap we those the for has getting historically to higher going never it six, guidance lumber lumber that of to - happened higher seem almost unheard any you months. last and months for in once

should once I with track more said, as double those get think allow us comparables, I that be we conditions so, to And get past on incrementals. we the digit those would

Matt McCall

QX So or QX? part. missed I post that beginning was that in

Jim Major

little shift bit. you will last seen we've in kind were the that here quarter Yeah. recall QX. first commodity as was the largely in incrementals in and Beginning challenging more QX by mix where of become inflation and the driven

Operator

comes Goldman next Eisner Our from line Samuel Sachs. the question with of

Samuel Eisner

for $XX to organic we're on going not quarter growth this. now worth into questions three you of I look this million kind EBITDA two X really you into that if or quarters Just here, the about and slide at adjusted of back incremental, of translate any kind had did

there's adjusted comment should is there we to competitive but inflation, you local even what's how guys the into I not volume on of EBITDA that going lumber growth translating company. is in so market a about recognize just growth want dynamics, the on because And make the think

Jim Major

back we translated to to through. X I just million that levels. Having component below day all if here a EBITDA mass way growth positive of in expect by obviously, some selling then and like more pull said, challenges quarter feel as last, that about of big this quarters, volume the I you of the comparables targeted bill said the of here the get mix the would year-over-year and incremental will Well, mean, less of gave sales part we've bridge. the comment, the we our gross of margin we Obviously, percentage a we the impact. of what and into couple the over next obviously the was talk resume that, of past see hurricane some the element as been on the biggest have as those the And bridge, EBITDA compression kind

Samuel Eisner

guess with are you're And that EBITDA along of the price million out getting arriving cost excess the those are $X you're assuming the in storm commodity adjusted at I associated same achieved calling you quarter? activity. number, how lines, of you that in

Jim Major

hourly all for profit. the Houston, pay we gross cost the we response have the variable around would of bit our take million to million being gross week lost decision close given XX points, you were saved we $XX of also sales, the million folks if on that's the there right range, little in margin the obviously, But to mean, in that our I as in we to Well, a of our midpoint that lost $XX on commented $XX.X made call, situation.

basically down and And cost savings that that SG&A minimal gross profit sales lost against fairly our to line. was our led savings, so, bottom the

Samuel Eisner

for the on fall? levels I has kind then I offset that, being the year but the if at we you out not before of It medium-term lumber by let's as mean comment market apologize to, were back how for about at made how parsing this your happened materially down think would certainly say, And though fall just just right. to prior where price your the the level, this or started words, pricing lumber if sustainable to All prices $XXX the your they that? these ability I'm to question off year, do the seems were up, three way to react inflation of input about not quarters to expectations gaining if just first prices of lumber prices

Peter Alexander

longer happened do bit have. the we our a and what has window we the in that have can general price environment than time and so of successful. so, hold little our where goal managers the instructions sales would doing we're and that's certainly in market a fall historically team underlying Certainly, a And in falling is

percentage gross in expansion an see the that generally You category. margin product on

Samuel Eisner

has in that in. market the that see within guys just competitively to kind first participate markets question, that Houston the back guys or changed of you there my maybe key whether anything And going is market any you other

Peter Alexander

but which to Sam, the got not our tied a on tremendous Maybe differently product. capability with I is material broad entry but a beast of on the of nothing cover high revenue to you thing bit breath us end is on think it, last market, the We've end. the say would greatly capability year in that millwork. I size components that the the for scale. up question I'll XX% level. tremendous We only is our low overlooked We've got in is answer unique for Houston

Houston for business. it it refused a the positions on a the partner, so opportunity think competitive help we want also a as I be huge as landscape, rebuild ourselves if to as see rebuild but we to in anything us really nicely,

Operator

of Rygiel question Ladies FBR. from Alex today and line our last the gentlemen, comes Riley for with B.

Alex Rygiel

questions. quick Two

in family mix to about multi-family? and single it your as relates and that what's millwork commentary windows, between doors First, the business

Peter Alexander

XX% we and XX%, multi-family. decline falloff in states on, multi-family in of the some to with concentrated the activity Texas. And around which, quarter some storms saw commented been business probably in fairly multifamily family Texas, we It's in in day the due has where as this then balance one single the was there

Alex Rygiel

question, next And quarter thoughts tax rate then in and year. about fourth modeling the

Jim Major

XX. We like XX%, better than

mean year, this fourth the you year fourth did you? of the I Sorry, misheard quarter you or said quarter maybe of next

Alex Rygiel

Yes.

Jim Major

Sorry.

tax with all wouldn't and the comes year, forward hovers the rate this and change to obviously mid-XXs any for expect seeing in So, beyond. fourth mean, generally the next our certainly year quarter we look what I for up and in Congress yeah,

Operator

to Mr. ladies you, any time, Alexander At comments. Thank this I'll for and final gentlemen. this back floor turn

Peter Alexander

once All for again the call. right. Thanks joining

I think got compelling a we've story.

to think I forward power for doing the we're short-term to and look correctly, quarterly everything support. group Thank both execute our on and updating within long-term again the we the next call. you

Operator

you. This concludes today's Thank teleconference.

disconnect participation. at may time. you your your Thank lines You this for

BMC Stock (BMCH) 6 Nov 172017 Q3 Earnings call transcript