Bluelinx Holdings Inc.

Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter 2020 Bluelinks Holdings Inc. Earnings Conference Call. At this time, all participants lie in their listen-only mode. After this speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to Mary Moll. Thank you. Please go ahead.

Thank you, and good morning, everyone. We appreciate you joining us for the Blue Links 2020 Fourth Quarter Earnings Conference Call. The earnings release is posted in the investor section of our website at www.bluelinksco.com. We will also be referring to a supplementary presentation as we go through the call. The presentation is available on our website as well. Joining us on the call today are Mitch Lewis, Chief Executive Officer, and Kelly Jansen, Chief Financial Officer. Before we get started, I'd like to remind you that this presentation includes forward-looking statements. These statements are subject to risk and uncertainties that could cause our actual results to differ materially from those reflected in the statements. Those risks and uncertainties are described in our earnings release and discussed in our filings with the SEC. Today's presentation also includes references to non-GAAP financial measures. These non-GAAP measures are described and reconciled to their GAAP counterparts in the presentation materials, the earnings release, and in the investor section of our website. With that, I'll turn the call over to Mitch.

Thanks, Mary, and good morning. 2020 was an exceptional year for Blue Links, a year of rapid change and transformation. The pandemic has created incredible challenges for our company, and the Blue Links team has faced these challenges with resolve. while always keeping the safety and well-being of our associates as our top priority. We were able to capitalize on the opportunities we were afforded in 2020, delivering a record financial performance while significantly deleveraging the company in the process. We began 2020 with strong momentum, realizing the benefits from the investments we made in people and processes in the second half of 2019 which drove operational efficiencies and improved customer service. These efforts included investments in the centralized logistics team, a relentless focus on enhancing our customer service levels, and executing on market share growth initiatives at the local and national level. We also began company-wide initiatives to strengthen our partnerships with strategic suppliers with a renewed emphasis on certain key product categories. Toward the end of the first quarter, we started to feel the impact of the pandemic, and the Blue Links organization immediately reacted to the resulting market conditions through a focus on employee safety, rigor in controlling working capital and liquidity, a reduction of fixed costs, and closely managing pricing. Fortunately, the pandemic-related shock to the housing market proved to be short-lived as the residential housing market recovered quickly through the second half of the year. During this period, we also encountered a historic price escalation in our wood-based commodity products. Our investment and efforts in the second half of 2019 and into the pandemic allowed us to capitalize on the markets we experienced. These efforts have continued to pay off, as our results in the fourth quarter were outstanding, with revenue, gross margin, and adjusted EBITDA all significantly increased in 2020-21. compared to 2019 levels. For the fourth quarter, our net sales were $865 million, an increase of 41 percent over 2019 levels. Our gross profit was $124 million, and we had a gross margin rate of 14.4 percent, resulting in adjusted EBITDA of $39 million. This compares to $11 million in the fourth quarter of 2019. The strength of the fourth quarter ended a fantastic year in 2020 with the highest adjusted EBITDA in our company's history of $170 million. Our adjusted EBITDA, coupled with the close management of our working capital, drove a fundamental enhancement to our liquidity while significantly reducing our annual interest expense. We ended the year with excess availability of $184 million under our ABL, over $100 million higher than last year. Earlier this week, we used some of this increased liquidity to further reduce the principal under our term loan by $25 million, which now brings the term loan principal balance below $20 million. We are now, from both a capital structure and leverage perspective, a fundamentally different company than we were a year ago, having brought a new level of financial flexibility into the business. Kelly will highlight our strong fourth quarter and full year results in more detail, which will clearly illustrate our renewed financial strength. When we last reported earnings in October, we were beginning to see wood-based commodity prices falling towards more typical historical levels. Prices continued to decline in the first two months of the fourth quarter before sharply rebounding in December. Supply-demand imbalances have continued to persist in the first quarter of 2021, and both the lumber and panel composite indices have reached new all-time highs, surpassing the peak that prices experienced in 2020. Today, wood-based commodity prices remain at historically high levels, and we continue to take advantage of these market conditions to enhance the financial strength and liquidity of the business. While we cannot predict when commodity prices will return to a more normalized rate, we are confident that they will ultimately decline. So we'll continue our disciplined approach to closely managing our structural inventory levels while utilizing mitigation strategies to reduce the impact when the commodity markets weaken. The robust demand in housing coupled with supply disruptions associated with the pandemic have also led to extended lead times and inevitable inflationary pressures in many of our specialty product categories as well. Our team has done a great job staying focused on our customers through these supply chain challenges and using similar pricing strategies with these product categories that we utilize for structural products. While we are successfully navigating through the current market environment, we also continue to execute on our most important strategic imperative organic growth. Our efforts include a continued investment in our national accounts team, emphasizing and investing in product categories where we have a competitive advantage, and a rigorous process for identifying and capitalizing on local market share opportunities. We believe that our extensive product assortment, excellent supply chain, and national footprint all position us well to excel in these areas. Another key area of our focus continues to be improving our logistics, operational, and administrative efficiency. Our operational performance improved in 2020 by reducing labor costs through efficiency initiatives, investing in our operational center of excellence, modernizing our fleet, and upgrading technologies. We will continue to invest in these areas to drive incremental operating leverage and productivity. In addition to these investments, there are significant opportunities to improve operational efficiency through route optimization, facility layout enhancements, and automation and process redesign for our administrative and transaction processing areas. This focus on operating performance improvement ties directly to our core value of continuous improvement, We will continue to evaluate everything we do through the lens of operating in a more efficient and effective manner, while our number one focus remains on providing excellent service to our customers. Before I turn it over to Kelly, I'd like to thank the entire Blue Links team for their hard work, determination, and commitment to safety through perhaps the most challenging year in our history. Their collective efforts led to our historic performance in 2020. a year that was truly transformative for Bluelinks. We're simply a different company today than we were a year ago. We have a much stronger balance sheet to support the continuing execution of our sales growth and operational initiatives that will propel our success in the months ahead. No one can predict the long-term impact of the last 12 months, but my optimism for the future remains strong, and I am confident that the future for Bluelinks is bright. The Blue Links team seized this opportunity, and in 2021, we will continue to drive towards our goal of being the industry leader in the markets we serve. And now I'd like to turn it over to Kelly, who will walk you through our fourth quarter and full year 2020 financial performance in more detail.