Bluelinx Holdings Inc.

Good day and thank you for standing by. Welcome to the Blue Links Holdings, Inc. First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone phone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mary Moe, Director of Investor Relations. Thank you. Please go ahead.

Thank you, and good morning, everyone. We appreciate you joining us for the Blue Links 2021 First 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. The first quarter was a great start to 2021 with historically strong financial results as the Blue Leagues team performed at a high level and capitalized on the continued strength in the residential construction and home renovation markets. It's hard to believe it's only been a year since I opened our quarterly call with a discussion about our response to the pandemic, our focus on the safety and well-being of our team, and reassuring you that we were an essential business. The changes we made in the second quarter of 2020, along with our emphasis on customer service and efficiency in 2019, have fueled the transformation of BlueLynx and our tremendous first quarter results. These fundamental changes we made to our business, coupled with excellent execution, have allowed us to benefit from the robust market conditions we've experienced and led to our performance in the first quarter of this year, perhaps the best quarterly financial performance in the history of the company. Our financial metrics in the first quarter were very strong and substantially better than our first quarter of 2020. Net sales were $1 billion, an increase of 55% over 2020 levels. This is the highest level of first quarter sales we've seen since 2006. Our gross profit was $180 million, and we had a gross margin rate of 17.6%. resulting in record adjusted EBITDA of $107 million. This is the highest adjusted EBITDA quarter we've recorded in the company's history. And our trailing 12 months adjusted EBITDA at the end of the quarter was $257 million. Our profitability and the discipline management of our working capital continue to drive fundamental enhancements to our liquidity. We ended the quarter with excess availability of $238 million under our ABL, which was over $140 million higher than last year, even when you consider that we voluntarily repaid the remaining principal under our term loan of approximately $16 million. BlueLinks has fundamentally transformed over the last year. We have real momentum and a new level of financial flexibility, which affords a plethora of options for the companies in the days ahead. In a few moments, Kelly will provide more details regarding the strong first quarter results and the significant year-over-year improvements we've made. At the time of our last call in early March, the lumber and panel composite indices had surpassed the peak prices experienced in 2020. Since then, market imbalances have continued, and the lumber and panel composite indices have once again reached all-time highs. Wood-based commodity prices remain at historically high levels, and we continue to capitalize on these robust market conditions. And we're continuing to see this positive impact to the business in April, where the strength of demand coupled with higher product costs in both our structural and specialty categories have led to the highest daily average gross profit we've seen this year. While the optimism in the housing market is as strong as I've seen in my tenure at Blue Lanes, escalating prices may ultimately curb demand, which would lead to commodity price moderation or decline. We obviously can't predict when this will happen, but we believe it will. With this in mind, as we have successfully done over the last few quarters, we'll continue our disciplined approach to closely manage our structural inventory levels while utilizing mitigation strategies to reduce the impact when the inevitable decline does arrive. This includes keeping inventory levels lean while continuing to provide excellent service to our customer base, tightening our purchase lead times to reduce timing risk, and maximizing levels of available consigned inventory, which has less exposure to a reduction in market pricing. While lean commodity inventory levels may impact volume in a market environment with supply constraints, we would much rather operate with higher margins and short-term lower volume if the lower volume reduces our exposure to the potential impact of a rapid deflationary event. Our first quarter results are evidence of the success of this strategy. Inflationary pressures from housing demand and lingering supply disruptions have continued to impact many of our specialty categories as well. Our team has done a great job staying focused on our customers through these supply chain challenges as a significant amount of our sales and service energy has been on ensuring we deliver products to our customers. And our continued emphasis on appropriate customer and product pricing resulted in first quarter specialty gross margin of 19.3%, another record-breaking quarter for Blue Links. While we continue to manage through the current market dynamics, rest assured that we have not lost sight of our strategic imperatives. While organic volume growth in the very near term is challenging given the supply constraints we're seeing, we're looking to the future as we continue to invest in key customer and market channels as well as in product categories where we have competitive advantages. We're also identifying local market share opportunities so that as the market stabilizes, we're well positioned for organic sales growth. Our extensive product assortment, national footprint, excellent supply chain, enhanced customer service levels, and financial flexibility provide us with a framework to excel in these areas. Improving our logistics as well as our operational and administrative efficiency also continues to be an important area of focus. In 2020, we reduced labor costs by approximately $13 million on an annualized basis, while also taking steps to modernize our fleet and upgrade some of our technology. We are continuing to invest in these areas in 2021 to drive incremental operating leverage and productivity. In fact, during the first quarter, we replaced 150 more tractors, which represents approximately a quarter of our fleet. In addition to these investments, we're committed to capitalizing on the significant opportunities we have to improve operational efficiency through route optimization, facility layout enhancements, and automation and process redesign for our administrative and transaction processing areas. These improvements will enhance our continuing objective of providing excellent service to our customers. And now I'd like to turn it over to Kelly, who will walk you through our first quarter 2021 financial performance in more detail before I close with some final remarks.