Bluelinx Holdings Inc.

Greetings and welcome to Blue Link's holding third quarter 2021 results conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. Ryan Taylor, Vice President, Investor Relations and Treasury. Thank you. You may begin.

Thank you, operator, and good morning, everyone, and welcome to the BlueLynx Holdings third quarter 2021 conference call. With me on the call today are President and CEO Dwight Gibson and Chief Financial Officer Kelly Jansen. Our third quarter news release and Form 10-Q were issued yesterday, along with the webcast presentation. These items are available in the investor section of our website, bluelynxco.com. We encourage you to follow along on the webcast with the detailed information on the slides. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our most recent SEC filings. Except as required by law, we undertake no obligation to update our forward-looking statements. Today's presentation also includes certain non-GAAP financial measures that we believe provide helpful context for investors evaluating our business. Reconciliations of these measures to the closest GAAP financial measure can be found in the appendix of our presentation. All variances in today's discussion refer to year-over-year progress except where noted. At the conclusion of our prepared remarks, we'll open the line for questions. And with that, I'll turn the call over to Dwight.

Thanks, Ryan, and welcome to the Bluelinks team. Good morning, everyone. Thank you for joining our call today. We appreciate your engagement. This is an exciting time for Bluelinks. We delivered an exceptional third quarter, capitalizing on robust demand for building materials, as well as our size and scale, to provide both strong profitability and cash generation. While the supply chain remains challenging, and we saw significant wood-based commodity market price deflation during the quarter, our team remained disciplined and focused on their margin preservation strategies when navigating these challenges to generate another strong quarter. Our financial strength positions us well to be able to invest in our business to fuel both organic and inorganic growth. while also taking a focused approach to driving continuous improvement. As we move into a new phase of growth, we continue to further emphasize the importance of fostering a performance-based culture that creates an exceptional employee and customer experience. This is paramount to maximizing our significant potential. Looking at our Q3 results at a high level, I'm pleased to report that net sales grew by 11% We delivered $79 million of adjusted EBITDA and generated strong cash flow of over $100 million, all of which helped reduce our net leverage ratio to 1.3 times. This marks the sixth consecutive quarter of net leverage reduction, a tremendous accomplishment driven by disciplined debt reduction and significant EBITDA growth. During the quarter, we capitalized on continued strong demand for our specialty products while successfully navigating historic and rapid wood-based commodity price deflation through disciplined, strategic inventory management. Overall, we delivered results that exceeded expectations for the quarter and demonstrated the strength and resiliency of our business. We continue to execute on strategic actions that further diversify our business into specialty product categories and drive sustainable, profitable growth through all economic cycles. These actions include continuing to leverage our centralized purchasing and pricing teams, emphasizing growth in our higher margin specialty products, maintaining a disciplined approach to structural inventory, and issuance of our $300 million senior secured notes. Before diving into the details, I'd like to recognize our team members across the country for their tremendous effort and teamwork during the quarter. Together, we maintain focus on delivering to our best customers through a turbulent pricing and supply chain environment. Taking a closer look at the end market environment, The residential housing market remains very strong, with U.S. housing starts up 9% year-over-year in Q3, including an 8% increase in September. New home sales were up 14% in September, while mortgage rates remained favorable. And repair and remodel activity is expected to remain at high levels well into next year. Wood-based commodity pricing experienced historical deflation, with lumber and panel prices plummeting 74% and 66% respectively between June and August. This marked the most significant decline over a two-month period of wood-based commodity pricing in the past 20 years. Pricing gradually bounced off August lows and modestly improved to September and October. Even so, average October prices $556 per thousand board foot for lumber and $654 per square foot for panels were approximately 60% respectively between June and August. This marked the most significant decline. This has resulted in a relatively more stable wood-based commodity price environment so far in the fourth quarter. Thus, to sum up our view of the market, new home and repair demand continues to look strong for the foreseeable future, and the go-forward outlook is positive from our perspective. While we are encouraged by these favorable market dynamics, it is important to underscore the strength of our unique position in the housing industry and ability to perform well through macroeconomic cycles. As a leading two-step distributor of building products in the United States, we are an entrenched and essential part of the supply chain in the residential new homes and repair markets. we provide a differentiated value proposition to our customers across the growing regional markets we serve. Our deep, long-standing supply relationships, broad product offering, and integrated value-added services have enabled us to capitalize on the strong demand environment across new home construction and renovation markets while delivering an exceptional customer experience. With residential construction activity continuing to be robust, Our broad customer base, including the national home centers, pro dealers, and distributors, count on us as a vital sourcing partner. For many customers and suppliers, we are a natural extension of their own internal sales teams, and they look to us to provide technical expertise and application knowledge across the markets we serve. As a result, we are an essential value-added supplier to our customers throughout the ebbs and flows of the housing industry. And we are especially well positioned to capitalize in the current market environment. Even so, we continue to focus on continuous improvement efforts to further strengthen our business. We are in the early stages of implementing standard repeatable work processes with an emphasis on data-driven decision making. Over the past few months, we implemented improved processes and tools to guide purchasing and pricing actions, while also centralizing key decisions to drive consistency across our locations. The benefits of this approach were evidenced in our third quarter performance. We continued our approach to keep structural product inventory low to mitigate the risk of wood-based commodity price deflation. The wisdom of these decisions was on display in Q3. as we nimbly managed a decline of greater than 60% in commodity wood prices and still delivered positive gross margin on structural product sales. As we look ahead, Bluelinks remains exceptionally well positioned with ample opportunity to drive continuous improvement and profitable growth. In support of this, we continue to build a performance-driven culture designed to develop, retain, and attract leaders aligned with our values and vision for the organization. On the commercial front, we continue to focus on driving a higher quality of sales, in part by concentrating our sales in specialty product categories, while selectively investing in the efficiency and reliability of our operations. Our path to continued margin expansion includes driving a higher quality sales mix, concentrating sales growth in specialty product categories, while prudently managing our structural product business. Disciplined capital allocation will play a critical role in future value creation. Over the past six quarters, we've been appropriately focused on debt reduction and deleveraging. With our balance sheet now in a strong and flexible position, we are broadening our aperture for capital allocation. We intend to invest strategically in our business to drive organic and in organic growth. On that front, we are increasing our capital expenditures this year as we continue to invest in upgrading our fleet and modernizing our distribution facilities. Additionally, we are actively building out our internal capabilities to support enterprise strategy and evaluate and pursue acquisition opportunities. With respect to acquisitions, we intend to be strategic and disciplined in our approach. At this time, I'll turn the call over to Kelly for a more detailed discussion for our third quarter financial results and capital structure. Following that, I'll provide a brief summary before we take your questions. Kelly?