Core Natural Resources, Inc.

ladies and gentlemen thank you for standing by and welcome to the cornerstone building brand third quarter 2020 earnings conference call at this time all participants are in a listen-only mode after the speaker's presentation there will be a question and answer session to ask a question during your session you need to press star one in your telephone please be advised that today's conference is being recorded if you require any further assistance please press star zero I would now like to turn the call over to Tina Baskett, Vice President of Finance and Investor Relations. Please go ahead.

Good morning, and thank you for your interest in Cornerstone Building Brands. Joining me today are Jim Metcalf, Chairman and Chief Executive Officer, and Jeff Lee, Executive Vice President and Chief Financial Officer. Please be reminded that comments regarding the company's results and projections may include forward-looking statements that are subject to risks and uncertainties. These risks are described in detail in the company's SEC filings, earnings release, and our investor presentations. The company's actual results may differ materially from the anticipated performance or results expressed or implied by these forward-looking statements. In addition, management will refer to certain non-GAAP financial measures. You will find a reconciliation of these non-GAAP financial measures and other related information in the earnings release and investor presentation located in the investor section of our website. Please note, we will be referencing our investor presentation throughout today's call. Today's call is copyrighted by Cornerstone Building Brands. We prohibit any use, recording, or transmission of any portion of the call without our express advanced written consent. Throughout this presentation, management may also refer to pro forma financial results. Such pro forma results give effect to completed acquisitions as if such acquisitions were consummated prior to the periods presented. With that, I would like to turn the call over to Jim.

Thank you, Tina. Good morning and thank you for joining us this morning. We hope you and your families are healthy and safe. Cornerstone Building Brands is committed to our customers in creating great building solutions for the communities we serve. As COVID-19 pandemic continues to create uncertainties, we remain deeply rooted in our core values. Safety is an essential part of our culture, and we are focused on taking the actions necessary to ensure the health and safety of our employees. Now I'd like to turn you to slide three. Two years ago, we formed our company with a strong foundation of a business model that emphasizes commitment to our customers. We've developed a well-defined business strategy focused on driving profitable growth, leveraging operational excellence across our businesses, and preserving our strong capital allocation framework. We operate our business with an ongoing commitment to sustainability, from waste recycling and reuse programs to build long-lasting, energy-saving products and systems. We believe every home and building we create positively contributes to the communities where people live, work, and play. We are confident that our strategy will deliver long-term value to both our customers and to our shareholders. Now moving to slide four. We delivered strong results for the third quarter of adjusted earnings of $0.31 per diluted share and an all-time high of 15.8% adjusted EBITDA margins. This is 160 basis points better than the same pro forma period last year on 5.5% lower net sales. This is the sixth consecutive quarter we've demonstrated our ability to generate year-over-year margin expansion while navigating market volatility and the many other challenges brought on by COVID-19. As the largest manufacturer of exterior building products in North America, we've established leading market positions in many of our core product categories. Our ability to maximize their business model, remain disciplined on price, and focused on operational excellence across our enterprise contributed to $155 million of free cash flow during the quarter, which is the best performance we've delivered so far. As we have mentioned previously, reducing leverage is key, and we continue to make progress towards that goal. During the quarter, we reduced net debt by approximately $150 million and improved our leverage ratio by close to a full term on a year-over-year basis. We completed a $500 million bond offering that enhanced our liquidity profile and strengthened our financial position. Our improved cost structure and liquidity positions us to take advantage of the improving market sentiment. This includes making balanced investments in growth categories to ensure we are deploying our capital that drives the greatest long-term returns for our shareholders. For example, in our North Brunswick, New Jersey window plant, we've installed two new automated vinyl window lines. increasing our capacity by approximately 20% for our largest product line. Investing back into the business is vital to strengthening our customer relationships and supporting their growth in the market. Key investments like these also create long-term value for all of our stakeholders. Now let's turn to slide five. We continue to see strong momentum within the new residential and the repair and remodel markets. U.S. housing activity rebounded sharply in the third quarter, supported by growing preference for single-family homes in less urban areas. On a seasonally adjusted basis, single-family starts improved by over 15% compared with the third quarter of 2019. Additionally, single-family permits and new home sales increased approximately 20% and 40% respectively. Repair and remodel momentum also remained strong, driven by a robust demand from the do-it-yourself market. Our signing and window segment have benefited from the positive rebound. During the quarter, average daily bookings were over 20% versus prior year levels. But the rapid pace of this recovery coupled with industry-wide labor shortages, have resulted in increased backlogs and extended lead times. At the end of the third quarter, backlogs within siding and window segments were strong, representing record levels for both segments. We are working diligently to ramp up our staffing to maximize our installed capacity to meet the current and future market demands for our customers. We are encouraged by the continued improvement in U.S. housing. Interest rates are at historic lows and demand for housing exceeds the available supply. Partially as a result of COVID-19, our business is benefiting from a broad increase in demand for housing as consumer preferences shift away from the urban living into the suburban single-family homes where our products are more prevalent. Also, we expect to continue to benefit from the strong growth in housing for first-time and entry-level homebuyers, as we believe our products are particularly well-suited for this segment of the housing market. The repair and remodel market tends to be less cyclical than new construction. This is also positive for Cornerstone because exterior building products are exposed to the elements and maintenance is less likely to be deferred. With the strong market demand and increasing costs in raw material, labor, and transportation, we have announced price increases across our residential businesses. We do remain cautious, however, of the rising COVID-19 infection rates and the potential pullback of the reopening plans, which are weighing on consumer confidence levels, as well as the potential for a further rise in unemployment. As we look to our commercial end markets on slide six, the impact from COVID-19 on the non-residential end-use markets have been significant. Non-residential construction spent is tied to private and public capital spending patterns, interest rates, government funding, and consumer demands. Our participation in this end market focused primarily on low-rise buildings five stories or below, serves to partially mitigate the impact of the housing cycles on a business. Commercial construction activity has been slow to rebound, but does remain stable. Our average daily bookings remain soft to the prior year, but is slowly improving with construction activity. As we remain focused on managing our price with fluctuations in steel costs, which have been increasing to pre-pandemic levels, we have announced price increases across all products in our commercial businesses. Low-rise commercial markets are stable with slight improvements in some areas like data centers, warehouses, and cold storage facilities, which do make up about 25% of our commercial segment. 2021 is still uncertain and dependent upon capital spending, commodity prices, and consumer confidence. Low-rise building applications are central to growing suburban areas, and the demand for commercial construction typically lags the housing cycle by 18 to 24 months. Now let's turn to slide seven. Our business model emphasizes commitment to our customers and operational excellence. This is supported by strong procurement, vertical integration, and engineering capabilities across our extensive manufacturing footprint while leveraging our strong customer connections. Our broad portfolio of products, and vast manufacturing network enables us to participate in a diversified set of end markets. This provides us with a unique strategic advantage. We see great opportunity to expand and strengthen our existing customer relationships by providing integrated solutions tailored to each channel and optimizing our capital deployment to create long-term shareholder value. The underlying fundamental factors are favorable that will drive long-term growth across the markets in which we operate. Our business is well positioned to benefit from the broader societal and population trends favoring suburban regions as employment and living preferences shift. Our discipline culture is committed to delivering sales growth and margin improvement from a focus on operational excellence. We accelerated cost, automation, and productivity initiatives that structurally transformed the company's cost structure. We have structurally reduced costs by approximately $75 million through the successful execution of these savings initiatives. We do remain committed to delivering between $80 and $100 million of structural cost benefits this year yet preserving the fundamental elements of our business that provide a value proposition for our customers. We have further invested in talent with the appointment of Jim Kepler as Executive Vice President of Operations. Jim has over 30 years' experience leading manufacturing and supply chain operations for large, diverse organizations. I'm excited to welcome Jim to Cornerstone's leadership team where he will play a vital role in accelerating our manufacturing and operations strategy. Now I'd like to turn the call over to Jeff, who's going to walk through some of the financials.