Core Natural Resources, Inc.

Ladies and gentlemen, thank you for standing by and welcome to Cornerstone Building Brands' fourth quarter 2020 earnings 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 the session, you will need to press star 1 on your telephone. 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 your speaker today, Tina Beskid, Vice President of Finance and IR. You may begin.

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 presentation. 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 expressed advance 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 now turn the call over to Jim.

Thanks, Tina. Good morning, and thank you all for joining us. As I look at where Cornerstone is today, I'm incredibly proud of our team. the accomplishments, and what was truly an unprecedented year. Decisive actions that took place at the start of the pandemic not only allowed us to operate safely and serve our customers, they made Cornerstone a stronger company and well positioned for 2021. We delivered strong fourth quarter results, rounding out the year with record performance despite a very challenging market environment. we saw widespread improvement across the business. Fourth quarter net sales for the window and siding segments combined were approximately 4 percent higher than the prior year, and average daily sales in our commercial business were 3.5 percent higher as compared with the third quarter. Furthermore, we maintained cost discipline, which drove our seventh consecutive quarter of adjusted EBITDA margin expansion across all of our segments. The fourth quarter performance demonstrates our team's ability to consistently deliver strong results despite difficult challenges. It shows our dedication towards a partner of choice for our customers, the importance of a strong portfolio of brands, a national footprint, and ultimately why we continue to be a market leader. We have entered 2021 a leaner, more agile company, eager to serve our customers and capitalize on the recovery in our markets. Moving on to slide four. The actions we took in 2020 have strengthened Cornerstone and are positioning us for growth. While we needed to act swiftly to address market challenges, we never wavered from our strategic roadmap, keeping a keen eye on the future. And we did this while maintaining the safety and wellbeing of our employees as our number one priority. With innovation as a core value, we launched several new products during the year in both the residential and commercial markets. These included our laminated bronze 1100 series and windows, a new laminated color rat vinyl window in Western Canada, our Duo Pro gutter production product in siding, and as part of our IMP product offering, VersaWall H Plus in commercial. These product additions enhance our already diverse product portfolio. Driving organic growth through innovation is an important part of our strategy as we continue to provide a value proposition for our customers. We strengthened our market presence in the fast-growing segment of residential cladding and stone market with the strategic acquisition of Cleary Masonry in Northern California. This acquisition expanded our turnkey stone veneer solution and brings new opportunities across the builder and contractor networks to cross-sell into the commercial buildings business. We also took the opportunity to accelerate transformational actions that already were underway. These included the layering the management structure within the commercial business, getting the leadership team closer to the customers, and improving our market leadership positions. For example, our team in Canada did a tremendous job in their transformational effort to improve market position and achieve record results in 2020. a complete turnaround. Continuous improvement is a core competency throughout all of our segments at Cornerstone. In 2020, we delivered over $110 million of structural cost savings, exceeding our original targets. We made investments in talent, processes, and equipment that are positioning us to be the cost advantage manufacturer in our markets and to achieve long-term growth. As a result of these investments, we have also increased production capacity and are better positioned to capture the growth and service our customers. In our ongoing effort to reduce costs and position the company for growth, we've taken approximately $250 million of structural costs out of the company since the merger, contributing to the 260 basis point margin expansion. All of these actions stem from the commitment of our dedicated associates, a team comprised of many backgrounds, each adding a unique and valuable contribution to our success. To support the growth and opportunities in our organization, we have advanced our talent development efforts through many initiatives. Some examples are the launch of our talent success model and the creation of a diversity, equity, and inclusion council. whose focus is on fostering a work environment that is inclusive and equitable for all of our employees. Our purpose is to deliver building solutions that have a positive impact on the customers and the communities we serve. We are deeply committed to transparency and continued improvement of our policies and practices with a shared purpose in mind, contributing to the communities where we live, work in play. To increase our communication about our efforts in these areas, we have recently launched an environmental, social, and governance hub on our website, and I invite you to take a look at it. All of our actions in the fourth quarter and throughout 2020 have resulted in improved financial results and financial flexibility. We wrapped up 2020 with strong free cash flow and lower net debt, and record liquidity. We are evolving as an organization, positioning for growth, and looking forward to delivering strong performance in 2021 and beyond. Now, let's look at slide five. I'd like to share some thoughts on the markets we serve. Residential markets continue their strong recovery in the fourth quarter as U.S. housing starts average 1.6 million units which is an 11 percent sequential improvement. Single-family starts improved by approximately 20 percent quarter of a quarter. Single-family units represent approximately 80 percent of residential construction, which is up from 67 percent a year ago. Single-family housing is an important end-use market for us as it comprises about 30 percent of our net revenues. The fundamentals are strong in this market. Housing permits are at the highest level, and the post-COVID-19 preference for larger single-family homes, coupled with the consumer preference to shift away from the urban to suburban living, are favoring our business. We expect to benefit from the strong growth in housing for the first time in entry-level buyers, as our products are well-suited for this segment of the market. The repair and remodel market continues to show consistent growth with tailwinds continuing into 2021. Fundamental drivers remain solid with increasing home equity, aging inventory, and consumer access to capital spending. The repair and remodel market tends to be less cyclical than new construction, particularly for exterior building products that are exposed to the elements and were maintenanced is less likely to be deferred. Our participation in this market also positions us well to capture growth. In the first quarter, we are seeing a strong pace of incoming orders from the rapid residential recovery. The pace, coupled with industry-wide labor shortages, has led to extended lead times and growing backlogs. Our operation teams are focused on overcoming these challenges and solidifying our service position as the partner of choice for our customers. We've completed market studies and improved our recruiting and retention efforts by increasing employee wages and benefits at our manufacturing facilities. These actions are resulting in positive momentum. Since the third quarter, we've increased our hourly headcount by over 1,000 associates, We still require additional labor capacity, but we are also leveraging our national network, flexible manufacturing capabilities, and our investments in automation to produce and deliver high-quality products more efficiently for our customers. Maintaining price discipline to offset inflation impacts is another key competency for Cornerstone. This is important such, along with the positive market momentum, we're experiencing increasing commodity costs across the board. With careful consideration, we've announced price increases in both windows and siding as we expect inflation to continue throughout 2021. Now let's turn to slide six. Private and public capital spend drives the demand in the commercial and markets. As I mentioned earlier, we saw sequential improvement in our commercial business from the third to the fourth quarter. As we move into 2021, we anticipate the commercial segment will remain steady, but there's still some uncertainty. The impact of COVID-19 is still very much present in this sector, and it continues to influence decisions about the type and the timing of projects. We also look at a number of indicators when formulating our sentiment, including Dodge and the architectural index. The first quarter incoming orders have been higher than last year with a significant increase in metal components, which has a shorter order to delivery terms. We believe that the increase could be pulled forward in demand due to rising steel costs and we'll monitor as we move into the second quarter. As I mentioned, Price discipline is a core competency, and we've been increasing our prices within the commercial business to offset the rapid impacts of rising steel costs. By comparison, in 2018, we saw a 25% increase in steel costs in a nine-month period from trough to peak. For 2021, we currently expect steel costs to rise from the low point in the fourth quarter of 2020 to a peak that may be more severe over a shorter period of time. Through our price discipline, we have demonstrated that we can effectively manage this environment. Looking forward, we believe we are positioning for growth in the commercial segment. Our low-rise building applications are central to growing suburban areas, and that demand typically lags new home construction starts by 18 to 24 months. So we continue to navigate this end market by remaining close to our customers and strengthening our relationships with our value proposition. Now let's turn to slide seven. We are excited about the growth opportunities ahead of us in 2021 and our key priorities. Advancing our growth strategy, elevating the customer experience, operating with excellence, and maintaining our financial discipline. are positioning us for sustainable growth and success. We are continuing to advance our growth strategy by investing in innovation and targeted acquisition opportunities. We have a well-defined product innovation process. It is centered on reducing complexity, offering better performing products with a focus on labor savings. We remain focused on elevating the customer experience. We pride ourselves on maintaining strong customer relationships, delivering exceptional service and being the partner of choice. In 2021, we remain committed to addressing lead time challenges in continuing our focus on operational excellence across our businesses. We are increasing efficiencies and product output, and we're making additional investments in automation, capacity-increasing projects with approximately 50 percent in U.S. windows. Throughout all of our efforts, we are committed to maintaining financial discipline and reducing our net debt leverage ratio by three-quarters to one term is paramount to higher earnings generation. By staying focused on our priorities, we expect to deliver long-term value to all of our stakeholders. Before I turn the call over to Jeff, I'd like to take a moment to recognize and thank our dedicated team. As I reflect on how we came together to support each other and our customers, I've never been as proud of a team as I've done over the last year. Our team remained flexible and focused on our customers and our performance is a direct reflection of that commitment. I'm encouraged by the momentum we've seen at the start of 2021, and excited for the opportunities ahead. Now I'd like to turn the call over to Jeff, who will walk through the financial results. Jeff?