BlueLinx Holdings Inc. (NYSE:BXC) Q3 2023 Earnings Call Transcript

Reuben Garner: So throughout the quarter, we heard on the commodity side of your business that things maybe were starting to get a little bit more competitive. I think the term aggressive was even thrown around from someone in the industry. Are you guys feeling that? Have you had to defend share position? How are you thinking about that? I see your guidance for the fourth quarter. Is it touched below, but still very strong on the structural piece at 9% to 10% gross margin? But maybe just walk me through, if you’re seeing any of that kick in and how you kind of think about share versus margin in that part of your business?

Andy Wamser: Sure. I’ll take the first stab at that. What I would say on structural, there certainly has been a little bit of a margin compression as we go from the fourth quarter or go into the fourth quarter. And in some of my comments, I gave sort of a framework in terms of where we ended in September to where we’re turning in October. So when we look at lumber and panels, it is down a decent bit. We’ve seen some real drop off here in pricing, I’d say over the last, frankly, eight weeks or so. As it relates to volumes, though, through the first four weeks of this year, structural volumes, I would say are modestly up from a sequential. Again, I wouldn’t read too much into that, the same sort of — I would sort of say the same comments as I mentioned to Greg, where it’s good to see that October volumes on a sequential basis. In October up, I’d call it moment single digits. But then we do expect that drop off in that normal seasonality in November and December.

Shyam Reddy: Yes, look, the structural piece of our business is an important one. We are obviously moving in the direction of achieving an 80%, net sales to 20% — 80% 20% specialty structural mix. But given the needs of our customers, we really believe that through strategic management of our structural program and which we’re – and where we use consignment, great inventory management from a centralized perspective gives us the ability to really take advantage of that piece of our business to drive overall sales growth and support our customers in the way they need in order to be successful on their end. So despite the margin compression, we are seeing those volumes tick back up mainly because it’s a core piece of our business. So the focus is on specialty.

Reuben Garner: And on that specialty side, I think more exposure to the R&R space there. And I recognize the longer term comments about home equity levels and aging of housing stock and that sort of thing. But in the near term, that area I would assume is maybe a little bit more challenged than new construction. Is that a fair assessment? And are you seeing any particular opportunities or product categories that are doing better than others? So outdoor living, for instance, versus any other exposure that you have?

Shyam Reddy: Yes, so yes, I mean, obviously we’ll feel some of the adverse impact as it relates to repair and remodel, repair and remodel activity, lowering or the outlook being a little muted heading into the next year. That said, as we look at our product diversification, we do play in many layers of the construction cycle. So to the extent there are changes being made or sacrifices being made, we feel like there’ll still be repair and remodel activity. It’ll just be smaller projects than maybe in the past because the home equity levels are high. But at the same time, our product diversification and our performance relative to the market decline suggests that we’re actually comping favorably. So if the market comes down, we’re not coming down as much.