BlueLinx Holdings Inc. Q1 FY2025 earnings call

• Gross margins for specialty products were over 18% and structural products just over 9% in Q1, despite price deflation and volume challenges. - Partially offset price deflation by driving volume growth in engineered wood products, lumber, and panels. - Digital transformation Phase 1 set to complete by Q3 2025. - Greenfield in Portland performing better than expected; exploring Greenfield and M&A opportunities. - Specialty product margins improved in March; structural margins slightly better in Q2 first four weeks. - Repurchased $15 million in shares during Q1 and plan to return capital to shareholders.

Specialty Products: Net sales were $480 million, down 5% year-over-year due to price deflation and volume pressure, but partially offset by volume growth in engineered wood products, lumber, and panels. Gross margin was 18.7% in Q1. Specialty products account for approximately 70% of net sales and about 80% of gross profit. Structural Products: Net sales were $230 million, up over 3% year-over-year due to higher lumber prices and volume increases in lumber and panels. Gross margin was 9.3% in Q1.

• Q2 specialty product margins slightly below Q1 due to regional and competitive dynamics; structural product margins slightly better due to higher lumber prices. - Specialty pricing improved from Q4 but remains volatile; volumes may be impacted by tariffs, mortgage rates, and economic uncertainty. - Believes in long-term prospects of housing and building product sector; estimates over 1.5 million homes needed annually for 10 years to meet demand.

• Continued price deflation impacting financial results, especially in certain product categories. - Macro economic forces like weather and lower volumes affecting results. - Tariffs putting pressure on gross margins, difficulty passing along all costs. - Volume uncertainty due to tariffs, high mortgage rates, and economic uncertainty.

Q: Greg Palm asked about specialty gross margin commentary, tariffs impact, and inventory levels.

A: Shyam Reddy said there are competitive pricing pressures and unconstrained supply; tariffs will be passed along but margin may decrease depending on tariff magnitude; inventory bill was due to soft start of year and weather, with volumes up in Q2.

Q: Reuben Garner followed up on specialty margin, volumes, competition, and tariff impact on new channels.

A: Shyam Reddy said market is softer with competitive pricing pressure; volumes up due to multifamily focus and national accounts, but near-term margins hit due to local competitive dynamics; greenfield in Portland is performing well but subject to normal market softness.

Q: Kurt Yinger asked about SG&A, customer inventory, and capital allocation.

A: Shyam Reddy said focused on managing cost structure responsibly; customer inventory levels were lower with customers wanting to buy less more often; capital allocation includes M&A and buybacks, prioritizing strategic growth.

Q: Jeffrey Stevenson asked about lumber sourcing, pilot program progress, and M&A expectations.

A: Shyam Reddy said less than 20% lumber sourced from Canada, tariffs will be passed through; pilot program with production builders has led to share gain and volume growth; expectations for M&A are improving with narrowing spreads and more deal flow.