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Ladies and gentlemen, thank you for standing by, and welcome to the BlueLinx Holdings Inc. Fourth Quarter Full Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. And today's call is being recorded.

Thank you, operator, and welcome to the BlueLinx Holdings Inc. fourth quarter and full year 2024 earnings call. Joining me on today's call is Shyam Reddy, our President and Chief Executive Officer, and Kim Debrock, our Vice President, Chief Accounting Officer, and Interim Principal Financial Officer. At the end of today's prepared remarks, we will take questions. Our fourth quarter and full year news release and Form 10-K were issued yesterday after the close of the market. Along with our webcast presentation, these items are available in the Investors section of our website, bluelinxco.com. We encourage you to follow along with the detailed information on the slides during our webcast. Today's discussion contains forward-looking statements. Actual results may differ significantly from those forward-looking statements due to various risks and uncertainties, including the risks described in our most recent SEC filings. Today's presentation includes certain non-GAAP and adjusted financial measures, which we believe provide helpful context for investors evaluating our business. Reconciliations to the closest GAAP financial measure can be found in the appendix of our presentation. Now I'll turn it over to Shyam.

Thanks, Tom, and good morning, everyone. We are pleased with both our fourth quarter and full year 2024 results, especially in a year when elevated high mortgage rates and record home prices pressed sales in the housing and building products sector. Despite these headwinds, our margins remain strong, especially in specialty products, and we continue to generate solid margins in our structural products business as well. During the quarter, we also demonstrated our commitment to returning capital to shareholders by continuing to repurchase shares under our $100 million share repurchase authorization. Next, I'd like to offer a few highlights from 2024. First, we delivered solid full-year 2024 results. Our teams and supplier partners, combined with the confidence our customers have in BlueLinx Holdings Inc., helped us compete effectively in challenging environments. Our specialty product gross margins were 18.4% and 10.1% for structural products for the year. Second, our fourth quarter results were also solid. As expected, our revenues were flat year over year, largely due to market-driven price deflation. However, our specialty and structural gross margins came in at 18.4% and 10.8%, respectively. That's a testament to the value of our service proposition to customers and our ability to effectively manage our inventory. In addition, while deflation still had an impact in Q4, it improved from Q3. It is also worth noting that specialty product volumes were up low single digits year over year, demonstrating that our corporate growth strategy is bearing fruit. Third, we remain focused on our five key high-margin specialty product categories: engineered wood, siding, millwork, industrial, and outdoor living products. Specialty products accounted for approximately 70% of net sales and 80% of gross profit for both the fourth quarter and full year 2024. We also continue to execute successfully on our local and national market share gain strategies, as seen by our multifamily growth, expansion of product lines with key national accounts, our expansion of branded product lines into new geographic markets, and launches of new product lines. For example, we recently announced an expanded distribution partnership with Louisiana Pacific that will broaden the geographic reach of our wood-based siding offering, demonstrating our focus on specialty product growth. These product categories and the strategic vendor partners we've aligned with enable us to be a necessary extension of our customers in a scalable way, whether they are local or national. These product categories are also sold at various points of the construction cycle rather than at just the front or back end of a single or multifamily housing project, or remodeling job for that matter. In addition, they drive higher net sales and gross profit, generate sustainable and durable operating cash flow that can be reinvested back into the business and used to fund opportunistic greenfields and M&A opportunities. Fourth, our digital transformation journey is well underway as we strive to become the most technologically advanced two-step distributor of building products in the United States, transforming BlueLinx Holdings Inc. and making us the provider of choice for both suppliers and customers. These technology improvements are designed to enable us to rapidly grow our business at scale with both customers and suppliers by providing an exceptional customer and supplier experience that is more efficient and effective. They will also enable us to drive productivity improvements that will enhance our gross margins and EBITDA margins. Phase one includes implementing a new master data management platform, launching an e-commerce platform, which is now live in a pilot phase, and establishing a new transportation management system, which is on track to be fully implemented by Q3 2025. We are also emphasizing the technology enablement of our warehouse operations. We believe that subsequent phases will further enhance our operational and commercial capabilities. Modernizing the business with new technology will differentiate ourselves in the marketplace and accelerate our profitable sales growth and operational excellence initiatives. This November, we announced our first greenfield in Portland, Oregon, and we expect to have additional announcements in 2025. We expect our upfront cash investment for each new location to be less than $5 million and EBITDA positive after two years, with EBITDA margins between 6% and 10%. These greenfields should generate between $40 million and $100 million of net sales at maturity. Of course, these expectations will vary depending on the size of the market, the branch real estate footprint, product mix, and other factors. It is also important to note that as we launch a greenfield, we intend to have a product mix more heavily weighted to specialty products. We will strive to get to our 70/30 specialty/structural split in the initial year and then to around 80/20 at maturity. We have considerable strength managing our structural products business, so we believe that capability will provide us with a competitive advantage when launching greenfields and allow us to meet our financial objectives much faster. Sixth, our financial position remains strong, with liquidity of $852 million at the end of the year, including $506 million of cash on hand. This strength gives us the flexibility to reinvest in business initiatives that allow us to increase sales, improve productivity, expand our geographic reach, and provide better customer and vendor service, an example of which would be our digital transformation initiative. And of course, having the ability to return capital to shareholders remains a priority, as demonstrated by our share repurchase program. For the year, we returned $45 million to shareholders. Now for a few more details on our full-year results, we generated 2024 net sales of $3 billion, $131 million in adjusted EBITDA, for a 4.4% adjusted EBITDA margin. Adjusted net income was $55 million or $6.44 per diluted share. For the year, we delivered solid gross margin performance with specialty products coming in at 19.4% and structural products at 10.1%. Our focus on business and operational excellence led to effective pricing, strong service levels, procurement opportunities, and cost management, contributing to these strong results. Kim will provide more details in her remarks. Now let's turn to our perspective on the broader housing and building products market. Early last year, industry sources were optimistic about the overall market for building products rebounding in the second half of 2024. As we all know, that rebound never happened. As we continue to operate in an environment with the lowest existing housing sales backdrop in thirty years, elevated interest rates, home affordability issues, and market volatility due to tariff and other recent policy announcements, there is general uncertainty about the timing for a sustained housing recovery. Of course, one of the critical factors in pivoting a housing recovery is the Federal Reserve's positioning regarding rate cuts, in addition to policies and market forces that may keep mortgage rates stubbornly high or otherwise volatile. As we've noted before, it is also important to note that the Federal Reserve interest rate cuts do not directly result in lower mortgage rates given other macroeconomic factors that influence these rates. Now although the year ended with many observers expecting housing starts to be up slightly in 2025, recent views suggest that housing starts will be flat to down this year. In fact, builder sentiment fell five points from January over concerns about tariffs, high mortgage rates, and affordability issues with housing. Regardless of market conditions, we will continue to emphasize our product and channel growth strategies and, in particular, our multifamily growth strategy to gain share in an otherwise challenging market. Repair remodel spending continues to be soft because existing home sales are low. Despite this softness, our strategic focus on national accounts is expected to enable us to grow this business on a year-over-year basis. And as the turnover increases, we believe the investments we're making today will accelerate our growth efforts in the repair and remodel-driven business when the markets turn. Although this near-term outlook remains uncertain, we continue to believe in the long-term prospects of the housing and building product sector. As many of you know, it is estimated that 1.8 million homes need to be built every year for the next ten years to meet the housing demand, which if anything is probably a low estimate based on the actual need due to a variety of demographic trends. We took the anticipated demand curve and the fundamental drivers for housing and building products into account when we developed our share gain strategy to drive profitable sales growth, which generated positive results in 2024. Focus and clarity will continue to be critical to the successful execution of our strategy in 2025. Through the first seven weeks of Q1 2025, we have maintained solid margins for specialty products, which are generally in line with Q4 2024. Structural product margins are slightly lower so far in 2025, largely due to declining panel prices. Daily volumes have been adversely impacted by the extreme weather patterns experienced in January. In fact, over twenty of our locations were closed for at least half a day in January due to unusually cold weather and winter storms. In addition, it is important to note that while industry-driven specialty product price deflation continues to have an impact on both our top line and cost of goods sold, the situation improved in Q4. For example, in the fourth quarter, specialty pricing was down mid-single digits versus high single digits in the third quarter. For the first seven weeks of the year, pricing has been volatile but generally flat relative to Q4 when you take all the puts and takes into account. And given the political backdrop, inflationary pressures, and discussions with our vendor partners, we are optimistic that the specialty pricing volatility will abate at some point. The flip side, however, is that the outlook volumes may be tempered a bit by these same factors: high mortgage rates and economic uncertainty. In summary, we delivered solid results for both the fourth quarter and full year 2024. We're also delivering on our strategic priorities as seen by our specialty product expansion efforts, margin performance driven by our pricing and cost discipline, and capital allocation initiatives. I'd like to end by thanking my fellow BlueLinx Holdings Inc. associates for their continued grit, tenacity, and resilience during a challenging housing market and for their dedication to our customers and our suppliers. Our teams are committed to generating more profitable structural and specialty product sales as we position ourselves for long-term success regardless of near-term market conditions. Now I'll turn it over to Kim who will provide more details on our financial results and our capital structure.

Thanks, Shyam, and good morning, everyone. Let's first go through the consolidated highlights for the quarter. Overall, we delivered solid fourth-quarter results, highlighted by solid margins in both our specialty and structural product categories. Net sales were $711 million, consistent with last year's fourth quarter. Specialty product sales were down 1% from the prior year due to price deflation. Structural product sales were up 1%, largely due to year-over-year increases in lumber prices. Total gross profit was $113 million, and gross margin was 15.9%, down 70 basis points from the prior period. SG&A was $93 million, up 10% from the prior year period, primarily due to increased payroll and payroll-related expenses, partially driven by increased logistics costs due to higher volume and costs associated with our digital transformation. Net income was $5.3 million, diluted earnings per share was $0.62 per share. Adjusted net income was $5.2 million, and adjusted diluted EPS was $0.61 per share. Tax expense for the fourth quarter was $1.7 million or 24.3%. For the first quarter of 2025, we anticipate our tax rate to be in the 24% to 28% range. Adjusted EBITDA was $22 million or 3% of net sales, following our normal seasonal patterns. As a reminder, we tend to have higher adjusted EBITDA margins in the second and third quarters but relatively lower margins in the first and fourth quarters of the year. Turning now to fourth-quarter results for Specialty Products. Net sales were $484 million, down 1% year over year. This decline was largely driven by price deflation across most of our specialty product categories, partially offset by higher volumes. Gross profit from specialty product sales was $89 million, down 6% year over year. Specialty gross margin was 18.4%, a strong margin, but down 100 basis points from last year. Through the first seven weeks of 2025, specialty product gross margin was in the range of 18% to 19%, with daily sales volumes down low double digits compared to the fourth quarter of 2024, given the impact of the January weather. Over the past three weeks, however, specialty volumes were about flat on a year-over-year basis. In addition, we are seeing average specialty pricing down low single digits compared to this time last year. Now moving on to structural products. Net sales were $227 million, up 1% compared to the prior year period. This increase was primarily due to price increases in framing lumber, partially offset by slightly lower volumes. Gross profit from structural products was $25 million, a decrease of 3% year over year. And structural gross margin was 10.8%, up 20 basis points from the same period last year. In the fourth quarter of 2024, average lumber prices were about $430 per thousand board feet and panel prices were about $549 per thousand square feet, a 12% increase and a 6% decrease, respectively, compared to the averages in the fourth quarter of 2023. Sequentially, comparing the third and fourth quarters of 2024, these prices were up 12% and 6%, respectively. During the fourth quarter, both lumber and panel prices increased in October and November but declined in December and finished the last week of December at $433 and $543, respectively. In the first seven weeks of Q1 2025, these prices are now $446 per thousand board feet and $543 per thousand square feet, respectively. Our strong structural margin continues to reflect the excellent job our team does to manage commodity cost volatility risk through leveraging consignment and utilizing centralized purchasing and pricing to keep structural inventory levels low. Through the first seven weeks of Q1 2025, structural product gross margin was in the range of 8% to 9%, with daily sales volumes down low double digits compared to the fourth quarter of 2024, given the impact of January weather. Similar to specialty products, over the past three weeks, there has been some improvement in volume. And pricing is also up slightly year over year. For the year, net sales were $3 billion, down 6% from 2023, largely due to specialty price deflation. Specialty and structural product sales were down 6% and 5%, respectively, once again largely due to price deflation. Total gross profit was $489 million, gross margin was 16.6%, down 20 basis points from the prior year period. SG&A was $366 million, up almost 3% versus the prior year period. For 2025, we expect our SG&A levels to increase slightly as well as our growth initiative. Net income was $53 million, and diluted EPS was $6.19 per share. Adjusted net income was $55 million, and adjusted diluted EPS was $6.44 per share. The full-year tax rate was 24.9%, and for the full year 2025, we anticipate our tax rate to be in the 24% to 28% range. Adjusted EBITDA was $131 million or 4.4% of net sales. Looking now at our balance sheet. Our liquidity remains excellent due to the strong execution of our strategic effective management of working capital. At the end of the year, cash on hand was $506 million, a decrease of $21 million from Q3, largely due to normal seasonal changes in working capital. When considering our cash on hand and undrawn revolver capacity of $346 million, available liquidity was $852 million at the end of the year. Total debt, excluding our real property financing leases, was $350 million, and net debt was a negative $156 million. Our net leverage ratio was a negative 1.2 times given our positive net cash position, and we have no material outstanding debt maturities until 2029. Our balance sheet and liquidity remained strong. And when combined with our solid EBITDA generation, we are well-positioned to support our strategic initiatives, including our digital transformation effort. These include investments in our highest return prospects, such as organic and inorganic growth initiatives, and opportunistic share repurchases. Now moving on to working capital and free cash flow. During the fourth quarter, we generated operating cash flow of $19 million and free cash flow of negative $1.5 million, primarily driven by lower net income, working capital seasonality, and CapEx. For the full year 2024, we generated operating cash flow of $85 million and free cash flow of $45 million. Our full-year cash generation was supported by solid earnings, partially offset by increased CapEx. Turning now to capital allocation. During the quarter, we spent approximately $20 million in CapEx, primarily to improve our distribution facilities, upgrade our fleet, and for our digital transformation. For the year, CapEx was about $40 million. For 2025, we expect capital investments to once again be around $40 million, focusing on facility improvements, further upgrades to our fleet, and the technology improvements previously discussed. Our digital transformation will also have approximately a $5 million impact on operating expenses in 2025, related to software license implementation, as well as increased headcount associated with this initiative. As Shyam mentioned, during the fourth quarter, we purchased approximately $15 million of our company's common stock through open market transactions under our repurchase program. And we plan to continue to be opportunistic in the market. Our guiding principles for capital allocation remain consistent. We intend to maintain a strong balance sheet, which enables us to invest in our business through economic cycles, expand our geographic footprint, and pursue a disciplined M&A strategy as well as return capital to shareholders. We also plan to maintain a long-term net leverage ratio of two times or less. Overall, we are pleased with our fourth quarter and full-year results, highlighted by our strong margins, especially when considering the difficult housing market. Our strong balance sheet positions us well to execute on our strategy and provide returns for our shareholders. Operator, we are now ready to take questions.

Thank you. If you would like to ask a question at this time, please press star followed by the number one. If your question has been answered and you would like to remove yourself from the queue, press star followed by the number one. We'll pause for just a moment to compile the Q&A roster. Your first question is from the line of Jeffrey Stevenson with Loop Capital.

Hey. Thanks for taking my questions today. Shyam, can you provide more color on the sequential improvement on specialty product pricing you saw during the quarter and whether that included any stabilization in key categories such as EWP? And then also at a high level, how should we think about the cadence of year-over-year specialty products pricing as we move through fiscal 2025?

Sure. Thanks, Jeff. Good to hear from you. So first of all, I'm very proud of the five quarters of sequential year-over-year growth that the year-over-year growth after over five consecutive quarters with respect to specialty products, which shows our strategy bearing fruit. As I said earlier in my remarks, it's a very targeted strategy, both channel and product. And so as we continue to move forward, it will generate more volume despite headwinds or market headwinds because we're very focused on national accounts and multifamily. While also expanding geographic footprint with key suppliers, expanding our SKU mix with key suppliers, and also pulling in new products to support specialty growth in key markets. As it relates to pricing, over the course of the year, it's very challenging from a certainty standpoint because of the various policy positions that are coming out that make it a little bit more difficult to get a handle on the demand curve. At the end of the day, we have centers of excellence around pricing. We have a strong value proposition. And also from an operational excellence standpoint and scale, tied to our supply chain, we believe that we can continue to make headway on stabilizing the pricing through intentional efforts. That said, I mean, market pricing is market pricing, but we believe that with our scale and operational value proposition, we can manage through it, especially given how well we've done with inventory, for example. And as you've seen with our margin management over multiple quarters, we feel pretty good about continuing that. But it's too early to tell, Jeff, quite frankly. I mean, we've seen if you look at the first seven weeks, pricing was improving in January, so we saw it continue. And then in February, it started to come down. And the market is very noisy. Right? We had bad weather in January, not nearly as bad as a year prior. And so over the first part of the year, our volumes are up, but there's still significant pressure as it relates to pricing. But we are starting to see it come back up this week on the specialty side.

Got it. No. That's very clear. Thanks for all that insight. And I just wondered as well, what you're hearing from both channel partners and contracted customers regarding R and R or DemandX expectations in 2025. You cited some of the leading indicators such as existing home sales remain soft. We have seen a little bit of sequential improvement as we move through the back half of the year, and other leading demand indicators such as the LIRA have started to improve. And I wondered if you've seen any sequential improvement in market demand expectations.

Yeah. You know, as long as we continue to see low existing home sales turnover, generally speaking, that puts pressure on repair and remodel activity. Right? Because people typically invest in their homes on the way in and on the way out. That said, again, in terms of owning our destiny, we are absolutely laser-focused on key elements of our channel strategy, one of which is national accounts. So the fact is the overall pie is big. The market is big. And even with sort of depressed or less than ideal activity, we continue to gain share in that space because of our value proposition and our product mix that supports meaningful repair and remodel jobs. On top of that, even DIY jobs, if you're picking up trim board off an aisle, with respect to a major customer, you can still do that yourself, put it up in a bedroom or whatnot. So our strategy again tackles both the small R and R job to the big R and R job, and quite frankly, if we weren't focused on it, I'd probably be more subject or BlueLinx Holdings Inc. would be more subject to the current market dynamic. It doesn't mean that we're not, we're just trying to make lemonade out of lemons. Right. Despite the market headwinds, in spite of the market headwinds.

Great. No. No. Understood. And then last question, just on the timeline of your Phase one of your technology investments. Obviously, the completion of your transportation management system will be done in the third quarter of this year. But when do you expect the full ramp of your e-commerce platform to complete? Is that a 2026 story or how are you thinking about that right now, Shyam?

Yeah. So confirmed on the OTM going fully live later this year and starting to bear some early fruit as it relates to the savings in Q4 this year, and then we'll get a full year of it next year. As it relates to e-commerce, we've taken a more graduated approach to it. So we launched an e-commerce pilot in one of our markets. We are now enhancing the capabilities of that service proposition so that we can scale it out to other markets across the US. But I would think about it as sort of version 1.0 or 2.0 of a multi-year journey around e-commerce because, as you can imagine, in this space, we are still our overall industry, unlike some of our customers, the biggest customers are obviously more B2C oriented. They tend to have robust e-commerce platforms that are actually used pretty ubiquitously across the nation, whereas in our space and with our industry, it's still in the early innings of getting wide-scale adoption. So with that in mind, we are gradually making investments so we have a seat at the table, and then tweaking the offering with customer input so that it truly, quite frankly, is responsive to what our customers' needs are now while providing flexibility to expand the capabilities over time. And then ultimately, we'll be in a position to really put in place, advance it to the point where it's a full robust platform that does way more than just facilitating the purchase and delivery of a product.

Great. Thank you.

Your next question is from the line of Greg Palm with Craig Hallum.

Yeah. Thanks. Good morning. Sounds like sales activity has rebounded quite a bit. I think you said the last three weeks it was flat in specialty relative to maybe what you saw in the month of January. So I'm just curious, is that just a catch-up phenomenon? Is there still a lot of pent-up demand left just as a result of the softness that you saw at least at the beginning of the quarter?

He's talking about pricing. Greg, first of all, great to hear from you. Great to have you on the line. So you're talking about pent-up demand, and I just want to make sure I understand the question. Are you more focused on pricing or volumes?

Volumes. I think what you said was down double digits so far in the quarter, but the last three weeks, it was flat. So I guess it implies that it's rebounded quite a bit in the last couple of weeks.

Yeah. I mean, well, so yes. So year over year, it was up just in the first part of this year. And that's but at the same time, it was down sequentially because we had over twenty branches that were closed for at least half a day and in some cases up to two days. And then through the first part of February, we started to see a ramp back up. It's hard for me to say if it's pent-up demand or normalized demand. No doubt that there are clearly sales that aren't happening while your customers are closed, and they put them in as they reopen. So I would say it's a combination of pent-up demand plus new purchases. And then as we head into February, just as we thought things were getting back up to speed, another winter storm hit the Midwest, and I think it's going up into the northeast. We're also seeing some weather here in the south. So we've had some locations shut down this week as well. But generally speaking, we're seeing pricing go back up, and we're also feeling like volumes are ramping back up.

Yeah. Okay. So sounds about right. So I guess what I'm trying to get at is, barring any future weather events, it sounds like there still could be some pent-up or some catch-up activity as a result of some of the disruptions you've seen kind of quarter to date. I guess that's what I'm looking at.

Yeah. Absolutely.

Yeah. Okay. And then I want to spend a minute on Greenfields. You know, it's been several months now that Portland's been open. So maybe you can give us a little bit of sense on kind of the ramp-up of this specific location. And I think what you said was a couple of years until it hits EBITDA breakeven or profitability. Where are we right now in terms of the losses and just the ramp-up period of the revenue itself? Is that sort of the same as EBITDA? Just help us understand kind of when you open a location, the amount of time it takes to get to sort of that full run rate, that mature level of revenue and EBITDA.

Yeah. So this is our first one. First greenfield that we've done in my time at BlueLinx Holdings Inc., which is coming up on ten years. So I'd love to get back to you on that. But let me just in terms of giving you more specificity. But generally speaking, the low startup costs combined with our expertise put us in a great position to do greenfields. In this particular case, we're doing it in the part of the country where we actually have anchor locations up in Seattle and Spokane. And so we believe we will be able to accelerate its growth probably more so than in, let's say, a brand new market. That said, we did open it in the wintertime. And we've had a challenging first few months, and we've been mainly focused on getting the equipment there, getting the racking in place. We just took delivery of new trucks. We have a new GM in place who was recently hired towards the end of last year or beginning of January, we've got new salespeople coming on board. So it does take a quarter to a quarter and a half to ramp up the capabilities. But as salespeople come in, and as we take inbound product, we are in a position to start selling and delivering, and to the extent we don't have the product received yet, we do have locations in Seattle and Spokane that can actually service the business, so we're not necessarily stymied any more than we need to be. But that's all to say, Greg, that I just need a little bit more time to give you more.

Yeah. That's fair. Maybe I'll try one more, but I might get the same kind of answer. But based on what you've seen so far, you said that you're planning on opening up more locations. So is there a goal, a cadence in terms of the amount of locations a year, or is that also kind of a TBD?

You know, so look. As someone who's maniacally focused on growing this business, I would love to open up, let's say, three a year. But the problem is the primary constraint is real estate. And having spent thirteen years in this space, finding real estate can be challenging, especially nowadays when you're competing with, let's say, data centers. Right? Where you've got investors buying up raw property, unused property, land, etcetera, which makes it even more challenging. So the fact is we have an aggressive posture around greenfielding, but we're limited by real estate availability in any given market. Because we're not looking at going into a tertiary market. Right? We have a very methodical approach to greenfielding, which ties back to housing starts and permits and also being able to more effectively leverage our scale so that we can, quite frankly, generate the profitable sales more quickly. Now we do have the scale, right, with our supplier relationships, and they want to be partners with us as we go into new greenfield locations. So I feel good about making sure we have the supply chain to support specialty and commodity sales. We obviously have pretty good brand recognition in the marketplace to hire new leaders and new salespeople. But at the end of the day, it comes down to real estate and whether I can get enough indoor and outdoor stores and preferably have it be rail served in order to be truly optimized. That said, depending on where we are, we don't necessarily need the rail. Right? If we're in parts of the country where it's truck in truck out from a cost-effectiveness standpoint. So it just depends, I guess. But aspirationally, I have pretty high ambitions.

Yeah. Makes sense. I will hop back in the queue. Thanks.

Your next question is from the line of Kurt Yinger with DA Davidson.

Great. Thanks and good morning everyone. Curious. Kind of operationally whether your approach or strategy on the structural side might change at all if we were to see tariffs on Canada come through. And then, relatedly, I guess, as we move through Q4 and into Q1 here, anything from a customer purchasing pattern perspective that provides you any insight or takeaways in terms of how the market might be adapting to that possibility.

You know, that is one of the prevailing questions that many of us in this space are asking. So I would say any market volatility or uncertainty really causes people to sort of hold back on spending, whether it's commercial or consumer spending. We've seen recent consumer sentiment come out that is troubling. Obviously, we saw recently that inflation is back up to 3%. And, you know, as I think about our year-over-year within the first seven weeks of the year numbers, our facilities were closed for more than twenty, I'm sorry, more than twenty of our locations were closed anywhere between half a day and two days. And so you would expect volumes to be down. That said, they were closed more facilities were closed for longer last year. And you would expect your volumes to be higher. They were higher on a year-over-year basis, but not as high as we would have liked, which would suggest that there could be some holdback on spending to some degree, but it's really hard to say. But, you know, at the end of the day, I do think the uncertainty does play a role. But we are seeing things pick up as the weather has improved and feel pretty good about that. And then, of course, our strategy is very much focused in a meaningful way to drive share gain, which over five consecutive quarters has been the case with the last three in particular being pretty exciting. As it relates to Canada and would our strategy change? I would say if I didn't have confidence and faith in our inventory management capabilities, which we do, we have a very, I think we have a best-in-class inventory management team combined with processes and collaboration across the entire organization, that drives great terms, return on working capital, etcetera, with respect to our structural business. And as it relates to tariffs and commodity wood products, those prices will get passed through pretty quickly. What's hard, you know, and again, as we think about how we buy and sell and the low day sale DSI that we have, respect to those products, our ability to manage through the risk is probably, well, I believe, again, being as aspirational as I am, second to none. The hard part for us in this space, whether it's us or any of our competitors, quite frankly, is, you know, it's one thing for a tariff to go in, the fact that it could be pulled back thirty days later is what is really hard to manage through. But we have teams in place. We have the supply chain, you know, vendor relationships that we're taking advantage of to make sure that we're managing our risk accordingly. And so we'll do what we need to do. But from a strategy standpoint, we'll still continue to be in the space, and we'll manage our buys accordingly. Alright. In a manner that doesn't compromise our customer relationships.

Okay. Yep. That makes sense. And a little bit of commodity inflation wouldn't be such a bad thing either. In terms of the Portland facility, you know, I get that it's early days. The equipment's moving in, new people. Where do you kind of stand in terms of building out the vendor commitments or list to get kind of a full product lineup that you would need to kind of hit those mature sales targets that you put out?

Yeah. So we actually have a product mix that we've landed on as a team, and the vendor relationships are there to support the product mix. It's just a matter of timing in terms of receiving the product. I think all the racking is in place. The trucks have been delivered. We've hired a couple of key salespeople. We have our GM in place. So I feel great about the foundation to grow. Now we're just managing through the laws of physics to get it done, get everything in place as quickly as possible to take advantage of what we've already landed on just in terms of the supply chain.

Got it. Okay. That makes sense. It will just take some time. But like we said, like I said earlier in my remarks, the plan is to get to the optimal mix as quickly as possible and hit the market. I mean, we already have started delivering product and making sales. It's happening, but it clearly has to be a lot higher than it currently is. But that's not surprising.

Right. Right. Okay. And, you know, your specialty gross margin performance has been really stable and notwithstanding this last year, you know, some duty benefits that provided a little bit of a lift. I guess as we enter 2025, you talked about some of the cloudiness on the demand side, some of the uncertainty on pricing. I mean, bigger picture, what do you see as kind of the biggest downside risk to specialty margins if there are any because how are overall competitive activity levels in the current environment?

Yeah. You know, I mean, look, obviously, as it relates to tariffs, the most important thing is that we don't lose margin if and when tariffs are implemented. And so our ability to leverage our supply chain, our vendor relationships, our focus on operational excellence, and clearly pricing strategically. Right? So that our most strategic and our best customers get the best and right pricing and those who are more transactional or come to us when they need us at the last minute are priced accordingly, right, is the most important thing we can do as a company to maintain those margins. So and, obviously, in terms of managing our return on working capital, in particular, our turn days as it relates to inventory and reducing downside inventory adjustments, which is tied to, quite frankly, making sure we're executing operationally at a level that would make our customers proud, will continue to be a focus. So again, it's really just getting laser-focused on the business and the things that we do best, whether it's operationally or from a procurement standpoint, and just being prepared to handle these potential swings in the market that may happen as a result of newly implemented policies or demand drop-offs or uncertainty. But, you know, look, at the end of the day, we believe in our strategy. And there are still a lot of housing happening, whether that be single-family or multifamily. And we've got more than sixty-six locations across the country, and some really great markets to continue serving to manage through some of these headwinds that we're all dealing with.

Got it. Alright. Well, appreciate all the color, and I'll turn it over.

Your next question is from the line of Reuben Garner with Benchmark Company.

Thank you. Good morning, guys.

Good morning.

Maybe to start, just to follow up on the greenfield. I know there's a few questions. I'm a little confused. I thought initially the plan or the way that you were going to have to kind of get started in these markets was going to have to be led heavily by structural, but it sounds like you're already thinking you're going to be kind of above company average with specialty, I think, in year one if I heard that correctly. Has something changed in that regard, or you just had a lot of success in this Portland location? Can you just walk us through that strategic shift if there was one?

Sure. Yeah. So we can always backstop any greenfield with our structural business fairly easily. Right? And we have strong capabilities around it. At the same time, with each new location and each new market, as we have conversations with our specialty product suppliers on just our private label. So for example, we've got on center, which is EWP, and we've got PrimeLinks as it relates to Millwork or trim board and other products. So we have a number of private label brands combined with our structural products to form the foundation of any greenfield location. But as we've had more and more conversations with our key suppliers on the specialty side, there continues to be a tremendous amount of support to help us grow our business while also growing their business. So I just feel better today than now that we've got one location in terms of how those conversations have gone and reaching the stocking positions over the next couple of years to drive the best mix possible.

Okay. Great. And then this may be a little deep in the weeds, but just a question about kind of on the tariffs topic. The Southern Yellow Pine, I know, has always kind of struggled to gain adoption in some markets geographically to be used in new housing. For instance, are you seeing any acceleration in kind of shifting demand to that product just given that it's a cheaper wood source and wouldn't have to deal with the Canadian issues, or are there reasons that that will not happen?

Well, not yet, but it is something that we think about and that is absolutely, as we think about substitute products and whatnot. But let's not forget that there's only so much mill capacity in the US. Right? And so there's only so much it can absorb. So it's hard to know, quite frankly, until we actually see some of this coming through.

Okay. That's helpful. And then that's yeah. But that said, in fact, I was looking at, you know, I get emails every day on pricing, and we are seeing it go up. In fact, this morning, there was a we got some commentary asking the question, you know, is it going up ahead of anticipated tariffs? For example. And so we're starting to see it go up, but, again, it's too hard to it's too early to say if this is going to be sustainable. Or if it's reflective of demand or just some normal market movement that you just see from time to time.

Understood. Sorry for cutting you off. The last question I have is I think you said and correct me if I'm wrong, but I think you said you grew your multifamily business year over year. That would be pretty impressive. Just given that market is off significantly from where it was over the last couple of years. Can you talk specifically about what you're doing to kind of gain some share in that space and maybe, you know, how underpenetrated are you to multifamily?

Yeah. So just to kind of go back a little bit, we set the strategy last year and then we organized the team to support the strategy. And then we started allocating capital, whether it be in the context of OPEX or CAPEX, in order to drive the strategy, all of which is over the last year, over 2024. And I strongly believe that is what is leading to the share gain that we have. So as we think about multifamily in particular, we have stood up or enhanced the centralized multifamily team with headcount also being added in the field to drive multifamily sales across multiple channels. And those channels include not only our sort of traditional customer base, whether it be the pro dealer or the lumber yard that might have a local multifamily project, but it's also happening with our national accounts as well. And then on top of that, we have pretty strong relationships with the multifamily brokers out there that's helping drive volumes from a multifamily standpoint. Now in the overall scheme of things, historically speaking, BlueLinx Holdings Inc.'s multifamily business was a relatively small piece of our business. And so we have very aggressive year-over-year growth targets, and they're panning out. And by the way, before we did all this, before we decided to make this a core part of our strategy, we piloted multifamily efforts in certain regions and markets that brought through pretty quickly. And as a result, we fine-tuned the machine. We've developed a playbook. We have a leader in place. We have people who are tied to headquarters, who drive it nationally from an operational excellence or commercial excellence standpoint, and then we've got people in the field who are working both locally and with the national team to drive sales, and it continues to bear fruit, so we will continue to focus on it. Oh, and one last thing, as I mentioned earlier around CapEx, we have invested heavily in vehicles in our fleet to support multifamily sales as well. So as you can imagine, with a multifamily sale, it usually requires job site delivery. So we will pull through a sale in collaboration with a key customer that will then get delivered to a job site, a multifamily job. And we've invested CapEx in equipment, Moffitts and Princetons and straight trucks, etcetera, that allow for that in addition to taking our normal tractor trailers to a multifamily job site, which has, again, helped us grow share while also strengthening key customer relationships.

Great. Thanks for all the detail, and good luck, guys.

This concludes the Q&A portion of today's call. We will now hand the call back over to Tom Morabito for any closing remarks.

Thanks, Tamika. Thank you again for joining us today, and we look forward to speaking with you in May as we share our first quarter 2025 results.