BlueLinx Holdings, Inc. (NYSE:BXC) Q2 2020 Earnings Conference Call - Final Transcript

Aug 04, 2020 • 10:00 am ET

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BlueLinx Holdings, Inc. (NYSE:BXC) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Your first question comes from the line of Alex Rygiel. Your line is open. Please ask your question.

Executive
Kelly C. Janzen

Thank you. Good morning and congratulations on a very nice quarter.

Executive
Mitchell B. Lewis

Great. Thank you. Good morning.

Executive
Kelly C. Janzen

Thank you. Could you talk a little bit about the components of free cash flow, how you're thinking about them and maybe offer up some guidance for 2020 and how you think about free cash flow? Yeah. So what I can talk to you about is the free cash flow that we had for the quarter. We saw a significant improvement as it related to just gross margin improvement. So those earnings really drove a lot of that. And in addition, we had some improvement coming out of the working capital, as we said that improvement in inventory really drove a lot of that. We had about $43 million of improvement in the cash flow as it relates to bringing that off the balance sheet. So those two are the main drivers of cash flow. We obviously still have a lot -- a long way to go as it relates to understanding what next year would look like. So unfortunately, I don't really have an outlook for you at that -- this time, but hopefully, as we continue to generate stronger earnings, if that's possible in the next few months, we would start to see an improvement and then maybe we can get a better view.

Analyst
Alex Rygiel

And then as it relates to price and volume, can you help us to understand how that played out in 2Q and how that might play out in the second half? And maybe Mitch touch upon how BlueLinx benefits and/or gets hurt from commodity price volatility?

Executive
Mitchell B. Lewis

Sure. So on the volume side, really, the second quarter was dramatically different in April and then rebounded, as we talked about, in May and June. And so if you look at the volume generally across the quarter, year-over-year, it was relatively flat. I'm guessing what the -- what we can talk about, which we did, of course, is where we are in July. And we certainly have seen a robust market, which we've heard on the backs of homebuilders, certainly, our customers as well and a very strong commodity market.

As we look forward, Alex, the -- I can tell you there's a very strong sentiment that housing will do well for the rest of the year from our customer base. They're optimistic. Our supply base, we're talking about, in some cases, unprecedented demand. But what we don't know, of course, is the impact that the pandemic ultimately will have, what impact the unemployment rates will have. The increase in commodity pricing, for example, may have an impact ultimately on demand if it continues to escalate the way that we've seen it.

As we manage the commodity price and the risk, of course, of it coming down, we touched a little bit on that when I talked earlier. We -- we're aware