Bluelinx Holdings Inc (BXC) 2017 Q2 法說會逐字稿

Good morning. My name is Ruschay, and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter 2017 BlueLinx Call. (Operator Instructions) Thank you, Ms. Poulos, you may begin your conference.

Thank you, Ruschay, and good morning, everyone. We appreciate you joining us for our Second Quarter 2017 Earnings Conference Call. The earnings release and presentation slides for this call can be found in the Investor Relations section of the company's website at www.bluelinxco.com.

Joining us on the call today are Mitch Lewis, Chief Executive Officer; and Susan O'Farrell, Chief Financial Officer.

I'll also remind you, this presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our future operations and financial performance. These statements are subject to risks and uncertainties that cause our actual results to differ materially from those provided, including, but not limited to, those identified in our press release and discussed in our filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date of this presentation, and we undertake no obligation to provide them in light of new information.

Today's presentation also includes references to non-GAAP financial measures.

With that, I'll turn the call over to Mitch.

Thanks, Natalie, and good morning. We're pleased to be able to report another solid quarter at BlueLinx. We had positive net income of $3.2 million compared to a loss of $3.1 million in the second quarter of 2016. Our second quarter was the fourth consecutive quarter in which we have posted positive net income and the seventh consecutive quarter in which adjusted EBITDA exceeded our prior year's performance. Our adjusted EBITDA for the quarter was $12.8 million, which was also our best second quarter performance since 2008.

From a revenue perspective, the quarter was somewhat choppy. The quarter started strong and then appeared to soften as it progressed. We believe the uncertainty associated with certain international duties and tariffs, including the Canadian softwood lumber agreement, the Chinese plywood dispute and the Trump administration's Section 232 investigation associated with steel may have impacted the quarter. Amidst this environment, we were still able to achieve revenue growth of 5.1% when taking into account the facility closures and product rationalization activities that we initiated in the second quarter last year.

Unfortunately, there remains uncertainty in commodity raw material prices. There has been no clear resolution to any of these potential tariffs, duties or quotas. And we've seen an escalation in many of these commodity prices in July. We're hopeful that there will be a resolution by the end of the year on most of these disputes, which should add some stability to the market.

The long-term prospects for market demand for BlueLinx remains strong. We are bullish on single-family housing starts over the long term. As we've indicated in the past, BlueLinx has historically been highly correlated to single-family housing starts. In 2016, single-family housing starts were 781,000 units. This compares to an annual 1.2 million average from 2000 to 2009 and a 1.1 million annual average from 1990 to 1999. In fact, 2016 single-family housing start levels would still need to increase by approximately 30% just to hit the average annual single-family housing starts that have taken place in the United States since 1959 when the Census Bureau began publishing the data in its current form.

So while we have seen some percentage gains in recent years, there remains significant opportunity in single-family housing starts in the years ahead, and this means significant opportunity for BlueLinx as well.

As you may recall, in the second quarter of last year, we announced that we would focus on deleveraging our balance sheet while continuing our company-wide emphasis on improving margin. I am pleased to report that we have made great progress on both initiatives. Our overall debt has been reduced by over $75 million from the second quarter in 2016. And this comparison is to a quarter when we began to make great progress in deleveraging initiatives as we exited facilities and rationalized our product offerings. Susan will discuss our current debt levels in more detail. But rest assured, we remain committed to reducing our leverage. It remains a strategic priority, as we continue to improve our balance sheet to enable BlueLinx to enjoy taking advantage of the consolidation that we anticipate will take place in wholesale distribution over the next few years.

While we were making progress on our debt reduction, we were also able to remain focused on our margin improvement initiatives as well. Our gross margin for the quarter was the highest second quarter gross margin in almost a decade. We're particularly proud of this accomplishment in light of the pricing environment we faced with our lumber products during the period. We experienced a significant decline in lumber pricing as we moved through the quarter. Commodity price degradation has historically negatively impacted the gross margins at BlueLinx. Our team did a great job managing both our lumber inventory and pricing, which enabled the organization to enjoy our continued overall margin improvement.

We did not announce any major sale leasebacks of our real estate in the second quarter. We spent most of the quarter assessing potential financing alternatives for our real estate. We did continue our discussions with several third parties regarding potential sale leaseback transactions, and we'll continue to evaluate opportunities to utilize our real estate to provide a solid capital foundation for BlueLinx.

As we've discussed previously, we're now pivoting the organization to focus on growing our market share in certain key markets and product categories. To support this initiative, we have invested in additional sales and marketing resources. We now have in-house training for our inside and outside sales representatives and have also created an analytical market and pricing team that assesses profitability as well as product and market trends, which enables us to quickly react to accretive opportunities.

We've also invested in additional outside sales support in markets and geographic territories where we believe we are underpenetrated. And we are aggressively pursuing new product development and additional brand representation to enhance our overall product portfolio. While these efforts are all relatively new, we are beginning to realize opportunities from these growth initiatives and look forward to sharing our success in the quarters ahead.

The second quarter of 2017 continues the positive trend we've enjoyed now for over 2 years, but we're just getting started. Significant opportunities for improvement at BlueLinx continue to exist in virtually every aspect of our business. And our core value of continuous improvement is helping us take advantage of these opportunities. I want to thank our loyal customers and suppliers for your continued support of BlueLinx, and I want to thank the entire BlueLinx team for their tremendous efforts and a job well done.

And now I'd like to turn it over to Susan, who will walk you through our financial performance for the second quarter in greater detail.

Thanks, Mitch, and good morning, everyone. It's my pleasure to speak with you today and to review our second quarter business results.

On Page 7, let's review some of our highlights first before we get into more detailed review of our financial results. Our primary focus over the past year has been our strategic initiative to delever the business. Last year, we rationalized our local inventory assortments, closed underperforming facilities and began monetizing select real estate properties, which we collectively referred to as our operational efficiency initiatives.

We're very pleased with the successful completion of these initiatives and the results we've achieved to date. We've sold closed facilities and entered into several sale leaseback transactions since announcing our deleveraging plan, enabling us to reduce our debt principal balance by $76.4 million since Q2 2016.

The successful execution against our strategy also enabled us to meet our first mortgage obligation of $60 million in 2017, a month ahead of our schedule. Net sales were $474 million for the quarter. Although net sales were down year-over-year, when excluding the effects of our operational efficiency initiatives, our adjusted same-center net sales were up $23.2 million or 5.1% from the prior year period.

And even with the pressure on commodity lumber prices during the quarter, our overall gross margin increased by 150 basis points to 12.8%. This is our best second quarter gross margin since 2008. This gross margin result has been driven by our continued focus on our margin-enhancement activities.

Our Structural products also grew from 40% to 45% of our business, and that mix had a 10 basis point headwind on our overall gross margin rate. Even with the shift in our product mix to more commodity type items, coupled with a volatile lumber market, we still delivered strong gross margin results for the quarter.

Net income as reported for the quarter was $3.2 million, up $6.4 million from the period a year ago. I'm pleased to share that this was our best second quarter of net income since 2008. And our adjusted EBITDA was $12.8 million for the quarter, again, another highlight for BlueLinx as this is our best second quarter adjusted EBITDA since 2008.

Operating working capital also improved by $21.6 million. This improvement primarily reflects our improvements in working capital components, including a decrease in receivables of $14 million and other current assets of $8.3 million.

We continue to work hard on improving our working capital processes and are pleased with the progress we've made. And although our commodity inventory values increased approximately $6 million from this period a year ago due to commodity raw material costs, we continue to stay focused on our in-stock inventory positions, ensuring we have the just-in-time inventory our customers need.

We are pleased to share that we had over $74 million in excess availability under our revolver, which has improved $8 million from Q2 2016 based on the qualifying inventory and receivable levels. With lower working capital on our revolver and an interest-only mortgage, we also incurred less interest expense during the quarter and year-to-date of $900,000 and $2.8 million, respectively, from prior year levels.

Moving on to Page 8. We'll highlight our year-to-date performance. Net sales were $902.6 million for the first half of the year. And on an adjusted same-center basis, sales increased $32.2 million or 3.7% from 2016. Additionally, our adjusted same-center gross profit, which excludes the effects of our operational efficiency initiatives, increased $6 million from the prior year. We're also very pleased to report that same-center adjusted EBITDA year-to-date increased $1.7 million or 8.9% from the first 6 months ended 2016.

As we move to Slide 9, we want to reiterate that over the last 2 years, the organization's goal has been to restore the company's financial strength, and finally, rebound from The Great Recession that so many in our industry faced. Since then, we've significantly improved our profitability with increased gross margins of 370 basis points from Q2 2013. Mitch talked to you earlier about some of the initiatives we have underway, and we are gaining traction in our margin-enhancement opportunities. And while we have improved, we strive to raise the bar every day.

On Slide 10, we're pleased to see our adjusted same-center net sales increase $23.2 million or 5.1% from the prior year period. This quarter-over-quarter increase was largely led by our engineered wood and vinyl siding product sales in our Specialty product category. Additionally, we experienced significant increased sales in our rebar and wood-based Structural product categories, respectively.

Equally important is the revenue increase we've experienced year-to-date compared to the first 6 months of 2016, which was also led by increased sales on our Structural product category. We're excited to see the emerging trend in our top line growth as we remain focused on sales excellence and garnering market share through our local market strategy.

Moving to Slide 11. Even with the property sales incurred since announcing our deleveraging strategy last year, we still have significant value available to us in our real estate. In late 2015, we had a desktop valuation performed, which resulted in a $332 million to $352 million estimate for our real estate portfolio at that time. This previous desktop appraisal is supported by the value of the real estate sales that we have experienced over the past 18 months. Our real estate continues to prove to be a valuable and attractive asset, as the collective value received of the property sales were over 98% of that desktop valuation.

Taken into account the property sales incurred over the past 18 months, we estimate having a remaining real estate valuation of approximately $264 million to $284 million. That's a lot of excess value with an outstanding mortgage balance of just under $98 million. As we remain focused on improving our company's capital structure and deleveraging our balance sheet, we're exploring additional sale and leaseback transactions as well as alternative mortgage refinancing options.

On Slide 12, our debt principal balance is down $76.4 million from the second quarter 2016. As mentioned earlier, this is significant progress on our deleveraging initiative. Our mortgage principal is down $60.9 million and our ABL debt balance is down $15.5 million from this time a year ago, mainly driven by our working capital efficiencies and successful execution against our real estate monetization plan.

In conclusion, I'd like to thank our BlueLinx team for their hard work and efforts. Their contributions certainly show in outstanding results we're able to share today. And of course, special thanks go out to our customers and suppliers for their continued partnerships. And now [Ruschay,] we'd like to open it up for any questions we may have at this time.

(Operator Instructions) Your first question comes from the line of [Don Colt with Colt Investment].

You've done a beautiful job of this. I understand your words and I'm listening to all this, but how were you able to come up with such a wonderful quarter with your sales being down? I mean, your cost of goods sold are -- I mean, that -- you've done a remarkable job here. It seems to me that you've just gotten extremely efficient. I mean, your COGS went down very nicely, and your profit went up, but your sales went down. I mean, that's just a remarkable feat. So work me through -- give me some more color as to how you did that? That's like a miracle quarter.

Thanks, Don. Well, we have -- for the last year, we've focused the organization on effective sales. And so while we have not -- and I think I've been pretty public about this, we've not really focused on growing the top line of the business, we've been much more focused on margin opportunities we have and making sure the sales that we have are efficient. So where it doesn't make sense, for instance, for us on a variable basis to profitably sell, we stopped doing that. And we've got the entire organization focused on variable contribution margin, which includes investing in the team to help train and improve the performance that we have within the organization. And we're starting to see improvement. My view is, as an organization, we have been emphasizing that. But ultimately, obviously, we've got to grow this business. And so we're starting, I would say, to pivot the organization to start thinking about share growth as well, without diluting the efforts that we have on incremental variable margin for the organization.

And my next follow-up is, are you finding any specific areas that are extremely attractive that you think will continue to have good follow-through in sales? Or -- and the converse, are you finding areas that are considerably weaker than you thought?

So more of the former than the latter. I mean, one of the things also that we did, again, it's just about 2 years or maybe a little over 2 years ago, is that we identified pretty quickly that we needed to have the sales leadership of the organization in the market. And so -- whereas before, the strategy of the business was more centralized, to try to take advantage of economies of scale. We've basically pushed out our leadership into the market. So -- whereas, for example, 2.5 years ago, you'd find the general managers, who had sales P&L responsibility, primarily located in Atlanta or Denver. Now of our roughly 25 general managers, there's only a couple who are located there. Everybody else is in the market. So what we've done now is been able to identify, at the local level, opportunities that we have as well as opportunities that transcend just a particular market. And in those areas, on a consolidated basis, we're making investments. So don't want to give away some of the strategic work we're working on, as you can imagine, but there are areas that we're underpenetrated in geographies or areas that we're underpenetrated in products. And there are areas that we're underpenetrated in markets. And that's kind of the pivot that the organization is starting to focus on now.

And your next question in line of Mitchell Scott with Choice Equities.

Congratulations on a clean and profitable quarter, nice work. I was wondering, this thing about the top line, the 5% growth, if you could perhaps parse out or at least point us in the right direction on how volume and price contributed to that number?

Sure, Mitchell. So as we look at that, I'll start with Structural maybe, because it's a little bit more straightforward. But we were positive in both volume and price in those categories for us for the quarter. So we were pleased to see that. On the Specialty side, it gets a little bit harder to compare apples-to-oranges on volumes as you add across the categories. So what I'd share is, overall price is up in our Specialty product category. And as we just look at our top 3 categories individually, which is probably the easiest way to look at that, we were also up in volume. So overall, we had some puts and calls, but we like looking at those big categories and seeing them grew on both the volume and the price.

Okay, very helpful. And thinking about the existing distribution center network today and sort of the way they break out single-family housing starts on the census data, is it fair to say we should really be focusing on the South and the Northeast regions and perhaps even just kind of aggregating those totals to think about your market growth rates?

Yes, that's a great point actually. I would say, the Midwest as well. It's interesting, because as you know, we exited the West. We don't have a facility that is west of the Rockies right now. And when you look at the quarter, for example, on single-family housing starts, the West was up north of 20%. The Northeast, where we have a strong penetration, was down for the quarter, single-family housing starts in the 13% range. So we look at it now, we've moved to looking at single-family housing starts by particular facilities to see how we're doing and challenging ourselves to see how we are growing share relative to the local markets. But yes, I would say, as you're looking at it, I would focus on the Northeast, the Midwest and the South and really not consider the West.

Okay, all right. That's very helpful, yes. And that was kind of why I have -- I mean, I have seen that the Northeast came in kind of down mid-single digits for the quarter. And even aggregating this in the South, it was only up 2.8. So good volume work there in the context of the market that, for whatever reason, is maybe a little underneath the national average. Is there anything in particular about the Northeast market that's going on, that's causing it to lag the national average? Or is it just comparability and weather, as these things are always pretty volatile?

Yes, we've asked that question a lot, as you'd imagine and hope, I guess. And what we're hearing is there's nothing fundamental that has changed in that overall market. Definitely, the weather patterns, relative to last year, are certainly not as a good. But I hate to use weather as an excuse. But we don't think anything fundamentally has changed in the Northeast. And our teams up there actually are very bullish on the back half of the year. So we'll see whether that materializes or not. But there's nothing that we see that fundamentally has changed.

Okay, great. And then, I know I've asked you this before, but if you could just kind of help us -- help remind us the seasonality of your business. Obviously, 1Q and 4Q are light, and the meat of the season is 2Q and 3Q. Is there -- if it's first half to second half, or perhaps you could call out which of those shoulder quarters tends to be the lightest, just any help on kind of the normal seasonality of the year would be helpful.

Sure, Mitchell. So in general, as you said, our business is seasonal. It's why we get so much color on year-over-year comparing quarter-to-quarter. But the first half of the year has slightly more sales than the back half. So you'd expect to see the back half of the year, and this is looking over, gosh, a 7-year period or so, you'd see the back half of the year being lighter by 4%, 5% than the first half of the year. So that's just first half, second half. So really, again, within in the quarter is where you see the difference. So if you look at the third and fourth quarter, you'll see the third quarter is stronger than our fourth quarter. So in order, first half is certainly a little bit stronger. And then between third quarter and fourth quarter, you'll see increased sales in the third quarter versus the fourth quarter.

Okay, very helpful. And that sort of dovetails then, I guess, to the next one. Obviously, the working capital will come down as we approach short of the winter. But I'm looking at it just to try to sort of gauge what the interest expense might be. I've got you at kind of a $21 million run rate in the first half. But given the mortgage balance and a lower revolver is pointing me towards something like an $18 million run rate for the second half. Is that directionally accurate?

Well, we don't give forward-looking guidance. So I would just share that we continue to work on making sure we have just the right amount of inventory. We always want to stay in-stock for the customer. And so year-over-year, we did decrease our revolver balance by working on our efficiencies. And that was offset slightly by the spot interest rates. As you know, with the reserve -- the Fed Reserve interest rate changes, we had an increase. And so year-over-year, the interest rates were up about 75 basis points. But the working capital balances and the ABL revolver balance itself was down on average throughout the quarter just a little bit less than $20 million. So we had some offsetting factors there, but pleased with the efforts that we've got there.

Yes, and Mitchell, I would say also just as we have talked about, any sale of property could materially impact the way you're thinking about the interest costs going forward as well, right?

Okay. All right, very helpful. Last one from me and then I'll hop off. The Specialty gross margin number was very impressive. I don't recall seeing a number that high. Is that a record? I'm just kind of curious how you're thinking about that. And is that a number that can continue to go higher?

So I don't think we know the answer whether it was a record or not. And I would just reiterate, this organization is focused on continuous improvement. And we view -- there's always opportunity to perform better. And so the answer is, yes. We're going to continue to work very hard to drive costs down and where it makes sense. And we're creating value for our customers, make sure that we're getting paid for that as well.

Okay. We look forward to seeing what you guys can do as you start to turn your efforts a little more towards the offensive end. So congratulations, keep up the work. I'll hop off.

Your next question is from the line of Alan Weber with Robotti & Company.

Again, nice to see these kind of results compared to a few years ago. Mitch, you made a comment about the consolidation of wholesale distribution over the next few years. And could you just talk about that, and what you think it means for BlueLinx and how you can benefit?

Yes, sure. So what we've seen is private equity has started to dip their toe into the wholesale distribution market from -- with some of our competitors. So we've seen a couple of regional competitors that have been acquired. From a private equity perspective, there's been some competitors that have been on the market. And it is interestingly, a space that if you look at the downturn, there really wasn't a lot of competition that left the market. So there is capacity certainly from a square footage standpoint, I think, from a logistics perspective. And so that creates opportunities. As it relates to BlueLinx, and we've been talking about this internally again for about a year, when we thought this was going to happen and then it materialized with some transactions that have taken place and some shopping of companies that have taken place. And from our perspective, it's twofold. With the right balance sheet, it certainly potentially creates opportunities to be acquisitive and potentially to have the, at least, ability to utilize our equity as currency, right? So that's an opportunity. And then, my view is, we obviously have tremendous scale anyway in the marketplace. And even if we are not an acquirer in the marketplace, it gives us the opportunity to utilize capital to take advantage of opportunities that will likely take place with the disruption of consolidating competitors in the market. And whether that is investment in facilities, investment in products or working capital, or investment in people that happened with the dislocation, we want to be ready. So we're trying to be in as good a shape as possible to be opportunistic. And that really is the mission of the company.

And I guess, as a follow-on to that, given kind of where your balance sheet is today versus where it was when you first came to the company, can you just talk about kind of, besides acquisitions, kind of does it give you more opportunities with vendors, customers and like that? Because you do -- obviously, your balance sheet is much more of a strength today than, obviously, compared to what it was a few years ago.

Yes. The short answer is, yes. It was -- Susan and I spent a tremendous amount of time early on placating suppliers and vendors to make sure they understood we weren't going anywhere and that it would be in their long-term strategic interest to partner with us. We're fortunate that we have some fantastic supply supporters from our vendor base. And we certainly appreciate that and are growing and have -- and we'll continue to develop relationships with them. But it creates opportunities, obviously, from a -- brand expansion opportunities. It creates opportunities as it relates to, for example, imports, where you have an incremental -- typically having an incremental working capital expense relative to domestic opportunities. It enables you to expand. It enables modest vertical integration capital investment. So where we are -- and to be very clear, our leverage is not where we want it to be and where we're driving the organization to try to take it. But where we are relative to where we were, certainly, is much more enabling for the organization as we can take advantage of opportunities that we see now.

Okay. And then my last question is, do you know what, approximately, what percent of your business is with the larger national 12 builders and like that?

So the answer is, we know that, as you would hope we do. But we don't report on that. So I would -- if you're looking for -- maybe let me answer -- let me answer a question that you maybe leading towards, if that makes sense, which is, the organization has a high disparity as it relates to its customer base. So if you look at any one customer of the organization, it is clearly less than double digits as it relates to the total revenue of the company. So if you're thinking -- maybe that's a way to help you think about it. So as we look at, certainly, a consolidation of our independent lumber yards in the marketplace is something that we think about and look at and creates risk and opportunities for the organization. We're not in a situation where we're completely reliant on any particular customer.

Okay. Yes, I was just really more thinking longer term, as that part of the distribution world consolidates with that. Obviously, we've had some in the last few years. And as they get integrated, what that means for BlueLinx going forward if there's a continuation?

Well, the national consolidators are very important large customers for BlueLinx and remain so even after they consolidate. So we would expect to do everything in our power to continue to add great value to them as customers for the company.

(Operator Instructions) And your next question is from line of Hans Fredrikson.

And I have a couple of questions. EBITDA for the first 6 months, I guess, you reported it just north of $20 million. Are you willing to give us any sense or guide for kind of for the full year where you'd expect EBITDA perhaps to come in?

Well, gosh, Hans, as you might imagine, we think about that internally and how we can maximize it, but we don't give forward-looking guidance on that. So we're focused on, as you can see, driving those efficient sales where we get the incremental gross margin, which really is being paid for the value that we provide to our customers. So the more we keep focusing on taking great care of our customers, it's our intention to keep growing profitable sales, and hopefully the results will continue to grow.

Okay. No, I understand. This is a little bit related, so maybe it's hard to answer this as well. But I did see that the business consumed a lot of cash in the first 6 months. It looks like net cash used in operating activities was about $55 million or $54.5 million, which was up quite a bit from the same period last year. Could you give us maybe a little more detail on that? And I know that kind of tends to reverse in the back half of the year. But do you feel confident that, that will, in fact, fully reverse towards the back half of the year?

Yes, that's a great question. So specifically, a portion of that was commodity price increases in the raw material goods. So we certainly saw some of that throughout the quarter. And then Mitch also talked about the volatility of the commodity prices. And when we see that happening, sometimes customers take a pause or a deep breath. And so we believe we have got product in stock in our inventory that has consumed cash that it's high-quality inventory that will be spinning as we move forward in Q3. So we think that's a temporary thing and we'll be working through that this quarter and over the coming time. But you'll see it was inventory really was consuming a good amount of that cash.

Certainly, it looked like that was the biggest one. And then, I guess, receivables was up significantly as well?

No, actually, receivables was favorable. And if you want to offline, we can walk you through that. But we're pleased with work on receivables, yes.

Was that, okay. What was free operating cash flow minus CapEx for last year? Can you remind us how much that was?

It would just take me a few minutes. If you want to, I can get back to you on that one.

No, that's okay. And then, for Mitch probably or anybody, Cerberus Capital, how involved are they kind of day-to-day at this point?

They're not very involved at all and candidly haven't been for the last 18 months, 2 years. The good news is, I think, they're obviously very bright people, shrewd investors. And I think as a management team, we're pretty proud that after staying close to the business for the first several months that the new management team came on board, we think they developed confidence in the management team so that they felt like they could go focus on some other things. So from a board representation standpoint, we have a director who is from Cerberus. We have a observer who is from Cerberus. And certainly, as you'd expect, to the extent they can help us from a capital market standpoint as advisers and directors. And they're, again, very talented people. We lean on them.

And is there anything you can share or anything they have shared with you in terms of what their long-term plan is for this particular investment event?

Another great question. I would encourage you to talk to them directly. We certainly can't speak for Cerberus and their plans for the company.

In some -- I know some private equity operations, there is in fact a firm deadline. I mean, there is a time where they sort of have to sell and monetize their investments. Do you know if they have a firm deadline?

I don't know that. And again, I think that's something that would be better answered directly with Cerberus.

(Operator Instructions) At this time, there are no further questions. Ms. Poulos, you may begin.

Yes, thanks, [Ruschay.] I want to, I guess, just thank you all for the kind words for the quarter we have. And I just want to reiterate the fact that while we have improved, we've got a long way to go. And so again, I want to reiterate my appreciation to our teams who have done tremendous work in improving this company, more importantly, who understand that there is tremendous work left ahead of us. So we're going to work hard to continue to deliver results for you. And we certainly appreciate your continued interest in BlueLinx and look forward to sharing our third quarter results with you in the month ahead. So thank you very much. Have a great day.

This concludes today's conference call. You may now disconnect at this time.