Good morning. My name is Teresa and I will be your conference operator today. At this time, I would like to welcome everyone to the BlueLinx Fourth Quarter Investor Relations Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session [Operator Instructions] Thank you. Ms. Natalie Poulos, you may begin your conference.

Thank you, Teresa. And good morning everyone. We appreciate you joining us the BlueLinx fourth quarter 2016 earnings conference call. This call is being webcast on the company's website at www.bluelinxco.com. The earnings release and presentation slides for this call can be found in the Investor Relations section of the company's website. Joining us on the call today are Mitch Lewis, Chief Executive Officer and Susan O'Farrell, Chief Financial Officer. I will also remind you that 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 could 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 Exchange Commission. Forward-looking statements speak only as of the date of this presentation and we undertake no obligation to revise them in light of new information and today's presentation includes references to non-GAAP financial measures. With that, I'll turn the call over to Mitch.

Thanks, Natalie and good morning. We’re happy to be able to report another good quarter at BlueLinx. We had net income for the quarter of $10.4 million, which is our best fourth quarter since 2009. Our net income for the year was $16.1 million representing our best financial performance since 2005. Our adjusted EBITDA also reflected our continued progress in the fourth quarter as we made $5.7 million, a $1.5 million improvement from 2015 levels. Our full year adjusted EBITDA of $36.4 million was $11.6 million better than our 2015 performance. Our progress continued at BlueLinx as the fourth quarter of 2016 was our sixth consecutive year-over-year quarterly improvement in adjusted EBITDA. In addition, when you consider the lost sales associated with the facility closures and product exits that took place earlier in the year, our same-center sales revenue improved in the fourth quarter by 12.9%. This tracks relatively close to the single family housing starts which improved in the United States by 12.5% for the quarter. We also feel good about our continued progress with our strategic priority to reduce the company's leverage. Our team has been relentlessly focused on this strategy and I want to thank them for their fantastic execution in 2016. The reduction in our debt from the end of 2015 by approximately $84 million while improving our adjusted EBITDA by over 45% from 2015 level facilitated the extension of our ABL in the fourth quarter and also helped provide the economic stability we now enjoy so that we can focus on the day to day management of our business. Susan will discuss in detail our efforts to reduce debt in 2016 as well as the continued deleveraging activity that we are undertaking. As I discussed on our previous call, we began to significantly invest in…

Thanks, Mitch and good morning everyone. It's a pleasure for me to speak with you today and to review our fourth quarter and year to date business results. So on Page 7, let's review some of our highlights before we get into the more detailed review of our results. As Mitch just mentioned, we continue to focus and advance on our strategic initiatives and we're very pleased with our results to date. In 2016 we closed certain facilities and rationalized our inventory which we refer to our operational efficiency initiative. In addition, we have executed well on our real estate monetization effort. With the sale of three previously closed facilities during the fourth quarter we continue to make terrific progress towards paying down our mortgage. Even with the impact of our strategic initiatives, net sales were $421.7 million for the quarter. When excluding our operational efficiency initiative, our net sales were up $47.7 million or 12.9% from this time a year ago. Additionally, our adjusted sales volume increased 12.4% from the prior fourth quarter led by double digit volume increase seen in both our specialty and structural product categories. When we look at fourth quarter performance, gross margin increased by 40 basis points to 12.4%. As Mitch previously shared, we continue to execute on our local market strategy and as a result we are realizing higher gross margin. We also had net income of $10.4 million with earnings per share of $1.14. Adjusted EBITDA was $5.7 million which is up 36.7% from the same period a year ago. We are delighted to see this continued year over year improvement in our fourth quarter adjusted EBITDA results. Our debt principal balance is down $84 million from the fourth quarter 2015. This is significant progress on our deleveraging initiative. Our mortgage principal…

[Operator Instructions] And your first question comes from Marc Stern with Northport Investors [ph].

Guys, congratulations on a good quarter. I was wondering if you guys are counting on a one-time accounting gains from reversing the writedowns on defunct properties held for sale.

So just to make sure I understand the question, you're saying the differential in the book basis of the real estate versus the sales we've had from properties that we've exited, is that the question?

That's the question, yes.

Marc, thanks for the question. No, we're not anticipating that. So we plan to move different properties in short order and you won't see a reversal. We don't anticipate one at the time.

My second question is, on the SG&A is up $2 million quarter to quarter comparison and can you provide me with a better description of exactly what adjustments were made to the real numbers excluding the effects of the operational efficiency initiatives?

So as we look at SG&A we look at things as it relates to operating with our volume. So we have within SG&A includes our logistics expenses, so as our volume increases we also have our operational expenses go within there. Additionally we also have our short term incentive programs accrue within there. As you might imagine with a record and banner year like we had, we’re also accruing for additional expenses for our team. So the operational and logistics costs for the increased volumes that we're serving as well as the banner year that we've had.

Excellent, and finally are you guiding us to project significant gains, profit improvements for 2018, for example, in the line of $6 million?

Marc, we don't give any guidance, I'm sorry about that but we don't give forward guidance.

I tried, I remember that from previous calls. I gave it a shot. I gave it a shot of.

It is sort of a trump question, right? You were waking up this morning so you didn’t catch it.

I tried to catch it -- thank you guys very much and congratulations.

[Operator Instructions] Your next question comes from Alan Weber with Robotti Advisors.

Good morning. Can you -- you made a comment about scale being more important. Can you just talk about that because actually the company stance is smaller today than it was a few years ago? So if you just talk about that comment and why you think becomes more important going forward?

Yes, I think the reason I have a lot of conviction and that's important is because of the consolidations that are taking place in the marketplace. And so the supply basis has consolidated tremendously after the economic downturn, we're seeing more of that happening in the traditional customer base for BlueLinx which is the independent lumberyards. And so what we're starting to see now is consolidation that's taking place at the wholesale distribution level. So for example, a company was sold in 2016, there are certainly rumors out in the marketplace that there are two or more of our competitors that are for sale. And so my view is that there's a good probability that as we look back three years from now we're going to see a much more -- a much smaller and less fragmented supply chain. So I think the fact that we're at the scale we are now gives us the gravitas within the industry both from a customer standpoint and a supply standpoint to compete effectively.

And then just when you -- because you've had the sale of facilities you've gotten out of markets, are you expecting working capital to be a source of cash again this year?

That sounds like a forecast question -- I would add -- let me answer -- let me answer this way, Alan. It is something that we are -- it is a strategic emphasis of this company that we're de-leveraging the company and the organization understands what that means and that's reducing debt and that's increasing EBITDA of the business. So we have a much better processes in place than we certainly had two years ago as it relates to managing our working capital, it is a key emphasis for the business and we also operate under a core value of continuous improvement. So we look at everything we do and certainly feel like there remains significant opportunity of BlueLinx, really in every way that we operate the business.

And then I guess my last question was -- if you continue to have some improvement in gross profit percent, again at some point it becomes an apples to apples to less discontinued. When you're in that spot, how do you think about the incremental SG&A relative to the growth of gross profit?

Yes, so our view is that from a -- if you look at the fixed cost aspect of the overall business, what we have now is scalable and so that would mean that my expectation would certainly be that we get enhanced efficiencies on a criminal volume and margin on that the company has and you get that on the fixed overhead cost, then you also get incremental efficiency zone on some of the variable costs obviously as you -- for example your fleet becomes more efficient, your operation at the facilities become more efficient. So the expectations would certainly be that we're not -- we would not be ramping up the SG&A anywhere close to the pace that we ramp up either our volume or incremental gross margin improvement.

I know you said only because if you look at -- again it's hard to really make a comparison because the closed facilities and sign of some facilities, but if you look at the incremental gross profit ‘15 to ‘16 and if you look at the SG&A the truth is SG&A went up more than the gross profit in absolute dollars. And that you're saying should be that really should not be going forward the case?

Yes, absolutely should not be the case going forward. And again there's not -- there's a lot of noise in those numbers with the initiatives that we have, that you have acknowledged.

[Operator Instructions] Our next question comes from Michael Scott with CHOICE Equities Capital Management.

Morning everybody. Congrats on a nice quarter, starting to really the balance sheet initiatives come through on the financial statements. And I guess I had a question mostly on the volumes, look really good and particularly in comparison to recent reports from your peers. I'm just wondering if you can characterize what was driving that, perhaps relationship single family starts but if there was anything in terms of a price impact in there as well.

So from an overall market perspective, as I indicated it was actually as has been the case with the business pretty highly correlated to our single family housing starts again. There was some modest price across the board and season has -- some modest price appreciation but it was primarily I would say a result of the market as I’ve talked about we are in my view just beginning to get very proficient at fighting back now from some of the share losses that we've had over the last three to five years as the company was really focused on the balance sheet and getting our financial house in order. And we’re investing in that and I would expect us as an organization to outperform certainly going forward in the future but I would say the fourth quarter was as much more just quantitative to what was going on in the general marketplace.

While there are a lot, maybe could you provide a little color on the return you're seeing on having general managers in the local areas and closer to their end customers.

Well, the EBITDA was up a lot in ‘16 versus ‘15. The margins were up a lot in ‘16 versus ‘15 and so I think the economic performance objectively is somewhat a result of that. But again it's still early days, in that -- it was one of the things when we look at the business early when I came in was, you could see a higher correlation of profitability and return on invested capital for those facilities that tended to have local management, which is intuitive, right? And so we are starting to see, I’d say, penetration in better relationships at the customer level and we’re getting enhanced confidence at the supply level -- at a local level, the all the stakeholders understand that, we understand the market and that we’re going to address the market being there. So where we have --- certainly in 2016 where we have local general managers that were not there, for example, in 2014 the performance was generally very much improved.

And last one for me, and then I will drop off. It’s just on the interest expense which continues to come down or reflect lower leverage in total. Is that approximating sort of a decent go forward break or would you expect for it to continue to come down from the $5 million and change on the quarter going forward?

Well, Mitchell, as you think about -- the things we’ve talked about which is we’re still selling through some of the real estate. So we’ve talked you before our mortgages, 6.35% mortgage, we sell through some of the real estate that implies lower mortgage interest rates and then as we continue to work on our inventory efficiencies and we’ve shared with you in the past some of our revolver balance, interest rates, we will get more efficient there too. So I think you can pencil through for yourself what you might see that coming down for, but we will continue to give you progress report each quarter on that business. End of Q&A

[Operator Instructions] And there are no further questions. Thank you at this time.

Thank you, Teresa and thank you. We certainly appreciate your continued interest in BlueLinx. And we look forward to sharing our first quarter results with you in the months ahead.