Ladies and gentlemen, thank you for standing by, and welcome to the BlueLinx Holdings Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. And today's call is being recorded. We will begin with opening remarks and introductions. At this time, I would like to turn the conference over to your host, Investor Relations Officer, Thomas C. Morabito. Please go ahead.

Thank you, Operator, and welcome to the BlueLinx Holdings Inc. Fourth Quarter and Full Year 2025 Earnings Call. Joining me on today's call is Shyam K. Reddy, our Chief Executive Officer, and Christopher Kelly Wall, our Chief Financial Officer and Treasurer. At the end of today's prepared remarks, we will take questions. Our fourth quarter and full year news release and Form 10-Ks were filed yesterday after the close of the market along with our webcast presentation and 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 that 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. I will now turn it over to Shyam. Thanks, Tom, and good morning, everyone. 2025 embodied grit and determination. Our fourth quarter and full year results demonstrated our ability to grow the business in the face of another year of challenging market headwinds and competitive pricing conditions. Our relentless focus on the company's profitable sales growth strategy targeting both single and multifamily end markets with different disruptive product and service expansion initiatives led to flat net sales and higher volumes at solid margins in 2025 when compared to 2024. Our strategy is working, as it enables us to successfully navigate a market that saw 2025 single family housing starts down 7% year over year. In essence, our disciplined execution of the strategy led to share gains across multiple…

Before we get started, I would like to remind everyone that the fourth quarter of 2025 had 14 weeks versus our usual 13 weeks. As a result, our fiscal year also had 53 weeks versus the typical 52 weeks. Overall, both specialty products and structural products delivered solid volumes and gross margins within a challenging macro environment. Net sales for the fourth quarter of 2025 were $716 million, up slightly year over year. Total gross profit was $113 million and gross margin was 15.7%, down slightly from 15.9% in the prior-year period. SG&A was $102 million, up $10 million from last year's fourth quarter. This increase was mainly due to higher personnel expense, the addition of Distero, the extra week in the fourth quarter, and increased sales and logistics expenses driven by our strategic channel growth, including multifamily. Given the difficult demand environment, we remain focused on rigorous expense management and on identifying opportunities to further improve operational efficiency. Net loss for the quarter was $8.6 million, or $1.08 per share, primarily due to higher net interest expense, higher depreciation and amortization, and M&A-related expenses. Adjusted net loss was $3.7 million, or $0.47 per share. And we had an income tax benefit of 28% of the pretax loss. Adjusted EBITDA for the quarter was $13.9 million. Turning now to fourth quarter results for Specialty Products, fourth quarter net sales for Specialty Products were $505 million, up over 4% year over year. This increase was driven by higher volumes in nearly all product categories and modest price increases in millwork and siding, as well as the addition of Distero, partially offset by volume declines in millwork. Gross profit for specialty product sales was $92 million, up 3% year over year. Specialty gross margin was 18.1%, down slightly from last year's 18.4%…

Thank you. If you would like to ask a question, please press star followed by the number one on your telephone keypad. Once again, to ask a question, please press star followed by the number one. Our first question comes from Jeffrey Patrick Stevenson from Loop Capital Markets. Please go ahead. Your line is open.

Hi. Thanks for taking my questions today. You know, first up, you know, specialty products gross margin reported a nice sequential improvement during the fourth quarter and returned to your previously discussed normalized 18% to 19% range. And I wondered if you could provide more color on what were the primary drivers of the sequential improvement you saw in segment margins during the quarter?

Yeah. Hi, Jeff. It is Kelly. So I think part of the improvement, if you recall, we talked last quarter, we had some one-time rebate-related true-ups with one of our vendors and that represented about half of the increase. It is really been normalizing for what we would expect in a typical quarter, and, you know, I guess the rest here is just continuing to maintain, you know, discipline, right, as we continue to price into what continues to be a challenging market. And what I would say is that as we move into 2026, right, we would, you know, kind of similar to the trend that we have seen in the back half of 2025 with the kind of a normalization or flattening, if you will, of the decline that we have seen over the last two or three years in that specialty product margin, we are expecting in 2026 to be relatively flat to the margins that we experienced in the fourth quarter.

And just to add, Jeff, you know, obviously, with soft market conditions, it is a competitive pricing environment. But given our go-to-market strategy with respect to product and channel, we are really leveraging our value-add services on top of key investments we have made to support those channels to really maintain our pricing at acceptable levels that correspond to the value we are providing, whether it be on project management, takeoff services, certain CapEx investments we are making to drive various product-related value-add services, and so on. So we are really proud of what we have been able to do over the last year in an incredibly challenging housing environment with respect to not only volume growth, but maintaining those margins you were asking about.

No. That is great color, and I appreciate all the detail. And, you know, maybe kind of following up on, you know, specialty product pricing, in addition to some of the initiatives you have done internally, you know, we have heard from, you know, one of your competitors that, you know, EWP price has largely stabilized and, you know, we are likely at the bottom as far as sequential declines go unless the builders' spring selling season comes in worse than anticipated. And, you know, wondered if you would, you know, agree with that from what you are seeing in your business and, you know, maybe, you know, could talk about a broader, you know, pricing outlook in the segment as we move into the '26.

Yeah. I would say based on, you know, our conversations, well, between looking at macro-level data and conversations with customers, suppliers, and other stakeholders, we absolutely agree with that. We do think it has stabilized. But coming back to our value proposition in the market, there are various, you know, creative programs that we have developed on top of channel focus with multifamily, for example, that puts us in a more competitive position as it relates to driving, for example, EWP volumes while maintaining solid margins and being above the fray when it comes to an incredibly competitive pricing environment due to market conditions. But to your question, yes. We agree with that statement.

Got it. Got it. Understood. And then, you know, lastly, you know, just, you know, appreciate the update on kind of where things stand with your technology investments. And, you know, wondered if you could provide, you know, additional thoughts on, you know, why you pivoted away from, you know, you know, an internal e-commerce, you know, platform, and now that, you know, there is more AI opportunities. And then, you know, moving forward, you know, you talked about, you know, a larger phase two, you know, with things like, you know, warehouse management system. Is that still in the cards over the coming years, Shyam?

Yeah. So to take your first question on e-commerce, I am sure you are in the same boat as us where you cannot pick up a paper every day or listen to something on the news where AI is rapidly changing the tech environment. So, for example, it is not out of the realm of possibility that people will be able to execute on e-commerce orders via ChatGPT or Claude or Perplex or one of these other AI platforms, or X off OpenClaw, which is all the big rage over the last couple weeks. You know, you have got vibe coding that is taking place as well where people can very quickly spin up new applications in order to drive sales internally as opposed to relying on third-party platforms. All of that is to say that I think it would be foolhardy to spend millions of dollars investing in an e-commerce platform that is based on traditional notions that could be obsolete before we even got through phase one of it. So the idea is to take a step back and invest on the digital e-commerce side in a way that aligns with our channel strategy and where we are driving sales. So with our biggest accounts, being more aligned with them to drive accelerated sales off their platforms and to really accelerate growth from a digital commerce standpoint that way, while continuing to evaluate the landscape and figure out ways to jump in as quickly as possible as the tech landscape changes. As it relates to WMS, we absolutely believe in WMS. In fact, we have a very successful pilot that has shown, you know, promising results. And so the idea would be to invest in a very responsible way over the coming, you know, twelve to twenty-four months, you know, in other facilities beyond what we already have. So, you know, we have bin locations and a variety of other things that support operational excellence and, you know, in a $3 billion top-line distribution business, we have that. The idea is to take it to the next level. And the recent pilot showed that it makes great sense to do so. So that is the plan over the next twelve to twenty-four months to make those targeted investments where it makes the most sense. The good thing is we are now further along in what that solution looks like than we were, call it, two years ago.

Great. Thank you.

Yeah.

As a reminder, to ask a question, please press star followed by the number one on your telephone key. Next question comes from John McGlade from The Benchmark Company. Please go ahead. Your line is open.

Hey, guys. This is John on for Reuben. Just congratulations on the quarter.

Thanks, John. Thank you.

So I just wanted to ask kind of two and a half questions here. First one, just curious with with kind of how the market landscape has been over the past few quarters and how it looks like it is going to head into this year. Could you maybe give us some additional color on how your customer conversations have shifted? Maybe they are viewing the value of your services differently in the way that they are operating day to day.

Sure, John. Good morning. Yeah. I would be happy to do that. So if I think about the market landscape over the last few quarters, it is not lost on me that beyond just housing starts, whether it be total housing starts or even single family housing starts, that beyond that, if you look at housing expenditures as a percent of overall GDP and where that sits, there have been sequential quarterly declines over the last year. And then if you look at housing burden, the cost of housing burden over the last four quarters, that has continued to go up. And then if you look at personal consumption expenditures, those are also, as it relates to repair and remodel and some other key indicators with housing, those are also very much down. So all of that is to say besides what everybody talks about, there are additional macro statistics that suggest an incredibly weak housing market. All of that said, the fact is we have grown share and we have maintained top line year over year at solid margins because of the investments we have made to drive value-add services. Whether that be, you know, on the multifamily side, the channel focus as it relates to multifamily and certain key customers, we are able to drive greater conversions into our product lines, namely with EWP, for example, or on the siding front. With multifamily, we have converted off, you know, one of the more popular, one of another competitive suppliers out there that we do not carry in the GP DENS product. So the fact is that we have taken our strategy and we have gone out to the marketplace with our customer base and our supplier base to show them that even in soft market conditions, we can…

Yeah. And just to add on that, absolutely. And so whether it is a destocking or whether it is tough market conditions, two-step can benefit just by buying—we will put aside—just in soft market conditions, customers will buy less more often, right? That is one of the opportunities for two-step distribution. I would say though that if you look at us relative to what may take place at other companies, our ability to meet that less-more-often desire on the part of customers while maintaining optimal inventory levels through our own working capital management capabilities, which I continue to feel are second to none, I think it is a pretty noteworthy competitive advantage we have because we were able to meet our customers' expectations, manage our inventory levels accordingly, end the year with a strong cash balance, especially compared year over year in light of a soft selling year, and yet maintain good margins. Right? We did not have to—because we are able to match up or marry up the inventory levels with the customer demand, while selling the value-add and other services we provide, we were able to maintain those solid margins, optimal inventory levels that did not compromise our ability to grow volumes as demonstrated by the results and, of course, maintain pricing at appropriate levels to ensure year-over-year flat sales in an otherwise tough market.

Okay. That is fantastic. I really appreciate the deep dive there. Just one other thing, and I know it has been a focus, and I know last quarter you guys shared just really kind of the exceptional level of service you have been providing in the multifamily sector. It sounds to me like you really may have shifted there before others decided that was going to be more of a priority this year for the end markets. Obviously, those projects have a longer timeline than single family. I was hoping you might be able to give us a rough estimate on when you kind of expect to see that increased activity, increased interest starting to flow through. We have heard from others that it is more of a late Q3, Q4 event for them.

Sorry. You are talking about multifamily?

Yes.

Yeah. So, yeah. Yeah. So let me just be clear, John, given the affordability crisis in housing, and if you look at housing as a percentage of GDP and where it has been going over the last couple years, especially over the last four quarters, it is clear that multifamily is going to be, in my view, the solve to bending the cost curve as it relates to housing pricing, especially given the demand or the need to put people in homes over the next ten years. So whether it is good or bad, our strategy is designed to take more and more multifamily share and to grow our multifamily business. So it is kind of all over the map. If you look at the forecasting, it changes from month to month and quarter to quarter. When people were running away from multifamily, we were running into the fire because we strongly believe that if you build more faster, against the backdrop of the current regulatory environment, you could help bend the cost curve and get more people into homes. And so we have designed our product strategy and our go-to-market strategy as it relates, from a channel perspective, to take advantage of the multifamily housing starts that are out there, number one. Number two, if you look at kind of the way the financing market works and the instruments that people typically use in order to finance multifamily housing, the rate environment is favorable as it relates to that from a short-term standpoint given the recent rate cuts because their instruments are based on short-term rates by and large. By the way, that is similar with some aspects of our industrial business and the OEM market, like manufactured housing. That is also supportive of kind of where you see that rate environment relative to where long-term rates may be. So the long-winded answer to that question is, I do see multifamily continuing to improve over time, mainly because there is an absolute need for multifamily housing in the context of an affordable housing crisis, number one. Number two, between the rate environment and our channel and product strategy, I am absolutely convinced that we will continue to grow multifamily share over the coming years because we have built capabilities to support that share growth, which came to fruition in 2025 with 19% volume growth year over year.

Okay. And I guess I might have thrown you off a little bit there on the initial question. But maybe if I could pin you down and just try and get an idea of, like you said, you guys are running into the fire when everyone else was running out. I guess, how much of a head start do you think that that might have given you?

I think it has given us a huge head start because if you look at it—okay. So two things. Number one, in order to grow that channel, it truly does take endurance, stamina, and investments in key services that you might not otherwise find elsewhere. So, for example, we have invested in enhanced capabilities when it comes to takeoff services, which is something that historically two-step distribution has not had. And we have those capabilities around takeoff services that allow us to respond to—basically look at plans and be able to drive our product sales through those multifamily projects in a way that we could not have otherwise done a few years ago, number one. So that is just one example. The other is project management services and the working capital management associated with supporting multifamily projects where you have to keep—we have got some—we have ways of making the sales but then managing the inventory through our warehouses with reload services and other working capital management levers that support those multifamily projects in a way that is good for our business. That is not necessarily easy to do overnight, okay? So we have got that, and that supports the project management piece. We have also invested CapEx into specialized equipment that allows us to deliver to multifamily job sites, for example, in urban environments at two in the morning. Right? That was a nuanced approach to our CapEx strategy that aligned with the channel strategy that gave us a head start. And then last but not least, I would suggest that the personnel investments we have made between what we have at a corporate level combined with field resources to drive business development in the multifamily channel distinguishes us from maybe others in the space. And those BD resources, those resources out in the field combined with the scalable capabilities that we are offering from an enterprise-wide basis, allows us to bring our customers into the mix and have channel partners get more closely aligned with those end developers, and ultimately provide us a means by which we can convert jobs into our product offerings, whether it be siding, for example, or EWP, or GP DENS, and so on. So we have a head start because we have invested CapEx and OpEx to drive it, and then there are these value-add services that others do not necessarily have that are enabling, or giving us a competitive advantage, I think. So I do believe we are ahead of the game.

Alright. Thank you so much for the color. I took up so much time. I will pass it on now.

Alright. Thanks, John.

Our next question comes from Aditya Madan from D.A. Davidson. Please go ahead.

Hi. It is Adi on for Kurt today. Thank you for taking my question and for all the details so far. A lot of my questions have been answered. But a couple of them are around the incremental cost maybe from the AI focus versus the traditional e-commerce platform. What do those incremental costs even look like and is there any rough timeline you have in mind for rolling it out?

Okay. So Adi, I really appreciate the question. But I think if I gave you a timeline, it would be obsolete a week from now. So I honestly do not know. I will say that the incremental costs are also unknown. But suffice it to say that they would be, in the scheme of things, kind of immaterial relative to traditional costs that would go into a regular e-commerce platform. You know, with AI, as we have all seen, there are virtually zero barriers to entry for all, at least for now. I mean, who knows what it is going to be when the investments catch up down the road that others are making, not us.

So I—

You know, as it relates to e-commerce, I do not know, quite frankly. But I do know that the future looks bright. Just if you look at some of the recent announcements with some of the big Fortune 50 companies and their partnerships with some of the most prominent AI platforms, I mean, there is a world where people will just go into a ChatGPT or, you know, Claude and direct it to buy something off one of their, you know, rewards accounts, whether it be a Walmart Plus or, you know, Amazon or something else. And people may never even go to the traditional e-commerce platforms anymore, which is why I do not know what the future looks like.

As it relates to our AI investments that we have made to drive—which, incidentally, are aligned with our commercial strategy as well as just productivity improvements or giving our employees what I very affectionately describe as an Ironman suit—have really enabled our folks to just be more productive. Do we have any measures on it? Absolutely not. It is too early to know. But as it relates to AI applications, we are—

We are—you know, we as I said in my remarks—

We have developed AI tools for people to assist with modeling. So, for example, you know, in the traditional way, someone would normally have to call an associate, one of their teammates in FP&A, to help them with the model. Now there is an actual AI application or AI agent they can use to build a model before they even have the conversation with our FP&A team, which is exciting. You know, from a benefits perspective, we have benefits chatbots that our teammates are able to use in order to answer standard benefits questions or get their arms around something before they might have a call with a benefits specialist. And then, of course, on sales, for instance, you can use our AI agents to help you build sales plans, sales execution plans, especially given the data, the access to data that folks have through our BI intelligence platforms via Microsoft. So all of that is to say there really is not any incremental cost as it relates to our employees using the AI platforms that are part of our Microsoft suite of products. But, you know, as the future continues to develop, I do not know what that is going to be. I mean, there is clear cost associated with software engineering and building connections into the systems that we are still trying to figure out, but for now, we are just focused on making sure that our data architecture is—

Got it. So it is mainly been, like, an internal focus, yeah, and not external client-facing just yet?

Is well designed to be able to take advantage of that next frontier of technology. Well, I would not say—so our tools, our folks can use the tools to make them better client-facing teammates. As it relates to someone from the outside accessing an AI agent, for example, to place an order, that does not exist yet, you know? But those are absolutely the kinds of things that we think about. You know, for example, just to give you an example, let's say someone sends in an email—

Asking for a quote.

And we set up an inbox to take those quotes, there is a not-too-distant future state where a fax and email message could get routed into an AI agent that takes that information, links with our ERP, i.e., Agility, and then puts forth a quote, generates a quote that one of our sales associates can review and then execute on, right? Whether it is picking up the phone and calling or using the agents and then respond accordingly at scale so that we can process more, faster. Those are absolutely the kinds of ideas that we are exploring. But nothing in action yet. Let us just put it that way.

Got it. Yeah. That makes sense. And maybe when you are looking at M&A pipeline right now, how are you thinking about growing the acquisition to fill in the white space on the West Coast, specifically maybe to complement Distero versus buybacks?

Yeah. It is absolutely an important piece of our strategy. So as we think about our M&A strategy, it is two-pronged, and that is grow our specialty product mix, which Distero absolutely did, and, secondly, you know, support geographic expansion. Distero actually accomplished both, more so on the front end with respect to specialty distribution, and then as it related to geographic expansion, it just further strengthened our Pacific West Coast presence. But those are absolutely two prongs. We have got, you know, a pipeline of potential targets that we are regularly evaluating. You know, we use shows like IBS and one-on-ones over the course of the year to continue nurturing those relationships so that we can be opportunistic when the time comes.

Awesome. Thank you for taking my question. For all the detail. Good luck here in the first quarter.

Thanks. Thanks, Adi.

And we have no further questions. I would like to turn the call back over to Thomas C. Morabito for closing remarks.

Thanks, Julian. Thank you again for joining us today, and we look forward to speaking with you in May as we share our first quarter 2026 results.

This concludes today's conference call. Thank you for your participation. You may now disconnect.