Q1 2022 Bluelinx Holdings Inc Earnings Call
Greetings and welcome to the Bluelinx Holdings first quarter 2022 results conference call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
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As a reminder, this conference being recorded.
It is now my pleasure to introduce your host Brian Taylor, Vice President of Investor Relations. Thank you you may begin.
Thank you operator, and good morning, everyone welcome to the Bluelinx Holdings first quarter 2022 earnings call.
Presenting today are Dwight Gibson, President and CEO of Bluelinx, and Kelly Johnson, our Chief Financial Officer.
Our first quarter news release and Form 10-Q 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 links Seo Dot com.
We encourage you to follow along with the detailed information on the slides during our webcast.
In addition to our Q1 earnings we also announced yesterday that our board of directors increased our share repurchase authorization to $100 million with $60 million to be repurchased via an accelerated share repurchase plan Dwight.
Dwight and Kelly will provide more details on that news during our call. This morning.
As a reminder, today's discussion contains forward looking statements actual results may differ 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.
At the conclusion of our prepared remarks, we will open the line for questions and with that I'll turn the call over to Duane.
Thanks, Ryan and good morning, everyone.
Thank you for joining us on the call today.
This is an exciting time in the history of Bluelinx as we continue to exceed expectations. During one of the most dynamic periods in the history of the U S housing industry.
I am extremely proud of the Bluelinx team our continued strong execution contributed to record first quarter profitability.
Our operating priorities continue to be focusing our sales mix and higher margin specialty products.
Making disciplined purchasing and pricing decisions.
And rigorous management of commodity inventory.
These efforts have contributed to outstanding performance for six consecutive periods as compared to our historical results.
Over the past six quarters, we've averaged net sales growth of 39%.
Adjusted EBITDA of $117 million and adjusted EBITDAR margins of 10, 5%.
We believe our results over this extended period demonstrate our ability to capitalize on robust demand.
To navigate supply constraints and to successfully manage historic volatility in wood based commodity prices.
We believe the progress we've made over the past 18 months has significantly increased our baseline performance even in a normalized environment.
While we are encouraged by our improvement we are equally excited about our potential as we have identified additional opportunities to drive greater efficiency across our business and increase capacity to grow sales of our higher margin specialty products.
We are closely monitoring the impact of higher mortgage rates broad based inflation and ongoing volatility in wood based commodities.
Even with these headwinds we currently believe fundamentals for the U S housing industry remain healthy underpinned by low levels of unemployment strong demand for new homes and record levels of home equity, which is contributing to strong repair and remodel activity.
We ended Q1 in a strong financial position with low net leverage and available liquidity of $421 million.
We also had strong cash generation in April further strengthening our financial position.
April sales volumes were consistent with Q1.
Specialty gross margins above 23% and structural margins in the high single digits.
Okay.
Following a detailed review of our multi year capital allocation plan, our board of directors increased our share repurchase authorization to $100 million.
Based on our analysis, we believe the expected future cash generation profile of our business even in a slower growth end market environment is significantly undervalued by the market.
In our view the disparity between our view of the business versus the market's view creates a compelling investment opportunity.
Thus, we decided to commit $60 million to repurchase shares in an accelerated timeframe.
This represents just under 10% of our average market cap value over the past year.
These actions demonstrate confidence in our current performance opportunities for continued improvement and our long term growth strategy.
We are committed to delivering shareholder value through strong business execution and disciplined capital allocation.
Taking a closer look at our first quarter highlights.
Net sales increased 27% driven by specialty product sales, which grew 36% year over year.
Gross profit was $291 million or 22, 3% of net sales.
Nearly two thirds of our gross profit was generated from sales of specialty products consistent with our strategy to grow that part of our business and.
And we generated over $200 million for adjusted EBITDA, which is 15, 5% of net sales both all time highs on a quarterly basis for Bluelinx.
Our financial results reflect benefits from our focus on commercial excellence continued operational improvement and driving high levels of employee engagement, which are core levels for sustainable profitable growth.
In support of these initiatives, we have invested in robust project management capabilities and deployed standard processes and tools for key operational and commercial activities, such as inventory management safety and pricing.
And earlier this year, we deployed a balanced scorecard with clear Kpis focused on people process and performance to increase accountability.
From a strategic perspective, we are focused on increasing our mix of specialty product sales growing our private label business and expanding our value added service capabilities.
On the supplier side, we are working with select vendors to partner on key specialty products and categories such as engineered.
Engineered wood millwork siding outdoor living and industrial products.
Our ultimate goal is to drive profitable sales growth and expand gross margins through the combination of an engaged and accountable workforce.
Commercial excellence and continuous operational improvement.
I believe the actions, we have and continue to take to improve our business make bluelinx stronger and more resilient to economic cycles.
And I am confident in our future I believe we will perform well even in a slower growth environment.
Given the dynamic nature of the U S housing industry I'll now shift gears and provide our view of industry as we see it today.
All things considered we currently believe fundamentals for the U S housing industry remain healthy.
Underpinned by low levels of unemployment strong demand for new homes, and a low supply of available homes.
We acknowledged that rising mortgage rates increased home prices and broad based inflation are impacting affordability for some buyers.
It is also true that low levels of unemployment and increasing wages provide some support for qualified buyers to remain engaged in the market.
Meanwhile, rent prices have risen rapidly up approximately 15% over the past 12 months influencing some renters to consider buying a home even with rising mortgage rates.
Broadly speaking, we believe the aspiration to purchase a home remains high while supply if available homes remain near historically low levels and we believe the low supply of available homes will continue to drive investment in both existing and new homes.
We also believe that high levels of home equity housing turnover and aging housing stock will continue to support growth in repair and remodel activity.
As a point of reference about 45% of our annual sales are tied to the repair and remodel market with 40% tied to residential new home construction and about 15% related to the commercial industry.
We expect demand in all three market categories to remain stable.
For us market stability represents an opportunity to accelerate our mix shift to specialty products.
Our supply constraints ease we believe it will provide us the opportunity to expand sales volume with key vendors and gained share and specialty product categories with our best customers.
And we are poised to gain share based on improvements we've made in the business and initiatives. We are executing to further optimize our performance.
That said like many parts of the economy, we are still experiencing supply constraints with few signs of abatement in the near term.
The majority of our specialty products remain on vendor allocation.
This includes product categories, such as engineered wood siding millwork outdoor living and industrial products.
We continue to focus on expanding relationships with key suppliers, who align with our strategy as we look to increase net sales and specialty product categories expand our value added capabilities and extend our geographic presence.
We are making progress in this area with Q1 unit sales volume up 6% and siding and 2% in millwork on a year over year basis.
And sequentially sales volumes increased 8% in total across our specialty product offerings.
And structural products, our focus remains on efficiently serving our best customers, while effectively mitigating risk from ongoing commodity price volatility.
To this end, we remain relentless in managing our structural product inventory with greater emphasis on optimizing cost price dynamics as opposed to growing volume.
As a result of this approach.
We cycled out of higher cost of structural inventory and approximately six weeks when wood based commodity prices declined toward the end of Q1.
In addition to supply constraints and fluctuations in commodity pricing, we have effectively managed rising input cost a competitive labor market and extended lead times on imports, which represents approximately 20% of our overall vendor supply.
To summarize we expect to continue capitalizing on strong demand, while vigilantly monitoring and controlling commodity risk and.
And in parallel we are executing our long term strategic initiatives to drive sustainable profitable growth.
That concludes my opening remarks at this time I'll turn the call over to Kelly for a more detailed discussion of our financial results and capital structure.
Following that I'll provide closing remarks before we take your questions.
Kelly.
Thanks, Duane and good morning, everyone. Our Q1 results reflect improved execution and our ability to capitalize on market trends as compared to the prior year.
Net sales were $1 3 billion up 27% year every year led by specialty product sales, which increased 36%.
Gross profit increased 61% to $291 million, resulting in a 22, 3% overall gross margin and all time high on a quarterly basis.
As a percent of sales SG&A was that 7% consistent with the prior year period, However, SG&A costs increased 21% year over year to $91 million. This was due primarily to higher variable compensation and to a lesser extent increased delivery and logistics costs.
Net income was $133 million and diluted EPS was $13 19 per share more than double the prior year period, our tax rate for the quarter was 26, 2% in line with our expectations.
Adjusted EBITDA was $202 million or 15, 5% of net sales. This was also an all time high on a quarterly basis and free cash flow increased $26 million over the prior year period.
Our year over year growth and excellent profitability reflect the benefits from our emphasis on growing high value specialty product sales alongside continuous operational improvements, while also demonstrating our ability to capitalize on favorable market conditions.
Now I'll discuss the product categories for the first quarter, starting with specialty products.
Net sales were $768 million up 36% or $205 million when compared to the prior year period gross profit was $184 million up $76 million or 70% year over year and gross margin expanded 470 basis points to 24.
4%, our second highest rate ever.
The net sales growth and improved profitability were again, driven by disciplined value based pricing action and also reflect a favorable shift in volume to strategic specialty categories, such as nowhere exciting and engineered wood.
Sales volume and no work in siding increase year every year with engineered Woodbine flat, reflecting ongoing supplier allocation.
Sequentially net sales of specialty products increased 20%, including approximately 8% volume growth and gross margin expanded 210 basis points.
Through April specialty products gross margin within the range of 23% to 24% and sales volumes have stayed consistent with first quarter levels.
Now moving onto the first quarter results for our structural products.
Net sales increased 16% to $534 million as compared to the prior year period.
The sales growth was driven by the steady price increases in lumber and panels during the quarter that started in the fourth quarter of 2021.
Per random length, the average Q1 price for framing lumber with $1244 per thousand board, but up 26% from Q1 of last year and the average price for panels with $1232 per thousand square foot up 23% from last year's first.
Order as well.
Gross profit was $107 million, an increase of $35 million or 49% year over year.
Gross margin expanded 450 basis points when compared to the prior year to 20% representing our all time high gross margin for structural products.
Sequentially gross margin expanded 390 basis points.
The structural profitability reflects the benefit of our continued discipline in our approach to commodity inventory management as we continue to keep levels low while leveraging confinement as well as centralizing purchasing and pricing decision.
We anticipate structural margins to be lower in Q2 than what we experienced in Q1, given the recent steady decline in wood based commodity prices from mid March through late April .
For the month of April average commodity prices were down to $956 per thousand board foot for lumber and $981 per thousand square foot for panel, a decrease of 23% and 20% respectively from average prices in the first quarter.
As a result, our second quarter to date gross margin on structural product sales is in the high single digit while sales volumes have stayed consistent with first quarter levels.
At this point, we have already cycled out of the majority of our higher cost of commodity inventory and are now selling structural product at prices relatively consistent with current market pricing, which have recently stabilized.
That's to summarize our performance to date in the second quarter sales volumes for both specialty and structural product have remained consistent with the first quarter gross margin on specialty product sales has been in the 23% to 24% range with structural product margins in the high single digit it was a strong month of cash generation.
<unk> due to due to commodity deflation and for the full quarter, we expect our Q2 tax rate to be in the range of 21% to 25%.
Yeah.
Turning now to working capital during the first quarter, our net working capital investment was $181 million. This investment reflects strong demand in the U S home building industry and the impact of increased pricing for sales of wood based commodity products.
Wondered and $57 million of the increase was concentrated in accounts receivable, while $24 million related to a net increase in inventory when considering payable related primarily to specialty products.
Total inventory as of April 2nd was $563 million with nearly 85% related to specialty products.
First quarter free cash flow improved by $26 million versus the prior year and represents our best first quarter cash performance over the last four years.
During the quarter capital expenditures were $2 5 million.
And related primarily to facility upgrades at our distribution branches for the full year, we now anticipate investing up to $30 million in capital expenditures.
From our previous estimate of $25 million. These investments will be focused on continued facility improvements at several of our distribution branches.
Great and our fleet of rolling stock and enhancing our digital and technology capabilities.
Looking now at the balance sheet.
As of the end of the first quarter, our cash on hand were $74 million total debt was $572 million and net debt was $498 million net leverage was reduced to 0.9 times trailing 12 month, adjusted EBITDA of $560 million as compared to net leverage.
Two and a half times from the end of the first quarter of 2021.
When considering our cash on hand, and Undrawn revolver capacity of $346 million available liquidity was $421 million.
As of the end of the first quarter.
And as of April 29, our cash on hand increased to approximately $150 million.
As Greg mentioned, our focused efforts in 2020, one to improve our financial position combined with expected near term cash generation has positioned us to returning meaningful amounts of capital to shareholders in an accelerated timeframe spin.
Specifically, our board increased our share repurchase authorization to $100 million up 75 million from our previous $25 million authorization instituted in the third quarter of last year.
In the first quarter, we repurchased 81331 shares under the plan in the open market for a total of $6 $4 million.
Given the pullback in equity markets through April , particularly as it relates to valuations of companies in the U S. Homebuilding industry, we believe the opportunity to repurchase shares had become increasingly attractive.
Such we've chosen to repurchase 60 million under the authorization through an accelerated share repurchase agreement, which demonstrates our commitment to execute at a very opportunistic time.
Under the terms of the ASR, we will find the $60 million I made it that at that time, we will receive and retire approximately 554000 shares of stock.
The ASR is expected to be completed within the next three to five months.
These actions are consistent with our capital allocation framework and even after funding the accelerated share repurchase we expect to have ample liquidity to invest in organic growth initiatives as well as evaluate evaluate strategic acquisition.
As a guiding principle, we intend to maintain a strong balance sheet and financial flexibility that enables us to invest in our business through all economic cycles, while maintaining a long term target net leverage of at or around three times.
As we invest for growth, we will evaluate both organic and acquisition opportunities that yield a risk adjusted return above our weighted average cost of capital.
And are consistent with our strategy to increase our mix of higher specialty product.
We will maintain discipline in our approach to all growth investment comparing those opportunities against the value of returning capital to shareholders and we believe our share repurchase actions demonstrate our capital allocation discipline.
In summary, we are focused on maintaining a strong financial position and delivering long term value to our shareholders.
At this time I will turn the call back over to Dwight for closing remarks.
Thanks Kelly.
Closing it is an exciting time for Bluelinx.
We are off to a strong start in 2022 with record profitability in Q1 and a good April .
We have exceeded expectations for six consecutive quarters, demonstrating our ability to capitalize in a dynamic market environment and raising the base level performance of our business.
We're increasing accountability emphasizing growth in our specialty products and driving continuous improvement throughout the business.
Our financial position is strong.
We are investing in our business to improve efficiency and increase capacity to deliver sustainable profitable growth.
And we are repurchasing $60 million of Bluelinx shares demonstrating confidence in our business strategy.
Continued improvement in our execution and commitment to delivering shareholder value through disciplined capital allocation.
As we look to the future I believe we are in an opportunity rich environment to create long term value for all stakeholders and we are steadfastly committed tobacco.
Our aspiration is to be the preeminent building products distributor in North America.
And we believe we have a long runway of growth ahead of us as we leverage our scale and product breadth to expand relationships with our best customers and key vendors.
At our Investor Day in June our executive leadership team will share details about our plans to accelerate growth drive productivity and increase shareholder value.
If you'd like to attend please RSVP using the QR code provided in our presentation, our reach out to Ryan.
That concludes our prepared remarks at this time, we're happy to answer any questions.
Thank you we will now conduct a question and answer session.
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Our first question comes from Greg Palm with Craig Hallum. Please proceed.
Yeah. Thanks, good morning, everybody and congrats on the really good results there.
Hey, good morning. Thank you. Thank you.
I wanted to start with.
Supply chain I'm, just curious if your thoughts around when some of the supply chain challenges might use if if you've thought about how long that lasts given where we are and then more importantly, as those supply chain challenges do start to use what's your view on pricing at that.
Point do you think pricing can be maintained at current levels do you think that pricing needs to come in at all just wanted to get some high level thoughts on what you're seeing out there.
Yeah, So we rarely rarely see the supply environment continuing to be tight for the balance of the year a lot of our suppliers that we stay connected to our investing to increase capacity, but there is a lag between windows investments happened when you actually see them.
More product available in the market. So we think you know that.
The balance of the year will be more of the same and as we've said in past calls and it's Kelly has mentioned, we still think that we are.
Able to manage and hold price and the expectations around particularly in the specialty side being in the mid 20% range are we think are solid.
Okay. Good.
If you look back at the last year or so I mean, obviously you know its been a string of positive really impressive results I know, it's been a strong backdrop, but do you think you're gaining share at all I mean do you feel like you're maybe you're getting your hands on more supply than some of your peers or would you really characterize just.
A really good environment with strong pricing and overall execution.
Yes, I mean, we're focused on the things we can control, which is really our performance. So we've really been leaning into just driving.
Greater execution, managing in our inventory building deeper and better relationships with our suppliers and our customers. The supply environment continues to be challenging. So we want to make sure. We're getting our fair share of the right kinds of products, but gaining share in this market is a challenging thing. So we're continuing just to really focus on shifting our mix building good.
Deep sticky customer relationships vendor relationships and be prepared for more volume as it becomes available.
Okay, and then just lastly in light of the buyback news you know should we expect that that means you're you're not necessarily paring back on on M&A, but just kind of curious if your capital allocation priorities have changed at all just given you know.
The news be where the stock price price is and see certainly what the you know either M&A or pipeline it looks like our overall environment.
No I mean, our our our operating principles around capital allocation are unchanged right, we're focused on and making investments that generate a return greater than our weighted average cost of capital. We always are excited about prioritizing organic investments that kind of increase our capacity and efficiency and scale of our busy.
And we're going to continue to be thoughtful around things that could accelerate that which could be inorganic activities and then.
As as available returned share returned capital to shareholders. So those priorities are kind of enduring and we believe that this was an opportune time to kind of return should have returned capital to shareholders, but we're also continuing to stay engaged and look for opportunities to drive our strategy forward yeah.
I'll hear in my prepared remarks.
But you know kind of how we think about capital allocation in more detail as we're looking at the bigger picture as Greg mentioned, we're at our target leverage remains unchanged. So.
I feel really I think it's just it's just us taking the next step in evolving and having a good detailed plan around capital allocation as we've been discussing with you previously that we would that we ran the process of doing.
Yeah that makes sense all right best of luck going forward. Thanks.
Thanks, Craig.
Our next question comes from Reuben Garner the benchmark company. Please proceed.
Thank you and good morning, everybody and congrats on the strong results guys.
Thanks Reuben.
Let's see so where to start so that I'm wondering though.
Get some more color on the specialty business and specifically, they're there you know.
Our obvious risks in the market now with where mortgage rates have gone and your margin structure is very different than it's been historically, if we did see any kind of soft patch or slowdown or things go sideways I mean do you still.
Is the 20% margin number that you put out in the past is that something that you think you could do even if the market were to soften up or would you see risk to that level. You know I know, it's a it's sort of a tough question, but just wanted to get your thoughts on kind of the downside to the margins. If we were to see this.
A soft period.
Yeah, well thanks for events for the question.
As you know every for the last few quarters, we've been well above the 20% to 23, 24% range and that 20% really comes down to actually incorporating our thoughts around if we saw some softening in the market or not.
Say it differently normalization, we believe we would be right around that that rate. We believe we made fundamental differences and changes in our pricing structure to support that Oh.
Now that that considers a softening I mean, certainly we don't know what's going to happen in the future, but we feel pretty good about that number and that's why we continue to support it and reiterate it.
Okay and then.
I heard private label mentioned earlier do you guys.
Are there plans to increase private labeling and some of the other specialty categories that you participate in or.
Was that specific to kind of growing your engineered wood.
That form more aggressively.
Aggressively in the coming quarters.
Yeah, It's a great question and the answer is yes, and yes, we like our private label business again on incentives the kind of the number three AWP engineered wood brand in the marketplace and we think Theres room to run there and working really hard to get more supply and we think there is other categories.
That we've been able to introduce some some pretty cool products under our private label brands and our private brands are Poland's brands and other things. So we think there's other opportunities in our core categories of course breast two categories to explore.
Expanding and offering new private label products.
Okay and on that note are in your efforts to grow the specialty business, what I think historically people people investors would've thought of Bluelinx is maybe a tilt.
Tilted heavily to new construction, but you guys have grown in the specialty business quite a bit in some of those categories like decking siding or more tilted towards R&R do you have a sense or an estimate of what your kind of mix.
Mix is between new construction and R&R now that that you guys have changed so much in the last couple few years.
Yes, we did some work on this within the last year or so and we you know based on our data where approximately 45% R&R for only 40% new construction, so actually a little bit tilted toward R&R as a whole.
And then and then the rest kind of commercial multifamily et cetera.
That's where we stand.
Based on our current view of that.
Perfect and then a lot of last one for me I'm going to sneak one in if I could so.
If you could help us the first month of the second quarter. The structural gross margins I think it said there were high single digits. That's.
Sort of.
Unbelievable for lack of a better.
Word out how.
Has something changed in the market that allows you even in declining.
Commodity price environments to put forth you know kind of.
Table are normal.
The margin profile, I guess said differently I kind of thought that you know even even with your.
For programs and different things you guys have in place to centralize that that with prices going from 1400 sub 1000 over the course of a month it would be tough for you to have a positive margin much less be sort of where you've historically been in stable markets.
Yes, well, we've ribbon we continued to refine our approach around managing our commodity inventory. We don't just you know we continue to rethink and and look at it and improve we have we have weekly calls and we've have done that since the biggest middle of 2020, but we continue to think it through and I think specifically this quarter.
We really even brought it even further and upped our game around continuing to keep very lean inventory and still being able to serve our customers and.
That number marks on the on the call as well, we said in our specialty inventory, it's really closer to 85% now 15% commodity that's a big improvement even from just a few months ago, where we said commodities closer to 20% to 25%. So we continue to just refine and improve and I think that's shown you know we got off our inventory.
Very quickly and and then the market did stabilize to be fair, a pretty quickly as well. So so yeah. So right around or what are the margin rate that we've typically sat as a more normalized margin rate for us with a commodity business right now.
Great very helpful. Thanks, guys and congrats on results.
Our next question comes from Kurt Yinger with D. A Davidson. Please proceed.
Great. Thank you and good morning, everyone.
Just wanted to start off within the specialty segment on the comment regarding kind of shifting volume towards higher margin categories could you maybe just add some color around what that looks like from a product perspective, and how much of that is kind of market and customer driven versus your own inter.
All initiatives.
Well I'll start and I'll, let do I add on to that as you know our general volume changes, we've seen are upticks, and mostly siding and millwork, where we're able to get a little more supply and to be able to kind of improve our share there.
Typically AWP is also I've been a mix shift over the last several months, however, where it's a little tighter from a supply perspective, so it's a little more flat than than the other two categories. We've spoken about and and then just as an overall perspective like sequentially is it like from Q4 to Q1, we saw.
And overall, 8% volume across all almost all the categories. So so yeah. It's just an intentional focus on these key categories as core for our business as we continue to talk about you know focusing on the specialty products side of the.
Aside of the product line, so I wish it was yeah.
I think Kelly Kelly nailed it.
We're being really really intentional and aligning the entire organization around the areas of the business that we want to drive growth from a product perspective, and also markets right. So we've.
We've had some opportunities as we have gotten a little bit more volume to really lean into some programs expanding there is that availability across some additional branches and locations, which is contributing to what you see and we're going to continue to kind of drive that with energy over the course of the year.
Got it Okay. That's helpful and then.
Just thinking about the impact of price on the specialty segment over the next few quarters, excluding maybe cedar and some of the other kind of industrial products that may be.
Kind of tangential to commodities any overall range, you're thinking about in terms of average price inflation in 2022.
You know right.
Now.
They unfortunately don't have a good view of that all I can tell you is that currently we have been able to sustain the price mix and we've seen continued price hikes from the end of 2020, we continue to stay at sustained that pricing and in fact, we saw.
Little bit more going into even in this past quarter. So from what we see we don't see any abatement in the near term.
As it relates to pricing of course, we're cognizant and monitoring the macro environment, just like everybody else says certainly, but we haven't seen it yet.
Okay.
Got it Alright, and then you know theres been a couple of different comments in terms of operational improvements and commercial excellence focus I was hoping you can maybe just provide a few examples of wins, you've seen or been able to achieve there over the last couple of quarters.
Yeah. So you know.
I'll talk about that in a couple of different areas.
Things that I've been really really pleased to see if the team really understanding and making sure we have good.
Opportunities relationships with some of our larger customers, particularly on the national account side between the large original customers. So we've been able to put together some programs that really speak to their needs a bit more specifically around certain products that we've been able to offer.
So in services that we've been able to offer.
Addition to the products that leverage our expertise and leverage our capabilities.
Had some nice wins in most of our regions around that.
I'll, probably talk about that a little bit more detail at our upcoming Investor Day, and then in just terms of how we're running the business really really driving standard processes and approaches.
At our best practices across all of our locations as it relates to how we manage our inventory how we price, making sure there is consistency and clarity and good visibility around deviations in managing that appropriately and also around safety, just making sure that from a safety perspective center.
Very proud of.
I think as a contributor to efficiency and capacity, making sure we're driving that in a consistent way across their organization than having metrics that are consistent and common that we hold people accountable to and make sure we're seeing progress so.
Lots of things on the commercial side on the operational side and again I still think we're in the early days of the work we're doing to continue to make bluelinx domestic could be.
Okay, Alright, I appreciate that and then just my last one kind of a bigger picture question I mean, the balance sheet and liquidity has drastically improved over the last couple of years, you're increasing investments back into the business when you speak with suppliers and customers.
Do you think that's had an impact on how they view bluelinx as a partner.
And when you think about the competitive landscape and trying to align yourself with the best brands and products do you think the current state of the business puts you in a better position to attract those premium brands to the platform.
Yeah, I think I think the team has done a really really good job of driving performance throughout the business and we've also really continue to drive a high level of engagement with customers and with vendors and Thats been recognized I've had the opportunity now to meet with.
So all of our top customers in pretty much most of our top suppliers and visit them and spend time with them and they've referenced that.
So we're excited about that we feel good about that but the work is not yet done we still have I think meaningful opportunities to continue to grow our wallet share with their big customers and be even a bigger partner to the best brands in the industry and that's what we're focused on.
Got it okay, well I appreciate all the color and I'll turn it over guys. Thanks.
Thank you.
Our next question comes from Jeff Stevenson Loop capital. Please proceed.
Hi, Thanks for taking my questions today, and congrats on the great quarter.
Thanks, Josh.
Sure. Yeah. My first question is just around the decision to increase the share repurchase authorization by 100 million and included yes, or just wondering how that came about because previously you held off on buying back shares in the back half of last year, but the market volatility just make current valuation levels.
To load ignore.
Okay.
Yes again, we.
We are really really trying to drive a thoughtful and disciplined approach to capital allocation as we've kind of talked about.
And we felt that with the performance that we were delivering in the business and as we were obviously ramping up our organic investments.
Taking that up a fair amount over the past.
A few quarters.
We're continuing to be really thoughtful and build a really nice pipeline Sean is in a good doing good job on the M&A side and we also wanted to make sure that we would be opportunistic because we've spent the past and also move with pace. Once we decided to think about.
Returning capital to shareholders all of those things came together.
Great Great engagement and support from our board and we still think and with the liquidity that we have in the year, but we expect over the next couple of years. It doesn't restrict our ability to continue to invest in the business. Another another another way so felt like the right thing to do and really excited about getting that out into the marketplace.
Great.
Helpful. And then I just wanted to touch on our structural products volume growth given your playbook of running lower inventory levels and using consignment to limit commodity risk I'm just wondering how.
Volumes were in the first quarter and if we should expect them to lag on a year over year basis moving forward.
Given the a the lower inventory levels.
Yes so.
So we did so the year over year volume change as it is a slight decrease and as really doesn't that last few quarters have been decreased this year every year.
You know as we manage the inventory we're keeping it lower we're more focused on driving volume growth on our specialty side, where we're absolutely supporting the commodity structural business and supporting our customers and the best way.
But we have given a little bit up on the volume side to really manage and balance the risk associated with the with the commodity market.
Yeah.
Got it and then shifting to the specialty side, you had increased both sequentially and year over year on the inventory side was this just the opportunity that I'm sure you have enough product on hand, and a strong demand environment or was there another reason for that.
Well year over year with a slight decrease with with increases specifically in key categories, such as the nowhere exciting that I had mentioned earlier sequentially. We had a nice increase and an 8% increase and all of that is really it's just kind of shifting around depending on the allocation of supply that we have.
The demand is good the market's really good still good right now for these products and I think we're executing really well, so where we're making the most of what we've got.
Okay. Thank you.
Thanks, Jeff as Ryan might look like.
I would like to thank you everyone.
Yeah. Thank you so much this.
This is Ryan Taylor VP of Investor Relations.
That concludes our question and answer session for today's call. We really appreciate everybody joining us today. If you have any follow up questions. Please feel free to reach out to Alexandra and myself.
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