BlueLinx Announces Record First Quarter 2022 Profitability

BlueLinx Holdings Inc. (“the company”), a leading U.S. wholesale distributor of building products, announced today results for the first quarter 2022.

First Quarter 2022 Highlights
(all comparisons are versus the prior year period)

• Net sales increased $277 million, or 27%, to $1.3 billion
• Gross margin of 22.3%, up 470 basis points
• Diluted earnings per share of $13.19, an increase of 110%
• Adjusted EBITDA of $202 million, up $96 million, or 90%
• Net Leverage of 0.9x and available liquidity of $421 million
• Increased share repurchase authorization to $100 million, including $60 million accelerated share repurchase

“I’m extremely proud of the BlueLinx team and our continued strong execution which contributed to record first quarter profitability. Once again, we demonstrated the ability to capitalize on continued robust demand for building products while navigating on-going supply constraints and volatility in wood-based commodity prices. Net sales grew by approximately 27% year-over-year, and we delivered adjusted EBITDA of $202 million and adjusted EBITDA margin of over 15%, both all-time highs on a quarterly basis for BlueLinx.”

“Notably, our growth was led by specialty products where net sales grew 36% and gross margins improved 470 basis points to 24%. Nearly two-thirds of our gross profit was generated from sales of specialty products, consistent with our strategy to aggressively grow that part of our business.”

“We currently believe near-term fundamentals for the U.S. housing industry are healthy despite the recent rise in mortgage rates and broad-based inflation. Specifically, we believe high levels of home equity, housing turnover, and aging housing stock will continue to support growth in repair and remodel activity and the low supply of available homes will continue to drive investment in both existing and new homes.”

“Following a detailed review of our multi-year capital allocation plans, our Board of Directors has increased our share repurchase authorization to $100 million, including a $60 million accelerated share repurchase agreement that will begin executing this week. These actions demonstrate confidence in our long-term growth strategy, continued improvement in our execution, and commitment to delivering shareholder value through disciplined capital allocation. We remain focused on driving sustained, profitable growth and we are excited about our future,” concluded Dwight Gibson, President and CEO of BlueLinx.

Details of the company’s increased share repurchase authorization and accelerated share repurchase agreement can be found in a separate news release also issued today.

First Quarter 2022 Financial Performance

In the first quarter, net sales were $1.3 billion, an increase of $277 million, or 27% year-over-year. Gross profit was $291 million, an increase of $111 million, or 61% over the prior year period and gross margin expanded 470 basis points to 22.3%. Selling, general and administrative (“SG&A”) expenses increased $16 million, or 21%, year-over-year to $91 million, which is 7% of net sales and flat to the prior year. The increase in SG&A was due primarily to higher variable incentive compensation and, to a lesser extent, increased delivery and logistics costs. Interest expense decreased $5 million, or 30%, to $11 million due mainly to the write off of debt issuance costs related to the extinguishment of the company’s former Term Loan Facility in the prior year period. Net income was $133 million, or $13.19 per diluted share, versus $62 million, or $6.28 per diluted share, in the prior year period. Adjusted EBITDA was $202 million, or 15.5% of net sales, as compared to $107 million, or 10.4% of net sales in Q1 2021.

The increase in net sales and profitability versus the prior year period was driven by continued robust demand for building products amid on-going supply constraints, increased wood-based commodity prices and improved operating performance. Notably, the growth in net sales and gross profit was primarily attributable to specialty products, consistent with the company’s strategy to increase the percentage of net sales in specialty products categories.

Net sales of specialty products, which includes products such as engineered wood, siding, moulding and millwork, outdoor living, specialty lumber and industrial products, increased $205 million, or 36%, to $768 million in the first quarter. Gross profit from specialty product sales was $184 million, an increase of $76 million, or 70%, year-over-year. Gross margin on specialty product sales was 24.0%, an increase of 470 basis points over the prior year period. The net sales growth and improved profitability was primarily driven by continued strong demand for specialty building products in both new construction and repair and remodel projects, on-going supply constraints and strategic pricing actions.

Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, increased $72 million, or 16%, to $534 million in the first quarter due to continued strong demand for building products and increased wood-based commodity prices. Gross profit from structural product sales was $107 million, an increase of $35 million, or 49%, year-over-year. Gross margin on structural product sales increased 450 basis points to 20.0% reflecting increased pricing of wood-based commodities during the period, as well as our disciplined, lean approach to managing structural product inventory.

Net cash generated from operating activities was $2 million in the first quarter 2022 as compared to a net usage of $25 million in the prior year period. The increase in cash generated from operating activities was driven by the increase in net income, partially offset by increases in accounts receivable and inventory. During the period, the net working capital investment was $181 million, of which $157 million related to accounts receivable with the remaining related to the net impact of increasing inventory, primarily specialty products, partially offset by an increase in accounts payable. The net working capital investment in the first quarter reflects strong demand in the U.S. home building industry and also reflects the impact of increased pricing for sales of wood-based commodity products.

Cash capital investments were $2.5 million, primarily related to investments in our distribution branches and, to a lesser extent, upgrading the company’s fleet of rolling stock.  Free cash flow was ($0.3) million in the first quarter of 2022 as compared to ($26) million in the prior year period.

Second Quarter 2022 Update

Through the first four weeks of the second quarter 2022, specialty product margins were in the range of 23% to 24% and structural product margins were in the high single digits, reflecting sequential declines in the average price of wood-based commodities. Volumes across both specialty and structural product categories were generally consistent with first quarter levels.

The majority of the company’s profitability and cash is generated from sales of specialty building products and the company expects demand for specialty building products to remain relatively stable in the coming months. It also expects to continue to efficiently manage volatility in wood-based commodities, a capability the company has demonstrated over the past five quarters.

For the full first quarter results, click here.

About BlueLinx

BlueLinx (NYSE: BXC) is a leading U.S. wholesale distributor of residential and commercial building products with both branded and private-label SKUs across product categories such as lumber, panels, engineered wood, siding, millwork, metal building products, and other construction materials. With a strong market position, broad geographic coverage footprint servicing over 40 states, and the strength of a locally focused sales force, we distribute our comprehensive range of products to approximately 15,000 national, regional, and local dealers, specialty distributors, national home centers, and manufactured housing customers. BlueLinx provides a wide range of value-added services and solutions to our customers and suppliers. We are headquartered in Georgia, with executive offices located at 1950 Spectrum Circle, Marietta, Georgia, and we operate our distribution business through a broad network of distribution centers. BlueLinx encourages investors to visit its website, www.BlueLinxCo.com, which is updated regularly with financial and other important information about BlueLinx.

Contact:

Seth Freeman – VP Marketing & Communications – seth.freeman@bluelinxco.com

Source: BlueLinx Holdings, Inc.