BlueLinx Announces Second Quarter 2023 Results

BlueLinx Holdings Inc. (“BlueLinx” or the “Company”), a leading U.S. wholesale distributor of building products, today reported financial results for the three months ended July 1, 2023.

Second Quarter 2023 Highlights
(all comparisons are versus the prior year period unless otherwise noted)

• Net sales of $816 million, a decrease of $423 million
• Gross profit of $136 million, gross margin of 16.6% and specialty product gross margin of 19.1%
• Net income of $24 million, or $2.70 diluted earnings per share
• Adjusted net income of $26 million, or $2.91 adjusted diluted earnings per share
• Adjusted EBITDA of $49 million, 6.0% of net sales
• Operating cash generated of $64 million and free cash flow of $59 million
• Available liquidity increased to $765 million, including $418 million cash on hand
• Net debt of $153 million and net leverage ratio of 0.6x
• Completed $12 million of share repurchases

“During the second quarter, we maintained both our price and cost discipline to deliver solid results in a market that continues to be soft when compared to last year,” stated Shyam Reddy, President, and CEO of BlueLinx. “Our specialty product gross margins improved to just over 19%, and we generated operating cash of $64 million during the period, further strengthening our overall financial condition. I am very pleased with the team’s focus on our strategic initiatives and the quality of their execution,” continued Reddy. 

“The building products market is improving, and two step distribution will continue to play a meaningful role given our product mix and value proposition,” continued Reddy. “We remain focused on the execution of our growth strategy and consistent in our approach to capital allocation to drive long-term value creation. During the second quarter, we invested $5 million in capital expenditures and returned $12 million to shareholders through repurchases of the company’s common stock under our existing $100 million share repurchase program. Our liquidity is exceptional and at the end of the period, net leverage was 0.6x.”

Second Quarter 2023 Financial Performance

In the second quarter of 2023, net sales were $816 million, a decrease of $423 million, or 34% when compared to the second quarter of 2022. Gross profit was $136 million, a decrease of $66 million, or 33%, year-over-year, and gross margin was 16.6%, up 30 basis points from the same period last year.

Net sales of specialty products, which includes products such as engineered wood, siding, millwork, outdoor living, specialty lumber and panels and industrial products were $571 million, a decrease of $217 million, or 28% when compared to the second quarter of 2022. This decline was due to a combination of deflation and lower volume, primarily related to engineered wood products.   Gross profit from specialty product sales was $109 million, a decrease of $71 million, or 40% when compared to the second quarter of last year. Gross margin was 19.1% compared to 22.9% in the prior year period.

Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, decreased $207 million, or 46%, to $245 million in the second quarter. The decrease in structural sales was due primarily to the year-over-year declines in the average composite price of framing lumber and structural panels, which were 49% and 39% respectively. Gross profit from sales of structural products was $27 million, an increase of $6 million from the prior year period, and gross margin was 11.0%, up from 4.7% in the prior year period which was impacted by wood-based commodity price deflation and a lower of cost or market adjustment recorded that was not repeated during the current period.

Selling, general and administrative (“SG&A”) expenses were $88.8 million in the second quarter, $2.6 million lower than the prior year period. The year-over-year decrease in SG&A was due primarily to lower delivery costs and variable compensation, partially offset by the inclusion of incremental operating expenses related to our acquisition of Vandermeer Forest Products.

Net income was $24 million, or $2.70 per diluted share, versus $71 million, or $7.48 per diluted share, in the prior year period. Adjusted Net Income was $26 million, or $2.91 per diluted share compared to $73 million, or $7.63 per diluted share in the second quarter of last year.

Adjusted EBITDA was $49 million, or 6.0% of net sales, for the second quarter of 2023, as compared to $112 million, or 9.1% of net sales in the second quarter of 2022.

Net cash generated from operating activities was $64 million in the second quarter of 2023 and free cash flow was $59 million. The cash generated during the second quarter was driven by net income and a net benefit from working capital, primarily related to a reduction of approximately $30 million in inventory.

Capital Allocation and Financial Position

During the second quarter, BlueLinx invested $5 million of cash in capital investments used to improve its distribution facilities and upgrade its fleet. Additionally, the Company purchased approximately $12 million of the company’s common stock through open market transactions under its $100 million dollar share repurchase program, with $22 million remaining under the current authorization as of July 1, 2023. Under BlueLinx’s existing share repurchase authorization, the Company may repurchase its common stock at any time or from time to time, without prior notice, subject to prevailing market conditions and other considerations.

As of July 1, 2023, total debt was $571 million, consisting of $300 million of senior secured notes that mature in 2029 and $271 million of finance leases. Available liquidity was $765 million which included an undrawn revolving credit facility that had $346 million of availability plus cash and cash equivalents of $418 million. Net debt was $153 million, resulting in a net leverage ratio of 0.6x on trailing twelve-month Adjusted EBITDA of $259 million.  

Third Quarter 2023 Outlook

Through the first four weeks of the third quarter of 2023, specialty product gross margin was in the range of 18.5% to 19.5% with average daily volumes consistent with what we experienced during the second quarter of 2023. Structural product gross margin was in the range of 12% to 13% given recent increases in wood-based commodity prices with relatively similar average daily sales volumes compared to the second quarter of 2023.

For the full second 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, and industrial products. With a strong market position, broad geographic coverage footprint servicing 50 states, and the strength of a locally focused sales force, we distribute our comprehensive range of products to approximately 15,000 customers including national home centers, pro dealers, cooperatives, specialty distributors, regional and local dealers and industrial manufacturers. 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:

Noel Ryan – Investor Relations – investor@bluelinxco.com – (720) 778-2415

Source: BlueLinx Holdings, Inc.