BlueLinx Provides Business Update Regarding the Impact of COVID-19
BlueLinx Holdings Inc. (“BlueLinx” or the “Company”), a leading distributor of building and industrial products in the United States, provided an update on actions that it is taking to strengthen the Company’s operating position in response to the COVID-19 pandemic.
“The pandemic has rapidly evolved, but we are evolving with it,” said Mitch Lewis, President and Chief Executive Officer. “We began preparing for the pandemic in late February, and in early March we implemented new policies and procedures to protect our associates, serve our customers, and support our suppliers. We then moved quickly to develop plans and take actions that should give the Company the financial and operating flexibility necessary to provide long-term value for our stockholders and other stakeholders.”
“All states where we operate have designated our business as ‘essential’, and we are continuing to operate our business and provide our customers and suppliers with the same level of service and commitment as before. While the next several months hold a great deal of uncertainty, we feel confident we are taking the necessary steps to continue to support our country’s infrastructure needs as we navigate these challenging circumstances. Also, with our core values of continuous improvement, teamwork, and integrity front and center, we believe we can weather the storm.”
Protecting Our Employees
“First and foremost, our concern is for the safety and well-being of our employees and their families and communities,” said Mr. Lewis. “We formed a cross-functional COVID-19 Disaster Response Team in February and implemented protocols consistent with the Centers for Disease Control and Prevention and local guidance that include enhanced cleaning and disinfecting procedures, social distancing guidelines, no travel mandates, no contact rules, visitor guidelines, no gathering directives, enhanced safety procedures for drivers, and mobile work for employees whose work can be done remotely. We also developed rapid response procedures for presumptive and confirmed COVID-19 cases.”
Actions to Provide Greater Financial Flexibility
Term Loan Amendment
The Company is highly confident that it will meet its first quarter leverage ratio covenant obligation under its term loan in light of the anticipated strength of its first quarter results and the recent steps taken to ensure efficient and effective operations. In addition, on April 1, 2020, the Company amended its term loan to provide greater financial flexibility by increasing the leverage ratio covenant levels in the second and third quarters of 2020 to 8.75:1.00 from 6.50:1.00 and 6.00:1.00, respectively. No other material changes were made to the facility and no fees were paid for this modification.
As of April 1, 2020, the term loan principal balance was reduced to approximately $69 million. As previously announced, as a result of the February 2020 term loan amendment, the Company will no longer be subject to the quarterly leverage ratio covenant when the principal balance of the term loan is less than $45 million. If the Company determines to make the approximate $24 million reduction in principal to eliminate the leverage ratio covenant, it can do so through proceeds from additional real estate transactions and asset sales, as well as voluntary prepayments using cash on hand or funds from its revolving credit facility.
The Company has also developed plans designed to reduce its cost structure, strengthen its balance sheet, and further increase liquidity in response to the COVID-19 pandemic. Initial steps taken to reduce operating costs include:
– Paused all hiring
– Limited all non-essential spending
– Substantial headcount and variable operating expense reductions correlating to local market demand declines
– Furloughed approximately 15% of corporate workforce
– Reduced or eliminated executive and key management base salaries for the next six months
– Maximizing working capital efficiency to enhance liquidity for operations
First Quarter Net Sales and Excess Availability
The Company announced that for the first quarter ended March 28, 2020, preliminary net sales are expected to be approximately 9% higher than the prior year period when excluding the impact of first quarter 2019 net sales attributable to the discontinued legacy Cedar Creek siding line. This improvement reflects increased activity and demand through the first quarter which began to diminish in the second half of March.
Excess availability, including cash on hand, at quarter end is estimated to be between $95 – $100 million, providing the Company with a solid liquidity position as it enters the second quarter.
The Company has not experienced any significant supply chain disruptions as a result of the COVID-19 pandemic. As of the end of March, the Company’s supply chain remained intact in all material respects.
First Quarter 2020 Earnings Call
The Company expects to provide further updates and results on its operations and business conditions during its first quarter earnings call and webcast, which is scheduled for Wednesday, May 6, 2020, at 10:00 a.m. Eastern Time. The Company’s press release announcing its financial results will be made available after the market closes on Tuesday, May 5th, under “Press Releases” in the Investor Relations section of the BlueLinx website, at www.BlueLinxCo.com.
Participants can access the live conference call via telephone at (877) 873-5864, using Conference ID # 7594658. Investors will also be able to access an archived audio recording of the conference call for one week following the live call by dialing (404) 537-3406, Conference ID # 7594658. A live webcast of the conference call and accompanying materials will also be available and can be accessed by visiting the “Webcasts and Presentations” section of the Company’s website. You can access this information by going to www.BlueLinxCo.com and selecting “Investors” from the options at the top of the page and then “Webcasts & Presentations” from the drop-down menu. An online replay will be archived and available at the same site shortly after the webcast is complete.
About BlueLinx Holdings Inc.
BlueLinx (NYSE: BXC) is a leading wholesale di tributor of building and industrial products in the United States with over 50,000 branded and private-label SKUs, and a broad distribution footprint servicing 40 states. BlueLinx has a differentiated distribution platform, value-driven business model and extensive cache of products across the building products industry. Headquartered in Marietta, Georgia, BlueLinx has over 2,200 associates and distributes its comprehensive range of structural and specialty products to approximately 15,000 national, regional, and local dealers, as well as specialty distributors, national home centers, industrial, and manufactured housing customers. BlueLinx encourages investors to visit its website, www.BlueLinxCo.com, which is updated regularly with financial and other important information about BlueLinx.
Mary Moll – Investor Relations – firstname.lastname@example.org – (866) 671-5138
Source: BlueLinx Holdings, Inc.