BlueLinx Announces Fourth Quarter and Full Year 2020 Results
BlueLinx Holdings, Inc. (“BlueLinx” or the “Company”), a leading U.S. wholesale distributor of building products, today reported financial results for the three and twelve months ended January 2, 2021.
Fourth Quarter 2020 Results
(all comparisons versus the prior-year period unless otherwise noted)
– Net sales increased $252 million, or 41%, to $865 million
– Gross margin 14.4%, an increase of 90 basis points
– Net income of $20 million was $30 million higher than prior period
– Adjusted EBITDA was $39 million, compared to $11 million
– Excess availability and cash on hand $184 million, an increase of $104 million
Full-Year 2020 Results
(all comparisons versus the prior-year period unless otherwise noted)
– Net sales increased $460 million, or 17%, to $3.1 billion
– Gross margin increased 190 basis points, to 15.4%
– Net income of $81 million, an increase of $99 million
– Adjusted EBITDA of $170 million improved by $99 million
– Reduced total bank debt by $142 million, or 30%
“The fourth quarter was a fantastic conclusion to a historic year for BlueLinx, one where improved execution, pricing discipline, effective inventory management and market tailwinds resulted in record financial performance for the Company and significant debt reduction,” said Mitch Lewis, President and CEO. “We again recorded significant increases in net sales along with strong margins as current market conditions remain favorable, supported by strong demand for new residential construction and increased home renovation activity. Our operational improvements that began in 2019 continued to yield significant benefits as they led to excellent customer service, sales growth, margin expansion and disciplined working capital management. We are enthusiastic about the year as we are motivated to take advantage of our greater financial flexibility and build on our success in 2020.”
Supply-demand imbalances within the commodity wood markets have continued to persist into the first quarter of 2021, resulting in elevated prices for commodity lumber and panels,” continued Lewis. “While higher commodity wood prices have benefited our business over the near-term, we capitalized on initiatives to enhance margins and profitability while taking preemptive actions to mitigate potential downside commodity price risk. As supply conditions normalize, we anticipate commodity wood prices reverting back toward long-term market averages.”
“Our 2020 financial performance was exceptional, and the transformation of our balance sheet provides the opportunity to increasingly invest in and support the growth of the Company,” stated Kelly Janzen, Chief Financial Officer. “We ended the fourth quarter with $104 million more excess availability under our revolving credit facility compared to last year and a net leverage ratio of 3.5x. On March 1, 2021, we reduced outstanding indebtedness under our term loan by an additional $25 million, leaving a remaining term loan balance of approximately $18 million.”
Fourth Quarter 2020 Results
The Company reported net sales of $865 million in the fourth quarter, compared to $613 million in the prior year period and gross profit of $124 million, compared to $83 million in the prior year period. Fourth quarter net sales for specialty products, which includes products such as engineered wood, cedar, moulding, siding, metal products and insulation, accounted for $498 million of net sales in the period with a related gross margin of 17.4% which increased 130 basis points compared to the fourth quarter of 2019. Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, were $367 million, which we believe was a result of continued wood-based commodity price inflation. The impact of wood-based commodity price inflation is estimated to have increased structural product net sales by approximately $105 million to $115 million for the quarter. Structural product gross margin increased by 150 basis points year over year to 10.2% for the fourth quarter.
The Company reported net income of $20 million in the fourth quarter, or $2.04 per diluted share, compared to a net loss of $10 million, or $(1.09) per diluted share, in the prior-year period. Excluding the impact of non-recurring items, including approximately $4 million of integration and restructuring expenses in 2019, net income increased by $24 million, or $2.53 per diluted share, on a year-over-year basis. In addition, the fourth quarter 2020 effective tax rate was 0%, due primarily to the release of valuation allowances associated with state net operating losses.
Adjusted EBITDA, a non-GAAP measure, was $39 million in the fourth quarter, compared to $11 million in the prior-year period. Investments in key strategic inventory categories such as cedar, siding and millwork contributed to cash used in operating activities of $19 million in the fourth quarter, while cash provided by operating activities during the prior year period was $27 million.
Full-Year 2020 Results
The Company recorded net sales of $3.1 billion and gross profit of $478 million for 2020 compared to $2.6 billion of net sales and $357 million of gross profit in the prior year period. Full-year specialty products net sales, which includes products such as engineered wood, cedar, moulding, siding, metal products and insulation, accounted for $1.9 billion for the year and specialty gross margin was 17.1%, an increase of 120 basis points when compared to last year. Net sales for structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, were $1.2 billion and the impact of the record wood-based commodity price inflation occurring in the second half of the year is estimated to have increased net sales by approximately $210 million to $230 million. Structural product gross margin increased 410 basis points year over year, also as a result of the wood-based commodity inflation, from 8.7% to 12.8%.
The Company reported net income of $81 million in the 2020 fiscal year, or $8.55 per diluted share, compared to a net loss of $18 million, or $(1.89) per diluted share, in the prior-year period. 2020 net income benefited from $3 million, or $0.32 per diluted share, of non-recurring items, versus a negative impact from $10 million of non-recurring items, or ($1.06) per diluted share in the prior year period. Excluding these non-recurring items, net income increased by $86 million, or $9.05 per diluted share, on a year-over-year basis, when compared to the fiscal year 2019.
Adjusted EBITDA, a non-GAAP measure, was $170 million for the 2020 fiscal year, an increase of $99 million compared to $71 million in the prior-year period. Cash provided by operating activities was $55 million for 2020, compared to cash used in operating activities of $10 million in the prior-year period. The increase was primarily attributable to the year-over-year increase in Adjusted EBITDA offset by an increase in accounts receivable attributable to a significant increase in December sales compared to the prior year period.
The Company remains committed to strategic priorities that include sales growth, margin expansion, improved operating efficiency, and a disciplined approach for capital allocation.
Sales Growth and Margin Expansion
The Company increased the full year total net sales by nearly 10% year over year, excluding the estimated impact of wood-based commodity inflation, due mainly to improved pricing discipline. In addition, the Company expanded its national sales leadership, and added new resources to the product category management team, including general manager roles with overall responsibility for high growth categories including cedar and outdoor living during 2020.
Improved Operating Efficiency
The Company reduced fourth quarter selling, general and administrative as a percent of net sales by 160 basis points on a year over year basis to 10.3% of net sales. 30 basis points of that improvement are attributable to cost out actions, primarily labor reductions occurring earlier in the year. Actual selling, general and administrative costs for the fourth quarter increased year over year as a result of $12 million in variable incentives that were a direct result of the strong financial performance as well as the inclusion of an additional fiscal week in 2020. The Company continues to contain its selling, general and administrative costs while increasing its investments in its fleet, facilities, and technologies to improve productivity. The Company also made improvements in working capital management throughout the year, reducing Days Sales of Inventory (“DSI”) by 18 days in the fourth quarter when compared to the prior year period.
Disciplined Capital Allocation
During the twelve months ended January 2, 2021, the Company meaningfully reduced net leverage from 9.2x to 3.5x and expanded excess availability on its revolving credit facility to $184 million. The Company reduced bank debt by $142 million, which was made possible through the Company’s strong performance and by completing 15 sale leaseback transactions for net proceeds of approximately $80 million during the year. On March 1, 2021, the Company reduced outstanding indebtedness under its term loan by an additional $25 million, leaving a remaining term loan balance of approximately $18 million.
Market and Business Outlook
Domestic new residential construction and residential home renovation markets were robust during the fourth quarter 2020 and remain strong into the first quarter 2021.
– Single-family housing starts, a key economic indicator with a high historical correlation to the Company’s business, continue to show strength and increased nearly 30% on a quarter-over-quarter basis, and on an annual basis, were at the highest level since 2007.
– Annualized single-family housing starts for 2020 are approximately 42% below the peak cyclical levels and remain below the last 50-year average. Total U.S. monthly supply of homes remained constrained, with housing inventory at the end of the fourth quarter at approximately 26% below the 20-year average.
– February 2021 Builders’ Confidence Index, according to the National Association of Home Builders (“NAHB”), while down slightly from the all-time highs experienced in November, remains positive, which indicates a likelihood of a strong first half of 2021.
– Existing home sales and remodeling expenditures continued to increase on a quarter-over-quarter basis. According to the NAHB, the Remodeling Market Index (“RMI”) remains strong with the fourth quarter 2020 index equal to 79, an increase of 65% when compared to the first quarter RMI of 48.
For the full fourth quarter results, click here.
About BlueLinx Holdings
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 40 states, and the strength of a locally focused sales force, we distribute our comprehensive range of products to over 15,000 national, regional, and local dealers, specialty distributors, national home centers, and manufactured housing customers. BlueLinx is able to provide 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.
Mary Moll – Investor Relations – firstname.lastname@example.org – (866) 671-5138
Source: BlueLinx Holdings, Inc.