BlueLinx Reports Strong Fourth Quarter Results Completes Historic 2021 with All-Time High Profitability
BlueLinx Holdings Inc. (“BlueLinx”), a leading U.S. wholesale distributor of building products, today reported financial results for the three months and twelve months ended January 1, 2022.
Fourth Quarter 2021 Highlights
(all comparisons versus the prior-year period unless otherwise noted)
- Net sales of $973 million, an increase of 12%
- Gross margin of 19.9%, up 550 basis points
- Diluted earnings per share of $7.30, an increase of 258%
- Adjusted EBITDA of $112 million, up $73 million or 190%
- Net leverage ratio of 1.1x, down from 3.5x
- Completed $300 million offering of 6% senior secured notes due 2029
Full Year 2021 Highlights
(all comparisons versus the prior-year period unless otherwise noted)
- Net sales of $4.3 billion, increased 38%
- Gross margin of 18.2%, up 280 basis points
- Diluted earnings per share of $29.99, increased 251%
- Adjusted EBITDA of $464 million, up $294 million or 172%
- Operating cash flow of $145 million, increased 164%
- Net debt of $490 million, reduced 19% or $115 million
- Available liquidity of $432 million as of January 1, 2022
“We finished 2021 with an outstanding fourth quarter, highlighted by double-digit sales growth and record gross margin, led by specialty product sales which grew 29% year-over-year and comprised 66% of total sales in the quarter. Our Q4 operational performance further demonstrates our ability to capitalize on strong demand amid on-going supply constraints and continued volatility in wood-based commodity prices,” said Dwight Gibson, President and CEO of BlueLinx.
“We remain committed to fostering a performance-based culture to drive sustainable, profitable growth through all economic cycles. On this front, we took decisive action last year to emphasize growth in higher value specialty products, drive a disciplined approach to structural product inventory, and leverage centralized purchasing and pricing teams. These actions were underscored by our second half 2021 performance.”
“Looking back at our accomplishments for the full year, I am incredibly proud of our team,” continued Gibson. “It was a remarkable year during which we achieved record profitability, recapitalized our balance sheet and significantly improved our operational performance. Net sales grew 38% to $4.3 billion, gross margin expanded 280 basis points to 18.2% and adjusted EBITDA increased 172%, or $294 million, to $464 million.”
“Additionally, we generated $131 million of free cash flow and issued $300 million of senior secured notes while reducing net debt by nearly 20%. We ended the year in a strong, flexible financial position, with our net leverage ratio at 1.1x. We have ample liquidity to invest in our business and we are poised to create value through prudent, disciplined capital allocation.”
“At the outset of 2022, our operating execution remains strong and trends in the U.S. housing industry continue to be favorable. As we look to the future, we will continue to improve operational efficiency, leverage our scale and strategically expand our business. We are focused on driving transformational growth and we are incredibly excited about our future,” concluded Gibson.
Fourth Quarter 2021 Financial Performance
For the three months ended January 1, 2022, BlueLinx generated net sales of $973 million, an increase of $108 million, or 12%, when compared to the prior-year period. This increase was driven by 29% growth in net sales of specialty products, partially offset by a 10% decline in net sales of structural products. Gross profit was $194 million, an increase of $69 million, or 56% over the prior year period. Gross margin expanded 550 basis points to 19.9%.
Net income of $74 million increased 271% as compared to $20 million in the prior-year period. The increase in net income was driven by sales growth in specialty product categories, gross margin expansion across both specialty and structural products, and a $5 million, net of tax, non-recurring gain on the sale of property recorded during the quarter.
Diluted earnings per share was $7.30, an increase of 258% as compared to $2.04 per diluted share in the prior year period.
Adjusted EBITDA was $112 million, or 11.5% of net sales, as compared to $39 million, or 4.5% of net sales in Q4 2020.
Operating cash flow was $18 million, including a $77 million net working capital investment, of which $52 million related to inventory, largely to support future specialty product sales. Cash capital investments were $9 million and primarily related to upgrading the company’s trailer fleet and, to a lesser extent, maintenance at distribution branches. Free cash flow, which excludes these investments, was $9 million for the fourth quarter.
Net sales of specialty products, which includes engineered wood, industrial products, cedar, moulding, siding, metal products and insulation, were $641 million, an increase of $143 million, or 29%, over Q4 2020. Specialty products gross profit was $140 million, up $54 million, or 62% over the prior year period. Specialty products gross margin expanded 450 basis points to 21.9%. The growth in net sales and profitability is attributable to disciplined pricing strategies along with continued demand for specialty building products amid ongoing supply constraints.
Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, were $331 million, a decrease of $35 million, or 10%, versus the prior year period. This decline was primarily a result of the company’s disciplined and strategic approach to mitigate volatility in commodity-based wood products through lean structural products inventory. Despite the decline in sales, structural products gross profit increased $16 million, or 42%, over the prior year period to $53 million and gross margins expanded 590 basis points to 16.1%, reflecting price escalation in commodity lumber and panels throughout the quarter.
Full Year 2021 Financial Performance
For the twelve months ended January 1, 2022, net sales were $4.3 billion, an increase of $1.2 billion, or 38%, over the prior year. Gross profit was $778 million, an increase of $301 million, or 63% over the prior year. Gross margins expanded 280 basis points to 18.2%.
Net income of $296 million increased 266% as compared to $81 million in the prior year. The increase in net income was driven by sales growth and gross margin expansion across both specialty and structural product categories.
Diluted earnings per share was $29.99, an increase of 251% as compared to $8.55 per diluted share in the prior year period.
Adjusted EBITDA was $464 million, or 10.8% of net sales, as compared to $170 million, or 5.5% of net sales in 2020.
Operating cash flow was $145 million, which included a net working capital investment of $178 million, of which $146 million related to inventory, largely to support future specialty product sales. Cash capital investments were $14 million and primarily related to upgrading the company’s trailer fleet and also upgrading and maintaining distribution branches. Free cash flow, which excludes these investments, was $131 million.
Net sales of specialty products were $2.5 billion, an increase of $655 million, or 35%, year-over-year. Gross profit was $562 million, up $242 million, or 76% year-over-year. Specialty products gross margin expanded 520 basis points to 22.3%. The sales growth and gross profit improvement were attributable to disciplined pricing strategies, robust demand for specialty building products amid ongoing supply constraints, and a higher margin product mix.
Net sales of structural products were $1.8 billion, an increase of $525 million, or 43%, year-over-year. This growth was primarily the result of increased average prices for commodity lumber and panels as compared to the prior year. Structural products gross profit was $217 million, up $59 million, or 37%, year-over-year and gross margin was 12.3%.
Balance Sheet Update
On October 18, 2021, the company completed an offering of $300 million aggregate principal amount of its 6.0% Senior Secured Notes due 2029. In conjunction with this transaction, the capacity under the company’s revolving credit facility was reduced to $350 million, down from $600 million. The majority of the proceeds of the offering were used to pay down all outstanding borrowings under the Company’s revolving credit facility.
As of January 1, 2022, total debt was $575 million, comprised of $300 million senior secured notes and $275 million of finance lease obligations. Cash on hand was $85 million and net debt was $490 million. The net leverage ratio, calculated as the ratio of net debt to trailing twelve month Adjusted EBITDA, was 1.1x, down from 3.5x in the prior year period.
Available liquidity was $432 million, comprised of $85 million of cash on hand and $346 million of borrowing capacity on the company’s revolving credit facility. The company believes it has sufficient liquidity to support the ongoing operations of the business and evaluate opportunistic capital allocation actions.
Culture and Strategic Initiatives
The company is committed to driving a culture of profitable growth within new and existing product lines and geographies, while positioning the company for long-term value creation. The following initiatives represent key areas of leadership’s focus:
- Foster a performance-driven culture committed to profitable growth. This includes enhancing the employee and customer experience; accelerating organic growth within specific product and solutions offerings where the company is uniquely advantaged; and deploying capital to drive sustained margin expansion, grow cash flow and maintain continued profitable growth.
- Migrate sales mix toward higher-margin specialty product categories. The company intends to pursue a revenue mix increasingly weighted toward higher-margin, specialty product categories such as engineered wood, moulding, millwork, decking and industrial products. Additionally, the company intends to expand its value-added service offerings designed to simplify complex customer sourcing requirements, together with marketing, inventory and pricing services afforded by the company’s national platform.
- Maintain a disciplined capital structure and pursue high-return investments that increase the value of the company. The company intends to maintain a disciplined capital structure while investing in its business to modernize and upgrade its tractor, trailer and forklift fleet and distribution branches and to improve operational performance. The company also continues to evaluate potential acquisition targets that complement its existing capabilities, grow its specialty products business, increase customer exposure, expand its geographic reach, or a combination thereof.
Through the first seven weeks of 2022, market conditions in the U.S. housing industry remained generally favorable with robust demand across most building product categories and prices for commodity wood-based products above Q4 2021 average pricing. These market dynamics in combination with the company’s strategic pricing actions and continued disciplined approach to managing wood-based commodity inventory have positively benefited the first quarter gross margin. On a first quarter-to-date basis gross margin for both specialty and structural product categories exceeded 20%.
For the full fourth quarter results, click here.
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.
Seth Freeman – VP, Marketing and Communications – Seth.Freeman@bluelinxco.com
Source: BlueLinx Holdings, Inc.