BlueLinx Announces Second Quarter 2022 Results
BlueLinx Holdings Inc., a leading U.S. wholesale distributor of building products, announced results for the second quarter 2022.
Second Quarter 2022 Key Results
(all comparisons are versus the prior year period)
- Delivered third highest quarter ever in diluted Earnings Per Share, adjusted EBITDA, and Operating Cash
- Net sales of $1.2 billion, a decrease of 5% due primarily to wood-based commodity price declines
- Specialty product sales increased 17% to $788 million
- Gross profit of $201 million, a decrease of 20%
- Specialty product gross profit increased 9% to $180 million
- Net income of $71 million and diluted EPS of $7.48
- Adjusted EBITDA of $112 million, or 9.1% of net sales
- Generated $101 million of Operating Cash and $97 million of Free Cash Flow
- Net Leverage reduced to 0.9x and available liquidity increased to an all-time high of $451 million
“In the second quarter we delivered our third highest quarter ever in three key financial metrics with diluted EPS of $7.48, adjusted EBITDA of $112 million and operating cash of $101 million and continued to accelerate growth in our higher value specialty products, consistent with the long-term strategy we detailed at our investor day in June. We also maintained a strong balance sheet with net leverage at 0.9x and $451 million of available liquidity, an all-time high. We accomplished this in light of a dynamic macro-economic environment which saw steep declines in wood-based commodity prices during the period,” said Dwight Gibson, President and Chief Executive Officer of BlueLinx. “Our second quarter performance is a testament to our team’s focus, discipline, and quality execution.”
“In Q2, specialty product sales grew 17% year-over-year and represented 64% of total sales and specialty product gross profit grew 9% year-over-year and comprised over 85% of total gross profit. We reported structural product gross margin of approximately 5%, a solid result that reflects our ability to strategically manage inventory during a period in which wood-based commodity prices declined more than 50% from a high point in mid-March to a low point in late-June.”
“We are closely monitoring the macro-economic environment as broad-based inflation and the rapid rise in mortgage rates have put pressure on home affordability and new home starts. Given these developments, we anticipate a slowdown in the U.S. housing industry over the coming quarters. However, we believe the undersupply of homes, demographic shifts, repair and remodel activity and high levels of home equity, among other factors, will continue to support the broad residential housing market.”
“As such, we continue to execute our strategy to accelerate growth in specialty products, optimize productivity, invest in our human capital and drive performance. We are confident that this strategy, along with the talented team we have assembled, the performance-based culture we have established, and our disciplined approach to capital allocation will provide us with a significant opportunity to create compelling value for shareholders,” concluded Gibson.
Second Quarter 2022 Financial Performance
In the second quarter, net sales were $1.2 billion, a decrease of $69 million, or 5% year-over-year. Gross profit was $201 million, a decrease of $50 million, or 20%, year-over-year, and gross margin was 16.3%, down 290 basis points year-over-year. The net decrease in sales and gross profit reflects 17% growth in specialty product sales offset by a 29% decrease in structural product sales due primarily to significant declines in average prices for wood-based commodities as compared to the prior year.
Net sales of specialty products, which includes products such as engineered wood, siding, millwork, outdoor living, specialty lumber and industrial products, increased $113 million, or 17%, to $788 million in the second quarter. This growth was primarily driven by strategic pricing actions, offset partially by slightly lower volume when compared to the prior year where we saw historically strong demand. Gross profit from specialty product sales was $180 million, an increase of $15 million, or 9%, year-over-year and gross margin was 22.9% compared to 24.4% in the prior year period, primarily due to price volatility related to products such as treated lumber and panels.
Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, decreased $181 million, or 29%, to $452 million in the second quarter and gross profit from sales of structural products decreased $65 million, or 75%, year-over-year to $21 million. The decrease in structural sales and gross profit was due primarily to a significant decline in the average price of wood-based commodities. Gross margin on structural product sales was 4.7% in the second quarter, reflecting the impact from wood-based commodity price deflation and also a lower of cost or market adjustment recorded in the quarter.
Selling, general and administrative (“SG&A”) expenses were $91 million in the second quarter, flat to Q1 2022 and $4 million, or 5%, higher than the prior year period. The year-over-year increase in SG&A was due primarily to higher logistical expenses related to inflation in delivery costs along with strategic investments in the Company’s workforce. These increases were partially offset by a lower level of variable incentive compensation, including sales commissions.
Net income was $71 million, or $7.48 per diluted share, versus $113 million, or $11.61 per diluted share, in the prior year period. The $7.48 per diluted share included a $0.33 per share benefit as a result of lower shares outstanding due to the Company’s share repurchases during the first half of 2022.
Adjusted EBITDA was $112 million, or 9.1% of net sales, as compared to $166 million, or 12.7% of net sales in Q2 2021.
Net cash generated from operating activities was $101 million in the second quarter 2022 compared to $47 million in the prior year period. The increase in cash generated from operating activities compared to the prior year was driven primarily by a $74 million reduction in accounts receivable which benefited from wood-based commodity deflation during the period.
Free cash flow was $97 million in the second quarter of 2022 compared to $45 million in the prior year period.
Cash capital investments were $4.4 million in the second quarter of 2022, primarily related to investments to upgrade or enhance the Company’s distribution branches. Additionally, $2.3 million was invested into the fleet through equipment finance leases during the quarter.
In May, the Company increased its share repurchase authorization to $100 million and entered into a $60 million accelerated stock repurchase plan.
Third Quarter 2022 Update
Through the first four weeks of the third quarter 2022, specialty product sales volumes were consistent with the second quarter and gross margins were in the range of 22% to 23%. Structural product sales volumes were above second quarter levels with gross margins between 18% and 19%, which includes a ~900 basis-point benefit from the reversal of the full amount of the lower of cost or market adjustment recorded in Q2 2022. The Company will continue to evaluate market pricing for wood-based commodities and adjust accordingly at the end of each period.
For the complete press release, 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 & Communications – email@example.com
Source: BlueLinx Holdings, Inc.