BlueLinx Announces First 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 April 1, 2023.
First Quarter 2023 Highlights
(all comparisons are versus the prior year period unless otherwise noted)
- Net sales of $798 million, a decrease of $504 million
- Gross profit of $134 million, gross margin of 16.7% and specialty margin of 18.8%
- Net income of $18 million, or $1.94 diluted earnings per share
- Adjusted net income of $23 million, or $2.53 adjusted diluted earnings per share
- Adjusted EBITDA of $47 million, 5.9% of net sales
- Operating cash generated of $89 million and free cash flow of $80 million
- Available liquidity increased to $723 million, including $376 million cash on hand
- Net debt of $195 million and net leverage ratio of 0.6x
“Our first quarter performance reflected the continued execution of our long-term strategy in a challenging market, guided by a continued focus on high-value specialty categories and operational, pricing, and procurement excellence across our distribution network,” stated Shyam Reddy, President and CEO of BlueLinx. “Despite a decline in demand for building products across our industry since late last year, we worked hard to maintain both our price and cost discipline, resulting in solid margin performance, lower operating expenses and strong operating cash flow.”
“BlueLinx remains well-positioned for future growth by leveraging its national scale, deep supplier and customer relationships and fortified balance sheet,” continued Reddy. “We will remain disciplined in our approach to capital allocation to drive long-term value creation and we intend to repurchase $34 million of the company’s common stock under our existing $100 million dollar share repurchase program in the near term.”
First Quarter 2023 Financial Performance
In the first quarter of 2023, net sales were $798 million, a decrease of $504 million, or 39% when compared to the first quarter of 2022. Gross profit was $134 million, a decrease of $158 million, or 54%, year-over-year, and gross margin was 16.7%, down 560 basis points from the same period last year.
Net sales of specialty products, which includes products such as engineered wood, siding, millwork, outdoor living, industrial products and specialty lumber and panels, decreased $200 million, or 26%, to $568 million. This decline was due to lower volume, primarily related to engineered wood products. Gross profit from specialty product sales was $107 million, a decrease of $77 million, or 42%, compared to the first quarter last year. Gross margin was 18.8% compared to 24.0% in the prior year period.
Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, decreased $304 million, or 57%, to $230 million in the first quarter and gross profit from sales of structural products decreased $80 million from $107 million in the prior year period. The decrease in structural sales and gross profit was due primarily to the year-over-year declines in the average composite price of framing lumber and structural panels, which were 67% and 60% respectively. Gross margin on structural product sales was 11.7% in the first quarter, down from 20.0% in the prior year period.
Selling, general and administrative (“SG&A”) expenses were $91 million in the first quarter, including approximately $2 million of incremental operating expenses related to our acquisition of Vandermeer Forest Products, and was flat versus the prior year period.
Net income was $18 million, or $1.94 per diluted share, versus $133 million, or $13.19 per diluted share, in the prior year period. Adjusted Net Income was $23 million, or $2.53 per diluted share compared to $136 million, or $13.44 per diluted share in the first quarter of last year.
Adjusted EBITDA was $47 million, or 5.9% of net sales, for the first quarter of 2023, as compared to $202 million, or 15.5% of net sales in the first quarter of 2022, which was an all-time high for Company quarterly Adjusted EBITDA.
Net cash generated from operating activities was $89 million in the first quarter of 2023 compared to $2 million in the prior year period, and free cash flow was $80 million. The increase in cash generated during the first quarter was driven by a net benefit from working capital, primarily related to a reduction of about $75 million in specialty inventory.
Capital Allocation and Financial Position
During the first quarter, we invested $9 million of cash in capital investments used to improve our distribution facilities and upgrade our fleet, an increase of $6 million when compared to the prior year period. Additionally, we have $34 million of share repurchase authorization remaining. Under our remaining share repurchase authorization, we may repurchase our common stock at any time or from time to time, without prior notice, subject to prevailing market conditions and other considerations.
As of April 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 $723 million which included an undrawn revolving credit facility that had $346 million of availability plus cash and cash equivalents of $376 million. Net debt was $195 million, resulting in a net leverage ratio of 0.6x on trailing twelve-month Adjusted EBITDA of $322 million.
Market and Second Quarter 2023 Update
Our end-markets, including repair and remodel, new residential construction, and commercial construction, continue to experience pressure from the higher interest rate environment and economic uncertainty, resulting in lower activity levels and a decrease in demand for building products. In the first quarter, we experienced a meaningful decline in volume for some of our key product categories, particularly those tied to new residential construction like engineered wood products, associated with the double-digit decline in single-family housing starts year-over-year.
Through the first four weeks of the second quarter of 2023, specialty product gross margin was in the range of 18% to 19% and structural product gross margin was in the range of 10% to 11%. Average daily sales volumes for both specialty and structural products were slightly improved versus the first quarter of 2023. The Company will continue to evaluate market pricing for wood-based commodities and adjust accordingly at the end of each period.
For the full first 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, 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.
Noel Ryan – Media Contact – firstname.lastname@example.org – (720) 778-2415
Source: BlueLinx Holdings, Inc.