BlueLinx Reports Third Quarter 2023 Results

BlueLinx Holdings Inc. (NYSE: BXC), a leading U.S. wholesale distributor of building products, today reported financial results for the three months ended September 30, 2023.

Third Quarter 2023 Highlights

(all comparisons are versus the prior year period unless otherwise noted)

• Net sales of $810 million
• Gross profit of $139 million, gross margin of 17.2% and specialty product gross margin of 19.8%
• Net income of $24 million, or $2.71 diluted earnings per share
• Adjusted net income of $27 million, or $2.98 adjusted diluted earnings per share
• Adjusted EBITDA of $50 million, 6.2% of net sales
• Operating cash generated of $78 million and free cash flow of $73 million
• Available liquidity of $816 million, including $470 million cash on hand
• Net debt of $107 million and net leverage ratio of 0.5x
• Completion of $18 million in share repurchases
• Announcement of new $100 million share repurchase authorization

“Our third quarter results demonstrate our ability to execute on our strategy, despite a challenging interest rate environment adversely impacting the housing and building products sector,” said Shyam Reddy, President, and CEO of BlueLinx. “We were pleased with our financial results, especially our strong margins in specialty products which accounted for about 70% of our net sales. Structural products also had solid margins and continue to support our specialty business. In addition, we returned $18 million to shareholders under our previous $100 million share repurchase program, which is now complete. Today we announced a new $100 million share repurchase authorization, further demonstrating our commitment to returning capital to shareholders.”

“Our continued strong free cash flow generation contributed to ending the quarter with $470 million in cash on hand and net leverage of 0.5x.” said Andy Wamser, Chief Financial Officer of BlueLinx. “We remain focused on growing our higher margin specialty business, continuing to make improvements in our operations, and maintaining a consistent and balanced approach to capital allocation to drive long-term shareholder value.”

Third Quarter 2023 Financial Performance

In the third quarter of 2023, net sales were $810 million, a decrease of $251 million, or 24% when compared to the third quarter of 2022.   Gross profit was $139 million, a decrease of $50 million, or 26%, year-over-year, and gross margin was 17.2%, down 70 basis points from the same period last year.

Net sales of specialty products, which includes products such as engineered wood, siding, millwork, outdoor living, specialty lumber and panels and industrial products were $559 million, a decrease of $165 million, or 23% when compared to the third quarter of 2022. This decline was due to a combination of deflation and lower volumes across several specialty categories. Gross profit from specialty product sales was $111 million, a decrease of $41 million, or 27% when compared to the third quarter of last year. Gross margin was 19.8% compared to 20.9% in the prior year period.

Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, decreased $85 million, or 25%, to $251 million in the third quarter. The decrease in structural sales was due primarily to the year-over-year declines in the average composite prices of framing lumber and structural panels of 26% and 6%, respectively. Gross profit from sales of structural products was $28 million, a decrease of $10 million from the prior year period, and gross margin was 11.3%, flat versus the prior year period.

Selling, general and administrative (“SG&A”) expenses were $91 million in the third quarter of 2023, $0.3 million lower than the prior year period. The year-over-year decrease in SG&A was primarily due to lower delivery costs, offset by higher operating expenses associated with the Vandermeer acquisition.

Net income was $24 million, or $2.71 per diluted share, versus $60 million, or $6.38 per diluted share, in the prior year period. Adjusted Net Income was $27 million, or $2.98 per diluted share compared to $61 million, or $6.56 per diluted share in the third quarter of last year.

Adjusted EBITDA was $50 million, or 6.2% of net sales, for the third quarter of 2023, as compared to $100 million, or 9.4% of net sales in the third quarter of 2022.

Net cash generated from operating activities was $78 million in the third quarter of 2023 and free cash flow was $73 million. The cash generated during the third quarter was driven by net income and a net benefit from working capital, primarily related to a reduction of approximately $15 million in inventory.

Capital Allocation and Financial Position

During the third quarter, BlueLinx invested $5 million of cash in capital investments used to improve its distribution facilities and upgrade its fleet. Additionally, the Company purchased approximately $18 million of the Company’s common stock through open market transactions under its previous $100 million share repurchase program, which, as of early October, is now complete.

Our Board of Directors has approved a new share repurchase authorization of $100 million. Under the share repurchase authorization, the Company may repurchase its common stock from time to time, without prior notice, subject to prevailing market conditions and other considerations.

As of September 30, 2023, total debt was $577 million, consisting of $300 million of senior secured notes that mature in 2029 and $277 million of finance leases. Available liquidity was $816 million which included an undrawn revolving credit facility that had $346 million of availability plus cash and cash equivalents of $470 million. Net debt was approximately $107 million, resulting in a net leverage ratio of 0.5x on trailing twelve-month Adjusted EBITDA of $209 million.  

Fourth Quarter 2023 Outlook

Through the first four weeks of the fourth quarter of 2023, specialty product gross margin was in the range of 18% to 19% with average daily volumes slightly down compared to what we experienced during the third quarter of 2023, but in line with historical seasonality. Structural product gross margin was in the range of 9% to 10%, with average daily sales volumes slightly up compared to the third quarter of 2023.

For the complete press release, click here.

About BlueLinx

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.

Contact:

Noel Ryan – Investor Relations – investor@bluelinxco.com – (720) 778-2415

Source: BlueLinx Holdings, Inc.