– Net Income of $3.2 Million; Best Second
Quarter Since 2008 –– Adjusted EBITDA of $12.8 Million; Best Second
Quarter Since 2008 – – Gross Margin of 12.8%, up 150 Basis Points
From Q2 2016 – – Debt Principal Reduction of
$76.4 Million From Q2 2016 –
BlueLinx Holdings Inc. (NYSE:BXC), a leading distributor of
building and industrial products in the United States, today
reported financial results for the fiscal second quarter ended July
1, 2017.
“We continue to make progress in our local
market and sales excellence emphasis, which coupled with our
ongoing deleveraging efforts, enabled us to improve our financial
performance while significantly reducing our debt from prior year
levels. As we remain focused on our customers and markets, our team
is energized and motivated to continue improving our operating
results and garnering market share,” said Mitch Lewis, President
and Chief Executive Officer.
Susan O’Farrell, Senior Vice President and Chief
Financial Officer added, “With the successful completion of our
operational efficiency initiatives, we have experienced excellent
performance this quarter, even with fewer facilities. Our
commitment to improving our business resulted in our best second
quarter net income, gross margin, and Adjusted EBITDA results since
2008.
“We have also significantly reduced our debt
principal by $76.4 million from this period a year ago. We
continue to focus on deleveraging our balance sheet while actively
marketing certain owned facilities for sale leaseback opportunities
and exploring financing alternatives. Furthermore, with the working
capital efficiencies we have achieved, we have reduced our
operating working capital by $21.6 million from second quarter
2016.”
Second Quarter Results Compared to Prior
Year PeriodBlueLinx generated net sales of $474.0 million
for the second quarter of fiscal 2017, compared to $509.0 million
from the prior fiscal second quarter. As previously disclosed, the
Company undertook several operational efficiency initiatives
beginning in the second quarter of fiscal 2016, pursuant to which
it closed and sold certain facilities and rationalized inventory by
discontinuing certain underperforming products. When excluding
the effects of these operational efficiency initiatives, adjusted
same-center net sales increased by $23.2 million or 5.1% from this
period a year ago. We believe that excluding the effects of the
Company’s operational efficiency initiatives from our financial
performance is helpful in presenting comparability across
periods.
Even with the pressure on commodity lumber
prices during the period, the Company recorded gross profit of
$60.5 million during the fiscal second quarter, up $3.2 million
from the prior fiscal second quarter, with a gross margin of 12.8%,
up 150 basis points from this period a year ago. When excluding the
effects of the Company’s operational efficiency initiatives,
adjusted same-center gross profit increased by $3.4 million from
fiscal second quarter 2016.
BlueLinx recorded net income of $3.2 million for
the fiscal second quarter, up $6.4 million from this period a year
ago. Adjusted EBITDA, which is a non-GAAP measure, was $12.8
million for the fiscal second quarter.
First Six Months of Fiscal 2017 Compared
to Prior Year PeriodFor the first six months of fiscal
2017, the Company generated $902.6 million in net sales compared to
$983.3 million from the prior year period. When excluding the
effects of our operational efficiency initiatives, adjusted
same-center net sales increased by $32.2 million or 3.7% from the
same period in 2016.
Gross profit for the first six months of fiscal
2017 was equal to the prior period at $115.0 million, with a gross
margin of 12.7%, an increase of 100 basis points from the prior
year period. When excluding the effects of the Company’s
operational efficiency initiatives, adjusted same-center gross
profit increased by $6.0 million or 5.5% from the first six months
ended July 2, 2016.
The Company recorded net income of $3.8 million
for the first six months of fiscal 2017, up $13.1 million from this
period a year ago. Adjusted EBITDA, which is a non-GAAP measure,
for the six month period was $20.1 million, an increase of $0.5
million or 2.3% from the first six months of fiscal 2016. Excluding
the effects of our operational efficiency initiatives, same-center
Adjusted EBITDA, a non-GAAP measure, was up $1.7 million or 8.9%
from the same period in 2016.
Working Capital and LiquidityAs
of July 1, 2017, the Company had $74.2 million of excess
availability under its asset-based revolving credit facility, based
on qualifying inventory and receivables, an increase of $8.9
million from the same period a year ago. As a result of our working
capital initiatives and mortgage reduction efforts, interest
expense decreased by $0.9 million or 14.1% from fiscal second
quarter 2016 and by $2.8 million or 21.2% from the first six months
of fiscal 2016.
Conference CallBlueLinx will
host a conference call today at 10:00 a.m. Eastern Time,
accompanied by a supporting slide presentation. Investors can
listen to the conference call and view the accompanying slide
presentation by going to the BlueLinx website, www.BlueLinxCo.com,
and selecting the conference link on the Investor Relations page.
Investors will be able to access an archived recording of the
conference call for one week following the live call by dialing
404-537-3406, Conference ID# 5957625. The recording will be
available two hours after the conference call has concluded.
Investors can also access a recording of this call on the BlueLinx
website.
Use of Non-GAAP Measures and
Supplementary InformationBlueLinx reports its financial
results in accordance with accounting principles generally accepted
in the United States (“GAAP”). The Company also believes that
presentation of certain non-GAAP measures may be useful to
investors. Any non-GAAP measures used herein are reconciled in the
financial tables accompanying this news release. The Company
cautions that non-GAAP measures should be considered in addition
to, but not as a substitute for, the Company’s reported GAAP
results.
We define Adjusted EBITDA as an amount equal to
net income (loss) plus interest expense and all interest expense
related items, income taxes, depreciation and amortization, and
further adjusted to exclude certain non-cash items and other
adjustments to Consolidated Net Income (Loss). Further, we also
exclude, as an additional measure, the effects of the operational
efficiency initiatives, to determine same-center Adjusted EBITDA,
which is useful for period over period comparability.
We present Adjusted EBITDA (and the exclusion of
the effects of the operational efficiency initiatives) because it
is a primary measure used by management to evaluate operating
performance and, we believe, helps to enhance investors’ overall
understanding of the financial performance and cash flows of our
business. However, Adjusted EBITDA is not a presentation made in
accordance with GAAP, and is not intended to present a superior
measure of the financial condition from those determined under
GAAP. Adjusted EBITDA, as used herein, is not necessarily
comparable to other similarly titled captions of other companies
due to differences in methods of calculation. We believe Adjusted
EBITDA is helpful in highlighting operating trends. We also
believe that Adjusted EBITDA is frequently used by securities
analysts, investors and other interested parties in their
evaluation of companies, many of which present an Adjusted EBITDA
measure when reporting their results. We compensate for the
limitations of using non-GAAP financial measures by using them to
supplement GAAP results to provide a more complete
understanding of the factors and trends affecting the business than
using GAAP results alone.
We define the non-GAAP metrics of adjusted
same-center net sales and adjusted same-center gross profit as net
sales and gross profit excluding the effects of both closed
facilities and the inventory rationalization initiative. These
measures are not in accordance with GAAP, and are not intended to
present a superior measure of the financial condition from those
determined under GAAP. Adjusted same-center net sales and adjusted
same-center gross profit, as used herein, are not necessarily
comparable to other similarly titled captions of other companies
due to differences in methods of calculation.
We believe adjusted same-center net sales and
adjusted same-center gross profit are helpful in presenting
comparability across periods without the effect of our operational
efficiency initiatives. We also believe that these non-GAAP
metrics are used by securities analysts, investors, and other
interested parties in their evaluation of our company, to
illustrate the effects of these initiatives. We compensate for the
limitations of using non-GAAP financial measures by using them to
supplement GAAP results to provide a more complete
understanding of the factors and trends affecting the business than
using GAAP results alone.
Additionally, we believe supplementary
GAAP-based information such as operating working capital and debt
principal are helpful to investors in explaining the impacts of our
operating efficiencies. Operating working capital is defined as
current assets less current liabilities plus the current portion of
long-term debt. Operating working capital is an important measure
we use to determine the efficiencies of our operations and our
ability to readily convert assets into cash. Debt principal is
defined as the principal amount of debt payable at the stated
period-end date and is used by management to monitor our progress
in meeting our goals to reduce the debt on our balance sheet.
About BlueLinx Holdings
Inc.BlueLinx Holdings Inc., operating through its wholly
owned subsidiary BlueLinx Corporation, is a leading distributor of
building and industrial products in the United States. The Company
is headquartered in Atlanta, Georgia and operates its distribution
business through its broad network of distribution centers.
BlueLinx is traded on the New York Stock Exchange under the symbol
BXC. Additional information about BlueLinx can be found on its
website at www.BlueLinxCo.com.
Forward-looking StatementsThis
press release includes “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements relating to our ability to return to
profitability, and our guidance regarding anticipated financial
results. All of these forward-looking statements are based on
estimates and assumptions made by our management that, although
believed by BlueLinx to be reasonable, are inherently uncertain.
Forward-looking statements involve risks and uncertainties,
including, but not limited to, economic, competitive, governmental,
and technological factors outside of BlueLinx’s control that may
cause its business, strategy or actual results to differ materially
from the forward-looking statements. These risks and uncertainties
may include, among other things: changes in the prices, supply
and/or demand for products that it distributes, general economic
and business conditions in the United States; the activities of
competitors; changes in significant operating expenses; changes in
the availability of capital and interest rates; adverse weather
patterns or conditions; acts of cyber intrusion; variations in the
performance of the financial markets, including the credit markets;
and other factors described in the “Risk Factors” section in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2016, its Quarterly Reports on Form 10-Q, and in its periodic
reports filed with the Securities and Exchange Commission from time
to time. Given these risks and uncertainties, you are cautioned not
to place undue reliance on forward-looking statements. BlueLinx
undertakes no obligation to publicly update or revise any
forward-looking statement as a result of new information, future
events, and changes in expectation or otherwise, except as required
by law.
BLUELINX HOLDINGS INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except
per share data)(Unaudited) |
|
|
Three Months Ended |
|
Six Months Ended |
|
July 1, 2017 |
|
July 2, 2016 |
|
July 1, 2017 |
|
July 2, 2016 |
Net sales |
$ |
474,001 |
|
|
$ |
509,011 |
|
|
$ |
902,609 |
|
|
$ |
983,337 |
|
Cost of sales |
413,455 |
|
|
451,624 |
|
|
787,629 |
|
|
868,354 |
|
Gross profit |
60,546 |
|
|
57,387 |
|
|
114,980 |
|
|
114,983 |
|
Operating expenses
(income): |
|
|
|
|
|
|
|
Selling,
general, and administrative |
49,012 |
|
|
52,678 |
|
|
101,925 |
|
|
107,855 |
|
Gains
from sales of property |
— |
|
|
(384 |
) |
|
(6,700 |
) |
|
(761 |
) |
Depreciation and amortization |
2,253 |
|
|
2,396 |
|
|
4,616 |
|
|
4,871 |
|
Total
operating expenses |
51,265 |
|
|
54,690 |
|
|
99,841 |
|
|
111,965 |
|
Operating income |
9,281 |
|
|
2,697 |
|
|
15,139 |
|
|
3,018 |
|
Non-operating expenses
(income): |
|
|
|
|
|
|
|
Interest
expense |
5,367 |
|
|
6,250 |
|
|
10,610 |
|
|
13,457 |
|
Other
expense (income), net |
— |
|
|
135 |
|
|
(2 |
) |
|
(237 |
) |
Income (loss) before
provision for (benefit from) income taxes |
3,914 |
|
|
(3,688 |
) |
|
4,531 |
|
|
(10,202 |
) |
Provision for (benefit
from) income taxes |
676 |
|
|
(544 |
) |
|
709 |
|
|
(913 |
) |
Net income (loss) |
$ |
3,238 |
|
|
$ |
(3,144 |
) |
|
$ |
3,822 |
|
|
$ |
(9,289 |
) |
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share |
$ |
0.36 |
|
|
$ |
(0.35 |
) |
|
$ |
0.42 |
|
|
$ |
(1.05 |
) |
Diluted earnings (loss)
per share |
$ |
0.35 |
|
|
$ |
(0.35 |
) |
|
$ |
0.42 |
|
|
$ |
(1.05 |
) |
BLUELINX HOLDINGS INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(In thousands, except share
data)(Unaudited) |
|
|
July 1, 2017 |
|
December 31, 2016 |
Assets: |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
4,777 |
|
|
$ |
5,540 |
|
Receivables, less allowances of $2,701 and $2,733,
respectively |
167,570 |
|
|
125,857 |
|
Inventories, net |
220,677 |
|
|
191,287 |
|
Other
current assets |
20,228 |
|
|
23,126 |
|
Total current
assets |
413,252 |
|
|
345,810 |
|
Property and
equipment: |
|
|
|
Land and
land improvements |
30,703 |
|
|
34,609 |
|
Buildings |
84,772 |
|
|
80,131 |
|
Machinery
and equipment |
75,036 |
|
|
72,122 |
|
Construction in progress |
358 |
|
|
3,104 |
|
Property and equipment,
at cost |
190,869 |
|
|
189,966 |
|
Accumulated depreciation |
(103,926 |
) |
|
(101,644 |
) |
Property and equipment,
net |
86,943 |
|
|
88,322 |
|
Other non-current
assets |
12,089 |
|
|
10,005 |
|
Total assets |
$ |
512,284 |
|
|
$ |
444,137 |
|
Liabilities: |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
96,363 |
|
|
$ |
82,735 |
|
Bank
overdrafts |
22,296 |
|
|
21,696 |
|
Accrued
compensation |
6,047 |
|
|
8,349 |
|
Current
maturities of long-term debt, net of discount of $415 and $201,
respectively |
56,585 |
|
|
29,469 |
|
Other
current liabilities |
13,892 |
|
|
12,092 |
|
Total current
liabilities |
195,183 |
|
|
154,341 |
|
Non-current
liabilities: |
|
|
|
Long-term
debt, net of discount of $1,997 and $2,544, respectively |
270,185 |
|
|
270,792 |
|
Pension
benefit obligation |
32,879 |
|
|
34,349 |
|
Other
non-current liabilities |
39,432 |
|
|
14,496 |
|
Total liabilities |
537,679 |
|
|
473,978 |
|
Stockholders’
deficit: |
|
|
|
Common
Stock, $0.01 par value, Authorized - 20,000,000 shares, Issued and
Outstanding - 9,098,221 and 9,031,263, respectively |
91 |
|
|
90 |
|
Additional paid-in capital |
258,548 |
|
|
257,972 |
|
Accumulated other comprehensive loss |
(36,693 |
) |
|
(36,651 |
) |
Accumulated stockholders’ deficit |
(247,341 |
) |
|
(251,252 |
) |
Total stockholders’
deficit |
(25,395 |
) |
|
(29,841 |
) |
Total liabilities and
stockholders’ deficit |
$ |
512,284 |
|
|
$ |
444,137 |
|
BLUELINX HOLDINGS INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands)(Unaudited) |
|
|
Six Months Ended |
|
July 1, 2017 |
|
July 2, 2016 |
Net cash used
in operating activities |
$ |
(54,491 |
) |
|
$ |
(25,943 |
) |
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Property and equipment
investments |
(189 |
) |
|
(344 |
) |
Proceeds from sale of
assets |
27,598 |
|
|
2,197 |
|
Net cash
provided by investing activities |
27,409 |
|
|
1,853 |
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Repayments on revolving
credit facilities |
(172,932 |
) |
|
(282,371 |
) |
Borrowings from
revolving credit facilities |
227,654 |
|
|
308,673 |
|
Principal payments on
mortgage |
(28,976 |
) |
|
(9,431 |
) |
Increase in cash held
in escrow related to the mortgage |
1,490 |
|
|
9,118 |
|
Other, net |
(917 |
) |
|
(1,467 |
) |
Net cash
provided by financing activities |
26,319 |
|
|
24,522 |
|
|
|
|
|
(Decrease) increase in
cash |
(763 |
) |
|
432 |
|
Cash, beginning of
period |
5,540 |
|
|
4,808 |
|
Cash, end of
period |
$ |
4,777 |
|
|
$ |
5,240 |
|
BLUELINX HOLDINGS INC.RECONCILIATION
OF NON-GAAP MEASUREMENTS(In
thousands)(Unaudited) |
|
The
following schedule sets forth a reconciliation of net income (loss)
to Adjusted EBITDA, including same-center Adjusted EBITDA versus
comparable prior year periods: |
|
|
Quarter Ended |
|
Six Months Ended |
|
July 1, 2017 |
|
July 2, 2016 |
|
July 1, 2017 |
|
July 2, 2016 |
Net income (loss) |
$ |
3,238 |
|
|
$ |
(3,144 |
) |
|
$ |
3,822 |
|
|
$ |
(9,289 |
) |
Adjustments: |
|
|
|
|
|
|
|
Depreciation and amortization |
2,253 |
|
|
2,396 |
|
|
4,616 |
|
|
4,871 |
|
Interest
expense |
5,367 |
|
|
6,250 |
|
|
10,610 |
|
|
13,457 |
|
Provision
for (benefit from) income taxes |
676 |
|
|
(544 |
) |
|
709 |
|
|
(913 |
) |
Gain from
sales of property |
— |
|
|
(384 |
) |
|
(6,700 |
) |
|
(761 |
) |
Share-based compensation expense |
695 |
|
|
430 |
|
|
1,459 |
|
|
845 |
|
Multi-employer pension withdrawal |
1,000 |
|
|
— |
|
|
5,500 |
|
|
— |
|
Restructuring, severance, and legal, and other |
(427 |
) |
|
7,581 |
|
|
108 |
|
|
8,069 |
|
Refinancing-related expenses |
— |
|
|
69 |
|
|
— |
|
|
3,385 |
|
Adjusted EBITDA |
$ |
12,802 |
|
|
$ |
12,654 |
|
|
$ |
20,124 |
|
|
$ |
19,664 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
12,802 |
|
|
$ |
12,654 |
|
|
$ |
20,124 |
|
|
$ |
19,664 |
|
Less:
non-GAAP adjustments |
— |
|
|
106 |
|
|
— |
|
|
1,190 |
|
Same-center Adjusted
EBITDA |
$ |
12,802 |
|
|
$ |
12,548 |
|
|
$ |
20,124 |
|
|
$ |
18,474 |
|
The following schedule sets forth a
reconciliation of net sales and gross profit to the non-GAAP
measures of adjusted same-center sales and adjusted same-center
gross profit versus comparable prior periods:
|
Quarter Ended |
|
Six Months Ended |
|
July 1, 2017 |
|
July 2, 2016 |
|
July 1, 2017 |
|
July 2, 2016 |
Net sales |
$ |
474,001 |
|
|
$ |
509,011 |
|
|
$ |
902,609 |
|
|
$ |
983,337 |
|
Less:
non-GAAP adjustments |
— |
|
|
58,222 |
|
|
— |
|
|
112,893 |
|
Adjusted same-center
net sales |
$ |
474,001 |
|
|
$ |
450,789 |
|
|
$ |
902,609 |
|
|
$ |
870,444 |
|
Adjusted year-over-year
percentage increase - sales |
5.1 |
% |
|
|
|
3.7 |
% |
|
|
|
|
|
|
|
|
|
|
Gross profit |
$ |
60,546 |
|
|
$ |
57,387 |
|
|
$ |
114,980 |
|
|
$ |
114,983 |
|
Less:
non-GAAP adjustments |
— |
|
|
224 |
|
|
— |
|
|
5,959 |
|
Adjusted same-center
gross profit |
$ |
60,546 |
|
|
$ |
57,163 |
|
|
$ |
114,980 |
|
|
$ |
109,024 |
|
BLUELINX HOLDINGS INC.SUPPLEMENTARY
INFORMATION(In
thousands)(Unaudited) |
Debt Principal |
|
The following schedule presents debt principal for the
second quarters of fiscal 2017 and fiscal 2016, respectively: |
|
|
July 1, 2017 |
|
July 2, 2016 |
|
YOY Change |
Revolving credit
facilities - principal |
$ |
231,335 |
|
|
$ |
246,858 |
|
|
$ |
(15,523 |
) |
Mortgage -
principal |
97,847 |
|
|
158,769 |
|
|
(60,922 |
) |
Total |
$ |
329,182 |
|
|
$ |
405,627 |
|
|
$ |
(76,445 |
) |
Operating Working Capital |
|
Operating
working capital is defined as current assets less current
liabilities plus the current portion of long-term debt. The
following schedule displays the selected balance sheet components
of our operating working capital calculation: |
|
|
July 1, 2017 |
|
July 2, 2016 |
|
YOY Change |
Current assets: |
|
|
|
|
|
Cash |
$ |
4,777 |
|
|
$ |
5,240 |
|
|
$ |
(463 |
) |
Receivables, less allowance for doubtful accounts |
167,570 |
|
|
181,623 |
|
|
(14,053 |
) |
Inventories, net |
220,677 |
|
|
214,802 |
|
|
5,875 |
|
Other
current assets |
20,228 |
|
|
28,562 |
|
|
(8,334 |
) |
Total current
assets |
$ |
413,252 |
|
|
$ |
430,227 |
|
|
$ |
(16,975 |
) |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
$ |
96,363 |
|
|
$ |
96,830 |
|
|
$ |
(467 |
) |
Bank
overdrafts |
22,296 |
|
|
17,330 |
|
|
4,966 |
|
Accrued
compensation |
6,047 |
|
|
6,829 |
|
|
(782 |
) |
Current
maturities of long-term debt, net of discount |
56,585 |
|
|
62,653 |
|
|
(6,068 |
) |
Other
current liabilities |
13,892 |
|
|
12,942 |
|
|
950 |
|
Total current
liabilities |
$ |
195,183 |
|
|
$ |
196,584 |
|
|
$ |
(1,401 |
) |
|
|
|
|
|
|
Operating working
capital |
$ |
274,654 |
|
|
$ |
296,296 |
|
|
$ |
(21,642 |
) |
BlueLinx Contact Information:
Susan O’Farrell, SVP, CFO & Treasurer
BlueLinx Holdings Inc.
(770) 953-7000
Natalie Poulos, Investor Relations
BlueLinx Holdings Inc.
(770) 953-7522
investor.relations@bluelinxco.com
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