BlueLinx Announces Fourth Quarter and Full Year 2022 Results

BlueLinx Holdings Inc. a leading U.S. wholesale distributor of building products, today reported financial results for the three months and twelve months ended December 31, 2022.

Fourth Quarter 2022 Highlights

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

• Net sales of $848 million, a decrease of $125 million
• Gross profit of $151 million, gross margin of 17.8% and specialty margin of 21.1%
• Net income of $32 million, or $3.50 diluted earnings per share
• Adjusted net income of $36 million, or $3.97 adjusted diluted earnings per share
• Adjusted EBITDA of $63 million, 7.4% of net sales
• Operating cash of $154 million and free cash flow of $137 million
• Available liquidity increased to $645 million, including $299 million cash on hand
• Acquired Vandermeer Forest Products on October 3, 2022, for $67 million

Full Year 2022 Highlights

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

• Net sales of $4.5 billion, an increase of 4%
• Gross profit increased 7% to $833 million and gross margin increased 50 basis points to 18.7%
• Net income of $296 million, or $31.51 diluted earnings per share
• Adjusted net income of $306 million, or $32.55 adjusted diluted earnings per share
• Adjusted EBITDA increased 3% to an all-time high of $478 million, or 10.7% of net sales
• Record cash flow including $400 million of operating cash flow and $364 million of free cash flow

“Our fourth quarter and full year 2022 were highlighted by strong margin performance and record operating cash flow, demonstrating our ability to generate solid results despite more challenging macro conditions,” stated Dwight Gibson, President, and CEO of BlueLinx. “We continue to strengthen our financial position through robust cash generation, increasing our available liquidity. Throughout 2022, we allocated approximately $170 million of capital towards the acquisition of Vandermeer, capital expenditures that improved the effectiveness of our facilities and our fleet, and share repurchases.”

“Increasing interest rates have significantly slowed new residential construction and to a lesser extent, repair and remodel activity,” continued Gibson. “We saw a meaningful deceleration in the demand for building products as the fourth quarter progressed and despite this, we delivered solid results. As we navigate this challenging cycle, our fortress balance sheet provides opportunities to further execute on our strategy.”

“Throughout 2023 we expect that sales volumes and margins will continue to be adversely impacted. Consistent with our actions in 2022, we will continue to drive rigor around pricing and emphasize operational excellence across our business, while adjusting costs as necessary. We will also maintain our disciplined approach to capital allocation to generate shareholder returns,” concluded Gibson.

Fourth Quarter 2022 Financial Performance

In the fourth quarter of 2022, net sales were $848 million, a decrease of $125 million, or 13% when compared to the fourth quarter of 2021. Gross profit was $151 million, a decrease of $42 million, or 22%, year-over-year, and gross margin was 17.8%, down 210 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 $50 million, or 8%, to $592 million. This decline was primarily due to lower volume. Gross profit from specialty product sales was $125 million, a decrease of $16 million, or 11%, compared to the fourth quarter last year. Gross margin was 21.1% compared to 21.9% in the prior year period.

Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, decreased $75 million, or 23%, to $256 million in the fourth quarter and gross profit from sales of structural products decreased $27 million from $53 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, 36% and 26% respectively, in addition to lower volumes. Gross margin on structural product sales was 10.4% in the fourth quarter, down from 16.1% in the prior year period.  

Selling, general and administrative (“SG&A”) expenses were $92 million in the fourth quarter, flat versus the third quarter of 2022 and $9 million, or 10%, higher than the prior year period. The year-over-year increase in SG&A was due primarily to investments in the Company’s workforce during the year, increased delivery costs and the inclusion of costs related to Vandermeer.

Net income was $32 million, or $3.50 per diluted share, versus $74 million, or $7.30 per diluted share, in the prior year period. Adjusted Net Income was $36 million, or $3.97 per diluted share. As a result of lower shares outstanding due to the Company’s share repurchases in 2022, earnings of $3.50 per diluted share included a $0.31 per share benefit and adjusted earnings of $3.97 per diluted share included a $0.35 per share benefit.

Adjusted EBITDA was $63 million, or 7.4% of net sales, as compared to $112 million, or 11.5% of net sales in the prior period.

Net cash generated from operating activities was $154 million in the fourth quarter of 2022 compared to $18 million in the prior year period. The increase in cash generated from operating activities was driven by a net benefit from working capital, specifically a $122 million reduction in accounts receivable and a $68 million reduction in inventory. Free cash flow was $137 million in the fourth quarter of 2022, up $128 million compared to the prior year period. We allocated $16.8 million to cash capital investments related to both distribution facilities and our fleet during the quarter.

Full Year 2022 Financial Performance

For the twelve months ended December 31, 2022, net sales were $4.5 billion, an increase of $173 million, or 4% year-over-year. Gross profit was $833 million, an increase of $55 million, or 7%, year-over-year, and gross margin was 18.7%, up 50 basis points. The increase in sales and gross profit reflects 14% growth in specialty product sales and a 10% decline in structural product sales.

Net sales of specialty products increased $351 million, or 14%, to $2.9 billion in the twelve months ended December 31, 2022. This growth was primarily driven by strategic pricing actions slightly offset by lower volumes. Gross profit from specialty product sales was $640 million, an increase of $79 million, or 14%, year-over-year and gross margin was 22.3%, consistent with the prior year period.

Net sales of structural products decreased $178 million, or 10%, to $1.6 billion in the twelve months ended December 31, 2022, and gross profit from sales of structural products decreased $24 million to $193 million. The decrease in structural sales and gross profit was due primarily to a decrease in the average composite price of framing lumber and structural panels year-over-year in addition to lower volumes. Gross margin on structural product sales was 12.2%, relatively consistent with the prior year period.

SG&A expenses were $366 million during fiscal year 2022, up $44 million, or 14%, when compared to the prior year period. The year-over-year increase in SG&A was due primarily to higher delivery costs resulting from increases in fuel prices and variable compensation, along with strategic investments in the Company’s workforce.

Net income was $296 million, or $31.51 per diluted share, versus $296 million, or $29.99 per diluted share in the prior year. Adjusted net income was $306 million and Adjusted earnings per share was $32.55 in the current year. As a result of lower shares outstanding due to the Company’s share repurchases in 2022, earnings of $31.51 per diluted share included a $1.60 per share benefit and adjusted earnings of $32.55 per diluted share included a $1.65 per share benefit.

Adjusted EBITDA was $478 million, or 10.7% of net sales, as compared to $464 million, or 10.8% of net sales in 2021.

Net cash generated from operating activities was $400 million for fiscal year 2022 compared to $145 million in fiscal year 2021. This was driven by a net benefit from working capital. Free cash flow was $364 million for fiscal year 2022 compared to $131 million in the prior year period.

Capital Allocation and Financial Position

During the full year 2022 we allocated $169 million of cash including $67 million for the acquisition of Vandermeer, which occurred in the fourth quarter. $36 million was invested in cash capital investments used to improve our distribution facilities and upgrade our fleet, an increase of $21 million when compared to fiscal 2021. $66 million was allocated to buy back approximately 9% of our stock, $60 million of which was done through an accelerated share repurchase program that was completed in the third quarter of 2022. Currently, we have $34 million remaining under our share repurchase authorization.

As of December 31, 2022, total debt was $573 million, including $300 million of senior secured notes that mature in 2029 and $273 million of finance leases. Available liquidity was $645 million which included an undrawn revolving credit facility that had $346 million of availability plus cash and cash equivalents of $299 million. Net debt was $274 million, resulting in a net leverage ratio of 0.6x on trailing twelve-month adjusted EBITDA of $478 million.  

First Quarter 2023 Update

Through the first seven weeks of the first quarter of 2023, specialty product gross margin was in the range of 18% to 19% with daily sales volumes down approximately 15% versus the prior year reflecting the challenging macro environment. Structural product gross margin was in the range of 10% to 11% with relatively consistent sales volumes when compared to last year. 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.

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, 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.

Contact:

Noel Ryan – Investor and Media Contact – investor@bluelinxco.com – (720) 778-2415

Source: BlueLinx Holdings, Inc.