BlueLinx Announces Third Quarter 2024 Results

BlueLinx Holdings Inc., a leading U.S. wholesale distributor of building products, reported financial results for the three months ended September 28, 2024.

Third Quarter 2024 Highlights

• Net sales of $747 million
• Gross profit of $126 million, gross margin of 16.8% and specialty product gross margin of 19.4%, which includes a net benefit of approximately $3.5 million related to import duties from prior periods
• Net income of $16 million, or $1.87 diluted earnings per share
• Adjusted net income of $17 million, or $1.95 adjusted diluted earnings per share
• Adjusted EBITDA of $37 million, or 4.9% of net sales, which includes a net benefit of approximately $3.5 million related to import duties from prior periods
• Operating cash flow of $62 million and free cash flow of $54 million
• Available liquidity of $873 million, including $526 million cash and cash equivalents on hand
• $15 million in share repurchases, with $61 million remaining on the share repurchase authorization as of quarter-end

“Our third quarter results delivered solid volume growth in several of our key specialty product categories, as well as strong volume growth across our structural products business,” said Shyam Reddy, President and CEO of BlueLinx. “Specialty products’ gross margins were within our expected range and structural products’ gross margins were strong, despite the effects of continued price deflation for both product categories. Current market conditions remain challenging, but we believe our growth strategy, significant liquidity, and strong balance sheet will continue to position us well for an industry rebound.”

“Our strong free cash flow generation of $54 million during the third quarter resulted in a cash balance of $526 million and a net leverage ratio of (1.2x),” said Andy Wamser, Senior Vice President, Chief Financial Officer and Treasurer of BlueLinx. “During the third quarter, we purchased $15 million of stock under our share repurchase program, once again showing our commitment to returning capital to shareholders. At the end of the quarter, we had $61 million remaining on our share repurchase authorization, and we will continue to be opportunistic in the market.”

Third Quarter 2024 Financial Performance

In the third quarter of 2024, net sales were $747 million, a decrease of $63 million, or 8% when compared to the third quarter of 2023. Gross profit was $126 million, a decrease of $14 million, or 10%, year-over-year, and gross margin was 16.8%, down 40 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 $519 million, a decrease of $40 million, or 7.1% when compared to the third quarter of 2023. This decrease was due to price deflation across specialty products, partially offset by an increase in volumes. Gross profit from specialty product sales was $100 million, a decrease of $10 million, or 9.4% when compared to the third quarter of last year. Gross margin for specialty products was 19.4% compared to 19.8% in the prior year period. The current period included a net benefit of $3.5 million for import duty-related items from prior periods. Excluding this benefit, gross margin was 18.7%. The duty items were related to changes in retroactive rates for anti-dumping duties and to classification adjustments for certain goods imported by the Company.

Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, decreased $23 million, or 9.1% when compared to the third quarter of 2023, to $228 million in the third quarter of 2024. The decrease in structural sales was due to price deflation in both lumber and panels, partially offset by an increase in volumes. Gross profit from sales of structural products was $25 million, a decrease of $3 million from the prior year period, and gross margin was 11.0%, compared to 11.3% in the prior year period. Gross profit and gross margin for current period were positively impacted by a $2.4 million inventory write-down for certain structural products at the end of the second quarter 2024 that resulted in lower cost of products sold in the third quarter 2024 since substantially all of the inventory associated with the write-down was sold during third quarter of fiscal 2024. This adjustment increased the current quarter’s gross margin for structural products by 100 basis points. The third quarter of fiscal 2023 was negatively impacted by a $0.6 million interim period provision for inventory related to our structural products.

Excluding the structural products inventory write-down at the end of second quarter 2024 that benefited cost of products sold in the current quarter, and the duty-related items for specialty products, both totaling $5.9 million, Company gross margin was 16.0% for the third quarter.

Selling, general and administrative (“SG&A”) expenses were $92 million in the third quarter of 2024, $1 million higher than the prior year period. The year-over-year change in SG&A was primarily due to higher technology expenses associated with our digital transformation, partially offset by lower fleet-related logistics costs.

Net income was $16 million, or $1.87 per diluted share, versus $24 million, or $2.71 per diluted share, in the prior year period. Adjusted Net Income was $17 million, or $1.95 per diluted share compared to $27 million, or $2.98 per diluted share in the third quarter of last year. The 2024 period reflects a pre-tax benefit of $2.2 million related to an adjustment of the settlement charge recorded in the fourth quarter of 2023 related to the termination of our defined benefit pension plan. This benefit was partially offset by $1.2 million of estimated net losses related to Hurricane Helene in September 2024, which is reported within Other operating expenses, net on our unaudited condensed consolidated statements of operations.

Adjusted EBITDA was $37 million, or 4.9% of net sales, for the third quarter of 2024, compared to $50 million, or 6.2% of net sales in the third quarter of 2023. The current period includes the benefit of the duty-related matters, and not including these items, Adjusted EBITDA was $33 million, or 4.4% of net sales. Adjusted EBITDA excludes the aforementioned adjustment of the pension settlement and estimated insurance deductibles.

Net cash generated from operating activities was $62 million in the third quarter of 2024 and free cash flow was $54 million. The cash generated during the third quarter was driven by net income and improved working capital.

Capital Allocation and Financial Position

During the third quarter, we invested $8 million of cash in capital investments primarily used to improve our distribution facilities and for our digital transformation initiative. Additionally, we purchased approximately $15 million of the Company’s common stock through open market transactions under our $100 million share repurchase program. At quarter-end, we had $61 million remaining under this authorization and we plan to continue to be opportunistic with respect to repurchasing shares.

As of September 28, 2024, total debt and finance lease obligations, but excluding real property finance lease obligations, was $351 million. This consisted of $300 million of senior secured notes that mature in 2029 and $51 million of finance lease obligations for equipment. Net debt was ($176) million, which consisted of total debt and finance leases excluding real property finance lease obligations of $351 million less cash and cash equivalents of $526 million, resulting in a net leverage ratio of (1.2x) using a trailing twelve-month Adjusted EBITDA of $146 million. Available liquidity was $873 million which included an undrawn revolving credit facility that had $346 million of availability plus cash and cash equivalents of $526 million.

Fourth Quarter 2024 Outlook

Through the first four weeks of the fourth quarter of 2024, specialty product gross margin was in the range of 18% to 19% and structural product gross margin was in the range of 9% to 10%. Average daily sales volumes improved slightly versus the third quarter of 2024.

For full results 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 a comprehensive range of products to our customers which include 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, and we operate our business through a broad network of distribution centers. To learn more about BlueLinx, please visit www.bluelinxco.com .

Contact:

Tom Morabito – Investor Relations – investor@bluelinxco.com – (470) 394-0099

Source: BlueLinx Holdings, Inc.