BlueLinx Holdings Inc. (NYSE:BXC), a leading distributor of
building and industrial products in the United States, today
reported financial results for the fiscal third quarter ended
September 28, 2019.
2019 Third Quarter Financial Highlights (all comparisons
to prior year period unless otherwise noted)–
Net sales of $679 million,
compared to $860 million–
Gross margin increased to 13.8%, compared to 10.7%–
Gross profit of $94 million,
up $2 million– Net loss of
$7.0 million, compared to a net loss of $9.9 million–
Adjusted EBITDA of $19.0
million, compared to $16.6 million–
Debt under the term loan and
revolving credit facility reduced by $92 million
Management CommentaryMitch
Lewis, President and Chief Executive Officer, stated, “We are
pleased that we expanded gross margin again this quarter, both
sequentially and on a year-over-year basis. Gross margin was 13.8%,
our highest gross margin since the acquisition of Cedar Creek,
which led to the increase in gross profit over 2018 and our
improved results. Our team is focused on profitable growth through
providing our customers and suppliers excellent products and
service while continuing our emphasis on operating our business
more efficiently.”
Susan O’Farrell, Senior Vice President and Chief
Financial Officer, added, “During the third quarter we reduced debt
under the term loan and revolving credit facility by $92 million
compared to the prior year period. Our excess availability
and cash on hand averaged $101 million for the third quarter,
continuing to demonstrate our strong liquidity.”
2019 Third Quarter Financial Results
ReviewThe Company reported net sales of $679 million for
the third quarter of 2019, compared to $860 million for the prior
year period.
The Company recorded gross profit of $94 million
during the third quarter, compared to $92 million in the prior year
period, with a gross margin of 13.8% compared to 10.7% in the prior
year period, which prior year period includes a lower of cost or
net realizable value adjustment on inventory of $5 million related
to lumber and wood products, and acquisition-related inventory
step-up charges of $1 million.
The Company recorded net loss of $7.0 million
for the third quarter, compared to a net loss of $9.9 million in
the prior year period. Third quarter 2019 includes one-time
charges for integration and restructuring costs of $4 million, and
charges related to a partial multi-employer pension plan withdrawal
of $1 million. The prior year period includes a partial
multi-employer pension plan withdrawal of $7 million, and
acquisition related fees and restructuring costs of $5 million, in
addition to the lower of cost or net realizable value adjustment
and acquisition-related inventory step-up charges noted above.
Adjusted EBITDA, which is a non-GAAP measure,
was $19.0 million for the third quarter, compared to $16.6 million
in the prior year period.
First Nine Months of 2019 Financial
Results ReviewThe Company reported net sales of $2.0
billion in the first nine months of 2019, compared to $2.2 billion
in the prior year period.
The Company recorded gross profit of $274
million during the first nine months of 2019, compared to $251
million in the prior year period, with a gross margin of 13.5%
compared to 11.4% in the prior year period, which prior year period
includes an acquisition-related inventory step-up charge of $12
million, and a lower of cost or net realizable value adjustment on
inventory of $5 million.
The Company recorded a net loss of $7.5 million
for the first nine months of 2019, compared to a net loss of $31.9
million in the prior year period. The first nine months of
2019 includes gains from sales of real property of $10 million and
one-time charges for acquisition-related integration costs of $11
million, restructuring costs of $3 million, and charges related to
a partial multi-employer pension plan withdrawal of $1 million. The
prior year period included one-time charges for acquisition related
legal, consulting, and professional fees of $19 million, charges
associated with share-based compensation of $15 million, $7 million
for a partial multi-employer pension plan withdrawal, and $1
million for restructuring charges, in addition to the lower of cost
or net realizable value adjustment and acquisition-related
inventory step-up charges noted above.
Adjusted EBITDA, which is a non-GAAP measure,
was $60.5 million for the nine months of 2019, compared to $61.7
million in the prior year period.
2019 Third Quarter Conference Call with
Accompanying Slide PresentationBlueLinx will host a
conference call on November 6, 2019, at 10:00 a.m. Eastern
Time, accompanied by a supporting slide presentation.
Participants can access the live conference call
via telephone at (877) 873-5864, using Conference ID # 7584665.
Investors can also listen to the live audio of
the conference call and view the accompanying slide presentation by
visiting the BlueLinx website, www.BlueLinxCo.com, and selecting
the conference link on the Investor Relations page. After the
conference call has concluded, an archived recording will be
available on the BlueLinx website.
Use of Non-GAAP Measures and
Supplemental Financial InformationThe Company reports its
financial results in accordance with GAAP. The Company also
believes that presentation of certain non-GAAP measures and
GAAP-based and non-GAAP supplemental financial information may be
useful to investors and may provide a more complete
understanding of the factors and trends affecting the business than
using reported GAAP results alone. Any non-GAAP measures used
herein are reconciled to their most directly comparable GAAP
measures herein or in the financial tables accompanying this news
release. The Company cautions that non-GAAP measures and
supplemental financial information should be considered in addition
to, but not as a substitute for, the Company’s reported GAAP
results.
Adjusted EBITDA and Pro forma Adjusted
EBITDA
We define Adjusted EBITDA as an amount equal to
net income plus interest expense and all interest expense related
items, income taxes, depreciation and amortization, and further
adjusted for certain non-cash items and other special items,
including compensation expense from share-based compensation,
one-time charges associated with the legal and professional fees
and integration costs related to the Cedar Creek acquisition, and
gains on sales of properties including amortization of deferred
gains.
We present Adjusted EBITDA 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. 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.
However, Adjusted EBITDA is not a presentation made in accordance
with GAAP, and is not intended to present a superior measure of our
financial condition from those measures 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 present Pro-forma Adjusted EBITDA in the
financial tables accompanying this news release. Pro-forma Adjusted
EBITDA for any period is calculated in the same manner as Adjusted
EBITDA, but also combines the historical results of BlueLinx for
the three and nine months ended September 29, 2018, with the
historical results of Cedar Creek for the three and nine months
ended September 29, 2018, giving effect to the Cedar Creek
acquisition and related adjustments as if the acquisition occurred
on January 1, 2017.
Supplemental Financial Measures
We completed the acquisition of Cedar Creek on
April 13, 2018 (the “Closing Date”). As a result, Cedar Creek’s
financial results are only included in the combined company’s
reported financial results from the Closing Date forward. To
supplement these reported results, we have provided GAAP-based and
non-GAAP pro forma financial information of the combined company in
the financial tables accompanying this news release that includes
Cedar Creek’s financial results for the relevant periods prior to
the Closing Date. This pro forma information combines the
historical results of BlueLinx for the three and nine months ended
September 29, 2018, with the historical results of Cedar Creek for
the three and nine months ended September 29, 2018, giving effect
to the Cedar Creek acquisition and related adjustments as if the
acquisition occurred on January 1, 2017.
About BlueLinx Holdings
Inc.BlueLinx (NYSE: BXC) is a leading wholesale
distributor of building and industrial products in the United
States with over 50,000 branded and private-label SKUs, and a broad
distribution footprint servicing 40 states. BlueLinx has a
differentiated distribution platform, value-driven business model
and extensive cache of products across the building products
industry. Headquartered in Marietta, Georgia, BlueLinx has over
2,200 associates and distributes its comprehensive range of
structural and specialty products to approximately 15,000 national,
regional, and local dealers, as well as specialty distributors,
national home centers, industrial, and manufactured housing
customers. BlueLinx encourages investors to visit its website,
www.BlueLinxCo.com, which is updated regularly with financial and
other important information about BlueLinx.
Contacts:Investors:Susan
O’Farrell, SVP, CFO & TreasurerBlueLinx Holdings Inc.(770)
953-7000
Mary Moll, Investor Relations(866)
671-5138investor@bluelinxco.com
Forward-looking StatementsThis
press release contains forward-looking statements. Forward-looking
statements include, without limitation, any statement that
predicts, forecasts, indicates or implies future results,
performance, liquidity levels or achievements, and may contain the
words “believe,” “anticipate,” “expect,” “estimate,” “intend,”
“project,” “plan,” “will be,” “will likely continue,” “will likely
result” or words or phrases of similar meaning. The forward-looking
statements in this press release include statements about our areas
focus, our ability to generate profitable growth; our emphasis on
and ability to operate our business more efficiently; and strength
of our liquidity.
Forward-looking statements are based on
estimates and assumptions made by our management that, although
believed by us to be reasonable, are inherently uncertain.
Forward-looking statements involve risks and uncertainties that may
cause our business, strategy, or actual results to differ
materially from the forward-looking statements. These risks and
uncertainties include those discussed under the heading “Risk
Factors” in Item 1A of our Annual Report on Form 10-K for the year
ended December 29, 2018, and those discussed in our Quarterly
Reports on Form 10-Q and in our periodic reports filed with the
Securities and Exchange Commission from time to time. We operate in
a changing environment in which new risks can emerge from time to
time. It is not possible for management to predict all of these
risks, nor can it assess the extent to which any factor, or a
combination of factors, may cause our business, strategy, or actual
results to differ materially from those contained in
forward-looking statements. Factors that may cause these
differences include, among other things: our ability to integrate
and realize anticipated synergies from acquisitions; loss of
material customers, suppliers, or product lines in connection with
acquisitions; our indebtedness and its related limitations;
sufficiency of cash flows and capital resources; changes in
interest rates; fluctuations in commodity prices; adverse housing
market conditions; disintermediation by customers and suppliers;
changes in prices, supply and/or demand for our products; inventory
management; competitive industry pressures; industry consolidation;
product shortages; loss of and dependence on key suppliers and
manufacturers; new tariffs; our ability to monetize real estate
assets; our ability to successfully implement our strategic
initiatives; fluctuations in operating results; sale-leaseback
transactions and their effects; real estate leases; exposure to
product liability claims; changes in our product mix; petroleum
prices; information technology security and business interruption
risks; litigation and legal proceedings; natural disasters and
unexpected events; activities of activist stockholders; labor and
union matters; limits on net operating loss carryovers; pension
plan assumptions and liabilities; risks related to our internal
controls; retention of associates and key personnel; federal,
state, local and other regulations, including environmental laws
and regulations; and changes in accounting principles. Given these
risks and uncertainties, we caution you not to place undue reliance
on forward-looking statements. We expressly disclaim any obligation
to update or revise any forward-looking statement as a result of
new information, future events 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 |
|
Nine Months Ended |
|
September 28, 2019 |
|
September 29, 2018 |
|
September 28, 2019 |
|
September 29, 2018 |
Net sales |
$ |
678,665 |
|
|
$ |
859,776 |
|
|
$ |
2,023,814 |
|
|
$ |
2,190,215 |
|
Cost of sales |
584,952 |
|
|
768,021 |
|
|
1,749,889 |
|
|
1,939,484 |
|
Gross profit |
93,713 |
|
|
91,755 |
|
|
273,925 |
|
|
250,731 |
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general, and administrative |
79,881 |
|
|
87,692 |
|
|
228,392 |
|
|
238,655 |
|
Gains from sales of property |
(38 |
) |
|
— |
|
|
(9,798 |
) |
|
— |
|
Depreciation and amortization |
7,577 |
|
|
8,068 |
|
|
22,408 |
|
|
18,177 |
|
Total operating expenses |
87,420 |
|
|
95,760 |
|
|
241,002 |
|
|
256,832 |
|
Operating income (loss) |
6,293 |
|
|
(4,005 |
) |
|
32,923 |
|
|
(6,101 |
) |
Non-operating expenses
(income): |
|
|
|
|
|
|
|
Interest expense |
13,409 |
|
|
13,273 |
|
|
40,527 |
|
|
33,947 |
|
Other income, net |
(317 |
) |
|
(94 |
) |
|
(212 |
) |
|
(282 |
) |
Loss before provision for
(benefit from) income taxes |
(6,799 |
) |
|
(17,184 |
) |
|
(7,392 |
) |
|
(39,766 |
) |
Provision for (benefit from)
income taxes |
244 |
|
|
(7,288 |
) |
|
69 |
|
|
(7,885 |
) |
Net loss |
$ |
(7,043 |
) |
|
$ |
(9,896 |
) |
|
$ |
(7,461 |
) |
|
$ |
(31,881 |
) |
|
|
|
|
|
|
|
|
Basic loss per share |
$ |
(0.75 |
) |
|
$ |
(1.07 |
) |
|
$ |
(0.80 |
) |
|
$ |
(3.46 |
) |
Diluted loss per share |
$ |
(0.75 |
) |
|
$ |
(1.07 |
) |
|
$ |
(0.80 |
) |
|
$ |
(3.46 |
) |
BLUELINX HOLDINGS
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands, except share
data)(Unaudited)
|
September 28, 2019 |
|
December 29, 2018 |
ASSETS |
Current assets: |
|
|
|
Cash |
$ |
12,847 |
|
|
$ |
8,939 |
|
Receivables, less allowances of $3,811 and $3,656,
respectively |
243,905 |
|
|
208,434 |
|
Inventories, net |
362,389 |
|
|
341,851 |
|
Other current assets |
42,366 |
|
|
40,629 |
|
Total current assets |
661,507 |
|
|
599,853 |
|
Property and equipment, at
cost |
321,004 |
|
|
308,398 |
|
Accumulated depreciation |
(113,740 |
) |
|
(103,285 |
) |
Property and equipment,
net |
207,264 |
|
|
205,113 |
|
Operating lease right-of-use
assets |
53,689 |
|
|
— |
|
Goodwill |
47,772 |
|
|
47,772 |
|
Intangible assets, net |
28,354 |
|
|
35,222 |
|
Deferred tax assets |
54,784 |
|
|
52,645 |
|
Other non-current assets |
19,259 |
|
|
19,284 |
|
Total assets |
$ |
1,072,629 |
|
|
$ |
959,889 |
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
Current liabilities: |
|
|
|
Accounts payable |
$ |
179,376 |
|
|
$ |
149,188 |
|
Accrued compensation |
8,780 |
|
|
7,974 |
|
Current maturities of long-term debt, net of discount and debt
issuance costs of $74 and $64, respectively |
1,790 |
|
|
1,736 |
|
Finance leases - short-term |
8,373 |
|
|
7,555 |
|
Real estate deferred gains - short-term |
4,448 |
|
|
5,330 |
|
Operating lease liabilities - short-term |
6,381 |
|
|
— |
|
Other current liabilities |
13,835 |
|
|
24,985 |
|
Total current liabilities |
222,983 |
|
|
196,768 |
|
Non-current liabilities: |
|
|
|
Long-term debt, net of discount and debt issuance costs of
$12,081 and $12,665, respectively |
488,097 |
|
|
497,939 |
|
Finance leases - long-term |
155,258 |
|
|
143,486 |
|
Real estate financing obligation |
44,725 |
|
|
— |
|
Real estate deferred gains - long-term |
82,400 |
|
|
86,011 |
|
Operating lease liabilities - long-term |
47,418 |
|
|
— |
|
Pension benefit obligation |
27,625 |
|
|
26,668 |
|
Other non-current liabilities |
24,694 |
|
|
23,680 |
|
Total liabilities |
1,093,200 |
|
|
974,552 |
|
Commitments and
Contingencies |
|
|
|
STOCKHOLDERS' DEFICIT: |
Common Stock, $0.01 par value, Authorized - 20,000,000 shares,
Issued and Outstanding - 9,364,959 and 9,293,794,
respectively |
94 |
|
|
92 |
|
Additional paid-in capital |
260,883 |
|
|
258,596 |
|
Accumulated other comprehensive loss |
(39,157 |
) |
|
(37,129 |
) |
Accumulated stockholders’ deficit |
(242,391 |
) |
|
(236,222 |
) |
Total stockholders’
deficit |
(20,571 |
) |
|
(14,663 |
) |
Total liabilities and
stockholders’ deficit |
$ |
1,072,629 |
|
|
$ |
959,889 |
|
BLUELINX HOLDINGS
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In
thousands)(Unaudited)
|
Nine Months Ended |
|
September 28, 2019 |
|
September 29, 2018 |
Net cash used in
operating activities |
$ |
(54,940 |
) |
|
$ |
(59,293 |
) |
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Proceeds from sale of assets |
13,699 |
|
|
107,972 |
|
Acquisition of business, net of cash acquired |
— |
|
|
(353,094 |
) |
Property and equipment investments |
(3,321 |
) |
|
(1,872 |
) |
Net cash provided by
(used in) investing activities |
10,378 |
|
|
(246,994 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Borrowings on revolving credit facilities |
512,379 |
|
|
736,254 |
|
Repayments on revolving credit facilities |
(490,842 |
) |
|
(503,577 |
) |
Borrowings on term loan |
— |
|
|
180,000 |
|
Repayments on term loan |
(31,899 |
) |
|
(900 |
) |
Principal payments on mortgage |
— |
|
|
(97,847 |
) |
Proceeds from real estate transactions |
44,725 |
|
|
— |
|
Change in outstanding payments |
22,348 |
|
|
14,671 |
|
Debt issuance costs |
(1,588 |
) |
|
(10,470 |
) |
Payments on finance lease obligations |
(6,445 |
) |
|
(5,890 |
) |
Repurchase of shares to satisfy employee tax withholdings |
(208 |
) |
|
(3,020 |
) |
Net cash provided by
financing activities |
48,470 |
|
|
309,221 |
|
|
|
|
|
Net change in cash |
3,908 |
|
|
2,934 |
|
Cash at beginning of
period |
8,939 |
|
|
4,696 |
|
Cash at end of period |
$ |
12,847 |
|
|
$ |
7,630 |
|
BLUELINX HOLDINGS
INC.SUPPLEMENTARY INFORMATION(In
thousands)(Unaudited)
Pro Forma Sales, Gross Profit and Net
Loss
The following unaudited consolidated pro forma information
presents consolidated information as if the Cedar Creek acquisition
had occurred on January 1, 2017:
|
|
Pro forma |
|
|
Quarter Ended |
|
Nine Months Ended |
(In
thousands) |
|
September 28, 2019 |
|
September 29, 2018 |
|
September 28, 2019 |
|
September 29, 2018 |
Net sales |
|
$ |
678,665 |
|
|
$ |
859,776 |
|
|
$ |
2,023,814 |
|
|
$ |
2,592,597 |
|
Gross Profit |
|
93,713 |
|
|
92,623 |
|
|
273,925 |
|
|
313,321 |
|
Net income (loss) |
|
(5,194 |
) |
|
(6,219 |
) |
|
937 |
|
|
(5,455 |
) |
The pro forma amounts above have been calculated in accordance
with GAAP after applying the Company's accounting policies and
adjusting the three and nine months ended September 28, 2019
for $1.8 million and $8.4 million, and the three and nine months
ended September 29, 2018 for $3.7 million and $40.3 million,
respectively, for transaction related costs, net of tax. Due to the
net loss for the three-month period ended September 28, 2019,
114,000 incremental shares from share-based compensation
arrangements were excluded from the computation of diluted weighted
average shares outstanding because their effect would be
anti-dilutive. The pro forma amounts do not include any potential
synergies, cost savings or other expected benefits of the
acquisition, are presented for illustrative purposes only, and are
not necessarily indicative of results that would have been achieved
had the acquisition occurred as of January 1, 2017, or of future
operating performance.
BLUELINX HOLDINGS
INC.RECONCILIATION OF NON-GAAP
MEASUREMENTS(In
thousands)(Unaudited)
The following schedule reconciles net loss to
Adjusted EBITDA:
|
Quarter Ended |
|
Nine Months Ended |
|
September 28, 2019 |
|
September 29, 2018 |
|
September 28, 2019 |
|
September 29, 2018 |
Net loss |
$ |
(7,043 |
) |
|
$ |
(9,896 |
) |
|
$ |
(7,461 |
) |
|
$ |
(31,881 |
) |
Adjustments: |
|
|
|
|
|
|
|
Depreciation and amortization |
7,577 |
|
|
8,068 |
|
|
22,408 |
|
|
18,177 |
|
Interest expense |
13,409 |
|
|
13,273 |
|
|
40,527 |
|
|
33,947 |
|
Provision for (benefit from) income taxes |
244 |
|
|
(7,288 |
) |
|
69 |
|
|
(7,885 |
) |
Gain from sales of property |
(38 |
) |
|
— |
|
|
(9,798 |
) |
|
— |
|
Amortization of deferred gain |
(1,071 |
) |
|
(1,300 |
) |
|
(2,972 |
) |
|
(3,769 |
) |
Share-based compensation expense |
1,156 |
|
|
1,708 |
|
|
2,498 |
|
|
14,670 |
|
Multi-employer pension withdrawal |
954 |
|
|
6,510 |
|
|
954 |
|
|
6,510 |
|
Inventory step-up adjustment |
— |
|
|
868 |
|
|
— |
|
|
11,786 |
|
Merger and acquisition costs (1) |
2,482 |
|
|
3,825 |
|
|
11,272 |
|
|
19,058 |
|
Restructuring, severance, and legal |
1,302 |
|
|
844 |
|
|
3,015 |
|
|
1,071 |
|
Refinancing related expenses |
— |
|
|
— |
|
|
— |
|
|
— |
|
Adjusted EBITDA |
$ |
18,972 |
|
|
$ |
16,612 |
|
|
$ |
60,512 |
|
|
$ |
61,684 |
|
____________________
(1) Reflects primarily legal, professional and
other integration costs related to the Cedar Creek acquisition
The following table reconciles our pro forma net income (loss)
to pro forma Adjusted EBITDA:
|
Quarter Ended |
|
Nine Months Ended |
|
September 28, 2019 |
|
September 29, 2018 |
|
September 28, 2019 |
|
September 29, 2018 |
Pro forma net income
(loss) |
$ |
(5,194 |
) |
|
$ |
(6,219 |
) |
|
$ |
937 |
|
|
$ |
(5,455 |
) |
Adjustments: |
|
|
|
|
|
|
|
Depreciation and amortization |
7,577 |
|
|
8,068 |
|
|
22,408 |
|
|
23,505 |
|
Interest expense |
13,409 |
|
|
13,273 |
|
|
40,527 |
|
|
39,884 |
|
Provision for (benefit from) income taxes |
877 |
|
|
(6,272 |
) |
|
2,943 |
|
|
(3,168 |
) |
Gain from sales of property |
(38 |
) |
|
— |
|
|
(9,798 |
) |
|
— |
|
Amortization of deferred gain |
(1,071 |
) |
|
(1,300 |
) |
|
(2,972 |
) |
|
(3,769 |
) |
Share-based compensation expense |
1,156 |
|
|
1,708 |
|
|
2,498 |
|
|
14,670 |
|
Multi-employer pension withdrawal |
954 |
|
|
6,510 |
|
|
954 |
|
|
6,510 |
|
Inventory step-up adjustment |
— |
|
|
— |
|
|
— |
|
|
— |
|
Merger and acquisition costs (1) |
— |
|
|
— |
|
|
— |
|
|
— |
|
Restructuring, severance, and legal |
1,302 |
|
|
844 |
|
|
3,015 |
|
|
1,071 |
|
Pro forma adjusted EBITDA |
$ |
18,972 |
|
|
$ |
16,612 |
|
|
$ |
60,512 |
|
|
$ |
73,248 |
|
BlueLinx (NYSE:BXC)
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