– Net income of $15.0 million; highest quarter
net income since 2004 –– Diluted earnings per share of $1.68 ––
Debt principal reduction of $87.2 million from Q3 2015 –
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
October 1, 2016.
“Our performance this quarter confirms that we
continue to make good progress on our key strategic initiatives of
monetizing our real estate and deleveraging the balance sheet. We
have successfully extended our asset-based credit facility,
prudently managed our working capital, and sold several of our
unoccupied facilities which have enabled us to significantly reduce
our debt from 2015 third quarter levels. In addition, we continue
to focus on our customers through our local market emphasis as we
improve our operational efficiencies and bottom line,” said Mitch
Lewis, President and Chief Executive Officer.
Susan O’Farrell, Senior Vice President and Chief
Financial Officer added, “We are pleased to announce we have sold
four unoccupied properties during the quarter, enabling us to pay
down our mortgage by an additional $16.6 million during the
quarter. The Company is also actively marketing additional
unoccupied facilities for sale and other operating facilities for
sale leaseback transactions which we anticipate announcing in the
next few months. With the progress we’ve made with our facility
monetization and inventory efficiency efforts, we have successfully
decreased our debt principal by $87.2 million and our operating
working capital by $71.5 million when compared to the same period a
year ago.”
Third Quarter Results Compared to Prior
Year PeriodBlueLinx generated net sales of $476.0 million
for the third quarter of fiscal 2016, compared to $517.8 million
from the prior year quarter. When excluding our strategic
operational efficiency initiatives, consisting of facility closures
and inventory rationalization efforts where we discontinued certain
underperforming products, adjusted net sales were $469.7 million
for the fiscal third quarter, an increase of $16.5 million from
this time a year ago.
The Company recorded gross profit of $60.1
million during the quarter with a gross margin of 12.6%, an
increase of 90 basis points from the prior year quarter.
The Company recorded net income of $15.0 million
for the quarter, with a diluted earnings per share of $1.68.
Adjusted EBITDA, which is a non-GAAP measure, was $11.1 million.
Excluding our strategic operational efficiency initiatives,
Adjusted EBITDA was up $1.5 million or 16.1% from the prior year
quarter.
First Nine Months of Fiscal 2016
Compared to Prior Year PeriodFor the nine months ended
fiscal 2016, the Company generated $1.46 billion in net sales
compared to $1.49 billion from the prior year period. When
excluding our strategic operational efficiency initiatives,
adjusted net sales were $1.35 billion, an increase of $57.74
million or 4.5% from the same period in 2015.
The Company recorded gross profit of $175.0
million with a gross margin of 12.0%, an increase of 50 basis
points from the prior year period. On an adjusted basis, excluding
the facility and inventory rationalization activity, gross margin
was 12.6%, an increase of 100 basis points from the nine months
ended October 3, 2015.
The Company recorded net income of $5.7 million
for the nine months ended fiscal 2016, up $11.2 million from this
period a year ago. Adjusted EBITDA, which is a non-GAAP measure,
for the nine month period was $30.7 million, an increase of 49%
from the first nine months in 2015. Excluding our strategic
operational efficiency initiatives, Adjusted EBITDA was up $13.0
million or 78.2% from the same period in 2015.
Working Capital and
LiquidityThe Company’s working capital initiatives drove
increased productivity, resulting in a reduction of its cash cycle
by seven days, when compared to the same period in 2015. As of
October 1, 2016, the Company had $68.9 million of excess
availability under its asset-based revolving credit facilities,
based on qualifying inventory and receivables. Additionally, on
November 3, 2016 the Company obtained an extension of the
maturity of the asset based credit facility to July 15, 2018.
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# 3043825. The recording will be
available two hours after the conference call has concluded.
Investors also can 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 (e.g., write-off of debt issuance costs, charges
associated with mortgage refinancing), 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, operational
efficiency initiatives such as facility closures and SKU
rationalization, for period over period comparability.
We present Adjusted EBITDA (and an exclusion of
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.
Adjusted sales and gross profit, non-GAAP
measures, are defined as net sales and gross profit at locations
excluding the effect of operational efficiency initiatives;
specifically, facility closures and the SKU rationalization
initiative. We believe adjusted sales and gross profit are helpful
in presenting comparability across periods without the effect of
our operational efficiency initiatives. We also believe
adjusted sales and gross profit can be 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 payable 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. Management of operating working capital
helps us monitor our progress in meeting our goals to maximize our
return on working capital assets. 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.
Cash cycle days are defined as the total number
of days to turn our inventory, receivables, and payables on a
trailing three month basis. Management of our cash cycle days helps
us monitor how efficiently we are generating cash from our short
term assets and liabilities.
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 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
January 2, 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 AND |
COMPREHENSIVE
INCOME (LOSS) |
(In thousands,
except per share data) |
(unaudited) |
|
|
Three Months Ended |
|
Nine Months Ended |
|
October 1,2016 |
|
October 3,2015 |
|
October 1,2016 |
|
October 3,2015 |
Net sales |
$ |
476,049 |
|
|
$ |
517,831 |
|
|
$ |
1,459,386 |
|
|
$ |
1,488,435 |
|
Cost of sales |
415,999 |
|
|
457,007 |
|
|
1,284,354 |
|
|
1,317,433 |
|
Gross profit |
60,050 |
|
|
60,824 |
|
|
175,032 |
|
|
171,002 |
|
Operating expenses
(income): |
|
|
|
|
|
|
|
Selling, general, and
administrative |
49,152 |
|
|
49,907 |
|
|
157,006 |
|
|
150,617 |
|
Gains from sales of property |
(13,940 |
) |
|
— |
|
|
(14,701 |
) |
|
— |
|
Depreciation and amortization |
2,220 |
|
|
2,439 |
|
|
7,091 |
|
|
7,155 |
|
Total operating expenses |
37,432 |
|
|
52,346 |
|
|
149,396 |
|
|
157,772 |
|
Operating income |
22,618 |
|
|
8,478 |
|
|
25,636 |
|
|
13,230 |
|
Non-operating expenses
(income): |
|
|
|
|
|
|
|
Interest expense |
6,105 |
|
|
7,115 |
|
|
19,562 |
|
|
20,358 |
|
Other (income) expense, net |
(17 |
) |
|
263 |
|
|
(255 |
) |
|
650 |
|
Income (loss) before
provision for (benefit from) income taxes |
16,530 |
|
|
1,100 |
|
|
6,329 |
|
|
(7,778 |
) |
Provision for (benefit
from) income taxes |
1,522 |
|
|
539 |
|
|
609 |
|
|
(2,264 |
) |
Net income (loss) |
$ |
15,008 |
|
|
$ |
561 |
|
|
$ |
5,720 |
|
|
$ |
(5,514 |
) |
|
|
|
|
|
|
|
|
Basic earnings per
share |
$ |
1.69 |
|
|
$ |
0.06 |
|
|
$ |
0.64 |
|
|
$ |
(0.63 |
) |
Diluted earnings per
share |
$ |
1.68 |
|
|
$ |
0.06 |
|
|
$ |
0.64 |
|
|
$ |
(0.63 |
) |
|
|
|
|
|
|
|
|
Comprehensive income
(loss): |
|
|
|
|
|
|
|
Net income (loss) |
$ |
15,008 |
|
|
$ |
561 |
|
|
$ |
5,720 |
|
|
$ |
(5,514 |
) |
Other comprehensive
income (loss): |
|
|
|
|
|
|
|
Foreign currency translation, net
of tax |
(29 |
) |
|
(214 |
) |
|
277 |
|
|
(530 |
) |
Amortization of unrecognized
pension loss, net of tax |
340 |
|
|
84 |
|
|
787 |
|
|
342 |
|
Pension curtailment, net of
tax |
— |
|
|
(1,852 |
) |
|
(12,185 |
) |
|
4,414 |
|
Total other comprehensive income
(loss) |
311 |
|
|
(1,982 |
) |
|
(11,121 |
) |
|
4,226 |
|
Comprehensive income
(loss) |
$ |
15,319 |
|
|
$ |
(1,421 |
) |
|
$ |
(5,401 |
) |
|
$ |
(1,288 |
) |
|
BLUELINX HOLDINGS
INC. |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(In thousands,
except share data) |
(unaudited) |
|
|
October 1, 2016 |
|
January 2, 2016 |
Assets: |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
4,704 |
|
|
$ |
4,808 |
|
Receivables, less allowances of
$3.3 million and $3.2 million, respectively |
163,388 |
|
|
138,545 |
|
Inventories, net |
207,909 |
|
|
226,660 |
|
Other current assets |
25,176 |
|
|
32,011 |
|
Total current
assets |
401,177 |
|
|
402,024 |
|
Property and
equipment: |
|
|
|
Land and land improvements |
35,873 |
|
|
40,108 |
|
Buildings |
80,839 |
|
|
89,006 |
|
Machinery and equipment |
75,240 |
|
|
79,173 |
|
Construction in progress |
1,539 |
|
|
255 |
|
Property and equipment,
at cost |
193,491 |
|
|
208,542 |
|
Accumulated depreciation |
(104,052 |
) |
|
(106,966 |
) |
Property and equipment,
net |
89,439 |
|
|
101,576 |
|
Other non-current
assets |
9,822 |
|
|
9,542 |
|
Total assets |
$ |
500,438 |
|
|
$ |
513,142 |
|
Liabilities: |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
93,777 |
|
|
$ |
88,087 |
|
Bank overdrafts |
15,554 |
|
|
17,287 |
|
Accrued compensation |
7,581 |
|
|
4,165 |
|
Current maturities of long-term
debt |
44,909 |
|
|
6,611 |
|
Other current liabilities |
12,728 |
|
|
14,023 |
|
Total current
liabilities |
174,549 |
|
|
130,173 |
|
Non-current
liabilities: |
|
|
|
Long-term debt |
318,245 |
|
|
377,773 |
|
Pension benefit obligation |
44,608 |
|
|
36,791 |
|
Other non-current liabilities |
12,769 |
|
|
14,301 |
|
Total liabilities |
550,171 |
|
|
559,038 |
|
Stockholders’
deficit: |
|
|
|
Common Stock, $0.01 par value,
Authorized - 20,000,000 shares, Issued - 9,031,263 and 8,943,846
respectively. |
90 |
|
|
89 |
|
Additional paid-in capital |
257,468 |
|
|
255,905 |
|
Accumulated other comprehensive
loss |
(45,895 |
) |
|
(34,774 |
) |
Accumulated stockholders’
deficit |
(261,396 |
) |
|
(267,116 |
) |
Total stockholders’
deficit |
(49,733 |
) |
|
(45,896 |
) |
Total liabilities and
stockholders’ deficit |
$ |
500,438 |
|
|
$ |
513,142 |
|
|
BLUELINX HOLDINGS
INC. |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In
thousands) |
(unaudited) |
|
|
Nine Months EndedOctober 1, 2016 |
|
Nine Months EndedOctober 3, 2015 |
Net cash used
in operating activities |
$ |
(170 |
) |
|
$ |
(28,253 |
) |
|
|
|
|
Property and equipment
investments |
(511 |
) |
|
(1,482 |
) |
Proceeds from sale of
assets |
18,900 |
|
|
621 |
|
Net cash
provided by (used in) investing activities |
18,389 |
|
|
(861 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Repayments on revolving
credit facilities |
(399,283 |
) |
|
(293,169 |
) |
Borrowings from
revolving credit facilities |
401,963 |
|
|
346,028 |
|
Principal payments on
mortgage |
(26,041 |
) |
|
(8,903 |
) |
Decrease in bank
overdrafts |
(1,733 |
) |
|
(9,159 |
) |
Decrease in restricted
cash related to the mortgage |
9,118 |
|
|
117 |
|
Other, net |
(2,347 |
) |
|
(3,418 |
) |
Net cash provided by
(used in) financing activities |
(18,323 |
) |
|
31,496 |
|
|
|
|
|
Increase (decrease) in
cash |
(104 |
) |
|
2,382 |
|
Cash balance, beginning
of period |
4,808 |
|
|
4,522 |
|
Cash balance, end of
period |
$ |
4,704 |
|
|
$ |
6,904 |
|
|
BLUELINX HOLDINGS
INC.RECONCILIATION OF NON-GAAP
MEASUREMENTS(In
thousands)(unaudited)
The following schedule reconciles net income
(loss) to Adjusted EBITDA, including Adjusted EBITDA less
operational efficiency initiatives:
|
Quarter Ended |
|
Nine Months Ended |
|
October 1,2016 |
|
October 3,2015 |
|
October 1,2016 |
|
October 3,2015 |
Net income (loss) |
$ |
15,008 |
|
|
$ |
561 |
|
|
$ |
5,720 |
|
|
$ |
(5,514 |
) |
Adjustments: |
|
|
|
|
|
|
|
Depreciation and amortization |
2,220 |
|
|
2,439 |
|
|
7,091 |
|
|
7,155 |
|
Interest expense |
6,105 |
|
|
7,115 |
|
|
19,562 |
|
|
20,358 |
|
Provision for (benefit from) income
taxes |
1,522 |
|
|
539 |
|
|
609 |
|
|
(2,264 |
) |
Gain from sales of property |
(13,940 |
) |
|
— |
|
|
(14,701 |
) |
|
— |
|
Share-based compensation
expense |
776 |
|
|
379 |
|
|
1,621 |
|
|
1,514 |
|
Restructuring, severance, and
legal |
(751 |
) |
|
(530 |
) |
|
7,321 |
|
|
(595 |
) |
Refinancing-related expenses |
135 |
|
|
— |
|
|
3,518 |
|
|
— |
|
Adjusted EBITDA |
$ |
11,075 |
|
|
$ |
10,503 |
|
|
$ |
30,741 |
|
|
$ |
20,654 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
11,075 |
|
|
$ |
10,503 |
|
|
$ |
30,741 |
|
|
$ |
20,654 |
|
Less: Operational efficiency
initiatives |
— |
|
|
960 |
|
|
1,229 |
|
|
4,091 |
|
Adjusted EBITDA less
operational efficiency initiatives |
$ |
11,075 |
|
|
$ |
9,543 |
|
|
$ |
29,512 |
|
|
$ |
16,563 |
|
We define Adjusted EBITDA as an amount equal to
net income (loss) plus interest expense and all interest expense
related items (e.g., write-off of debt issuance costs, charges
associated with mortgage refinancing), income taxes, depreciation
and amortization, and further adjusted to exclude certain non-cash
items such as gains from sales of property, and other adjustments
to Consolidated Net Income (Loss). Further, we also exclude, as an
additional measure which we refer to as Adjusted EBITDA less
operational efficiency initiatives, the effects of certain
initiatives we have undertaken such as facility closures and SKU
rationalization, for period over period comparability. The
following table sets forth a reconciliation of net sales and gross
profit to the non-GAAP measures of adjusted sales and adjusted
gross profit versus comparable prior periods:
|
Quarter Ended |
|
Nine Months Ended |
|
October 1,2016 |
|
October 3,2015 |
|
October 1,2016 |
|
October 3,2015 |
Net sales |
$ |
476,049 |
|
|
$ |
517,831 |
|
|
$ |
1,459,386 |
|
|
$ |
1,488,435 |
|
Less: Operational efficiency
initiatives |
(6,349 |
) |
|
(64,585 |
) |
|
(105,775 |
) |
|
(192,566 |
) |
Adjusted net sales |
$ |
469,700 |
|
|
$ |
453,246 |
|
|
$ |
1,353,611 |
|
|
$ |
1,295,869 |
|
Adjusted year-over-year
percentage increase |
3.6 |
% |
|
|
|
4.5 |
% |
|
|
|
|
|
|
|
|
|
|
Gross profit |
$ |
60,050 |
|
|
$ |
60,824 |
|
|
$ |
175,032 |
|
|
$ |
171,002 |
|
Less: Operational efficiency
initiatives |
(1,923 |
) |
|
(6,516 |
) |
|
(4,204 |
) |
|
(20,128 |
) |
Adjusted gross
profit |
$ |
58,127 |
|
|
$ |
54,308 |
|
|
$ |
170,828 |
|
|
$ |
150,874 |
|
The adjusted net sales and gross profit
schedule, presented above, includes net sales and gross profit at
locations excluding the effect of operational efficiency
initiatives; specifically, facility closures and the SKU
rationalization initiative, for period over period comparability.
The above schedule 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
sales and gross profit, as used herein, are not necessarily
comparable to other similarly titled captions of other companies
due to differences in methods of calculation.
BLUELINX HOLDINGS
INC.SUPPLEMENTARY INFORMATION(In
thousands)(unaudited)
Debt Principal
Additional information regarding our debt
principal payable, which is a GAAP metric, may be useful to
investors. The following schedule presents debt principal payable
for the third quarters of fiscal 2016 and 2015, respectively:
|
October 1,2016 |
|
October 3,2015 |
|
YOY Change |
Revolving credit
facilities - principal |
$ |
223,157 |
|
|
$ |
283,674 |
|
|
$ |
(60,517 |
) |
Mortgage -
principal |
142,159 |
|
|
168,820 |
|
|
(26,661 |
) |
Total debt principal
payable |
$ |
365,316 |
|
|
$ |
452,494 |
|
|
$ |
(87,178 |
) |
Operating Working Capital
The following schedule displays the selected
balance sheet components of our operating working capital
calculation:
|
October 1,2016 |
|
|
October 3,2015 |
|
YOYChange |
Current assets: |
|
|
|
|
|
|
Cash |
$ |
4,704 |
|
|
|
$ |
6,904 |
|
|
$ |
(2,200 |
) |
Receivables, less allowance for
doubtful accounts |
163,388 |
|
|
|
187,344 |
|
|
(23,956 |
) |
Inventories, net |
207,909 |
|
|
|
255,035 |
|
|
(47,126 |
) |
Other current assets |
25,176 |
|
|
|
33,348 |
|
|
(8,172 |
) |
Total current
assets |
$ |
401,177 |
|
|
|
$ |
482,631 |
|
|
$ |
(81,454 |
) |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts payable |
$ |
93,777 |
|
|
|
$ |
101,540 |
|
|
$ |
(7,763 |
) |
Bank overdrafts |
15,554 |
|
|
|
18,121 |
|
|
(2,567 |
) |
Accrued compensation |
7,581 |
|
|
|
4,466 |
|
|
3,115 |
|
Current maturities of long-term
debt |
44,909 |
|
|
|
203,022 |
|
|
(158,113 |
) |
Other current liabilities |
12,728 |
|
|
|
15,474 |
|
|
(2,746 |
) |
Total current
liabilities |
$ |
174,549 |
|
|
|
$ |
342,623 |
|
|
$ |
(168,074 |
) |
|
|
|
|
|
|
|
Operating working
capital |
$ |
271,537 |
|
|
|
$ |
343,030 |
|
|
$ |
(71,493 |
) |
Operating working capital is an important
measurement we use to determine the efficiencies of our operations
and our ability to readily convert assets into cash. Operating
working capital is defined as current assets less current
liabilities plus the current portion of long-term debt.
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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