Net Income of $0.18 Per Share On $1.08 Billion Revenue Gross Margin Rises to 11.0% for Quarter
ATLANTA, Aug. 7, 2007 (PRIME NEWSWIRE) -- BlueLinx Holdings Inc. (NYSE:BXC), a leading distributor of building products in North America, today reported financial results for the second quarter ended June 30, 2007.
The company's second-quarter net income totaled $5.4 million, or $0.18 per diluted share, compared with net income of $9.6 million, or $0.31 per share, in the year-ago period. The year-ago results included an after-tax charge of $3 million, or $0.10 per share, associated with the company's mortgage refinancing. Revenues of $1.08 billion declined 21.5% from $1.38 billion for the same period a year ago. The decline reflects a 25.1% drop in structural product sales and a 17% sales decline in specialty products. Approximately two-thirds of the sales decline in structural products resulted from unit volume, which fell 17.1% from a year ago. The specialty products sales decrease was largely due to unit volume, which declined 15.3%. Overall second-quarter unit volume for the company's estimated weighted end-use markets fell 12.8% from the prior year, driven by a 21.8% decline in housing starts and an 18.8% decline in manufactured housing.
Gross profit for the second quarter totaled $119.2 million, compared with $136.4 million in the prior-year period, largely reflecting reduced unit volume associated with the ongoing housing starts decline. The decrease in gross profit was offset in part by an increase in gross margin to 11% from 9.9% a year earlier. Structural product gross margin of 9.3% improved 230 basis points from the same period a year ago and 60 basis points from the previous quarter, due largely to ongoing effective management of our structural products business. Specialty product gross margin of 14% was down 40 basis points from a year ago, but up 10 basis points from the first quarter.
Total operating expenses of $98.7 million decreased $4.5 million, or 4.4%, from the same period a year ago, primarily reflecting lower payroll costs related to headcount reductions implemented in the third quarter of 2006. The operating expense decrease was partially offset by normal ongoing operating expense related to Austin Hardwoods, which was acquired last August, and expenses associated with business improvement programs. Operating income for the quarter totaled $20.6 million, compared with $33.3 million a year ago.
For the six months ended June 30, 2007, net income totaled $5.2 million, or $0.17 per fully diluted share, on revenues of $2.04 billion, compared with net income of $19.4 million, or $0.63 per share, on revenues of $2.76 billion a year ago. The declines were largely due to reduced unit volume and prices resulting from the demand slowdown in business related to new home construction.
Gross profit for the six months totaled $223 million and gross margin was 10.9%, compared with $266.4 million and 9.7%, respectively, a year earlier. Operating expenses declined to $192.5 million from $205.5 million a year ago, primarily reflecting decreases in variable compensation and lower payroll costs related to the headcount reductions, partially offset by normal ongoing operating expenses associated with Austin Hardwoods and expenses associated with business improvement programs.
"The ongoing correction in the housing market continued to weigh on much of our business during the quarter," said Stephen Macadam, chief executive officer. "We continued to operate in a weak but generally stable business environment. In addition, wood-based structural product prices firmed somewhat during the quarter, with the average quarterly price for key grades rising about 10% from the first quarter of this year, after deteriorating continually during 2006. Despite the rise, we do not expect a prolonged price increase until more sustained demand returns with the eventual recovery of the housing sector.
"This challenging environment is continuing into the second half of 2007 and we do not see any signs of recovery on the horizon for our housing-related business," Macadam said. "We are focused on margin performance and diligently managing inventory, costs and working capital. At the same time, we are continuing to execute on our growth strategy by offering high-quality service to our customers, by forging new long-term relationships with suppliers and customers, and by continuing to invest in the processes and systems necessary to grow our company as a leading distributor of specialty building products."
Dividend
On August 6, 2007 the BlueLinx Board of Directors declared a $0.125 dividend on the company's common shares for the quarter ended June 30, 2007. The dividend is payable on September 28, 2007, to shareholders of record on September 14, 2007.
Conference Call
BlueLinx will host a conference call today at 10:00 a.m. Eastern Time, accompanied by a supporting slide presentation. Investors may listen to the conference call and download the presentation by going to the Investor Relations page of the BlueLinx Web site at www.BlueLinxCo.com. Investors also can access a recording of the conference call for one week by calling (706)645-9291, Conference ID# 10913212. 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 Web site where a replay of the Webcast will be available for 90 days.
Use of Non-GAAP Measures
BlueLinx reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). The company also believes that presentation of certain non-GAAP measures, i.e., results excluding certain charges, provides useful information for the understanding of its ongoing operations and enables investors to focus on period-over-period operating performance, without the impact of significant special items, and thereby enhances the user's overall understanding of the company's current financial performance relative to past performance and provides a better baseline for modeling future earnings expectations. Non-GAAP measures 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.
About BlueLinx Holdings Inc.
Headquartered in Atlanta, Georgia, BlueLinx Holdings Inc., operating through its wholly owned subsidiary BlueLinx Corporation, is a leading distributor of building products in North America. Employing more than 3,200 people, BlueLinx offers greater than 10,000 products from over 750 suppliers to service approximately 11,500 customers nationwide, including dealers, industrial manufacturers, manufactured housing producers and home improvement retailers. The company operates its distribution business from sales centers in Atlanta and Denver, and its network of more than 70 warehouses. BlueLinx, which is on the Fortune 500 list of the nation's largest companies, is traded on the New York Stock Exchange under the symbol BXC. Additional information about BlueLinx can be found on its Web site at www.BlueLinxCo.com.
Forward-looking Statements
This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 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 its control, that may cause our 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 supply and/or demand for products that we distribute, especially as a result of conditions in the residential housing market; general economic and business conditions in the United States; the activities of competitors; changes in significant operating expenses; changes in the availability of capital; the ability to identify acquisition opportunities and effectively and cost-efficiently integrate acquisitions; adverse weather patterns or conditions; acts of war or terrorist activities; variations in the performance of the financial 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 30, 2006, 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 or otherwise, except as required by law.
BlueLinx Holdings Inc. Statements of Operations in thousands, except per share data Quarters Ended Six Months Ended ---------------------- ---------------------- June 30, July 1, June 30, July 1, 2007 2006 2007 2006 ---------- ---------- ---------- ---------- (unaudited) (unaudited) (unaudited) (unaudited) Net sales $1,081,990 $1,378,950 $2,039,104 $2,755,556 Cost of sales 962,752 1,242,507 1,816,111 2,489,161 ---------- ---------- ---------- ---------- Gross profit 119,238 136,443 222,993 266,395 ---------- ---------- ---------- ---------- Operating expenses: Selling, general, and administrative 93,346 98,122 181,814 195,389 Depreciation and amortization 5,335 5,063 10,734 10,106 ---------- ---------- ---------- ---------- Total operating expenses 98,681 103,185 192,548 205,495 ---------- ---------- ---------- ---------- Operating income 20,557 33,258 30,445 60,900 Non-operating expenses: Interest expense 11,798 12,262 22,404 23,459 Charges associated with mortgage refinancing -- 4,864 -- 4,864 Other (income)/ expense, net (225) (69) (608) 12 ---------- ---------- ---------- ---------- Income before provision for income taxes 8,984 16,201 8,649 32,565 Provision for income taxes 3,550 6,590 3,404 13,160 ---------- ---------- ---------- ---------- Net income 5,434 9,611 5,245 19,405 ---------- ---------- ---------- ---------- Basic weighted average number of common shares outstanding 30,848 30,649 30,824 30,533 ========== ========== ========== ========== Basic net income per share applicable to common stock $ 0.18 $ 0.31 $ 0.17 $ 0.64 ========== ========== ========== ========== Diluted weighted average number of common shares outstanding 30,995 30,790 30,945 30,751 ========== ========== ========== ========== Diluted net income per share applicable to common stock $ 0.18 $ 0.31 $ 0.17 $ 0.63 ========== ========== ========== ========== Dividends declared per share of common stock $ 0.125 $ 0.125 $ 0.25 $ 0.25 ========== ========== ========== ========== BlueLinx Holdings Inc. Balance Sheets in thousands ----------- ----------- June 30, December 30, 2007 2006 ----------- ----------- (unaudited) Assets: Current assets: Cash $ 24,756 $ 27,042 Receivables 405,798 307,543 Inventories 470,222 410,686 Deferred income taxes 9,908 9,024 Other current assets 39,911 44,948 ----------- ----------- Total current assets 950,595 799,243 ----------- ----------- Property, plant, and equipment: Land and land improvements 57,172 56,985 Buildings 96,763 95,814 Machinery and equipment 66,732 61,955 Construction in progress 4,515 2,025 ----------- ----------- Property, plant, and equipment, at cost 225,182 216,779 Accumulated depreciation (46,544) (38,530) ----------- ----------- Property, plant, and equipment, net 178,638 178,249 Other non-current assets 23,238 26,870 ----------- ----------- Total assets 1,152,471 1,004,362 =========== =========== Liabilities : Current liabilities: Accounts payable $ 260,318 $ 195,815 Bank overdrafts 34,563 50,241 Accrued compensation 10,306 8,574 Current maturities of long-term debt 103,816 9,743 Other current liabilities 16,644 14,633 ----------- ----------- Total current liabilities 425,647 279,006 ----------- ----------- Noncurrent liabilities: Long-term debt 522,719 522,719 Deferred income taxes 1,870 1,101 Other long-term liabilities 10,842 12,137 ----------- ----------- Total liabilities 961,078 814,963 ----------- ----------- Shareholders' Equity: Common stock 312 309 Additional paid in capital 140,471 138,066 Accumulated other comprehensive income 2,537 412 Retained earnings 48,073 50,612 ----------- ----------- Total shareholders' equity 191,393 189,399 ----------- ----------- ----------- ----------- Total liabilities and equity $ 1,152,471 $ 1,004,362 =========== =========== BlueLinx Holdings Inc. Statements of Cash Flows in thousands Six Months Ended ---------------------- June 30 July 1, 2007 2006 --------- --------- (unaudited) (unaudited) Cash flows from operating activities: Net income $ 5,245 $ 19,405 Adjustments to reconcile net income to cash used in operations: Depreciation and amortization 10,734 10,106 Amortization of debt issue costs 1,215 1,409 Charges associated with mortgage refinancing -- 4,864 Deferred income tax benefit (1,563) (1,733) Share-based compensation 2,227 1,246 Excess tax benefits from share-based compensation arrangements (60) (863) Changes in assets and liabilities: Receivables (98,255) (70,028) Inventories (59,536) (59,093) Accounts payable 64,503 (13,733) Changes in other working capital 8,840 (5,515) Other 2,278 498 --------- --------- Net cash used in operating activities (64,372) (113,437) --------- --------- Cash flows from investing activities: Property, plant, and equipment investments (10,027) (2,785) Proceeds from sale of assets 1,086 332 --------- --------- Net cash used in investing activities (8,941) (2,453) --------- --------- Cash flows from financing activities: Proceeds from stock options exercised 323 1,483 Excess tax benefits from share-based compensation arrangements 60 863 Net increase in revolving credit facility 94,073 5,512 Proceeds from new mortgage -- 295,000 Debt financing costs -- (5,953) Retirement of old mortgage -- (165,000) Prepayment fees associated with old mortgage -- (2,475) Decrease in bank overdrafts (15,678) (3,034) Common dividends paid (7,784) (7,680) Other 33 -- --------- --------- Net cash provided by financing activities 71,027 118,716 --------- --------- Increase (decrease) in cash (2,286) 2,826 Balance, beginning of period 27,042 24,320 --------- --------- Balance, end of period $ 24,756 $ 27,146 ========= ========= BlueLinx Holdings, Inc. Reconciliation of Non-GAAP Financial Measures to their GAAP Equivalents in thousands, except per share data Quarters Ended Six Months Ended ------------------- ------------------- June 30, July 1, June 30, July 1, 2007 2006 2007 2006 -------- -------- -------- -------- (unaudited) (unaudited) Reconciliation of Income Before Charges and Income Before Charges Per Share: Net Income $ 5,434 $ 9,611 $ 5,245 $ 19,405 Reconciling Items: Write-off of unamortized debt issuance costs -- 2,828 -- 2,828 Termination penalty resulting from prepayment of old mortgage -- 1,650 -- 1,650 Unamortized exit penalty resulting from prepayment of old mortgage -- 386 -- 386 -------- -------- -------- -------- Charges associated with mortgage refinancing -- 4,864 -- 4,864 Tax effect of reconciling items at 39.0% -- (1,897) -- (1,897) -------- -------- -------- -------- Net income before mortgage refinancing(a) $ 5,434 $ 12,578 $ 5,245 $ 22,372 ======== ======== ======== ======== Diluted weighted average number of common shares outstanding: 30,995 30,790 30,945 30,751 Diluted net income per share applicable to common stock $ 0.18 $ 0.31 $ 0.17 $ 0.63 Reconciling Items: Write-off of unamortized debt issuance costs -- 0.09 -- 0.09 Termination penalty resulting from prepayment of old mortgage -- 0.06 -- 0.06 Unamortized exit penalty resulting from prepayment of old mortgage -- 0.01 -- 0.01 -------- -------- -------- -------- Charges associated with mortgage refinancing -- 0.16 -- 0.16 Tax effect of reconciling items at 39.0% -- (0.06) -- (0.06) -------- -------- -------- -------- Diluted net income before mortgage refinancing per share applicable to common stock (a) $ 0.18 $ 0.41 $ 0.17 $ 0.73 ======== ======== ======== ======== Note (a) -- Net income before mortgage refinancing is a non-GAAP performance measure and is not intended to be a performance measure that should be regarded as an alternative to or more meaningful than GAAP net income.