Revenue Grows 28%
Unit Volume Grows 12%
ATLANTA, Aug. 5, 2010 (GLOBE NEWSWIRE) -- BlueLinx Holdings Inc. (NYSE:BXC), a leading distributor of building products in North America, today reported financial results for the second quarter ended July 3, 2010.
Revenues increased 27.7% to $540.8 million from $423.5 million for the same period a year ago. The increase reflects a 45.1% increase in structural product sales and a 14.4% increase in specialty product sales. Overall unit volume rose 11.9% compared to the year-ago period. The Company incurred a net loss of $3.4 million, or $0.11 per diluted share for the second quarter of 2010, compared with net profit of $0.6 million, or $0.02 per diluted share, for the second quarter of 2009, which benefited from $19.4 million in pre-tax net gains from significant special items.
Gross profit for the second quarter totaled $64.1 million, up 32.8% from $48.3 million in the prior-year period. Gross margins increased to 11.9% from the 11.4% generated in the year earlier period. Total operating expenses increased $22.8 million, or 60.4% from the same period a year ago, which benefited from $20.5 million in net gains from significant special items. Reported operating income for the quarter was $3.6 million, compared with an operating profit of $10.6 million a year ago.
"The second-quarter business climate was characterized by unprecedented volatility in the structural wood-based products market and a sluggish recovery of demand for products related to new home construction." said BlueLinx President and CEO George Judd. "Despite this challenging environment, we performed well as we grew our unit volume by 11.9% and increased our gross profit by 32.8%. We also remained focused on cost management reducing our selling, general and administrative expenses to 10.6% of sales.
For the six months ended July 3, 2010, net loss totaled $18.1 million, or $0.59 per diluted share, on revenues of $971.8 million, compared with a net loss of $60.0 million, or $1.93 per diluted share, on revenues of $830.6 million a year ago. The increase in revenue was largely due to the 14% increase in housing construction activity relative to the prior period, increases in structural wood-based selling prices and the Company's focus on targeted growth initiatives. Gross profit for the six months ended July 3, 2010 totaled $116.4 million and gross margin was 12.0%, compared with $92.6 million and 11.1%, respectively, a year earlier. Operating expenses increased to $120.8 million from $100.4 million a year ago, which included $19.4 million in net gains from significant special items.
The Company's operating results for the 2010 and 2009 second quarter and year-to-date periods, adjusted for significant special items, are shown in the following table (see accompanying financial schedules for full financial details and reconciliations of non-GAAP financial measures to their GAAP equivalents):
|
in millions, except per share amounts (unaudited) |
Quarters Ended |
Six Months Ended |
||
|
July 3, 2010 |
July 4, 2009 |
July 3, 2010 |
July 4, 2009 |
|
| Pretax (loss) income | ($3.4) | $0.6 | ($18.1) | ($32.0) |
| Gain on early cancellation of Master Supply Agreement with G-P | -- | (17.4) | -- | (17.4) |
| Gain on sale of certain surplus properties | -- | (4.2) | -- | (4.2) |
| Changes associated with the ineffective interest rate swap | (1.2) | 1.1 | (2.1) | 5.9 |
| Facility consolidation & severance related costs | -- | 1.1 | -- | 2.2 |
| Write-off of debt issuance costs | -- | -- | -- | 1.4 |
| Adjusted pretax loss | (4.6) | (18.8) | (20.2) | (44.1) |
| Adjusted benefit from income taxes | (1.7) | (7.9) | (7.8) | (17.2) |
| Adjusted net loss | ($2.9) | ($10.9) | ($12.4) | ($26.9) |
| Diluted weighted average shares | 30.6 | 32.7 | 30.6 | 31.1 |
| Adjusted diluted net loss per share applicable to common shares | ($0.09) | ($0.33) | ($0.41) | ($0.86) |
For the quarter and year-to-date periods ended July 3, 2010, the above table reflects the effect of a reduction to the fair value of the Company's ineffective interest rate swap offset by the continued amortization of the other comprehensive loss related to the ineffective interest rate swap into interest expense. The adjusted benefit from income taxes reflected in the table is based on the Company's effective tax rate excluding the valuation allowance related to its deferred tax assets and the tax effect of significant special items. The valuation allowance recorded for the quarter and year-to-date periods are $1.3 million and $7.0 million, respectively. The adjusted benefit from income taxes assumes the Company is in a position to demonstrate that the deferred tax assets are realizable.
For the quarter and year-to-date periods ended July 4, 2009, the above table reflects the following events: (i) the Company reached an agreement with G-P to cancel our Master Supply Agreement one year prior to the original expiration date, with G-P agreeing to make four quarterly payments to BlueLinx starting May 1, 2009; (ii) the Company sold certain excess property during the second quarter; (iii) the Company reduced its borrowings during the second quarter under its revolving credit facility by $15 million resulting in a non-cash interest charge related to its ineffective interest rate swap. In the year-to-date period, the Company reduced its borrowings under its revolving credit facility by $75 million resulting in a non-cash interest charge related to its ineffective interest rate swap. In addition the changes associated with the ineffective interest rate swap reflect the effect of changes in the fair value and the continued amortization of the other comprehensive loss into interest expense; (iv) the Company recorded other restructuring costs related to facility consolidations and severance expense; and (v) the Company wrote-off a portion of its debt issuance costs related to the Company's decision to lower its revolving credit facility from $800 million to $500 million which resulted in a non-cash charge. The adjusted benefit from income taxes reflected in the table is based on the Company's effective tax rate excluding the valuation allowance recorded against its deferred tax asset and the tax effect of significant special items. The valuation allowance recorded for the year-to-date period ended July 4, 2009 was $40.2 million. The adjusted benefit from income taxes assumes the Company is in a position to demonstrate that the deferred tax assets are realizable.
Conference Call
BlueLinx 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 web site, 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 by calling 706-645-9291, Conference ID# 90749467. 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 or other nonrecurring events, when appropriate, 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. 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.
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 approximately 2,000 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 60 warehouses. BlueLinx 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, including statements relating to our outlook on the housing industry. 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' 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 supply and/or demand for products that it distributes, 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, including the availability of residential mortgages; 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 January 2, 2010 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, changes in expectation or otherwise, except as required by law.
| BlueLinx Holdings Inc. | ||||
| Statements of Operations | ||||
| in thousands, except per share data | ||||
| Quarters Ended | Six Months Ended | |||
|
July 3, 2010 |
July 4, 2009 |
July 3, 2010 |
July 4, 2009 |
|
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Net sales | $ 540,781 | $ 423,526 | $ 971,831 | $ 830,637 |
| Cost of sales | 476,662 | 375,226 | 855,434 | 738,061 |
| Gross profit | 64,119 | 48,300 | 116,397 | 92,576 |
| Operating expenses: | ||||
| Selling, general, and administrative | 57,089 | 50,852 | 113,603 | 108,517 |
| Net gain from terminating the Georgia-Pacific supply agreement | -- | (17,351) | -- | (17,351) |
| Depreciation and amortization | 3,434 | 4,241 | 7,178 | 9,271 |
| Total operating expenses | 60,523 | 37,742 | 120,781 | 100,437 |
| Operating income (loss) | 3,596 | 10,558 | (4,384) | (7,861) |
| Non-operating expenses: | ||||
| Interest expense | 8,205 | 8,506 | 15,520 | 16,623 |
| Changes associated with the ineffective interest rate swap | (1,256) | 1,078 | (2,061) | 5,910 |
| Write-off of debt issuance costs | -- | -- | -- | 1,407 |
| Other expense, net | 18 | 315 | 251 | 158 |
| (Loss) income before provision for income taxes | (3,371) | 659 | (18,094) | (31,959) |
| Provision for income taxes | 36 | 31 | 52 | 28,066 |
| Net (loss) income | $ (3,407) | $ 628 | $ (18,146) | $ (60,025) |
| Basic weighted average number of common shares outstanding | 30,587 | 32,566 | 30,587 | 31,054 |
| Basic net (loss) income per share applicable to common stock | $ (0.11) | $ 0.02 | $ (0.59) | $ (1.93) |
| Diluted weighted average number of common shares outstanding | 30,587 | 32,664 | 30,587 | 31,054 |
| Diluted net (loss) income per share applicable to common stock | $ (0.11) | $ 0.02 | $ (0.59) | $ (1.93) |
| BlueLinx Holdings Inc. | ||
| Balance Sheets | ||
| in thousands | ||
|
July 3, 2010 |
January 2, 2010 |
|
| (unaudited) | (unaudited) | |
| Assets: | ||
| Current assets: | ||
| Cash and cash equivalents | $ 18,821 | $ 29,457 |
| Receivables, net | 201,569 | 119,347 |
| Inventories, net | 226,158 | 173,185 |
| Other current assets | 22,442 | 44,970 |
| Total current assets | 468,990 | 366,959 |
| Property, plant, and equipment: | ||
| Land and improvements | 52,515 | 52,621 |
| Buildings | 96,056 | 96,145 |
| Machinery and equipment | 71,357 | 69,767 |
| Construction in progress | 1,137 | 791 |
| Property, plant, and equipment, at cost | 221,065 | 219,324 |
| Accumulated depreciation | (88,175) | (82,141) |
| Property, plant, and equipment, net | 132,890 | 137,183 |
| Other non-current assets | 42,167 | 42,704 |
| Total assets | $ 644,047 | $ 546,846 |
| Liabilities: | ||
| Current liabilities: | ||
| Accounts payable | $ 103,478 | $ 64,618 |
| Bank overdrafts | 37,112 | 27,232 |
| Accrued compensation | 6,228 | 4,879 |
| Current maturities of long-term debt | 37,023 | -- |
| Other current liabilities | 19,625 | 22,508 |
| Total current liabilities | 203,466 | 119,237 |
| Noncurrent liabilities: | ||
| Long-term debt | 373,333 | 341,669 |
| Other non-current liabilities | 32,880 | 35,120 |
| Total liabilities | 609,679 | 496,026 |
| Shareholders' Equity: | ||
| Common stock | 327 | 322 |
| Additional paid in capital | 146,416 | 145,035 |
| Accumulated other comprehensive loss | (8,067) | (8,375) |
| Accumulated deficit | (104,308) | (86,162) |
| Total shareholders' equity | 34,368 | 50,820 |
| Total liabilities and shareholders' equity | $ 644,047 | $ 546,846 |
| BlueLinx Holdings Inc. | ||
| Statements of Cash Flows | ||
| in thousands | ||
| Six Months Ended | ||
|
July 3, 2010 |
July 4, 2009 |
|
| (unaudited) | (unaudited) | |
| Cash flows from operating activities: | ||
| Net loss | $ (18,146) | $ (60,025) |
|
Adjustments to reconcile net loss to cash used in operations: |
||
| Depreciation and amortization | 7,178 | 9,271 |
| Amortization of debt issuance costs | 379 | 1,229 |
| Net gain from terminating the Georgia-Pacific supply agreement | -- | (17,351) |
| Payment from terminating the Georgia-Pacific supply agreement | 4,706 | 4,706 |
| Gain from sale of facility | -- | (4,237) |
| Prepayment fee associated with sale of facility | -- | 616 |
| Changes associated with the ineffective interest rate swap | (2,061) | 5,910 |
| Write-off of debt issuance costs | -- | 1,407 |
| Deferred income tax (benefit) provision | (414) | 27,228 |
| Share-based compensation expense | 1,969 | 1,431 |
|
Decrease in restricted cash related to the ineffective interest rate swap, insurance, and other |
5,607 | 2,189 |
| Changes in assets and liabilities: | ||
| Receivables | (82,222) | (30,132) |
| Inventories | (52,973) | 26,903 |
| Accounts payable | 38,860 | 26,631 |
| Changes in other working capital | 18,538 | (3,629) |
| Other | (2,295) | 691 |
| Net cash used in operating activities | (80,874) | (7,162) |
| Cash flows from investing activities: | ||
| Property, plant, and equipment investments | (1,263) | (688) |
| Proceeds from disposition of assets | 656 | 6,995 |
| Net cash (used in) provided by investing activities | (607) | 6,307 |
| Cash flows from financing activities: | ||
| Repurchase of common stock | (583) | (1,624) |
| Increase (decrease) in the revolving credit facility | 68,687 | (75,000) |
| Payment of principal on mortgage | -- | (3,201) |
| Prepayment fee associated with sale of facility | -- | (616) |
| Payments on capital lease obligations | (473) | -- |
| Increase (decrease) in bank overdrafts | 9,880 | (10,328) |
| Increase in restricted cash related to the mortgage | (6,581) | (5,677) |
| Debt financing costs | (91) | -- |
| Other | 6 | (41) |
| Net cash provided by (used in) financing activities | 70,845 | (96,487) |
| Decrease in cash | (10,636) | (97,342) |
| Balance, beginning of period | 29,457 | 150,353 |
| Balance, end of period | $ 18,821 | $ 53,011 |
| BlueLinx Holdings Inc. | ||||
| Reconciliation of GAAP Loss to Adjusted Net Loss | ||||
| in thousands | ||||
| Quarters Ended | Six Months Ended | |||
|
July 3, 2010 |
July 4, 2009 |
July 3, 2010 |
July 4, 2009 |
|
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| GAAP net (loss) income | $ (3,407) | $ 628 | $ (18,146) | $ (60,025) |
| Gain on early cancellation of Master Supply Agreement with G-P | -- | (17,351) | -- | (17,351) |
| Gain from sale of certain surplus properties | -- | (4,237) | -- | (4,237) |
| Changes associated with the ineffective interest rate swap | (1,255) | 1,078 | (2,061) | 5,910 |
| Facility consolidations & severance related costs | -- | 1,074 | -- | 2,153 |
| Write-off of debt issuance costs | -- | -- | -- | 1,407 |
| Tax effect of selected charges | 485 | 7,918 | 795 | 5,093 |
| Valuation allowance | 1,301 | -- | 6,984 | 40,200 |
| Adjusted net loss | $ (2,876) | $ (10,890) | $ (12,428) | $ (26,850) |