updated 2/17/2011 7:16:25 AM ET 2011-02-17T12:16:25

– Net Loss of $0.66 Per Share as Housing-Related Recovery Slows Down –

– Specialty Revenue Growth Reported in Fourth Quarter –

ATLANTA, Feb. 17, 2011 (GLOBE NEWSWIRE) -- BlueLinx Holdings Inc. (NYSE:BXC), a leading distributor of building products in North America, today reported financial results for the fourth quarter and full year ended January 1, 2011.

Revenues increased 0.5% to $367.9 million from $366.1 million for the same period a year ago. The increase reflects a 7.4% increase in specialty product sales and a 9.5% decrease in structural product sales. Overall unit volume declined 4.3%, with a 5.9% increase in specialty unit volume being offset by a 16.5% decline in structural unit volume. The Company incurred a net loss of $20.2 million, or $0.66 per diluted share for the fourth quarter of 2010, compared with net income of $12.0 million, or $0.37 per diluted share, for the fourth quarter of 2009 which included a tax benefit of $23.6 million or $0.72 per diluted share.

Gross profit for the fourth quarter totaled $44.3 million, down 2.1% from $45.3 million in the prior-year period. Gross margins decreased to 12.1% from the near record level of 12.4% generated in the year earlier period. The decline in overall gross margin was driven by a 0.6% decline in specialty gross margins largely resulting from shifts in channel mix. Total operating expenses increased to $56.5 million from $50.1 million a year ago, largely driven by a $6.0 million gain on a property sale realized in the year ago period. Reported operating loss for the quarter was $12.2 million, compared with an operating loss of $4.8 million a year ago.

"BlueLinx' fourth-quarter operational performance was impacted by the continuing difficult conditions of the housing and construction markets as the recovery slowed down and we experienced the normal seasonal slow down associated with our fourth quarter," said BlueLinx President and CEO George Judd. "In the face of this challenging operating environment our financial results demonstrate modest revenue growth, strong gross margin performance, and diligent cost management. We generated approximately $18 million in cash from operations during the quarter. 

"While this difficult economic period continues, we remain focused on the strategic initiatives that will build a stronger, more profitable company. During the quarter we grew specialty revenue, a key strategic focus for BlueLinx, to 59% of our total revenues driven by a 5.9% increase in specialty unit volume," Mr. Judd added.

For the full year ended January 1, 2011, net loss totaled $53.2 million, or $1.73 per diluted share, on revenues of $1.80 billion, compared with a net loss of $61.5 million, or $1.98 per diluted share, on revenues of $1.65 billion a year ago. The increase in revenue was largely due to the 5.9% increase in housing construction activity relative to the prior period, increases in structural wood-based selling prices relative to the prior period, and the Company's focus on targeted growth initiatives. Gross profit for the full year ended January 1, 2011 totaled $210.7 million and gross margin was 11.7%, compared with $193.2 million and 11.7%, respectively, a year earlier. Operating expenses increased to $234.6 million from $209.4 million a year ago, and included $1.1 million and $26.0 million in net gains from significant special items, respectively.

The Company's operating results for the 2010 and 2009 fourth-quarter and full-year 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 Years Ended
  January 1, January 2, January 1, January 2,
  2011 2010 2011 2010
Pretax loss ($20.1) ($11.6) ($53.8) ($56.9)
OSB lawsuit settlement gain -- -- (5.2) --
Tender offer expenses -- -- 3.0 --
Gain on early cancellation of Master Supply Agreement with G-P -- (0.2) -- (17.8)
Gain on sale of certain surplus properties -- (6.0) -- (10.4)
Changes associated with the ineffective interest rate swap (1.4) (1.1) (4.6) 6.3
Facility consolidation & severance related costs 0.7 -- 1.1 2.2
Write-off of debt issuance costs -- -- 0.2 1.4
         
Adjusted pretax loss (20.8) (18.9) (59.3) (75.2)
Adjusted benefit from income taxes (7.9) (10.3) (23.5) (33.8)
         
Adjusted net loss ($12.9) ($8.6) ($35.8) ($41.4)
         
Diluted weighted average shares 30.8 32.7 30.7 31.0
         
Adjusted diluted net loss per share applicable to common shares ($0.42) ($0.26) ($1.17) ($1.34)

For the quarter and full year periods ended January 1, 2011, the above table reflects the following events: (i) the Company received payment for a litigation settlement; (ii) the Company incurred expenses from the terminated tender offer; (iii) the Company recorded the effect of a reduction to the fair value of its ineffective interest rate swap offset by the continued amortization of the accumulated other comprehensive loss related to the ineffective interest rate swap into interest expense; (iv) the Company recorded certain severance costs; (v) the Company amended its credit facility resulting in a non-cash charge due to the write-off of associated debt issuance cost. The adjusted benefit from income taxes reflected in the table is comprised of the Company's effective tax rate excluding the valuation allowance related to its deferred tax assets, a tax benefit related to our intra period income tax allocation to other comprehensive income and the tax effect of significant special items. The valuation allowance recorded for the quarter and full-year periods are $7.8 million and $20.8 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 full year periods ended January 2, 2010, 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) in the fourth quarter 2009, the Company realized a $6.0 million gain on the sale of a surplus property which had previously been deferred in the fourth quarter of 2008, in addition certain other surplus properties were sold in the full-year period; (iii) the Company recorded a reduction to the fair value of the ineffective interest rate swap along with the continued amortization of accumulated other comprehensive loss into interest expense. In the full-year period, the Company reduced its borrowings under its revolving credit facility by $100 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 accumulated 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, a tax benefit related to our intra period income tax allocation to other comprehensive income and the tax effect of significant special items. The valuation allowance adjustment recorded for the quarter and full year period ended January 2, 2010 was $16.3 million of benefit and $29.3 million of expense, respectively. 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# 42723478. 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 60 distribution centers. 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.

- Tables to Follow -

BlueLinx Holdings Inc.        
Statements of Operations        
in thousands, except per share data        
         
         
  Quarters Ended Years Ended
  January 1, January 2,  January 1,  January 2,
  2011 2010 2011 2010
  (unaudited) (unaudited) (unaudited) (unaudited)
         
Net sales  $ 367,897  $ 366,108  $ 1,804,418  $ 1,646,108
Cost of sales  323,563  320,828  1,593,745  1,452,947
Gross profit  44,334  45,280  210,673  193,161
Operating expenses:        
Selling, general, and administrative  53,461  46,470  221,185  210,214
Net gain from terminating the Georgia-Pacific supply agreement  --  (218)  --  (17,772)
Depreciation and amortization  3,076  3,831  13,365  16,984
Total operating expenses  56,537  50,083  234,550  209,426
         
Operating loss  (12,203)  (4,803)  (23,877)  (16,265)
Non-operating expenses:        
Interest expense  9,147  7,846  33,788  32,456
Changes associated with the ineffective interest rate swap, net  (1,386)  (1,089)  (4,603)  6,252
Write-off of debt issuance costs  --  --  183  1,407
Other expense, net  144  37  587  519
         
Loss before provision for (benefit from) income taxes  (20,108)  (11,597)  (53,832)  (56,899)
Provision for (benefit from) income taxes  137  (23,622)  (589)  4,564
         
Net (loss) income   $ (20,245)  $ 12,025  $ (53,243)  $ (61,463)
         
Basic weighted average number of common shares outstanding  30,754  32,550  30,688  31,017
Basic net (loss) income per share applicable to common shares   $ (0.66)  $ 0.37  $ (1.73)  $ (1.98)
Diluted weighted average number of common shares outstanding   30,754  32,666  30,688  31,017
         
Diluted (loss) net income per share applicable to common shares  $ (0.66)  $ 0.37  $ (1.73)  $ (1.98)
BlueLinx Holdings Inc.    
Balance Sheets    
in thousands    
     
     
  January 1, January 2,
  2011 2010
  (unaudited) (unaudited)
Assets:    
Current assets:    
Cash and cash equivalents  $ 14,297  $ 29,457
Receivables, net  119,202  119,347
Inventories, net  188,250  173,185
Deferred income tax assets  143  --
Other current assets  22,768  44,970
Total current assets  344,660  366,959
     
Property, plant, and equipment:    
Land and improvements  52,540  52,621
Buildings  96,720  96,145
Machinery and equipment  70,860  69,767
Construction in progress   2,028  791
Property, plant, and equipment, at cost  222,148  219,324
Accumulated depreciation  (92,517)  (82,141)
Property, plant, and equipment, net  129,631  137,183
Other non-current assets  50,728  42,704
Total assets  $ 525,019  $ 546,846
     
Liabilities:    
Current liabilities:    
Accounts payable   $ 62,827  $ 64,618
Bank overdrafts  23,089  27,232
Accrued compensation  4,594  4,879
Current maturities of long term debt  1,190  --
Other current liabilities  16,792  22,508
Total current liabilities  108,492  119,237
Noncurrent liabilities:    
Long-term debt  381,679  341,669
Deferred income taxes  192  --
Other non-current liabilities  33,665  35,120
Total liabilities  524,028  496,026
     
Shareholders' Equity:    
Common stock  327  322
Additional paid in capital  147,427  145,035
Accumulated other comprehensive loss  (7,358)  (8,375)
Accumulated deficit  (139,405)  (86,162)
Total shareholders' equity  991  50,820
Total liabilities and shareholders' equity  $ 525,019  $ 546,846
BlueLinx Holdings Inc.    
Statements of Cash Flows    
in thousands    
     
     
     
  Years Ended
  January 1, January 2,
  2011 2010
  (unaudited) (unaudited)
     
Cash flows from operating activities:    
Net loss  $ (53,243)  $ (61,463)
Adjustments to reconcile net loss to cash (used in) provided by operations:    
Depreciation and amortization  13,365  16,984
Amortization of debt issuance costs  1,963  2,459
Net gain from terminating the Georgia-Pacific supply agreement  --  (17,772)
Payments from terminating the Georgia-Pacific supply agreement  4,706  14,118
Gain from sale of properties  --  (10,397)
Prepayment fees associated with principle payments on mortgage  --  616
Changes associated with the ineffective interest rate swap, net  (4,603)  6,252
Write-off of debt issuance costs  183  1,407
Vacant property charges, net  53  1,222
Deferred income tax (benefit) provision  (600)  24,220
Share-based compensation expense  3,978  2,922
Decrease (increase) in restricted cash related to the swap, insurance, and other  6,556  (2,511)
Changes in assets and liabilities:    
Receivables  145  11,306
Inventories  (15,065)  16,297
Accounts payable  (1,791)  (13,749)
Changes in other working capital  15,452  (13,583)
Other  (1,008)  1,819
Net cash (used in) operating activities  (29,909)  (19,853)
     
Cash flows from investing activities:    
Property, plant, and equipment investments  (4,092)  (1,815)
Proceeds from disposition of assets  711  14,451
Net cash (used in) provided by investing activities  (3,381)  12,636
     
Cash flows from financing activities:    
Repurchase of common stock   (583)  (2,042)
Increase (decrease) in the revolving credit facility  41,200  (100,000)
Payment of principal on mortgage  --  (3,201)
Prepayment fees associated with principle payments on mortgage  --  (616)
Payments on capital lease obligations  (629)  --
(Decrease) increase in bank overdrafts  (4,143)  2,517
Debt financing costs  (6,521)  --
Increase in restricted cash related to the mortgage  (11,201)  (10,296)
Other  7  (41)
Net cash provided by (used in) financing activities  18,130  (113,679)
     
Decrease in cash  (15,160)  (120,896)
Balance, beginning of period  29,457  150,353
Balance, end of period  $ 14,297  $ 29,457
BlueLinx Holdings Inc.        
Adjusted Pre-Tax Loss        
in thousands, except per share data        
         
  Quarters Ended Years Ended
  January 1, January 2, January 1, January 2,
  2011 2010 2011 2010
  (unaudited) (unaudited) (unaudited) (unaudited)
         
Pretax loss  $ (20,108)  $ (11,597)  $ (53,832)  $ (56,899)
OSB lawsuit settlement gain --  -- (5,206)  --
Tender offer expenses --  -- 3,030  --
Gain on early cancellation of Master Supply Agreement with G-P --  (218) --  (17,772)
Gain from sale of certain surplus properties --  (5,990) --  (10,397)
Changes associated with the ineffective interest rate swap, net (1,386)  (1,089) (4,603)  6,252
Facility consolidations & severance related costs 720  -- 1,092  2,160
Write-off of debt issue costs --  -- 183  1,407
Adjusted pretax loss (20,774)  (18,894) (59,336)  (75,249)
Adjusted (benefit from) provision for income taxes (7,881)  (10,320) (23,547)  (33,848)
Adjusted net loss  $ (12,893)  $ (8,574)  $ (35,789)  $ (41,401)
Diluted weighted average shares  30,754  32,666  30,688  31,017
Adjusted diluted net loss per share applicable to common shares  $ (0.42)  $ (0.26)  $ (1.17)  $ (1.34)
BlueLinx Holdings Inc.        
Reconciliation of GAAP Net Income (Loss) to Adjusted Net Loss         
in thousands        
         
  Quarters Ended Years Ended
  January 1, January 2, January 1, January 2,
GAAP Reconciliation 2011 2010 2011 2010
  (unaudited) (unaudited) (unaudited) (unaudited)
         
GAAP net (loss) income  $ (20,245)  $ 12,025  $ (53,243)  $ (61,463)
OSB lawsuit settlement gain  --  --  (5,206)  --
Tender offer expenses  --  --  3,030  --
Gain on early cancellation of Master Supply Agreement with G-P  --  (218)  --  (17,772)
Gain from sale of certain surplus properties  --  (5,990)  --  (10,397)
Changes associated with the ineffective interest rate swap, net  (1,386)  (1,089)  (4,603)  6,252
Facility consolidations & severance related costs  720  --  1,092  2,160
Write-off of debt issue costs  --  --  183  1,407
Tax effect of selected charges  257  3,022  2,180  9,076
Valuation allowance  7,761  (16,324)  20,778  29,336
Adjusted net loss  $ (12,893)  $ (8,574)  $ (35,789)  $ (41,401)
CONTACT:  Doug Goforth, CFO & Treasurer
          BlueLinx Holdings Inc.
          (770) 953-7505
         
          Investor Relations:
          Maryon Davis, Director Finance & IR
          (770) 221-2666

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