ATLANTA, Feb. 13, 2007 (PRIME 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 December 30, 2006.
The fourth-quarter net loss totaled $5.9 million, or $0.19 per diluted share, compared with net income of $14.5 million, or $0.48 per share, in the year-ago period, which benefited in part from stronger-than-expected seasonal demand in the aftermath of Hurricanes Katrina and Rita. Historically, fourth-quarter results are negatively impacted by the seasonal slowdown in construction.
Revenues for the fourth quarter decreased 29.3% to $940.3 million from $1.33 billion for the same period a year ago, reflecting a 37.5% drop in structural product sales and a 14.7% sales decline in specialty products. Approximately 50% of the decline in structural product sales resulted from unit volume, which fell 18.3% from a year ago, due to the home-construction-related demand slowdown. Specialty product unit volume decreased 15.4%, partially offset by increased prices. Overall unit volume for the company's estimated end-use markets declined 16% for the period.
Gross profit for the fourth quarter totaled $92.5 million, down 34.1% from $140.4 million in the prior-year period. Gross margin contracted 80 basis points, to 9.8% from 10.6% a year ago, reflecting lower unit volume and margins associated with the decline in housing starts and lower wood-based structural product prices relative to last year. The 9.8% gross margin was consistent with the average gross margin for the first three quarters of 2006 as the company focused on maintaining wood-based structural product margins in a declining price environment. Total operating expenses of $92.0 million for the fourth quarter decreased $13.7 million, or 13.0%, from the same period a year ago, primarily reflecting decreases in variable compensation and lower payroll costs related to headcount reductions implemented in the third quarter. Operating income for the quarter was $0.6 million, compared with $34.7 million a year ago.
For the full year ended December 30, 2006, net income totaled $15.8 million, or $0.51 per diluted share, compared with $44.6 million, or $1.46 per share, for the prior year. Full-year results included an after-tax charge totaling $3 million, or $0.10 per share, related to the company's mortgage refinancing. Sales for the year totaled $4.90 billion, down 12.9% from $5.62 billion a year ago, reflecting lower structural product prices and unit volume that were slightly offset by a 1.0% increase in specialty product unit volume.
Gross profit decreased 6.4% to $479.8 million from $512.4 million for the prior year, translating to gross margins of 9.8% and 9.1% for 2006 and 2005, respectively. The increased gross margin for 2006 primarily resulted from the company's focus on specialty product growth and effective management of structural products to maintain margins in a declining price environment. Total operating expenses of $402.3 million for the year increased $5.5 million, or 1.4%, from 2005, primarily reflecting $9.3 million in ongoing operating expenses associated with acquired companies Lane Stanton Vance and Austin Hardwoods, as well as $3.8 million in severance and other related expenses, partially offset by reductions in variable compensation and consulting costs.
"We faced a very challenging operating environment in the fourth quarter," said Stephen Macadam, chief executive officer. "As a distributor of building products, we continued to experience a sharp drop in demand that began earlier in the year as housing starts continued their slowdown and prices for wood-based structural products remained sharply below year-ago levels. The fall-off in demand was exacerbated by ongoing inventory reductions throughout the supply chain, and by the normal seasonal business slowdown associated with the winter months.
"The 50% portion of our end-use markets not directly related to new home construction turned in a mixed performance, dragged down primarily by a 47% decline in manufactured housing from the hurricane-inflated levels of a year ago and in part by a sluggish repair and remodel segment," Macadam said. "Overall, these other end-use markets declined 3.6% for the quarter.
"Against these headwinds, we continued to pursue our long-term growth strategy while aggressively managing costs," Macadam continued. "We focused on positioning our specialty business for growth and managing our structural business for profitability. We achieved a 9.8% gross margin in a challenging price environment for both the quarter and the full year. Our full-year margin performance reflects an improvement of 70 basis points over the 9.1% gross margin for 2005. We also demonstrated our commitment to aggressively manage costs and working capital. Operating expenses declined 13% in the fourth-quarter from a year ago, largely a result of the decline in variable expenses associated with the business slowdown and our cost-reduction initiatives launched in the third quarter.
"As we move forward in 2007, we remain focused on providing dependable, high-quality service to our customers as the home construction industry works its way through this cyclical correction," Macadam said. "The housing market shows no signs of improvement in the near future and the outlook for our other end-use markets remains mixed. Our objective is to continue positioning BlueLinx for long-term growth in what we expect will be a reduced-demand environment throughout the year. We plan to work toward this objective in 2007 by expanding margins through the continued growth of our specialty products business, by managing our structural business for profitability, and by aggressively managing costs.
"We remain confident in our ability to expand our specialty products distribution business in this environment," Macadam said. "We added several top brand names in the fourth quarter including Hitachi power tools, Johns Manville and CertainTeed fiberglass insulation, and Columbia Forest Products hardwood plywood. These world-class manufacturers join a growing list of companies that we are proud to have as partners."
Dividend
As previously reported, on January 22, 2007, the BlueLinx Board of Directors declared a $0.125 dividend on the company's common shares for the quarter ended December 30, 2006. The dividend is payable on March 30, 2007, to shareholders of record on March 16, 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# 6939847. 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 3,300 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 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 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 we distribute; 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; general economic and business conditions in the United States; 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 31, 2005, 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 Years Ended
----------------------- -----------------------
Dec. 30, Dec. 31, Dec. 30, Dec. 31,
2006 2005 2006 2005
---------- ---------- ---------- ----------
(unaudited) (unaudited) (unaudited)
Net sales $ 940,249 $1,329,259 $4,899,383 $5,622,071
Cost of sales 847,743 1,188,866 4,419,576 5,109,632
---------- ---------- ---------- ----------
Gross profit 92,506 140,393 479,807 512,439
---------- ---------- ---------- ----------
Operating expenses:
Selling, general,
and administrative 86,550 100,699 381,554 378,008
Depreciation and
amortization 5,401 4,977 20,724 18,770
---------- ---------- ---------- ----------
Total operating
expenses 91,951 105,676 402,278 396,778
---------- ---------- ---------- ----------
Operating income 555 34,717 77,529 115,661
Non-operating expenses:
Interest expense 10,659 11,105 46,164 42,311
Charges associated
with mortgage
refinancing - - 4,864 -
Other expense, net 337 128 320 186
---------- ---------- ---------- ----------
Income (loss) before
provision for (benefit
from) income taxes (10,441) 23,484 26,181 73,164
Provision for (benefit
from) income taxes (4,576) 8,946 10,349 28,561
---------- ---------- ---------- ----------
Net income (loss) (5,865) 14,538 15,832 44,603
---------- ---------- ---------- ----------
Basic weighted average
number of common
shares outstanding 30,745 30,240 30,618 30,195
========== ========== ========== ==========
Basic net income (loss)
per share applicable
to common stock $ (0.19) $ 0.48 $ 0.52 $ 1.48
========== ========== ========== ==========
Diluted weighted
average number of
common shares
outstanding 30,745 30,551 30,779 30,494
========== ========== ========== ==========
Diluted net income
(loss) per share
applicable to
common stock $ (0.19) $ 0.48 $ 0.51 $ 1.46
========== ========== ========== ==========
Dividends declared
per share of common
stock $ 0.125 $ 0.125 $ 0.50 $ 0.50
========== ========== ========== ==========
BlueLinx Holdings Inc.
Balance Sheets
in thousands
December 30, December 31,
2006 2005
----------- -----------
(unaudited)
Assets:
Current assets:
Cash $ 27,042 $ 24,320
Receivables 307,543 399,093
Inventories 410,686 473,068
Deferred income taxes 9,024 6,678
Other current assets 44,948 44,909
----------- -----------
Total current assets 799,243 948,068
----------- -----------
Property, plant, and equipment:
Land and land improvements 56,985 56,521
Buildings 95,814 93,381
Machinery and equipment 61,955 54,200
Construction in progress 2,025 2,350
----------- -----------
Property, plant, and equipment, at cost 216,779 206,452
Accumulated depreciation (38,530) (22,403)
----------- -----------
Property, plant, and equipment, net 178,249 184,049
Other non-current assets 26,870 25,523
----------- -----------
Total assets $ 1,004,362 $ 1,157,640
=========== ===========
Liabilities:
Current liabilities:
Accounts payable $ 195,815 $ 327,004
Bank overdrafts 50,241 62,392
Accrued compensation 8,574 13,494
Current maturities of long-term debt 9,743 -
Other current liabilities 14,633 15,195
----------- -----------
Total current liabilities 279,006 418,085
----------- -----------
Noncurrent liabilities:
Long-term debt 522,719 540,850
Deferred income taxes 1,101 1,911
Other long-term liabilities 12,137 12,942
----------- -----------
Total liabilities 814,963 973,788
----------- -----------
Shareholders' Equity:
Common stock 309 303
Additional paid in capital 138,066 132,346
Accumulated other comprehensive income 412 1,023
Retained earnings 50,612 50,180
----------- -----------
Total shareholders' equity 189,399 183,852
----------- -----------
----------- -----------
Total liabilities and equity $ 1,004,362 $ 1,157,640
=========== ===========
BlueLinx Holdings Inc.
Statements of Cash Flows
in thousands
Years Ended
-------------------------
December 30, December 31,
2006 2005
--------- ---------
(unaudited)
Cash flows from operating activities:
Net income $ 15,832 $ 44,603
Adjustments to reconcile net income
to cash provided by operations:
Depreciation and amortization 20,724 18,770
Amortization of debt issue costs 2,628 3,629
Charges associated with mortgage
refinancing 4,864 -
Deferred income tax benefit (3,700) (368)
Stock-based compensation 3,137 2,170
Changes in assets and liabilities:
Receivables 94,113 (30,609)
Inventories 66,504 36,889
Accounts payable (131,594) 56,605
Changes in other working capital (5,780) (12,746)
Other (3,524) 5,994
--------- ---------
Net cash provided by operating activities 63,204 124,937
--------- ---------
Cash flows from investing activities:
Acquisitions, net of cash acquired (9,391) (16,908)
Property, plant, and equipment investments (9,601) (12,744)
Proceeds from sale of assets 822 1,153
--------- ---------
Net cash used in investing activities (18,170) (28,499)
--------- ---------
Cash flows from financing activities:
Issuance of common stock, net - 8,548
Proceeds from stock options exercised 1,914 258
Excess tax benefits from stock-based
compensation 891 71
Net decrease in revolving credit facility (138,388) (111,253)
Proceeds from new mortgage 295,000 -
Debt financing costs (6,703) (570)
Retirement of old mortgage (165,000) -
Prepayment fees associated with old mortgage (2,475) -
Increase (decrease) in bank overdrafts (12,151) 30,359
Common dividends paid (15,400) (15,103)
--------- ---------
Net cash used in financing activities (42,312) (87,690)
--------- ---------
Increase in cash 2,722 8,748
Balance, beginning of period 24,320 15,572
--------- ---------
Balance, end of period $ 27,042 $ 24,320
========= =========
BlueLinx Holdings Inc.
Reconciliation of Non-GAAP Financial Measures to their
GAAP Equivalents
in thousands, except per share data
Quarters Ended Years Ended
-------------------- --------------------
Dec. 30, Dec. 31, Dec. 30, Dec. 31,
2006 2005 2006 2005
-------- -------- -------- --------
(unaudited) (unaudited)
Reconciliation of Net -------------------- --------------------
income before mortgage
refinancing and Net
income before mortgage
refinancing per share:
Net Income $ (5,865) $ 14,538 $ 15,832 $ 44,603
Reconciling Items:
Write-off of
unamortized debt
issuance costs -- -- 2,828 --
Termination penalty
resulting from
prepayment of old
mortgage -- -- 1,650 --
Unamortized exit
penalty resulting
from prepayment of
old mortgage -- -- 386 --
-------- -------- -------- --------
Charges associated with
mortgage refinancing -- -- 4,864 --
Tax effect of
reconciling items
at 39.0% -- -- (1,897) --
-------- -------- -------- --------
Net income before
mortgage refinancing(1) $ (5,865) $ 14,538 $ 18,799 $ 44,603
======== ======== ======== ========
Diluted weighted
average number of
common shares
outstanding: 30,745 30,551 30,779 30,494
Diluted net income per
share applicable to
common stock $ (0.19) $ 0.48 $ 0.51 $ 1.46
Reconciling Items:
Write-off of
unamortized debt
issuance costs -- -- 0.09 --
Termination penalty
resulting from pre-
payment of old mortgage -- -- 0.06 --
Unamortized exit
penalty resulting
from prepayment of
old mortgage -- -- 0.01 --
-------- -------- -------- --------
Charges associated with
mortgage refinancing -- -- 0.16 --
Tax effect of
reconciling items
at 39.0% -- -- (0.06) --
-------- -------- -------- --------
Diluted net income
before mortgage
refinancing per share
applicable to common
stock(1) $ (0.19) $ 0.48 $ 0.61 $ 1.46
======== ======== ======== ========
Note (1) -- 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.