Net Loss Totals $25.1 Million on 36% Revenue Decline Related to
Continued Housing Slump
Fourth-Quarter Results also impacted by Restructuring and Severance
Charges
Generated $82 Million in Cash from Operations in Fourth Quarter
ATLANTA, Feb. 17, 2009 (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 3, 2009.
The Company's fourth-quarter net loss totaled $25.1 million, or $0.81 per diluted share, compared with a net loss of $34.1 million, or $1.10 per share, in the year-ago period. The Company's results for the fourth quarter of 2008 reflect the ongoing downturn in the housing market and also were impacted by a number of restructuring and other charges detailed in the attached table.
Revenues for the fourth quarter decreased 35.6% to $501.5 million from $778.9 million for the same period a year ago, reflecting a 41.2% decline in structural product sales and a 26.9% sales decline in specialty products, both associated with the approximate 44% decline in housing starts relative to the year ago quarter. The decline in structural product sales and specialty product sales resulted from unit volume declines of 41.7% and 31.4%, respectively, compared to the prior year period. These volume decreases were partially offset by a slight improvement in product mix and underlying prices combined with the Company's margin improvement initiatives.
Gross profit for the fourth quarter totaled $46.4 million, down 29.8% from $66.1 million in the prior year period. The gross profit decline reflects lower unit volume associated with the decline in housing starts offset by a slight increase in underlying product prices relative to last year and the Company's margin improvement initiatives. Gross margin was 9.3% for the period compared to 8.5% in the prior year period. Gross margin for the fourth quarter of 2008 was negatively impacted by the rapid decline in margins on certain structural metal products. The year ago period's margin was negatively impacted by approximately 1.3% due to the stock keeping unit ("SKU") rationalization undertaken in the fourth quarter of 2007.
Total operating expenses of $73.3 million for the fourth quarter decreased $37.9 million, or 34.1%, from the same period a year ago. Operating expenses include net charges of $3.7 million associated with the Company's facility consolidations, severance related costs, and other items resulting from the Company's restructuring efforts during the fourth quarter. Operating expenses in the prior year period included approximately $16.9 million of similar charges. Operating loss for the quarter was $26.8 million, compared with an operating loss of $45.1 million a year ago. In addition to the restructuring charges indicated above, the fourth quarter of fiscal 2007 operating loss included an estimated $10 million negative margin impact from the SKU rationalization program. Additionally, we generated approximately $82 million in cash from operations during the fourth quarter of 2008 and ended the year with approximately $192 million in excess availability on our revolving credit facility.
For the full year ended January 3, 2009, net loss totaled $31.7 million, or $1.02 per diluted share, compared with a net loss of $27.9 million, or $0.91 per diluted share, for the prior year. Full-year results include after-tax charges totaling $7.7 million, or $0.25 per diluted share, related to the Company's restructuring charges, severance related costs, and other items, compared to $15.4 million, or $0.51 per diluted share, for the prior year. Sales for the year totaled $2.8 billion, down 27.5% from $3.8 billion a year ago, reflecting lower unit volume associated with an approximate 33% decrease in housing starts versus the comparable prior year period.
Interest expense for the fourth quarter increased $1.1 million from the same period a year ago due to mortgage prepayment fees. Benefit from income taxes of $12.9 million decreased $8.2 million compared to the same period a year ago due to a lower pre-tax loss and recording a valuation allowance of $1.2 million related to state taxes.
For the full year ended January 3, 2009, gross profit decreased 19.6% to $314.9 million from $391.9 million for the prior year, translating to gross margins of 11.3% and 10.2% for 2008 and 2007, respectively. The increase in gross margin for 2008 is primarily attributable to an increase in certain structural metal prices earlier in the year and a shift in product mix from structural to higher margin specialty products. The Company estimates the impact of the fourth quarter 2007 SKU rationalization negatively impacted full year gross margins by approximately 0.3%. Total operating expenses of $323.9 million for the year decreased $69.8 million, or 17.7%, from 2007, primarily due to reduced payroll, commissions and other operating expenses. Operating costs for 2008 include net charges related to facility consolidations, severance related costs, and other items of $8.4 million compared with prior year operating costs which included $15.2 million of similar charges.
BlueLinx generated $181 million in cash from operations during 2008 compared to $80 million in fiscal 2007. As previously disclosed in our earnings pre-release issued January 20, 2009, we made a $7.5 million discretionary contribution to our hourly pension plan in the fourth quarter which we believe will satisfy fiscal 2009 funding requirements. During the year, the market value of our pension plan assets was negatively impacted by stock market declines in 2008 causing the net unfunded amount of our benefit plan at year end to be approximately $17.0 million. The 2008 period end unfunded status compares with a net funded status of the benefit plan of $1.8 million at December 29, 2007.
"The housing and building products markets continued to be challenging during the quarter as a result of the historic slump in the housing industry," said George Judd, chief executive officer. "During the quarter, and throughout the year, we remained focused on the areas we could control and continued to take measures to effectively manage our business in this difficult operating environment. We remain focused on working with our customers to ensure we are meeting their needs and with our vendors to be their distributor of choice. While it is difficult to predict when the turn around will occur, I believe our efforts will position BlueLinx to participate in that rebound as a much stronger competitor and as the leading building products distributor in the United States."
Fourth-Quarter 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# 83616719. 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, 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 2,100 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 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 certain statements related to expected fourth-quarter results and anticipated fiscal 2009 events. 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 our 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 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 December 29, 2007 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 Years Ended
----------------------- -----------------------
Jan. 3, Dec. 29, Jan. 3, Dec. 29,
2009 2007 2009 2007
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
Net sales $ 501,514 $ 778,918 $ 2,779,699 $ 3,833,910
Cost of sales 455,068 712,775 2,464,766 3,441,964
----------- ----------- ----------- -----------
Gross profit 46,446 66,143 314,933 391,946
----------- ----------- ----------- -----------
Operating expenses:
Selling, general,
and administrative 67,748 106,114 303,403 372,754
Depreciation and
amortization 5,508 5,084 20,519 20,924
----------- ----------- ----------- -----------
Total operating
expenses 73,256 111,198 323,922 393,678
----------- ----------- ----------- -----------
Operating loss (26,810) (45,055) (8,989) (1,732)
Non-operating
expenses:
Interest expense 11,017 9,904 38,547 43,660
Other expense
(income), net 216 231 601 (370)
----------- ----------- ----------- -----------
Loss before provision
for income taxes (38,043) (55,190) (48,137) (45,022)
Benefit from income
taxes (12,926) (21,110) (16,434) (17,077)
----------- ----------- ----------- -----------
Net loss $ (25,117) $ (34,080) $ (31,703) $ (27,945)
----------- ----------- ----------- -----------
Basic weighted average
number of common
shares outstanding 31,164 30,890 31,083 30,848
=========== =========== =========== ===========
Basic net loss per
share applicable to
common shares $ (0.81) $ (1.10) $ (1.02) $ (0.91)
=========== =========== =========== ===========
Diluted weighted
average number of
common shares
outstanding 31,164 30,890 31,083 30,848
=========== =========== =========== ===========
Diluted net loss per
share applicable to
common shares $ (0.81) $ (1.10) $ (1.02) $ (0.91)
=========== =========== =========== ===========
Dividends declared per
common shares $ -- $ 0.125 $ -- $ 0.50
=========== =========== =========== ===========
BlueLinx Holdings Inc.
Balance Sheets
in thousands
Jan. 3, Dec. 29,
2009 2007
----------- -----------
(unaudited)
Assets:
Current assets:
Cash and cash equivalents $ 150,353 $ 15,759
Receivables, net 130,653 263,176
Inventories, net 189,482 335,887
Deferred income taxes 11,868 12,199
Other current assets 37,351 53,231
----------- -----------
Total current assets 519,707 680,252
----------- -----------
Property, plant, and equipment:
Land and improvements 53,426 57,295
Buildings 96,159 98,420
Machinery and equipment 70,491 67,217
Construction in progress 2,035 4,212
----------- -----------
Property, plant, and equipment, at cost 222,111 227,144
Accumulated depreciation (69,336) (54,702)
----------- -----------
Property, plant, and equipment, net 152,775 172,442
Non-current deferred tax assets 17,468 2,628
Other non-current assets 42,457 28,114
----------- -----------
Total assets $ 732,407 $ 883,436
=========== ===========
Liabilities:
Current liabilities:
Accounts payable $ 78,367 $ 164,717
Bank overdrafts 24,715 37,152
Accrued compensation 11,552 10,372
Current maturities of long-term debt 60,000 --
Other current liabilities 24,546 19,280
----------- -----------
Total current liabilities 199,180 231,521
----------- -----------
Noncurrent liabilities:
Long-term debt 384,870 478,535
Other non-current liabilities 45,505 18,557
----------- -----------
Total liabilities 629,555 728,613
----------- -----------
Shareholders' Equity:
Common stock 323 312
Additional paid in capital 144,148 142,081
Accumulated other comprehensive (loss)
income (16,920) 5,426
(Accumulated deficit) retained earnings (24,699) 7,004
----------- -----------
Total shareholders' equity 102,852 154,823
----------- -----------
----------- -----------
Total liabilities and shareholders' equity $ 732,407 $ 883,436
=========== ===========
BlueLinx Holdings Inc.
Statements of Cash Flows
in thousands
Years Ended
--------------------------
Jan. 3, Dec. 29,
2009 2007
----------- -----------
(unaudited)
Cash flows from operating activities:
Net loss $(31,703) $(27,945)
Adjustments to reconcile net loss
to cash provided by operations:
Depreciation and amortization 20,519 20,924
Amortization of debt issue costs 2,479 2,431
Non-cash vacant property charges 4,441 11,037
Deferred income tax benefit (2,935) (9,526)
Prepayment fees associated with principal
payments on mortgage 1,868 --
Gain from sale of properties (1,936) --
Gain from insurance settlement -- (1,698)
Share-based compensation 2,614 3,500
Excess tax benefits from share-based
compensation arrangements (81) (20)
Changes in assets and liabilities:
Receivables 132,523 44,367
Inventories 146,405 74,799
Accounts payable (86,350) (31,098)
Changes in other working capital 20,440 (6,211)
Other (27,013) (718)
----------- -----------
Net cash provided by operating activities 181,271 79,842
----------- -----------
Cash flows from investing activities:
Property, plant, and equipment investments (4,919) (13,141)
Proceeds from disposition of assets 5,904 4,071
----------- -----------
Net cash provided by (used in) investing
activities 985 (9,070)
----------- -----------
Cash flows from financing activities:
Proceeds from stock options exercised 434 496
Excess tax benefits from share-based
compensation arrangements 81 20
Net decrease in revolving credit facility (27,535) (53,927)
Debt financing costs (217) --
Principal payments on mortgage (6,130) --
Prepayment fees associated with principal
payments on mortgage (1,868) --
Decrease in bank overdrafts (12,437) (13,089)
Common dividends paid -- (15,591)
Other 10 36
----------- -----------
Net cash used in financing activities (47,662) (82,055)
----------- -----------
Increase (decrease) in cash and
cash equivalents 134,594 (11,283)
Balance, beginning of period 15,759 27,042
----------- -----------
Balance, end of period $ 150,353 $ 15,759
=========== ===========
BlueLinx Holdings Inc.
Restructuring and Other Charges
in thousands, except per
share amounts
Quarters Ended
---------------------------------------
Jan. 3, Dec. 29,
2009 2007
------------------- -------------------
(unaudited) (unaudited)
After-tax items: $(000s) $ EPS $(000s) $ EPS
--------- --------- --------- ---------
Facility consolidations and
severance related costs (1) $ (3,023) $ (0.10) $(10,335) $ (0.33)
Valuation allowance on
deferred tax assets (1,179) (0.04) -- --
Prepayment fees associated
with principal payments on
mortgage (1,140) (0.04) -- --
Goodwill impairment (1) (665) (0.02) -- --
Gain from sale of
real estate (1) 1,181 0.04 -- --
SKU Rationalization -- -- (6,100) (0.20)
--------- --------- --------- ---------
Total $ (4,826) $ (0.16) $(16,435) $ (0.53)
========= ========= ========= =========
Years Ended
---------------------------------------
Jan. 3, Dec. 29,
2009 2007
------------------- -------------------
(unaudited) (unaudited)
After-tax items: $(000s) $ EPS $(000s) $ EPS
--------- --------- --------- ---------
Facility consolidations and
severance related costs (1) $ (5,902) $ (0.19) $(10,335) $ (0.34)
Valuation allowance on
deferred tax assets (1,179) (0.04) -- --
Prepayment fees associated
with principal payments on
mortgage (1,140) (0.04) -- --
Goodwill impairment (1) (665) (0.02) -- --
Gain from sale of
real estate (1) 1,181 0.04 1,036 0.03
SKU Rationalization -- -- (6,100) (0.20)
--------- --------- --------- ---------
Total $ (7,705) $ (0.25) $(15,399) $ (0.51)
========= ========= ========= =========
(1) Included in operating expenses.