Attached files
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| EX-99.2 - EXHIBIT 99.2 - BlueLinx Holdings Inc. | q32018earnings992a.htm |
| 8-K/A - 8-K/A - BlueLinx Holdings Inc. | q32018earnings8ka.htm |
Exhibit 99.1
4300 Wildwood Parkway
Atlanta, GA 30339
1-888-502-BLUE
www.BlueLinxCo.com
FOR IMMEDIATE RELEASE
BLUELINX ANNOUNCES THIRD QUARTER 2018 RESULTS
- Net Sales of $860 million for the Quarter; Up $380 million From Q3 2017 -
- Gross Profit of $92 million for the Quarter; Up $31 million From Q3 2017 -
- Expected 2018 Year-End Integration Synergies Annualized Run-Rate to exceed $25 million -
- Remain Confident in Reaching 2019 Year-End Integration Synergies Annualized Run-Rate of at least $50 million -
ATLANTA - November 8, 2018 - BlueLinx Holdings Inc. (NYSE:BXC), a leading distributor of building and industrial products in the United States, today reported financial results for the fiscal third quarter ended September 29, 2018.
“BlueLinx remains focused on integrating our second quarter acquisition of Cedar Creek and is pleased to announce that we expect our synergies efforts by the end of the year to result in an annual benefit of at least $25 million in 2019,” said Mitch Lewis, President and Chief Executive Officer. “While the wood-based commodity markets have proven challenging over the last few months, our third quarter performance provides evidence that our diversity can afford protection during market dislocations. We remain confident in our ability to deliver the expected synergies of at least $50 million annually, continue to operate effectively to realize market opportunities from our combination, and are well-positioned to drive enhanced value for our customers and shareholders.”
Susan O’Farrell, Senior Vice President and Chief Financial Officer, added, “We remain focused on our strategic objectives, making significant progress with our integration efforts and delivering solid financial results despite the significant headwinds we incurred. Our excess availability and cash on hand during the quarter averaged $142 million demonstrating our strong liquidity and deleveraging potential.”
BlueLinx completed the acquisition of Cedar Creek on April 13, 2018 (the “Closing Date”). Under generally accepted accounting principles (GAAP), Cedar Creek’s financial results are only included in the combined company’s reported financial results from the Closing Date forward and are not reflected in the combined company’s reported financial results for any periods prior to the Closing Date. In this release, to supplement and aid in an understanding of the combined company’s reported financial results, BlueLinx is also providing certain GAAP-based and non-GAAP Pro forma financial information of the combined company that includes Cedar Creek’s financial results for the relevant periods prior to the Closing Date, as if the acquisition occurred on January 1, 2017. See “Use of Non-GAAP Measures and Supplementary Information” below and the accompanying financial schedules for more information, including descriptions of any such pro forma measures that may be non-GAAP measures and reconciliations of those non-GAAP measures to their most directly comparable GAAP measures.
Third Quarter 2018 Results Compared to Prior Year Period
The Company reported net sales of $859.8 million for the third quarter of 2018, up $380.5 million or 79.4% from the prior year period. Pro forma net sales were up $18.4 million or 2.2%.
The Company recorded gross profit of $91.8 million during the third quarter, up $31.2 million or 51.5% from the prior year period, with a gross margin of 10.7%. Gross profit was negatively impacted by a lower of cost or net realizable value adjustment on inventory of $5.2 million related to lumber and wood products, and acquisition related inventory step-up charges of $0.9 million due to the second quarter acquisition of Cedar Creek. Pro forma gross profit was $92.6 million during the third quarter, down $17.6 million or 16.0%. The Company recorded a net loss of $9.9 million for the third quarter, compared to a net income of $5.7 million in the prior year period. In addition to the lower of cost or net realizable value inventory and inventory step-up adjustments, the net loss was negatively impacted by a partial multi-employer pension plan withdrawal charge of $6.5 million and acquisition related fees of $3.8 million. Pro forma net loss for the third quarter was $6.2 million.
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Adjusted EBITDA, which is a non-GAAP measure, was $16.6 million for the third quarter, up $2.7 million or 19.0% from this period a year ago. Pro forma Adjusted EBITDA, also a non-GAAP measure, was $16.6 million for the third quarter, down $13.5 million or 44.7%.
First Nine Months of 2018 Compared to Prior Year Period
For the first nine months of 2018, the Company generated net sales of $2.2 billion, up $808.3 million or 58.5% from the prior year period. Pro forma net sales for the first nine months were $2.6 billion, up $132.9 million or 5.4%.
The Company recorded gross profit of $250.7 million during the first nine months of 2018, up $75.2 million or 42.8% from the prior year period, with a gross margin of 11.4%. Gross profit was negatively impacted by acquisition related inventory step-up charges of $11.8 million and a lower of cost or net realizable value inventory adjustment of $5.2 million. Excluding the effect of acquisition related inventory step-up charges of $11.8 million, gross margin was 12.0%. Pro forma gross profit for the first nine months of 2018 was $313.3 million, down $0.2 million or 0.1%.
The Company incurred one-time charges during the first nine months of 2018 for legal, professional and other integration costs of $19.1 million related to the Cedar Creek acquisition. Additionally, the Company incurred $14.7 million in share-based compensation expense and $11.8 million of acquisition-related inventory step-up charges. Taking these items into account, the Company recorded a net loss of $31.9 million for the first nine months of 2018, compared to net income of $9.5 million in the prior year period. Pro forma net loss for the first nine months of 2018 was $5.5 million, a $15.0 million or 73.4% improvement over the prior year period.
Adjusted EBITDA was $61.7 million for the first nine months of 2018, up $27.6 million or 81.0% from the prior year period. Pro forma Adjusted EBITDA was $73.2 million, down $8.8 million or 10.8%.
Capital Structure and Liquidity
Excess availability under the amended ABL and cash on hand as of September 29, 2018, was approximately $123 million, and averaged approximately $142 million for the quarter.
Conference Call
BlueLinx will host a conference call today at 10:00 a.m. Eastern Time, accompanied by a supporting slide presentation. Participants can access the live conference call via telephone at (877) 873-5864, using Conference ID # 5957637. Investors can also listen to the live audio of the conference call and view the accompanying slide presentation by visiting the BlueLinx website, www.BlueLinxCo.com, and selecting the conference link on the Investor Relations page. After the conference call has concluded, an archived recording will be available on the BlueLinx website.
Use of Non-GAAP Measures and Supplementary Information
The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company also believes that presentation of certain non-GAAP measures and GAAP-based and non-GAAP supplemental financial measures may be useful to investors and may provide a more complete understanding of the factors and trends affecting the business than using reported GAAP results alone. Any non-GAAP measures used herein are reconciled herein or in the financial tables accompanying this news release to their most directly comparable GAAP measures. The Company cautions that non-GAAP measures and supplemental financial measures should be considered in addition to, but not as a substitute for, the Company’s reported GAAP results.
Adjusted EBITDA and Pro forma Adjusted EBITDA
We define Adjusted EBITDA as an amount equal to net income plus interest expense and all interest expense related items,
income taxes, depreciation and amortization, and further adjusted for certain non-cash items and other special items, including compensation expense from share based compensation, one-time charges associated with the legal, consulting, and professional fees related to the Cedar Creek acquisition, and gains on sales of properties including amortization of deferred gains.
We present Adjusted EBITDA because it is a primary measure used by management to evaluate operating performance and, we believe, helps to enhance investors’ overall understanding of the financial performance and cash flows of our business. We believe Adjusted EBITDA is helpful in highlighting operating trends. We also believe that Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an Adjusted EBITDA measure when reporting their results. However, Adjusted EBITDA is not a presentation made in accordance with GAAP, and is not intended to present a superior measure of the financial condition from those determined under GAAP. Adjusted EBITDA, as used herein, is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation.
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Pro forma Adjusted EBITDA for any period is calculated in the same manner as Adjusted EBITDA, but also combines the historical results of BlueLinx for the three and nine months ended September 29, 2018, and September 30, 2017, with the historical results of Cedar Creek for the three month period ended March 31, 2018, and thirteen day period ended April 13, 2018, and the three and nine months ended September 30, 2017, respectively, giving effect to the Cedar Creek acquisition and related adjustments as if the acquisition occurred on January 1, 2017.
Supplemental Financial Measures
We completed the acquisition of Cedar Creek on April 13, 2018. As a result, Cedar Creek’s financial results are only included in the combined company’s reported financial results from the Closing Date forward. To supplement these reported results, we have provided GAAP-based and non-GAAP pro forma financial information of the combined company in this news release that includes Cedar Creek’s financial results for the relevant periods prior to the Closing Date. This pro forma information combines the historical results of BlueLinx for the three and nine months ended September 29, 2018, and September 30, 2017, with the historical results of Cedar Creek for the three month period ended March 31, 2018, and thirteen day period ended April 13, 2018, and the three and six months ended July 1, 2017, respectively, giving effect to the Cedar Creek acquisition and related adjustments as if the acquisition occurred on January 1, 2017.
About BlueLinx Holdings Inc.
BlueLinx (NYSE: BXC) is a leading wholesale distributor of building and industrial products in the United States with over 50,000 branded and private-label SKUs, and a broad distribution footprint servicing 40 states. BlueLinx has a differentiated distribution platform, value-driven business model and extensive cache of products across the building products industry. Headquartered in Atlanta, Georgia, BlueLinx has over 2,500 associates and distributes its comprehensive range of structural and specialty products to approximately 15,000 national, regional, and local dealers, as well as specialty distributors, national home centers, industrial, and manufactured housing customers. BlueLinx encourages investors to visit its website, www.BlueLinxCo.com, which is updated regularly with financial and other important information about BlueLinx.
Contacts:
Investors:
Susan O’Farrell, SVP, CFO & Treasurer
BlueLinx Holdings Inc.
(770) 953-7000
Mary Moll, Investor Relations
BlueLinx Holdings Inc.
(866) 671-5138
investor@bluelinxco.com
Forward-looking Statements
This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance, liquidity levels or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” “will be,” “will likely continue,” “will likely result” or words or phrases of similar meaning. The forward-looking statements in this release include statements about expected levels of run-rate synergies at the end of 2018 and 2019; the ability of our product and geographic diversity to afford protection during market dislocations; our ability to drive enhanced value for our customers and shareholders; and our deleveraging potential. 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’s 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 prices, supply and/or demand for products that it distributes; changes in commodities pricing and our ability to successfully manage inventory levels; new housing starts and inventory levels of existing homes for sale; general economic and business conditions in the United States; the imposition or threat of protectionist trade policies or import or export tariffs; modified or new global or regional trade agreements; our ability to successfully integrate the Cedar Creek business and realize anticipated synergies from the acquisition; the significant indebtedness that we have incurred in connection with the Cedar Creek acquisition; acceptance by our customers of our privately branded products; financial condition and creditworthiness of our customers; supply from our key vendors; reliability of the technologies we utilize; the
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activities of competitors; changes in significant operating expenses; fuel costs; risk of losses associated with accidents; exposure to product liability claims; changes in the availability of capital and interest rates; adverse weather patterns or conditions; acts of cyber intrusion; variations in the performance of the financial markets, including the credit 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, 2017, its Quarterly Reports on Form 10-Q, 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, and changes in expectations or otherwise, except as required by law.
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BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | ||||||||||||
Net sales | $ | 859,776 | $ | 479,318 | $ | 2,190,215 | $ | 1,381,927 | |||||||
Cost of sales | 768,021 | 418,773 | 1,939,484 | 1,206,402 | |||||||||||
Gross profit | 91,755 | 60,545 | 250,731 | 175,525 | |||||||||||
Operating expenses (income): | |||||||||||||||
Selling, general, and administrative | 87,692 | 47,088 | 238,655 | 149,290 | |||||||||||
Gains from sales of property | — | — | — | (6,700 | ) | ||||||||||
Depreciation and amortization | 8,068 | 2,249 | 18,177 | 6,865 | |||||||||||
Total operating expenses | 95,760 | 49,337 | 256,832 | 149,455 | |||||||||||
Operating income (loss) | (4,005 | ) | 11,208 | (6,101 | ) | 26,070 | |||||||||
Non-operating expenses (income): | |||||||||||||||
Interest expense | 13,273 | 5,670 | 33,947 | 16,279 | |||||||||||
Other income, net | (94 | ) | (271 | ) | (282 | ) | (549 | ) | |||||||
Income (loss) before provision for (benefit from) income taxes | (17,184 | ) | 5,809 | (39,766 | ) | 10,340 | |||||||||
Provision for (benefit from) income taxes | (7,288 | ) | 123 | (7,885 | ) | 832 | |||||||||
Net income (loss) | $ | (9,896 | ) | $ | 5,686 | $ | (31,881 | ) | $ | 9,508 | |||||
Basic earnings (loss) per share | $ | (1.07 | ) | $ | 0.63 | $ | (3.46 | ) | $ | 1.05 | |||||
Diluted earnings (loss) per share | $ | (1.07 | ) | $ | 0.62 | $ | (3.46 | ) | $ | 1.04 | |||||
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BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
September 29, 2018 | December 30, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash | $ | 7,630 | $ | 4,696 | |||
Receivables, less allowances of $4,278 and $2,761, respectively | 285,489 | 134,072 | |||||
Inventories, net | 401,222 | 187,512 | |||||
Other current assets | 44,947 | 17,124 | |||||
Total current assets | 739,288 | 343,404 | |||||
Property and equipment: | |||||||
Land and land improvements | 22,513 | 30,802 | |||||
Buildings | 178,698 | 84,781 | |||||
Machinery and equipment | 112,770 | 70,596 | |||||
Construction in progress | 1,812 | 570 | |||||
Property and equipment, at cost | 315,793 | 186,749 | |||||
Accumulated depreciation | (102,865 | ) | (102,977 | ) | |||
Property and equipment, net | 212,928 | 83,772 | |||||
Goodwill and other intangibles, net | 74,172 | — | |||||
Deferred tax asset | 45,964 | 53,853 | |||||
Other non-current assets | 19,200 | 13,066 | |||||
Total assets | $ | 1,091,552 | $ | 494,095 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 153,814 | $ | 70,623 | |||
Bank overdrafts | 36,264 | 21,593 | |||||
Accrued compensation | 7,611 | 9,229 | |||||
Current maturities of long-term debt, net of discount and debt issuance costs of $64 and $0, respectively | 1,736 | — | |||||
Capital leases - short-term | 8,058 | 3,552 | |||||
Real estate deferred gains - short-term | 5,330 | 1,836 | |||||
Other current liabilities | 21,528 | 10,772 | |||||
Total current liabilities | 234,341 | 117,605 | |||||
Non-current liabilities: | |||||||
Long-term debt, net of discount and debt issuance costs of $13,280 and $3,792, respectively | 579,380 | 276,677 | |||||
Capital leases - long-term | 145,175 | 14,007 | |||||
Real estate deferred gains - long-term | 86,768 | 10,485 | |||||
Pension benefit obligation | 25,616 | 30,360 | |||||
Other non-current liabilities | 18,048 | 9,959 | |||||
Total liabilities | 1,089,328 | 459,093 | |||||
Commitments and Contingencies | |||||||
STOCKHOLDERS’ EQUITY: | |||||||
Common Stock, $0.01 par value, Authorized - 20,000,000 shares, Issued and Outstanding - 9,288,673 and 9,100,923, respectively | 92 | 91 | |||||
Additional paid-in capital | 258,088 | 259,588 | |||||
Accumulated other comprehensive loss | (35,905 | ) | (36,507 | ) | |||
Accumulated stockholders’ deficit | (220,051 | ) | (188,170 | ) | |||
Total stockholders’ equity | 2,224 | 35,002 | |||||
Total liabilities and stockholders’ equity | $ | 1,091,552 | $ | 494,095 | |||
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BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended | |||||||
September 29, 2018 | September 30, 2017 | ||||||
Net cash used in operating activities | (59,293 | ) | (38,278 | ) | |||
Cash flows from investing activities: | |||||||
Proceeds from sale of assets | 107,972 | 27,461 | |||||
Acquisition of business, net of cash acquired - see Note 2 | (353,094 | ) | — | ||||
Property and equipment investments | (1,872 | ) | (241 | ) | |||
Net cash provided by (used in) investing activities | (246,994 | ) | 27,220 | ||||
Cash flows from financing activities: | |||||||
Borrowings from revolving credit facilities | 736,254 | 329,936 | |||||
Repayments on revolving credit facilities | (503,577 | ) | (288,841 | ) | |||
Borrowings from term loan | 180,000 | — | |||||
Repayments on term loan | (900 | ) | — | ||||
Principal payments on mortgage | (97,847 | ) | (28,976 | ) | |||
Bank overdrafts | 14,671 | (55 | ) | ||||
Debt issuance costs | (10,470 | ) | — | ||||
Payments on capital lease obligations | (5,890 | ) | (2,446 | ) | |||
Repurchase of shares to satisfy employee tax withholdings | (3,020 | ) | — | ||||
Cash released from escrow related to the mortgage | — | 1,490 | |||||
Net cash provided by financing activities | 309,221 | 11,108 | |||||
Net change in cash | 2,934 | 50 | |||||
Cash at beginning of period | 4,696 | 5,540 | |||||
Cash at end of period | $ | 7,630 | $ | 5,590 | |||
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BLUELINX HOLDINGS INC.
SUPPLEMENTARY INFORMATION
(In thousands)
(Unaudited)
Pro Forma Sales, Gross Profit and Net Income (Loss)
The following unaudited consolidated pro forma information presents consolidated information as if the Cedar Creek acquisition had occurred on January 1, 2017:
Pro forma (1) | ||||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | ||||||||||||
Net sales | $ | 859,776 | $ | 841,330 | $ | 2,592,597 | $ | 2,459,713 | ||||||||
Gross Profit | 92,623 | 110,272 | 313,321 | 313,497 | ||||||||||||
Net income (loss) | (6,219 | ) | 8,033 | (5,455 | ) | (20,477 | ) | |||||||||
________________________
(1) The pro forma amounts above have been calculated in accordance with GAAP after applying the Company's accounting policies and adjusting: (i) the three- and nine-months ended September 29, 2018, to reflect a $0.9 million and $11.8 million, respectively, charge related to an inventory step-up adjustment, and the three and nine months ended September 30, 2017, for $0 and $11.8 million, respectively; (ii) the three- and nine-months ended September 29, 2018, for $3.8 million and $37.9 million, respectively, for transaction related costs, and the three- and nine-months ended September 30, 2017, for $0 and $37.9 million, respectively. Due to the net loss for the three- and nine-month periods ended September 29, 2018, and for the nine-month period ended September 30, 2017, 0 incremental shares, 0.1 million incremental shares and 0.2 million incremental shares, respectively, from share-based compensation arrangements were excluded from the computation of diluted weighted average shares outstanding, in both periods, because their effect would be anti-dilutive. The pro forma amounts do not include any potential synergies, cost savings or other expected benefits of the acquisition, are presented for illustrative purposes only, and are not necessarily indicative of results that would have been achieved had the acquisition occurred as of January 1, 2017, or of future operating performance.
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BLUELINX HOLDINGS INC.
RECONCILIATION OF NON-GAAP MEASUREMENTS
(In thousands)
(Unaudited)
The following schedule reconciles net income to Adjusted EBITDA:
Quarter Ended | Nine Months Ended | ||||||||||||||
September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | ||||||||||||
Net income (loss) | $ | (9,896 | ) | $ | 5,686 | $ | (31,881 | ) | $ | 9,508 | |||||
Adjustments: | |||||||||||||||
Depreciation and amortization | 8,068 | 2,249 | 18,177 | 6,865 | |||||||||||
Interest expense | 13,273 | 5,670 | 33,947 | 16,279 | |||||||||||
Provision for (benefit from) income taxes | (7,288 | ) | 123 | (7,885 | ) | 832 | |||||||||
Gain from sales of property | — | — | — | (6,700 | ) | ||||||||||
Amortization of deferred gain | (1,300 | ) | — | (3,769 | ) | — | |||||||||
Share-based compensation expense | 1,708 | 345 | 14,670 | 1,805 | |||||||||||
Multi-employer pension withdrawal | 6,510 | — | 6,510 | 5,500 | |||||||||||
Inventory step-up adjustment | 868 | — | 11,786 | — | |||||||||||
Merger and acquisition costs (1) | 3,825 | — | 19,058 | — | |||||||||||
Restructuring, severance, and legal | 844 | (112 | ) | 1,071 | (4 | ) | |||||||||
Adjusted EBITDA | $ | 16,612 | $ | 13,961 | $ | 61,684 | $ | 34,085 | |||||||
____________________
(1) Reflects primarily legal, professional and other integration costs related to the Cedar Creek acquisition
The following table reconciles our pro forma net income to pro forma Adjusted EBITDA:
Quarter Ended | Nine Months Ended | ||||||||||||||
September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | ||||||||||||
Pro forma net income (loss) | $ | (6,219 | ) | $ | 8,033 | $ | (5,455 | ) | $ | (20,477 | ) | ||||
Adjustments: | |||||||||||||||
Depreciation and amortization | 8,068 | 6,957 | 23,505 | 20,990 | |||||||||||
Interest expense | 13,273 | 12,041 | 39,884 | 32,452 | |||||||||||
Provision for (benefit from) income taxes | (6,272 | ) | 2,184 | (3,168 | ) | (1,822 | ) | ||||||||
Gain from sales of property | — | — | — | (6,700 | ) | ||||||||||
Amortization of deferred gain | (1,300 | ) | (501 | ) | (3,769 | ) | (954 | ) | |||||||
Share-based compensation expense | 1,708 | 345 | 14,670 | 1,805 | |||||||||||
Multi-employer pension withdrawal | 6,510 | — | 6,510 | 5,500 | |||||||||||
Inventory step-up adjustment | — | — | — | 11,786 | |||||||||||
Merger and acquisition costs (1) | — | — | — | 37,869 | |||||||||||
Restructuring, severance, and legal | 844 | 1,003 | 1,071 | 1,634 | |||||||||||
Pro forma adjusted EBITDA | $ | 16,612 | $ | 30,062 | $ | 73,248 | $ | 82,083 | |||||||
____________________
(1) Reflects primarily legal, professional and other integration costs related to the Cedar Creek acquisition
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