Bluelinx issued the following announcement on Feb. 22.
BlueLinx Holdings Inc. (NYSE: BXC), a leading U.S. wholesale distributor of building products, today reported financial results for the three months and twelve months ended January 1, 2022.
FOURTH QUARTER 2021 HIGHLIGHTS
(all comparisons versus the prior-year period unless otherwise noted)
- Net sales of $973 million, an increase of 12%
- Gross margin of 19.9%, up 550 basis points
- Diluted earnings per share of $7.30, an increase of 258%
- Adjusted EBITDA of $112 million, up $73 million or 190%
- Net leverage ratio of 1.1x, down from 3.5x
- Completed $300 million offering of 6% senior secured notes due 2029
(all comparisons versus the prior-year period unless otherwise noted)
- Net sales of $4.3 billion, increased 38%
- Gross margin of 18.2%, up 280 basis points
- Diluted earnings per share of $29.99, increased 251%
- Adjusted EBITDA of $464 million, up $294 million or 172%
- Operating cash flow of $145 million, increased 164%
- Net debt of $490 million, reduced 19% or $115 million
- Available liquidity of $432 million as of January 1, 2022
“We remain committed to fostering a performance-based culture to drive sustainable, profitable growth through all economic cycles. On this front, we took decisive action last year to emphasize growth in higher value specialty products, drive a disciplined approach to structural product inventory, and leverage centralized purchasing and pricing teams. These actions were underscored by our second half 2021 performance.”
“Looking back at our accomplishments for the full year, I am incredibly proud of our team,” continued Gibson. “It was a remarkable year during which we achieved record profitability, recapitalized our balance sheet and significantly improved our operational performance. Net sales grew 38% to $4.3 billion, gross margin expanded 280 basis points to 18.2% and adjusted EBITDA increased 172%, or $294 million, to $464 million.”
“Additionally, we generated $131 million of free cash flow and issued $300 million of senior secured notes while reducing net debt by nearly 20%. We ended the year in a strong, flexible financial position, with our net leverage ratio at 1.1x. We have ample liquidity to invest in our business and we are poised to create value through prudent, disciplined capital allocation.”
“At the outset of 2022, our operating execution remains strong and trends in the U.S. housing industry continue to be favorable. As we look to the future, we will continue to improve operational efficiency, leverage our scale and strategically expand our business. We are focused on driving transformational growth and we are incredibly excited about our future,” concluded Gibson.
FOURTH QUARTER 2021 FINANCIAL PERFORMANCE
For the three months ended January 1, 2022, BlueLinx generated net sales of $973 million, an increase of $108 million, or 12%, when compared to the prior-year period. This increase was driven by 29% growth in net sales of specialty products, partially offset by a 10% decline in net sales of structural products. Gross profit was $194 million, an increase of $69 million, or 56% over the prior year period. Gross margin expanded 550 basis points to 19.9%.
Net income of $74 million increased 271% as compared to $20 million in the prior-year period. The increase in net income was driven by sales growth in specialty product categories, gross margin expansion across both specialty and structural products, and a $5 million, net of tax, non-recurring gain on the sale of property recorded during the quarter.
Diluted earnings per share was $7.30, an increase of 258% as compared to $2.04 per diluted share in the prior year period.
Adjusted EBITDA was $112 million, or 11.5% of net sales, as compared to $39 million, or 4.5% of net sales in Q4 2020.
Operating cash flow was $18 million, including a $77 million net working capital investment, of which $52 million related to inventory, largely to support future specialty product sales. Cash capital investments were $9 million and primarily related to upgrading the company’s trailer fleet and, to a lesser extent, maintenance at distribution branches. Free cash flow, which excludes these investments, was $9 million for the fourth quarter.
Net sales of specialty products, which includes engineered wood, industrial products, cedar, moulding, siding, metal products and insulation, were $641 million, an increase of $143 million, or 29%, over Q4 2020. Specialty products gross profit was $140 million, up $54 million, or 62% over the prior year period. Specialty products gross margin expanded 450 basis points to 21.9%. The growth in net sales and profitability is attributable to disciplined pricing strategies along with continued demand for specialty building products amid ongoing supply constraints.
Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, were $331 million, a decrease of $35 million, or 10%, versus the prior year period. This decline was primarily a result of the company’s disciplined and strategic approach to mitigate volatility in commodity-based wood products through lean structural products inventory. Despite the decline in sales, structural products gross profit increased $16 million, or 42%, over the prior year period to $53 million and gross margins expanded 590 basis points to 16.1%, reflecting price escalation in commodity lumber and panels throughout the quarter.
FULL YEAR 2021 FINANCIAL PERFORMANCE
For the twelve months ended January 1, 2022, net sales were $4.3 billion, an increase of $1.2 billion, or 38%, over the prior year. Gross profit was $778 million, an increase of $301 million, or 63% over the prior year. Gross margins expanded 280 basis points to 18.2%.
Net income of $296 million increased 266% as compared to $81 million in the prior year. The increase in net income was driven by sales growth and gross margin expansion across both specialty and structural product categories.
Diluted earnings per share was $29.99, an increase of 251% as compared to $8.55 per diluted share in the prior year period.
Adjusted EBITDA was $464 million, or 10.8% of net sales, as compared to $170 million, or 5.5% of net sales in 2020.
Operating cash flow was $145 million, which included a net working capital investment of $178 million, of which $146 million related to inventory, largely to support future specialty product sales. Cash capital investments were $14 million and primarily related to upgrading the company’s trailer fleet and also upgrading and maintaining distribution branches. Free cash flow, which excludes these investments, was $131 million.
Net sales of specialty products were $2.5 billion, an increase of $655 million, or 35%, year-over-year. Gross profit was $562 million, up $242 million, or 76% year-over-year. Specialty products gross margin expanded 520 basis points to 22.3%. The sales growth and gross profit improvement were attributable to disciplined pricing strategies, robust demand for specialty building products amid ongoing supply constraints, and a higher margin product mix.
Net sales of structural products were $1.8 billion, an increase of $525 million, or 43%, year-over-year. This growth was primarily the result of increased average prices for commodity lumber and panels as compared to the prior year. Structural products gross profit was $217 million, up $59 million, or 37%, year-over-year and gross margin was 12.3%.
BALANCE SHEET UPDATE
On October 18, 2021, the company completed an offering of $300 million aggregate principal amount of its 6.0% Senior Secured Notes due 2029. In conjunction with this transaction, the capacity under the company’s revolving credit facility was reduced to $350 million, down from $600 million. The majority of the proceeds of the offering were used to pay down all outstanding borrowings under the Company’s revolving credit facility.
As of January 1, 2022, total debt was $575 million, comprised of $300 million senior secured notes and $275 million of finance lease obligations. Cash on hand was $85 million and net debt was $490 million. The net leverage ratio, calculated as the ratio of net debt to trailing twelve month Adjusted EBITDA, was 1.1x, down from 3.5x in the prior year period.
Available liquidity was $432 million, comprised of $85 million of cash on hand and $346 million of borrowing capacity on the company’s revolving credit facility. The company believes it has sufficient liquidity to support the ongoing operations of the business and evaluate opportunistic capital allocation actions.
CULTURE AND STRATEGIC INITIATIVES
The company is committed to driving a culture of profitable growth within new and existing product lines and geographies, while positioning the company for long-term value creation. The following initiatives represent key areas of leadership’s focus:
- Foster a performance-driven culture committed to profitable growth. This includes enhancing the employee and customer experience; accelerating organic growth within specific product and solutions offerings where the company is uniquely advantaged; and deploying capital to drive sustained margin expansion, grow cash flow and maintain continued profitable growth.
- Migrate sales mix toward higher-margin specialty product categories. The company intends to pursue a revenue mix increasingly weighted toward higher-margin, specialty product categories such as engineered wood, moulding, millwork, decking and industrial products. Additionally, the company intends to expand its value-added service offerings designed to simplify complex customer sourcing requirements, together with marketing, inventory and pricing services afforded by the company’s national platform.
- Maintain a disciplined capital structure and pursue high-return investments that increase the value of the company. The company intends to maintain a disciplined capital structure while investing in its business to modernize and upgrade its tractor, trailer and forklift fleet and distribution branches and to improve operational performance. The company also continues to evaluate potential acquisition targets that complement its existing capabilities, grow its specialty products business, increase customer exposure, expand its geographic reach, or a combination thereof.
Through the first seven weeks of 2022, market conditions in the U.S. housing industry remained generally favorable with robust demand across most building product categories and prices for commodity wood-based products above Q4 2021 average pricing. These market dynamics in combination with the company’s strategic pricing actions and continued disciplined approach to managing wood-based commodity inventory have positively benefited the first quarter gross margin. On a first quarter-to-date basis gross margin for both specialty and structural product categories exceeded 20%.
CONFERENCE CALL INFORMATION
BlueLinx will host a conference call on February 23, 2021, at 10:00 a.m. Eastern Time, accompanied by a supporting slide presentation.
A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of the BlueLinx website at http://bluelinxco.com/webcast-presentations, and a replay of the webcast will be available at the same site shortly after the webcast is complete.
To participate in the live teleconference:
Domestic Live: 1-877-407-4018
Passcode: 13726267
To listen to a replay of the teleconference, which will be available through March 9, 2022:
Domestic Replay: 1-844-512-2921
Passcode: 13726267
NON-GAAP MEASURES
The Company reports its financial results in accordance with GAAP. The Company also believes that presentation of certain non-GAAP 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 to their most directly comparable GAAP measures herein or 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.
Adjusted EBITDA and Adjusted EBITDA Margin. BlueLinx defines 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 share-based compensation expense, one-time charges associated with debt issuance, restructuring and gains on sales of properties including amortization of deferred gains.
The Company presents Adjusted EBITDA because it is a primary measure used by management to evaluate operating performance. Management believes this metric helps to enhance investors’ overall understanding of the financial performance and cash flows of the business. Management also believes Adjusted EBITDA is helpful in highlighting operating trends. 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.
We determine our Adjusted EBITDA Margin by dividing our Adjusted EBITDA for the applicable period by our net sales for the applicable period. We believe that this ratio is useful to investors because it more clearly defines the quality of earnings and operational efficiency of translating sales to profitability.
Our Adjusted EBITDA and Adjusted EBITDA Margin are not presentations made in accordance with GAAP and are not intended to present superior measures of our financial condition from those measures determined under GAAP. Adjusted EBITDA and Adjusted EBITDA Margin, as used herein, are not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. These non-GAAP measures are reconciled in the “Reconciliation of Non-GAAP Measurements” table later in this release.
Free Cash Flow. BlueLinx defines free cash flow as net cash provided by operating activities less total capital expenditures. Free cash flow is a measure used by management to assess our financial performance, and we believe it is useful for investors because it relates the operating cash flow of the company to the capital that is spent to continue and improve business operations. In particular, free cash flow indicates the amount of cash generated after capital expenditures that can be used for, among other things, investment in our business, strengthening our balance sheet, and repayment of our debt obligations. Free cash flow does not represent the residual cash flow available for discretionary expenditures since there may be other nondiscretionary expenditures that are not deducted from the measure. Free cash flow is not a presentation made in accordance with GAAP and is not intended to present a superior measure of financial condition from those determined under GAAP. Free cash flow, as used herein, is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. This non-GAAP measure is reconciled in the “Reconciliation of Non-GAAP Measurements” table later in this release.
Net Debt and Net Leverage Ratio . BlueLinx calculates net debt as its total short- and long-term debt, including outstanding balances under our term loan and revolving credit facility and the total amount of its obligations under financing leases, less cash and cash equivalents. We believe that net debt is useful to investors because our management reviews our net debt as part of its management of overall liquidity, financial flexibility, capital structure and leverage, and creditors and credit analysts monitor our net debt as part of their assessments of our business.
We determine our overall net leverage ratio by dividing our net debt by trailing twelve-month Adjusted EBITDA. We believe that this ratio is useful to investors because it is an indicator of our ability to meet our future financial obligations. In addition, the ratio is a measure that is frequently used by investors and creditors.
Our net debt and overall net leverage ratio are not presentations made in accordance with GAAP and are not intended to present a superior measure of our financial condition from measures and ratios determined under GAAP. In addition, our net debt and overall net leverage ratio, as used herein, are not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. This non-GAAP measure is reconciled in the “Reconciliation of Non-GAAP Measurements” table later in this release.
Original source can be found here.
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