BlueLinx reports Q4 net loss of US$2.5M compared with net loss of US$11.4M a year earlier, on sales up 10.4% to US$486.3M; full-year net loss grows 76.5% to US$40.6M, with year-earlier figure benefiting from pretax gains on special items

ATLANTA , February 20, 2014 (press release) – – Markets Continue Improvement as Fourth Quarter Sales Rise 10.4% –
– Full Year Comparable Same Center Revenue Increases 13.5% –
– Restructuring Initiatives Completed in 2013 –


BlueLinx Holdings Inc. (NYSE:BXC), a leading distributor of building products in North America, today reported financial results for the fiscal fourth quarter and fiscal year ending January 4, 2014. The fiscal fourth quarter and fiscal year ending January 4, 2014, included 14 and 53 weeks respectively, compared to 13 and 52 weeks respectively, for the fiscal fourth quarter and fiscal year ending December 29, 2012.

"Our operating performance for the fourth quarter of 2013 represents an improvement in net sales reflecting continued market recovery while our Adjusted EBITDA improved over 2012 levels," said Mitch Lewis, President and Chief Executive Officer. "We are gaining traction on the previously announced restructuring efforts that were completed in 2013. Our organization is intently focused on improving our gross margins and operating more efficiently to facilitate leveraging our incremental volume to enhance our financial performance," Mr. Lewis concluded.

Revenues for the fiscal fourth quarter ending January 4, 2014, increased 10.4% to $486.3 million from $440.3 million for the fiscal fourth quarter ended December 29, 2012. On a 13-week comparable same center basis, 2013 fourth quarter revenue increased to $467.1 million or 12.1% compared to the fiscal fourth quarter of 2012. Adjusted EBITDA loss for the 2013 fiscal fourth quarter improved to $1.0 million from an adjusted EBITDA loss of $1.4 million for the same period a year ago. The 2013 quarterly adjusted EBITDA was $0.1 million, a year-over-year improvement of $1.5 million when considering the additional week in the 2013 fiscal fourth quarter.

For the full fiscal year 2013, revenues totaled $2.15 billion, up 12.8% from $1.91 billion the same period a year ago. On a 52-week comparable same center basis, revenues for the 2013 year increased 13.5%.

The Company's net sales and Adjusted EBITDA for the 2013 and fiscal 2012 fourth quarter and full year periods, reported on a comparable same center basis, 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):

Comparable Same Center
Net Sales and Adjusted EBITDA
   
in millions
(unaudited)
For the 13-week and 13-week
Periods Ended
For the 52-week and 52-week
Periods Ended
  Quarters Ended Years Ended
  January 4,
2014
December 29,
2012
January 4,
2014
December 29,
2012
Comparable Net Sales $467.1 $416.7 $2,047.2 $1,803.1
Comparable Adjusted EBITDA $0.1 ($1.4) $2.4 $6.0

The Company incurred a net loss of $2.5 million, or $0.03 per diluted share for the fiscal fourth quarter of 2013, compared with a net loss of $11.4 million, or $0.17 per diluted share, for the fiscal fourth quarter of 2012. The current quarter net loss included an income tax benefit of $8.0 million related to the allocation of income tax expense to other comprehensive loss for a non-operating actuarial gain associated with the Company's hourly pension plan. Fiscal fourth-quarter results for 2013 included net pretax gains from significant special items of $0.1 million, or $0.00 per diluted share. Fiscal fourth-quarter results for 2012 included net pretax charges from significant special items of $0.5 million, or $0.01 per diluted share. After adjusting for significant special items, 2013 fiscal fourth quarter adjusted net loss was $6.4 million, or $0.08 per diluted share, compared to an adjusted net loss of $6.7 million, or $0.10 per diluted share, for the same period a year ago.

Gross profit for the 2013 fiscal fourth quarter totaled $54.3 million, up 4.3% from $52.1 million in the year-ago period. Gross margins for the 2013 fiscal fourth quarter of 11.2% were up compared to the full fiscal year gross margin of 10.6%, and down compared to 11.8% for the same period a year ago. Overall 2013 fiscal fourth quarter gross margins were impacted by a higher channel mix of direct and reload sales and higher year ago structural wood-based product prices.

Fiscal 2013 fourth-quarter operating expenses were $58.1 million compared to $56.7 million for the same period a year ago. Significant special items included in operating expenses for the 2013 fiscal fourth quarter included $1.3 million in gains from the sale of certain properties and $1.2 million in restructuring and severance costs. Significant special items included in operating expenses in the year ago quarter included $0.2 million in gains from the sale of certain properties. Operating expenses in the year ago period also included $3.5 million in expenses related to the five closed distribution centers. After adjusting for significant special items, closed distribution centers, and the 53rd week, operating expense as a percentage of comparable same center revenue improved to 11.7% in the 2013 fiscal fourth quarter from 12.8% in the year ago period. Reported operating loss for the 2013 fiscal fourth quarter was $3.7 million, compared to an operating loss of $4.5 million a year ago and reflects the increase in gross margin dollars and the significant special items detailed in the adjusted net loss table below.

Fiscal 2013 full-year net loss totaled $40.6 million, or $0.51 per diluted share, compared with a net loss of $23.0 million, or $0.35 per diluted share a year ago. Fiscal full-year results for 2013 included net pretax charges from significant special items of $10.6 million, or $0.13 per diluted share. Fiscal full-year results for 2012 included net pretax gains from significant special items of $10.9 million, or $0.17 per diluted share.

Gross profit for the 2013 fiscal year totaled $228.5 million and gross margin was 10.6%, compared with $230.1 million and 12.1% a year ago. Declines in gross margin were driven by volatility in wood-based structural product pricing, primarily during the fiscal 2013 second quarter. The decline in gross margin was further impacted by lower margin structural sales increasing from 42% of revenue in the year ago period to 45% of revenue for the year ended January 4, 2014.

Total operating expenses for the 2013 fiscal year increased to $249.8 million from $224.6 million a year ago. Significant special items included in operating expenses for the 2013 fiscal year included $5.2 million in gains from the sale of certain properties, $12.1 million in restructuring and severance costs, and $10.0 million in expenses related to closed distribution centers. Significant special items included in operating expenses in the year ago period included total gains of $10.4 million from the sale of certain properties and an insurance settlement. Operating expense in 2012 also included $12.7 million in expenses related to the five distribution centers closed in 2013. After adjusting for significant special items, closed distribution centers, and the 53rd week, operating expense as a percentage of comparable same center revenue improved to 11.6% for the 2013 fiscal year from 11.8% a year ago. Reported operating loss for 2013 was $21.3 million, compared to operating income of $5.5 million a year ago and reflects the decline in gross margin and the significant special items detailed in the adjusted net loss table below.

The Company's net sales for the 2013 and 2012 fiscal fourth quarter and fiscal full year periods, reported on a same center and comparable basis, 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):

Comparable Same Center Net Sales    
in millions
(unaudited)
Quarters Ended Years Ended
  January 4,
2014
December 29,
2012
% Inc
(Dec)
January 4,
2014
December 29,
2012
% Inc
(Dec)
Total Net Sales $486.3 $440.3 10.4% $2,152.0 $1,907.8 12.8%
Less: Closed Center -- 23.6 (100.0%) 85.6 104.7 (18.2%)
Same Center 486.3 416.7 16.7% 2,066.4 1,803.1 14.6%
Less:  Week of December 29, 2013 19.2 -- nmf 19.2 -- nmf
Comparable 13/52-week vs. 13/52-week $467.1 $416.7 12.1% $2,047.2 $1,803.1 13.5%

The Company's Adjusted EBITDA for the 2013 and 2012 fiscal fourth quarter and fiscal full year periods, reported on a same center and comparable basis, 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):

Adjusted EBITDA    
in millions
(unaudited)
Quarters Ended Years Ended
  January 4,
2014
December 29,
2012
January 4,
2014
December 29,
2012
Net loss ($2.5) ($11.4) ($40.6) ($23.0)
Reconciling items:        
Depreciation and amortization 2.6 2.0 9.1 8.6
Interest expense, net 7.0 6.8 28.0 28.2
(Benefit from) provision for income taxes (8.3) -- (9.0) 0.4
Loss (income) from closed distribution centers -- 0.7 3.7 (0.5)
Gain from sale of certain properties (1.3) (0.2) (5.2) (9.9)
Gain from property insurance settlement -- -- -- (0.5)
Stock-based compensation (excluding restructuring) 0.4 0.7 3.2 2.8
Restructuring and severance related costs 1.2 -- 12.1 --
Adjusted EBITDA Same Center ($1.0) ($1.4) $1.3 $6.0
Add back EBITDA loss week of December 29, 2013 1.1 -- 1.1 --
Comparable 13/52-week vs. 13/52-week $0.1 ($1.4) $2.4 $6.0
% Same Center (0.2%) (0.3%) 0.1% 0.3%
% Comparable 13/52-week vs. 13/52-week 0.0% (0.3%) 0.1% 0.3%

The Company's operating results for the 2013 and 2012 fiscal fourth quarter and fiscal 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):

Adjusted Net Loss    
in millions, except per share amounts
(unaudited)
Quarters Ended Years Ended
  January 4,
2014
December 29,
2012
January 4,
2014
December 29,
2012
Pretax loss ($10.8) ($11.3) ($49.6) ($22.6)
Loss (income) from closed distribution centers -- 0.7 3.7 (0.5)
Gain from sale of certain properties (1.3) (0.2) (5.2) (9.9)
Gain from property insurance settlement -- -- -- (0.5)
Restructuring and severance related costs 1.2 -- 12.1 --
Adjusted pretax loss (10.9) (10.8) (39.0) (33.5)
Adjusted benefit from income taxes (4.5) (4.1) (15.4) (12.6)
Adjusted net loss ($6.4) ($6.7) ($23.7) ($21.0)
Basic and diluted weighted average shares 84.8 65.5 80.2 65.5
Adjusted basic and diluted net loss per share applicable to common shares ($0.08) ($0.10) ($0.30) ($0.32)

For the fiscal quarter and fiscal full year periods ended January 4, 2014, the above table reflects the following events: (i) the Company recorded a loss from closed distribution centers; (ii) the Company recorded a gain on the sale of certain surplus properties; (iii) the Company recorded certain restructuring and severance related costs. 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 and the tax effect of significant special items. The adjusted benefit from income taxes assumes the Company's deferred tax assets are realizable. See the reconciliation of GAAP Net Loss to Adjusted Net Loss accompanying this press release for further details.

For the fiscal quarter and fiscal full year periods ended December 29, 2012, the above table reflects the following events: (i) the Company recorded a quarterly loss and annual profit from closed distribution centers; (ii) the Company recorded a gain on the sale of certain surplus properties; (iii) the Company recorded a gain from a property insurance settlement. 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 and the tax effect of significant special items. The adjusted benefit from income taxes assumes the Company's deferred tax assets are realizable. See the reconciliation of GAAP Net Loss to Adjusted Net Loss accompanying this press release for further details.

Liquidity and Capital Resources

As of February 8, 2014, the Company had $59.2 million of excess availability under its asset-backed revolving credit facilities, based on qualifying inventory and receivables.

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 404-537-3406, Conference ID# 59454923. 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.

Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the Company. Adjusted EBITDA, as we define it, is an amount equal to net (loss) income plus interest expense and all interest expense related items (e.g. changes associated with ineffective interest rate swap, write-off of debt issue costs, charges associated with mortgage refinancing), income taxes, stock compensation, depreciation and amortization, further adjusted to exclude other non-cash items and certain other adjustments. Adjusted EBITDA is presented herein because we believe it is a useful supplement to cash flow from operations in understanding cash flows generated from operations that are available for debt service (interest and principal payments) and further investment in acquisitions. 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.

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 over 1,700 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 current network of 50 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.

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