8-K
BlueLinx Holdings Inc. (BXC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 4, 2021
BlueLinx Holdings Inc.
(Exact name of registrant specified in its charter)
| Delaware | 001-32383 | 77-0627356 |
|---|---|---|
| (State or other | (Commission | (I.R.S. Employer |
| jurisdiction of<br>incorporation) | File Number) | Identification No.) |
| 1950 Spectrum Circle, Suite 300, Marietta, GA | 30067 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (770) 953-7000
_________________________________________________
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 under the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | BXC | New York Stock Exchange |
Item 2.02 Results of Operations and Financial Condition
On May 4, 2021, BlueLinx Holdings Inc. ("BlueLinx" or "the Company”) issued a press release announcing its financial results for the fiscal first quarter ended April 3, 2021. A copy of BlueLinx's press release is furnished as Exhibit 99.1 hereto.
On May 5, 2021, as previously announced, BlueLinx will hold a teleconference and audio webcast to discuss its financial results from the fiscal first quarter ended April 3, 2021. A copy of supplementary materials that will be referred to in the teleconference and webcast, and which will be posted to the Company's website, is furnished as Exhibit 99.2 hereto.
The information included in this Item 2.02, as well as Exhibits 99.1 and 99.2, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits:
The following exhibits are attached with this Current Report on Form 8-K:
| Exhibit No. | Exhibit Description |
|---|---|
| 99.1 | Press Release dated May 4, 2021 reporting financial results for fiscal first quarter ended April 3, 2021 |
| 99.2 | Supplementary Materials to be used during webcast conference call on May 5, 2021 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BlueLinx Holdings Inc. | ||
|---|---|---|
| (Registrant) | ||
| Dated: May 4, 2021 | By: | /s/ Kelly C. Janzen |
| Kelly C. Janzen | ||
| Senior Vice President and Chief Financial Officer |
Document
Exhibit 99.1
BlueLinx Announces First Quarter 2021 Results
Net Sales Exceed $1 billion, Highest Q1 Since 2006
Record Net Income of $62 million and Adjusted EBITDA of $107 million
More than $100 million decrease in Total Outstanding Bank Debt year over year
MARIETTA, GA, May 4, 2021 - BlueLinx Holdings Inc. (NYSE:BXC), a leading U.S. wholesale distributor of building products, today reported financial results for the three months ended April 3, 2021.
First Quarter 2021 Results
(all comparisons versus the prior-year period unless otherwise noted)
•Net sales increased $363 million, or 55%, to $1.0 billion
•Gross margin increased 350 basis points to 17.6%
•Net income of $62 million, an increase of $63 million
•Adjusted EBITDA of $107 million, improved by $87 million
•Excess availability and cash on hand increased to $238 million
•Term Loan fully repaid
“The BlueLinx team has continued to perform at a high level during a period of continued strength in residential construction and home renovation, leading to significant year-over-year growth in revenue and profitability,” said Mitch Lewis, President and CEO. “We generated more than $1 billion in revenue and $107 million in Adjusted EBITDA during the first quarter, providing the Company a strong platform to drive continued growth and efficiency across our business.”
“The ongoing supply-demand imbalances for many of our products contributed to further price escalations during the first quarter, a trend that is continuing in the second quarter,” stated Lewis. “We are a beneficiary of these price escalations which are a key near-term driver of improved margin realization and profitability while remaining focused on preemptive actions to help mitigate the impact of downside commodity price risk.”
“Our business transformation continued during the first quarter, supported by a significant increase in gross profit across both product categories,” stated Kelly Janzen, Chief Financial Officer. “Since the end of the first quarter 2020, we have reduced our total outstanding bank debt by over $100 million. Late in the quarter, we voluntarily repaid the approximately $16 million of remaining outstanding principal under our term loan, an action which further simplifies our capital structure and reduces cash interest expense. We ended the first quarter with excess availability of $238 million under our revolving credit facility, an increase of $141 million versus the prior-year period, and a net leverage ratio of 2.5x, inclusive of finance lease obligations.”
“Given the significant increase in net sales, accounts receivable grew by more than $125 million in the first quarter, when compared to the fourth quarter 2020,” continued Janzen. “As we look to the second half of the current year, we anticipate that the conversion of our accounts receivable will result in significant growth in cash flow.”
Financial Performance
The Company reported net sales of $1.0 billion in the first quarter, compared to $662 million in the prior year period, and gross profit of $180 million, compared to $93 million in the prior year period. First quarter net sales for specialty products, which includes products such as engineered wood, cedar, moulding, siding, metal products and insulation, accounted for $563 million of net sales in the period, up from $421 million in the prior year period. The $142 million improvement year over year was primarily a result of price escalations. The specialty gross margin was 19.3% which increased 290 basis points compared to the first quarter of 2020. Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, continued to benefit from wood-based commodity price inflation and were $462 million, an increase of $222 million compared to last year. The impact of wood-based commodity price inflation is estimated to approximate the full amount
of the increase in net sales. Structural product gross margin increased by 540 basis points year over year to 15.5% for the first quarter.
The Company reported net income of $62 million in the first quarter, or $6.28 per diluted share, compared to a net loss of $0.8 million, or $(0.08) per diluted share, in the prior-year period. First quarter 2021 net income was reduced by approximately $5 million from non-recurring items, including a $6 million write-off of debt issuance costs, that was included in interest expense, associated with the term loan payoff, offset by a $1 million gain on sales of property, and first quarter 2020 net income was reduced by approximately $4 million of integration, real estate financing, and restructuring expenses. Excluding the impact of these non-recurring items, net income increased by $64 million, or $6.44 per diluted share, on a year-over-year basis.
Adjusted EBITDA, a non-GAAP measure, was $107 million in the first quarter, compared to $20 million in the prior-year period. Cash used in operating activities for the first quarter was $25 million, an improvement of $35 million when compared to the prior year period and was primarily a result of increased net income offset by an increase in accounts receivable of $125 million in the first quarter, due to increased net sales.
Business Update
The Company remains committed to its strategic priorities that include sales growth, margin expansion, strategic product emphasis and continuous improvements in operational efficiency.
•Sales growth and margin expansion. BlueLinx is committed to driving sustained sales growth and margin expansion through increased penetration of the national dealer, home center and local markets. The Company has continued to invest in resources and analytical tools to support its disciplined pricing strategies and has expanded sales support for these key customer segments.
•Value-added product line expansion. BlueLinx is focused on delivering specialized, higher-value products, in which two-step distribution plays a key role. The Company is committed to further building its relationships with marquee brands through its valued supplier partners, while investing in products with low disintermediation risk.
•Operational efficiencies. BlueLinx emphasizes continuous improvement in its operational processes. Productivity improvements through project initiatives and investments in fleet, facility optimization, and technologies remain a primary focus for the Company. Overall selling, general and administrative expense remained relatively consistent compared to the prior year period, increasing approximately $1 million due to higher variable incentive compensation and sales commissions of approximately $5 million. Offsetting the increase in variable compensation was a reduction in fixed overhead costs, primarily from reduced labor expense. Working capital management improvements continued during the first quarter, with Days Sales of Inventory of 39 days, an improvement of 19 days, when compared to the prior year period.
Market Outlook
While domestic new residential construction and home renovation markets remain robust, higher raw material costs and adverse weather conditions impacted construction activity during the first quarter, as key North American mills continue to have supply constraints.
•Single-family housing starts (SFHS), a key economic indicator with a high historical correlation to the Company’s business, remain relatively strong, although SFHS on a trailing twelve month basis as of March 2021 are still approximately 40% below the prior cyclical peak achieved in 2005.
•Total U.S. monthly supply of homes for sale increased from year-end levels but remain constrained, with housing inventory at the end of the first quarter at approximately 38% below the 20-year average.
•According to the National Association of Home Builders (NAHB), the April 2021 Builders’ Confidence Index increased slightly to 83 from 82 in March. Increases in materials costs and delivery times have impacted short-term builder sentiment.
•While existing home sales were down 10% due to limited housing inventory, remodeling expenditures continued to increase on a quarter-over-quarter basis. According to the NAHB, the Remodeling Market Index (RMI) increased 9% to 86 for the first quarter 2021 index as compared to 79 for fourth quarter 2020.
First Quarter 2021 Conference Call Details
BlueLinx will host a conference call on May 5, 2021, 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 # 7956909.
Investors will also be able to access an archived audio recording of the conference call for one week following the live call by dialing (404) 537-3406, Conference ID # 7956909.
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
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
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 compensation expense from share-based compensation, one-time charges associated with the legal and professional fees and integration costs related to the Cedar Creek acquisition, 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. However, Adjusted EBITDA is not a presentation made in accordance with GAAP and is not intended to present a superior measure of our financial condition from those measures 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. 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 determines our net debt based on total short- and long-term debt, including our outstanding balances under the Company’s term loan and revolving credit facility and the total amount of obligations under its financing leases, less cash and cash equivalents.
After determining net debt, BlueLinx determines its overall net leverage ratio by dividing net debt by trailing twelve-month Adjusted EBITDA. Management believes that this ratio is useful to investors because it is an indicator of the Company’s ability to meet its future financial obligations. In addition, the ratio is a measure that is frequently used by investors and creditors. 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 the Company’s financial condition from measures and ratios determined under GAAP. In addition, the Company’s 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.
ABOUT BLUELINX HOLDINGS
BlueLinx (NYSE: BXC) is a leading U.S. wholesale distributor of residential and commercial building products with both branded and private-label SKUs across product categories such as lumber, panels, engineered wood, siding, millwork, metal building products, and other construction materials. With a strong market position, broad geographic coverage footprint servicing 40 states, and the strength of a locally focused sales force, we distribute our comprehensive range of products to over 15,000 national, regional, and local dealers, specialty distributors, national home centers, and manufactured housing customers. BlueLinx is able to provide a wide range of value added services and solutions to our customers and suppliers. We are headquartered in Georgia, with executive offices located at 1950 Spectrum Circle, Marietta, Georgia, and we operate our distribution business through a broad network of distribution centers. BlueLinx encourages investors to visit its website, www.BlueLinxCo.com, which is updated regularly with financial and other important information about BlueLinx.
CONTACT
Noel Ryan
(720) 778-2415
BXC@val-adv.com
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements. Forward-looking statements include, without limitation, any statement that predicts, forecasts, indicates or implies 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 press release include statements about our strategic imperatives and priorities, and our focus thereon; our ability to capitalize on our geographic footprint to grow our national dealer and home center customer markets; our local entrepreneurial initiatives; our focus on reducing non-essential costs and our ability to, and the potential success of, investing in resources to support strategic sales growth; our market and business outlook, including the outlook for the residential housing construction markets, and trends in wood-based commodity prices; our efforts to manage commodity price volatility and the potential success thereof; and the COVID-19 pandemic and our response thereto, including statements about the potential trajectory of the pandemic and its potential effects.
Forward-looking statements in this press release are based on estimates and assumptions made by our management that, although believed by us to be reasonable, are inherently uncertain. Forward-looking statements involve risks and uncertainties that may cause our business, strategy, or actual results to differ materially from the forward-looking statements. These risks and uncertainties include those discussed in greater detail in our filings with the Securities and Exchange Commission. We operate in a changing environment in which new risks can emerge from time to time. It is not possible for management to predict all of these risks, nor can it assess the extent to which any factor, or a combination of factors, may cause our business, strategy, or actual results to differ materially from those contained in forward-looking statements. Factors that may cause these differences include, among other things: pricing and product cost variability; volumes of product sold; changes in the prices, supply, and/or demand for products that we distribute; the cyclical nature of the industry in which we operate; housing market conditions; the COVID-19 pandemic and other contagious illness outbreaks and their potential effects on our industry; effective inventory management relative to our sales volume or the prices of the products we produce; information technology security risks and business interruption risks; increases in petroleum prices; consolidation among competitors, suppliers, and customers; disintermediation risk; loss of products or key suppliers and manufacturers; our dependence on international suppliers and manufacturers for certain products; business disruptions; exposure to product liability and other claims and legal proceedings related to our business and the products we distribute; natural disasters, catastrophes, fire, or other unexpected events; successful implementation of our strategy; wage increases or work stoppages by our union employees; costs imposed by federal, state, local, and other regulations; compliance costs associated with federal, state, and local environmental protection laws; our level of indebtedness and our ability to incur additional debt to fund future needs; the risk that our cash flows and capital resources may be insufficient to service our existing or future indebtedness; the covenants of the instruments governing our indebtedness limiting the discretion of our management in operating our business; the fact that we lease many of our distribution centers, and we would still be obligated under these leases even if we close a leased distribution center; changes in our product mix; shareholder activism; potential acquisitions and the integration and completion of such acquisitions; the possibility that the value of our deferred tax assets could become impaired; changes in our expected annual effective tax rate could be volatile; the costs and liabilities related to our participation in multi-employer pension plans could increase; the possibility that we could be the subject of securities class action litigation due to stock price volatility; and changes in, or interpretation of, accounting principles.
Given these risks and uncertainties, we caution you not to place undue reliance on forward-looking statements. We expressly disclaim any obligation to 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| April 3, 2021 | March 28, 2020 | |||||
| (In thousands, except per share data) | ||||||
| Net sales | $ | 1,025,469 | $ | 662,070 | ||
| Cost of sales | 845,077 | 568,861 | ||||
| Gross profit | 180,392 | 93,209 | ||||
| Gross margin | 17.6 | % | 14.1 | % | ||
| Operating expenses: | ||||||
| Selling, general, and administrative | 75,560 | 74,588 | ||||
| Depreciation and amortization | 7,465 | 7,635 | ||||
| Amortization of deferred gains on real estate | (984) | (984) | ||||
| Gains from sales of property | (1,287) | (525) | ||||
| Other operating expenses | 112 | 4,165 | ||||
| Total operating expenses | 80,866 | 84,879 | ||||
| Operating income | 99,526 | 8,330 | ||||
| Non-operating expenses (income): | ||||||
| Interest expense, net | 16,234 | 14,380 | ||||
| Other income, net | (314) | (237) | ||||
| Income (loss) before provision for (benefit from) income taxes | 83,606 | (5,813) | ||||
| Provision for (benefit from) income taxes | 21,746 | (5,026) | ||||
| Net income (loss) | $ | 61,860 | $ | (787) | ||
| Basic income (loss) per share | $ | 6.53 | $ | (0.08) | ||
| Diluted income (loss) per share | $ | 6.28 | $ | (0.08) |
BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| April 3, 2021 | January 2, 2021 | |||
|---|---|---|---|---|
| (In thousands, except share data) | ||||
| ASSETS | ||||
| Current assets: | ||||
| Cash | $ | 179 | $ | 82 |
| Receivables, less allowances of $5,573 and $4,123, respectively | 418,815 | 293,643 | ||
| Inventories, net | 376,423 | 342,108 | ||
| Other current assets | 33,029 | 32,581 | ||
| Total current assets | 828,446 | 668,414 | ||
| Property and equipment, at cost | 310,101 | 299,935 | ||
| Accumulated depreciation | (125,769) | (121,223) | ||
| Property and equipment, net | 184,332 | 178,712 | ||
| Operating lease right-of-use assets | 48,969 | 51,142 | ||
| Goodwill | 47,772 | 47,772 | ||
| Intangible assets, net | 17,067 | 18,889 | ||
| Deferred tax assets | 66,795 | 62,899 | ||
| Other non-current assets | 19,099 | 20,302 | ||
| Total assets | $ | 1,212,480 | $ | 1,048,130 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 218,975 | $ | 165,163 |
| Accrued compensation | 10,798 | 24,751 | ||
| Taxes payable | 33,646 | 7,847 | ||
| Current maturities of long-term debt, net of debt issuance costs of $0 and $74, respectively | — | 1,171 | ||
| Finance lease liabilities - short-term | 7,459 | 5,675 | ||
| Operating lease liabilities - short-term | 5,123 | 6,076 | ||
| Real estate deferred gains - short-term | 4,040 | 4,040 | ||
| Other current liabilities | 11,747 | 14,309 | ||
| Total current liabilities | 291,788 | 229,032 | ||
| Non-current liabilities: | ||||
| Long-term debt, net of debt issuance costs of $2,615 and $8,936, respectively | 355,899 | 321,270 | ||
| Finance lease liabilities - long-term | 273,815 | 267,443 | ||
| Operating lease liabilities - long-term | 44,021 | 44,965 | ||
| Real estate deferred gains - long-term | 77,059 | 78,009 | ||
| Pension benefit obligation | 21,730 | 22,684 | ||
| Other non-current liabilities | 25,655 | 25,635 | ||
| Total liabilities | 1,089,967 | 989,038 | ||
| Commitments and contingencies | ||||
| STOCKHOLDERS' EQUITY: | ||||
| Common Stock, $0.01 par value, 20,000,000 shares authorized,<br><br>9,468,042 and 9,462,774 outstanding on April 3, 2021 and January 2, 2021, respectively | 95 | 95 | ||
| Additional paid-in capital | 268,006 | 266,695 | ||
| Accumulated other comprehensive loss | (35,742) | (35,992) | ||
| Accumulated stockholders’ deficit | (109,846) | (171,706) | ||
| Total stockholders’ equity | 122,513 | 59,092 | ||
| Total liabilities and stockholders’ equity | $ | 1,212,480 | $ | 1,048,130 |
BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | ||||
|---|---|---|---|---|
| April 3, 2021 | March 28, 2020 | |||
| (In thousands) | ||||
| Cash flows from operating activities: | ||||
| Net income (loss) | $ | 61,860 | $ | (787) |
| Adjustments to reconcile net income (loss) to cash used in operations: | ||||
| Provision for (benefit from) income taxes | 21,746 | (5,026) | ||
| Depreciation and amortization | 7,465 | 7,635 | ||
| Amortization of debt issuance costs | 603 | 956 | ||
| Adjustments to debt issuance costs associated with term loan | 5,791 | — | ||
| Gains from sales of property | (1,287) | (525) | ||
| Amortization of deferred gains from real estate | (984) | (984) | ||
| Share-based compensation | 1,410 | 1,004 | ||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | (125,172) | (55,068) | ||
| Inventories | (34,315) | (32,828) | ||
| Accounts payable | 53,812 | 30,050 | ||
| Prepaid and other current assets | (1,246) | (3,006) | ||
| Other assets and liabilities | (14,291) | (608) | ||
| Net cash used in operating activities | (24,608) | (59,187) | ||
| Cash flows from investing activities: | ||||
| Proceeds from sale of assets | 1,810 | 44 | ||
| Property and equipment investments | (1,122) | (1,245) | ||
| Net cash provided by (used in) investing activities | 688 | (1,201) | ||
| Cash flows from financing activities: | ||||
| Borrowings on revolving credit facilities | 262,210 | 204,196 | ||
| Repayments on revolving credit facilities | (191,943) | (149,079) | ||
| Repayments on term loan | (43,204) | (69,238) | ||
| Proceeds from real estate financing transactions | — | 78,329 | ||
| Debt financing costs | (861) | (336) | ||
| Repurchase of shares to satisfy employee tax withholdings | (56) | (7) | ||
| Principal payments on finance lease liabilities | (2,129) | (2,562) | ||
| Net cash provided by financing activities | 24,017 | 61,303 | ||
| Net change in cash | 97 | 915 | ||
| Cash at beginning of period | 82 | 11,643 | ||
| Cash at end of period | $ | 179 | $ | 12,558 |
BLUELINX HOLDINGS INC.
RECONCILIATION OF NON-GAAP MEASUREMENTS
(Unaudited)
The following schedule reconciles net income (loss) to Adjusted EBITDA:
| Three Months Ended | ||||
|---|---|---|---|---|
| April 3, 2021 | March 28, 2020 | |||
| (In thousands) | ||||
| Net income (loss) | $ | 61,860 | $ | (787) |
| Adjustments: | ||||
| Depreciation and amortization | 7,465 | 7,635 | ||
| Interest expense, net | 10,443 | 14,380 | ||
| Term loan debt issuance costs(1) | 5,791 | — | ||
| Provision for (benefit from) income taxes | 21,746 | (5,026) | ||
| Share-based compensation expense | 1,410 | 1,004 | ||
| Amortization of deferred gains on real estate | (984) | (984) | ||
| Gain from sales of property(1) | (1,287) | (525) | ||
| Real estate financing costs(1) | — | 1,793 | ||
| Merger and acquisition costs(1)(2) | — | 1,070 | ||
| Restructuring and other(1)(3) | 113 | 1,309 | ||
| Adjusted EBITDA | $ | 106,557 | $ | 19,869 |
(1) Reflects non-recurring items of approximately $5 million in non-beneficial items to the current quarter and approximately $4 million in
non-beneficial items to the same quarterly period of the prior year.
(2) Reflects primarily legal, professional, technology and other integration costs related to the Cedar Creek acquisition.
(3) Reflects costs related to our restructuring efforts, such as severance, net of other one-time non-operating items.
The following schedule presents Net Debt and the Net Leverage Ratio for the Trailing Twelve Months:
| Three Months Ended | ||||
|---|---|---|---|---|
| April 3, 2021 | March 28, 2020 | |||
| (In thousands) | ||||
| Current maturities of long term debt, gross of debt issuance costs | $ | — | $ | 2,250 |
| Finance lease liabilities - short term | 7,459 | 5,924 | ||
| Long term debt, gross of debt issuance costs | 358,514 | 456,798 | ||
| Finance lease liabilities - long term(1) | 273,815 | 269,192 | ||
| Total long-term debt | 639,788 | 734,164 | ||
| Less: available cash | 179 | 12,558 | ||
| Net Debt | 639,609 | 721,606 | ||
| Trailing twelve month Adjusted EBITDA | $ | 257,088 | $ | 74,698 |
| Net Leverage Ratio | 2.5x | 9.7x |
(1) Finance lease liabilities - long term include the combination of finance lease liabilities - long term and real-estate financing obligations in those periods when real estate financing obligations were presented.
9
bxc1q2021conferencecallp
Divider slide 29 September, 2020 First Quarter Results Conference Call May 5, 2021
1 Safe Harbor Statement -1- Note to Our Investors This presentation contains forward-looking statements. Forward-looking statements include, without limitation, any statement that predicts, forecasts, indicates or implies future results, performance, liquidity levels or achievements, and may contain the words “ believe,”“ anticipate,”“ expect,”“ estimate,”“ intend,”“ project,” “plan,” “will be, ”be, ”will likely continue, ”continue,” “will likely result” or words or phrases of similar meaning. Forward-looking statements involve risks and uncertainties that may cause our business, strategy, or actual results to differ materially from the forward-looking statements. The forward-looking statements in this presentation include statements about our strategic imperatives and priorities, and our focus thereon; our ability to capitalize on our geographic footprint to grow our national dealer and home center customer markets; our local entrepreneurial initiatives; our focus on reducing non-essential costs and our ability to, and the potential success of, investing in resources to support strategic sales growth; our market and business outlook, including the outlook for the residential housing construction markets, and trends in wood-based commodity prices; trends in deurbanization, housing inventory and prices; trends in residential repair and remodel activity; the influence of wood-based commodity price inflation on specialty product sales; our efforts to manage commodity price volatility and the potential success thereof; and the COVID-19 pandemic and our response thereto, including statements about the potential trajectory of the pandemic and its potential effects. Forward-looking statements in this presentation are based on estimates and assumptions made by our management that, although believed by us to be reasonable, are inherently uncertain. Forward-looking statements involve risks and uncertainties that may cause our business, strategy, or actual results to differ materially from the forward-looking statements. These risks and uncertainties include those discussed in greater detail in our filings with the Securities and Exchange Commission. We operate in a changing environment in which new risks can emerge from time to time. It is not possible for management to predict all of these risks, nor can it assess the extent to which any factor, or a combination of factors, may cause our business, strategy, or actual results to differ materially from those contained in forward-looking statements. Factors that may cause these differences include, among other things: pricing and product cost variability; volumes of product sold; changes in the prices, supply, and/or demand for products that we distribute; the cyclical nature of the industry in which we operate; housing market conditions; the COVID-19 pandemic and other contagious illness outbreaks and their potential effects on our industry; effective inventory management relative to our sales volume or the prices of the products we produce; information technology security risks and business interruption risks; increases in petroleum prices; consolidation among competitors, suppliers, and customers; disintermediation risk; loss of products or key suppliers and manufacturers; our dependence on international suppliers and manufacturers for certain products; business disruptions; exposure to product liability and other claims and legal proceedings related to our business and the products we distribute; natural disasters, catastrophes, fire, or other unexpected events; successful implementation of our strategy; wage increases or work stoppages by our union employees; costs imposed by federal, state, local, and other regulations; compliance costs associated with federal, state, and local environmental protection laws; our level of indebtedness and our ability to incur additional debt to fund future needs; the risk that our cash flows and capital resources may be insufficient to service our existing or future indebtedness; the covenants of the instruments governing our indebtedness limiting the discretion of our management in operating our business; the fact that we lease many of our distribution centers, and we would still be obligated under these leases even if we close a leased distribution center; changes in our product mix; shareholder activism; potential acquisitions and the integration and completion of such acquisitions; the possibility that the value of our deferred tax assets could become impaired; changes in our expected annual effective tax rate could be volatile; the costs and liabilities related to our participation in multi-employer pension plans could increase; the possibility that we could be the subject of securities class action litigation due to stock price volatility; and changes in, or interpretation of, accounting principles. Given these risks and uncertainties, we caution you not to place undue reliance on forward-looking statements. We expressly disclaim any obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. Non-GAAP Financial Measures. BlueLinx reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”). We also believe that presentation of certain non-GAAP measures, such as Adjusted EBITDA, net debt, the ratio of our total net debt to Adjusted EBITDA, and free cash flow, 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. Explanations of these non-GAAP measures are included in the accompanying Appendix to this presentation, and any non-GAAP measures used herein are reconciled herein or in the financial tables in the Appendix to their most directly comparable GAAP measures. We caution that non-GAAP measures should be considered in addition to, but not as a substitute for, our reported GAAP results. Immaterial Rounding Differences. Immaterial rounding adjustments and differences may exist between slides, press releases, and previously issued presentations. This presentation and the associated remarks made during this conference call are integrally related and are intended to be presented and understood together.
2 • Record first quarter results. Record operating income, net income and Adjusted EBITDA, driven by higher commodity wood prices, specialty products margin expansion, and operational effectiveness • Significant leverage reduction while enhancing liquidity. Reduced bank debt outstanding by $101 million year over year; Paid off Term Loan in full eliminating higher interest debt; Excess availability and cash increased to $238 million as of quarter end • Broad-based sales increase. Specialty and Structural product net sales higher by 34% and 92%, respectively • Margin expansion across both product categories. Total gross margin +350 bps to 17.6%; Record specialty products gross margin +290 bps to 19.3%; Structural products gross margin +540 bps to 15.5% • Disciplined cost controls. Cost containment efforts from 2020 sustained through Q1’ 21 • Improved profitability. Net income increased $63 million; earnings per diluted share of $6.28 vs. $(0.08) in prior year period; Adjusted EBITDA of $107 million, up $87 million Executive Summary First Quarter 2021 Performance • Single-family residential housing remains strong. Q1 single-family housing starts continue to be well below prior cyclical peak in 2005. Mortgage rates, low housing inventory, deurbanization, and improving employment conditions currently fuel housing start trends • Commodity wood prices at historic levels. Framing Lumber increased 56% & Structural Panel prices increased 78% in Apr-21 compared to Dec-20, continuing to rise given ongoing strong residential demand and production constraints • Builders’ Confidence Index remains elevated. NAHB Builders’ Confidence Index 65% above the 20-year average at 83 as of Apr-21; anticipate double digit percent growth in SFHS in 2021 • Remodeling activity continues to improve. LIRA Index and NAHB RMI both indicate continued R&R momentum with LIRA reaching record levels in Q1 • Economic measures trending positively. Employment conditions improving; national unemployment rate down in March to 6.2%, a 30-basis point improvement from December. The rate on a 30-year fixed rate mortgage continues to stay at historically low levels Market Conditions Company Performance Note: All comparisons versus the prior-year period unless otherwise noted -2-
3 - 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 E 2 0 2 2 E 2 0 2 3 E 2 0 2 4 E 0 10 20 30 40 50 60 70 80 90 100 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 0 2 4 6 8 10 12 14 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 (1) Source: Historical data is U.S. Census Bureau; Forecast: John Burns Real Estate Consulting, LLC subject limitations and disclaimers – not for redistribution (2) Source: U.S. Census Bureau. The months' supply is the ratio of houses for sale to houses sold. This statistic provides an indication of the size of the for-sale inventory in relation to the number of houses currently being sold. The months' supply indicates how long the current for-sale inventory would last given the current sales rate if no additional new houses were built. (3) Source: NAHB. The NAHB Housing Market Index (HMI) is based on a monthly survey of NAHB members designed to take the pulse of the single-family housing market. The survey asks respondents to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes. Single-Family Housing Demand Our business is correlated to single-family housing starts (SFHS) -3- Total U.S. Single Family Housing Starts Housing starts in thousands(1) Total U.S. Monthly Single-Family Residential Home Supply Months of inventory(2) NAHB “Builders’ Confidence” Market Index Composite index(3) Builders’ confidence reached a 35-year high in Nov-20 and remains elevated 50-year average 2021 SFHS annual estimate ~33% below the prior cyclical peak achieved in 2005 Single-family residential home supply is 38% below the 20-year average 20-year average 20-year average • 2021 SFHS forecasted at 1.2 million units, 12% above 50-year average; expected growth over next 3 years(1) • Months of supply for new and existing home inventory 38% below the 20-year average, builder confidence remains near the Nov-20 all-time high • Average U.S. home prices currently 6% higher than a year ago; anticipate double-digit % growth for full year 2021(1) • Low mortgage rates continue to support market growth 30 Year Fixed Mortgage Rate 16.6% 3.2% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 1 9 8 0 1 9 8 2 1 9 8 4 1 9 8 6 1 9 8 8 1 9 9 0 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 0 0 0 2 0 0 2 2 0 0 4 2 0 0 6 2 0 0 8 2 0 1 0 2 0 1 2 2 0 1 4 2 0 1 6 2 0 1 8 2 0 2 0 2 0 2 1 P 2 0 2 3 P 40-year average
4 $0 $50 $100 $150 $200 $250 $300 $350 $400 1 Q 0 0 4 Q 0 0 3 Q 0 1 2 Q 0 2 1 Q 0 3 4 Q 0 3 3 Q 0 4 2 Q 0 5 1 Q 0 6 4 Q 0 6 3 Q 0 7 2 Q 0 8 1 Q 0 9 4 Q 0 9 3 Q 1 0 2 Q 1 1 1 Q 1 2 4 Q 1 2 3 Q 1 3 2 Q 1 4 1 Q 1 5 4 Q 1 5 3 Q 1 6 2 Q 1 7 1 Q 1 8 4 Q 1 8 3 Q 1 9 2 Q 2 0 1 Q 2 1 ( P ) 4 Q 2 1 ( P ) $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 (1) Source: HIRL Research; updated annually (2) Source: Historical data is from the U.S. Census Bureau; The Value of Construction Put in Place Survey (VIP) provides monthly estimates of the total dollar value of construction work done in the U.S. The survey covers construction work done each month on new structures or improvements to existing structures for private and public sectors. (3) Source: Joint Center for Housing Studies at Harvard University. The Leading Indicator of Remodeling Activity (LIRA) provides a short-term outlook of national home improvement and repair spending to owner-occupied homes. The indicator, measured as an annual rate-of-change of its components, is designed to project the annual rate of change in spending for the current quarter and subsequent four quarters, and is intended to help identify future turning points in the business cycle of the home improvement and repair industry. Residential Repair & Remodel Activity Remains Healthy U.S. Installed base of more than 125 million homes expected by the end of 2021 -4- U.S. Private Residential Construction Put-In-Place (CPP) Dollars in millions(2) LIRA Remodeling Activity Index TTM Moving Total - Dollars in Billions(3) Total Installed Base of U.S. Homes, Including Renter and Owner-Occupied Homes Homes in millions(1) • U.S. Homes installed base forecasted to continue it’s rise supporting both residential construction and repair and remodel end markets • CPP and remodeling data indicate continued elevating R&R activity, with the LIRA index at record levels • Monitoring commodity price inflation impact on future R&R activity • Existing home sales remain elevated generating an optimistic outlook on R&R spend 116 117 117 118 118 119 120 121 122 123 124 125 126 127 128 129
5 - 200 400 600 800 1,000 1,200 1,400 Ja n -1 5 M a r- 1 5 M a y -1 5 Ju l- 1 5 S e p -1 5 N o v -1 5 Ja n -1 6 M a r- 1 6 M a y -1 6 Ju l- 1 6 S e p -1 6 N o v -1 6 Ja n -1 7 M a r- 1 7 M a y -1 7 Ju l- 1 7 S e p -1 7 N o v -1 7 Ja n -1 8 M a r- 1 8 M a y -1 8 Ju l- 1 8 S e p -1 8 N o v -1 8 Ja n -1 9 M a r- 1 9 M a y -1 9 Ju l- 1 9 S e p -1 9 N o v -1 9 Ja n -2 0 M a r- 2 0 M a y -2 0 Ju l- 2 0 S e p -2 0 N o v -2 0 Ja n -2 1 M a r- 2 1 Index Price TTM Avg. Index Price - 200 400 600 800 1,000 1,200 1,400 Ja n -1 5 M a r- 1 5 M a y -1 5 Ju l- 1 5 S e p -1 5 N o v -1 5 Ja n -1 6 M a r- 1 6 M a y -1 6 Ju l- 1 6 S e p -1 6 N o v -1 6 Ja n -1 7 M a r- 1 7 M a y -1 7 Ju l- 1 7 S e p -1 7 N o v -1 7 Ja n -1 8 M a r- 1 8 M a y -1 8 Ju l- 1 8 S e p -1 8 N o v -1 8 Ja n -1 9 M a r- 1 9 M a y -1 9 Ju l- 1 9 S e p -1 9 N o v -1 9 Ja n -2 0 M a r- 2 0 M a y -2 0 Ju l- 2 0 S e p -2 0 N o v -2 0 Ja n -2 1 M a r- 2 1 Index Price TTM Avg. Index Price (1) Source: Random Lengths, company analysis; Apr-21 data thru 4/30/21 (2) Source: Random Lengths; company analysis; Apr-21 data thru 4/30/21 Commodity Price Environment a Key Growth Driver Strong residential demand and supply constraints driving lumber and panel prices to all-time highs -5- Framing Lumber Composite Index As of April 2021(1) Structural Panel Composite Index As of April 2021(2) Apr-21 structural panel prices were 223% above the 5-year average and 69% above the TTM rolling average • Supply-demand imbalances continue to impact wood-based commodity pricing; prices reached all-time high in Apr-21 with both Framing Lumber and Structural Panels 192% and 223% higher than 5-year average, respectively • Supply remains constrained leading to historically high pricing levels • Demand in single-family construction, together with a robust R&R market, provides optimism for overall demand for the rest of 2021 Apr-21 framing lumber prices were 192% above the 5-year average and 49% above the TTM rolling average
6 Key Areas of Management Focus Continuing to execute on strategic imperatives -6- • National account growth, utilizing extensive product assortment and excellent supply chain capabilities • Product category emphasis; drive growth with strategic supplier partners and marquee brands • Local market strategic share gains • Service expansion across broad, national platform • Focus on specialized, higher- value products and services • Disciplined pricing strategy and effective price management • Emphasis on reducing wood- based commodity price deflation risk, including centralized purchasing and consignment • Realize economies of scale associated with large national network • Local sales execution strategies along with disciplined product purchasing • Focus on ensuring efficient cost of delivery • Increasing investment in facility optimization and technology • Working capital management initiatives • Generate cash flow to support sustained, profitable sales growth • Maintain adequate liquidity to support business initiatives • Continue to reduce net leverage • Provide financial optionality for inorganic opportunities Organic Sales Growth 1 Margin Expansion 2 Organizational Efficiencies 3 Disciplined Capital Allocation 4
7 $20 $107 $75 $257 1Q20 1Q21 1Q20 TTM 1Q21 TTM $93 $180 $364 $565 1Q20 1Q21 1Q20 TTM 1Q21 TTM $662 $1,025 $2,661 $3,461 1Q20 1Q21 1Q20 TTM 1Q21 TTM 1Q21 & TTM Performance Indicators Significant year-over-year growth in Net Sales, Gross Profit, Net Income and Adjusted EBITDA -7- Total Net Sales Dollars in millions Total Gross Profit Dollars in millions Total Adjusted EBITDA Dollars in millions Total Net Income Dollars in millions, except for per share +55% +30% +94% +55% +435% +243% Note: All comparisons versus the prior-year period unless otherwise noted $(1) Million $(0.08)/Share $62 Million $6.28/Share $(12) Million $(1.25)/Share $144 Million $14.56/Share 1Q20 1Q21 1Q20 TTM 1Q21 TTM
8 1.3% 9.7% 1.5% 6.7% 1Q20 1Q21 1Q20 TTM 1Q21 TTM 3.0% 10.4% 2.8% 7.4% 1Q20 1Q21 1Q20 TTM 1Q21 TTM 11.3% 7.4% 11.1% 9.1% 1Q20 1Q21 1Q20 TTM 1Q21 TTM 14.1% 17.6% 13.7% 16.3% 1Q20 1Q21 1Q20 TTM 1Q21 TTM -8- 1Q21 & TTM Performance Indicators Margin expansion through capitalizing on strong market dynamics Gross Margin Gross Profit / Net Sales Adjusted EBITDA Margin Adjusted EBITDA / Net Sales Operating Margin Operating Income / Net Sales SG&A Percentage of Net Sales SG&A / Net Sales +350 bps +260 bps -390 bps -200 bps +840 bps +520 bps +740 bps +460 bps Note: All comparisons versus the prior-year period unless otherwise noted
9 Specialty Products and Structural Products Performance Record net sales growth and margin expansion across both specialty and structural products in Q1 2021 -9- Specialty Products Sales and Gross Margin Dollars in Millions Structural Products Sales and Gross Margin Dollars in Millions TTM Q1 2020 Sales: $1.8 billion Gross Margin: 16.2% TTM Q1 2021 Sales: $2.0 billion Gross Margin: 17.9% TTM Q1 2020 Sales: $0.9 billion Gross Margin: 8.9% TTM Q1 2021 Sales: $1.5 billion Gross Margin: 14.2% • Specialty products net sales of $563 million, 55% of total 1Q21 net sales • Specialty products gross margin 19.3% in 1Q21, increased 290 basis points • Improvement in specialty net sales almost exclusively driven by inflation impact; gross margin benefited through disciplined pricing strategy • Structural products net sales of $462 million, 45% of total 1Q21 net sales • Structural products gross margin 15.5% in 1Q21, increased 540 basis points • Wood-based commodity inflation approximates the full amount of the year over year net sales increase Note: All comparisons versus the prior-year period unless otherwise noted GM Rate GM Rate $224 $226 $215 $241 $250 $375 $367 $462 7.7% 9.0% 8.7% 10.1% 9.3% 19.6% 10.2% 15.5% 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 $482 $453 $398 $421 $449 $496 $499 $563 15.9% 16.2% 16.1% 16.4% 17.3% 17.4% 17.4% 19.3% 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21
10 Effective Operating Working Capital Management Improvement in operating working capital metrics year over year and sequentially -10- Days Sales of Inventory (DSI) Number of Days (1) Operating working capital includes accounts receivable, inventory, accounts payable and cash (2) Cash Cycle Days = Days Sales Outstanding plus Days Sales of Inventory less Days Payable Outstanding • 45% return on working capital for Q1 2021 TTM, up significantly; 16% in the prior year period • $99 million increase in total operating working capital; inflation increased operating working capital ~$115 million year over year • Operating working capital increase primarily from receivables due to higher net sales; receivables currency rate of 94% • DSI improved by 19 days or nearly 33% for first quarter 2021, through continuation of purchasing controls • Cash cycle days improved by 15 days over prior year • Anticipate meaningful working capital to cash conversion later in 2021 Note: All comparisons versus the prior-year period unless otherwise noted Disciplined Operating Working Capital Management Dollars in millions(1) Cash Cycle Days Number of Days(2) 60 55 56 61 58 53 40 43 39 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 $471 $458 $440 $418 $477 $431 $446 $471 $576 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% $80 $180 $280 $380 $480 $580 $680 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Total Operating Working Capital Return on Working Capital 66 62 62 66 65 62 48 54 50 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21
11 Significant Reduction In Bank Debt Outstanding Reduced bank debt outstanding by $101 million year over year, supported by strong free cash flow generation -11- TTM Free Cash Flow Generation Dollars in millions(2) Bank Debt Reduction Dollars in millions 14 asset sales Estimated Annual Cash Commitments, excluding Taxes Dollars in millions(3) (1) Includes excess availability and cash on hand under our revolving credit facility due October 2022 (2) Free cash flow in a non-GAAP metric defined as total operating cash flow less total capital expenditures (3) Provided solely to illustrate potential future annual uses of cash; excludes principal payments under Term Loan, ABL and Finance Leases Note: All comparisons versus the prior-year period unless otherwise noted • Term Loan paid off in full in 1Q21 • Excess availability and cash on hand increased $141 million to $238 million • Total net leverage of 2.5x, down from 9.7x in Q1 2020 • Total net interest expense, decreased by ~$4 million for Q1 2021; excludes write off of term loan debt issuance costs of $5.8M • TTM 1Q21 FCF increased by more than $98 million vs. TTM 1Q20, supporting deleveraging cycle • Inflation significantly impacting operating working capital compressing TTM 1Q21 FCF Finance Lease Interest $24 ABL Interest $8 Capital Expenditures $6 Pension $1 Annual Cash Commitments before Taxes ~$39 $326 $382 $322 $263 $288 $359 $147 $77 $69 $58 $43 $473 $459 $391 $321 $331 $359 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 ABL Debt Outstanding Term Loan Debt Outstanding -$15 -$16 $51 $98 $51 $86 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Excess Availability and Net Leverage Ratio (includes finance leases) Dollars in millions(1); Net Debt / TTM Adjusted EBITDA $114 $97 $238 9.2x 9.7x 2.5x 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Excess Availability Net Leverage Ratio
Divider slide 29 September, 2020Appendix
13 Non-GAAP Measures -13- BlueLinx reports its financial results in accordance with GAAP, but we also believe 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. We caution that non-GAAP measures should be considered in addition to, but not as a substitute for, our reported GAAP results. Adjusted EBITDA. We define Adjusted EBITDA as and 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 the 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 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. Free Cash Flow. We define 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. Net Debt and Overall Net Leverage Ratio. We determine our net debt based on our total short- and long-term debt, including our outstanding balances under our term loan and revolving credit facility and the total amount of our obligations under our 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.
14 Q1 2020 to Q1 2021 SG&A Expense Bridge Dollars in Millions -14- Supplementary Information -$2.6$74.6 $75.6$3.6
15 Non-GAAP Reconciliation -15-
16 Non-GAAP Reconciliation -16-
17 Non-GAAP Reconciliation -17-