BlueLinx Holdings Inc., a leading distributor of building and industrial products in the United States, reported financial results for the fiscal second quarter ended July 1, 2017.

“We continue to make progress in our local market and sales excellence emphasis, which coupled with our ongoing deleveraging efforts, enabled us to improve our financial performance while significantly reducing our debt from prior year levels. As we remain focused on our customers and markets, our team is energized and motivated to continue improving our operating results and garnering market share,” said Mitch Lewis, President and Chief Executive Officer.

Susan O’Farrell, Senior Vice President and Chief Financial Officer added, “With the successful completion of our operational efficiency initiatives, we have experienced excellent performance this quarter, even with fewer facilities. Our commitment to improving our business resulted in our best second quarter net income, gross margin, and Adjusted EBITDA results since 2008.

“We have also significantly reduced our debt principal by $76.4 million from this period a year ago.  We continue to focus on deleveraging our balance sheet while actively marketing certain owned facilities for sale leaseback opportunities and exploring financing alternatives. Furthermore, with the working capital efficiencies we have achieved, we have reduced our operating working capital by $21.6 million from second quarter 2016.”

Second Quarter Results Compared to Prior Year Period
BlueLinx generated net sales of $474.0 million for the second quarter of fiscal 2017, compared to $509.0 million from the prior fiscal second quarter. As previously disclosed, the Company undertook several operational efficiency initiatives beginning in the second quarter of fiscal 2016, pursuant to which it closed and sold certain facilities and rationalized inventory by discontinuing certain underperforming products. When excluding the effects of these operational efficiency initiatives, adjusted same-center net sales increased by $23.2 million or 5.1% from this period a year ago. We believe that excluding the effects of the Company’s operational efficiency initiatives from our financial performance is helpful in presenting comparability across periods.

Even with the pressure on commodity lumber prices during the period, the Company recorded gross profit of $60.5 million during the fiscal second quarter, up $3.2 million from the prior fiscal second quarter, with a gross margin of 12.8%, up 150 basis points from this period a year ago. When excluding the effects of the Company’s operational efficiency initiatives, adjusted same-center gross profit increased by $3.4 million from fiscal second quarter 2016.

BlueLinx recorded net income of $3.2 million for the fiscal second quarter, up $6.4 million from this period a year ago.  Adjusted EBITDA, which is a non-GAAP measure, was $12.8 million for the fiscal second quarter.

First Six Months of Fiscal 2017 Compared to Prior Year Period
For the first six months of fiscal 2017, the Company generated $902.6 million in net sales compared to $983.3 million from the prior year period. When excluding the effects of our operational efficiency initiatives, adjusted same-center net sales increased by $32.2 million or 3.7% from the same period in 2016.

Gross profit for the first six months of fiscal 2017 was equal to the prior period at $115.0 million, with a gross margin of 12.7%, an increase of 100 basis points from the prior year period. When excluding the effects of the Company’s operational efficiency initiatives, adjusted same-center gross profit increased by $6.0 million or 5.5% from the first six months ended July 2, 2016.

The Company recorded net income of $3.8 million for the first six months of fiscal 2017, up $13.1 million from this period a year ago. Adjusted EBITDA, which is a non-GAAP measure, for the six month period was $20.1 million, an increase of $0.5 million or 2.3% from the first six months of fiscal 2016. Excluding the effects of our operational efficiency initiatives, same-center Adjusted EBITDA, a non-GAAP measure, was up $1.7 million or 8.9% from the same period in 2016. 

Working Capital and Liquidity
As of July 1, 2017, the Company had $74.2 million of excess availability under its asset-based revolving credit facility, based on qualifying inventory and receivables, an increase of $8.9 million from the same period a year ago. As a result of our working capital initiatives and mortgage reduction efforts, interest expense decreased by $0.9 million or 14.1% from fiscal second quarter 2016 and by $2.8 million or 21.2% from the first six months of fiscal 2016.