BlueLinx Holdings Inc., a leading distributor of building and industrial products in the United States, reported financial results for the fiscal third quarter ended September 30, 2017.

"We are pleased to report continued improvement in our financial performance from the second quarter of 2017 which resulted in increased net income for the third quarter and our highest third quarter Adjusted EBITDA since 2007. These results, coupled with the new five year revolving credit facility that we closed on October 10, 2017, and the successful completion of our secondary offering last week, provide an inflection point for BlueLinx as we move forward into the next phase of our recovery," said Mitch Lewis, President and Chief Executive Officer.

Susan O'Farrell, Senior Vice President and Chief Financial Officer added, "This quarter continues the financial momentum we have enjoyed over the last several quarters as we enhance our operating performance while prudently managing our working capital. In addition to continuing to actively market several of our owned facilities for potential sale leaseback transactions, we were also able to significantly reduce our debt principal by $49.8 million from this period a year ago."

Third Quarter Results Compared to Prior Year Period

BlueLinx generated net sales of $479.3 million for the third quarter of fiscal 2017, up $3.3 million from the prior fiscal third 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 $15.3 million or 3.3% from this period a year ago.

The Company recorded gross profit of $60.5 million during the fiscal third quarter, up $0.5 million from the prior fiscal third quarter, with a gross margin of 12.6%. When excluding the effects of the Company's operational efficiency initiatives, adjusted same-center gross profit increased by $1.7 million from this period a year ago.

BlueLinx recorded net income of $5.7 million for the third quarter of fiscal 2017 which did not include any real estate gains, compared to $15.0 million from the prior fiscal third quarter which included $13.9 million in real estate gains. Adjusted EBITDA, which is a non-GAAP measure, was $14.0 million for the fiscal third quarter, up $2.9 million from this period a year ago. When excluding the effects of our operational efficiency initiatives, same-center Adjusted EBITDA, a non-GAAP measure, was up $3.3 million from the same period in fiscal 2016. 

First Nine Months of Fiscal 2017 Compared to Prior Year Period

For the first nine months of fiscal 2017, the Company generated $1.38 billion in net sales compared to $1.46 billion from the prior year period. When excluding the effects of our operational efficiency initiatives, adjusted same-center net sales increased by $47.5 million or 3.6% from the same period in fiscal 2016.

Gross profit for the first nine months of fiscal 2017 was $175.5 million, up $0.5 million from the prior year period, with a gross margin of 12.7%, an increase of 70 basis points from the first nine months of fiscal 2016. When excluding the effects of the Company's operational efficiency initiatives, adjusted same-center gross profit increased by $5.9 million from the first nine months ended October 1, 2016.

The Company recorded net income of $9.5 million for the first nine months of fiscal 2017, up $3.8 million from this period a year ago. Adjusted EBITDA, which is a non-GAAP measure, for the nine-month period was $34.1 million, an increase of $3.3 million or 10.9% from the first nine months of fiscal 2016. Excluding the effects of our operational efficiency initiatives, same-center Adjusted EBITDA, a non-GAAP measure, was up $5.0 million or 17.1% from the same period in fiscal 2016. 

Working Capital and Liquidity

As of September 30, 2017, the Company had $82.7 million of excess availability under its asset-based revolving credit facility, based on qualifying inventory and receivables, an increase of $13.8 million from the same period a year ago. As a result of our working capital initiatives and mortgage reduction efforts, interest expense for the first nine months of fiscal 2017 decreased by $3.3 million or 16.8% from the same period in fiscal 2016. With the new five year revolving credit facility entered into on October 10, 2017, additional interest rate savings will be obtained over the life of the loan compared to the previous credit facility with improved economic terms, including LIBOR margin improvements of 75 to 125 basis points depending on excess availability levels.