BlueLinx Holdings Inc., a leading distributor of building and industrial products in the United States, today reported financial results for the fiscal fourth quarter and audited financial results for the fiscal year ended December 30, 2017.

“We are pleased to share our 2017 results, including our best full year gross margin and net income on record and our best full year Adjusted EBITDA since 2006. These results, coupled with the four sale-leaseback transactions we completed on January 10, 2018, position us well to capitalize on our anticipated continued strength in the markets we serve,” said Mitch Lewis, President and Chief Executive Officer.

Susan O’Farrell, Senior Vice President and Chief Financial Officer added, “2017 was exceptional for BlueLinx. Our continued focus on deleveraging the business led to one of the best years in Company history as we improved our financial results and significantly reduced our debt.”

Fourth Quarter Results Compared to Prior Year Period
BlueLinx generated net sales of $433.6 million for the fourth quarter of fiscal 2017, up $12.0 million or 2.8% from the prior fiscal fourth quarter. As previously disclosed, the Company initiated 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, which is a non-GAAP measure, increased by $14.7 million or 3.5% from this period a year ago.

The Company recorded gross profit of $55.5 million during the fiscal fourth quarter, up $3.1 million or 6.0% from the prior fiscal fourth quarter, with a gross margin of 12.8%, an increase of 40 basis points from the prior year period. When excluding the effects of the Company’s operational efficiency initiatives, adjusted same-center gross profit, which is a non-GAAP measure, increased by $3.4 million from this period a year ago.

The Company released a substantial portion of its Deferred Tax Valuation Allowance during the fiscal fourth quarter, resulting in a significant income tax benefit. BlueLinx recorded net income of $53.5 million for the fourth quarter of fiscal 2017, up $43.1 million from this period a year ago. The previous fiscal fourth quarter included real estate gains of $13.4 million. Adjusted EBITDA, which is a non-GAAP measure, was $9.8 million for the fiscal fourth quarter, up $4.2 million or 73.2% from this period a year ago.

Full Year Fiscal 2017 Compared to Prior Year Period
For the full fiscal year ended 2017, the Company generated $1.82 billion in net sales compared to $1.88 billion from the prior year. When excluding the effects of our operational efficiency initiatives, adjusted same-center net sales, which is a non-GAAP measure, increased by $63.7 million or 3.6% from the same period in fiscal 2016.

Gross profit for the full fiscal year ended 2017 was $231.0 million, up $3.6 million from the prior year period, with a gross margin of 12.7%, an increase of 60 basis points from 2016. When excluding the effects of the Company’s operational efficiency initiatives, adjusted same-center gross profit, which is a non-GAAP measure, increased by $11.2 million from the prior fiscal year ended December 31, 2016.

Net income for the full fiscal year was $63.0 million, up $46.9 million from this period a year ago, with a diluted earnings per share of $6.81. Adjusted EBITDA, which is a non-GAAP measure, for the full fiscal year was $43.9 million, an increase of $7.5 million or 20.6% from the fiscal year ended 2016. Excluding the effects of our operational efficiency initiatives, same-center Adjusted EBITDA, which is a non-GAAP measure, was up $9.5 million or 27.4% from the same period in fiscal 2016. 

Working Capital and Liquidity
As of December 30, 2017, the Company had $63.3 million of excess availability under its asset-based revolving credit facility, based on qualifying inventory and receivables. As a result of our working capital initiatives and mortgage reduction efforts, interest expense for the full fiscal year 2017 decreased by $3.7 million or 14.8% 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. The new facility’s improved economic terms include LIBOR margin improvements of 75 to 125 basis points depending on excess availability levels.

In fiscal year 2018, the Company paid off the remaining mortgage principal of approximately $98.0 million. The payment was funded through long-term sale leaseback transactions on four properties owned by the Company, which provided $110.0 million in aggregate sale proceeds.