Building and industrial products distributor BlueLinx Holdings developed plans to reduce its cost structure, strengthen its balance sheet, and increase liquidity in response to the coronavirus (COVID-19) pandemic.
To cut operating costs, the company has paused all hiring, furloughed approximately 15% of its corporate workforce, and reduced or eliminated executive and key management base salaries for the next six months. The company is also limiting all nonessential spending, maximizing working capital efficiency, and reducing headcount and variable operating expenses related to local market demand declines. BlueLinx did not disclose exactly how many employees have been furloughed.
“The pandemic has rapidly evolved, but we are evolving with it,” president and CEO Mitch Lewis said in a news release. “We began preparing for the pandemic in late February, and in early March we implemented new policies and procedures to protect our associates, serve our customers, and support our suppliers.”
Lewis said amid the uncertainty, the company is taking the necessary steps to continue to support the United States’ infrastructure needs. BlueLinx previously announced Lewis reduced his annual base salary of $850,000 to a monthly salary of $1 for a six-month period beginning April 1.
On April 1, BlueLinx amended its term loan to provide greater financial flexibility by increasing the leverage ratio covenant levels in the second and third quarters of 2020. The term loan principal balance was also reduced to approximately $69 million. As the result of a previous move, BlueLinx will no longer be subject to the quarterly leverage ratio covenant when the principal balance of the term loan is less than $45 million.
BlueLinx said it has not experienced any significant supply chain disruptions as a result of the COVID-19 pandemic and the supply chain has remained intact in all material aspects.
“First and foremost, our concern is for the safety and well-being of our employees and their families and communities,” Lewis said. “We formed a cross-functional COVID-19 Disaster Response Team in February and implemented protocols consistent with the Centers for Disease Control and Prevention and local guidance that include enhanced cleaning and disinfecting procedures, social distancing guidelines, no travel mandates, no contact rules, visitor guidelines, no gathering directives, enhanced safety procedures for drivers, and mobile work for employees whose work can be done remotely.”
Marietta, Ga.-based BlueLinx has a distribution footprint serving 50 states and distributes its range of structural and specialty products to approximately 15,000 customers across the United States.
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