Building products distributor BlueLinx generated a profit in the second quarter of 2019, posting a net income of $6 million after recording a net loss of $9 million in the same period in 2018. Net sales, however, decreased significantly year over year (YOY) for the Marietta, Ga.-based distributor, according to the company’s second quarter earnings report.
BlueLinx reported net sales of $706 million in the second quarter of 2019, a 21% decrease from the $893 in sales from the second quarter in 2018. Deflationary conditions in commodity wood products and lower-than-expected single-family housing starts in the first half of the year contributed to the lower net sales in the quarter.
“We are pleased with our gross margin improvement in the quarter and we expect to achieve continued margin expansion as our business grows following our substantially completed integration of Cedar Creek,” president and CEO Mitch Lewis said in a public statement. “We are seeing favorable trends that support our optimism for an improved second half compared to 2018. We are committed to driving further margin improvement by realizing operational efficiencies while keeping costs aligned with business levels and we see numerous advantages to leveraging our business platform to drive improvement in the second half of 2019.”
The second quarter report for BlueLinx includes the gains from sales of real property of $10 million and one-time charges for integration costs and professional fees related to its Cedar Creek acquisition in April 2018.
BlueLinx recorded a gross profit of $94 million during the second quarter, down $10 million on a YOY basis, and reported a gross margin of 13.3%, up from 11.6% in the same period a year ago. Adjusted EBITDA—earnings before interest, taxes, depreciation, amortization, and one-time costs—was $25 million for the second quarter, a $12 million decrease YOY.
“Our deleveraging initiatives continued to proceed as expected during the second quarter of 2019,” senior vice president and CFO Susan O’Farrell said. “We were pleased to announce two sale-leaseback transactions and two sales of former distribution facilities during the period as part of our real estate monetization and debt reduction efforts. These transactions resulted in gross proceeds of approximately $57 million, which were used to repay indebtedness under the Company’s term loan and revolving credit facility.”
BlueLinx’s debt under its term loan and revolving credit facility decreased $113 million compared to the second quarter of 2018, according to O’Farrell.
