Building products distributor BlueLinx reported a record financial performance in the fiscal second quarter of 2021, driven by a combination of product price escalations, volume growth within the company’s specialty products business, and an improved sales mix. The distributor said supply-demand imbalances it experienced during the first quarter have persisted across its specialty categories, resulting in a succession of supplier price increases that allowed BlueLinx to expand its margins.
“We expect that demand for key specialty categories will continue to outpace supply for the remainder of the current year and likely into the first half of 2022,” BlueLinx president and CEO Dwight Gibson said in the company’s quarterly earnings report. “While wood-based commodity prices continued to rise during April and mid-May, lumber prices declined by nearly 50% and 38% during June and July, respectively. In anticipation of the decline in commodity wood prices, we reduced our structural inventory footage to below prior-year levels, which served to mitigate price deflation in the period.”
During the fiscal second quarter, BlueLinx generated net sales of $1.3 billion, an increase of $609 million when compared to the second quarter of 2020, at the beginning of the COVID-19 pandemic.
Net sales of specialty products, which includes engineered wood, industrial products, cedar, moulding, siding, metal products, and insulation, increased $226 million on a year-over-year (YOY) basis to $675 million in the quarter. Elevated demand for construction materials, along with continued supply constraints, contributed to price increases during the quarter, positively contributing to sales growth, according to BlueLinx. Gross profit in the specialty products category increased $87 million YOY to $165 million, with specialty gross margin improving 710 basis points to 24.4% in the fiscal second quarter.
Net sales of structural products, which includes lumber, plywood, oriented strand board, rebar, and remesh, increased $383 million YOY to $633 million in the second quarter of 2021. Gross profit in the category increased $63 million to $86 million, and gross margin increased 430 basis points YOY to 13.6%.
The distributor reported a net income of $113 million in the fiscal second quarter, compared to $7 million in the second quarter of 2020. The significant YOY increase in profitability for BlueLinx was attributable to broad-based revenue growth across the specialty and structural product lines, improved price realization, and disciplined inventory management and targeted cost control, according to the company.
“We continued our business transformation during the second quarter, while capitalizing on elevated demand within our core residential construction and home renovation markets,” Gibson said. “Our performance-driven culture, emphasis on long-term customer and supplier relationships at both national and local levels and our strategic product and service offerings, represent a durable and meaningful value proposition in a highly fragmented market.”
BlueLinx reported an adjusted EBITDA in the second quarter of $166 million, compared to $31 million in the second quarter of 2020.
Marietta, Ga.-based BlueLinx has a distribution footprint serving 40 states and the company distributes its range of structural and specialty products to approximately 15,00 customers across the United States.
