BlueLinx credited its debt-cutting, efficiency-boosting moves today in reporting a swing in the second quarter to a net profit of $3.2 million from a year-earlier net loss of $3.1 million. This came even as sales dropped 6.9% to $474 million.
The revenue decline came largely because of the sale and closure of several distribution centers last year. Sales in areas that the Atlanta-based distributor served both last spring and this year rose 5.1%.
Gross profit grew 5.5% to 60.5 million, boosting its gross margin by 1.5 percentage points to 12.8%. Meanwhile, BlueLinx’s selling, general, and administrative costs shrank by $3.6 million to reach $49 million.
Interest expense–a major drag on BlueLinx’s earnings in recent years–declined roughly $900,000 year-over-year to total $5.4 million, the earnings report shows.
BlueLinx measures itself by adjusted EBITDA–earnings before interest, taxes, depreciation, amortization, changes from property sales, share-based compensation expenses, pension costs, and restruction- and refinancing-related expenses. By that metric, adjusted EBITDA inched up by roughly $150,000 to reach $12.8 million.
“Our commitment to improving our business resulted in our best second quarter net income, gross margin, and adjusted EBITDA results since 2008,” Susan O’Farrell, senior vice president and chief financial officer, said in a statement. “We have also significantly reduced our debt principal by $76.4 million from this period a year ago. We continue to focus on deleveraging our balance sheet while actively marketing certain owned facilities for sale leaseback opportunities and exploring financing alternatives. Furthermore, with the working capital efficiencies we have achieved, we have reduced our operating working capital by $21.6 million from second quarter 2016.”
Operating working capital–current assets less current liabilities plus the current portion of long-term debt–stood as $296.3 million as of July 2, 2016. A year later, it was $274.7 million.
