Building products distributor BlueLinx Holdings reported sales of $971 million in the fiscal third quarter, an 11% increase on a year-over-year (YOY) basis compared to the third quarter of 2020. While sales increased on a YOY basis, net income for BlueLinx shrank 14% YOY to $47 million. BlueLinx attributed the decrease in net income to the “significant decline” in the market value of higher-cost commodity wood product inventory sold during the third quarter. Additionally, net income was negatively impacted by an approximately $8 million, non-recurring gain on the sale of property recorded in the third quarter of 2020.
Net sales of specialty products, which includes engineered wood, industrial products, cedar, molding, siding, metal products, and insulation, increased 29% on a YOY basis in the third quarter to $641 million. Specialty products gross profit increased $62 million YOY to $148 million in the third quarter, resulting in a gross margin of 23.0%. The increases in net sales and gross profit were primarily driven by price increases reflective of high demand and ongoing supply constraints, according to BlueLinx. Specialty products experienced low double-digit sales volume declines YOY due to supply chain disruptions despite the positive growth in net sales. Sales volume did increase in some high-value categories, such as industrial products, molding, and siding.
Net sales of structural products at BlueLinx, including lumber, plywood, oriented strand board, rebar, and remesh, declined 12% YOY to $330 million due to significant price deflation for commodity wood products during the quarter. Dwight Gibson, CEO and president of BlueLinx, said structural product gross margins were “significantly impacted by the historical decline of over 60% in commodity wood prices that began at the end of the second quarter.”
“BlueLinx continues to deliver a differentiated value proposition across the growing regional markets we serve, one that leverages our deep supplier relationships, diverse product offerings, and integrated support services to provide an exceptional customer experience,” Gibson said in a prepared statement. “Our excellent third quarter performance was highlighted by continued growth in specialty product sales and robust cash flow generation. We delivered specialty product gross margins well above historic averages as we continue to capitalize on supplier-led price increases and our value-added services.”
BlueLinx reported adjusted EBITDA of $79 million in the third quarter of 2021, down $2 million from $81 million in the third quarter of 2020. The distributor generated free cash flow from operations of $104 million and free cash flow of $012 million in the third quarter, up 70% and 66%, respectively, from the prior-year period.
“Looking ahead, our focus remains on developing world class employee engagement and customer service to drive growth within higher-gross margin product and service categories,” Gibson said. “The demand outlook for construction materials remains strong, with expectations for continued growth in domestic new home construction and renovation activity over a multi-year period.”
