Bluelinx Holdings Inc. · NYSE:BXC
Bluelinx — Investor Presentation (November 2006)
43 slides from Bluelinx's investor presentation, Nov 15, 2006
Slide 1: BlueLinx Investor Book November 2006
Dallas Austin BlueLinx Investor Book November 2006
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward-Looking Statement Safe Harbor — This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All of these forward-looking statements are based on estimates and assumptions made by our management that
Slide 3: Investor Book Agenda
BlueLinx Investor Book November 2006 BlueLinx Overview Industry Dynamics Focused Growth Strategy 2006 Q3 Update Looking Forward
Slide 4: Overview: Operations
BlueLinx Overview: Operations Largest Building Products Distributor in U.S. NYSE: BXC 2005 Revenue: $5.6 Billion Analysts Covering: 8 ~12,000 customers and 750+ suppliers Market Cap: $308.5 Product portfolio 10,000+ SKUs Shares Outstanding: 30.8 (diluted) 70+ warehouses; 80+ reloads Dividend/Yield:
Slide 5: Overview: Evolution of BlueLinx
BlueLinx Overview: Evolution of BlueLinx Growth Strategy 1954 — 1976 1977 — 19931994 — 20002001 — 2003 2004 — Future DiversifiedCentralized, Improve “Masters” Outlet for GP building nationwide Gross of the Plywood products distribution Margin &nbs p; supply chain distributor transition Georgia-Pacif
Slide 6: Overview: Evolving to Achieve Our Objectives
BlueLinx Overview: Evolving to Achieve Our Objectives FROM: TO: Commodities-focused, Customer-focused, distribution arm of solutions-driven, value-manufacturer added distribution partner 55%+ structural products 60%+ specialty products Volume orientation Profit orientation Structural products- Speci
Slide 7: Overview: Positioned at the Center of Value Creation
BlueLinx Overview: Positioned at the Center of Value Creation Manufactured Housing / Industrial Residential Building and Non-Products BlueLinx Dealers Residential Manufacturers Construction Home Repair and Improvement Remodeling Centers Benefits to ManufacturersBenefits to Customers Reliable channel
Slide 8: Overview: Diversified Product, Customer & End Use Segments
BlueLinx Overview: Diversified Product, Customer & End Use Segments Product Categories Customer CategoriesEnd Use Segments Non Residential Construction 5% Engineered lumber InsulationHome Center Hardboard Manufactured Specialty lumber Manufactured DeckingHousing Vinyl siding Specialty HousingRepair
Slide 9: Overview: Diversified Product, Vendor Relationships
BlueLinx Overview: Diversified Product, Vendor Relationships Diverse & Growing Supply Base: World Class, Loyal Customers: 750+ Vendor Partners 12,000+ Customer Partners National Home Centers National Dealers Regional Dealers Industrials/ Manufactured Housing
Slide 10: Overview: Strategic Objectives
BlueLinx Overview: Strategic Objectives Profitably grow specialty revenues to 60+ % of total sales Profitably grow structural margin dollars while reducing exposure to volatility Outgrow the market over the long term
Slide 11: Overview: Experienced Leadership Team
BlueLinx Overview: Experienced Leadership Team Management Team Leadership Background Stephen Macadam CEO Strategy CEO Consolidated Container; EVP Georgia-Pacific; McKinsey & Co. George Judd COO Operations VP Eastern operations, Georgia-Pacific; inside and outside sales manager, national accounts man
Slide 12: Overview: How We Think About Our Business Going Forward
BlueLinx Overview: How We Think About Our Business Going Forward 2006 Update Q3 housing starts and permits down sharply Housing starts down 18.7% from year ago Permits down 23.2% from year ago Category Jan Feb Mar Apr May Jun Jul Aug Sep Starts 2.265 M 2.132 1.972 1.832 1.953 1.841 1.772 1,665 1,772
Slide 13: Investor Book Agenda
BlueLinx Investor Book November 2006 BlueLinx Overview Industry Dynamics Focused Growth Strategy 2006 Q3 Update Looking Forward
Slide 14: Solid Long-Term Industry Fundamentals
Growing & Attractive Industry: Solid Long-Term Industry Fundamentals Annual Housing Starts Annual Unit Volume Growth In (mm)Other End-Use Markets Industrial Repair & Remodeling Mobile homes 1.9 1.8 Non-residential 1.4 2.8% 1.9% 1.8% 1991-2000 2001-2005 2006E- 1991-2000 2001-20052006E- AvgAvg 2015E A
Slide 15: Market Growth of Two-Step Distribution
Growing & Attractive Industry: Market Growth of Two-Step Distribution 50$48.7 $46.1 45 40 $38.4 $35.4 $ billions 35 $33.8 30 25 20 2001 2002 2003 2004 2005 Total Market Revenue Source: Home Channel News, July 2006
Slide 16: Largest in a Highly Fragmented Industry, Ripe for Consolidation
Growing & Attractive Industry: Largest in a Highly Fragmented Industry, Ripe for Consolidation Highly Fragmented Industry Many Small and Medium Sized Players 2005 Market Share Number of Competitors By Revenue* BlueLinx 11.5% 100’s Weyerhaeuser 10.0% Boise Cascade 6.9% Universal FP 4.4% Huttig 2.3% O
Slide 17: Investor Book Agenda
BlueLinx Investor Book November 2006 BlueLinx Overview Industry Dynamics Focused Growth Strategy 2006 Q3 Update Looking Forward
Slide 18: BXC Strategic Framework
Focused Growth Strategy: BXC Strategic Framework Mission: Strategy Initiatives and Enablers: Gross Margin Improvement Cost Improvement “Be the Masters of the Supply Improvement Productivity Improvement Chain for those products Efforts Asset Management we choose to distribute.” Value Proposition: Pro
Slide 19: Diversified, Market Relevant Specialty Products — Recent Launches
Focused Growth Strategy : Diversified, Market Relevant Specialty Products — Recent Launches
Slide 20: Structural Products - Effective Inventory Management
Focused Growth Strategy: Structural Products -Effective Inventory Management Focus on improved profitability and reduced risk Q3 structural inventory down 10% from year ago Increased utilization of consignment and program inventories Expanding imports from Europe and other areas offering lowest-cost
Slide 21: Outgrow the Market Over the Long Term
Focused Growth Strategy: Outgrow the Market Over the Long Term Unit Volume Growth vs. End-Use Market Year over Year Change Market Share Growth* Weighted End-Use Market Growth BlueLinx Growth 12.1% 8.2% 11.5% 11.1% 4.7% 4.4% 3.9% 2.5% 2.0% -0.7% -1.9% 2003 2004 2005 Q3 ‘06(TTM) 2003 2004 2005 *Source
Slide 22: Total Volume Growth vs. Market
Focused Growth Strategy: Total Volume Growth vs. Market BXC Growth Estimated Weighted #’s on graph equal percentage point spread End-Use Market Growth 14.0% 10.0% 6.0% (1.7) 2.4 2.0% (1.2) (2.0%) (2.0) Unit Volume Growth % (6.0%) (10.0%) (3.3) (14.0%) Q4 Q1 Q2 Q3 TTM 2005200620062006 BlueLinx contin
Slide 23: Specialty Volume Growth vs. Market
Focused Growth Strategy: Specialty Volume Growth vs. Market BXC Specialty Growth Estimated Weighted = percentage point spread End-Use Market Growth 18.0% 14.0% 10.0% 6.0 12.3 6.0% 11.4 8.7 2.0% Unit Volume Growth % (2.0%) (6.0%) 4.8 (10.0%) Q4Q1Q2 Q3 TTM 2005 2006 2006 2006 Continued specialty share
Slide 24: Investor Book Agenda
BlueLinx Investor Book November 2006 BlueLinx Overview Industry Dynamics Focused Growth Strategy 2006 Q3 Update Looking Forward
Slide 25: 2006 Q3 Update: Executing Our Plan In A Cyclical Housing Start Correction
2006 Q3 Update (Vs. Year Ago): Executing Our Plan In A Cyclical Housing Start Correction Revenue: Dn 17.2% to $1.2 billion Specialty down 1.1% — 45% of Total Rev, 62% of GM Structural dn 26.8% Unit Volume: Total Dn 12% Specialty dn3.9% — Structural dn 17% End-use markets dn8.7% Gross margin: Total 1
Slide 26: 2006 Q3 Update: Accelerating Specialty Growth
2006 Q3 Update : Accelerating Specialty Growth Unit Volume Growth Gross Margin Structural Specialty End-Use Markets Structural Specialty 14.3% 13.9% 14.4% 14.0% 12.7% 14.9% 13.3% 12.6% 12.9% 9.6% 6.6% 5.8% 4.2% 8.3% 7.0% 7.3% 6.8% 7.0% 7.0% 1.7% 0.2% -3.9% 5.3% 0.5% 0.9% -0.8% -11.3% -17.0% Q1 ‘05 Q
Slide 27: Investor Book Agenda
BlueLinx Investor Book November 2006 BlueLinx Overview Industry Dynamics Focused Growth Strategy 2006 Q3 Update Looking Forward
Slide 28: Looking Forward: Go-Forward Initiatives
Looking Forward: Go-Forward Initiatives Expand relationships with existing and new specialty product vendors who recognize the BlueLinx value proposition Continue and improve disciplined inventory management to help mitigate price volatility impact on structural products Target growing accounts that
Slide 29: BXC Investment Considerations
BXC Investment Considerations: Largest independent building products distributor in highly fragmented industry ripe for consolidation Positioned at the center of the supply chain to create maximum value for both manufacturers and customers Diversified products, customers & end use segments Solid lon
Slide 30: Appendix
Appendix TOPIC PAGE Fundamentals 32 Revenues by Quarter 33 Unit Volume Growth by Quarter 34 Market Growth by Quarter 35 Gross Margin by Quarter 36 Income by Quarter 37 Inventory by Quarter 38 Quarterly Volume by Region 39 Year to Date Volume by Region 40 Gross Margin % Analysis 41 Channel Mix Analys
Slide 31: Fundamentals
BlueLinx Holdings Inc. Fundamentals * TRADING VALUATION NYSE: BXC Dividend/yield $0.50/5.0% 8 Analysts Providing Research Debt to Total Capital 76% (9/30/06) Market Capitalization $308.5 million Cash per share $0.79 (9/30/06) Shares Outstanding 30.8 million (diluted) Book value per share $6.41 (9/30
Slide 32: Revenues by Quarter
BlueLinx Holdings Inc. Revenues by Quarter Sales $ in millions 2004 (1) 2005 2006 2003 (1) 2004 (1) 2005 TTM Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Specialty (2) $ 473.9 $ 501.1 $ 542.6 $ 559.9 $ 539.5 $ 580.0 $ 603.3 $ 553.5 $1,688.8 $1,959.8 $2,143.1 $2,276.3 Structural 754.9 861.2 960.7 910.6 815.2 813.4 $ 798.
Slide 33: Unit Volume Growth By Quarter
BlueLinx Holdings Inc. Unit Volume Growth By Quarter Unit Volume Growth 2004 2005 2006 2003 2004 2005 TTM Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Specialty (1) 2.9% 1.7% 0.5% 5.8% 12.7% 14.9% 9.6% (3.9%) 4.4% 7.6% 5.1% 8.0% Structural Plywood 9.7% (1.0%) (3.3%) (14.6%) (8.7%) (10.3%) (13.2%) (9.0%) (7.1%) 4.1% (6.7
Slide 34: Market Growth By Quarter
BlueLinx Holdings Inc. Market Growth By Quarter Market Growth 2004 2005 2006 2003 2004 2005 TTM Weight Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 End Use Driver Actual Housing Starts 50.0% (2.5%) 5.5% 6.7% 6.7% 3.0% 2.5% (9.5%) (18.7%) 8.4% 5.8% 5.6% (6.2%) Industrial Production 22.0% 4.2% 3.9% 3.4% 2.9% 2.7% 3.4% 3.7
Slide 35: Gross Margin by Quarter
BlueLinx Holdings Inc. Gross Margin by Quarter Gross Margin $ in millions 2004 (1) 2005 2006 2003 (1) 2004 (1) 2005 TTM Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Specialty (2) (3) $ 64.3 $ 63.2 $ 70.1 $ 74.2 $ 76.9 $ 80.4 $ 86.9 $ 77.5 $223.2 $279.6 $284.4 $321.7 Structural (3) 36.1 60.6 50.7 66.6 67.8 55.8 55.7 46.8
Slide 36: Income by Quarter
BlueLinx Holdings Inc. Income by Quarter Profit & Loss Statement $ in millions (4) , except per share amounts 2004 (1) 2005 (2) 2006 (3) 2003 (1) 2004 (1) 2005 (2) TTM Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Sales $1,509.6 $1,207.6 $1,351.6 $1,487.0 $1,454.2 $1,329.3 $1,376.6 $1,379.0 $1,203.6 $4,271.8 $5,558.2
Slide 37: Inventory by Quarter
BlueLinx Holdings Inc. Inventory by Quarter Inventory $ in millions 2004 2005 2006 2003 2004 2005 2006 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Specialty (1) $248.8 $254.7 $238.4 $228.2 $245.5 $269.1 $299.6 $292.4 $181.3 $248.8 $245.5 $292.4 Structural 225.7 234.1 217.7 168.1 184.6 194.7 192.5 158.1 150.4 225.7 184.
Slide 38: Quarterly Volume by Region
BlueLinx Holdings Inc. Quarterly Volume by Region $ millions (unaudited ) Q3 Q3 Total $ $ Unit %Unit 2005 Sales 2006 Sales Variance Variance Variance Central 107.3 87.6 (19.7) (15.6) (14.5%) Western 330.4 269.2 (61.2) (45.2) (13.7%) Mid Atlantic 253.9 209.1 (44.8) (31.0) (12.2%) Northeast 173.5 147.
Slide 39: Year to Date Volume by Region
BlueLinx Holdings Inc. Year to Date Volume by Region $ millions (unaudited ) YTD YTD Total $ $ Unit %Unit 2005 Sales 2006 Sales Variance Variance Variance Central 326.0 281.4 (44.6) (34.3) (10.5%) Western 984.1 877.9 (106.2) (75.6) (7.7%) Mid Atlantic 756.8 688.6 (68.2) (37.8) (5.0%) Northeast 467.3
Slide 40: Gross Margin % Analysis
BlueLinx Holdings Inc. Gross Margin % Analysis 3Q06 Variance from Trend Trend (3) 4Q05 1Q06 2Q06 3Q06 F/(U) Structural Products (1) Warehouse 10.6% 12.0% 10.4% 9.5% 9.1% (1.5%) Direct 4.3% 5.1% 3.7% 4.6% 5.1% 0.8% Reload 6.7% 5.9% 4.7% 5.9% 5.3% (1.4%) Total 8.1% 8.3% 6.8% 7.0% 7.0% (1.1%) Specialty
Slide 41: Revenue Channel Mix Analysis
BlueLinx Holdings Inc. Revenue Channel Mix Analysis 3Q06 Variance from Trend Trend (1) 4Q05 1Q06 2Q06 3Q06 F/(U) Structural Products Warehouse 57.2% 45.1% 44.9% 44.6% 46.3% (10.9%) Direct 33.6% 40.7% 41.4% 39.3% 35.5% 1.9% Reload 9.2% 14.2% 13.7% 16.1% 18.2% 9.0% Total 100.0% 100.0% 100.0% 100.0% 10
Slide 42: Structural Products Price Trends
BlueLinx Holdings Inc. Structural Products Price Trends Plywood Price Trend 2003-2006 YTD Oriented Strand Board Price Trend 2003 - - 2006 YTD Southern Sheathing 15/32” 4 Ply. West Zone Oriented Strand Board 7/16” North Central Zone $550 $550 $500 $500 $450 $450 $400 $400 $350 $350 $300 $300 $250 $25
Slide 43: Capital Structure Position
BlueLinx Holdings Inc. Capital Structure Position Debt to Total Capital Ratio of 76% is manageable Low borrowing cost / Asset-based / Liquidity balanced Key Metrics YTD Accomplishments Debt as % of total capital as of 9/30/06 76% In June, reduced projected annual interest rate expense by approximate
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