Bluelinx Holdings Inc. · NYSE:BXC
Bluelinx — Q3 2022 Earnings Presentation
38 slides from Bluelinx's earnings presentation, Nov 2, 2022
Slide 1: BlueLinx Q3 2022 Results
BlueLinx Q3 2022 Results November 2, 2022
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT This presentation contains forward-looking statements. Forward-looking statements include, without limitation, any statement that predicts, forecasts, indicates or implies future results, performance, liquidity levels or achievements, and may contain the words “believe,” “antic
Slide 3: Opening Remarks
Opening Remarks Dwight Gibson, President & CEO Q3 2022 RESULTS | 3
Slide 4: A Whole New Blue / executive summary
A WHOLE NEW BLUE / executive summary ▪ Net sales of $3.6b / up 9% year-over-year ✓ Delivered strong year-to-to date results ▪ Adjusted EBITDA of $415m / up 18% year-over-year ▪ Adjusted EBITDA of $100m ✓ Solid Q3 results highlighted by record cash generation ▪ Generated operating cash of $143m – an
Slide 5: Vandermeer Acquisition / transaction overview
VANDERMEER ACQUISITION / transaction overview ▪ Acquired privately-owned Vandermeer, a premier wholesale distributor of building products with trailing twelve-month sales of ~$150 million that serves over 250 customers across the Pacific Northwest, Alaska, Hawaii, British Columbia and Alberta ▪ Sign
Slide 6: Vandermeer Acquisition / strategic rationale
VANDERMEER ACQUISITION / strategic rationale ▪ Aligns to specialty products strategy ▪ Establishes meaningful growth platform in the Pacific Northwest: ❑ Adds three distribution branches in Washington state ❑ Provides direct access to Seattle and Portland (two of the top 15 MSAs in the United States
Slide 7: Q3 2022 Results / specialty products growth and record cash generation
Q3 2022 RESULTS / specialty products growth and record cash generation ▪ Net sales of $1.1b, up 9% year-over-year: Gross Profit by Product Category ❑ Specialty product sales increased 13% to $724m ❑ Structural product sales increased 2% to $336m as a result of wood-based commodity price inflation ▪
Slide 8: Quarterly Results / continued operational improvement and growth in specialty products
QUARTERLY RESULTS / continued operational improvement and growth in specialty products ~70% (Q3 2021) and >50% (Q2 2022) decline Sales in wood-based commodity prices BlueLinx productivity improvements: Adj. EBITDA % ▪ Rigorous structural inventory management: $1,308 $1,302 ❑ Wood-based inventory red
Slide 9: U.S. Housing Industry / U.S. housing fundamentals slowing
U.S. HOUSING INDUSTRY / U.S. housing fundamentals slowing ▪ Repair and remodel rate of growth expected to slow during 2023, per LIRA Index(1): BLUELINX SALES BY END MARKET ❑ Home price appreciation and record home equity levels ❑ Remote work flexibility ❑ Average age of existing homes ~40 years old(
Slide 10: U.S. Housing Industry / wood-based commodity prices remained volatile
U.S. HOUSING INDUSTRY / wood-based commodity prices remained volatile Average quarterly prices for framing lumber ($/MBF) Supply/Cost Environment and structural panels ($/MSF) (per RISI(1)): $1,700 $1,566 ▪ Average lumber and panel prices declined 26% and 23%, $1,500 respectively, from Q2 to Q3, and
Slide 11: Financial Review
Financial Review Kelly Janzen, Chief Financial Officer Q3 2022 RESULTS | 11
Slide 12: Third Quarter 2022 Results / key metrics
THIRD QUARTER 2022 RESULTS / key metrics $ millions, except per share data Q3 2021 Q3 2022 Variance ▪ Net sales increased 9% to $1.1b: ❑ Specialty product sales grew 13% Net sales $971 $1,061 +9% ❑ Structural product sales grew 2% Gross Profit $153 $189 +24% ▪ Gross Margin of 17.9%, up 210 bps: ❑ Dr
Slide 13: Working Capital / 57% return on working capital for TTM Q3 2022
WORKING CAPITAL / 57% return on working capital for TTM Q3 2022 ▪ Significant return on Operating Working Days Sales of Inventory (DSI) working capital, 57% for Capital Management(1) Number of Days TTM Q3 2022 Dollars in millions 58 54 48 50 $1,000 80% 47 43 40 ▪ $52m sequential increase $904 $918 3
Slide 14: Specialty Products Q3 2022 Results
SPECIALTY PRODUCTS Q3 2022 RESULTS / sales grew 13% with gross profit up 3% Q3 year-over-year analysis ($ millions) $768 $788 $724 ▪ Net sales grew 13%, or $83m: GM Rate Net sales $675 ▪ Sales growth driven by strategic $641 $641 pricing actions $563 24.4% 24.0% ▪ Volume relatively flat 23.0% 22.9%
Slide 15: Structural Products Q3 2022 Results
STRUCTURAL PRODUCTS Q3 2022 RESULTS / sales grew $7m and profit increased $32m Q3 year-over-year analysis ($ millions) ▪ Net sales increased 2%, or $7m: $633 ▪ Reflects year-over-year higher average pricing for commodity framing lumber: GM Rate $534 ❑ 26% increase in average price of lumber Net sale
Slide 16: Balance Sheet / strong financial position to support value creation
BALANCE SHEET / strong financial position to support value creation ($ millions) Gross Debt Structure Debt Maturity Schedule $350 $594 $573 $300 $58 $500 ABL @ ~2% $263 $300 undrawn $223 $300m Senior Notes @ 6% revolver $273 $277 $273 3Q20 3Q21 3Q22 2022 2023 2024 2025 2026 2027 2028 2029 Finance Le
Slide 17: Capital Allocation Framework / disciplined approach to drive value creation
CAPITAL ALLOCATION FRAMEWORK / disciplined approach to drive value creation GUIDING PRINCIPLES ▪ Maintain strong balance sheet OPERATING CASH FLOW FREE CASH FLOW and financial stability ▪ Long-term net leverage could increase to at or around 3.0x INVEST IN THE STRATEGIC SHARE when considering growth
Slide 18: Executive Summary
Executive Summary Dwight Gibson, President and CEO Q3 2022 RESULTS | 18
Slide 19: A Whole New Blue / a compelling investment
A WHOLE NEW BLUE / a compelling investment 1 2 3 Attractive BlueLinx is well Leveraging market positioned to grow growth ▪ >$40b addressable market ▪ ~10% market share ▪ Optimizing productivity ▪ 5%+ long-term growth rate ▪ Growing with best customers ▪ Infusing capabilities ▪ Fragmented competition
Slide 20: North America's Preeminent Building Products Distributor
A WHOLE NEW BLUE / North America’s Preeminent Building Products Distributor Accelerating Growth Optimizing Productivity Accelerating growth with our best Optimizing productivity thru distribution center customers and our best specialty products optimization and procurement excellence North America’s
Slide 21: A Whole New Blue / executive summary
A WHOLE NEW BLUE / executive summary ▪ Thru the first nine months of 2022 we delivered strong results: ✓ Net sales of $3.6b, up 9% year-over-year ✓ Adjusted EBITDA of $415m, up 18% year-over-year ✓ Operating cash of $246m, up ~2x year-over-year ▪ Closely monitoring the US housing industry and broade
Slide 22: Appendix
Appendix Q3 2022 RESULTS | 22
Slide 23: Non-GAAP Measures
Non-GAAP Measures BlueLinx reports its financial results in accordance with GAAP. The Company also believes that presentation of certain non-GAAP measures may be useful to investors and may provide a more complete understanding of the factors and trends affecting the business than using reported GAA
Slide 24: Macro Trends / starts slowing but other key indicators remain solid
MACRO TRENDS / starts slowing but other key indicators remain solid despite rising interest rates Total U.S. Single Family Housing Starts (SFHS) LIRA Remodeling Activity Index Housing starts in thousands (1) TTM Moving Total - Dollars in billions (3) 2,000 1,800 starts expected to be below 25-year $
Slide 25: Macro Trends / hybrid work and record home equity support home investment
MACRO TRENDS / shift to hybrid work and record levels of home equity support home investment Fully on-site Household Owners’ Equity Levels in Real Estate Dollars in billions (1) $35,000 record levels of home equity Hybrid/work from $30,000 home $25,000 $20,000 $15,000 $10,000 $5,000 $0 2004-… 1992-…
Slide 26: Wood-Based Commodity Price Trends
WOOD-BASED COMMODITY PRICE TRENDS / wood-based commodity markets remain volatile Framing Lumber Composite Index ▪ Prices declined throughout As of October 2022(1) 3Q22 1,600 Index Price TTM Avg. Index Price 1,400 Oct-22 framing lumber prices are 18% lower than the 5-year average and 40% below 1,200
Slide 27: Non-GAAP Reconciliation / Supplementary Financial Information
Non-GAAP Reconciliation / Supplementary Financial Information Net sales, gross profit dollars, gross profit percentages, sales mix, and gross profit mix by product category by fiscal quarter, Q4 2020 – Q3 2022 In millions where dollars are presented Q3 2022 RESULTS | 27
Slide 28: Non-GAAP Reconciliation / Supplementary Financial Information
Non-GAAP Reconciliation / Supplementary Financial Information Adjusted EBITDA reconciliation by fiscal quarter, Q4 2020 – Q3 2022 In millions where dollars are presented Q3 2022 RESULTS | 28
Slide 29: Non-GAAP Reconciliation / Supplementary Financial Information
Non-GAAP Reconciliation / Supplementary Financial Information Adjusted EBITDA reconciliation for the nine-month periods, Q3 2022 – Q3 2021 In millions where dollars are presented Q3 2022 RESULTS | 29
Slide 30: Non-GAAP Reconciliation / Supplementary Financial Information
Non-GAAP Reconciliation / Supplementary Financial Information Free cash flow for the three and nine months ended, Q3 2022 and Q3 2021 In millions where dollars are presented Three Months Ended Nine Months Ended September 2022 September 2021 September 2022 September 2021 (in millions) (in millions) (
Slide 31: Non-GAAP Reconciliation / Supplementary Financial Information
Non-GAAP Reconciliation / Supplementary Financial Information Working capital by fiscal quarter, Q1 2020 – Q3 2022 In millions where dollars are presented Cash investments in property, plant, and equipment (CAPEX) for three months ended March 2022, June 2022, and September 2022 In millions where dol
Slide 32: Non-GAAP Reconciliation / Supplementary Financial Information
Non-GAAP Reconciliation / Supplementary Financial Information Net leverage ratio for the trailing twelve months ended fiscal September 2022 with accompanying Adjusted EBITDA reconciliation In millions where dollars are presented Q3 2022 RESULTS | 32
Slide 33: Non-GAAP Reconciliation / Supplementary Financial Information
Non-GAAP Reconciliation / Supplementary Financial Information Net leverage ratio for the trailing twelve months ended fiscal June 2022 with accompanying Adjusted EBITDA reconciliation In millions where dollars are presented Q3 2022 RESULTS | 33
Slide 34: Non-GAAP Reconciliation / Supplementary Financial Information
Non-GAAP Reconciliation / Supplementary Financial Information Net leverage ratio for the trailing twelve months ended fiscal September 2021 with accompanying Adjusted EBITDA reconciliation In millions where dollars are presented Q3 2022 RESULTS | 34
Slide 35: Non-GAAP Reconciliation / Supplementary Financial Information
Non-GAAP Reconciliation / Supplementary Financial Information Net leverage ratio for the trailing twelve months ended fiscal December 2020 with accompanying Adjusted EBITDA reconciliation In millions where dollars are presented Q3 2022 RESULTS | 35
Slide 36: Non-GAAP Reconciliation / Supplementary Financial Information
Non-GAAP Reconciliation / Supplementary Financial Information Net leverage ratio for the trailing twelve months ended fiscal September 2020 with accompanying Adjusted EBITDA reconciliation In millions where dollars are presented Q3 2022 RESULTS | 36
Slide 37: Non-GAAP Reconciliation / Supplementary Financial Information
Non-GAAP Reconciliation / Supplementary Financial Information Net leverage ratio for the trailing twelve months ended fiscal December 2019 with accompanying Adjusted EBITDA reconciliation In millions where dollars are presented Q3 2022 RESULTS | 37
Slide 38: Non-GAAP Reconciliation / Supplementary Financial Information
Non-GAAP Reconciliation / Supplementary Financial Information Adjusted EBITDA reconciliation and purchase price multiple for the trailing twelve months ended fiscal September 2022 In millions where dollars are presented Vandermeer Forest Products For the Trailing Twelve-Month Period September 2022 (