Bluelinx Holdings Inc. · NYSE:BXC
Bluelinx — Investor Presentation (March 2006)
45 slides from Bluelinx's investor presentation, Mar 28, 2006
Slide 1: BlueLinx Investor Presentation March 2006
BlueLinx Investor Presentation March 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: BlueLinx Investor Presentation March 2006
BlueLinx Investor Presentation March 2006 BlueLinx Overview Industry Dynamics Focused Growth Strategy 2005 Q4 Update Looking Forward
Slide 4: Overview: Operations
BlueLinx Overview: Operations « Sales Center Warehouse LSV Largest Building Products Distributor in U.S. 2005 Revenue: $5.6 Billion ~12,000 customers and 750+ suppliers Product portfolio 10,000+ SKUs 65+ warehouses; 80+ reloads Owned fleet of 900 trucks and 1,200 trailers 3,600 employees, including
Slide 5: At A Glance: Evolution of BlueLinx
BlueLinx At A Glance: Evolution of BlueLinx Growth Strategy Decentralized structure 13 warehouses Outlet for GP Plywood Diversified building products distributor Centralized, nationwide distribution transition "Masters" of the supply chain Decentralized structure 134 warehouses 1954 - 1976 1977 - 19
Slide 6: Overview: Positioned at the Center of Value Creation
BlueLinx Overview: Positioned at the Center of Value Creation Building Products Manufacturers BlueLinx Home Improvement Centers Dealers Repair and Remodeling Residential and Non- Residential Construction Manufactured Housing / Industrial Benefits to Manufacturers Reliable channels to market Consiste
Slide 7: Overview: Diversified Product, Customer & End Use Segments
BlueLinx Overview: Diversified Product, Customer & End Use Segments Structural 63% Hardwood plywood Engineered lumber Composite decking Vinyl siding Moulding Insulation Roofing Specialty 38% Plywood OSB Lumber Rebar/Remesh New Home Construction 50% Industrial Applications 22% Manufactured Housing 8%
Slide 8: Overview: Diversified Product, Vendor Relationships
BlueLinx Overview: Diversified Product, Vendor Relationships Diversified Product, Vendor Relationships Diversified Product, Vendor Relationships Diversified Product, Vendor Relationships Diversified Product, Vendor Relationships Diversified Product, Vendor Relationships Diversified Product, Vendor R
Slide 9: Overview: How We Think About Our Business
BlueLinx Overview: How We Think About Our Business 2000 2001 2002 2003PF 2004PF 2005 EBITDA 42 74 67 93 179 134 Adj EBITDA* 151 162 *2004 and 2005 commodity margins restated at the two-year average (see reconciliation in Appendix) EBITDA TREND Consistent EBITDA growth when normalized to eliminate th
Slide 10: Overview: Goals and Strategic Objectives
BlueLinx Overview: Goals and Strategic Objectives Profitably grow specialty revenues to 60+ % of total sales Profitably grow structural revenues while reducing exposure to volatility Outgrow the market over the long term Be the Masters of the Supply Chain for those products we choose to distribute
Slide 11: Overview: Experienced Leadership Team
BlueLinx Overview: Experienced Leadership Team Management Team Leadership Background Stephen Macadam CEO George Judd COO David Morris CFO Steve Skinner SVP Duane Goodwin SVP Dave Dalton SVP Sam Gaddis VP 6 Regional VPs RVP CEO Consolidated Container; EVP Georgia-Pacific; McKinsey & Co. VP Eastern op
Slide 12: BlueLinx Investor Presentation Agenda
BlueLinx Investor Presentation March 2006 BlueLinx Overview Industry Dynamics Focused Growth Strategy 2005 Q4 Update Looking Forward
Slide 13: Growing & Attractive Industry: Solid Long-Term Industry Fundamentals
1991-2000 Avg 0.028 2001-2005 Avg -0.021 2006E-2015E Avg 0.024 Growing & Attractive Industry: Solid Long-Term Industry Fundamentals 1991-2000 Avg 1.4 2001-2005 Avg 1.8 2006E-2015E Avg 1.8 Annual Housing Starts (mm) Annual Growth In Other End-Use Markets 50% of Our End-Market 50% of Our End-Market In
Slide 14: Growing & Attractive Industry: Market Growth of Two-Step Distribution
Growing & Attractive Industry: Market Growth of Two-Step Distribution 2001 2002 2003 2004 Total Market Revenue 32.9 36.4 39.2 47.1 Source: Home Channel News, July 2005
Slide 15: Largest in a Highly Fragmented Industry, Ripe for Consolidation
BlueLinx 11.8 WY 11.1 Boise Cascade 6 North Pacific Group 4.2 Huttig 2 Other 64.6 Many Small and Medium Sized Players <$250m 100 $250m - $500m 13 $500m - $1bn 6 $1bn-$2.5bn 5 >$2.5bn 3 Number of Competitors By Revenue Growing & Attractive Industry: Largest in a Highly Fragmented Industry, Ripe for C
Slide 16: BlueLinx Investor Presentation Agenda
BlueLinx Investor Presentation March 2006 BlueLinx Overview Industry Dynamics Focused Growth Strategy 2005 Q4 Update Looking Forward
Slide 17: Focused Growth Strategy: Strategic Shift Continues
Focused Growth Strategy: BXC's Growth Enabling Strategic Shift Continues Commodities-focused, distribution arm of manufacturer Customer-focused, solutions-driven, value- added distribution partner 55%+ structural products FROM: TO: 60%+ specialty products Structural products- driven earnings volatil
Slide 18: Focused Growth Strategy: BXC Strategic Framework
Focused Growth Strategy: BXC Strategic Framework Mission: "Be the Masters of the Supply Chain for those products we choose to distribute." Value Proposition: Provide the lowest total cost of sales and distribution through the supply chain Drive end-user demand, thereby increasing sales for our custo
Slide 19: Focused Growth Strategy: 2005 Specialty Product Initiatives
Focused Growth Strategy: 2005 Specialty Product Initiatives People Added seasoned experts in supply chain strategy, product procurement, and import -- Increased number of national product managers to 9 from 4 Focused support on key product areas that represent best opportunity for growth and profita
Slide 20: Focused Growth Strategy: Accelerating Specialty Growth
Focused Growth Strategy: Accelerating Specialty Growth 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr % of Total Revenue 0.37 0.36 0.39 0.41 % of GM 0.53 0.61 0.54 0.55 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Structural 0.042 0.064 9.0000000013148E-03 0.002 Specialty 0.017 0.005 0.058 0.127 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Slide 21: Focused Growth Strategy: Specialty Product Expansion
Focused Growth Strategy: Specialty Product Expansion Specialty Product Expansion Specialty Product Expansion Chosen in September by Louisiana-Pacific to nationally distribute its WeatherBest composite decking product All 1,000 BlueLinx sales employees trained and warehouses stocked within 45 days Pr
Slide 22: Focused Growth Strategy: 2005 Structural Product Initiatives
Focused Growth Strategy: 2005 Structural Product Initiatives Focus on improved profitability and reduced risk Reduced "high risk" structural inventory by $41 million, or 18% from 2004 Cost-to-serve analysis linked to pricing optimization system Increased utilization of consignment and program invent
Slide 23: Initiatives to Leverage Our Scaleable Platform
Focused Growth Strategy: Initiatives to Leverage Our Scaleable Platform to Drive Superior Returns Market Share Growth Goals Growth Drivers & Accelerators Increase penetration of selected high return customers (e.g. large, multi-unit chains, growing local businesses) Grow share in under- represented
Slide 24: Focused Growth Strategy: Industrials Strategy Update
Focused Growth Strategy: Industrials Strategy Update Objective & Rationale Grow market share in Industrials Industrials represent ~22% of sales; currently have ~3% market share Offers high contribution margin and increases specialty product opportunities Strategy Identify & pursue "high-opportunity"
Slide 25: Focused Growth Strategy: Outgrow the Market Over the Long Term
Focused Growth Strategy: Outgrow the Market Over the Long Term Market Share Growth* 2002 0.104 2003 0.109 2004 0.118 Unit Volume Growth vs. End-Use Market Year over Year Change Weighted End-Use Market Growth BlueLinx Growth 2003 0.02 0.025 2004 0.047 0.082 2005 0.044 0.039 *Source: Home Channel News
Slide 26: BlueLinx Investor Presentation Agenda
BlueLinx Investor Presentation March 2006 BlueLinx Overview Industry Dynamics Focused Growth Strategy 2005 Q4 Update Looking Forward
Slide 27: 2005 Q4 Update: Executing on Our Plan
2005 Q4 Update (Vs. Year Ago): Executing on Our Plan Revenue: Up 10% to $1.33 billion Specialty up 13.8% - Structural up 8% Unit Volume: Total Up 5% Specialty Up 12.7% - Structural Up 0.2% Gross margin: Total 10.6% vs. 8.4% Specialty 14.3% - Structural 8.3% Inventory: Total $473.1 million, down 5.4%
Slide 28: BlueLinx Investor Presentation Agenda
BlueLinx Investor Presentation March 2006 BlueLinx Overview Industry Dynamics Focused Growth Strategy 2005 Q4 Update Looking Forward
Slide 29: Looking Forward: 2006 Go-Forward Initiatives
Looking Forward: 2006 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
Slide 30: Appendix
Appendix TOPIC PAGE Fundamentals 31 Revenues by Quarter 32 Unit Volume Growth by Quarter 33 Market Growth by Quarter 34 Gross Margin by Quarter 35 Inventory by Quarter 36 Quarterly Volume by Region 37 Annual Volume by Region 38 Gross Margin % Analysis 39 Channel Mix Analysis 40 Structural Product Pr
Slide 31: Fundamentals
BlueLinx Holdings Inc. Fundamentals* TRADING NYSE: BXC 7 Analysts Providing Research Market Capitalization $492 million Shares Outstanding 30.2 million (basic) Avg. Daily Trading Vol. 208,000 (3 m) Float (%) 34 52-Week Range $16.95 (3/14/06) -- $8.25 (8/10/05) VALUATION Dividend/yield $0.50/3.1% Deb
Slide 32: Revenues by Quarter
BlueLinx Holdings Inc. Revenues by Quarter Revenues by Quarter Revenues by Quarter
Slide 33: Unit Volume Growth By Quarter
BlueLinx Holdings Inc. Unit Volume Growth By Quarter Unit Volume Growth By Quarter Unit Volume Growth By Quarter
Slide 34: Market Growth By Quarter
BlueLinx Holdings Inc. Market Growth By Quarter Market Growth By Quarter Market Growth By Quarter Source: Data from Resource Information Systems, Inc., or RISI, updated as of January 2006, weighed using managements estimates.
Slide 35: Gross Margin by Quarter
BlueLinx Holdings Inc. Gross Margin by Quarter Gross Margin by Quarter Gross Margin by Quarter
Slide 36: Inventory by Quarter
BlueLinx Holdings Inc. Inventory by Quarter Inventory by Quarter Inventory by Quarter
Slide 37: Quarterly Volume by Region
BlueLinx Holdings Inc. Quarterly Volume by Region *Miscellaneous consists of cash and competitive discounts, Canadian conversion, carve-out adjustments, service revenue and other miscellaneous items. $ millions (unaudited) (unaudited) (unaudited)
Slide 38: Annual Volume by Region
BlueLinx Holdings Inc. Annual Volume by Region *Miscellaneous consists of cash and competitive discounts, Canadian conversion, carve-out adjustments, service revenue and other miscellaneous items. $ millions (unaudited) (unaudited) (unaudited)
Slide 39: Gross Margin % Analysis
BlueLinx Holdings Inc. Gross Margin % Analysis Gross Margin % Analysis Gross Margin % Analysis
Slide 40: Revenue Channel Mix Analysis
BlueLinx Holdings Inc. Revenue Channel Mix Analysis Revenue Channel Mix Analysis Revenue Channel Mix Analysis
Slide 41: Structural Products Price Trends
BlueLinx Holdings Inc. Structural Products Price Trends Structural Products Price Trends Structural Products Price Trends Structural Products Price Trends Structural Products Price Trends Source: Data from Random Lengths Publications, Inc., updated as of March 17, 2006. Source: Data from Random Leng
Slide 42: Capital Structure Position
BlueLinx Holdings Inc. Capital Structure Position BXC Leverage -- Current State BXC Leverage -- Current State All low-cost asset-based borrowing Creates low WACC Liquidity balanced to working capital needs Liquidity balanced to working capital needs Liquidity balanced to working capital needs Key Me
Slide 43: Balanced Liquidity Illustration
BlueLinx Holdings Inc. Balanced Liquidity Illustration
Slide 44: EBITDA Reconciliation
BlueLinx Holdings Inc. EBITDA Reconciliation (all $ in millions) 2004 FY Pro Forma (1) 2005 Q1-Q4 Actual (2) 2004 Q1-2005 Q4 Total (A) (B) (C)=(A+B) Sales $ 5,558 $ 5,622 $ 11,180 Cost of Sales 4,994 5,110 10,104 Gross Margin 564 512 1,076 Gross Margin % 10.1% 9.1% 9.6% Operating Expenses Selling, G
Slide 45: EBITDA Reconciliation
BlueLinx Holdings Inc. EBITDA Reconciliation (all $ in millions) 2004 FY Pro Forma 2004 FY Pro Forma 2005 Q1-Q4 Actual 2005 Q1-Q4 Actual Pro Forma EBITDA $ 179 3.2% $ 134 2.4% Pro Forma Gross Margin 564 10.1% 512 9.1% Gross margin adjustment (1) (28) (0.5%) 28 0.5% Adjusted Pro Forma Gross Margin 53
BlueLinx Holdings — Investor Presentation (March 2006) on 6ix