BlueLinx Holdings CEO Discusses Q4 2010 Results - Earnings Call Transcript

BlueLinx Holdings Inc. ( BXC)

Q4 2010 Earnings Call

February 17, 2011 9:00 am ET


Maryon Davis - Director, Finance and Investor Relations

George R. Judd - President and Chief Executive Officer

H. Douglas Goforth - Senior Vice President, Chief Financial Officer and Treasurer


Steven Chercover - D. A. Davidson



Good morning. My name is Carly and I'll be your conference operator today. At this time, I would like to welcome everyone to the BlueLinx Fourth Quarter Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer period. (Operator Instructions) As a reminder, ladies and gentleman, this conference is being recorded, today, February 17, 2011. Thank you.

I’d now like to introduce Maryon Davis with BlueLinx. Ms. Davis, you may begin your conference.

Maryon Davis

Thank you, Carly, and welcome ladies and gentlemen to the BlueLinx fourth quarter 2010 conference call. With us this morning our George Judd, Chief Executive Officer and Doug Goforth, Chief Financial Officer.

Our press release was issued earlier this morning. A copy of the release is available in the Investor Relations section of the company's website at

Before starting the call, I need to refer you to our Safe Harbor statement. I would like to remind everyone that on today's call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including all statements concerning future or unexpected events or results. Actual results could differ materially from those projected in the company's forward-looking statements due to known and unknown risks and uncertainties.

A discussion of factors that may affect future results is provided in the company's filings with the Securities and Exchange Commission. BlueLinx undertakes no obligation to publicly update or revise any forward-looking statements contained in these presentations based on new information or otherwise, except as required by law.

With that requirement completed, I'd like to remind our listeners that we have posted slides on our website. We will be referring to these slides during this call and we encourage you to use them during our remarks. Additionally, the slide package contains an appendix of supplementary tables available for your review.

Now, let me turn the call over to our Chief Financial Officer, Doug Goforth.

H. Douglas Goforth

Good morning. I will start with an overview of the quarterly results and George will provide an operations review of the quarter and close with final perspective. For those of you following along with the slides posted on the Investor Relations section of the BlueLinx website, I will begin with slide 5.

Overall, sales for the fourth quarter ended January 1, totaled $367.9 million, up approximately 0.5% or approximately $1.8 million from the fourth quarter of 2009. Specialty sales increased 7.4% year-over-year, reflecting increases in both volume and product mix.

Structural product sales decreased 9.5% from the same period last year. The decrease was driven by 7% year-over-year increase in product selling prices offset by a 16.5% decrease in units sold. Specialty products comprised 59% of total sales, up from 55% in the fourth quarter of 2009.

Overall, unit volume declined 4.3% compared to the year ago period. Specialty volume grew 5.9%, as we continued to focus on increasing our share of value added products. Structural products volume declined 16.5% as demand for these products softened during the quarter.

Housing continues to remain weak, actual total U.S. housing starts declined 3% for the fourth quarter of 2010, compared to the same period last year with single-family starts, which our business is closely tied to down 8.7%.

The 2010 fourth quarter marks a record low for fourth quarter for both the total number of actual housing starts and the number of single-family starts, since record keeping began 50 years ago. The environment for homebuilding and home remolding continues to face substantial headwinds with an overhang of inventory, low consumer confidence and high unemployment. These conditions combined with the normal seasonal slowdown associated with our fourth quarter negatively impacted our financial results.

BlueLinx generated approximately $44 million in gross profit for the quarter; gross margin was 12.1%, which is down 0.3% from prior year quarter. Despite the year-to-year decline, we considered 12.1% as strong margin performance, considering the price and demand challenge that we faced in our markets.

Structural margins were flat to the prior-year quarter at 9.5% and improved 2.1% over the prior quarter as prices stabilized compared to the extreme pricing volatility of the third quarter. Specialty gross margins for the quarter were 14.7% compared with 14.4% in the third quarter and 15.3% a year ago.

Total operating expenses increased to $56.5 million from $50.1 million a year ago and included $0.7 million in significant special expense items and $6.2 million in real estate and other gain items, respectively. Keeping our expenses flat in the quarter reflects our ongoing focus on managing expenses.

The company reported an operating loss for the fourth quarter of $12.2 million compared to an operating loss of $4.8 million in the prior year period, reflecting a $900,000 decrease in gross profit and a $6.5 million increase in operating expense.

Our fourth quarter net loss of $20.2 million or $0.66 per diluted share compares with the net profit of $12 million or $0.37 per diluted share in the fourth quarter of 2009. Our reported net loss for the period is after interest expense of $7.8 million, which includes $1.4 million in pretax non-cash interest income related to our interest rate swap compared to interest expense of $6.8 million in the prior year period, which included a $1.1 million pretax non-cash charge associated with our interest rate swap.

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