UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 28, ~~2019~~2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 1-32383



	BlueLinx Holdings Inc.
	(Exact name of registrant as specified in its charter)



Delaware		77-0627356
(State of Incorporation)		(I.R.S. Employer Identification No.)

1950 Spectrum Circle, Suite 300
Marietta	GA	30067
(Address of principal executive offices)		(Zip Code)

(770) 953-7000

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	BXC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large Accelerated Filer	☐	Accelerated Filer	☑	Non-accelerated Filer	☐	Smaller Reporting Company	☑
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of ~~November~~May 4, ~~2019~~2020, there were ~~9,364,959~~9,368,874 shares of BlueLinx Holdings Inc. common stock, par value $0.01, outstanding.

BLUELINX HOLDINGS INC.

Form 10-Q

For the Quarterly Period Ended ~~September~~March 28, ~~2019~~2020

INDEX



	PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements — BlueLinx Holdings Inc. (Unaudited)	1
Condensed Consolidated Statements of Operations and Comprehensive Loss	1
Condensed Consolidated Balance Sheets	2
Condensed Consolidated Statements of Cash Flows	3
Condensed Consolidated Statements of Stockholders’ ~~(Deficit) Equity~~Deficit	4
Notes to Condensed Consolidated Financial Statements	65
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1916
Item 3. Quantitative and Qualitative Disclosures About Market Risk	2624
Item 4. Controls and Procedures	2624

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	2725
Item 1A. Risk Factors	2725
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3. Defaults Upon Senior Securities	27
Item 4. Mine Safety Disclosures	27
Item 5. Other Information	27
Item 6. Exhibits	28

Signature	29

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018			March 28, 2020			March 30, 2019
Net sales	$	678,665		$	859,776		$	2,023,814		$	2,190,215		$	662,070		$	638,701
Cost of sales	584,952			768,021			1,749,889			1,939,484			568,861			552,656
Gross profit	93,713			91,755			273,925			250,731			93,209			86,045
Operating expenses:
Selling, general, and administrative	79,881			87,692			228,392			238,655			77,769			74,410
Gains from sales of property	(38		)	—			(9,798		)	—			(525		)	—
Depreciation and amortization	7,577			8,068			22,408			18,177			7,635			7,328
Total operating expenses	87,420			95,760			241,002			256,832			84,879			81,738
Operating income (loss)	6,293			(4,005		)	32,923			(6,101		)
Operating income													8,330			4,307
Non-operating expenses (income):
Interest expense	13,409			13,273			40,527			33,947
Other income, net	(317		)	(94		)	(212		)	(282		)
Loss before provision for (benefit from) income taxes	(6,799		)	(17,184		)	(7,392		)	(39,766		)
Provision for (benefit from) income taxes	244			(7,288		)	69			(7,885		)
Interest expense, net													14,380			13,401
Other (income) expense, net													(237		)	150
Loss before benefit from income taxes													(5,813		)	(9,244		)
Benefit from income taxes													(5,026		)	(2,525		)
Net loss	$	(7,043	)	$	(9,896	)	$	(7,461	)	$	(31,881	)	$	(787	)	$	(6,719	)

Basic loss per share	$	(0.75	)	$	(1.07	)	$	(0.80	)	$	(3.46	)	$	(0.08	)	$	(0.72	)
Diluted loss per share	$	(0.75	)	$	(1.07	)	$	(0.80	)	$	(3.46	)	$	(0.08	)	$	(0.72	)

Comprehensive loss:
Net loss	$	(7,043	)	$	(9,896	)	$	(7,461	)	$	(31,881	)	$	(787	)	$	(6,719	)
Other comprehensive income (loss):
Foreign currency translation, net of tax	(9		)	—			(2		)	(3		)	3			7
Amortization of unrecognized pension gain (loss), net of tax	(1,834		)	201			(1,403		)	605
Amortization of unrecognized pension loss, net of tax													196			224
Pension curtailment, net of tax	—			—			(632		)	—			—			853
Other	(7		)	—			9			—			(19		)	15
Total other comprehensive income (loss)	(1,850		)	201			(2,028		)	602
Total other comprehensive income													180			1,099
Comprehensive loss	$	(8,893	)	$	(9,695	)	$	(9,489	)	$	(31,279	)	$	(607	)	$	(5,620	)

See accompanying Notes.

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)


	September 28, 2019			December 29, 2018			March 28, 2020			December 28, 2019
ASSETS
Current assets:
Cash	$	12,847		$	8,939		$	12,558		$	11,643
Receivables, less allowances of $3,811 and $3,656, respectively	243,905			208,434
Receivables, less allowances of $3,875 and $3,236, respectively							247,940			192,872
Inventories, net	362,389			341,851			378,634			345,806
Other current assets	42,366			40,629			26,437			27,718
Total current assets	661,507			599,853			665,569			578,039
Property and equipment, at cost	321,004			308,398			308,288			308,067
Accumulated depreciation	(113,740		)	(103,285		)	(117,036		)	(112,299		)
Property and equipment, net	207,264			205,113			191,252			195,768
Operating lease right-of-use assets	53,689			—			52,502			54,408
Goodwill	47,772			47,772			47,772			47,772
Intangible assets, net	28,354			35,222			24,414			26,384
Deferred tax assets	54,784			52,645			59,308			53,993
Other non-current assets	19,259			19,284			20,404			15,061
Total assets	$	1,072,629		$	959,889		$	1,061,221		$	971,425
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	179,376		$	149,188		$	162,398		$	132,348
Accrued compensation	8,780			7,974			8,216			7,639
Current maturities of long-term debt, net of discount and debt issuance costs of $74 and $64, respectively	1,790			1,736
Current maturities of long-term debt, net of discount and debt issuance costs of $74 and $74, respectively							2,176			2,176
Finance leases - short-term	8,373			7,555			5,924			6,385
Real estate deferred gains - short-term	4,448			5,330			3,935			3,935
Operating lease liabilities - short-term	6,381			—			7,016			7,317
Other current liabilities	13,835			24,985			9,903			11,323
Total current liabilities	222,983			196,768			199,568			171,123
Non-current liabilities:
Long-term debt, net of discount and debt issuance costs of $12,081 and $12,665, respectively	488,097			497,939
Long-term debt, net of discount and debt issuance costs of $11,861 and $12,481, respectively							444,937			458,439
Real estate financing obligation							123,765			44,914
Finance leases - long-term	155,258			143,486			145,427			146,611
Real estate financing obligation	44,725			—
Real estate deferred gains - long-term	82,400			86,011			80,935			81,886
Operating lease liabilities - long-term	47,418			—			45,571			47,091
Pension benefit obligation	27,625			26,668			22,596			23,420
Other non-current liabilities	24,694			23,680			24,106			24,024
Total liabilities	1,093,200			974,552			1,086,905			997,508
Commitments and Contingencies
STOCKHOLDERS’ DEFICIT:
Common Stock, $0.01 par value, Authorized - 20,000,000 shares, Issued and Outstanding - 9,364,959 and 9,293,794, respectively	94			92
Common Stock, $0.01 par value, 20,000,000 shares authorized, 9,366,641 and 9,365,768 outstanding on March 28, 2020 and December 28, 2019, respectively							94			94
Additional paid-in capital	260,883			258,596			261,980			260,974
Accumulated other comprehensive loss	(39,157		)	(37,129		)	(34,383		)	(34,563		)
Accumulated stockholders’ deficit	(242,391		)	(236,222		)	(253,375		)	(252,588		)
Total stockholders’ deficit	(20,571		)	(14,663		)	(25,684		)	(26,083		)
Total liabilities and stockholders’ deficit	$	1,072,629		$	959,889		$	1,061,221		$	971,425

See accompanying Notes.

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 28, 2019			September 29, 2018			March 28, 2020			March 30, 2019
Cash flows from operating activities:
Net loss							$	(787	)	$	(6,719	)
Adjustments to reconcile net loss to cash used in operations:
Benefit from income taxes							(5,026		)	(2,525		)
Depreciation and amortization							7,635			7,328
Amortization of debt issuance costs							956			455
Gains from sales of property							(525		)	—
Share-based compensation							1,004			706
Amortization of deferred gain							(984		)	(951		)
Changes in operating assets and liabilities:
Accounts receivable							(55,068		)	(37,908		)
Inventories							(32,828		)	(45,479		)
Accounts payable							30,050			26,004
Prepaid and other current assets							(3,006		)	(423		)
Other assets and liabilities							(608		)	1,191
Net cash used in operating activities	$	(54,940	)	$	(59,293	)	(59,187		)	(58,321		)

Cash flows from investing activities:
Acquisition of business, net of cash acquired							—			6,009
Proceeds from sale of assets	13,699			107,972			44			143
Acquisition of business, net of cash acquired	—			(353,094		)
Property and equipment investments	(3,321		)	(1,872		)	(1,245		)	(1,223		)
Net cash provided by (used in) investing activities	10,378			(246,994		)
Net cash (used in) provided by investing activities							(1,201		)	4,929

Cash flows from financing activities:
Borrowings on revolving credit facilities	512,379			736,254			204,196			197,114
Repayments on revolving credit facilities	(490,842		)	(503,577		)	(149,079		)	(136,892		)
Borrowings on term loan	—			180,000
Repayments on term loan	(31,899		)	(900		)	(69,238		)	(900		)
Principal payments on mortgage	—			(97,847		)
Proceeds from real estate transactions	44,725			—
Change in outstanding payments	22,348			14,671
Debt issuance costs	(1,588		)	(10,470		)
Payments on finance lease obligations	(6,445		)	(5,890		)
Principal payments on real estate financing obligations							(340		)	—
Proceeds from real estate financing obligations							78,329			—
Debt financing costs							(336		)	—
Repurchase of shares to satisfy employee tax withholdings	(208		)	(3,020		)	(7		)	—
Principal payments on finance lease obligations							(2,222		)	(2,187		)
Net cash provided by financing activities	48,470			309,221			61,303			57,135

Net change in cash	3,908			2,934			915			3,743
Cash at beginning of period	8,939			4,696			11,643			8,939
Cash at end of period	$	12,847		$	7,630		$	12,558		$	12,682

See accompanying Notes.

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ ~~(DEFICIT) EQUITY~~

~~(In thousands)~~

~~(Unaudited)~~

Common Stock
Additional
Paid-In Capital

Accumulated
Other
Comprehensive Loss
Accumulated Deficit Stockholders’ Deficit Total
Shares Amount
Balance, December 29, 2018 9,294
$ 92
$ 258,596
$ (37,129 ) $ (236,222 ) $ (14,663 )
Net loss —
—
—
—
(6,719 ) (6,719 )
Adoption of ASC 842, net of tax —
—
—
—
1,291
1,291
Foreign currency translation, net of tax —
—
—
7
—
7
Unrealized gain from pension plan, net of tax —
—
—
1,077
—
1,077
Vesting of restricted stock units 49
1
—
—
—
1
Compensation related to share-based grants —
—
706
—
—
706
Other —
—
—
15
15
Balance, March 30, 2019 9,343
93
259,302
(36,030 ) (241,650 ) (18,285 )
Net income —
—
—
—
6,301
6,301
Unrealized loss from pension plan, net of tax —
—
—
(1,278 ) —
(1,278 )
Vesting of restricted stock units 32
1
—
—
—
1
Compensation related to share-based grants —
—
635
—
—
635
Repurchase of shares to satisfy employee tax withholdings (10 ) —
(208 ) —
—
(208 )
Other —
—
(2 ) 1
—
(1 )
Balance, June 29, 2019 9,365
94
259,727
(37,307 ) (235,349 ) (12,835 )
Net loss —
—
—
—
(7,043 ) (7,043 )
Foreign currency translation, net of tax —
—
—
(9 ) —
(9 )
Unrealized loss from pension plan, net of tax —
—
—
(1,834 ) —
(1,834 )
Compensation related to share-based grants —
—
1,156
—
—
1,156
Other —
—
—
(7 ) 1
(6 )
Balance, September 28, 2019 9,365
$ 94
$ 260,883
$ (39,157 ) $ (242,391 ) $ (20,571 )

~~BLUELINX HOLDINGS INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY~~DEFICIT

(In thousands)

(Unaudited)


	Common Stock				Additional Paid-In Capital				Accumulated Other Comprehensive Loss			Accumulated Deficit				Stockholders’ Equity Total			Common Stock				Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Stockholders’ Deficit Total
	Shares		Amount					Shares				Accumulated Deficit			Amount								Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Stockholders’ Deficit Total
Balance, December 30, 2017	9,101		$	91	Additional Paid-In Capital			$	Accumulated Other Comprehensive Loss	259,588		$	(36,507	)		Stockholders’ Equity Total		$	(188,170	)	$	35,002
Net loss	—		—		—				—			(13,427		)		(13,427		)
Foreign currency translation, net of tax	—		—		—				6			—				6
Unrealized gain from pension plan, net of tax	—		—		—				203			—				203
Vesting of performance shares	109		1		—				—			—				1
Compensation related to share-based grants	—		—		319				—			—				319
Repurchase of shares to satisfy employee tax withholdings	—		—		(1		)		—			—				(1		)
Other	—		—		—				—			(7		)		(7		)
Balance, March 31, 2018	9,210		92		259,906				(36,298		)	(201,604		)		22,096
Balance, December 28, 2019																			9,366		$	94	$	260,974		$	(34,563	)	$	(252,588	)	$	(26,083	)
Net loss	—		—		—				—			(8,558		)		(8,558		)	—		—		—			—			(787		)	(787		)
Foreign currency translation, net of tax	—		—		—				(9		)	—				(9		)	—		—		—			3			—			3
Unrealized gain from pension plan, net of tax	—		—		—				201			—				201			—		—		—			196			—			196
Vesting of restricted stock units	11		—		—				—			—				—			2		—		12			—			—			12
Compensation related to share-based grants	—		—		338				—			—				338			—		—		1,004			—			—			1,004
Repurchase of shares to satisfy employee tax withholdings	(2	)	—		(1,719		)		—			—				(1,719		)	(1	)	—		(7		)	—			—			(7		)
Other	—		—		—				—			7				7			—		—		(3		)	(19		)	—			(22		)
Balance, June 30, 2018	9,219		92		258,525				(36,106		)	(210,155		)		12,356
Net loss	—		—		—				—			(9,896		)		(9,896		)
Unrealized gain from pension plan, net of tax	—		—		—				201			—				201
Vesting of restricted stock units	70		—		—				—			—				—
Compensation related to share-based grants	—		—		635				—			—				635
Repurchase of shares to satisfy employee tax withholdings	—		—		(1,068		)		—			—				(1,068		)
Other	—		—		(4		)		—			—				(4		)
Balance, September 29, 2018	9,289		$	92	$	258,088			$	(35,905	)	$	(220,051	)		$	2,224
Balance, March 28, 2020																			9,367		$	94	$	261,980		$	(34,383	)	$	(253,375	)	$	(25,684	)



	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Stockholders’ Deficit Total
	Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Stockholders’ Deficit Total
Balance, December 29, 2018	9,294	$	92	$	258,596	$	(37,129	)	$	(236,222	)	$	(14,663	)
Net loss	—	—		—		—			(6,719		)	(6,719		)
Adoption of ASC 842, net of tax	—	—		—		—			1,291			1,291
Foreign currency translation, net of tax	—	—		—		7			—			7
Unrealized gain from pension plan, net of tax	—	—		—		1,077			—			1,077
Vesting of restricted stock units	49	1		—		—			—			1
Compensation related to share-based grants	—	—		706		—			—			706
Other	—	—		—		15			—			15
Balance, March 30, 2019	9,343	$	93	$	259,302	$	(36,030	)	$	(241,650	)	$	(18,285	)

See accompanying Notes.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~March 28, ~~2019~~2020

(Unaudited)

1. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim Condensed Consolidated Financial Statements include the accounts of BlueLinx Holdings Inc. and its wholly owned subsidiaries ~~(the “Company”~~(“the Company”). ~~These~~Our independent registered public accounting firm has not audited the accompanying interim financial statements. We derived the condensed consolidated balance sheet at March 28, 2020, from the audited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted (“GAAP”) in the United States (“U.S.”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in ~~the Company’s~~our Annual Report on Form 10-K ~~(the “Annual Report on Form 10-K”)~~ for the fiscal year ended December ~~29, 2018,~~28, 2019 (the “Fiscal 2019 Form 10-K”), as filed with the Securities and Exchange Commission on March ~~13, 2019.~~

~~Our~~11, 2020. In the opinion of our management, the condensed consolidated financial ~~condition as~~statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of our statements of operations and ~~our operating results~~comprehensive loss for the three months ended March 28, 2020, and ~~nine-month periods ended September~~March 30, 2019, our balance sheets at March 28, ~~2019, are not necessarily indicative of the financial condition~~2020 and ~~results that may be expected for the full year ending~~ December 28, 2019, our statements of cash flows for the three months ended March 28, 2020 and March 30, 2019, and our statements of stockholders’ deficit for the three months ended March 28, 2020 and March 30, 2019.

We have condensed or ~~any~~omitted certain notes and other information from the interim ~~period. Certain~~condensed consolidated financial statements presented in this report. Therefore, these condensed consolidated interim financial statements should be read in conjunction with the Fiscal 2019 Form 10-K. In addition, certain prior period amounts have been reclassified to conform to the current period's presentation. These reclassifications did not materially impact ~~the Company's~~ operating income ~~(loss)~~ or consolidated net ~~income (loss).~~loss. The results for the three months ended March 28, 2020, are not necessarily indicative of results that may be expected for the full year ending January 2, 2021, or any other interim period.

~~Subsequent Events~~We operate on a 5-4-4 fiscal calendar. Our fiscal year ends on the Saturday closest to December 31 of that fiscal year and may comprise 53 weeks in certain years. Our 2020 fiscal year contains 53 weeks and ends on January 2, 2021. Fiscal 2019 contained 52 weeks and ended on December 28, 2019.

~~We evaluated subsequent events through~~Our financial statements are prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP), which requires us to make estimates based on assumptions about current and, for some estimates, future economic and market conditions, which affect reported amounts and related disclosures in our financial statements. Although our current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from our expectations, which could materially affect our results of operations and financial position. Some of our estimates may be affected by the ~~date that~~ongoing novel coronavirus (COVID-19) pandemic. The severity, magnitude, and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly changing, and difficult to predict. As a result, our ~~Condensed Consolidated Financial Statements were issued. Except as described~~accounting estimates and assumptions may change over time in ~~Note~~response to COVID-19.

On April 13, ~~no matters were identified that required~~2018, we completed the acquisition of Cedar Creek Holdings, Inc. (“Cedar Creek”). The accounting for the Cedar Creek acquisition was finalized on December 29, 2018 and is included in the consolidated financial information presented herein.

Reclassification of Prior Year Presentation

An adjustment ofhas been made to the Condensed Consolidated ~~Financial~~ Statements ~~or additional disclosure.~~

~~Outstanding Payments~~

~~Outstanding~~of Cash Flows for the three months ended March 28, 2020, and March 30, 2019, to include outstanding payments ~~represent outstanding checks and electronic payments that have not been presented for payment~~ as part of the ~~end of the period. These amounts are typically funded~~change in accounts payable within ~~24 hours. As of September 28, 2019, and December 29, 2018,~~cash flows from operating activities. In previous periods, this change was included within cash flows from financing activities. We believe this classification is a preferable way to present our cash flows as outstanding payments ~~of $39.8 million and $17.4 million, respectively, were~~are included in accounts payable onwithin our ~~condensed consolidated balance sheets.~~Condensed Consolidated Balance Sheet.

Recently Adopted Accounting Standards

Leases. In 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842).” Topic 842 establishes a new lease accounting model. The most significant changes include the clarification of the definition of a lease, the requirement for lessees to recognize for all leases a right-of-use asset and a corresponding lease liability in the consolidated balance sheet, and additional quantitative and qualitative disclosures which are designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. ~~Lease expenses will continue to be~~

Expenses are recognized in the consolidated statement of income ~~(loss)~~ in a manner similar to prior accounting guidance. Lessor accounting under the new standard is substantially unchanged. We adopted this standard, and all related amendments thereto, effective December 30, 2018, the first day of our 2019 fiscal year, using a modified retrospective approach, which applies the provisions of the new guidance at the effective date without adjusting the comparative periods presented. We have elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical accounting relating to lease identification and classification for existing leases upon adoption. We have made an accounting policy election to keep leases with an initial term of 12 months or less off of the consolidated balance sheet. We implemented internal controls and a lease accounting information system to enable the preparation of financial information required by the new standard. The adoption of Topic 842 had a material impact on our condensed consolidated balance sheets but did not have a material impact on our condensed consolidated statements of operations and comprehensive loss. The most significant impact was the recognition of right-of-use assets and lease liabilities of $57.5 million on the condensed consolidated balance ~~sheet.~~sheet as of the adoption date. Additionally, $1.7 million of deferred gains associated with sale-leaseback transactions was recorded as a cumulative-effect adjustment to accumulated deficit. ~~See Note 9 “Leases” for additional disclosures regarding our lease commitments.~~

~~Comprehensive Income~~. In February 2018, the FASB issued ASU No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220).” This standard provides an option to reclassify stranded tax effects within accumulated other comprehensive loss to retained earnings due to the U.S. federal corporate income tax rate change in the Tax Cuts and Jobs Act of 2017. This standard was effective for interim and annual reporting periods beginning after December 15, 2018. We did not exercise the option to make this reclassification.

Accounting Standards Effective in Future ~~Years~~Periods

Credit Impairment Losses. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326).” This ASU sets forth a current expected credit loss (“CECL”) model which requires the measurement of all expected credit losses for financial instruments or other assets (e.g., trade receivables), held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model, is applicable to the measurement of credit losses on financial assets measured at amortized cost, and applies to some off-balance sheet credit exposures. The standard also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity's portfolio. ~~The standard is~~ASU 2019-10 extended the effective ~~for reporting~~date of ASU 2016-13 to interim and annual periods beginning after December 15, 2019. We have not completed our assessment of the standard but we do not expect the adoption to have a material impact on the Company's consolidated financial position, results of operations or cash flows.

~~Goodwill.~~ ~~In January 2017, the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350).” This ASU is intended to simplify the test~~22, 2022, for goodwill impairments by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the new ASU, a goodwill impairment will now be the amount by which acertain public business entities, including smaller reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The accounting standard will be effective for reporting periods beginning after December 15, 2019, and early adoption is permitted. We do not expect the adoption of the standard to have a material impact on the Company's consolidated financial position, results of operations or cash flows.

~~Fair Value Measurement.~~ In August 2018, the FASB issued ASU No. 2018-13, “Fair Value (“FV”) Measurement (Topic 820).” Among other modifications, this ASU removes the requirements to disclose: (i) the amount of and reasons for transfers between Level 1 and Level 2 of the FV hierarchy; (ii) the policy for timing transfers between levels; and (iii) the valuation process for Level 3 FV measurements. The standard will require public entities to disclose: (a) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 FV measurements held at the end of the reporting period; and (b) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 FV measurements. The additional disclosure requirements should be applied prospectively for the most recent interim or annual period presented in the fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented. The amendments in this standard are effective for fiscal years beginning after December 15, 2019. Early adoption is permitted, and an entity may adopt the removed or modified disclosures and delay the adoption of new disclosures until the effective date.companies. We have not completed our assessment of the standard, but we do not expect the adoption to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

Defined Benefit Pension Plan. In August 2018, the FASB issued ASU No. 2018-14, “Compensation-Retirement-Benefits-Defined Benefit Plans-General (Subtopic 715-20).” The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans by removing six previously required disclosures and adding two. The amendments also clarify certain other disclosure requirements. The amendments in this standard are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. We have not completed our assessment of the standard, but we do not expect the adoption to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

~~2. Acquisition of Cedar Creek~~

~~On April 13, 2018, we completed~~Income Taxes. In December 2019, the ~~acquisition of Cedar Creek Holdings, Inc. (“Cedar Creek”)~~FASB issued ASU No.2019-12, “Income taxes (Topic 740): Simplifying the Accounting for ~~a purchase price of approximately $361.8 million. The acquisition was completed pursuant~~Income Taxes.” This ASU simplifies the accounting for income taxes by removing certain exceptions to the ~~terms~~general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. The amendments in this standard are effective for interim periods and fiscal years beginning after December 15, 2020. Early adoption is permitted. We are currently assessing the impact of ~~an Agreement and Plan of Merger (the "Merger Agreement"), dated as of March 9, 2018, by and among BlueLinx Corporation, one of our wholly owned subsidiaries, Panther Merger Sub, Inc.,~~the new guidance, but do not expect the adoption to have a ~~wholly-owned subsidiary of BlueLinx Corporation ("Merger Sub"), Cedar Creek, and CharlesBank Equity Fund VII, Limited Partnership. Upon closing~~material impact on the ~~transactions contemplated by the Merger Agreement, among other things, Merger Sub was merged with and into Cedar Creek, with Cedar Creek surviving the merger as one of our indirect~~

~~wholly-owned subsidiaries. The merger allowed us to expand our product offerings, while maintaining our existing geographical footprint.~~

Cedar Creek was established in 1977 as a wholesale building materials distribution company that distributes wood products across the United States. Its products include specialty lumber, oriented strand board, siding, cedar, spruce, engineered wood products and other building products.

~~The acquisition was accounted for under the acquisition method of accounting. The assets acquired, liabilities assumed and~~Company’s consolidated financial position, results of operations, ~~of the acquired business have been included in our consolidated results since April 13, 2018.~~

~~The following unaudited consolidated pro forma information presents consolidated information as if the acquisition had occurred on January 1, 2017:~~

Pro forma
Three Months Ended Nine Months Ended
(In thousands, except per share data) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018
Net sales $ 678,665
$ 859,776
$ 2,023,814
$ 2,592,597
Net income (loss) (5,194 ) (6,219 ) 937
(5,455 )
Earnings (loss) per common share:
Basic $ (0.55 ) $ (0.67 ) $ 0.10
$ (0.59 )
Diluted (0.55 ) (0.67 ) 0.10
(0.59 )

The pro forma amounts above have been calculated in accordance with GAAP after applying the Company's accounting policies and adjusting the three and nine months ended September 28, 2019, for $1.8 million and $8.4 million, and the three and nine months ended September 29, 2018, for $3.7 million and $40.3 million, respectively, for transaction related costs, net of tax. Due to the net loss for the three month period ended September 28, 2019, 114,000 incremental shares from share-based compensation arrangements were excluded from the computation of diluted weighted average shares outstanding because their effect would be anti-dilutive. The pro forma amounts do not include any potential synergies, cost savings or other expected benefits of the acquisition, are presented for illustrative purposes only, and are not necessarily indicative of results that would have been achieved had the acquisition occurred as of January 1, 2017, or of future operating performance.

~~The purchase price of Cedar Creek consisted of the following items:~~

(In thousands)
Consideration paid to shareholders and amounts paid to creditors:
Payments to Cedar Creek shareholders^[1]
$ 166,447

Subordinated unsecured note (due to shareholder)^[2]
13,743

Seller’s transaction costs paid by Company 7,349

Repayment of Cedar Creek debt^[3]
174,213

Total cash purchase price $ 361,752



^[1]	~~Payments to Cedar Creek’s shareholders include the purchase of common stock and certain escrow adjustments.~~



^[2]	~~The Cedar Creek note payable to a shareholder of $13.7 million was paid in full upon the acquisition of Cedar Creek and included $10 million in subordinated debt and $3.7 million in accrued interest.~~



^[3]	To finance the acquisition of Cedar Creek, the Company amended and restated its Revolving Credit Facility to increase the capacity thereunder to $600.0 million and also entered into a new $180.0 million senior secured Term Loan Facility. (See Note 6)

~~The excess of total purchase price, which includes the aggregate~~ cash consideration paid in excess of the fair value of the tangible and intangible assets acquired, was recorded as goodwill. The goodwill recognized is attributable to the expected operating synergies and growth potential that the Company expects to realize from the acquisition. None of the goodwill generated from the acquisition is deductible for tax purposes.

~~The following table summarizes the values of the assets acquired and liabilities assumed at the date of the acquisition:~~

(In thousands) Allocation as of December 29, 2018
Cash and net working capital assets
(excluding inventory) $ 88,318
Inventory
159,227
Property and equipment
71,203
Other, net (1,395 )
Intangible assets and goodwill:

Customer relationships
25,500
Non-compete agreements
8,254
Trade names
6,826
Favorable leasehold interests
800
Goodwill
47,772
Finance leases and other liabilities
(44,753 )
Cash purchase price $ 361,752

flows.

3.2. Goodwill and Other Intangible Assets

In connection with the acquisition of Cedar Creek, we acquired certain intangible assets. As of ~~September~~March 28, ~~2019,~~2020, our intangible assets consist of goodwill and other intangible assets including customer relationships, noncompete agreements, and trade names.

Goodwill

Goodwill is the excess of the cost of an acquired entity over the fair value of tangible and intangible assets (including customer relationships, noncompete agreements, and trade names) acquired, and liabilities assumed, under acquisition accounting for business combinations. As of ~~September~~March 28, ~~2019,~~2020, goodwill was $47.8 million.

Goodwill is not subject to amortization but must be tested for impairment at least annually. This test requires us to assign goodwill to a reporting unit and to determine if the ~~implied~~ fair value of the reporting unit’s goodwill is less than its carrying amount. We evaluate goodwill for impairment during the fourth quarter of each fiscal year. In addition, we will evaluate the carrying value for impairment between annual impairment tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Such events and indicators may include, without limitation, significant declines in the

industries in which our products are used, significant changes in capital market conditions, and significant changes in our market capitalization. Our one reporting unit has a negative carrying amount of net assets as of March 28, 2020.

Definite-Lived Intangible Assets.

~~At September~~On March 28, ~~2019, in connection with the acquisition of Cedar Creek, we had definite-lived intangible assets that related to customer relationships, noncompete agreements, and trade names.~~

~~At September 28, 2019,~~2020, the gross carrying amounts, ~~the~~ accumulated amortization, and ~~the~~ net carrying amounts of our definite-lived intangible assets were as follows:


(In thousands)	Gross carrying amounts		Accumulated Amortization			^[1]	Net carrying amounts		Gross carrying amounts		Accumulated Amortization			^[1]	Net carrying amounts
Customer relationships	$	25,500	$	(5,885	)		$	19,615	$	25,500	$	(7,655	)		$	17,845
Noncompete agreements	8,254		(3,016		)		5,238		8,254		(4,048		)		4,206
Trade names	6,826		(3,325		)		3,501		6,826		(4,463		)		2,363
Total	$	40,580	$	(12,226	)		$	28,354	$	40,580	$	(16,166	)		$	24,414

^[1] Intangible assets except customer relationships are amortized on straight line basis. Customer relationships are amortized on a double declining balance method.

Amortization Expense

The weighted average estimated useful life remaining for customer relationships, noncompete agreements, and trade names is approximately 1110 years, 32 years, and ~~2 years,~~1 year, respectively. Amortization expense for the definite-lived intangible assets for the three-month periods ended March 28, 2020, and March 30, 2019, was $2.0 million and ~~$6.1 million for the three and nine month periods ended September 28, 2019, respectively. For the three and nine month periods ended September 29, 2018, amortization expense was~~ $2.1 million, ~~and $4.0 million.~~respectively.

Estimated amortization expense for definite-lived intangible assets for the remaining portion of ~~2019~~2020 and the next ~~five~~four fiscal years is as follows:


(In thousands)	Estimated Amortization		Estimated Amortization
2019	$	1,970
2020	7,461		$	5,490
2021	4,973		4,973
2022	3,111		3,111
2023	1,807		1,807
2024	1,505		1,505

4.3. Revenue Recognition

We recognize revenue when control of promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

Contracts with our customers are generally in the form of standard terms and conditions of sale. From time to time, we may enter into specific contracts with some of our larger customers, which may affect delivery terms. Performance obligations in our contracts generally consist solely of delivery of goods. For all sales channel types, consisting of warehouse, direct, and reload sales, we typically satisfy our performance obligations upon shipment. Our customer payment terms are typical for our industry and may vary by the type and location of our customer and the products or services offered. The term between invoicing and when payment is due is not deemed to be significant by us. For certain sales channels and/or products, our standard terms of payment may be as early as 10 days.

In addition, we provide inventory to certain customers through pre-arranged agreements on a consignment basis. Customer consigned inventory is maintained and stored by certain customers; however, ownership and risk of loss remain with us. ~~When the consigned inventory is sold by the customer, we recognize revenue, net of trade allowances.~~

All revenues recognized are net of trade allowances (i.e., rebates), cash discounts, and sales returns. Cash discounts and sales returns are estimated using historical experience. Trade allowances are based on the estimated obligations and historical experience. Adjustments to earnings resulting from revisions to estimates on discounts and returns have been insignificant for each of the reported periods. Certain customers may receive cash-based incentives or credits, ~~(rebates),~~ which are accounted for as

variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We believe that there will not be significant changes to our estimates of variable consideration.

~~With the acquisition and integration of Cedar Creek, we changed our internal product hierarchy.~~ The following table presents our revenues disaggregated by revenue source. Certain prior year amounts have been reclassified to conform to the current year product mix of structural and specialty products. Sales and usage-based taxes are excluded from revenues.


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018		March 28, 2020		March 30, 2019
	(In thousands)								(In thousands)
Structural products	$	225,522	$	312,510	$	646,513	$	833,412	$	240,778	$	196,786
Specialty products	453,143		547,266		1,377,301		1,356,803		421,292		441,915
Total net sales	$	678,665	$	859,776	$	2,023,814	$	2,190,215	$	662,070	$	638,701

Also, due to the ~~acquisition and~~ integration of Cedar Creek, our reload sales are less distinct from warehouse sales as they have been traditionally classified. The following table presents our revenues disaggregated by sales channel. Certain prior year amounts have been reclassified to conform to the current year revenues disaggregated by sales channel. Sales and usage-based taxes are excluded from revenues.


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018			March 28, 2020			March 30, 2019
	(In thousands)												(In thousands)
Warehouse and reload	$	577,172		$	716,604		$	1,693,206		$	1,815,531		$	545,892		$	523,179
Direct	114,586			153,847			360,252			402,420			125,582			123,404
Service revenue	272			981			1,033			2,872
Customer discounts and rebates	(13,365		)	(11,656		)	(30,677		)	(30,608		)	(9,404		)	(7,882		)
Total net sales	$	678,665		$	859,776		$	2,023,814		$	2,190,215		$	662,070		$	638,701

Practical Expedients and Exemptions

We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general, and administrative expense.

We have made an accounting policy election to treat ~~any common carrier~~outbound shipping and handling activities as an expense.

5.4. Assets Held for Sale ~~and Net Gain on Disposition~~

~~In fiscal 2018, we designated certain non-operating properties as held for sale due to strategic realignments~~Three of our ~~business. At the time of designation, we ceased recognizing depreciation expense on these assets. As of December 29, 2018, 6~~non-operating properties were designated as held for sale ~~with an additional property~~as of March 28, 2020. These properties consisted of three former distribution facilities located in the Midwest and Southeast. We vacated these properties and designated them as held for sale during fiscal 2019 due to their proximity to other locations after the ~~first quarter of 2019. During the nine months ended September 28, 2019, 3 properties were sold, as further described below.~~Cedar Creek acquisition. As of ~~September~~March 28, ~~2019,~~2020, and December ~~29, 2018,~~28, 2019, the net book value of total assets held for sale was ~~$2.1~~$1.1 million ~~and $3.1 million, respectively,~~ and was included in “Other current assets” in our Condensed Consolidated Balance Sheets. ~~Properties held for sale as of September 28, 2019, consisted of land in the Northeast, and 4 warehouses located in the Midwest and South. We plan to sell these properties within the next 12 months.~~ We continue to actively market all properties that are designated as held for ~~sale.~~sale, and we plan to sell these properties within the next 12 months.

During the nine months ended September 28, 2019, we sold 3 non-operating distribution facilities previously designated as “held for sale”. We recognized a gain of $9.8 million in the Condensed Consolidated Statements of Operations as a result of these sales.

6.5. Long-Term Debt

~~As of September 28, 2019, and December 29, 2018, long-term debt consisted of the following:~~

      September 28, December 29,
(In thousands) Maturity Date    2019 2018
Revolving Credit Facility (net of discounts and debt issuance
costs of $4.9 million and $6.0 million at September 28, 2019
and December 29, 2018, respectively) October 10, 2022     $ 349,982
$ 327,319
Term Loan Facility (net of discounts and debt issuance costs
of $7.3 million and $6.7 million at September 28, 2019
and December 29, 2018, respectively) October 13, 2023     139,905
172,356
Total debt     489,887
499,675
Less: current portion of long-term debt     (1,790 ) (1,736 )
Long-term debt, net     $ 488,097
$ 497,939

Revolving Credit Facility

~~On April 13, 2018,~~

We have a revolving credit facility that we entered into ~~an Amended and Restated Credit Agreement~~in April 2018 with ~~certain of our subsidiaries as borrowers (together with us, the “Borrowers”) or guarantors thereunder,~~ Wells Fargo Bank, National Association, ~~in its capacity~~ as administrative agent, and certain other financial institutions party thereto (the “Revolving Credit ~~Agreement”~~Facility”)., with a maturity date of October 10, 2022. The Revolving Credit ~~Agreement provides for~~facility includes a committed senior secured asset-based revolving loan and letter of credit facility ~~(the “Revolving Credit Facility”)~~ of up to $600 million, and an uncommitted accordion feature that permits ~~the Borrowers~~us to increase the facility by an aggregate additional principal amount of up to $150 million, which would allow borrowings of up to $750 million under the Revolving Credit Facility. Letters of credit in an aggregate amount of up to $30 million are also available under the Revolving Credit Agreement, which would reduce the amount of the revolving loans available under the Revolving Credit Facility. The maturity date of the Revolving Credit Agreement is October 10, 2022. The Borrowers’million. Our obligations under the Revolving Credit ~~Agreement~~Facility are secured by a security interest in substantially all of our ~~and our subsidiaries’~~ assets ~~(other~~other than real ~~property), including inventories, accounts receivable, and proceeds from those items.~~property.

~~Borrowings~~

Loans under the Revolving Credit Agreement are subject to availability under the Borrowing Base (as that term is defined in the Revolving Credit Agreement). The Borrowers are required to repay revolving loans thereunder to the extent that such revolving loans exceed the Borrowing Base then in effect. The Revolving Credit Facility ~~may be prepaid in whole or in part from time to time without penalty or premium, but including all breakage costs incurred by any lender thereunder.~~

~~The Revolving Credit Agreement provides for~~bear interest ~~on the loans~~ at a rate per annum equal to (i) LIBOR plus a margin ranging from 1.75 percent to 2.25 percent, with the amount of such margin determined based upon the average of ~~the Borrowers’~~our excess availability for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on LIBOR, or (ii) the administrative agent’s base rate plus a margin ranging from 0.75 percent to 1.25 percent, with the amount of such margin determined based upon the average of ~~the Borrowers’~~our excess availability for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on the base rate.

~~In the event excess availability falls below the greater of (i) $50 million and (ii) 10 percent of the lesser of (a) the Borrowing Base and (b) the maximum permitted credit at such time,~~We amended the Revolving Credit ~~Agreement requires maintenance~~Facility on January 31, 2020, to provide that (i) the “Seasonal Period” will run from November 15, 2019, through July 15, 2020, for the calendar year 2019, and from December 15 of ~~a fixed charge coverage ratio~~each calendar year through April 15 of ~~1.0 to 1.0 until such time as~~each immediately succeeding calendar year for the ~~Borrowers’ excess availability has been at least the greater of (i) $50 million~~calendar year 2020 and thereafter, and (ii) ~~10 percent~~the measurement period in the definition of “Cash Dominion Event” will be five consecutive business days instead of three consecutive business days. The adjustment to the ~~lesser of (a)~~Seasonal Period better aligns advance rates under the ~~Borrowing Base and (b) the maximum permitted credit at such time for a period of 30 consecutive days.~~

~~The~~ Revolving Credit ~~Agreement also contains representations~~Facility with the seasonality in our business and ~~warranties~~provides us with an enhanced borrowing base and ~~affirmative and negative covenants customary for financings of this type, as well as customary events of default.~~greater liquidity through July 15, 2020.

As of ~~September~~March 28, ~~2019,~~2020, we had outstanding borrowings of ~~$354.8~~$381.6 million, excess availability of ~~$98.2~~$96.8 million, and a weighted average interest rate of ~~4.4 percent under our Revolving Credit Facility.~~3.2 percent. As of December ~~29, 2018,~~28, 2019, our principal balance was ~~$333.3~~$326.5 million, excess availability was ~~$91.7~~$80.0 million, and our weighted average interest rate was ~~4.6 percent under our~~3.9 percent.

The Revolving Credit ~~Facility.~~

Facility contains certain financial and other covenants, and our right to borrow under the Revolving Credit Facility is conditioned upon, among other things, our compliance with these covenants. We were in compliance with all covenants under the Revolving Credit ~~Agreement~~Facility as of ~~September~~March 28, ~~2019.~~2020.

Term Loan Facility

~~On April 13, 2018, in connection with the acquisition of Cedar Creek,~~

We have a term loan facility that we entered into ~~a credit and guaranty agreement~~in April 2018 with HPS ~~Investment~~Investments Partners, LLC, as administrative ~~agent~~ and collateral agent, ~~(“HPS”)~~ and certain other financial institutions as party thereto. On October 24, 2019, the credit and guaranty agreement was amended to, among other things, permit real estate sale leaseback transactions and modify the total net leverage ratio beginning in the third quarter of 2019 (as amended, thethereto (the “Term Loan ~~Agreement”~~Facility”)., with a maturity date of October 13, 2023. The Term Loan ~~Agreement~~Facility provides for a senior secured first lien loan facility in an initial aggregate principal amount of $180 million ~~(the “Term Loan Facility”). The maturity date of the Term Loan Agreement~~and is October 13, 2023. The proceeds from the Term Loan Facility were used to fund a portion of the cash consideration payable in connection with the acquisition of Cedar Creek and to fund transaction costs in connection with the acquisition and the Term Loan Facility.

~~The obligations under the Term Loan Agreement are~~ secured by a security interest in substantially all of our ~~and our subsidiaries’ assets, including inventories, accounts receivable, real property, and proceeds from those items.~~assets.

The Term Loan ~~Agreement~~Facility requires monthly interest payments, and also requires quarterly principal payments of $450,000, in ~~arrears.~~arrears, with the remaining balance due on the maturity date. The Term Loan ~~Agreement~~Facility also requires certain mandatory prepayments of outstanding loans, subject to certain exceptions, including prepayments commencing with the fiscal year ending December 28, 2019, based on a percentage of excess cash flow (as defined in the Term Loan Agreement for such fiscal year). The remaining balance is due on the loan maturity date of October 13, 2023.

exceptions. The Term Loan Facility ~~may be prepaid in whole or in part from time~~required maintenance of a total net leverage ratio of 6.25 to ~~time, subject~~1.00 for the quarter ending March 28, 2020, and requires a ratio of 8.75 to ~~payment~~1.00 for the second and third quarters of 2020, and ratio levels generally reduce over the ~~“Prepayment Premium” (as such~~remaining term ~~is defined in~~of the Term Loan ~~Agreement) if such voluntary prepayment does not otherwise constitute an exception to the Prepayment Premium~~Facility. We were in compliance with all covenants under the Term Loan ~~Agreement and is made on or prior to February~~Facility as of March 28, ~~2023, and all breakage costs incurred by any lender thereunder.~~2020.

Borrowings under the Term Loan ~~Agreement~~Facility may be made as Base Rate Loans or Eurodollar Rate Loans. The Base Rate Loans will bear interest at the rate per annum equal to (i) the greatest of the (a) U.S. prime lending rate published in The Wall Street Journal, (b) the Federal Funds Effective Rate plus 0.50 percent, and (c) the sum of the Adjusted Eurodollar Rate of one month plus 1.00 percent, provided that the Base Rate shall at no time be less than 2.00 percent per annum; ~~and~~plus (ii) ~~plus~~ the Applicable Margin, as described below. Eurodollar Rate Loans will bear interest at the rate per annum equal to (i) the ICE Benchmark Administration LIBOR Rate, provided that the Adjusted Eurodollar Rate shall at no time be less than 1.00 percent per annum; plus (ii) the Applicable Margin. The Applicable Margin will be 6.00 percent with respect to Base Rate Loans and 7.00 percent with respect to Eurodollar Rate Loans.

~~With the October 2019 amendment,~~We amended the Term Loan ~~Agreement~~Facility on December 31, 2019, to extend the period for satisfying the designated principal balance level required ~~maintenance of a~~to maintain the modified total net leverage ratio ~~of 7.50 to 1.00~~covenant levels for the fiscal quarter ending September 28, 2019, and such required covenant level generally reduces over the remaining term of the Term Loan Facility as set forth in the amended Term Loan Agreement; provided, that 2019 fourth ~~quarter~~ and subsequent ~~quarterly covenant levels revert to~~quarters thereunder, which was satisfied on January 31, 2020, through repayments from proceeds from the ~~higher levels existing prior to the October 2019 amendment if~~real estate financing transactions described in Note 8. On February 28, 2020, we ~~do not reduce the outstanding principal balance of~~further amended the Term Loan Facility to ~~approximately $95.3 million by January 31, 2020.As of September 28, 2019,~~provide that we ~~were in compliance with~~would not be subject to the facility’s total net leverage ratio covenant from and after the time, and then for so long as, the principal balance level under the facility is less than $45 million. On April 1, 2020, we amended the Term Loan Facility to, among other things, modify the total net leverage ~~ratio.~~

~~The Term Loan Agreement also contains representations, warranties, affirmative~~ratio covenant levels for the 2020 second and ~~negative covenants customary~~third quarters. All other total net leverage ratio covenant levels for ~~financing transactions of this type,~~prior and ~~customary events of default. Please refer to our risk factor entitled, “~~The instruments governing our indebtedness contain various covenants limiting the discretion of our management in operating our business, including requiring us to maintain a minimum level of excess liquidity~~” in our 2018 Annual Report on Form 10-K.~~future quarters were unchanged.

As of ~~September~~March 28, ~~2019,~~2020, we had outstanding borrowings of ~~$147.2~~$77.4 million under ~~our~~the Term Loan ~~Credit~~ Facility and an interest rate of ~~9.1~~8.6 percent per annum. AtAs of December ~~29, 2018,~~28, 2019, our principal balance was ~~$179.1~~$146.7 million with an interest rate of ~~9.3~~8.7 percent per annum.

~~We were~~ The decrease in ~~compliance with all covenants under~~the outstanding borrowings was due to net proceeds of the real estate financing transactions described in Note 8 being applied to the Term Loan ~~Agreement as of September 28, 2019.~~Facility.

139

~~Our remaining scheduled principal payments for fiscal 2019 and the following fiscal years, and thereafter, are as follows:~~

(In thousands)
2019 $ 527
2020 2,250
2021 1,800
2022 1,800
Thereafter 140,824

7.6. Net Periodic Pension (Benefit) Cost

The following table shows the components of our net periodic pension (benefit) cost:


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018			March 28, 2020			March 30, 2019
	(in thousands)												(in thousands)
Service cost	$	29		$	133		$	190		$	399		$	—		$	113
Interest cost on projected benefit obligation	881			963			2,899			2,889			723			1,045
Expected return on plan assets	(1,339		)	(1,327		)	(3,828		)	(3,981		)	(1,210		)	(1,194		)
Amortization of unrecognized loss	278			271			857			813			263			300
Net periodic pension cost (benefit)	$	(151	)	$	40		$	118		$	120
Net periodic pension (benefit) cost													$	(224	)	$	264

During the first nine months of fiscal 2019, we renegotiated our collective bargaining agreement with 5 unionized locations. This collective bargaining agreement covers a number of specific items such as wages, medical coverage, and certain other benefit programs, including pension plan participation. As a result of these renegotiations, 49 of the participants in the plan are no longer accruing future years of service under the applicable pension plan, which triggered a curtailment. As a result of the curtailment, we performed a revaluation of plan assets and liabilities. The related pension benefit obligation decreased $0.1 million and $0.3 million for the three and nine months ended September 28, 2019, respectively, as a result of changes in valuation assumptions. An overall increase in plan asset valuation was accompanied by a decrease to accumulated other comprehensive income of $2.5 million and $2.7 million for the three and nine months ended September 28, 2019, respectively, which was recorded in other comprehensive loss on the Condensed Consolidated Statements of Operations and Comprehensive Loss. No intraperiod income tax effect was required to be recorded as a result of the curtailment.

In the third quarter of 2019, we offered a voluntary lump sum payment option to certain qualified former employees or their beneficiaries who are vested participants in the BlueLinx Hourly Pension Plan. Qualified participants had until October 25, 2019 to determine whether to accept the offer. Lump sum payments in connection with the offer are expected to total approximately $9.5 million, and will be completed during the fourth quarter of 2019. The payments are being funded with existing plan assets, and no additional contribution by the Company to the plan was required in connection with the offer. The offer, once completed, will have the effect of decreasing our net periodic pension cost and overall projected benefit obligation, which will be reflected in our 2019 year end consolidated financial statements once the offer, and our year end pension valuation, have been completed.

8.7. Stock Compensation

~~Cash-Settled Stock Appreciation Rights (“SARs”)~~

During fiscal 2016, we granted certain executives and employees cash-settled SARs. The cash-settled SARs vested on July 16, 2018. On the vesting date, half of the vested value of the cash-settled SARs became payable within thirty days of the vesting date, and the remainder payable within one year of the vesting date. The exercise price for the cash-settled SARs was amended so that it was based on a 20 day trading average of the Company’s common stock through the vesting date, in excess of the $7.00 grant date valuation.

~~On September 28, 2019, there was no remaining liability related to the cash-settled SARs.~~

Stock Compensation Expense

During the three months ended ~~September~~March 28, ~~2019~~2020, and ~~September 29, 2018,~~March 30, 2019, we incurred stock compensation expense of ~~$1.2~~$1.0 million and ~~$1.7 million, respectively. During the nine months ended September 28, 2019 and September 29, 2018, we incurred stock compensation expense of $2.5 million and $14.7~~$0.7 million, respectively. The ~~decrease~~increase in our stock compensation expense for the ~~three and nine month periods of fiscal 2019~~three-month period is attributable to ~~cash-settled SARs expense~~having more outstanding equity-based grants during the period than in the prior year.

9.8. Leases

~~Effective December 30, 2018, we adopted ASU No. 2016-02, “Leases (Topic 842)” using the modified retrospective method, which applies the provisions of the new guidance~~We determine if an arrangement is a lease at the effective date without adjusting the comparative periods presented. We have elected the package of practical expedients permitted under the transition guidance within the new standard. This election allowed us to carry forward our historicalinception and assess lease ~~classification. The adoption of this standard resulted in the recording of~~classification as either operating or finance at lease right-of-use (“ROU”) assets and corresponding operating lease liabilities of $57.5 million on the condensed consolidated balance sheet as of December 30, 2018 (adoption date), the first day of fiscal 2019, which amortizes over the lease term.

inception or modification. Our operating and finance ~~(formerly capital)~~ lease portfolio generally includes leases for real estate, certain logistics equipment, and vehicles. The majority of our leases have remaining lease terms of 1 year to 15 years, some of which include one or more options to extend the leases for 5 years. Operating lease ~~ROU~~right-of use (“ROU”) assets and liabilities are presented separately on the condensed consolidated balance sheets. Finance lease ROU assets are included in property and equipment and the finance lease obligations are presented separately in the condensed consolidated balance sheet. We have also made the accounting policy election to not separate lease components from ~~non lease~~non-lease components related to ~~leases of several trucks during the second and third quarters of 2019.~~our mobile fleet asset class.

When a lease does not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments.

A portion of our real estate lease cost is generally subject to annual changes in the Consumer Price Index (“CPI”). The known changes to lease payments are included in the lease liability at lease commencement. Unknown changes related to CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. In addition, a subset of our vehicle lease cost is considered variable.

The components of lease expense were as follows:

Three Months Ended September 28, 2019 Nine Months Ended September 28, 2019

(In thousands)
Operating lease cost: $ 2,911
$ 9,047
Finance lease cost:
Amortization of right-of-use assets $ 2,589
$ 8,481
Interest on lease liabilities 3,467
10,764
Total finance lease costs $ 6,056
$ 19,245



	Three Months Ended March 28, 2020		Three Months Ended March 30, 2019
	Three Months Ended March 28, 2020		Three Months Ended March 30, 2019
	(In thousands)
Operating lease cost:	$	3,120	$	3,144
Finance lease cost:
Amortization of right-of-use assets	$	3,042	$	2,896
Interest on lease liabilities	4,425		3,248
Total finance lease costs	$	7,467	$	6,144

1510

Supplemental cash flow information related to leases was as follows:

Three Months Ended September 28, 2019 Nine Months Ended September 28, 2019

(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
   Operating cash flows from operating leases $ 2,990
$ 8,957
   Operating cash flows from finance leases 3,467
10,764
   Financing cash flows from finance leases 2,213
6,445
Right-of-use assets obtained in exchange for lease obligations
   Operating leases $ —
$ —
   Finance leases 14,403
18,652



	Three Months Ended March 28, 2020		Three Months Ended March 30, 2019
	Three Months Ended March 28, 2020		Three Months Ended March 30, 2019
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,774	$	2,903
Operating cash flows from finance leases	4,425		3,248
Financing cash flows from finance leases	2,222		2,187
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	—	$	—
Finance leases	—		787

Supplemental balance sheet information related to leases was as follows:

(In thousands) September 28, 2019

Finance leases
   Property and equipment $ 168,247
   Accumulated depreciation (22,457 )
Property and equipment, net $ 145,790
Weighted Average Remaining Lease Term (in years)
   Operating leases 12.14
   Finance leases 20.36
Weighted Average Discount Rate
   Operating leases 9.44 %
   Finance leases 10.93 %



	March 28, 2020			December 28, 2019
	(In thousands)
Finance leases
Property and equipment	$	155,927		$	156,770
Accumulated depreciation	(26,032		)	(23,364		)
Property and equipment, net	$	129,895		$	133,406
Weighted Average Remaining Lease Term (in years)
Operating leases	11.67			11.71
Finance leases	17.86			17.90
Weighted Average Discount Rate
Operating leases	9.37		%	9.34		%
Finance leases	10.48		%	10.33		%

The major categories of our finance lease liabilities as of March 28, 2020 are as follows:



	March 28, 2020		December 28, 2019
	(In thousands)
Equipment and vehicles	$	30,808	$	32,471
Real estate	120,543		120,525
Total finance leases	$	151,351	$	152,996

As of ~~September~~March 28, ~~2019,~~2020, maturities of lease liabilities were as follows:


(In thousands)	Operating leases			Finance leases
2019	$	3,380		$	6,232
							Operating leases			Finance leases
							(In thousands)
2020	9,403			22,877			$	11,479		$	15,927
2021	7,485			20,203			9,234			19,178
2022	6,111			19,216			7,922			18,350
2023	5,733			18,630			7,073			17,887
2024							6,753			17,324
Thereafter	53,118			307,018			48,887			284,409
Total lease payments	$	85,230		$	394,176		$	91,348		$	373,075
Less: imputed interest	(31,431		)	(230,545		)	(38,761		)	(221,724		)
Total	$	53,799		$	163,631		$	52,587		$	151,351

AtOn December ~~29, 2018,~~28, 2019, our total operating lease commitments were as follows:


(In thousands)
2019	$	11,980
			(In thousands)
2020	9,928		$	12,735
2021	8,435		10,092
2022	8,066		8,247
2023	7,539		7,899
2024			7,287
Thereafter	60,847		56,081
Total	$	106,795	$	102,341

Real Estate Transactions

On December 31, 2019, we completed 4 real estate financing transactions on warehouse facilities in Madison, TN; Kansas City, MO; Richmond, VA; and Bridgeton, MO for aggregate net proceeds of $27.2 million. On January 31, 2020, we completed 9 real estate financing transactions on warehouse facilities in Charlotte, NC; Memphis, TN; Independence, KY: San Antonio, TX; Portland, ME; Denville, NJ; Yaphank, NY; Pensacola, FL; and Tallmadge, OH for aggregate net proceeds of $34.1 million. On February 28, 2020, we completed 1 real estate financing transaction on a warehouse facility in Elkhart, IN for net proceeds of $7.5 million. These fourteen real estate financing transactions were completed pursuant to sale-leaseback arrangements, and upon their completion, we entered into long-term leases on the properties for initial terms from fifteen to eighteen years with multiple five-year renewal options.

We determined that these transactions did not qualify as sales in accordance with the FASB’s Accounting Standards Codification (“ASC”) Topic 842 and, for accounting purposes, the transactions were not accounted for as sale-leaseback transactions. When this occurs, the real estate transaction is accounted for as a financing transaction, whereby the gross proceeds are recorded as a financing obligation in our consolidated balance sheets in other current liabilities and in noncurrent liabilities as real estate financing obligations. The assets related to these transactions remain on our books and we continue to depreciate them. Gross proceeds of these transactions were $78.3 million.

On March 28, 2020, our future minimum payments related to the financing obligations under our real estate financing transactions entered into during 2019 and 2020 were as follows:



	(In thousands)
2020	$	7,305
2021	9,922
2022	10,130
2023	10,343
2024	10,559
Thereafter	124,454

~~10.~~

9. Commitments and Contingencies

Environmental and Legal Matters

From time to time, we are involved in various proceedings incidental to our businesses, and we are subject to a variety of environmental and pollution control laws and regulations in all jurisdictions in which we operate. Although the ultimate outcome of these proceedings cannot be determined with certainty, based on presently available information management believes that adequate reserves have been established for probable losses with respect thereto. Management further believes that, while the ultimate outcome of one or more of these matters could be material to operating results in any given quarter, it will not have a materially adverse effect on our consolidated financial condition, our results of operations, or our cash flows.

Collective Bargaining Agreements

As of ~~September~~March 28, ~~2019,~~2020, we had over 2,200 employees on a full-time basis, and approximately 20 percent of our employees were represented by various local labor union Collective Bargaining Agreements (“CBAs”). ~~As of September 28, 2019, less than~~Approximately 1 percent of our employees are covered by three CBAs that are up for renewal in fiscal ~~2019 or~~2020. As of March 28, 2020, one of these CBAs was renewed and the remaining two are ~~currently expired and under negotiation.~~expected to be renegotiated later this year.

~~11.~~10. Accumulated Other Comprehensive Loss

Comprehensive ~~income (loss) is a measure of income (loss) which~~loss includes both net ~~income (loss)~~loss and other comprehensive income (loss). Other comprehensive income (loss) results from items deferred from recognition into our Condensed Consolidated Statements of Operations and Comprehensive Loss. Accumulated other comprehensive loss is separately presented on our Condensed Consolidated Balance Sheets as part of stockholders’ deficit.

The changes in balances for each component of accumulated other comprehensive loss for the ~~nine~~three months ended ~~September~~March 28, ~~2019,~~2020, were as follows:

(In thousands)
Foreign currency, net
of tax

Defined
benefit pension
plan, net of tax

Other,
net of tax
Total Accumulated Other Comprehensive Loss
December 29, 2018, beginning balance $ 660
$ (38,001 ) $ 212
$ (37,129 )
Other comprehensive income, net of tax ^[1]
(2 ) (2,035 ) 9
(2,028 )
September 28, 2019, ending balance, net of tax $ 658
$ (40,036 ) $ 221
$ (39,157 )



	Foreign currency, net of tax		Defined benefit pension plan, net of tax			Other, net of tax			Total Accumulated Other Comprehensive Loss
	(In thousands)
December 28, 2019, beginning balance	$	666	$	(35,441	)	$	212		$	(34,563	)
Other comprehensive income, net of tax ^[1]	3		196			(19		)	180
March 28, 2020, ending balance, net of tax	$	669	$	(35,245	)	$	193		$	(34,383	)

^____^{____________________________}

^[1]For the ~~nine~~three months ended ~~September~~March 28, ~~2019,~~2020, the actuarial loss recognized in the Condensed Consolidated Statements of Operations and Comprehensive Loss as a component of net periodic pension cost was ~~$2.7~~$0.3 million, net of tax of ~~$0.7~~$0.1 million. Please see Note 7,6, Net Periodic Pension Cost, for further information.

11. Income Taxes

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted on March 27, 2020, and contained several measures meant to counteract the economic effects of the COVID-19 pandemic. We are currently evaluating the provisions of the CARES Act and its impact. Our effective tax rate for the three months ended March 28, 2020, and March 30, 2019, was 86.5 percent and 27.3 percent, respectively. Our effective tax rate for the three months ended March 28, 2020 was impacted by (i) the discrete tax benefit of $3.9 million resulting from the release of the valuation allowance associated with the nondeductible interest expense under Section 163(j) of the Internal Revenue Code (“IRC”) as a result of changes under the CARES Act to increase the allowable percentage from 30 percent of adjusted taxable income to 50 percent of adjusted taxable income, (ii) the permanent addback of certain nondeductible expenses, including meals and entertainment, and (iii) the effect of the partial valuation allowance for separate company state income tax losses. Our effective tax rate for the three months ended March 30, 2019, was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and the effect of the partial valuation allowance for separate company state income tax losses.

Our financial statements contain certain deferred tax assets which primarily resulted from tax benefits associated with the loss before income taxes in prior years, as well as net deferred income tax assets resulting from other temporary differences related to certain reserves, pension obligations, and differences between book and tax depreciation and amortization. We

record a valuation allowance against our net deferred tax assets when we determine that, based on the weight of available evidence, it is more likely than not that our net deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences can be carried forward under tax law. Currently, we have a valuation allowance that covers (i) our separate company state net operating loss carryforwards and (ii) disallowed interest calculated pursuant to the changes made by the Tax Cuts and Jobs Act of 2017, as adjusted by the CARES Act.

At the end of each quarter, we evaluate the weight of available evidence (both positive and negative). We considered the recent reported loss generated in the current quarter and prior years (adjusted for unusual one-time items) and income generated in 2017, including the prior year income from Cedar Creek. We also considered evidence related to the four sources of taxable income, to determine whether such positive evidence outweighed the negative evidence. The evidence considered included:

future reversals of existing taxable temporary differences;

future taxable income exclusive of reversing temporary differences and carryforwards;

taxable income in prior carryback years if carryback is permitted under the tax law; and

tax planning strategies.

At the end of the first fiscal quarters of 2020 and 2019, in our evaluation of the weight of available evidence, we concluded that the weight of the positive evidence outweighed the negative evidence. In addition to the evidence discussed above, we considered as positive evidence forecasted future taxable income, the detail scheduling of the timing of the reversal of our deferred tax assets and liabilities, and the evidence from business and tax planning strategies described below. Although we believe our estimates are reasonable, the ultimate determination of the appropriate amount of valuation allowance involves significant judgments. We believe that the change in control under IRC Section 382, resulting from the completion of the secondary offering on October 23, 2017, will not cause any of our federal net operating losses to expire unused because management has been effectively implementing a real estate strategy involving the sale and leaseback of real estate. This strategy is further supported by the transactions involving four warehouses in January 2018 and two warehouses during 2019. In the first quarter of 2020, the Company executed three more sale and leaseback transactions, involving a total of fourteen warehouse locations. Additionally, the acquisition of Cedar Creek did not generate any limitations under IRC Section 382 on Cedar Creek’s tax assets. We will continue to monitor any changes to our results of operations that may affect our estimates, including any impact of COVID-19 if applicable.

12. Loss per Share

We calculate basic loss per share by dividing net loss by the weighted average number of common shares outstanding. We calculate diluted earnings per share using the treasury stock method, by dividing net income by the weighted average number of common shares outstanding plus the dilutive effect of outstanding share-based awards, including restricted stock units, and performance units. Due to the financial results for the three and nine month periods ended September 28, 2019, 0.1 million and 0.0 million, respectively, of incremental shares were excluded from the computation of diluted weighted average shares outstanding, because their effect would be anti-dilutive. For the three and nine month periods ended September 29, 2018, 0.0 million and 0.1 million, respectively, of incremental shares from share-based compensation arrangements were excluded from the computation of diluted weighted average shares outstanding, because their effect would be anti-dilutive.

The reconciliation of basic loss and diluted loss per common share for the ~~three-~~three-month periods ended March 28, 2020, and ~~nine-month periods of fiscal~~March 30, 2019, ~~and 2018~~ were as follows:


	Three Months Ended						Nine Months Ended						Three Months Ended
(in thousands, except per share data)	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018			March 28, 2020			March 30, 2019
Net loss	$	(7,043	)	$	(9,896	)	$	(7,461	)	$	(31,881	)	$	(787	)	$	(6,719	)

Weighted-average shares outstanding - basic	9,366			9,274			9,351			9,209			9,366			9,337
Dilutive effect of share-based awards	—			—			—			—			—			—
Weighted-average shares outstanding - diluted	9,366			9,274			$	9,351		$	9,209		9,366			9,337

Basic loss per share	$	(0.75	)	$	(1.07	)	$	(0.80	)	$	(3.46	)	$	(0.08	)	$	(0.72	)
Diluted loss per share	$	(0.75	)	$	(1.07	)	$	(0.80	)	$	(3.46	)	$	(0.08	)	$	(0.72	)

~~13. Subsequent Events~~

~~Third Amendment to Term Loan Facility~~

On October 24, 2019, we amended our Term Loan Facility by entering into that certain Third Amendment to Credit and Guaranty Agreement (the “Amendment”), by and among the Company, as borrower, certain of the Company’s subsidiaries, as guarantors, the lenders party thereto, and HPS, in its capacity as administrative agent.

Pursuant to the Amendment, we are permitted to enter into additional real estate sale leaseback transactions, effective from the date of the Amendment through the remaining tenor of the Term Loan Facility, with the net proceeds therefrom to be used for repayment of indebtedness under the Term Loan Facility or the Revolving Credit Facility. In addition, any net proceeds from the sale of “Specified Properties” (as such term is defined under the Term Loan Facility) will be used for repayment of indebtedness under the Term Loan Facility and the Revolving Credit Facility. The Amendment also modified the quarterly total net leverage ratio covenant levels over the term of the Term Loan Facility with the 2019 fourth quarter and subsequent quarterly level modifications reverting to the pre-Amendment levels subject to a designated outstanding principal balance level on January 31, 2020. The Amendment also provides that certain post-period prepayment rights will not apply for purposes of calculating compliance with the total net leverage ratio for the fourth quarter of 2019.

1814

13. Subsequent Events

Sixth Amendment to the Term Loan Facility

On April 1, 2020, we entered into the Sixth Amendment to our Term Loan Agreement which, among other things, modified the total net leverage ratio covenant levels for the second and third quarters of 2020. Refer to Note 5 for further details.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a leading distributor of building and industrial products in the ~~U.S. With~~U.S with a combination of market position and geographic coverage, the buying power of certain centralized procurement, and the strength of a locally-focused sales force, BlueLinx is able to provide a wide range of value-added services and solutions to our customers and suppliers. We are headquartered in ~~Georgia, with executive offices located at 1950 Spectrum Circle, Suite 300,~~ Marietta, Georgia, and we operate our distribution business through a broad network of distribution centers. We serve many major metropolitan areas in the U.S. and deliver building and industrial products to a variety of wholesale and retail customers. We distribute products in two principal categories: structural products and specialty products. Structural products include primarily plywood, oriented strand board, rebar and remesh, lumber, spruce and other wood products primarily used for structural support ~~walls, and flooring~~ in construction projects. Structural products represented ~~approximately 33%~~between 31% and 37% of our ~~third quarter 2019~~ net ~~sales.~~sales over the past twelve months. Specialty products include primarily engineered wood products, moulding, siding and trim, cedar, metal products (excluding rebar and remesh), and insulation. Specialty products ~~accounted for approximately 67%~~represented between 63% and 69% of our ~~third quarter 2019~~ net ~~sales.~~

~~Recent Developments~~

~~Amendment to~~sales over the ~~Term Loan Facility~~past twelve months.

On ~~October 24, 2019 we amended our Term Loan Facility. Please refer to Note 6, Long-Term Debt, and Note~~April 13, ~~Subsequent Events, for more details.~~

~~Recent Sales of Assets~~

~~Third Quarter~~

~~In the third quarter, we sold a non-operating distribution facility previously designated as “held for sale” for a gain of $0.1 million.~~

~~Fourth Quarter~~

~~In October 2019,~~2018, we completed the ~~sale~~acquisition of Cedar Creek. Cedar Creek was established in 1977 as a wholesale building materials distribution company that distributed wood products across the United States. Its products included specialty lumber, oriented strand board, siding, cedar, spruce, engineered wood products, and other building products. This acquisition allowed us to expand our product offerings, while maintaining our existing geographical footprint.

Recent Developments - Impact of COVID-19 Pandemic

A novel strain of coronavirus (COVID-19) was first identified in December 2019 in certain Far East and European countries. On March 11, 2020, the spread of COVID-19 was declared a global pandemic by the World Health Organization, with a high concentration of cases in the United States. In response to the pandemic, governmental authorities around the world implemented numerous measures to combat the virus, such as travel bans and restrictions, quarantines, “shelter-in-place” orders, and business shutdowns. The pandemic and these containment measures have had, and are expected to continue to have, a substantial negative impact on businesses around the world and on global, regional, and national economies.

We began preparations for the pandemic in late February, and in early March we implemented policies and procedures to protect our associates, serve our customers, and support our suppliers. We also moved quickly to develop plans and take actions designed to give us financial and operating flexibility during the pandemic. To date, our business has been designated as “essential” in all states in which we operate, and we are continuing to operate and provide service to customers and suppliers. Also, notably, we have not experienced any significant supply chain disruptions as a result of the ~~pre-finishing assets~~pandemic, and our supply chain has remained intact in all material respects.

We formed a cross-functional COVID-19 Disaster Response Team and implemented safety and hygiene protocols consistent with the Centers for Disease Control and Prevention (“CDC”) and local guidance. Those protocols have evolved in accordance with CDC and local guidance, and they include mandating the use of face coverings where their use is required by local order; implementing enhanced cleaning and disinfecting procedures; using social distancing guidelines and physical separation where required; establishing no-travel mandates; implementing no-contact rules and visitor guidelines; implementing enhanced safety procedures for our drivers such as including contactless delivery procedures; using mobile work arrangements for employees whose work can be done remotely; and developing rapid response procedures for presumptive and confirmed COVID-19 cases at any of our locations.

We also developed plans designed to reduce our cost structure, strengthen our balance sheet, and further increase liquidity in response to the pandemic. Steps taken to reduce operating costs include pausing new hiring; limiting non-essential spending; closely monitoring and reviewing credit lines, open orders, overpaid accounts, and receivables aging; making substantial variable operating expense reductions correlating to local market demand declines; placing approximately 15% of our salaried workforce on an initial 60-day furlough; voluntary reductions of executive officer and vice president base salaries for at least six months; closely assessing and monitoring inventory availability and purchasing; and ongoing review and monitoring of payroll and branch expenses.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted to offer relief to employers through, among other things, deferment of employer-side social security payments, deferral of quarterly pension contributions, net operating loss carryback periods, alternative minimum tax credit refunds, and modifications to the net interest deduction

limitation. We have elected to utilize certain of the provisions offered and continue to examine the impacts the CARES Act may have on our business.

For the first fiscal quarter of 2020, the COVID-19 pandemic did not have a significant impact on our business. Net sales increased 3.7% and our net loss improved 88% compared to the first quarter of 2019. However, beginning at the end of the first fiscal quarter of 2020, we began to see market demand decline in several of our warehouse locations. We believe that social distancing requirements, shelter-in-place orders, and restrictions on non-essential construction in states like New York, Pennsylvania, Vermont, and Michigan, stemming from the COVID-19 pandemic are likely to have a negative impact; even in these states, however, our distribution business was not fully impacted, and we have continued to operate everywhere, albeit with social distancing and hygiene protocols. Overall, we currently expect the pandemic to negatively impact our business and sales in 2020. The extent of this decline will depend on future developments, including, among others, the duration of the pandemic, new information that may emerge concerning the severity of COVID-19, the actions, especially those taken by governmental authorities, to contain the pandemic or address its impact, and the ~~transfer~~impact the COVID-19 pandemic has on demand in the markets we service. The trajectory of the ~~related real estate lease associated with~~pandemic continues to evolve rapidly, and we cannot predict the extent to which our ~~former pre-finish facility located near St. Louis, Missouri. Also in October 2019,~~financial condition, results of operations, or cash flows will ultimately be impacted. We are closely monitoring the impact of the pandemic on these industry conditions, and we ~~sold a non-operating distribution facility and a parcel of undeveloped land. This non-operating distribution facility was previously designated~~anticipate that as ~~“held for sale.” A total gain of approximately $4.0 million will be recognized in our 2019 fourth quarter and year end consolidated financial statements for these sales.~~states begin to ease pandemic-related restrictions, any negative impact should begin to stabilize.

Industry Conditions

Many of the factors that cause our operations to fluctuate ~~are~~have historically been seasonal or cyclical in ~~nature.~~nature and we expect that to continue. Our operating results have historically been correlated with the level of single-family residential housing starts in the U.S. At any time, the demand for new homes is dependent on a variety of factors, including job growth, changes in population and demographics, the availability and cost of mortgage financing, the supply of new and existing homes, and consumer confidence. Since 2011, the U.S. housing market has generally shown improvement. Single family housing starts increased 3.7% in the third quarter of 2019 and the builders confidence index remains high. We continue to believe the housing market improvement trend will continue in the long term, and that we are well-positioned to support our customers.

Our operating results are also affected by commodity pricing, primarily the markets for wood-based commodities. Lumber and ~~during the third and fourth quarters of 2018, the industry experienced a significant decline in wood-based commodity prices, which included panels and framing lumber. Lumber~~panel prices generally trended upwards during the ~~third~~first quarter of ~~2019,~~2020, enhancing gross margins for structural products. ~~Though wood based commodity~~Market pricing ~~is returning closer~~in the first quarter of 2020 was close to historical averages, ~~sales realization in the third quarter of 2019 was below~~but is above the prior year levels, ~~resulting~~which resulted in favorable revenue ~~declines compared~~comparisons to the ~~third~~first quarter of ~~2018. We continue to closely monitor these pricing trends, and work to manage our business, inventory levels, and costs, accordingly.~~

2019.

Factors That Affect Our Operating Results

Our results of operations and financial performance are influenced by a variety of factors, including the following: the COVID-19 pandemic and other contagious illness outbreaks and their potential effects on our industry, suppliers and supply chains, and customers, our business, results of operations, cash flows, financial condition, and future prospects; the integration of the Cedar Creek business with ours and the potential for disruption in distribution relationships, operational performance and sales resulting therefrom; changes in the prices, supply and/or demand for products that we distribute; inventory management and commodities pricing; new housing starts; repair and remodeling activity; general economic and business conditions in the U.S.; disintermediation by our customers and suppliers; acceptance by our customers of our branded and privately branded products; financial condition and credit worthiness of our customers; supply from key vendors; reliability of the technologies we utilize; activities of competitors; changes in significant operating expenses; fuel costs; risk of losses associated with accidents; exposure to product liability claims and other legal proceedings; changes in the availability of capital and interest rates; adverse weather patterns or conditions; acts of cyber intrusion or other disruptions to our information technology systems; tariffs, anti-dumping and counter-vailing duties, anti-dumping charges, and similar import costs and restrictions; and variations in the performance of the financial markets, including the credit markets.

Results of Operations

The following table sets forth our results of operations for the ~~third~~first quarter of fiscal ~~2019~~2020 and fiscal ~~2018:~~2019:

(Dollars in thousands) Third Quarter of Fiscal 2019 % of
Net
Sales Third Quarter of Fiscal 2018 % of
Net
Sales
Net sales $ 678,665
100.0% $ 859,776
100.0%

Gross profit 93,713
13.8% 91,755
10.7%
Selling, general, and administrative 79,881
11.8% 87,692
10.2%
Gains from sales of property (38 ) 0.0% —
0.0%
Depreciation and amortization 7,577
1.1% 8,068
0.9%
Operating income (loss) 6,293
0.9% (4,005 ) (0.5)%
Interest expense 13,409
2.0% 13,273
1.5%
Other income, net (317 ) 0.0% (94 ) 0.0%
Loss before provision for (benefit from) income taxes (6,799 ) (1.0)% (17,184 ) (2.0)%
Provision for (benefit from) income taxes 244
0.0% (7,288 ) (0.8)%
Net loss $ (7,043 ) (1.0)% $ (9,896 ) (1.2)%

~~The following table sets forth our results of operations for the nine-month periods of fiscal 2019 and fiscal 2018:~~

(Dollars in thousands) First Nine Months of Fiscal 2019 % of
Net
Sales First Nine Months of Fiscal 2018 % of
Net
Sales
Net sales $ 2,023,814
100.0% $ 2,190,215
100.0%

Gross profit 273,925
13.5% 250,731
11.4%
Selling, general, and administrative 228,392
11.3% 238,655
10.9%
Gains from sales of property (9,798 ) (0.5)% —
0.0%
Depreciation and amortization 22,408
1.1% 18,177
0.8%
Operating income (loss) 32,923
1.6% (6,101 ) (0.3)%
Interest expense 40,527
2.0% 33,947
1.5%
Other income, net (212 ) 0.0% (282 ) 0.0%
Loss before provision for (benefit from) income taxes (7,392 ) (0.4)% (39,766 ) (1.8)%
Provision for (benefit from) income taxes 69
0.0% (7,885 ) (0.4)%
Net loss $ (7,461 ) (0.4)% $ (31,881 ) (1.5)%



(Dollars in thousands)	First Quarter of Fiscal 2020			% of Net Sales	First Quarter of Fiscal 2019			% of Net Sales
Net sales	$	662,070		100.0%	$	638,701		100.0%

Gross profit	93,209			14.1%	86,045			13.5%
Selling, general, and administrative	77,769			11.7%	74,410			11.7%
Gains from sales of property	(525		)	(0.1)%	—			—%
Depreciation and amortization	7,635			1.2%	7,328			1.1%
Operating income	8,330			1.3%	4,307			0.7%
Interest expense, net	14,380			2.2%	13,401			2.1%
Other (income) expense, net	(237		)	(0.0)%	150			0.0%
Loss before benefit from income taxes	(5,813		)	(0.9)%	(9,244		)	(1.4)%
Benefit from income taxes	(5,026		)	(0.8)%	(2,525		)	(0.4)%
Net loss	$	(787	)	(0.1)%	$	(6,719	)	(1.1)%

The following table sets forth net sales by product category for the ~~three~~three-month periods ending March 28, 2020, and ~~nine-month periods of fiscal~~March 30, 2019 ~~and 2018~~ (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018		March 28, 2020		March 30, 2019
Structural products	$	225,522	$	312,510	$	646,513	$	833,412	$	240,778	$	196,786
Specialty products	453,143		547,266		1,377,301		1,356,803		421,292		441,915
Net sales	$	678,665	$	859,776	$	2,023,814	$	2,190,215	$	662,070	$	638,701

The following table sets forth gross profit and gross margin percentages by product category for the ~~three and nine-month~~three-month periods of fiscal ~~2019~~2020 and ~~2018~~2019 (dollars in thousands):


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018			March 28, 2020			March 30, 2019
Structural products	$	20,183		$	15,151		$	56,187		$	65,177		$	24,233		$	18,733
Specialty products	73,530			82,625			217,738			202,493			68,976			67,312
Inventory adjustments^[1]	—			(6,021		)	—			(16,939		)
Gross profit	$	93,713		$	91,755		$	273,925		$	250,731		$	93,209		$	86,045
Gross margin percentage by category
Structural products	8.9		%	4.8		%	8.7		%	7.8		%	10.1		%	9.5		%
Specialty products	16.2		%	15.1		%	15.8		%	14.9		%	16.4		%	15.2		%
Total, including adjustments	13.8		%	10.7		%	13.5		%	11.4		%	14.1		%	13.5		%

^[1] ~~”Inventory adjustments” includes an adjustment for lower~~First Quarter of cost or net realizable value of $5.2 million for the three and nine- month periods ended September 29, 2018, and inventory acquisition step-up charges of $0.8 million for the three months ended September 29, 2018, and $11.8 million for the nine months ended September 29, 2018.

~~Third~~Fiscal 2020 Compared to First Quarter of Fiscal 2019 ~~Compared to Third Quarter of Fiscal 2018~~

Net sales. For the ~~third~~first quarter of fiscal ~~2019,~~2020, net sales ~~decreased 21.1~~increased 3.7 percent, or ~~$181.1~~$23.4 million, compared to the ~~third~~first quarter of fiscal ~~2018.~~2019. The sales ~~decrease~~increase was driven by ~~declines~~higher sales volumes and commodity price inflation, offset by the loss of $31.9 million of sales related to a siding program that was discontinued in ~~wood-based commodity prices and supplier and sales disruptions in connection~~conjunction with our Cedar Creek integration ~~activities.~~activities in the prior year.

Gross profit and gross margin. For the ~~third~~first quarter of fiscal 2020, gross profit increased by $7.2 million, or 8.3 percent, compared to the first quarter of fiscal 2019, ~~gross profit increased by $2.0 million, or 2.1 percent, compared to the third quarter of fiscal 2018,~~ primarily due to increased sales revenue and improved gross margins inon both our

specialty and structural products business during the quarter. Gross profit was negatively impacted by the lower of cost or net realizable value adjustment on inventory of $5.2 million in the prior year period and the inventory step-up charge related to the Cedar Creek acquisition during the quarter.businesses. Gross margin during the same period was ~~13.8~~14.1 percent, an increase compared to ~~10.7~~13.5 percent in the ~~third~~first quarter of fiscal ~~2018, driven by improvements in our structural products business.~~2019.

Selling, general, and administrative expenses. The ~~decrease~~increase in selling, general, and administrative expenses of ~~8.9~~4.5 percent, or ~~$7.8~~$3.4 million, for the ~~third~~first quarter of fiscal 2020, compared to the first quarter of fiscal 2019, ~~compared to the third quarter of fiscal 2018,~~ is primarily due to ~~the realization~~increases in our operational and logistics expenses in support of ~~acquisition synergies, a $0.6 million decrease in stock compensation expense~~our strategy to enhance our service to our customer base and ~~cost controls for the lower rate of sales.~~higher sales volumes.

Depreciation and amortization expense. For the ~~third~~first quarter of fiscal ~~2019,~~2020, depreciation and amortization expense ~~decreased~~increased by ~~$0.5~~$0.3 million to $7.6 million due to a ~~lower~~higher base of depreciable assets.

Interest expense. Interest expense increased by ~~$0.1~~$1.0 million for the ~~third~~first quarter of fiscal ~~2019,~~2020, compared to the ~~third~~first quarter of fiscal ~~2018.~~2019. The increase was largely attributable to an increase in ~~finance leases.~~real estate financing transactions.

Provision for income taxes. Our effective tax rate was ~~(3.6)~~86.5 percent and ~~42.4~~27.3 percent for the ~~third~~first quarter of fiscal ~~2019~~2020 and ~~2018,~~2019, respectively. Our effective tax rate for the ~~third~~first quarter of fiscal 2020 was impacted by (i) the discrete tax benefit of $3.9 million resulting from the release of the valuation allowance associated with the nondeductible interest expense under IRC Section 163(j) as a result of the CARES act changing the allowable percentage from 30 percent of adjusted taxable income to 50 percent of adjusted taxable income, (ii) the permanent addback of certain nondeductible expenses, including meals and entertainment, and (iii) the effect of the partial valuation allowance for separate company state income tax losses. Our effective tax rate for the first quarter of fiscal 2019 was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and the effect of the partial valuation allowance for separate company state income tax losses and consolidated interest expense limitation, including a $0.6 million discrete tax expense related to prior periods. The effective tax rate for the third quarter of fiscal 2018 was impacted by: (i) the inclusion of Cedar Creek’s operations from April 13, 2018, to September 29, 2018; (ii) the permanent addback of certainlosses.

nondeductible expenses including transaction costs related to the Cedar Creek acquisition; (iii) the discrete tax benefit of $0.6 million for stock vesting; and (iv) the effect of the valuation allowance for separate company state income tax losses generated during the third quarter of fiscal 2018.

Net loss. Our net loss improved over the prior year period due to higher sales, increased gross margins, and reduced costs associated with the acquisition of Cedar ~~Creek, partially offset by the decrease in sales.~~Creek.

~~First Nine Months of Fiscal 2019 Compared to First Nine Months of Fiscal 2018~~

~~Net sales.~~ For the first nine months of fiscal 2019, net sales decreased 7.6 percent, or $166.4 million, compared to the first nine months of fiscal 2018. Sales decreased primarily as a result of lower sales realization for structural products, partially offset by the acquisition of Cedar Creek and the inclusion of Cedar Creek’s sales revenue for the full nine months in 2019, as opposed to only during the period of April 13, 2018, the date of closing, to September 29, 2018, in the prior year period. Supplier and sales disruptions in connection with our Cedar Creek integration activities also contributed to the decrease in sales.

~~Gross profit and gross margin.~~ For the first nine months of fiscal 2019, gross profit increased by $23.2 million, or 9.3 percent, with gross margin of 13.5 percent, compared to 11.4 percent for the first nine months of fiscal 2018. Gross profit was negatively impacted in the prior year by the acquisition related inventory step-up charge of $11.8 million and a lower of cost or net realizable value inventory adjustment of $5.2 million.

~~Selling, general, and administrative expenses.~~ For the first nine months of fiscal 2019, selling, general, and administrative expenses decreased $10.3 million, or 4.3 percent, compared to the first nine months of fiscal 2018. The inclusion of the Cedar Creek business for the full nine months in 2019, as opposed to the period of April 13, 2018, to September 29, 2018, in the prior year period, increased expenses on a year-over-year basis. This was more than offset by a $12.2 million decrease in stock compensation expense, synergies realized from the acquisition of Cedar Creek, and decreases in cost of sales related to the year-over-year sales decline.

~~Gains from sales of property.~~ Sales of property with no leaseback in the first nine months of fiscal 2019 resulted in gains recognized of $9.8 million. Gains from the sale and leaseback of property in the first nine months of fiscal 2018 were deferred, due to the rules of accounting for sale and leaseback transactions, and are amortized as a credit to selling, general, and administrative expenses in the amount of approximately $1.0 million per fiscal quarter.

~~Depreciation and amortization expense.~~ For the first nine months of fiscal 2019, depreciation and amortization expense increased by $4.2 million to $22.4 million due to the acquisition of Cedar Creek, which resulted in a higher depreciable asset base and the addition of depreciable intangible assets.

~~Interest expense.~~ Interest expense increased by $6.6 million for the first nine months of fiscal 2019, compared to the first nine months of fiscal 2018. The increase was largely attributable to a higher average debt balance over the period, coupled with a higher average interest rate on outstanding debt. We increased our outstanding debt to finance the acquisition of Cedar Creek in the prior year and incurred transaction costs that are amortized as interest expense.

~~Provision for income taxes.~~ Our effective tax rate was (0.9) percent and 19.8 percent for the first nine months of fiscal 2019 and 2018, respectively. Our effective tax rate for the first nine months of fiscal 2019 was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and the effect of the partial valuation allowance for separate company state income tax losses and consolidated interest expense limitation, including a $0.6 million discrete tax expense related to prior periods. In addition, during the first nine months of fiscal 2019, we recorded discrete tax expense of $0.2 million for a shortfall on stock vesting which was offset by a $0.2 million discrete tax benefit for claiming state tax credits. The effective tax rate for the first nine months of fiscal 2018 was impacted by: (i) the inclusion of Cedar Creek’s operations from April 13, 2018, to September 29, 2018; (ii) the permanent addback of certain nondeductible expenses including transaction costs related to the Cedar Creek acquisition; and (iii) the effect of the valuation allowance for separate company state losses.

~~Net loss.~~ Net loss was substantially impacted by the factors described above including: (i) gain on sale of properties in fiscal 2019 of $9.8 million, (ii) higher selling, general and administrative expenses in fiscal 2018 resulting from the acquisition of Cedar Creek and related transaction fees totaling $19.1 million, along with an inventory valuation step-up charge of $11.8 million; (iii) increased interest expense due to higher interest rates on outstanding debt; and (iv) $14.7 million of additional expense recognized for cash-settled stock appreciation rights and other share based compensation in fiscal 2018.

Seasonality

We are exposed to fluctuations in quarterly sales volumes and expenses due to seasonal factors common in the building products distribution industry. The first and fourth fiscal quarters are typically our lower volume quarters, due to the impact of poor weather on the construction market. Our second and third fiscal quarters are typically our higher volume quarters, reflecting an increase in construction, due to more favorable weather conditions. Assuming no change in underlying inventory costs, our working capital generally increases in the fiscal second and third quarters, reflecting increased seasonal demand. However, due to the significant impacts of the COVID-19 pandemic, we do not expect to experience our typical seasonality trends in 2020.

Liquidity and Capital Resources

We expect our primary sources of liquidity to be cash flows from sales in the normal course of our operations and borrowings under our Revolving Credit Facility. We expect that these sources will fund our ongoing cash requirements for the foreseeable future. We believe that, assuming that our operations are not significantly impacted by the COVID-19 pandemic for a prolonged period, our sales in the normal course of our operations, and amounts currently available from our Revolving Credit Facility and other sources, will be sufficient to fund our routine operations, including working capital requirements, for at least the next 12 months.

~~Long-Term Debt~~

~~As of September 28, 2019, and December 29, 2018, long-term debt consisted of the following:~~

September 28, December 29,
(In thousands) Maturity Date 2019 2018
Revolving Credit Facility (net of discounts and debt issuance
costs of $4.9 million and $6.0 million at September 28, 2019
and December 29, 2018, respectively) October 10, 2022 $ 349,982
$ 327,319
Term Loan Facility (net of discounts and debt issuance costs
of $7.3 million and $6.7 million at September 28, 2019
and December 29, 2018, respectively) October 13, 2023 139,905
172,356
Total debt 489,887
499,675
Less: current portion of long-term debt (1,790 ) (1,736 )
Long-term debt, net $ 488,097
$ 497,939

Revolving Credit Facility

OnIn April ~~13,~~ 2018, we amended and restated our Revolving Credit Facility to provide for a senior secured revolving loan and letter of credit facility of up to $600 million and an uncommitted accordion feature that permits us to increase the facility by an aggregate additional principal amount of up to $150 million. If we obtain the full amount of the additional increases in commitments, the Revolving Credit Facility will allow borrowings of up to $750 million. Borrowings under the Revolving Credit Facility are subject to availability under the Borrowing Base (as that term is defined in the Revolving Credit ~~Agreement)~~Facility). Letters of credit in an aggregate amount of up to $30 million are also available under the Revolving Credit ~~Agreement,~~Facility, which would reduce the amount of the revolving loans available thereunder. Borrowings under the Revolving Credit ~~Facility. The Revolving Credit Agreement provides for~~Facility bear interest at a rate per annum equal to (i) LIBOR plus a margin ranging from 1.75 percent to 2.25 percent, with the margin determined based upon average excess availability for the immediately preceding fiscal quarter for loans based on LIBOR, or (ii) the administrative agent’s base rate plus a margin ranging from 0.75 percent to 1.25 percent, with the margin based upon average excess availability for the immediately preceding fiscal quarter for loans based on the base rate.

If excess availability falls below the greater of (i) $50 million and (ii) 10 percent of the lesser of (a) the borrowing base and (b) the maximum permitted credit at such time, the Revolving Credit ~~Agreement~~Facility requires maintenance of a fixed charge coverage ratio of 1.0 to 1.0 until excess availability has been at least the greater of (i) $50 million and (ii) 10 percent of the lesser of (a) the borrowing base and (b) the maximum permitted credit at such time for a period of 30 consecutive days.

We amended the Revolving Credit Facility on January 31, 2020, to provide that (i) the “Seasonal Period” will run from November 15, 2019, through July 15, 2020, for the calendar year 2019, and from December 15 of each calendar year through April 15 of each immediately succeeding calendar year for the calendar year 2020 and thereafter, and (ii) the measurement period in the definition of “Cash Dominion Event” will be five consecutive business days instead of three consecutive business days.

As of ~~September~~March 28, ~~2019,~~2020, we had outstanding borrowings of ~~$354.8~~$381.6 million, ~~and~~ excess availability of ~~$98.2~~$96.8 million, ~~under our Revolving Credit Facility with~~and a weighted average interest rate of ~~4.4 percent.~~3.2 percent under the Revolving Credit Facility. As of December ~~29, 2018~~28, 2019, our principal balance was ~~$333.3~~$326.5 million, excess availability was ~~$91.7~~$80.0 million, and our ~~stated~~weighted average interest rate was ~~4.6 percent~~3.9 percent.

We were in compliance with all covenants under ~~our~~the Revolving Credit ~~Facility.~~

Facility as of March 28, 2020.

Term Loan Facility

OnIn April ~~13,~~ 2018, we entered into ~~the~~our Term Loan ~~Agreement~~Facility with HPS Investment Partners, LLC, and ~~certain~~ other financial institutions as party thereto, ~~and on October 24, 2019, we amended the Term Loan Agreement. The Term Loan Agreement~~which provides for a ~~Term Loan Facility~~term loan of $180 million secured by substantially all of our assets. Borrowings under the Term Loan ~~Agreement~~Facility may be made as Base Rate Loans or Eurodollar Rate Loans. The Base Rate Loans will bear interest at the rate per annum equal to (i) the greatest of the (a) U.S. prime lending rate published in The Wall Street Journal, (b) the Federal Funds Effective Rate plus 0.50 percent, and (c) the sum of the Adjusted Eurodollar Rate of one month plus 1.00 percent, provided that the Base Rate shall at no time be less than 2.00 percent per annum; ~~and~~plus (ii) ~~plus~~ the Applicable Margin, as described below. Eurodollar Rate Loans will bear interest at the rate per annum equal to (i) the ICE Benchmark Administration LIBOR Rate, provided that the Adjusted Eurodollar Rate shall at no time be less than 1.00 percent per annum; plus (ii) the Applicable Margin. The Applicable Margin will be 6.00 percent with respect to Base Rate Loans and 7.00 percent with respect to Eurodollar Rate Loans.

~~Under~~provide that we would not be subject to the facility’s total net leverage ratio covenant from and after the time, and then for so long as, the principal balance level under the facility is less than $45 million. On April 1, 2020, we amended the Term Loan ~~Agreement, we are permitted~~Facility by, among other things, modifying the total net leverage ratio covenant levels for the 2020 second and third quarters. All other total net leverage ratio covenant levels for prior and future quarters were unchanged.

The Term Loan Facility permits us to enter into real estate sale leaseback transactions with the net proceeds therefrom to be used for repayment of indebtedness under the ~~Term Loan Facility,~~facility, subject to payment of an applicable prepayment ~~premium, or, under certain circumstances, repayment of indebtedness under our Revolving Credit Facility.~~premium. In addition, proceeds from the sale of “Specified Properties” ~~(as that term is defined in the Term Loan Agreement)~~ will be used for the repayment of indebtedness under the Term Loan Facility, subject to payment of an applicable prepayment premium, or, under certain circumstances, repayment of indebtedness under our Revolving Credit Facility.

The Term Loan Facility requires maintenance of a total net leverage ratio of 6.25 to 1.00 for the quarter ending March 28, 2020, a ratio of 8.75 to 1.00 for the second and third quarters of 2020, and ratio levels generally reducing over the remaining term of the Term Loan Facility. We were in compliance with all covenants under the Term Loan Facility as of March 28, 2020.

As of ~~September~~March 28, ~~2019,~~2020, we had outstanding borrowings of ~~$147.2~~$77.4 million under our Term Loan Facility and ~~a stated~~an interest rate of ~~9.1~~8.6 percent per annum. AtAs of December ~~29, 2018,~~28, 2019, our principal balance was ~~$179.1~~$146.7 million with ~~a stated~~an interest rate of ~~9.3~~8.7 percent per ~~annum under our~~annum. The decrease in the outstanding borrowings was due to net proceeds of the real estate financing transactions described in Note 8 being applied to the Term Loan Facility.

~~Mortgage Payoff and~~ Finance Lease Commitments and Real Estate Financing Obligations

OnIn January ~~10,~~ 2018, we completed sale-leaseback transactions on four distribution centers. We sold these properties for gross proceeds of $110.0 million. As a result of the transactions, we recognized finance lease assets and obligations totaling $95.1 million on these properties, and a total deferred gain of $83.9 million, which ~~will be~~is amortized over the lives of the applicable leases, in accordance with U.S. GAAP. The net proceeds received from the transactions were used to pay the remaining balance of our mortgage of $97.8 million, in its entirety, in the first quarter of fiscal 2018.

leases. Our total finance lease commitments, which substantially relate to leases of property, including the properties associated with these sale-leaseback transactions, totaled ~~$163.6~~$151.4 million as of ~~September~~March 28, ~~2019.~~2020.

In May 2019 and June 2019, we completed real estate financing transactions on two distributions centers under sale-leaseback arrangements. We sold these properties for gross proceeds of $45.0 million. During the first quarter of 2020, in December 2019, January 2020, and February 2020, we completed real estate financing transactions under sale-leaseback arrangements on an additional fourteen distribution centers. We sold these properties for gross proceeds of $78.3 million. Under ASC 842, which we adopted at the beginning of fiscal 2019, these transactions did not qualify as sales. As a result, we recorded financing obligations in the amount of the gross proceeds received, which are amortized over the lives of the financing obligations. Our total commitments under these financing obligations totaled $172.7 million as of March 28, 2020.

Interest Rates

Our Revolving Credit Facility and our Term Loan Facility include available interest rate options based on the London Inter-bank Offered Rate (LIBOR). It is widely expected that LIBOR will be discontinued after 2021, and the U.S. and other countries are currently working to replace LIBOR with alternative reference rates. The consequences of these developments with respect to LIBOR cannot be entirely predicted; however, we do not believe that the discontinuation of LIBOR as a reference rate in our loan agreements will have a material adverse effect on our financial position or materially affect our interest expense.

Sources and Uses of Cash

Operating Activities

Net cash used in operating activities for the first ~~nine~~three months of fiscal ~~2019~~2020 was ~~$54.9~~$59.2 million, compared to net cash used in operating activities of ~~$59.3~~$58.3 million in the first ~~nine~~three months of fiscal ~~2018.~~2019. During the first ~~nine~~three months of fiscal ~~2019,~~2020, cash used in operating activities ~~decreased~~increased slightly, primarily from the ~~decrease~~increase in working capital ~~from the~~compared to prior year.

Investing Activities

Net cash ~~provided by~~used in investing activities for the first ~~nine~~three months of fiscal ~~2019~~2020 was ~~$10.4~~$1.2 million compared to net cash ~~used in~~provided by investing activities of ~~$247.0~~$4.9 million in the first ~~nine~~three months of fiscal ~~2018.~~2019. The net cash provided ~~in the current year primarily related to the proceeds from the sale of assets of $13.7 million. Net cash used~~by investing activities in the prior year ~~primarily related~~was due to $6.0 million that was returned from escrow after the ~~$353.1 million of net~~Cedar Creek acquisition was finalized, offset by cash paid for ~~the acquisition~~property and equipment investments of ~~Cedar Creek during the second quarter of 2018, offset by the proceeds from the sale-leaseback transactions~~$1.2 million; cash paid for property and equipment investments was consistent in ~~the first quarter of 2018.~~both periods.

Financing Activities

Net cash provided by financing activities totaled ~~$48.5~~$61.3 million for the first ~~nine~~three months of fiscal ~~2019,~~2020, compared to ~~$309.2~~$57.1 million for the first ~~nine~~three months of fiscal ~~2018.~~2019. The ~~decrease~~increase in net cash provided by financing activities is primarily due to proceeds from real estate transactions of $78.3 million and net borrowings on the ~~decrease in borrowings in the current year relative to borrowings in the prior year, which included borrowings for the acquisition~~revolving credit facility of ~~Cedar Creek.~~$55.1 million, offset by a repayment on our term loan of $69.2 million.

Operating Working Capital ^[1]

Selected financial information (in thousands)
September 28, 2019 December 29, 2018 September 29, 2018
Current assets:
Cash $ 12,847
$ 8,939
$ 7,630
Receivables, less allowance for doubtful accounts 243,905
208,434
285,489
Inventories, net 362,389
341,851
401,222
Other current assets 42,366
40,629
44,947
Total current assets $ 661,507
$ 599,853
$ 739,288

Current liabilities:

Accounts payable $ 179,376
$ 149,188
$ 190,078
Accrued compensation 8,780
7,974
7,611
Current maturities of long-term debt, net of discount 1,790
1,736
1,736
Finance leases - short-term 8,373
7,555
8,058
Real estate deferred gains - short-term 4,448
5,330
5,330
Operating lease liabilities - short-term 6,381
—
—
Other current liabilities 13,835
24,985
21,528
Total current liabilities $ 222,983
$ 196,768
$ 234,341

Operating working capital $ 440,314
$ 404,821
$ 506,683



Selected financial information (in thousands)
	March 28, 2020		December 28, 2019		March 30, 2019
Current assets:
Cash	$	12,558	$	11,643	$	12,682
Receivables, less allowance for doubtful accounts	247,940		192,872		246,342
Inventories, net	378,634		345,806		387,330
	$	639,132	$	550,321	$	646,354

Current liabilities:
Accounts payable ^[2]	$	162,398	$	132,348	$	175,192
	$	162,398	$	132,348	$	175,192

Operating working capital	$	476,734	$	417,973	$	471,162

^{___________________________}

^[1] Operating working capital is defined as ~~current assets~~the sum of cash, receivables, and inventory less ~~current liabilities plus~~accounts payable.

^[2]Accounts payable includes outstanding payments of $26.5 million, $16.1 million, and $42.9 million as of March 28, 2020, December 28, 2019, and March 30, 2019, respectively. Outstanding payments represent outstanding checks and electronic payments that have not been presented for payment as of the ~~current portion~~end of ~~long-term debt.~~the period; these amounts are typically funded within 24 hours.

Operating working capital is an important measurement we use to determine the efficiencies of our operations and our ability to readily convert assets into cash.

Operating working capital of ~~$440.3~~$476.7 million ~~at September~~on March 28, ~~2019,~~2020, compared to ~~$404.8~~$418.0 million as of December ~~29, 2018,~~28, 2019, increased on a net basis by approximately ~~$35.5~~$58.8 million. The increase in operating working capital is primarily driven by seasonal increases in accounts receivable and inventory to support expected increases that the Company has historically experienced in sales activity during the summer building season, offset by increases in accounts payable.

Operating working capital ~~decreased from September 29, 2018,~~of $476.7 million on March 28, 2020, compared to ~~September 28,~~$471.2 million as of March 30, 2019, increased by ~~$66.4~~$5.6 million, ~~primarily~~ driven by ~~the~~a decrease in ~~sales and decline~~accounts payable, partially offset by a decrease in ~~commodity prices.~~the company’s inventory level.

Critical Accounting Policies

The preparation of our consolidated financial statements and related disclosures in conformity with GAAP requires our management to make judgments and estimates that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. There have been no material changes to our critical accounting policies from the information provided in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December ~~29, 2018.~~28, 2019.

Forward-Looking Statements

This report 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,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” “will be,” “will likely continue,” “will likely result” or words or phrases of similar meaning. The forward-looking statements in this report include statements about the COVID-19 pandemic, its duration and effects, and its potential effects on our business and results of operations; anticipated effects of adopting certain accounting standards; estimated future annual amortization expense; potential changes to estimates made in connection with revenue recognition; the expected outcome of legal proceedings; industry conditions; seasonality; and liquidity and capital resources.

Forward-looking statements are based on estimates and assumptions made by our management that, although believed by us to be reasonable, are inherently uncertain. Forward-looking statements involve risks and uncertainties that may cause our business, strategy, or actual results to differ materially from the forward-looking statements. These risks and uncertainties include those discussed under the heading “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December ~~29, 2018,~~28, 2019, and those discussed elsewhere in this report (including Item 1A of Part II of this report) and in future reports that we file with the SEC. We operate in a changing environment in which new risks can emerge from time to time. It is

not possible for management to predict all of these risks, nor can it assess the extent to which any factor, or a combination of factors, may cause our business, strategy, or actual results to differ materially from those contained in forward-looking statements. Factors that may cause these differences include, among other things: the COVID-19 pandemic and other contagious illness outbreaks and their potential effects on our industry, suppliers and supply chain, and customers, and our business, results of operations, cash flows, financial condition, and future prospects; our ability to integrate and realize anticipated synergies from acquisitions; loss of material customers, suppliers, or product lines in connection with acquisitions; operational disruption in connection with the integration of acquisitions; our indebtedness and its related limitations; sufficiency of cash flows and capital resources; ~~changes in interest rates;~~our ability to monetize real estate assets; fluctuations in commodity prices; adverse housing market conditions; disintermediation by customers and suppliers; changes in prices, supply and/or demand for our products; inventory management; competitive industry pressures; industry consolidation; product shortages; loss of and dependence on key suppliers and manufacturers; import taxes and costs, including new ~~tariffs; our ability to monetize real estate assets;~~or increased tariffs, anti-dumping duties, countervailing duties or similar duties; our ability to successfully implement our strategic initiatives; fluctuations in operating results; sale-leaseback transactions and their effects; real estate leases; changes in interest rates; exposure to product liability claims; our ability to complete offerings under our shelf registration statement on favorable terms, or at all; changes in our product mix; petroleum prices; information technology security and business interruption risks; litigation and legal proceedings; natural disasters and unexpected events; activities of activist stockholders; labor and union matters; limits on net operating loss carryovers; pension plan assumptions and liabilities; risks related to our internal controls; retention of associates and key personnel; federal, state, local and other regulations, including environmental laws and regulations; and changes in accounting principles. Given these risks and uncertainties, we caution you not to place undue reliance on forward-looking statements. We expressly disclaim any obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law.

2523

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Our management performed an evaluation, as of the end of the period covered by this report on Form 10-Q, under the supervision of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

During the period covered by this report, other than described below, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On April 13, 2018, we acquired Cedar Creek Holdings, Inc. in a business combination. The Company is in the process of integrating the policies, processes, information technology systems and other components of internal controls over financial reporting of the combined business. Management’s assessment of the Company’s internal control over financial reporting for the fiscal year 2019 will include the internal controls over financial reporting of Cedar Creek.

2624

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During the ~~third~~first quarter of fiscal ~~2019,~~2020, there were no material changes to our legal proceedings as disclosed in our Annual Report on Form 10-K for the year ended December ~~29, 2018.~~28, 2019. Additionally, we are, and from time to time may be, a party to routine legal proceedings incidental to the operation of our business. The outcome of any pending or threatened proceedings is not expected to have a material adverse effect on our financial condition, operating results, or cash flows, based on our current understanding of the relevant facts. Legal expenses incurred related to these contingencies are generally expensed as incurred.

ITEM 1A. RISK FACTORS

~~There have been no material changes~~In addition to the ~~risk~~other information set forth in this report, you should carefully consider the factors ~~disclosed~~discussed in ~~Item 1A, “Risk Factors,” of the Company’s~~Part I, "Item 1A.Risk Factors" in our Annual Report on Form 10-K for the year ended December ~~29, 2018.~~28, 2019, as updated and supplemented below, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Our business, results of operations, and financial condition may be materially adversely impacted by the COVID-19 pandemic.

A novel strain of coronavirus (COVID-19) was first identified in December 2019 in certain Far East and European countries. On March 11, 2020, the spread of COVID-19 was declared a global pandemic by the World Health Organization, with a high concentration of cases in the United States. On March 13, 2020, the United States declared a national emergency concerning the pandemic, and many U.S. states and municipalities have declared public health emergencies. In response, U.S. federal, state, and local governments and agencies have enacted wide-ranging actions to combat the pandemic, including “shelter-in-place” orders and quarantines, social distancing mandates, and hygiene protocols. In addition, some U.S. states and municipalities have placed significant limits on non-essential construction projects. These actions have substantially restricted daily activities for individuals and businesses, and have caused many businesses to curtail or cease normal operations.

The widespread health crisis created by the COVID-19 pandemic and the actions taken to combat it have had a significant adverse effect on the economies and financial markets of the U.S. and many other countries. The U.S. has experienced deteriorating economic conditions in many major markets, including increased unemployment, decreases in disposable income, declines in consumer confidence, general economic slowdowns, and significant volatility in financial markets. These deteriorating economic conditions have generally lowered demand for our products, and they may continue to do so in the future, which could materially reduce our sales and profitability. In addition, any bankruptcy or financial distress of our customers or suppliers due to deterioration in economic conditions could result in other significant negative impacts to our business including reduced sales, decreased collectability of accounts receivable, impaired credit, an ineffective supply chain, loss of credit from our suppliers, and a reduction in certain key product brands. Deteriorating economic conditions and reduced sales and profitability could also limit the availability of credit, or increase our borrowing costs, including by requiring additional collateral. We also may be required to record impairment charges with respect to assets whose fair values may be negatively affected by the effects of the pandemic on our operations.

In addition, although our operations and those of most of our direct customers and suppliers are currently considered “essential” and are therefore exempt from state and local business closure orders, these exemptions are not expected to completely mitigate the significant impact to our markets caused by the COVID-19 pandemic, and they may be curtailed or revoked in the future. If these exemptions are curtailed or revoked, it could require us, or our customers or suppliers, to further limit our operations or suspend them altogether, which would adversely impact our business, operating results, and financial condition. The pandemic has also caused, and may continue to cause, disruption to the global supply chain, which could impact our ability to source products from our suppliers, many of whom are located outside of the United States, including China.

In response to the pandemic, we have instituted a number of actions to protect our workforce, including restricting business travel, imposing mandatory quarantine periods for employees who have traveled to areas impacted by the pandemic, modifying office functions to allow employees to work remotely, and modifying our warehouse and delivery operations to enforce enhanced safety protocols around social distancing, hygiene, and health screening. While all of these steps are necessary and appropriate in light of the pandemic, they, coupled with state and local business closure orders and regulations, do impact our ability to operate our business in its ordinary and traditional course, and they have and may continue to cause us to experience reductions in productivity and disruptions to our business routines while they remain in place.

The potential magnitude or duration of the business and economic impacts from this pandemic are uncertain, but the associated negative trends are likely to continue through fiscal 2020. However, the negative impact on our business from the COVID-19 pandemic could be more prolonged and may become more severe. Any of the negative impacts of the COVID-19 pandemic, including those described above, alone or in combination with others, may have a material adverse effect on our results of operations, financial condition, and cash flows. In addition, any of these negative impacts, alone or in combination with others, could exacerbate many of the risks described in Part I, “Item 1A. Risk Factors”, in our Annual Report on Form 10-K for the year ended December 28, 2019, and the other risks described in this report. The full extent to which the COVID-19 pandemic will negatively affect our results of operations, financial condition, and cash flows will depend on future developments that are highly uncertain and cannot be predicted.

We have been notified that we are not in compliance with certain listing standards of the New York Stock Exchange (NYSE), and we may be unable to regain compliance.

On April 22, 2020, we were notified by the NYSE that we were not in compliance with the continued listing standards set forth in Section 802.01B of the New York Stock Exchange Listed Company Manual because our average global market capitalization over a consecutive 30 trading-day period was less than $50 million, and, at the same time, our stockholders’ equity was less than $50 million.

On April 28, 2020, we submitted a plan to regain conformity with this NYSE listing standard by January 1, 2022, in accordance with NYSE rules. Within 45 days of the submission of this plan, the NYSE will determine whether we have made a reasonable demonstration of our ability to conform to the relevant standards within the cure period. If the NYSE accepts our plan, our common stock will continue to be listed and traded on the NYSE during the cure period, subject to our compliance with other continued listing standards, and we will be subject to quarterly monitoring by the NYSE for compliance with the plan. The NYSE will deem us to have regained compliance if, during the cure period, we comply with the relevant continued listing standards, or qualify under an original listing standard, for a period of two consecutive quarters. Until the NYSE determines that we have regained compliance, our common stock trading symbol of “BXC” will have an added designation of “.BC” to indicate that the status of the common stock is “below compliance” with the NYSE continued listing standards. If we fail to comply with the plan, do not meet continued listing standards at the end of the allowed cure period, or in the event that our common stock trades at levels viewed to be abnormally low by the NYSE, our common stock will be subject to the prompt initiation of NYSE suspension and delisting procedures. There can be no assurance that the NYSE will accept our plan, or that our plans to regain compliance will be successful.

While we believe that the erosion of our average market capitalization was a direct result of the effects of the COVID-19 pandemic on the stock market, and we expect that a return to normalcy in the stock market should return our market capitalization to a compliant level, delisting would have an adverse effect on the liquidity of our common stock and, as a result, the market price for our common stock might decline if our common stock is delisted. Delisting could also make it more difficult for us to raise additional capital.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~We did not~~The following table summarizes the Company’s common stock repurchase ~~any~~activity for each month of ~~our equity securities during~~ the period covered by this report pursuant to any publicly announced plan or program, and no such plan or program is presently in effect. From time to time, we withhold shares upon the vesting of employee equity awards to satisfy certain tax obligations due in connection therewith, and the withholding of shares may be deemed to be repurchases of our equity securities. No such withholding occurred during the third quarter ~~of 2019~~.ended March 28, 2020:



		Total Number
		Shares	Average Price
Period		Purchased^[1]	Paid Per Share
December 29, 2019 - February 1, 2020		—	$	—
February 2 - February 29, 2020		498	$	13.45
March 1 - March 28, 2020		—	$	—
Total		498

[1]	The Company did not repurchase any of its equity securities during the period covered by this report pursuant to any publicly announced plan or program, and no such plan or program is presently in effect. All purchases reflected in the table above pertain to purchases of common stock by the Company in connection with tax withholding obligations of the Company’s employees upon the vesting of such employees’ restricted stock awards.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS



Exhibit Number		Description
10.1	*	~~Third~~First Amendment to Amended and Restated Credit Agreement, dated January 31, 2020, by and among BlueLinx Holdings Inc., certain subsidiaries of BlueLinx Holdings Inc. as borrowers or guarantors thereunder, Wells Fargo Bank, National Association, as administrative agent, and certain other financial institutions party thereto.
10.2	*	Fourth Amendment to Credit and Guaranty Agreement, dated ~~October 24,~~December 31, 2019, by and among BlueLinx Holdings Inc., as borrower, certain subsidiaries of BlueLinx Holdings Inc., as guarantors, the lenders party thereto, and HPS Investment Partners, LLC, in its capacity as administrative ~~agent~~agent.
10.3	*	Fifth Amendment to Credit and Guaranty Agreement, dated February 28, 2020, by and among BlueLinx Holdings Inc., as borrower, certain subsidiaries of BlueLinx Holdings Inc., as guarantors, the lenders party thereto, and HPS Investment Partners, LLC, in its capacity as administrative agent.
10.4	*	Employment Agreement between BlueLinx Corporation and Kelly C. Janzen, dated March 2, 2020.
~~10.2~~10.5	*	~~Form of 2019 Time Based Restricted Stock Unit Award~~Separation Agreement ~~under the~~between BlueLinx ~~Holdings, Inc. 2016 Amended~~Corporation and ~~Restated Long-Term Incentive Plan, as amended~~Susan C. O’Farrell, dated March 9, 2020.
~~10.3~~10.6	*	Form of ~~2019 Performance Based Restricted Stock Unit Award~~Purchase and Sale Agreement ~~under the~~with Big Acquisitions LLC, dated as of October 16, 2019.
10.7	*	Form of First Amendment to Purchase and Sale Agreement with Big Acquisitions LLC, dated as of November 20, 2019.
10.8	*	Form of Second Amendment to Purchase and Sale Agreement with Big Acquisitions LLC, dated as of December 13, 2019.
10.9	*	Letter Agreement, dated March 22, 2020, between BlueLinx Holdings Inc. ~~2016 Amended~~ and ~~Restated Long-Term Incentive Plan, as amended~~Mitchell B. Lewis.
31.1	*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	**	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	**	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.Def		Definition Linkbase Document.
101.Pre		Presentation Linkbase Document.
101.Lab		Labels Linkbase Document.
101.Cal		Calculation Linkbase Document.
101.Sch		Schema Document.
101.Ins		Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.


	*	Filed herewith.
	**	Exhibit is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.




		BlueLinx Holdings Inc.
		(Registrant)

Date: ~~November~~May 6, ~~2019~~2020	By:	/s/ ~~Susan~~Kelly C. ~~O’Farrell~~Janzen
		~~Susan~~Kelly C. ~~O’Farrell~~Janzen
		Senior Vice President and Chief Financial Officer ~~Treasurer, and Principal Accounting Officer~~



	Pro forma
	Three Months Ended						Nine Months Ended
(In thousands, except per share data)	September 28, 2019			September 29, 2018			September 28, 2019		September 29, 2018
Net sales	$	678,665		$	859,776		$	2,023,814	$	2,592,597
Net income (loss)	(5,194		)	(6,219		)	937		(5,455		)
Earnings (loss) per common share:
Basic	$	(0.55	)	$	(0.67	)	$	0.10	$	(0.59	)
Diluted	(0.55		)	(0.67		)	0.10		(0.59		)



	(In thousands)
Consideration paid to shareholders and amounts paid to creditors:
Payments to Cedar Creek shareholders^[1]	$	166,447
Subordinated unsecured note (due to shareholder)^[2]		13,743
Seller’s transaction costs paid by Company		7,349
Repayment of Cedar Creek debt^[3]		174,213
Total cash purchase price	$	361,752



(In thousands)	Allocation as of December 29, 2018
Cash and net working capital assets (excluding inventory)	$	88,318
Inventory		159,227
Property and equipment		71,203
Other, net		(1,395	)
Intangible assets and goodwill:
Customer relationships		25,500
Non-compete agreements		8,254
Trade names		6,826
Favorable leasehold interests		800
Goodwill		47,772
Finance leases and other liabilities		(44,753	)
Cash purchase price	$	361,752



		September 28,			December 29,
(In thousands)	Maturity Date	2019			2018
Revolving Credit Facility (net of discounts and debt issuance costs of $4.9 million and $6.0 million at September 28, 2019 and December 29, 2018, respectively)	October 10, 2022	$	349,982		$	327,319
Term Loan Facility (net of discounts and debt issuance costs of $7.3 million and $6.7 million at September 28, 2019 and December 29, 2018, respectively)	October 13, 2023		139,905			172,356
Total debt			489,887			499,675
Less: current portion of long-term debt			(1,790	)		(1,736	)
Long-term debt, net		$	488,097		$	497,939



	Three Months Ended September 28, 2019		Nine Months Ended September 28, 2019
	Three Months Ended September 28, 2019		Nine Months Ended September 28, 2019
	(In thousands)
Operating lease cost:	$	2,911	$	9,047
Finance lease cost:
Amortization of right-of-use assets	$	2,589	$	8,481
Interest on lease liabilities	3,467		10,764
Total finance lease costs	$	6,056	$	19,245



(Dollars in thousands)	Third Quarter of Fiscal 2019			% of Net Sales	Third Quarter of Fiscal 2018			% of Net Sales
Net sales	$	678,665		100.0%	$	859,776		100.0%

Gross profit	93,713			13.8%	91,755			10.7%
Selling, general, and administrative	79,881			11.8%	87,692			10.2%
Gains from sales of property	(38		)	0.0%	—			0.0%
Depreciation and amortization	7,577			1.1%	8,068			0.9%
Operating income (loss)	6,293			0.9%	(4,005		)	(0.5)%
Interest expense	13,409			2.0%	13,273			1.5%
Other income, net	(317		)	0.0%	(94		)	0.0%
Loss before provision for (benefit from) income taxes	(6,799		)	(1.0)%	(17,184		)	(2.0)%
Provision for (benefit from) income taxes	244			0.0%	(7,288		)	(0.8)%
Net loss	$	(7,043	)	(1.0)%	$	(9,896	)	(1.2)%



(Dollars in thousands)	First Nine Months of Fiscal 2019			% of Net Sales	First Nine Months of Fiscal 2018			% of Net Sales
Net sales	$	2,023,814		100.0%	$	2,190,215		100.0%

Gross profit	273,925			13.5%	250,731			11.4%
Selling, general, and administrative	228,392			11.3%	238,655			10.9%
Gains from sales of property	(9,798		)	(0.5)%	—			0.0%
Depreciation and amortization	22,408			1.1%	18,177			0.8%
Operating income (loss)	32,923			1.6%	(6,101		)	(0.3)%
Interest expense	40,527			2.0%	33,947			1.5%
Other income, net	(212		)	0.0%	(282		)	0.0%
Loss before provision for (benefit from) income taxes	(7,392		)	(0.4)%	(39,766		)	(1.8)%
Provision for (benefit from) income taxes	69			0.0%	(7,885		)	(0.4)%
Net loss	$	(7,461	)	(0.4)%	$	(31,881	)	(1.5)%