BlueLinx (BXC) 10-Q 4 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Apr. 01, 2017	May 04, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	BlueLinx Holdings Inc.
Entity Central Index Key	1,301,787
Trading Symbol	bxc
Current Fiscal Year Date	--01-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		9,070,317
Document Type	10-Q
Document Period End Date	Apr. 1, 2017
Amendment Flag	false
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Income Statement [Abstract]
Net sales	$ 428,608	$ 474,326
Cost of sales	374,174	416,730
Gross profit	54,434	57,596
Operating expenses:
Selling, general, and administrative	52,912	55,176
Gains from sales of property	(6,700)	(377)
Depreciation and amortization	2,363	2,476
Total operating expenses	48,575	57,275
Operating income	5,859	321
Non-operating expenses (income):
Interest expense	5,242	7,207
Other income, net	0	(372)
Income (loss) before provision for (benefit from) income taxes	617	(6,514)
Provision for (benefit from) income taxes	33	(369)
Net income (loss)	$ 584	$ (6,145)
Basic earnings (loss) per share (in dollars per share)	$ 0.07	$ (0.69)
Diluted earnings (loss) per share (in dollars per share)	$ 0.06	$ (0.69)
Comprehensive income (loss):
Net income (loss)	$ 584	$ (6,145)
Other comprehensive income:
Foreign currency translation, net of tax	12	272
Amortization of unrecognized pension loss, net of tax	268	223
Total other comprehensive income	280	495
Comprehensive income (loss)	$ 864	$ (5,650)

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Apr. 01, 2017	Dec. 31, 2016
Current assets:
Cash	$ 5,185	$ 5,540
Receivables, less allowances of $2,868 and $2,733, respectively	160,068	125,857
Inventories, net	214,658	191,287
Other current assets	18,271	23,126
Total current assets	398,182	345,810
Property and equipment:
Land and land improvements	30,711	34,609
Buildings	84,771	80,131
Machinery and equipment	74,844	72,122
Construction in progress	522	3,104
Property and equipment, at cost	190,848	189,966
Accumulated depreciation	(102,103)	(101,644)
Property and equipment, net	88,745	88,322
Other non-current assets	10,765	10,005
Total assets	497,692	444,137
Current liabilities:
Accounts payable	100,189	82,735
Bank overdrafts	18,354	21,696
Accrued compensation	5,071	8,349
Current maturities of long-term debt, net of discount of $4 and $201, respectively	2,246	29,469
Other current liabilities	13,273	12,092
Total current liabilities	139,133	154,341
Non-current liabilities:
Long-term debt, net of discount of $2,789 and $2,544, respectively	315,624	270,792
Pension benefit obligation	33,538	34,349
Other non-current liabilities	37,963	14,496
Total liabilities	526,258	473,978
Stockholders’ deficit:
Common Stock, $0.01 par value, Authorized - 20,000,000 shares, Issued and Outstanding - 9,070,317 and 9,031,263, respectively	90	90
Additional paid-in capital	258,294	257,972
Accumulated other comprehensive loss	(36,371)	(36,651)
Accumulated stockholders’ deficit	(250,579)	(251,252)
Total stockholders’ deficit	(28,566)	(29,841)
Total liabilities and stockholders’ deficit	$ 497,692	$ 444,137

CONDENSED CONSOLIDATED BALANCE4

CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands	Apr. 01, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable	$ 2,868	$ 2,733
Debt discount, current	4	201
Debt discount, noncurrent	$ 2,789	$ 2,544
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares issued (in shares)	9,070,317	9,031,263
Common stock, shares outstanding (in shares)	9,070,317	9,031,263

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Statement of Cash Flows [Abstract]
Net cash used in operating activities	$ (39,860)	$ (51,640)
Property and equipment investments	(160)	(172)
Proceeds from sale of assets	27,427	1,402
Net cash provided by investing activities	27,267	1,230
Cash flows from financing activities:
Repayments on revolving credit facilities	(70,938)	(73,851)
Borrowings from revolving credit facilities	115,553	125,857
Principal payments on mortgage	(27,388)	(8,812)
(Decrease) increase in bank overdrafts	(3,342)	1,192
(Decrease) increase in cash held in escrow related to the mortgage	(1,090)	9,118
Other, net	(557)	(776)
Net cash provided by financing activities	12,238	52,728
(Decrease) increase in cash	(355)	2,318
Cash, beginning of period	5,540	4,808
Cash, end of period	$ 5,185	$ 7,126

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Apr. 01, 2017
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of BlueLinx Holdings Inc. and its wholly owned subsidiaries (the “Company”). These 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 Annual Report on Form 10-K (the “Annual Report on Form 10-K”) for the year ended December 31, 2016 , as filed with the Securities and Exchange Commission. New Accounting Standards Compensation - Retirement Benefits. In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2017-07, “Compensation - Retirement Benefits (Topic 715).” This standard will require that an employer report the service cost component in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period, while the other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. This ASU is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. That is, early adoption should be within the first interim period of fiscal 2017, or adoption would occur at the required implementation date. Retrospective application is required. We have determined that the impact of the reclassification required by this ASU is immaterial to our financial statements, and we will adopt this ASU at the required implementation date.

Employee Benefits

Employee Benefits	3 Months Ended
	Apr. 01, 2017
Compensation and Retirement Disclosure [Abstract]
Employee Benefits	Employee Benefits Single-Employer Defined Benefit Pension Plan The following table shows the components of net periodic pension cost (in thousands): Three Months Ended April 1, 2017 April 2, 2016 Service cost $ 183 $ 252 Interest cost on projected benefit obligation 1,178 1,271 Expected return on plan assets (1,584 ) (1,551 ) Amortization of unrecognized loss 268 223 Net periodic pension cost $ 45 $ 195 Multiemployer Pension Plans On March 25, 2017, we entered into a new collective bargaining agreement with the Lumber Employees Local 786 union, at our Chicago facility. As a result of the new agreement, we provided for a withdrawal from the related multi-employer pension plan, and, accordingly, recorded the $4.5 million net present value of this withdrawal liability on the Condensed Consolidated Balance Sheet in “other non-current liabilities,” and recorded an offsetting non-cash expense in the Condensed Consolidated Statement of Operations in “selling, general, and administrative” costs. We expect the liability to be paid over a 20 -year period, with payments substantially similar on a total annual basis to those disclosed in our Annual Report on Form 10-K, Item 8, Note 9, for the year ended December 31, 2016 .

Assets Held for Sale and Net Ga

Assets Held for Sale and Net Gain on Disposition	3 Months Ended
	Apr. 01, 2017
Discontinued Operations and Disposal Groups [Abstract]
Assets Held for Sale and Net Gain on Disposition	Assets Held for Sale and Net Gain on Disposition We have designated two unoccupied properties as held for sale, due to strategic initiatives. At the time of designation, we ceased recognizing depreciation expense on these assets. As of April 1, 2017 , and December 31, 2016 , the net book value of total assets held for sale was $0.8 million and $2.7 million , respectively, and was included in “other current assets” in our Consolidated Balance Sheets. We are actively marketing properties that are designated as held for sale. During the first quarter of fiscal 2017, we sold non-operating distribution facilities located in Allentown, Pennsylvania, and Virginia Beach, Virginia, and a parcel of excess land located in Ft. Worth, Texas (the “Property Sales”). We recognized a gain of $6.7 million in the Condensed Consolidated Statements of Operations as a result of the Property Sales. Additionally, we performed sale-leaseback transactions on distribution centers located in Tampa, Florida; Ft. Worth, Texas; and Miami, Florida (the “Sale-Leaseback Transactions”). As a result of the Sale-Leaseback Transactions, we recognized a capital lease asset and obligation totaling $8.0 million on two of these properties. The remaining sale-leaseback property was classified as an operating lease. We recognized a total deferred gain of $13.7 million on the three sale-leaseback properties, which will be amortized over the life of the applicable lease in the case of the capital leases; or, in the case of the operating lease, will be amortized over the life of the applicable lease until our adoption of ASC 842, at which time the remaining deferred gain will be reclassified as a decrease to stockholders’ deficit. The liability for the capital leases and deferred gain is located in “other current liabilities” (for the portion amortizing within the next twelve months) and “other non-current liabilities” on our Condensed Consolidated Balance Sheet. As a result of the Property Sales and Sale-Leaseback Transactions, we reduced the balance of the mortgage by $27.4 million in fiscal 2017.

Fair Value Disclosure

Fair Value Disclosure	3 Months Ended
	Apr. 01, 2017
Fair Value Disclosures [Abstract]
Fair Value Disclosure	Fair Value Disclosure To determine the fair value of our mortgage, we use a discounted cash flow model. We believe the mortgage fair value valuation to be Level 2 in the fair value hierarchy, as the valuation model has inputs that are observable for substantially the full term of the liability. As of April 1, 2017 , the carrying amount and fair value of our mortgage was $99.4 million and $102.7 million , respectively. The difference between the book value and the fair value is derived from the difference between the period-end market interest rate and the stated rate of our fixed-rate mortgage. The fair value of our debt is not indicative of the amounts at which we could settle our debt.

Earnings per Share

Earnings per Share	3 Months Ended
	Apr. 01, 2017
Earnings Per Share [Abstract]
Earnings per Share	Earnings per Share We calculate basic earnings per share by dividing net income by the weighted average number of common shares outstanding, excluding unvested restricted shares. We calculate diluted earnings per share 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 awards, restricted stock units, performance shares, performance units, and stock options. Antidilutive common stock equivalents excluded from the diluted earnings per share calculation include all outstanding options and performance shares, and 50,000 total unvested restricted stock awards and restricted stock units. The following table shows the computation of basic and diluted earnings per share (in thousands, except per share data): Three months ended April 1, 2017 April 2, 2016 (1) Net income (loss) $ 584 $ (6,145 ) Basic weighted shares outstanding 8,966 8,876 Dilutive effect of share-based awards 132 — Diluted weighted average shares outstanding 9,098 8,876 Basic earnings (loss) per share $ 0.07 $ (0.69 ) Diluted earnings (loss) per share $ 0.06 $ (0.69 ) (1) Basic and diluted earnings per share are equivalent for the three months ended April 2, 2016 , due to net losses for the period.

Accumulated Other Comprehensive

Accumulated Other Comprehensive Loss	3 Months Ended
	Apr. 01, 2017
Equity [Abstract]
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss Comprehensive income is a measure of income which includes both net income and other comprehensive income. Other comprehensive income results from items deferred from recognition into our Consolidated Statements of Operations and Comprehensive Income (Loss). Accumulated other comprehensive loss is separately presented on our Consolidated Balance Sheets as part of common stockholders’ deficit. The changes in balances for each component of Accumulated Other Comprehensive Loss for the three months ended April 1, 2017 , 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 31, 2016, beginning balance $ 660 $ (37,523 ) $ 212 $ (36,651 ) Other comprehensive income, net of tax (1) 12 268 — 280 April 1, 2017, ending balance, net of tax $ 672 $ (37,255 ) $ 212 $ (36,371 ) (1) For the three months ended April 1, 2017 , there was $0.3 million of actuarial loss recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as a component of net periodic pension cost. There was no intraperiod income tax allocation and the deferred tax benefit was fully offset by a valuation allowance.

Summary of Significant Accoun12

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Apr. 01, 2017
Accounting Policies [Abstract]
New Accounting Standards	New Accounting Standards Compensation - Retirement Benefits. In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2017-07, “Compensation - Retirement Benefits (Topic 715).” This standard will require that an employer report the service cost component in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period, while the other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. This ASU is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. That is, early adoption should be within the first interim period of fiscal 2017, or adoption would occur at the required implementation date. Retrospective application is required. We have determined that the impact of the reclassification required by this ASU is immaterial to our financial statements, and we will adopt this ASU at the required implementation date.
Earnings per Share	We calculate basic earnings per share by dividing net income by the weighted average number of common shares outstanding, excluding unvested restricted shares. We calculate diluted earnings per share 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 awards, restricted stock units, performance shares, performance units, and stock options. Antidilutive common stock equivalents excluded from the diluted earnings per share calculation include all outstanding options and performance shares, and 50,000 total unvested restricted stock awards and restricted stock units.

Employee Benefits (Tables)

Employee Benefits (Tables)	3 Months Ended
	Apr. 01, 2017
Compensation and Retirement Disclosure [Abstract]
Schedule of net periodic pension cost for pension plans	The following table shows the components of net periodic pension cost (in thousands): Three Months Ended April 1, 2017 April 2, 2016 Service cost $ 183 $ 252 Interest cost on projected benefit obligation 1,178 1,271 Expected return on plan assets (1,584 ) (1,551 ) Amortization of unrecognized loss 268 223 Net periodic pension cost $ 45 $ 195

Earnings per Share (Tables)

Earnings per Share (Tables)	3 Months Ended
	Apr. 01, 2017
Earnings Per Share [Abstract]
Earnings per Share	es, and 50,000 total unvested restricted stock awards and restricted stock units. The following table shows the computation of basic and diluted earnings per share (in thousands, except per share data): Three months ended April 1, 2017 April 2, 2016 (1) Net income (loss) $ 584 $ (6,145 ) Basic weighted shares outstanding 8,966 8,876 Dilutive effect of share-based awards 132 — Diluted weighted average shares outstanding 9,098 8,876 Basic earnings (loss) per share $ 0.07 $ (0.69 ) Diluted earnings (loss) per share $ 0.06 $ (0.69 ) (1) Basic and diluted earnings per share are equivalent for the three months ended April 2, 2016 , due to net losses for the period.

Accumulated Other Comprehensi15

Accumulated Other Comprehensive Loss (Tables)	3 Months Ended
	Apr. 01, 2017
Equity [Abstract]
Schedule of changes in accumulated balances for each component of other comprehensive income (loss)	The changes in balances for each component of Accumulated Other Comprehensive Loss for the three months ended April 1, 2017 , 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 31, 2016, beginning balance $ 660 $ (37,523 ) $ 212 $ (36,651 ) Other comprehensive income, net of tax (1) 12 268 — 280 April 1, 2017, ending balance, net of tax $ 672 $ (37,255 ) $ 212 $ (36,371 ) (1) For the three months ended April 1, 2017 , there was $0.3 million of actuarial loss recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as a component of net periodic pension cost. There was no intraperiod income tax allocation and the deferred tax benefit was fully offset by a valuation allowance.

Employee Benefits (Details)

Employee Benefits (Details) - USD ($) $ in Thousands	Mar. 25, 2017	Apr. 01, 2017	Apr. 02, 2016
Compensation and Retirement Disclosure [Abstract]
Service cost		$ 183	$ 252
Interest cost on projected benefit obligation		1,178	1,271
Expected return on plan assets		(1,584)	(1,551)
Amortization of unrecognized loss		268	223
Net periodic pension cost		$ 45	$ 195
Multiemployer plans, withdrawal obligation	$ 4,500
Multiemployer plans, withdrawal obligation repayment period	20 years

Assets Held for Sale and Net 17

Assets Held for Sale and Net Gain on Disposition (Details)	3 Months Ended
	Apr. 01, 2017USD ($)property	Apr. 02, 2016USD ($)	Dec. 31, 2016USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties held for sale | property	2
Gain disposition of property plant equipment	$ 6,700,000	$ 377,000
Capital leased assets, gross	8,000
Capital lease obligations	$ 8,000,000
Number of properties subject to sale-leaseback arrangement | property	2
Sale leaseback transaction, deferred gain, gross	$ 13,700,000
Mortgage loan related to property sales, extinguished debt	27,400,000
Discontinued Operations, Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal group, including discontinued operation, assets, current	800,000
Total Assets Held For Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal group, including discontinued operation, assets, current			$ 2,700,000
Assets Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain disposition of property plant equipment	$ 6,700,000
Tampa, Florida, Ft. Worth, Texas, Miami, Florida
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties leased | property	3

Fair Value Disclosure (Details)

Fair Value Disclosure (Details) $ in Millions	Apr. 01, 2017USD ($)
Reported Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage, fair value disclosure	$ 99.4
Fair Value, Inputs, Level 2 | Estimate of Fair Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage, fair value disclosure	$ 102.7

Earnings per Share (Details)

Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Earnings Per Share [Abstract]
Net income (loss)	$ 584	$ (6,145)
Basic weighted shares outstanding (in shares)	8,966,000	8,876,000
Dilutive effect of share-based awards (in shares)	132,000	0
Diluted weighted average shares outstanding (in shares)	9,098,000	8,876,000
Basic earnings per share (in dollars per share)	$ 0.07	$ (0.69)
Diluted earnings per share (in dollars per share)	$ 0.06	$ (0.69)
Restricted Stock and Restricted Stock Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount	50,000

Accumulated Other Comprehensi20

Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	$ (29,841)
Other comprehensive income, net of tax	280	$ 495
Ending balance, net of tax	(28,566)
Foreign currency, net of tax
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	660
Other comprehensive income, net of tax	12
Ending balance, net of tax	672
Defined benefit pension plan, net of tax
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(37,523)
Other comprehensive income, net of tax	268
Ending balance, net of tax	(37,255)
Other, net of tax
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	212
Other comprehensive income, net of tax	0
Ending balance, net of tax	212
Total Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(36,651)
Other comprehensive income, net of tax	280
Ending balance, net of tax	(36,371)
Defined benefit pension plans adjustment, net gain (loss), net of tax
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Reclassification of actuarial loss	$ 300