BlueLinx Holdings, which has made improving its balance sheet its key objective, announced today its net profit swung to a $3.1 million loss in the second quarter from a $2.9 million profit in the year-earlier period. Sales rose 1.7% to $509 million.
The Atlanta-based distributor noted it has cut its debt principal by $63.6 million since the April-to-June 2015 quarter and reduced working capital by $64.5 million. It did that largely by following up on its April 21 announcement that it will close four distribution centers by Dec. 31, stop selling some products, and evaluate opportunities to sell or lease back some of its properties. The four centers being shuttered are in National City, Calif. (serving the San Diego market); La Puente, Calif. (Los Angeles); Ypsilanti, Mich. (Detroit); and Wausau, Wis. In addition, a BlueLinx staffer said then that a facility in Canada, near Vancouver, also is being closed.
Gross profit slipped 4.3% to $57.4 million. Gross margin was 11.3%.
"The inventory and facility rationalization initiatives reduced net income by $7.7 million during the quarter," BlueLinx said. "These charges included $1.2 million in severance and employee benefits charges." It also made numbers other than the profit line look worse. For instance, revenue at the facilities that weren't being closed rose 4.1% year over year, and its gross margin would have been 13.1%.
BlueLinx likes to measure itself against adjusted EBITDA, which it defines as net income plus interest expense and all interest expense related items (e.g., write-off of debt issuance costs, charges associated with mortgage refinancing), income taxes, depreciation and amortization, and further adjusted to exclude certain non-cash items and other adjustments to Consolidated Net Income. By that metric, the company said, its adjusted EBITDA rose to $12.7 million from $9.8 million in 2015's second quarter.