BlueLinx reported today that big cuts in back-office costs and reduced interest expenses enabled it to record $15 million in net income in its fiscal third quarter ended Oct. 1 vs. just a $561,000 net in the year-earlier period, all despite a 19% drop in sales to $476 million.
Gross profit for the Atlanta-based distributor was virtually the same, at $60.1 million compared with $60.8 million in the quarter ended Oct. 3, 2015. But property sales worth $13.9 million cut its operating expenses accordingly, causing operating income to jump to $22.6 million from $8.5 million. In addition, interest expense went down by $1 million to $6.1 million.
“Our performance this quarter confirms that we continue to make good progress on our key strategic initiatives of monetizing our real estate and deleveraging the balance sheet," Mitch Lewis, president and chief executive officer, said in a new release. "We have successfully extended our asset-based credit facility, prudently managed our working capital, and sold several of our unoccupied facilities which have enabled us to significantly reduce our debt from 2015 third quarter levels."
BlueLinx's balance sheet shows $500.4 million in assets but $318.2 million in non-current long-term debt plus $44.9 million in long-term debt that's currently maturing. The company sold four properties during the quarter that it previously had closed and is trying to sell other closed facilities.
BlueLinx prefers to report its results in terms of 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 such as gains from sales of property, and other adjustments to consolidated net income (Loss). Further, we also exclude, as an additional measure which we refer to as adjusted EBITDA less operational efficiency initiatives, the effects of certain initiatives we have undertaken such as facility closures and SKU rationalization, for period-over-period comparability."
by that metric, adjusted EBITDA rose to $11.1 million from $10.5 million.