BlueLinx Holdings Inc., the Atlanta-based distributor whose majority owner recently failed to take private, reported today its net loss for the third quarter deepened to $14.9 million from $13.5 million in the year-earlier period. Sales rose 3.4% to $464.7 million.
Gross profit dropped 9.7% to $94.9 million as gross margins shrank to 10.7% in the July-to-September period from 12.3% a year earlier, mainly because of lower wood prices, BlueLinx said. Total operating expenses shrank 2.8%, helping lead to an operating loss of $7.3 million vs. $3.6 million in 3Q09.
"Our overall performance for the third quarter was impacted by a lack of improvement in actual housing starts and continued deterioration of wood-based product prices," BlueLinx President and CEO George Judd said in a statement. "Total housing starts for the quarter fell 0.8% from year-earlier levels, while prices for key grades of structural wood products dropped 20% on average from the end of the second quarter. The price volatility seen in the last six months is some of the worst I have seen in my 25 years in this industry. This volatility in the wood markets had a negative impact on our margins during the quarter as our inventories returned to current market values. Despite this challenging environment, we increased sales by 3.4% while controlling our operating costs and generated approximately $33 million in cash from operations during the third quarter."
The 3.4% rise in revenues was credited to a 5.9% increase in structural product sales and 2.5% rise in sales of specialty products. In volume terms, activity wasn't as robust: specialty unit volume increased 1.3% and structural unit voume shrank 4.3%.
BlueLinx has been in the news a lot lately because Cerberus, the investment firm that owns 55% of the distributor, sought to buy the rest of the shares that it doesn't already own and take the company private. It raised its bid for the buyout and eventually won the support of a special board panel, but ultimately failed to capture 90% of the total shares. (Story)