Real estate gains from a year ago helped cause BlueLinx's latest third-quarter numbers to make the company look weaker than it actually is, the Atlanta-based distributor announced today.
Net profit shrank to $5.7 million from $15.0 million in 2016's third quarter, a period in which the company posted $13.9 million in real estate gains from facility sales.
Likewise, net sales grew for July through September rose just $3.3 million, or 0.7%, to $479.3 million. But sales at facilities in operation both quarters grew by $15.3 million or 3.3%, BlueLinx noted.
Gross profit was virtually unchanged at $60.5 million; that's a gross margin of 12.6%. Selling, general, and administrative costs dropped 4.7% to $6.8 million, and depreciation and amortization costs barely budgeted. But because of how the real estate sales cut 3Q16's operating expenses, BlueLinx's operating income for the quarter dropped nearly in half, to $11.5 million from $22.6 million.
Given how the company's so-called "operational efficiency initiatives"--basically, a drive to reduce debt and operate more successfully--skew the company's numbers when measured using generally accepted accounting principles, BlueLinx pointed to its performance based on adjusted EBITDA. It defines that metric as income plus interest expense, tax payments, depreciation and amortization, and other typical adjustments to consolidated net income.
For the third quarter, the company said, its adjusted EBITDA rose by $2.9 million from a year earlier to reach nearly $14 million. And adjusted EBITDA for its facilities in operation in the third quarter of both 2017 and 2016 rose by $3.3 million, it said.
"These results, coupled with the new five year revolving credit facility that we closed on Oct. 10, and the successful completion of our secondary offering last week, provide an inflection point for BlueLinx as we move forward into the next phase of our recovery,” Mitch Lewis, BlueLinx's president and CEO, said in a news release.
The company's balance sheet shows its long-term debt has fallen to $258.8 million as of Sept. 30 from $270.8 million last Dec. 31.