The interest rate environment adversely affected the housing and building products sector in the third quarter, contributing to a 24% year-over-year contraction in net sales for BlueLinx Holdings. Despite the decline, president and CEO Shyam Reddy said the company was able to successfully execute on its business strategy in the quarter.

“We were pleased with our financial results, especially our strong margins in specialty products, which accounted for about 70% of our net sales,” Reddy said in a prepared statement. “Structural products also had solid margins and continue to support our specialty business.”

Net sales decreased $251 million on a year-over-year basis to $810 million in the third quarter. BlueLinx reported a gross profit of $139 million in the quarter, compared to $189 million in the prior-year period and a gross margin of 17.2% compared to 17.9% in 2022.

The net sales of specialty products, which includes products such as engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products, were $559 million, a 23% decrease compared to the third quarter of 2022. BlueLinx attributed the decline to a combination of deflation and lower volumes across several of its specialty product categories. Gross profit from specialty product sales decreased $41 million year-over-year to $111 million and gross margin for the segment was 19.8%, compared to 20.8% in the prior-year period.

The net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, decreased $85 million, or 25%, to $251 million in the third quarter. The decrease in structural was due primarily to the year-over-year decline in the average composite prices of framing lumber and structural panels of 26% and 6%, respectively. Gross profit from sales of structural products decreased $10 million to $28 million in the third quarter and gross margin was flat at 11.3%.

Net income for BlueLinx in the period was $24 million compared to $60 million the same period of a year ago. Adjusted EBITDA was $50 million, or 6.2% of net sales, for the third quarter of 2023, compared to $100 million, or 9.4% of net sales, in the third quarter of 2022.

“We remain focused on growing our higher margin specialty business, continue to make improvements in our operations, and maintain a consistent and balanced approach to capital allocation to drive long-term shareholder value,” Andy Wamser, chief financial officer, said.