Aditya Madan

Aditya Madan inquired about BlueLinx's M&A pipeline, specifically regarding acquisitions to expand their West Coast presence and complement the Disdero acquisition, versus share buybacks.

Answer

CEO Shyam Reddy reiterated BlueLinx's two-pronged M&A strategy: growing specialty product mix and supporting geographic expansion, both of which Disdero accomplished. He confirmed an active pipeline of potential targets, with ongoing evaluation and relationship nurturing to facilitate opportunistic acquisitions.

Aditya Madan of D.A. Davidson Companies asked about the demand for capital equipment outside of the wood processing sector and the current level of customer confidence. He sought color on any pockets of geographic or end-market strength and weakness. Madan also requested an update on the key assumptions in the full-year guidance, including contributions from the recent Babini and GPS acquisitions, and asked how the margin profile of the backlog compares to the high gross margins seen recently. He later asked for a specific breakout of the GPS acquisition's contribution.

Answer

President & CEO Jeffrey Powell stated that while many projects were paused due to tariff uncertainty, the aging installed base is creating pent-up demand. He identified North America as the strongest region, China as the slowest, and Europe as in-between. EVP & CFO Michael McKenney noted the Babini acquisition was small (~$19M in 2024 revenue) and would be slightly dilutive initially. He explained that as more capital projects from the backlog are recognized as revenue in the second half, the parts mix will moderate, and gross margins are expected to fall into the 44% range. Powell clarified that the GPS acquisition is a key supplier to Babini, and their contributions are considered together.