Sign in

You're signed outSign in or to get full access.

BH

BlueLinx Holdings Inc. (BXC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net sales were $711M with gross margin 15.9%, while diluted EPS was $0.62 and adjusted diluted EPS $0.61; Adjusted EBITDA was $21.5M (3.0% margin) .
  • Specialty gross margin of 18.4% (in-range) and structural margin of 10.8% (above prior expectation) reflected solid margin discipline despite ongoing price deflation and higher SG&A from payroll, logistics, and digital investments .
  • Management guided Q1 2025 specialty margins 18–19% and structural margins 8–9% with average daily sales volumes down ~12% vs Q4 due to severe January weather; tax rate expected 24–28% for Q1 2025 .
  • Balance sheet remains strong: $852M liquidity including $506M cash; net leverage ratio per credit agreement at (1.2x); $15M buybacks in Q4 (total $45M in 2024) .
  • Consensus estimates via S&P Global were unavailable for Q4 2024; we did not include vs-estimate comparisons and expect near-term estimate revisions to incorporate weather-driven volume headwinds and stable specialty margin commentary .

What Went Well and What Went Wrong

What Went Well

  • Specialty margins held at 18.4% with low-single-digit volume growth YoY; “testament to the value of our service proposition” and inventory management discipline .
  • Structural margins improved to 10.8% on higher lumber pricing; lumber composite pricing +12% YoY with proactive risk management (consignment, centralized purchasing/pricing) .
  • Capital returns and liquidity: $15M repurchased in Q4 ($45M FY), cash $506M, liquidity $852M, net leverage (1.2x) per credit agreement .
  • Strategic initiatives progressing: digital transformation (MDM, e-commerce pilot, TMS on track for Q3 2025) and first greenfield in Portland targeting EBITDA-positive in ~2 years with 6–10% margins and $40–100M mature sales .

What Went Wrong

  • Gross margin compressed 70 bps YoY; Adjusted EBITDA down to $21.5M vs $36.5M in prior year; SG&A rose ~$8M YoY on payroll, logistics, and tech investments .
  • Operating cash flow fell to $18.7M (vs $75.9M prior year) and FCF was negative $(1.5)M on working capital changes and elevated CapEx (~$20.3M in Q4) .
  • Q1 2025 early-quarter volumes down ~12% vs Q4 due to severe weather; structural margins guided lower (8–9%) amid panel price declines .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($M)$768 $747 $711
Gross Profit ($M)$122 $126 $113
Gross Margin (%)15.9% 16.8% 15.9%
Diluted EPS ($)$1.65 $1.87 $0.62
Adjusted Diluted EPS ($)$1.68 $1.95 $0.61
Adjusted EBITDA ($M)$34 $37 $21.5
Adjusted EBITDA Margin (%)4.5% 4.9% 3.0%

Segment performance

Segment MetricQ2 2024Q3 2024Q4 2024
Specialty Net Sales ($M)$539 $519 $483.6
Specialty Gross Margin (%)19.3% 19.4% 18.4%
Structural Net Sales ($M)$228.9 $228 $227.0
Structural Gross Margin (%)7.9% 11.0% 10.8%

KPIs and cash/leverage

KPIQ2 2024Q3 2024Q4 2024
Cash from Operations ($M)$36 $62 $18.7
Free Cash Flow ($M)$29 $54 $(1.5)
Liquidity ($M)$838 $873 $852
Cash & Equivalents ($M)$491 $526 $506
Net Leverage (per credit agreement)(0.9x) (1.2x) (1.2x)
Share Repurchases ($M)$15 $15 $15

Notes: Q3 results benefited from duty-related items ($3.5M) and structural inventory write-down reversal ($2.4M); excluding these, company gross margin was ~16.0% in Q3 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Specialty Gross Margin (%)Q4 202418–19% Actual: 18.4% In-range execution
Structural Gross Margin (%)Q4 20249–10% Actual: 10.8% Above guide
Specialty Gross Margin (%)Q1 2025—18–19% New
Structural Gross Margin (%)Q1 2025—8–9% New (lower vs Q4 guide)
Average Daily Sales VolumesQ1 2025—Down ~12% vs Q4 (weather) New
Tax Rate (%)Q1 2025—24–28% New
CapEx ($M)FY 2025—~$40 New
Net Leverage TargetLong-term~≤2.0x ~≤2.0x Maintained

Earnings Call Themes & Trends

TopicQ2/Q3 Mentions (Trend)Current Period (Q4)Trend
Digital transformation (MDM, e-comm, TMS)Phase 1 underway; TMS targeted Q3 2025 Pilot e-comm live; TMS on track Q3 2025; focus on warehouse tech Continuing execution
Specialty pricing/deflationDeflation high-single digits; improvement likely 2H25 Sequential improvement in Q4; volatility early Q1; broadly flat vs Q4 Stabilizing
Structural commodity dynamicsQ2 pressure (OSB down 31%); Q3 normalization and reserve reversal Q4 margins 10.8%; Q1 guide lower (8–9%) on panels Mixed; cautious near term
Greenfield strategyAnnounced PNW plan; low capex; pipeline building Portland opened; targeting EBITDA-positive in ~2 years; more sites constrained by real estate Scaling gradually
Multifamily growthEarly initiatives driving share gains Grew multifamily YoY; centralized team and fleet investments Positive
Tariffs/macro (Canada/SYP)Heavy channel inventory; competitive intensity Strategy to protect margins amid potential tariffs; pass-through pricing; SYP substitution “not yet” Monitoring risk
R&R demandMuted near term; HELOC tailwind later Low existing home turnover; national accounts support; larger projects possible with lower HELOC Gradual improvement

Management Commentary

  • “Specialty products continued its strong performance with gross margins of 18.4% and solid volume growth during the quarter. Structural products also performed well with gross margins of 10.8%, largely due to improved lumber pricing during the quarter.” — Shyam Reddy, CEO .
  • “Our digital transformation journey is well underway… e-commerce platform is now live in a pilot phase… transportation management system on track to be fully implemented by Q3 2025.” — Shyam Reddy .
  • “Through the first 7 weeks of Q1 2025, specialty products gross margin was in the range of 18% to 19%… structural products gross margin was in the range of 8% to 9%… daily sales volumes down low double digits compared to Q4 due to January weather.” — Kim DeBrock (Interim PFO) .
  • “We expect upfront cash investment for each new [greenfield] location to be less than $5 million and EBITDA positive after 2 years with EBITDA margins between 6% and 10%… $40–100 million net sales at maturity.” — Shyam Reddy .

Q&A Highlights

  • Specialty pricing cadence: sequential improvement late Q4; early Q1 volatile but generally flat vs Q4; stabilization possible as volatility abates; centers of excellence in pricing and inventory management underpin margin discipline .
  • Volumes and weather: Q1-to-date volumes down due to closures at 20+ locations; recent weeks showed catch-up activity with volumes ramping as weather improved .
  • Greenfield ramp timeline: Portland ramping with equipment, trucks, staffing; leveraging Seattle/Spokane anchors to accelerate; real estate availability is primary constraint on cadence (aspiration ~3 per year) .
  • Tariffs and structural strategy: Margin protection via supply chain/vendor relationships and rapid pass-through; SYP substitution “not yet,” constrained by domestic mill capacity; caution about policy swings .
  • Multifamily growth: Centralized team, national account channels, broker relationships; fleet investments to support job site delivery; historically underpenetrated segment with strong share gains in 2024 .

Estimates Context

  • S&P Global Wall Street consensus was unavailable for Q4 2024, Q3 2024, Q2 2024, and Q1 2025; therefore, vs-estimate comparisons are not shown .
  • Near-term revisions likely reflect Q1 weather-driven volume headwinds and slightly lower structural margin guide (8–9%) with stable specialty margins (18–19%) .

Key Takeaways for Investors

  • Margin quality intact: Specialty margins consistently high-teens and structural near 11% in Q4; expect specialty stability and structural near-term pressure on panels; pricing volatility moderating into 2025 .
  • Weather-driven Q1 softness is transitory; watch weekly volume and margin cadence through late Q1 for recovery signals .
  • Strong balance sheet and ample liquidity ($852M) enable continued buybacks, greenfields, and digital investments without leverage constraints (net leverage (1.2x) per agreement) .
  • Greenfield/market expansion can compound specialty mix shift; early Portland ramp plus vendor expansions (LP SmartSide footprint to 17 locations) supports medium-term growth .
  • Non-GAAP impacts: FY 2024 includes $12.7M duty benefit; Q3 had duty and inventory reserve effects—normalize when modeling margins and EBITDA .
  • Trading lens: Near-term catalysts include weekly margin/volume updates, TMS go-live in Q3 2025, additional greenfield announcements; estimate sensitivity to macro/pricing/tariffs remains elevated .
  • Medium-term thesis: Specialty-led growth, digital productivity, disciplined capital allocation, and multifamily share gains underpin durable cash generation through cycle .