BlueLinx shares tumble as Q2 earnings miss estimates

Investing.com -- BlueLinx Holdings Inc. (NYSE:BXC), a leading U.S. wholesale distributor of building products, reported second quarter earnings that fell short of analyst expectations, sending shares down 3.1% in trading.

The company posted adjusted earnings of $0.70 per share for the second quarter, significantly below the analyst consensus of $1.00 per share. Revenue came in at $780 million, slightly missing the consensus estimate of $784.13 million, though it represented a 2% increase YoY.

BlueLinx’s performance was hampered by challenging market conditions despite volume increases in both specialty and structural products. Gross profit declined 2% YoY to $120 million, with gross margin contracting to 15.3%, down 60 basis points from the same period last year.

"We are pleased with the continued execution of our product and channel strategies. Our second quarter results were highlighted by net sales and volume increases in both specialty products and structural products, despite soft market conditions," said Shyam Reddy, President and Chief Executive Officer of BlueLinx.

Specialty products, which include engineered wood, siding, and millwork, saw sales increase 0.7% to $543 million, though gross margins in this segment declined 80 basis points to 18.5%. Structural products sales rose 3.4% to $237 million with improved gross margins of 8.2%.

The company’s selling, general and administrative expenses increased by $5.8 million compared to the prior year, primarily due to higher sales and logistics expenses related to increased volumes and investments in multi-family channel growth and digital transformation initiatives.

BlueLinx maintained a strong financial position with available liquidity of $730 million, including $387 million in cash. The company repurchased $20 million of its stock during the quarter and announced a new $50 million share repurchase authorization.

"With our continued strong balance sheet, significant liquidity, and low leverage, we remain well-positioned to accelerate our profitable sales growth as the home building industry rebounds," said C. Kelly Wall, Chief Financial Officer of BlueLinx.

For the third quarter outlook, the company indicated specialty product gross margins of 17-18% and structural product gross margins of 8-9%, with sales volumes slightly up from the second quarter.

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