bluelinx investor presentation march 2006 - iis windows...
TRANSCRIPT
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Safe Harbor Statement
Forward-Looking Statement Safe Harbor - This presentation includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All of these forward-looking statements are based on estimates and assumptions made by our management that, although believed by BlueLinx to be reasonable, are inherently uncertain. Forward-looking statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of its control, that may cause its business, strategy or actual results to differ materially from the forward-looking statements. These risks and uncertainties may include, among other things: changes in the supply and/or demand for products which we distribute; the activities of competitors; changes in significant operating expenses; changes in the availability of capital; the ability to identify acquisition opportunities and effectively and cost-efficiently integrate acquisitions; general economic and business conditions in the United States; adverse weather patterns or conditions; acts of war or terrorist activities; variations in the performance of the financial markets; and other factors described in the "Risk Factors" section in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2005, and in its periodic reports filed with the SEC. In addition, the statements in this presentation are made as of March 28, 2006. The Company expects that subsequent events or developments will cause its views to change. The Company undertakes no obligation to update any of the forward-looking statements made herein, whether as a result of new information, future events, changes in expectation or otherwise. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to March 28, 2006.
Use of Non-GAAP and Pro Forma* Financial Information - To supplement GAAP financial statements, the Company uses non-GAAP, or pro forma measures of operating results. This non-GAAP, or pro forma financial information is provided as additional information for investors and is not in accordance with or an alternative to GAAP. These adjusted results exclude certain costs, expenses, gains and losses, and we believe their exclusion can enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our GAAP results are made with the intent of providing both management and investors a more complete understanding of the operating performance of the Company as opposed to GAAP results, which may include non-recurring, infrequent or other non-cash charges that are not material to the ongoing performance of the Company's business. Company management uses these non-GAAP and pro forma results as a basis for planning and forecasting core business activity in future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net earnings, diluted earnings per share or net cash provided by (used in) operating activities prepared in accordance with generally accepted accounting principles in the United States.
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BlueLinx Investor PresentationMarch 2006
BlueLinx Overview
Industry Dynamics
Focused Growth Strategy
2005 Q4 Update
Looking Forward
4
BlueLinx Overview:Operations
Sales Center
Warehouse
LSV
Largest Building Products Distributor in U.S.
2005 Revenue: $5.6 Billion
~12,000 customers and 750+ suppliers
Product portfolio 10,000+ SKUs
65+ warehouses; 80+ reloads
Owned fleet of 900 trucks and 1,200 trailers
3,600 employees, including 1,000 sales
NYSE: BXC
Analysts Covering: 7
Market Cap: $492
Shares Outstanding: 30.2
Dividend/Yield: $.50/3.1%
P/E (ttm) 11.2
*Based on 3/17/06 close of $16.29
5
BlueLinx At A Glance:Evolution of BlueLinx Growth Strategy
Decentralized structure
13 warehouses
Outlet for GP Plywood
Outlet for GP Outlet for GP PlywoodPlywood
DiversifiedDiversifiedbuildingbuildingproductsproducts
distributordistributor
Centralized, Centralized, nationwide nationwide distribution distribution transitiontransition
““MastersMasters””of the of the
supply chainsupply chain
Decentralized structure
134 warehouses
1954 1954 –– 19761976 1977 1977 –– 19931993 1994 1994 –– 20002000 2004 2004 –– FutureFuture
Centralized platform supports market share growth
Organic growth focus supplemented by acquisitions
Value proposition: reduce supply chain costs
System rationalized & centralized
63 warehouses
Integrated IT systems
>$400mm one-time investment by GP in systems and infrastructure
BlueLinxBlueLinxGeorgia-Pacific through May 7, 2004
ImproveImproveGrossGrossMarginMargin
2001 2001 –– 20032003
Rationalized customer base
Increased gross margin by 225 basis points
6
BlueLinx Overview:Positioned at the Center of Value Creation
Building Building ProductsProducts
ManufacturersManufacturersBlueLinxBlueLinx
Home Home Improvement Improvement
CentersCenters
DealersDealers
Repair and Repair and RemodelingRemodeling
Residential Residential and Nonand Non--
Residential Residential ConstructionConstruction
Manufactured Manufactured Housing / Housing / IndustrialIndustrial
Benefits to ManufacturersReliable channels to marketConsistent production runsLimits inventory investmentAllows limited number of customersLimits credit risk and receivable investmentAbility to create markets for early life cycle products
Benefits to Customersto CustomersReliable source of many materialsBreak bulk quantitiesNear 100% fill ratesLimits vendors and inventory investmentJust in time deliveriesSafety stock
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BlueLinx Overview: Diversified Product, Customer & End Use Segments
StructuralStructural63%63%
Hardwood plywoodEngineered lumberComposite deckingVinyl sidingMouldingInsulationRoofing
SpecialtySpecialty38%38%
PlywoodOSBLumberRebar/Remesh
New Home New Home ConstructionConstruction
50%50%
Industrial Industrial ApplicationsApplications
22%22%
Manufactured Manufactured HousingHousing
8%8%Repair & Repair & RemodelingRemodeling
15%15%
Non Residential Non Residential ConstructionConstruction
5%5%
Product Categories Customer Categories End Use Segments
DealerDealer
IndustrialIndustrial
Manufactured Manufactured HousingHousing
Home CenterHome Center
~ 10,000 Products ~ 12,000 Customers 5 End Use Segments
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BlueLinx Overview:How We Think About Our Business
$42
$74$67
$179
$134
$151$162
$93
-
20
40
60
80
100
120
140
160
180
200
2000 2001 2002 2003PF 2004PF 2005
EBIT
DA
($ m
illio
n)
EBITDA Adj EBITDA*
*2004 and 2005 commodity margins restated at the two-year average (see reconciliation in Appendix)
EBITDA TREND
Consistent EBITDA growth when normalized to eliminate the impact of commodity margin volatility.
10
BlueLinx Overview:Goals and Strategic Objectives
Profitably grow specialty revenues to 60+ % of total sales
Profitably grow structural revenues while reducing exposure to volatility
Outgrow the market over the long term
Be the Masters of the Supply Chain for those products we choose to distribute
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BlueLinx Overview:Experienced Leadership Team
Management Team Leadership Background
Stephen Macadam CEO
George Judd COO
David Morris CFO
Steve Skinner SVP
Duane Goodwin SVP
Dave Dalton SVP
Sam Gaddis VP
6 Regional VPs RVP
CEO Consolidated Container; EVP Georgia-Pacific; McKinsey & Co.
VP Eastern operations, Georgia-Pacific; inside and outside sales manager, national accounts manager
VP Finance, Georgia-Pacific distribution division; Kimberly-Clark
CEO Peppers & Rogers Group, McKinsey & Co.
Home Depot, Wal-Mart, procurement and sourcing
Regional VP BlueLinx; division sales, management, Georgia-Pacific
Georgia-Pacific / BlueLinx, regional account manager, director national accounts
Average 20+ years of industry experience
Strategy
Operations
Finance
Business Development
Supply Chain
Western Region
National Accounts
Regional Operations/Sales
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BlueLinx Investor PresentationMarch 2006
BlueLinx Overview
Industry Dynamics
Focused Growth Strategy
2005 Q4 Update
Looking Forward
13
2.8% 2.4%
-2.1%
1991-2000Avg
2001-2005Avg
2006E-2015E Avg
Growing & Attractive Industry: Solid Long-Term Industry Fundamentals
1.4
1.81.8
1991-2000Avg
2001-2005Avg
2006E-2015E Avg
Annual Housing Starts (mm)
Annual Growth In Other End-Use Markets
50% of Our End-Market 50% of Our End-Market
IndustrialRepair & RemodelingMobile homesNon-residential
Source: Research Information Systems Inc. (RISI)
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Growing & Attractive Industry:Market Growth of Two-Step Distribution
$32.9
$36.4
$39.2
$47.1
20
25
30
35
40
45
50
2001 2002 2003 2004
$ b
illio
ns
Total Market Revenue
Source: Home Channel News, July 2005
15
Many Small and Medium Sized Players
136
100's
35
<$250m $250m -$500m
$500m -$1bn
$1bn-$2.5bn
>$2.5bn
Number of Competitors By Revenue
Growing & Attractive Industry:Largest in a Highly Fragmented Industry, Ripe for Consolidation
Highly Fragmented Industry
Weyerhaeuser11.1%
Boise Cascade6.0%
Universal FP4.2%
Consists of several hundred small, local distributors
BlueLinx11.8%
OtherOther64.9%64.9%
2004 Market Share
Source: Home Channel News, July 2005
Huttig BP2.0%
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BlueLinx Investor PresentationMarch 2006
BlueLinx Overview
Industry Dynamics
Focused Growth Strategy
2005 Q4 Update
Looking Forward
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Focused Growth Strategy:BXC’s Growth Enabling Strategic Shift Continues
Commodities-focused, distribution arm of manufacturer
Customer-focused, solutions-driven, value-added distribution partner
55%+ structural products
FROM:FROM: TO:TO:
60%+ specialty products
Structural products-driven earnings volatility
Specialty products-driven stable earnings growth
Developing integrated management systems
Leveraging management systems to create value
Volume orientation Profit orientation
Managing through complex internal transformations
Managing to create maximum value in the supply chain
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Focused Growth Strategy:BXC Strategic Framework
Mission:
“Be the Masters of the Supply Chain for those products we choose to distribute.”
Value Proposition:• Provide the lowest total cost
of sales and distribution through the supply chain
• Drive end-user demand, thereby increasing sales for our customers and our suppliers
Objectives: Gross Margin: 10+%Specialty Mix: 60+%Unit Sales: Outgrow the market
Improvement Efforts
Strategic Enablers
Growth Initiatives
Strategy Initiatives and Enablers:• Gross Margin Improvement• Cost Improvement• Productivity Improvement• Asset Management
• Product & Vendor Mgmt.• Marketing Excellence• Sales Processes & Support• Information Technology• Results Tracking & Accountability• Talent Development & Acquisition
• Accelerate Specialty growth• Target high-growth accounts• Increase volume in high-return
segments• Pursue supplemental acquisitions
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Focused Growth Strategy:2005 Specialty Product Initiatives
PeopleAdded seasoned experts in supply chain strategy, product procurement, and import -- Increased number of national product managers to 9 from 4Focused support on key product areas that represent best opportunity for growth and profitability
ProcessImproved operational agility for reacting to changing market conditions Solidified import process and capabilitiesLinking systems to drive increased service levels to customers, while improving productivity of assets
Products Signed national composite decking distribution agreement with Louisiana-PacificPursuing additional agreements with L-P and other vendors
Repositioned inventories to reflect business opportunities & limit exposure
AcquisitionsPurchased California-based Lane Stanton Vance, specialty hardwood distributor
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Focused Growth Strategy:Accelerating Specialty Growth
Specialty Products
37% 36%39%
41%
53%
61%
54% 55%
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
% of TotalRevenue% of GM
2005 Unit Volume Growth
4.2%6.4%
0.9% 0.2%1.7% 0.5%
5.8%
12.7%
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Structural Specialty
2005 Gross Margin
7.0%5.3%
7.3%8.3%
12.6% 12.9% 13.3%14.3%
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Structural Specialty
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Focused Growth Strategy: Specialty Product Expansion
Chosen in September by Louisiana-Pacific to nationally distribute its WeatherBest composite decking product
All 1,000 BlueLinx sales employees trained and warehouses stocked within 45 days
Program has potential to generate annualized revenues in excess of $100 million over the first two years
Big step in expanding into additional specialty programs with L-P and other major vendors over next several years
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Focused Growth Strategy:2005 Structural Product Initiatives
Focus on improved profitability and reduced risk Reduced “high risk” structural inventory by $41 million, or 18% from 2004Cost-to-serve analysis linked to pricing optimization systemIncreased utilization of consignment and program inventories Expanding imports from Europe and other areas offering lowest-cost sourcingDriving OSB business through direct channelFocusing on structural products that “behave” like specialty
Long-length lumberSpecialty plywoodMSR lumber
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Focused Growth Strategy:Initiatives to Leverage Our Scaleable Platform to Drive Superior Returns
Market Share Growth Goals Growth Drivers & Accelerators
Increase penetration of selected high return customers (e.g. large, multi-unit chains, growing local businesses)
Grow share in under-represented segments (e.g. industrials -- products used in manufacturing; cabinets & fixtures, commercial furniture, millwork)
Expand product portfolio and vendor base (e.g. working with current & new vendors, adding offshore procurement capabilities)
Consultative, solution-based selling
Disciplined quarterly sales plans supporting promotions and new product introductions
Account planning to create partnerships
Align top salespeople with high potential accounts
Increase product line
Execute supplemental acquisitions
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Focused Growth Strategy:Industrials Strategy Update
Objective & RationaleGrow market share in Industrials Industrials represent ~22% of sales; currently have ~3% market share
Offers high contribution margin and increases specialty product opportunities
Strategy Identify & pursue “high-opportunity” geographic areas with strong manufacturing baseCreate tailored value proposition for key customer segmentsWork with suppliers to form strategic relationships & develop new products
HighlightsSix regional market plans currently being executedHired China-based procurement specialist Adding cut-to-size capabilities at select facilitiesWorking with manufacturer on new flooring product for R-V industrySecured exclusive distribution agreement based on regional market plan
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Focused Growth Strategy:Outgrow the Market Over the Long Term
Market Share Growth*
10.4%
11.8%
10.9%
2002 2003 2004
Unit Volume Growth vs. End-Use Market Year over Year Change
2.0%
4.7% 4.4%
2.5%
8.2%
3.9%
2003 2004 2005
Weighted End-Use Market GrowthBlueLinx Growth
*Source: Home Channel News, July 2005
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BlueLinx Investor PresentationMarch 2006
BlueLinx Overview
Industry Dynamics
Focused Growth Strategy
2005 Q4 Update
Looking Forward
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2005 Q4 Update (Vs. Year Ago):Executing on Our Plan
Revenue: Up 10% to $1.33 billionSpecialty up 13.8% - Structural up 8%
Unit Volume: Total Up 5%Specialty Up 12.7% - Structural Up 0.2%
Gross margin: Total 10.6% vs. 8.4% Specialty 14.3% - Structural 8.3%
Inventory: Total $473.1 million, down 5.4% Specialty reduced 1.3% - Structural reduced 18.2%
Net income: $14.5 million/$0.48/shr vs. loss
Working capital turn days: 37 vs. year-ago 45
Total debt: down $111 million vs. year ago
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BlueLinx Investor PresentationMarch 2006
BlueLinx Overview
Industry Dynamics
Focused Growth Strategy
2005 Q4 Update
Looking Forward
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Looking Forward:2006 Go-Forward Initiatives
Expand relationships with existing and new specialty product vendors who recognize the BlueLinx value proposition
Continue and improve disciplined inventory management to help mitigate price volatility impact on structural products
Target growing accounts that serve attractive high-growth markets
Increase volume in under represented segments, e.g., industrials
Invest in the people and processes necessary to support specialty business growth
Be a patient, disciplined acquirer
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AppendixTOPIC PAGEFundamentals 31Revenues by Quarter 32Unit Volume Growth by Quarter 33Market Growth by Quarter 34Gross Margin by Quarter 35Inventory by Quarter 36Quarterly Volume by Region 37Annual Volume by Region 38Gross Margin % Analysis 39Channel Mix Analysis 40
Balanced Liquidity Illustration 43EBITDA Reconciliation 44-45
Structural Product Price Trends 41Capital Structure Position 42
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BlueLinx Holdings Inc.Fundamentals*
TRADING
NYSE: BXC
7 Analysts Providing Research
Market Capitalization $492 million
Shares Outstanding 30.2 million (basic)
Avg. Daily Trading Vol. 208,000 (3 m)
Float (%) 34
52-Week Range $16.95 (3/14/06) -- $8.25 (8/10/05)
VALUATION
Dividend/yield $0.50/3.1%
Debt to Total Capital 75% (12/31/05)
Cash per share $0.80 (12/31/05)
Book value per share $6.08 (12/31/05)
P/E Ratio (ttm) 11.2
Return on Equity (ttm) 27%
* As of 3/17/06 closing price of $16.29, except where noted
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BlueLinx Holdings Inc.Revenues by Quarter
Sales $ in millions
2003 (1) 2004 (1) 2005Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Specialty (2) $ 449.4 $ 513.5 $ 523.0 $ 473.9 $ 501.1 $ 542.6 $ 559.9 $ 539.5 $ 1,688.8 $ 1,959.8 $ 2,143.1
Structural 830.2 1,056.2 1,015.2 754.9 861.2 960.7 910.6 815.2 2,636.0 3,656.5 3,547.7
Other (3) 0.3 (8.6) (28.6) (21.2) (10.7) (16.3) (16.3) (25.4) (53.0) (58.1) (68.7)
Total $ 1,279.9 $ 1,561.1 $ 1,509.6 $ 1,207.6 $ 1,351.6 $ 1,487.0 $ 1,454.2 $ 1,329.3 $ 4,271.8 $ 5,558.2 $ 5,622.1
StructuralPlywood $ 268.7 $ 317.6 $ 285.7 $ 211.2 $ 244.8 $ 255.2 $ 243.6 $ 217.2 $ 861.5 $ 1,083.2 $ 960.8
OSB 186.7 236.9 187.0 132.6 184.9 213.1 196.8 205.7 609.2 743.2 800.5
Lumber 283.9 373.9 422.3 319.3 337.7 381.1 369.3 309.2 930.9 1,399.4 1,397.3
Sub Total 739.3 928.4 895.0 663.1 767.4 849.4 809.7 732.1 2,401.6 3,225.8 3,158.6
Rebar/Remesh 90.9 127.8 120.3 91.7 93.9 111.2 101.0 83.1 234.5 430.7 389.2
Total $ 830.2 $ 1,056.2 $ 1,015.3 $ 754.8 $ 861.3 $ 960.6 $ 910.7 $ 815.2 $ 2,636.1 $ 3,656.5 $ 3,547.8
Structural Unit Sales
StructuralPlywood 726,709 781,101 817,392 659,765 725,511 757,948 693,328 602,037 2,914,926 2,984,967 2,778,824
OSB 527,965 604,436 589,077 534,949 575,032 734,042 744,340 678,754 2,397,699 2,256,427 2,732,168
Lumber 670,326 756,928 812,762 715,773 720,134 828,620 835,550 702,796 2,543,536 2,955,789 3,087,100
Structural $/Unit
StructuralPlywood $/MSF 3/8" $ 370 $ 407 $ 350 $ 320 $ 337 $ 337 $ 351 $ 361 $ 296 $ 363 $ 346
OSB $/MSF 3/8" $ 354 $ 392 $ 317 $ 248 $ 322 $ 290 $ 264 $ 303 $ 254 $ 329 $ 293
Lumber $/MBF $ 424 $ 494 $ 520 $ 446 $ 469 $ 460 $ 442 $ 440 $ 366 $ 473 $ 453
(1) Pro Forma(2) Includes LSV as of the acquisition date, July 2005.(3) Includes competitive discounts, cash discounts, service revenue, Canadian conversion, and sales accruals.
2004 (1) 2005
33
BlueLinx Holdings Inc.Unit Volume Growth By Quarter
2003 2004 2005Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Specialty (1) 11.7% 13.4% 3.0% 2.9% 1.7% 0.5% 5.8% 12.7% 4.4% 7.6% 5.1%
StructuralPlywood 0.2% 0.7% 4.4% 9.7% (1.0%) (3.3%) (14.6%) (8.7%) (7.1%) 4.1% (6.7%)
OSB (10.2%) (10.0%) (4.4%) 7.0% 12.4% 21.5% 24.5% 23.7% (6.9%) (3.0%) 20.4%
Lumber 13.1% 14.4% 18.4% 23.8% 7.2% 9.4% 2.6% (1.8%) 11.0% 17.6% 4.3%
Rebar/Remesh 21.2% 27.9% 9.0% 19.4% (7.1%) (4.2%) (5.0%) (6.1%) 5.2% 19.1% (5.4%)
Total 5.4% 6.3% 7.5% 14.3% 4.2% 6.4% 0.9% 0.2% 1.0% 8.6% 3.2%
Total 8.4% 9.0% 5.9% 9.4% 3.3% 4.6% 2.6% 5.0% 2.5% 8.2% 3.9%
(1) Includes LSV as of the acquisition date, July 2005.
2004 2005
Unit Volume Growth
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BlueLinx Holdings Inc.Market Growth By Quarter
2003 2004 2005Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
End Use Driver
Actual Housing Starts 13.3% 9.9% 4.1% (2.5%) 5.5% 6.7% 6.7% 3.0% 8.4% 5.8% 5.6%
Industrial Production 2.7% 4.8% 4.6% 4.2% 3.9% 3.4% 2.9% 2.7% 0.6% 4.1% 3.2%
Repair & Remodel 8.4% 0.7% 2.3% 10.4% 1.8% (4.0%) (0.4%) 1.5% (2.4%) 5.0% (0.4%)
Actual Mobile Homes (4.9%) (2.3%) (1.7%) 9.5% 6.9% 0.0% (0.3%) 51.5% (22.5%) 0.0% 14.6%
Non Residential Const 0.3% 1.3% 3.1% (5.8%) (10.7%) (6.7%) (0.3%) 5.2% (3.5%) (0.1%) (3.3%)
Total 8.1% 6.0% 3.4% 1.7% 3.9% 3.2% 3.9% 6.7% 2.0% 4.5% 4.4%
Market Growth
2004 2005
Source: Data from Resource Information Systems, Inc., or RISI, updated as of January 2006, weighed using managements estimates.
35
BlueLinx Holdings Inc.Gross Margin by Quarter
Gross Margin $ in millions
2003 (1) 2004 (1) 2005Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Specialty (2) (3) $ 63.1 $ 77.9 $ 74.3 $ 64.3 $ 63.2 $ 70.1 $ 74.2 $ 76.9 $ 223.2 $ 279.6 $ 284.4
Structural (3) 96.4 95.8 81.7 36.1 60.6 50.7 66.6 67.8 247.6 310.0 245.7
Other (4) (3.5) (9.6) (13.7) 1.0 (4.5) (5.1) (3.8) (4.3) (17.6) (25.8) (17.7)
Total $ 156.0 $ 164.1 $ 142.3 $ 101.4 $ 119.3 $ 115.7 $ 137.0 $ 140.4 $ 453.2 $ 563.8 $ 512.4
Gross Margin %'s
Specialty (2) (3) 14.0% 15.2% 14.2% 13.6% 12.6% 12.9% 13.3% 14.3% 13.2% 14.3% 13.3%
Structural (3) 11.6% 9.1% 8.0% 4.8% 7.0% 5.3% 7.3% 8.3% 9.4% 8.5% 6.9%
Other (4) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Total 12.2% 10.5% 9.4% 8.4% 8.8% 7.8% 9.4% 10.6% 10.6% 10.1% 9.1%
(1) Pro Forma(2) Includes LSV as of the acquisition date, July 2005.(3) Includes product rebates.(4) Includes competitive discounts, cash discounts, Canadian conversion, and accruals.
2004 (1) 2005
36
BlueLinx Holdings Inc.Inventory by Quarter
Inventory $ in millions
2003 2004 2005Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Specialty (1) $ 215.9 $ 237.0 $ 262.1 $ 248.8 $ 254.7 $ 238.4 $ 228.2 $ 245.5 $ 181.3 $ 248.8 $ 245.5
Structural 225.8 216.8 215.0 225.7 234.1 217.7 168.1 184.6 150.4 225.7 184.6
Other (2) (15.9) 32.0 25.6 25.7 29.1 30.0 22.6 43.0 (25.5) 25.7 43.0
Total $ 425.8 $ 485.8 $ 502.7 $ 500.2 $ 517.9 $ 486.1 $ 418.9 $ 473.1 $ 306.2 $ 500.2 $ 473.1
StructuralPlywood $ 89.1 $ 69.8 $ 55.1 $ 59.9 $ 65.7 $ 55.6 $ 48.1 $ 54.1 $ 48.1 $ 59.9 $ 54.1
OSB 40.6 28.1 24.1 22.2 28.0 24.5 13.1 19.8 21.8 22.2 19.8
Lumber 76.3 90.7 94.9 98.9 102.5 100.2 82.4 88.1 62.5 98.9 88.1
Sub Total 206.0 188.6 174.1 181.0 196.2 180.3 143.6 162.0 132.4 181.0 162.0
Rebar/Remesh 19.8 28.2 40.9 44.7 37.9 37.4 24.5 22.6 18.0 44.7 22.6
Total $ 225.8 $ 216.8 $ 215.0 $ 225.7 $ 234.1 $ 217.7 $ 168.1 $ 184.6 $ 150.4 $ 225.7 $ 184.6
On-hand turn days (average)
All Products 42 38 40 47 49 42 40 42 43 41 43
(1) Includes LSV as of the acquisition date, July 2005.(2) Includes in-transit accruals, discounts, allowances, reserves, and other miscellaneous items.
2004 2005
37
BlueLinx Holdings Inc.Quarterly Volume by Region
*Miscellaneous consists of cash and competitive discounts, Canadian conversion,carve-out adjustments, service revenue and other miscellaneous items.
$ millions(unaudited)
Q4 2004Sales
Q4 2005Sales
Total $ Variance
$ Unit Variance
%UnitVariance
Central $188.9 $208.1 $19.2 $8.8 4.7%
Western 173.4 189.3 15.9 6.4 3.7%
Mid Atlantic 222.6 231.2 8.6 (3.2) (1.4%)
Northeast 142.8 139.9 (2.9) (7.7) (5.4%)
Southeast 326.6 373.2 46.6 28.0 8.6%
Mid West 122.0 132.8 10.8 5.5 4.5%
Other 52.5 80.2 27.7 24.1 45.9%
Total Invoiced Sales BlueLinx 1,228.8 1,354.7 125.9 61.9 5.0%
Miscellaneous* (21.2) (25.4) (4.2)
Total Net Sales $1,207.6 $1,329.3 $121.7
38
BlueLinx Holdings Inc.Annual Volume by Region
*Miscellaneous consists of cash and competitive discounts, Canadian conversion,carve-out adjustments, service revenue and other miscellaneous items.
$ millions(unaudited) 2004
Sales2005Sales
Total $ Variance
$ Unit Variance
%UnitVariance
Central $898.3 $913.0 $14.7 $46.5 5.2%
Western 844.5 794.2 (50.3) (8.1) (1.0%)
Mid Atlantic 956.2 988.0 31.8 43.6 4.6%
Northeast 649.9 607.2 (42.7) (32.5) (5.0%)
Southeast 1,447.7 1,548.8 101.1 127.0 8.8%
Mid West 581.9 563.4 (18.5) 1.0 0.2%
Other 237.8 276.2 38.4 38.5 16.2%
Total Invoiced Sales BlueLinx 5,616.3 5,690.8 74.5 216.0 3.9%
Miscellaneous* (58.1) (68.7) (10.6)
Total Net Sales $5,558.2 $5,622.1 $63.9
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BlueLinx Holdings Inc.Gross Margin % Analysis
Trend (4) 1Q05 2Q05 3Q05 4Q05
4Q05Variance from
TrendF/(U)
Structural Products (2)
Warehouse 10.6% 11.3% 7.4% 11.0% 12.0% 1.4%Direct 4.3% 2.9% 3.8% 3.7% 5.1% 0.8%Reload 6.7% 3.7% 2.1% 4.2% 5.9% (0.8%)
Total 8.1% 7.0% 5.3% 7.3% 8.3% 0.2%
Specialty Products (1) (2)
Warehouse 16.3% 16.3% 15.7% 16.1% 17.8% 1.5%Direct 7.5% 6.8% 7.9% 8.1% 8.2% 0.7%Reload 8.7% 8.6% 10.6% 10.1% 10.8% 2.1%
Total 13.3% 12.6% 12.9% 13.2% 14.3% 1.0%
Total (1) (2) (3) (4) 10.1% 8.8% 7.8% 9.4% 10.6% 0.5%
(1) Includes LSV as of the acquisition date, July, 2005.(2) Includes product rebates.(3) Includes competitive discounts, cash discounts, Canadian conversion, and accruals.(4) The 11 quarters from 2001 through Q3 2003 was selected as a representative trend period which reflects a variety of market conditions and pricing cycles.
40
BlueLinx Holdings Inc.Revenue Channel Mix Analysis
Trend (2) 1Q05 2Q05 3Q05 4Q05
4Q05Variance from
TrendF/(U)
Structural ProductsWarehouse 57.2% 48.4% 47.3% 48.7% 45.1% (12.1%)Direct 33.6% 38.8% 38.4% 36.3% 40.7% 7.1%Reload 9.2% 12.8% 14.3% 15.0% 14.2% 5.0%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 0.0%
Specialty Products (1)
Warehouse 64.8% 59.3% 60.8% 61.5% 60.4% (4.4%)Direct 29.2% 30.1% 28.5% 28.3% 29.2% 0.0%Reload 6.0% 10.6% 10.7% 10.2% 10.4% 4.4%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 0.0%
(1) Includes LSV as of the acquisition date, July, 2005.(2) The 11 quarters from 2001 through Q3 2003 was selected as a representative trend period which reflects a variety of market conditions and pricing cycles.
41
BlueLinx Holdings Inc.Structural Products Price Trends
Oriented Strand Board Price Trend 2003 - 3/17/2006Oriented Strand Board 7/16" North Central Zone
$100
$150
$200
$250
$300
$350
$400
$450
$500
$550
2003
Q1
2003
Q2
2003
Q3
2003
Q4
2004
Q1
2004
Q2
2004
Q3
2004
Q4
2005
Q1
2005
Q2
2005
Q3
2005
Q4
2006
Q1
($/m
sf -
3/8"
)
Plywood Price Trend 2003-3/17/2006 Southern Sheathing 15/32" 4 Ply. West Zone
$100
$150
$200
$250
$300
$350
$400
$450
$500
$550
2003
Q1
2003
Q2
2003
Q3
2003
Q4
2004
Q1
2004
Q2
2004
Q3
2004
Q4
2005
Q1
2005
Q2
2005
Q3
2005
Q4
2006
Q1
($/m
sf -
3/8"
)
Source: Data from Random Lengths Publications, Inc., updated as of March 17, 2006.
Lumber Price Trend 2003 - 3/17/2006Western SPF 2x4 #2 & Btr
$150
$200
$250
$300
$350
$400
$450
$500
$550
$600
2003
Q1
2003
Q2
2003
Q3
2003
Q4
2004
Q1
2004
Q2
2004
Q3
2004
Q4
2005
Q1
2005
Q2
2005
Q3
2005
Q4
2006
Q1
($/m
bf)
42
BlueLinx Holdings Inc.Capital Structure Position
BXC Leverage -- Current State
• All low-cost asset-based borrowing
• Creates low WACC
• Liquidity balanced to working capital needs
$220 mln• Revolver excess availability as of 12/31/05
6.3%• Average interest rate YTD 12/31/05
0.8%• Interest expense - % of sales YTD 12/31/05
75% • Debt as % of total capital as of 12/31/05
Key Metrics
• Pay down debt
• Invest in growth – where ROCE > WACC
• Maintain consistent dividend
BXC Priorities For Free Cash Flow• Reduced debt-to-total capital ratio by 754 bp
Q4’04 -- Q4’05
• Negotiated amendment on revolver that reduced interest rate spreads over LIBOR by 50bp
• Pursuing mortgage refinancing at favorable long-term rates
Working On…
Debt to Total Capital Ratio of 75% is manageableLow borrowing cost / Asset-based / Liquidity balanced
43
(all $ in millions)
Annual Incremental Revenue (500) 500 Annual Incremental COGS (453) 453
Turn Days (1) Turn Days (1)
Receivables (44) 32 44 32 Inventory (42) 34 42 34 Payables/Other 30 (24) (30) (24)
Required Funds (56) 42 56 42
Net NetIncremental Availability from… Advance Rate Advance RateInventory (30) 70% 30 70%Receivables (35) 80% 35 80%
Incremental Availability (65) 65
Net Availability Impact (8) 8
(1) 2005Q3 TTM turn days
ShrinkSensitivity
GrowthSensitivity
BlueLinx Holdings Inc.Balanced Liquidity Illustration
44
BlueLinx Holdings Inc.EBITDA Reconciliation
(all $ in millions) 2004 FYPro Forma (1)
2005 Q1-Q4Actual (2)
2004 Q1-2005 Q4Total
(A) (B) (C)=(A+B)
Sales $ 5,558 $ 5,622 $ 11,180
Cost of Sales 4,994 5,110 10,104
Gross Margin 564 512 1,076
Gross Margin % 10.1% 9.1% 9.6%
Operating Expenses
Selling, General & Administrative 385 378 763
Depreciation & Amortization 15 18 33
Total 400 396 796
Operating Income 164 116 280
Other Income/(Expense) - - -
EBIT 164 116 280
Plus:
Depreciation & Amortization 15 18 33
Pro Forma EBITDA $ 179 $ 134 $ 313
(1) Pro Forma as issued on p. 20 of 2004 Q4 earnings release Financial Review slides
(2) Actual Year Ending 2005 as issued on February 15, 2006
45
BlueLinx Holdings Inc. EBITDA Reconciliation
(all $ in millions) 2004 FYPro Forma
2005 Q1-Q4Actual
Pro Forma EBITDA $ 179 3.2% $ 134 2.4%
Pro Forma Gross Margin 564 10.1% 512 9.1%
Gross margin adjustment (1) (28) (0.5%) 28 0.5%
Adjusted Pro Forma Gross Margin 536 9.6% 540 9.6%
Adjusted Pro Forma EBITDA (1) $ 151 2.7% $ 162 2.9%
(1) Commodity gross margins restated at the two year average to eliminate the impact of commodity margin volatility