What changed in this filing

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Item 1. Business

2021-03-03 compared with 2020-03-11 · 36 added, 87 removed, 62 unchanged (66% of the section changed)

Company Overview

We are a leading distributor of building and industrial products in the United States (“U.S.”).

BlueLinx is a leading U.S.

wholesale distributor of residential and commercial building products with both branded and private-label stock keeping units (“SKUs”) across product categories such as lumber, panels, engineered wood, siding, millwork, metal building products, and other construction materials.

With a strong market position, broad geographic coverage footprint servicing 40 states, and the strength of a locally focused sales force, we distribute our comprehensive range of products to over 15,000 national, regional, and local dealers, specialty distributors, national home centers, and manufactured housing customers.

BlueLinx is able to provide a wide range of value added services and solutions to our customers and suppliers.

We are headquartered in Georgia, with executive offices located at 1950 Spectrum Circle, Marietta, Georgia, and we operate our distribution business through a broad network of distribution centers.

We serve many major metropolitan areas in the U.S., and deliver building and industrial products to a variety of wholesale and retail customers.

As a “two-step” wholesale distributor of building products, BlueLinx stocks products from leading manufacturers, such as Huber Engineered Woods, James Hardie, Georgia Pacific, Weyerhaeuser, and Oldcastle, and supplies these products to a broad range of customers, including lumber yards, dealers, home centers, and hardware stores.

These customers then serve residential and commercial builders and contractors in their respective geographic areas.

BlueLinx plays a critical role in enabling its lumber yard, dealer, and home center customers to offer a broad range of products and brands, as most of BlueLinx’s customers do not have the capability to purchase and warehouse directly from the manufacturers for such a large set of SKUs.

Similarly, BlueLinx provides value to its manufacturer partners by enabling access to the fragmented network of lumber yards and dealers that the manufacturers could not adequately serve directly.

Our place in this distribution model of building products provides easy access to the marketplace for our suppliers and the value proposition of rapid delivery on an as-needed basis to our customers from our network of warehouse facilities.

In addition to its broad portfolio of building products, BlueLinx also offers a wide array of custom cutting and fabrication services for the wood products industry.

We were incorporated in the State of Georgia on March 8, 2004 as ABP Distribution Holdings, Inc.

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On December 17, 2004, we consummated an initial public offering of our common stock.

On April 13, 2018, we completed the acquisition of Cedar Creek Holdings, Inc.

(“Cedar Creek”).

Cedar Creek was established in 1977 as a wholesale material distribution company that distributed wood products across the United States.

Its products included specialty lumber, oriented strand board, siding, cedar, spruce, engineered wood products, and other building products which were complimentary to our portfolio.

This acquisition allowed us to expand our product offerings, while maintaining our existing geographical footprint.

Significant Recent Transactions

Real Estate Transactions

During the second quarter of 2019, we completed real estate financing transactions through sale-leaseback arrangements on two of our distribution facilities for gross proceeds of $45.0 million.

Net proceeds from the transactions were used to repay indebtedness under our term loan and revolving credit facility.

Upon completion of the transactions, we entered into long-term leases with multiple renewal options on the properties.

Subsequent to the end of fiscal 2019, we completed real estate financing transactions through sale-leaseback arrangements on fourteen of our distribution facilities for gross proceeds of $78.3 million.

During the first quarter of fiscal 2020, we completed real estate financing transactions through sale-leaseback arrangements on fourteen of our distribution facilities.

Additionally, during the third quarter of fiscal 2020, we completed a real estate financing transaction through a sale-leaseback arrangement on one distribution facility.

Gross proceeds for these transactions were $89.3 million.

Net proceeds from these transactions were used to repay indebtedness under our term loan.

Upon completion of the transactions, we entered into long-term leases with multiple renewal options on the properties.

These real estate financing transactions are described in further detail in Note 16 to our Consolidated Financial Statements.

Pension Plan - Lump Sum Offer

During the fourth quarter of 2019, we completed the offering of a voluntary lump sum payment option to certain qualified former employees or their beneficiaries who were vested participants in the BlueLinx Corporation Hourly Pension Plan.

Lump sum payments made in connection with the offer totaled $9.7 million, and were funded with existing plan assets.

These lump sum payments decreased our related overall projected benefit obligation by approximately $ 12.2 million.

We also recorded a related settlement charge of $2.8 million.

Fiscal 2019 and fiscal 2018 each were comprised of 52 weeks.

These real estate financing transactions are described in further detail in Note 12, Lease Commitments , in the Notes to the Consolidated Financial Statements.

Products and Services

We distribute products in two principal categories:

structural products and specialty products.

Structural products, which represented approximately 33% and 36% of our fiscal 2019 and fiscal 2018 net sales, respectively, include plywood, oriented strand board, rebar and remesh, lumber and other wood products primarily used for structural support and walls in construction projects.

Specialty products, which represented approximately 67% and 64% of our fiscal 2019 and fiscal 2018 net sales, respectively, include engineered wood products, moulding, siding (including vinyl products), cedar, metal products (excluding rebar and remesh) and insulation.

specialty products and structural products.

Specialty products, which represented approximately 60 percent and 67 percent of our fiscal 2020 and fiscal 2019 net sales, respectively, include primarily engineered wood products, moulding, siding and trim, cedar, metal products (excluding rebar and remesh) and insulation.

Structural products, which represented approximately 40 percent and 33 percent of our fiscal 2020 and fiscal 2019 net sales, respectively, include plywood, oriented strand board, rebar and remesh, lumber, spruce and other wood products primarily used for structural support in construction projects.

In some cases, these products are branded by us.

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• backhaul services, when otherwise empty trucks are returning from customer deliveries.

During fiscal 2019, we changed our internal product hierarchy within our structural and specialty product categories.

As a result, amounts for fiscal 2018 disclosed above have been reclassified to conform to the revised product mix of structural and specialty products.

Distribution Channels

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Warehouse sales are delivered from our warehouses to our customers.

Reload sales are similar to warehouse sales but are shipped from third-party warehouses where we store owned product to enhance operating efficiencies.

Reload sales are similar to warehouse sales but are shipped from third-party warehouses where we store owned products to enhance operating efficiencies.

This channel is employed primarily to service strategic customers that would be less economical to service from our warehouses, and to distribute large volumes of imported products from port facilities.

Warehouse and reload sales accounted for approximately 82% of our fiscal 2019 and 2018 gross sales.

Direct sales are shipped from the manufacturer to the customer without our taking physical possession of the inventory.

Warehouse and reload sales accounted for approximately 83 percent and 82 percent of our fiscal 2020 and 2019 gross sales, respectively.

Direct sales are shipped from the manufacturer to the customer without our taking physical possession of the inventory and, as a result, typically generate lower margins than our warehouse and reload distribution channels.

This distribution channel requires the lowest amount of committed capital and fixed costs.

Direct sales accounted for approximately 18% our fiscal 2019 and 2018 gross sales.

Direct sales accounted for approximately 17 percent and 18 percent of our fiscal 2020 and 2019 gross sales, respectively.

building products distribution market is a highly fragmented market, served by national and multi-regional distributors, regionally focused distributors, and independent local distributors.

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We are exposed to fluctuations in quarterly sales volumes and expenses due to seasonal factors common in the building products distribution industry.

The first and fourth quarters are typically our slowest quarters due to the impact of unfavorable weather on the construction market.

Our second and third quarters are typically our strongest quarters, reflecting an increase in construction due to more favorable weather conditions.

Our working capital, accounts receivable, and accounts payable generally peak in the third quarter, while inventory generally peaks in the second quarter in anticipation of the summer building season.

As of December 28, 2019 , we employed approximately 2,200 employees, of which approximately 99% are full time.

Approximately 20% of our employees were covered by collective bargaining agreements (“CBAs”) negotiated between the company and various local unions.

Three of those CBAs covering approximately 30 employees are up for renewal in fiscal 2020.

Information About Our Executive Officers

The following are the executive officers of the Company as of March 11, 2020 :

Lewis , age 58, has served as our President and Chief Executive Officer, and as a Director of BlueLinx Holdings Inc., since January 2014.

Lewis has held numerous leadership positions in the building products industry since 1992.

Lewis served as a director and as President and Chief Executive Officer of Euramax Holdings, Inc., a building products manufacturer, from February 2008 through November 2013.

Lewis also served as Chief Operating Officer in 2005, Executive Vice President in 2002, and group Vice President in 1997 of Euramax Holdings, Inc.

and its predecessor companies.

Prior to being appointed group Vice President, Mr.

Lewis served as President of Amerimax Building Products, Inc.

Prior to 1992, Mr.

Lewis served as Corporate Counsel with Alumax Inc.

and practiced law with Alston & Bird LLP, specializing in mergers and acquisitions.

Lewis is currently a director of GMS Inc.

Lewis received a Bachelor of Arts degree in Economics from Emory University, and a Juris Doctor degree from the University of Michigan.

O’Farrell , age 56, has served as our Senior Vice President, Chief Financial Officer, Treasurer, and Principal Accounting Officer since 2014.

Prior to joining us, Ms.

O’Farrell was a senior financial executive holding several roles with The Home Depot, Inc.

As The Home Depot’s Vice President of Finance, she led teams supporting the retail organization.

O’Farrell was also responsible for the finance function for The Home Depot’s At Home Services Group.

O’Farrell led the financial operations of The Home Depot, and she served as the VP Finance for the Northern Division of the company.

O’Farrell began her career with Andersen Consulting, LLP (now Accenture), leaving as an Associate Partner in 1996 for a strategic information systems role with AGL Resources (now Southern Company Gas).

O’Farrell earned a Bachelor of Science degree in Business Administration from Auburn University and completed Emory University’s Executive Leadership program.

Averitt , age 43, has served as our Chief Operating Officer since April 2018.

From September 2017 to April 2018, Mr.

Averitt was President and Chief Executive Officer at Cedar Creek, LLC.

He joined Cedar Creek in 2005 as a sales manager and served in various roles for the company, including Chief Operating Officer from April 2015 to September 2017, and Vice President of Information Technology from May 2014 to April 2015.

Prior to joining Cedar Creek, Mr.

Averitt spent nine years in various roles with Jeld-Wen Inc., including as a General Manager.

Averitt earned a Bachelor of Professional Studies degree from Arkansas Tech University.

Reddy , age 45, has served as our Senior Vice President, Chief Administrative Officer, and Senior Vice President, Corporate Development, since May 2019.

Before that, he served as our Senior Vice President and Chief Transformation officer from April 2018 to May 2019, as our Senior Vice President, Chief Administrative Officer, General Counsel, and Corporate Secretary from May 2017 to April 2018, and as our Senior Vice President, General Counsel and Corporate Secretary from June 2015 until May 2017.

Prior to joining us, Mr.

Reddy served as Senior Vice President, Chief Administrative Officer, General Counsel, and Corporate Secretary of Euramax Holdings, Inc., from March 2013 to March 2015.

Before joining Euramax Holdings, Inc., Mr.

Reddy was the Regional Administrator of the Southeast Sunbelt Region of the U.S.

General Services Administration from March 2010 to March 2013.

Prior to accepting the Presidential Appointment at the U.S.

General Services Administration, Mr.

Reddy practiced corporate law as a partner in the Atlanta office of Kilpatrick, Townsend & Stockton LLP.

Reddy received a Bachelor of Arts degree in Political Science, and a Master of Public Health degree from Emory University, and also received a Juris Doctor degree from the University of Georgia.

Heineman , age 48, has served as our Vice President, General Counsel, and Corporate Secretary since May 2018.

Heineman joined us after 8 years with NCR Corporation (“NCR”).

Heineman served as Law Vice President, Chief Corporate Counsel and Assistant Secretary from October 2015 to May 2018, where he was responsible for oversight of the company’s corporate legal function, including mergers and acquisitions, corporate governance and securities law compliance.

From February 2010 to October 2015, Mr.

Heineman served as NCR’s Senior Corporate Counsel and Assistant Secretary.

Prior to joining NCR, Mr.

Heineman was a partner in the Atlanta office of Kilpatrick, Townsend & Stockton LLP.

Heineman received a Bachelor of Arts degree from Duke University, and a Juris Doctor degree from The University of North Carolina.

Sasadu , age 46, has served as our Chief Human Resource Officer since January 2019.

Before joining BlueLinx, from 2003 to December 2018, Mr.

Sasadu served in various roles with Coca-Cola Refreshments USA, Inc.

(“CCR”), the North American bottling and distribution arm of The Coca-Cola Company.

From July 2016 to December 2018, Mr.

Sasadu served as CCR’s Senior Vice President, Human Resources.

Before that, Mr.

Sasadu served as CCR’s Vice President, Human Resources - Supply Chain, US Region and Commercial from April 2014 to July 2016, and as CCR’s Vice President, Labor & Employment practices from August 2007 to April 2014.

Sasadu began his career in Atlanta at the international law firm of King & Spalding LLP where he practiced law with the Labor and Employment team.

Sasadu received a Bachelor of Arts degree in Political Science and a Juris Doctor degree from the University of Florida.

The first and fourth quarters are typically our lower volume quarters due to the impact of unfavorable weather on the construction market.

Our second and third quarters are typically our higher volume quarters, reflecting an increase in construction, due to more favorable weather conditions.

In past years, assuming no change in underlying inventory costs, our working capital has increased in second and third quarters, reflecting general increases in seasonal demand.

During fiscal 2020, our inventory and working capital balances decreased during the second and third quarters, despite increasing commodity prices, due to enhancements in our working capital management throughout the year.

During the ongoing novel coronavirus (“COVID-19”) pandemic, our typical patterns of seasonality changed, largely due to increased demand for our products.

Milder weather in the latter part of 2020 also contributed to our traditional summer patterns continuing into the fourth quarter.

While uncertain, it remains a possibility that changes to our typical seasonality trends could continue during fiscal 2021 should similar market conditions continue.

As of January 2, 2021, we employed approximately 2,100 employees and less than one percent of our employees are employed on a part-time basis.

Approximately 22 percent of our employees were represented by various local labor unions with terms and conditions of employment governed by collective bargaining agreements (“CBAs”).

Six CBAs covering approximately six percent of our employees are up for renewal in fiscal 2021.

Environmental and Other Governmental Regulations

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business