What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-03 compared with 2021-11-02 · 153 added, 224 removed, 358 unchanged (51% of the section changed)

4 unchanged sentences

(In thousands, except per share data)

Three Months Ended Nine Months Ended

October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

Three Months Ended

April 2, 2022 April 3, 2021

Net sales $ 1,302,305 $ 1,025,469

11 unchanged sentences

Interest expense, net 11,293 16,234

Other income, net ( 704 ) ( 238 ) ( 1,335 ) ( 58 )

Other expense (income), net 1,138 ( 314 )

Income before provision for income taxes 180,731 83,606

7 unchanged sentences

Amortization of unrecognized pension gain, net of tax 156 239

Other 7 ( 5 ) 24 ( 2 )

Total other comprehensive income 176 250

4 unchanged sentences

(In thousands, except share data)

October 2, 2021 January 2, 2021

April 2, 2022 January 1, 2022

Current assets:

Cash $ 186 $ 82

Cash and cash equivalents $ 74,438 $ 85,203

Receivables, less allowances of $ 4,965 and $ 4,024 , respectively

17 unchanged sentences

Taxes payable 53,195 6,138

Current maturities of long-term debt, net of debt issuance costs of $ 0 and $ 74 , respectively

Finance lease liabilities - short-term 7,264 7,864

15 unchanged sentences

Common Stock, $ 0.01 par value, 20,000,000 shares authorized,

9,723,838 and 9,462,774 outstanding on October 2, 2021 and January 2, 2021, respectively

9,651,000 and 9,725,760 outstanding on April 2, 2022, and January 1, 2022, respectively

Additional paid-in capital 263,428 268,085

Accumulated other comprehensive loss ( 29,184 ) ( 29,360 )

Accumulated stockholders’ equity (deficit) 50,810 ( 171,706 )

Accumulated stockholders’ equity 257,836 124,427

Total stockholders’ equity 492,176 363,249

6 unchanged sentences

Paid-In Capital Accumulated

Comprehensive Loss Accumulated Equity (Deficit) Stockholders’ Equity Total

Comprehensive Loss Accumulated Equity Stockholders’ Equity Total

Shares Amount

1 unchanged sentence

Net income — — — — 133,409 133,409

Foreign currency translation, net of tax — — — ( 6 ) — ( 6 )

Impact of pension plan, net of tax — — — 156 — 156

2 unchanged sentences

Repurchase of shares to satisfy employee tax withholdings ( 5 ) — ( 393 ) — — ( 393 )

Common stock repurchase and retirement ( 81 ) ( 1 ) ( 6,426 ) — — ( 6,427 )

Other — — — 20 — 20

Balance, April 2, 2022 9,651 96 263,428 ( 29,184 ) 257,836 492,176

Net income — — — — 113,458 113,458

Foreign currency translation, net of tax — — — 6 — 6

Impact of pension plan, net of tax — — — 246 — 246

Vesting of restricted stock units 355 2 — — — 2

Compensation related to share-based grants — — 1,992 — — 1,992

Repurchase of shares to satisfy employee tax withholdings ( 113 ) — ( 5,033 ) — — ( 5,033 )

Other — — ( 2 ) — — ( 2 )

Balance, July 3, 2021 9,710 97 264,963 ( 35,490 ) 3,612 233,182

Net income — $ — $ — $ — $ 47,198 $ 47,198

Foreign currency translation, net of tax — — — 7 — 7

Impact of pension plan, net of tax — — — 238 — 238

Vesting of restricted stock units 14 — — — — —

Compensation related to share-based grants — — 1,608 — — 1,608

Repurchase of shares to satisfy employee tax withholdings — — ( 3 ) — — ( 3 )

Other — — ( 4 ) — — ( 4 )

Balance, October 2, 2021 9,724 $ 97 $ 266,564 $ ( 35,245 ) $ 50,810 $ 282,226

See accompanying Notes.

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands)

Common Stock Additional

Paid-In Capital Accumulated

Comprehensive Loss Accumulated Deficit Stockholders’ Deficit Total

Comprehensive Loss Accumulated Deficit Stockholders’ Equity Total

Shares Amount

Balance, December 28, 2019 9,366 $ 94 $ 260,974 $ ( 34,563 ) $ ( 252,588 ) $ ( 26,083 )

Net loss — — — — ( 787 ) ( 787 )

Foreign currency translation, net of tax — — — 3 — 3

Impact of pension plan, net of tax — — — 196 — 196

Vesting of restricted stock units 2 — — — — —

Compensation related to share-based grants — — 1,004 — — 1,004

Repurchase of shares to satisfy employee tax withholdings ( 1 ) — ( 7 ) — — ( 7 )

Other — — 9 ( 19 ) — ( 10 )

Balance, March 28, 2020 9,367 94 261,980 ( 34,383 ) ( 253,375 ) ( 25,684 )

Net income — — — — 6,695 6,695

Foreign currency translation, net of tax — — — 17 — 17

Impact of pension plan, net of tax — — — 114 — 114

Vesting of restricted stock units 122 1 — — — 1

Compensation related to share-based grants — — 854 — — 854

Repurchase of shares to satisfy employee tax withholdings ( 28 ) — ( 247 ) — — ( 247 )

Other — — — 2 — 2

Balance, June 27, 2020 9,461 $ 95 $ 262,587 $ ( 34,250 ) $ ( 246,680 ) $ ( 18,248 )

Balance, January 2, 2021 9,463 $ 95 $ 266,695 $ ( 35,992 ) $ ( 171,706 ) $ 59,092

Net income — — — — 61,860 61,860

Foreign currency translation, net of tax — — — ( 12 ) — ( 12 )

Impact of pension plan, net of tax — — — 239 — 239

2 unchanged sentences

Repurchase of shares to satisfy employee tax withholdings ( 3 ) — ( 99 ) — — ( 99 )

Common stock repurchase and retirement — — — — — —

Other — — — 11 — 11

Balance, September 26, 2020 9,462 $ 95 $ 263,643 $ ( 33,961 ) $ ( 191,564 ) $ 38,213

Balance, April 3, 2021 9,468 95 268,006 ( 35,742 ) ( 109,846 ) 122,513

See accompanying Notes.

2 unchanged sentences

(In thousands)

Nine Months Ended

October 2, 2021 September 26, 2020

Three Months Ended

April 2, 2022 April 3, 2021

Cash flows from operating activities:

Net income $ 133,409 $ 61,860

Adjustments to reconcile net income to cash provided by operations:

Provision for income taxes 72,886 14,214

Adjustments to reconcile net income to cash provided by (used in) operations:

Depreciation and amortization 6,746 7,465

Amortization of debt issuance costs 1,560 2,888

Amortization of debt discount and issuance costs 263 603

Adjustments to debt issuance costs associated with term loan — 5,791

Gains from sales of property — ( 1,287 )

Deferred income tax ( 1,994 ) ( 3,896 )

Amortization of deferred gains from real estate ( 984 ) ( 984 )

4 unchanged sentences

Accounts payable 50,072 53,812

Taxes payable 47,057 25,799

Other current assets ( 601 ) ( 448 )

Pension contributions ( 325 ) ( 142 )

Other assets and liabilities ( 2,377 ) ( 15,246 )

Net cash provided by operating activities 126,859 74,396

Net cash provided by (used in) operating activities 2,237 ( 24,608 )

Cash flows from investing activities:

1 unchanged sentence

Property and equipment investments ( 2,509 ) ( 1,122 )

Net cash provided by (used in) investing activities ( 2,772 ) 8,799

Net cash (used in) provided by investing activities ( 2,460 ) 688

Cash flows from financing activities:

2 unchanged sentences

Repayments on term loan — ( 43,204 )

Proceeds from real estate financing transactions — 78,263

Common stock repurchase and retirement ( 6,427 ) —

Debt financing costs — ( 861 )

1 unchanged sentence

Principal payments on finance lease liabilities ( 3,722 ) ( 2,129 )

Net cash used in financing activities ( 123,983 ) ( 84,684 )

Net change in cash 104 ( 1,489 )

Cash at beginning of period 82 11,643

Cash at end of period $ 186 $ 10,154

Net cash (used in) provided by financing activities ( 10,542 ) 24,017

Net change in cash and cash equivalents ( 10,765 ) 97

Cash and cash equivalents at beginning of period 85,203 82

Cash and cash equivalents at end of period $ 74,438 $ 179

Supplemental cash flow information:

Net income tax payment during the period $ 82,596 $ 610

Interest paid during the period 6,387 9,971

Taxes paid during the period 2,350 —

Non-cash transactions:

Property and equipment acquired under finance leases — 10,211

See accompanying Notes.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 2, 2021

April 2, 2022

Basis of Presentation and Summary of Significant Accounting Policies

2 unchanged sentences

and its wholly owned subsidiaries (the “Company”).

We derived the condensed consolidated balance sheet at October 2, 2021, from the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 2, 2021 (the “Fiscal 2020 Form 10-K”), as filed with the Securities and Exchange Commission on March 3, 2021.

In the opinion of our management, the condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of our statements of operations and comprehensive income for the three and nine months ended October 2, 2021, and September 26, 2020, our balance sheets at October 2, 2021, and January 2, 2021, our statements of stockholders’ equity (deficit) for the nine months ended October 2, 2021, and September 26, 2020, and our statements of cash flows for the nine months ended October 2, 2021, and September 26, 2020.

We derived the condensed consolidated balance sheet at April 2, 2022, from the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 1, 2022 (the “Fiscal 2021 Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”) on February 22, 2022.

In the opinion of our management, the condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of our statements of operations and comprehensive income for the three months ended April 2, 2022, and April 3, 2021, our balance sheets at April 2, 2022, and January 1, 2022, our statements of stockholders’ equity for the three months ended April 2, 2022, and April 3, 2021, and our statements of cash flows for the three months ended April 2, 2022, and April 3, 2021.

We have condensed or omitted certain notes and other information from the interim condensed consolidated financial statements presented in this report.

Therefore, these condensed consolidated interim financial statements should be read in conjunction with the Fiscal 2021 Form 10-K.

The results for the three and nine months ended October 2, 2021 are not necessarily indicative of results that may be expected for the full year ending January 1, 2022, or any other interim period.

The results for the three months ended April 2, 2022, are not necessarily indicative of results that may be expected for the full year ending December 31, 2022, or any other interim period.

We operate on a 5-4-4 fiscal calendar.

Our fiscal year ends on the Saturday closest to December 31 of that fiscal year and may comprise 53 weeks in certain years.

Our 2021 fiscal year contains 52 weeks and ends on January 1, 2022.

Our 2022 fiscal year contains 52 weeks and ends on December 31, 2022.

Fiscal 2021 contained 52 weeks and ended on January 1, 2022.

3 unchanged sentences

Although our current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from our expectations, which could materially affect our results of operations and financial position.

Some of our estimates may be affected by the ongoing novel coronavirus (“COVID-19”) pandemic.

The severity, magnitude, and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly changing, and difficult to predict.

As a result, our accounting estimates and assumptions may change over time in response to the continuing COVID-19 pandemic.

Reclassification of Prior Period Presentation

We have reclassified certain costs within the Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 26, 2020, from selling, general and administrative to amortization of deferred gains on real estate.

These amounts relate to the amortization of deferred gains from real estate transactions in 2017 and 2018.

Refer to Note 9, Leases.

Additionally, we reclassified amounts in other comprehensive income from foreign currency translation, net of tax, to other, for the nine months ended October 2, 2021, and three and nine months ended September 26, 2020.

We have reclassified certain payables within the Condensed Consolidated Balance Sheets for the year ended January 2, 2021, from other current liabilities to taxes payable.

These payables relate to amounts due to various tax authorities.

For the quarter ended April 3, 2021, we have reclassified certain items within the presentation of our statement of cash flows to align with our statement of cash flows presentation for the quarter ended April 2, 2022.

Our reclassifications are limited to the operating activities section and include presenting only the impact of deferred income taxes, instead of our full provision for income taxes, as a reconciling item for net income to cash provided by operating activities.

We have also reclassified certain items previously presented individually, such as pension expense and pension contributions, to be included in the change of other assets and liabilities.

In addition, we are presenting the change in taxes payable, previously included in other assets and liabilities, as a distinct line item in our reconciliation of net income to cash provided by operating activities.

These reclassifications, we believe, provide an enhanced level of transparency with regards to the presentation of our statement of cash flows.

These reclassifications did not impact operating income or consolidated net income.

Recently Adopted Accounting Standards

Credit Impairment Losses.

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, “Financial Instruments - Credit Losses (Topic 326).” This ASU sets forth a current expected credit loss (“CECL”) model which requires the measurement of all expected credit losses for financial instruments or other assets (e.g., trade receivables), held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts.

This replaces the existing incurred loss model, is applicable to the measurement of credit losses on financial assets measured at amortized cost, and applies to some off-balance sheet credit exposures.

The standard also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity's portfolio.

The Company adopted this

standard on a modified retrospective basis in the first quarter of 2022 and the implementation did not have a material impact to the Company’s condensed consolidated financial statements.

Reference Rate Reform.

In March 2020, the FASB issued ASU No.

2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The standard provides temporary guidance to ease the potential burden in accounting for reference rate reform primarily resulting from the discontinuation of the publication of certain tenors of the London Inter-bank Offered Rate (“LIBOR”) on December 31, 2021, with complete elimination of the publication of the LIBOR by June 30, 2023.

The amendments in this ASU are elective and apply to all entities that have contracts referencing the LIBOR.

The Company’s revolving credit agreement, as further discussed in Note 6 to these condensed consolidated financial statements, currently references the LIBOR for determining interest payable on current and future borrowings and includes provisions for the use of alternative rates if the LIBOR is unavailable.

The guidance in this ASU provides a practical expedient which simplifies accounting analyses under current U.S.

GAAP for contract modifications if the change is directly related to a change from the LIBOR to a new interest rate index.

The Company adopted this standard prospectively in the first quarter of 2022.

The implementation did not have a material impact to the Company’s condensed consolidated financial statements or to any key terms of our revolving credit agreement other than the discontinuation of the LIBOR.

Income Taxes.

In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

In December 2019, the FASB issued ASU No.

2019-12, “Income Taxes (Topic 740):

1 unchanged sentence

The amendments in this standard are effective for interim periods and fiscal years beginning after December 15, 2020.

Early adoption is

We adopted this standard for the first fiscal quarter of 2021.

The adoption of this standard did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.

Defined Benefit Pension Plan .

In August 2018, the FASB issued ASU No.

2018-14, “Compensation-Retirement-Benefits-Defined Benefit Plans-General (Subtopic 715-20).” The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans by removing six previously required disclosures and adding two.

The ASU also removes the disclosure requirements for the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost, and the benefit obligation for postretirement healthcare benefits.

We adopted this standard effective for fiscal year 2021.

The adoption of this standard did not have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

Fair Value Measurement .

In August 2018, the FASB issued ASU No.

2018-13, “Fair Value (“FV”) Measurement (Topic 820).” In addition to making certain modifications, the standard removed the requirements to disclose:

(i) the amount of and reasons for transfers between Level 1 and Level 2 of the FV hierarchy;

(ii) the policy for timing transfers between levels;

and (iii) the valuation process for Level 3 FV measurements.

The standard requires public entities to disclose:

(a) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 FV measurements held at the end of the reporting period;

and (b) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 FV measurements.

The additional disclosure requirements are applied prospectively for the most recent interim or annual period presented in the fiscal year of adoption.

All other amendments are applied retrospectively to all periods presented.

We adopted this standard effective December 29, 2019, the first day of our 2020 fiscal year.

The adoption of this standard did not have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

Accounting Standards Effective in Future Periods

Credit Impairment Losses.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326).” This ASU sets forth a current expected credit loss (“CECL”) model which requires the measurement of all expected credit losses for financial instruments or other assets (e.g., trade receivables), held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts.

ASU 2019-10 extended the effective date of ASU 2016-13 to interim and annual periods beginning after December 15, 2022, for certain public business entities, including smaller reporting companies.

We have not completed our assessment of the standard, but we do not expect the adoption to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

The adoption of the standard did not have a material impact on the Company's condensed consolidated financial statements.

Our inventories consist almost entirely of finished goods inventory, with an immaterial amount of work-in-process inventory.

1 unchanged sentence

We have included all material charges directly incurred in bringing inventory to its existing condition and location.

We evaluate our inventory value at the end of each quarter to ensure that inventory, when viewed by category, is carried at the lower of cost and net realizable value, which also considers items that may be considered damaged, excess, and obsolete inventory.

For the three month periods ended October 2, 2021, we released a lower of cost or net realizable value reserve of $ 16.7 million resulting from the decrease in value of our structural lumber inventory related to the decline in wood-based commodity prices, accrued during the second quarter of fiscal 2021, as the inventory impacted by the reserve was sold to customers.

The lower of cost of net realizable value reserve of $ 16.7 million had no net impact on the nine month period ended October 2, 2021.

We evaluate our inventory value at the end of each quarter to ensure that inventory, when viewed by category, is carried at the lower of cost or net realizable value, which also considers items that may be considered damaged, excess, and obsolete inventory.

Goodwill and Other Intangible Assets

In connection with the acquisition of Cedar Creek on April 13, 2018, we acquired certain intangible assets.

As of October 2, 2021, our intangible assets consist of goodwill and other intangible assets including customer relationships, noncompete agreements, and trade names.

In connection with our past merger and acquisition activity, we acquired certain intangible assets.

As of April 2, 2022, our intangible assets consist of goodwill and other intangible assets including customer relationships, noncompete agreements, and trade names.

Goodwill is the excess of the cost of an acquired entity over the fair value of tangible and intangible assets (including customer relationships, noncompete agreements, and trade names) acquired, and liabilities assumed, under acquisition accounting for business combinations.

As of October 2, 2021, goodwill was $ 47.8 million.

As of April 2, 2022, goodwill was $ 47.8 million.

Goodwill is not subject to amortization but must be tested for impairment at least annually.

3 unchanged sentences

Such events and indicators may include, without limitation, significant declines in the industries in which our products are used, significant changes in capital market conditions, and significant changes in our market capitalization.

No such indicators were present during the third quarter of fiscal 2021.

Our one reporting unit has a fair value that exceeds its carrying value as of October 2, 2021.

No such indicators were present during the first quarter of fiscal 2022.

Our one reporting unit has a fair value that exceeds its carrying value as of April 2, 2022.

Definite-Lived Intangible Assets

On October 2, 2021, the gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets were as follows:

Intangible Asset Weighted Average Remaining Useful Lives Gross Carrying Amounts Accumulated

On April 2, 2022, the gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets were as follows:

Intangible Asset Weighted Average Remaining Useful Lives (Years) Gross Carrying Amounts Accumulated

Amortization (1)

Net Carrying Amounts

(Years) (In thousands)

(In thousands)

Customer relationships 8 $ 25,500 $ ( 13,061 ) $ 12,439

1 unchanged sentence

Trade names — 6,826 ( 6,826 ) —

6,826 ( 6,826 ) —

Total $ 40,580 $ ( 28,061 ) $ 12,519

1 unchanged sentence

Customer relationships are amortized on a double declining balance method.

During the second quarter of fiscal 2021, our trade names intangible asset became fully amortized.

Amortization Expense

Amortization expense for our definite-lived intangible assets was $ 1.1 million and $ 4.2 million for the three and nine month periods ended October 2, 2021, respectively.

For the three and nine month periods ended September 26, 2020, amortization expense was $ 1.8 million and $ 5.6 million, respectively.

Amortization expense for our definite-lived intangible assets was $ 1.1 million and $ 1.8 million for the three-month periods ended April 2, 2022, and April 3, 2021, respectively.

Estimated amortization expense for definite-lived intangible assets for the remaining portion of 2022 and the next five fiscal years is as follows:

21 unchanged sentences

Trade allowances are based on the estimated obligations and historical experience.

Adjustments to earnings resulting from revisions to estimates on discounts and returns have been insignificant for each of the reported periods.

Adjustments to earnings resulting from revisions to estimates on discounts and returns have been insignificant for

each of the reported periods.

Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration.

2 unchanged sentences

The following table presents our revenues disaggregated by revenue source.

Certain prior year amounts have been reclassified to conform to the current year product mix of structural and specialty products.

Sales and usage-based taxes are excluded from revenues.

Three Months Ended Nine Months Ended

Product type October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

(In thousands) (In thousands)

Structural products $ 329,818 $ 375,072 $ 1,425,389 $ 865,302

Three Months Ended

Product type April 2, 2022 April 3, 2021

(In thousands)

Specialty products $ 767,907 $ 563,060

Structural products 534,398 462,409

Total net sales $ 1,302,305 $ 1,025,469

6 unchanged sentences

Sales and usage-based taxes are excluded from revenues.

Three Months Ended Nine Months Ended

Sales channel October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

(In thousands) (In thousands)

Three Months Ended

Sales channel April 2, 2022 April 3, 2021

(In thousands)

Warehouse and reload $ 1,077,946 $ 849,419

3 unchanged sentences

Assets Held for Sale

As of October 2, 2021, and January 2, 2021, the net book value of total assets held for sale was $ 0.9 million and $ 1.3 million, respectively, and was included in “Other current assets” in our Condensed Consolidated Balance Sheets.

Only one of our non-

operating properties was designated as “held for sale” as of October 2, 2021.

This property is a former distribution facility located in Houston, Texas.

We vacated this property and designated it as held for sale during fiscal 2020.

We continue to actively market this property, and we plan to sell this property within the next 12 months.

As of April 2, 2022, and January 1, 2022, the net book value of total assets classified as “held for sale” was $ 3.0 million and $ 2.6 million, respectively, and was included in other current assets in our condensed consolidated balance sheets.

The book value of total liabilities classified as “held for sale” as of April 2, 2022, and January 1, 2022, was $ 2.1 million and $ 1.9 million, respectively, and was included in other current liabilities in our condensed consolidated balance sheets.

Assets classified as “held for sale” as of April 2, 2022, consisted of fixed assets, at net book value, and current assets, including raw material and work in process inventory, affiliated with one of our business locations in the Midwest.

Liabilities classified as “held for sale” included current liabilities, such as accounts payable, directly associated with those assets held for sale that will be transferred with the assets held for sale.

We plan to sell these assets and transfer these liabilities within the next 12 months.

Long-Term Debt

As of October 2, 2021, and January 2, 2021, long-term debt consisted of the following:

Debt categories October 2, 2021 January 2, 2021

As of April 2, 2022, and January 1, 2022, long-term debt consisted of the following:

April 2, 2022 January 1, 2022

(In thousands)

Revolving Credit Facility (1)

Senior secured notes (1)

$ 300,000 $ 300,000

Revolving credit facility (2)

Term loan facility (3)

3 unchanged sentences

Unamortized debt issuance costs ( 4,565 ) ( 4,701 )

Unamortized bond discount costs ( 3,901 ) ( 4,028 )

563,474 565,988

1 unchanged sentence

Long-term debt, net of current maturities $ 556,210 $ 558,124

(1) The average effective interest rate was 2.0 percent and 2.8 percent for the quarters ended October 2, 2021 and January 2, 2021, respectively.

(2) The average interest rate, exclusive of fees and prepayment premiums, was 8.0 percent for the quarter ended January 2, 2021.

(1) As of April 2, 2022 and January 1, 2022, our long-term debt was comprised of $ 300.0 million of senior secured notes issued in October 2021.

These notes are presented under the “Long-term debt” caption of our condensed consolidated balance sheets at $ 291.5 million and $ 291.3 million at April 2, 2022, and January 1, 2022, respectively.

This presentation is net of their discount of 3.9 million and 4.0 million and the combined carrying value of our debt issuance costs of 4.6 million and 4.7 million at April 2, 2022, and January 1, 2022, respectively.

Our senior secured notes are presented in this table at their face value.

(2) The average effective interest rate was zero percent and 2.4 percent for the quarters ended April 2, 2022, and April 3, 2021, respectively.

(3) The average effective interest rate, exclusive of fees and prepayment premiums, was zero percent and 8.0 percent for the quarters ended April 2, 2022, and April 3, 2021, respectively.

(4) Refer to Note 9, Leases , for interest rates associated with finance lease obligations.

Senior Secured Notes

In October 2021, we entered into an indenture (the “Indenture”) with the guarantors party thereto and Truist Bank, as trustee and collateral agent, in connection with a private offering of $ 300 million of our six percent senior secured notes due 2029 (the “2029 Notes”).

The 2029 Notes were issued to investors at 98.625 percent of their principal amount and will mature on November 15, 2029.

The majority of net proceeds from the offering of the 2029 Notes were used to repay borrowings under our revolving credit facility.

Revolving Credit Facility

We have a revolving credit facility that we entered into in April 2018 with Wells Fargo Bank, National Association, as administrative agent (“the Agent”), and certain other financial institutions party thereto.

On August 2, 2021, we entered into a second amendment to the facility to, among other things, extend the maturity date of the facility to August 2, 2026, and reduce the interest rate on borrowings under the facility (as amended, the “Revolving Credit Facility”) .

The Revolving Credit Facility includes a committed senior secured asset-based revolving loan and letter of credit facility of up to $ 600.0 million, and an uncommitted accordion feature that permits us to increase the facility by an aggregate additional principal amount of up to $ 150.0 million.

Our obligations under the Revolving Credit Facility are secured by a security interest in substantially all of our assets other than real property.

Loans under the Revolving Credit Facility bear interest at a rate per annum equal to (i) LIBOR plus a margin ranging from 1.25 percent to 1.75 percent, with the amount of such margin determined based upon the average of our excess availability for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on LIBOR, or (ii) the administrative agent’s base rate plus a margin ranging from 0.25 percent to 0.75 percent, with the amount of such margin determined based upon the average of our excess availability for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on the base rate.

As of October 2, 2021, we had outstanding borrowings of $ 223.1 million and excess availability of $ 351.9 million under our Revolving Credit Facility.

As of January 2, 2021, we had outstanding borrowings of $ 288.2 million and excess availability of $ 184.3 million under our Revolving Credit Facility.

Our average effective interest rate under the facility was 2.0 percent and 2.8 percent for the quarters ended October 2, 2021 and January 2, 2021, respectively.

For the quarter ended September 26, 2020, our average effective interest rate under the Revolving Credit Facility was 2.7 percent.

In April 2018, we entered into a revolving credit facility with Wells Fargo Bank, National Association, as administrative agent (“the Agent”), and certain other financial institutions party thereto.

In August 2021, we entered into a second amendment to our revolving credit facility to, among other things, extend the maturity date of the facility to August 2, 2026, and reduce the interest rate on borrowings under the facility (as amended, the “revolving credit facility”).

As amended, the revolving credit facility provides for a senior secured asset-based revolving loan and letter of credit facility of up to $ 350 million.

The Borrowers’ obligations under the revolving credit facility are secured by a security interest in substantially all of our and our subsidiaries’ assets (other than real property), including inventories, accounts receivable, and proceeds from those items.

Borrowings under the revolving credit facility bear interest at a rate per annum equal to (i) LIBOR plus a margin ranging from 1.25 percent to 1.75 percent, with the margin determined based upon average excess availability for the immediately preceding fiscal quarter for loans based on LIBOR, or (ii) the Agent’s base rate plus a margin ranging from 0.25 percent to 0.75 percent, with the margin based upon average excess availability for the immediately preceding fiscal quarter for loans based on the base rate.

Borrowings under the revolving credit facility are subject to availability under the Borrowing Base (as that term is defined in the revolving credit agreement).

The Borrowers are required to repay revolving loans thereunder to the extent that such revolving loans exceed the Borrowing Base then in effect.

The revolving credit facility may be prepaid in whole or in part from time to time without penalty or premium, but including all breakage costs incurred by any lender thereunder.

As of April 2, 2022, we had zero outstanding borrowings and excess availability, including cash in qualified accounts, of $ 420.9 million under our revolving credit facility.

As of January 1, 2022, we had zero outstanding borrowings and excess availability, including cash in qualified accounts, of $ 431.7 million under our revolving credit facility.

Our average effective interest rate under the facility was zero percent and 2.4 percent for the quarters ended April 2, 2022, and April 3, 2021, respectively.

The revolving credit facility contains certain financial and other covenants, and our right to borrow under the revolving credit facility is conditioned upon, among other things, our compliance with these covenants.

We were in compliance with all covenants under the Revolving Credit Facility as of October 2, 2021.

On October 25, 2021, we closed a private offering of $ 300.0 million at 6.0 % senior secured notes to persons reasonably believed to be “qualified institutional buyers,” as defined in Rule 144A under the Securities Act of 1933, as amended (“The Securities Act”), and to non-U.S.

persons outside the United States under Regulation S under the Securities Act.

The 2029 Notes were issued to investors at 98.625 % of their principal amount and will mature on November 15, 2029.

The majority of

net proceeds from the offering of the senior secured notes were used to repay borrowings under our Revolving Credit Facility.

In conjunction with this offering, we reduced the limit of the Revolving Credit Facility from $ 600.0 million to $ 350.0 million.

We were in compliance with all covenants under the revolving credit facility as of April 2, 2022.

Term Loan Facility

As of January 2, 2021, we had outstanding borrowings of $ 43.2 million under our Term Loan Facility.

On April 2, 2021, we repaid the remaining outstanding principal balance of the Term Loan Facility, and, as a result, as of October 2, 2021, we had no outstanding borrowings under the Term Loan Facility, which has been extinguished.

In connection with our repayment of the outstanding principal balance in full on April 2, 2021, we expensed $ 5.8 million of debt issuance costs during the first quarter of fiscal 2021 that we had been amortizing in connection with our former Term Loan Facility.

On April 2, 2021, we repaid the remaining outstanding principal balance of the term loan facility, and, as a result, as of January 1, 2022 and April 2, 2022, we had zero outstanding borrowings under the term loan facility, which has been extinguished.

In connection with our repayment of the outstanding principal balance in full on April 2, 2021, we expensed $ 5.8 million of debt issuance costs that we were amortizing in connection with our former term loan facility.

These costs are included within interest expense, net on the condensed consolidated statements of operations and reported separately as an adjustment to net income in our condensed consolidated statements of cash flows.

Our average interest rate under the facility, exclusive of fees and prepayment premiums, was approximately 8.0 percent for the quarter ended January 2, 2021.

As the facility was paid in full as of April 2, 2021, our average effective interest rate under the facility, exclusive of fees and prepayment premiums, was zero percent for the quarter ended April 2, 2022.

For the quarter ended April 3, 2021, our average effective interest rate under the facility, exclusive of fees and prepayment premiums, was approximately 8.0 percent.

Finance Lease Obligations

3 unchanged sentences

The following table shows the components of our net periodic pension benefit:

Three Months Ended Nine Months Ended

Pension-related items October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

(In thousands) (In thousands)

Three Months Ended

Pension-related items April 2, 2022 April 3, 2021

(In thousands)

Service cost (1)

$ — $ — $ — $ —

Interest cost on projected benefit obligation 606 505

5 unchanged sentences

Stock Compensation

During the three and nine month periods ended October 2, 2021, we incurred stock compensation expense of $ 1.6 million and $ 5.0 million, respectively.

For the three and nine month periods ended September 26, 2020, we incurred stock compensation expense of $ 1.1 million and $ 2.9 million.

The increase in our stock compensation expense for the three and nine month periods ended 2021 are attributable to having more outstanding equity-based awards during this period than in the prior year and the vesting of awards in connection with the departure of certain employees.

In addition, the stock price has increased during fiscal year 2021 compared to 2020.

During the three months ended April 2, 2022, and April 3, 2021, we incurred stock compensation expense of $ 2.2 million and $ 1.4 million, respectively.

The increase in our stock compensation expense for the three-month period is primarily attributable to an increase in the number of awards granted, as well as the increase in the grant-date fair value, or the Company’s stock price, of awards currently vesting compared to the prior year.

We have operating and finance leases for certain of our distribution facilities, office space, land, mobile fleet, and equipment.

Many of our leases are non-cancelable and typically have a defined initial lease term, and some provide options to renew at our election for specified periods of time.

The majority of our leases have remaining lease terms of 1 year to 15 years, some of which include one or more options to extend the leases for 5 years.

The majority of our leases have remaining lease terms of one to 15 years, some of which include one or more options to extend the leases for five years .

Our leases generally provide for fixed annual rentals.

7 unchanged sentences

Operating lease right-of use (“ROU”) assets and liabilities are presented separately on the condensed consolidated balance sheets.

Finance lease ROU assets are included in property and equipment and the finance lease obligations are presented separately in the condensed consolidated balance sheet.

Finance lease ROU assets are included in property and equipment and the finance lease obligations are presented separately in the condensed consolidated balance sheets.

When a lease does not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments.

3 unchanged sentences

As noted in the table below, a majority of our finance leases, formally known as capital leases, relate to real estate.

During the first and second quarters of fiscal 2021, we recorded finance leases of $ 10.2 million and $ 0.3 million, respectively, related to new tractors put into service as part of our mobile fleet.

These leases were entered into for a period of four years each.

Additionally, during the second quarter of fiscal 2021, we recorded operating leases totaling $ 5.0 million related to warehouse facilities in Milwaukee, WI, and Statesville, NC.

Each lease was entered into for an initial period of ten years , and has two five-year renewal options.

The following table presents our assets and liabilities related to our leases as of October 2, 2021 and January 2, 2021:

Lease assets and liabilities October 2, 2021 January 2, 2021

The following table presents our assets and liabilities related to our leases as of April 2, 2022 and January 1, 2022:

Lease assets and liabilities April 2, 2022 January 1, 2022

(In thousands)

11 unchanged sentences

Total lease liabilities $ 319,361 $ 324,388

(1) Finance lease right-of-use assets are presented net of accumulated amortization of $ 70.8 million and $ 58.6 million as of October 2, 2021 and January 2, 2021, respectively.

(1) Finance lease right-of-use assets are presented net of accumulated amortization of $ 77.5 million and $ 73.7 million as of April 2, 2022, and January 1, 2022, respectively.

The components of lease expense were as follows:

Three Months Ended Nine Months Ended

Components of lease expense October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

(In thousands) (In thousands)

Three Months Ended

Components of lease expense April 2, 2022 April 3, 2021

(In thousands)

Operating lease cost:

5 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Three Months Ended Nine Months Ended

Cash flow information October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

(In thousands) (In thousands)

Three Months Ended

Cash flow information April 2, 2022 April 3, 2021

(In thousands)

Cash paid for amounts included in the measurement of lease liabilities

6 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

Balance sheet information October 2, 2021 January 2, 2021

Balance sheet information April 2, 2022 January 1, 2022

(In thousands)

9 unchanged sentences

Finance leases 9.49 % 10.00 %

The major categories of our finance lease liabilities as of October 2, 2021 and January 2, 2021 are as follows:

Category October 2, 2021 January 2, 2021

The major categories of our finance lease liabilities as of April 2, 2022 and January 1, 2022 are as follows:

Category April 2, 2022 January 1, 2022

(In thousands)

2 unchanged sentences

Total finance leases $ 271,940 $ 274,717

As of October 2, 2021, maturities of lease liabilities were as follows:

As of April 2, 2022, maturities of lease liabilities were as follows:

Fiscal year Operating leases Finance leases

24 unchanged sentences

From time to time, we are involved in various proceedings incidental to our businesses, and we are subject to a variety of environmental and pollution control laws and regulations in all jurisdictions in which we operate.

Although the ultimate outcome of these proceedings cannot be determined with certainty, based on presently available information management believes that adequate reserves have been established for probable losses with respect thereto and receivables recorded for expected receipts from settlements.

Management further believes that, while the ultimate outcome of one or more of these matters could be material to our operating results in any given quarter, it will not have a materially adverse effect on our consolidated financial condition, our results of operations, or our cash flows.

Collective Bargaining Agreements

As of October 2, 2021, we employed approximately 2,100 employees and less than 1 percent of our employees are employed on a part-time basis.

Approximately 23 percent of our employees were represented by various local labor unions with terms and conditions of employment subject to Collective Bargaining Agreements (“CBAs”) negotiated between the Company and local labor unions.

Six CBAs covering approximately six percent of our employees are up for renewal in fiscal 2021, with three having been successfully renegotiated earlier this year.

We expect to renegotiate the remaining CBAs by the end of the year.

As of April 2, 2022, we employed approximately 2,078 associates and less than one percent of our associates are employed on a part-time basis.

Approximately 20 percent of our associates are represented by various local labor unions with terms and conditions of employment governed by Collective Bargaining Agreements (“CBAs”).

Two CBAs covering approximately three percent of our associates are up for renewal in fiscal 2022, both of which we expect to renegotiate by the end of the year.

Accumulated Other Comprehensive Loss

2 unchanged sentences

Accumulated other comprehensive loss is separately presented on our condensed consolidated balance sheets as part of stockholders’ equity.

The changes in balances for each component of accumulated other comprehensive loss for the nine months ended October 2, 2021, were as follows:

Foreign currency, net

of tax Defined

The changes in balances for each component of accumulated other comprehensive loss for the three months ended April 2, 2022, were as follows:

benefit pension

1 unchanged sentence

net of tax Total Accumulated Other Comprehensive Loss

(In thousands)

January 1, 2022, beginning balance, net of tax $ ( 30,245 ) $ 885 $ ( 29,360 )

Other comprehensive income, net of tax 156 20 176

October 2, 2021, ending balance, net of tax $ 667 $ ( 36,132 ) $ 220 $ ( 35,245 )

(1) For the nine months ended October 2, 2021, the actuarial gain recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income as a component of net periodic pension benefit was $ 0.9 million, net of tax of $ 0.2 million.

Please see Note 7, Net Periodic Pension Benefit , for further information.

April 2, 2022, ending balance, net of tax $ ( 30,089 ) $ 905 $ ( 29,184 )

Effective Tax Rate

Our effective tax rate for the three months ended October 2, 2021, and September 26, 2020, was 25.6 percent and 22.3 percent, respectively.

Our effective tax rate for the nine months ended October 2, 2021, and September 26, 2020, was 24.7 percent and 18.9 percent, respectively.

Our effective tax rate for the three and nine months ended October 2, 2021 was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, slightly offset by the partial release of the valuation allowance for state net operating loss carryforwards we anticipate being able to utilize based on our taxable income through the end of the third quarter of fiscal 2021.

Our effective tax rate for the three and nine months ended September 26, 2020 was primarily impacted by a discrete tax benefit resulting from the release of the valuation allowance associated with nondeductible interest expense under Section 163(j) of the Internal Revenue Code (“IRC”) as a result of changes allowed under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act that was enacted on March 27, 2020 which raised the allowable percentage of deductible interest from 30 percent to 50 percent of adjusted taxable income.

Our effective tax rate for the same periods was further impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and the effect of the partial valuation allowance for separate company state income tax losses, combined with expense related to the vesting of restricted stock units.

Our effective tax rate for the three months ended April 2, 2022, and April 3, 2021, was 26.2 percent and 26.0 percent, respectively.

Our effective tax rate for the three months ended April 2, 2022 and April 3, 2021 were impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, slightly offset by a benefit from the vesting of restricted stock units, which occurred during each period.

Our effective tax rate for the three months ended April 3, 2021 also benefited from the partial release of our valuation allowance for state net operating loss carryforwards we anticipated being able to utilize based on our taxable income through the end of the first quarter of fiscal 2021.

Deferred Tax Assets

Quarterly, we assess the carrying value of our deferred tax assets for impairment by evaluating the weight of available evidence at the end of each fiscal quarter.

In our evaluation of the weight of available evidence at the end of the current quarter, we considered the recent reported income in the current quarter, as well as the reported income for 2020 and the reported losses for 2019 and 2018, which resulted in a three year cumulative income situation as positive evidence which carried substantial weight.

In our evaluation of the weight of available evidence at the end of the current quarter, we considered the recent reported income in the current quarter, as well as the reported income for 2021 and 2020 and the reported losses for 2019, which resulted in a three-year cumulative income situation as positive evidence which carried substantial weight.

While this was substantial, it was not the only evidence we evaluated.

6 unchanged sentences

In addition to the positive evidence discussed above, we considered as positive evidence forecasted taxable income, the detail scheduling of timing of the reversal of our deferred tax assets and liabilities, and the evidence from business and tax planning strategies.

As of October 2, 2021, in our evaluation of the weight of available evidence, we concluded that our net deferred tax assets were not impaired.

As of April 2, 2022, in our evaluation of the weight of available evidence, we concluded that our net deferred tax assets were not impaired.

Income per Share

1 unchanged sentence

We calculate diluted income per share using the treasury stock method, by dividing net income by the weighted average number of common shares outstanding plus the dilutive effect of outstanding share-based awards, including restricted stock units .

The reconciliation of basic net income and diluted net income per common share for the three and nine month periods ended October 2, 2021, and September 26, 2020, were as follows:

Three Months Ended Nine Months Ended

October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

(In thousands, except per share data) (In thousands, except per share data)

The reconciliation of basic net income and diluted net income per common share for the three-month periods ended April 2, 2022, and April 3, 2021, were as follows:

Three Months Ended

April 2, 2022 April 3, 2021

(In thousands, except per share data)

Net income $ 133,409 $ 61,860

1 unchanged sentence

Dilutive effect of share-based awards 393 392

Weighted average share outstanding - diluted 9,953 9,631 9,714 9,419

Weighted-average shares outstanding - diluted 10,113 9,858

Basic income per share $ 13.72 $ 6.53

Diluted income per share $ 13.19 $ 6.28

Approximately 3,000 and 113,000 weighted-average share-based awards were excluded from the computation of earnings per share assuming dilution during the three months ended April 2, 2022, and April 3, 2021, respectively, as the awards would have been anti-dilutive for the periods presented.

Subsequent Event

Closing of Senior Secured Notes of $300M at 6.0% Due 2029

On October 25, 2021, we closed a private offering of $ 300 million at 6.0 % senior secured notes to persons reasonably believed to be “qualified institutional buyers,” as defined in Rule 144A under The Securities Act of 1933, and to non-U.S.

persons outside the United States under Regulation S under the Securities Act.

The 2029 Notes were issued to investors at 98.625 % of their principal amount and will mature on November 15, 2029.

Our obligations under these senior secured notes are guaranteed by our domestic subsidiaries that are co-borrowers under or guarantee our Revolving Credit Facility.

The senior secured notes and the related guarantees are secured by a first-priority security interest in substantially all of our guarantor’s existing and future assets (other than receivables, inventory, deposit accounts, securities accounts, business interruption insurance and other related assets), subject to certain exceptions and customary permitted liens.

The senior secured notes and the related guarantees are also secured on a second-priority basis by a lien on our Revolving Credit Facility collateral.

The majority of net proceeds from the offering of the senior secured notes were used to repay borrowings under our Revolving Credit Facility.

In conjunction with the closing of the senior secured notes offering, we reduced the limit under our Revolving Credit Facility from $ 600 million to $ 350 million.

On May 3, 2022, the Company announced that its Board of Directors has increased the Company’s share repurchase authorization to $ 100.0 million, up $ 75.0 million from the previous program, and that it has entered into an Accelerated Share Repurchase agreement (“ASR”) with Jeffries LLC to repurchase $ 60.0 million of the Company’s common stock.

The remaining $ 40.0 million of share repurchases are planned to be executed opportunistically in the open market with $ 6.4 million already completed in the current reporting period.

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-Q

Item 1. Financial Statements