What changed in this filing

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Item 1. Business

2024-02-20 compared with 2023-02-21 · 57 added, 84 removed, 120 unchanged (54% of the section changed)

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We also provide a wide range of value-added services and solutions aimed at relieving distribution and logistics challenges for our customers and suppliers, while enhancing their marketing and inventory management capabilities.

We have a strong market position and a broad geographic coverage footprint servicing all 50 states, where we maintain locations that serve 75 percent of the highest growth metropolitan statistical areas as it relates to forecasted housing starts and repair and remodel spend .

We have a strong market position and a broad geographic coverage footprint servicing all 50 states.

We operate our business from 66 warehouse and office facilities, allowing us to serve 75 percent of the highest growth metropolitan statistical areas as it relates to forecasted housing starts and repair and remodel spend .

With the strength of a locally focused sales force, we distribute a comprehensive range of products from over 750 suppliers.

Our suppliers include some of the leading manufacturers in the industry, such as Allura, Arauco, Fiberon, Georgia-Pacific, Huber Engineered Woods, James Hardie, Louisiana-Pacific, Oldcastle APG, Ply Gem, Roseburg, Royal and Weyerhaeuser.

Our suppliers include some of the leading manufacturers in the industry, such as Allura, Arauco, Fiberon, Georgia-Pacific, Huber Engineered Woods, Louisiana-Pacific, Oldcastle APG, Ply Gem, Roseburg, Royal and Weyerhaeuser.

We supply products to a broad base of customers including national home centers, pro dealers, cooperatives, specialty distributors, regional and local dealers and industrial manufacturers.

Many of our customers serve residential and commercial builders, contractors and remodelers in their respective geographic areas and local markets.

Our headquarters is located near Atlanta in Marietta, Georgia.

As a value-added partner in a complex and demanding building products supply chain, we play a critical role in enabling our customers to offer a broad range of products and brands, as most of our customers do not have the capability to purchase and warehouse products directly from manufacturers for such a large set of SKUs.

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

On October 3, 2022, we completed the acquisition of Vandermeer Forest Products, Inc.

(“Vandermeer”).

Vandermeer is a premier wholesale distributor of building products.

Vandermeer was founded in 1972 and serves more than 250 customers across the Pacific Northwest, Alaska, Hawaii, British Columbia and Alberta from distribution facilities in Kent, Spokane, and Marysville, Washington.

The acquisition of Vandermeer added three distribution facilities in the State of Washington and provides direct access to Seattle and Portland, two of the top 15 highest growth repair and remodel and new construction markets in the United States.

Additionally, following the acquisition, we now have coast-to-coast reach and serve all 50 states.

Vandermeer’s product offering and sales mix are similar to ours, with specialty products contributing to the majority of its revenue and gross profit.

We believe this acquisition aligns to our specialty products strategy, establishes a meaningful growth platform in the Pacific Northwest, increases our market penetration in key specialty product categories, such as siding and engineered wood, and strengthens strategic supplier relationships.

We remain committed to driving a culture of profitable growth within new and existing product lines and geographies, while positioning the Company for long-term value creation.

The following strategic initiatives represent key areas of our management team’s focus:

Foster a performance-driven culture committed to profitable growth.

This includes enhancing the customer experience;

accelerating organic growth within specific product and solutions offerings where the Company is uniquely advantaged;

and deploying capital to drive sustained margin expansion, grow cash flow and maintain continued profitable growth.

Migrate sales mix toward higher-margin specialty product categories.

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Additionally, the Company is expanding its value-added service offerings designed to simplify complex customer sourcing requirements, together with marketing, inventory and pricing services afforded by the Company’s national platform.

Maintain a disciplined capital structure and pursue high-return investments that increase the value of the Company.

The Company is maintaining a disciplined capital structure while at the same time investing in its business to modernize its distribution facilities, as well as its tractor and trailer fleet, and to improve operational performance.

The Company also continues to evaluate potential acquisition targets that complement its existing capabilities, grow its specialty products business, increase customer exposure, expand its geographic reach, or a combination thereof.

During the 2022 fiscal year, we allocated $169.3 million of capital towards the following transactions, all of which were funded with cash on hand:

• We completed the acquisition of Vandermeer for a total of $67.0 million, which aligns to our specialty products strategy, establishes a meaningful growth platform in the Pacific Northwest, increases market penetration in key specialty product categories, and strengthens strategic supplier relationships.

The purchase price of $67.0 million includes $63.4 million for the business and $3.6 million for a distribution facility and real estate located in Spokane, Washington, which was acquired in this transaction.

This transaction is discussed in more detail in Note 2, Business Combination .

Foster a performance-driven culture committed to business excellence and profitable growth to be the provider of choice for suppliers and customers.

This includes enhancing the customer experience through technology enablement;

accelerating organic growth within specific product and solutions offerings where the Company is uniquely advantaged;

enhancing our performance by leveraging our scale and footprint together with pricing, operational and procurement capabilities;

and deploying capital to drive sustained margin expansion, grow cash flow and maintain continued profitable growth.

Maintain a disciplined capital structure and pursue strategic investments that increase the value of the Company.

The Company continues to strategically target acquisition opportunities that grow its specialty products business, expand its geographic reach, or complement its existing capabilities.

The Company also continues to identify markets that are potential opportunities for new market development.

The Company further seeks to maintain a disciplined capital structure while at the same time investing in its business to modernize its distribution facilities, as well as its tractor and trailer fleet, and to improve operational performance.

During the 2023 fiscal year, we allocated $69.7 million of capital towards the following transactions, both of which were funded with the Company’s cash and cash equivalents:

• We invested $27.5 million in capital for our business to improve operational performance and productivity.

• We repurchased 882,346 shares of our common stock for $66.4 million under our share repurchase program at an average price of $75.28 per share.

Of the 882,346 shares we repurchased, 801,015 shares were repurchased through an accelerated share repurchase program.

As a component of our decision to terminate the BlueLinx Corporation Hourly Retirement Plan (“the Plan”), we also contributed $11.1 million to the Plan.

In exchange for our contributions, we reacquired two real estate properties that were previously contributed to the Plan.

This transaction is discussed in more detail in Note 11, Employee Benefits .

Products and Services

• We repurchased 506,312 shares of our common stock for $42.1 million under our share repurchase programs at an average price of $83.21 per share, excluding broker commissions.

As a component of our decision to settle the BlueLinx Corporation Hourly Retirement Plan, we also contributed $6.9 million to the plan in fiscal 2023.

This is discussed in more detail in Note 10, Employee Retirement Plans , in Item 8 of this Annual Report.

During fiscal 2022, we consummated the acquisition of Vandermeer Forest Products, Inc.

(“Vandermeer”), which aligns to our specialty products strategy, established a meaningful growth platform in the Pacific Northwest, increased market penetration in key specialty product categories, and strengthened strategic supplier relationships.

A distribution facility and real estate located in Spokane, Washington were acquired in this transaction.

This transaction is discussed in more detail in Note 2, Business Combination , in Item 8 of this Annual Report.

We distribute products in two principal categories:

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In some cases, these products are branded by us.

Structural products, which represented approximately 35 percent, 41 percent, and 40 percent of our fiscal 2022, fiscal 2021, and fiscal 2020 net sales, respectively, include lumber, plywood, oriented strand board, rebar, and remesh and other wood products primarily used for structural support in construction projects.

Structural products, which represented approximately 30 percent, 35 percent, and 41 percent of our fiscal 2023, fiscal 2022, and fiscal 2021 net sales, respectively, include lumber, plywood,

oriented strand board, rebar, and remesh and other wood products primarily used for structural support in construction projects.

Our structural products are commodity products.

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As of December 30, 2023, employees that identify as female represented 15 percent of our associate population, 20 percent of our executive leadership team, and 22 percent of our Board of Directors.

Additionally, employees that identify as racially or ethnically diverse represented 28 percent of our associate population, 43 percent of our executive leadership team, and 13 percent of our Board of Directors.

Additionally, employees who identify as racially or ethnically diverse represented 27 percent of our total associate population, 20 percent of our executive leadership team, and 22 percent of our Board of Directors.

We are committed to managing the business in a manner that fosters diversity, equity, and inclusion.

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If we identify discrepancies between actual compensation and our policies, we take action to make pay adjustments to close identified gaps.

In addition, during fiscal 2022, we activated seven employee resource groups that facilitate social, development, and community interaction in our workforce to foster a more inclusive culture.

In addition, during fiscal 2023, we supported seven employee resource groups that facilitate social, development, and community interaction in our workforce to foster a more inclusive culture.

Our Associates

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As of December 30, 2023, we employed approximately 2,000 associates and less than one percent of our associates are employed on a part-time basis.

Approximately 16 percent of our associates are represented by various local labor unions with terms and conditions of employment governed by Collective Bargaining Agreements (“CBAs”).

Five CBAs covering approximately five percent of our associates are up for renewal in fiscal 2023, which we expect to renegotiate by the end of fiscal 2023.

Approximately 28% of our associates are represented by various local labor unions with terms and conditions of employment governed by Collective Bargaining Agreements (“CBAs”).

Six CBAs covering approximately nine percent of our associates are up for renewal in fiscal year 2024, of which one has already been renegotiated, one is currently under negotiation, and we expect to renegotiate the remainder before their renewal dates.

We strongly believe that our corporate culture depends on our associates’ engagement and understanding of their contribution to the achievement of our strategic imperatives, vision, and mission.

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In addition to prioritizing regular communications, we are conducting quarterly employee surveys to monitor our culture and employee engagement, while seeking feedback on what is going well and where we can focus our efforts to do more.

Our more extensive annual Company survey had participation from approximately 76 percent of our associates in fiscal 2022, representing a wide cross section of our associate population.

Our CEO, along with other executives, conducts periodic leadership town halls where associates are invited to engage with senior leadership and also engages directly with associates through facility visits.

Our more extensive annual

Company survey had participation from approximately 74 percent of our associates in fiscal 2023, representing a wide cross section of our associate population.

Our CEO, along with other executives, conduct periodic leadership town halls where associates are invited to engage with senior leadership.

Additionally, our leaders engage directly with associates through facility visits.

During fiscal 2023, we continued to invest in our people, and in programs and systems designed to meet the increased demand for talent in a dynamic marketplace.

For instance, we are increasing our investments in our benefits programs, which included new and improved medical plans with lower deductibles, out of pocket maximums, free and unlimited virtual mental health counseling, enhanced life insurance benefits, and improved short-term disability benefits starting in 2023.

We also continued our periodic talent reviews to further our succession planning and launched new career development programs.

As a part of our investment in the Company’s associates and for the second year in a row, in December 2022 and in recognition of our performance and the contribution of our associates, we announced that all eligible hourly and salaried employees would receive a discretionary year-end bonus consisting of time-based restricted stock units with a one-year vesting period.

We increased our investments in our benefits programs, which included new and improved medical plans with lower deductibles, out of pocket maximums, free and unlimited virtual mental health counseling, enhanced life insurance benefits, and improved short-term disability benefits, as well as student loan repayment benefits.

We also standardized our Company-wide performance management process for salaried employees, held talent review discussions to further our succession planning efforts, and launched new career development programs for our sales organization.

We are committed to providing a safe and healthy working environment for our associates.

In addition to implementing COVID-19 protocols during the pandemic, we have established uniform safety and compliance procedures for our operations and implemented measures designed to prevent workplace injuries.

We have established uniform safety and compliance procedures for our operations and implemented measures designed to prevent workplace injuries.

Our proactive safety programs focus on job hazard identification and prevention, coupled with extensive on-going job-specific training.

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Accidents and injuries are investigated with corrective actions implemented locally and communicated to key operations personnel across the enterprise to help prevent future occurrences.

During fiscal 2022, in order to enhance the safety of our fleet, we made a significant investment in curtainside trailers that cover and enclose the materials during transit.

Our newest tractors are equipped with collision avoidance systems, dashboard cameras, speed monitoring, blind spot detection and

lane departure warning technology, and disc-type brakes to improve stopping distance and driver control.

We plan to continue to make significant investments in upgrading our fleet into fiscal 2023 and beyond.

During fiscal 2023, in order to enhance the safety of our material handling fleet, we made a significant investment in refreshing our forklifts across the network that operate more efficiently and have enhanced safety features such as clean electric technology, automated collision detection systems, blue spotlights and multi-facing cameras.

Our newest tractors are equipped with collision avoidance systems, dashboard cameras, speed monitoring, blind spot detection and lane departure warning technology, and disc-type brakes to improve stopping distance and driver control.

We plan to continue to make significant investments in upgrading our over-the-road and material handling fleet into fiscal 2024 and beyond.

We are exposed to fluctuations in quarterly sales volumes and expenses due to seasonal factors common in the building products distribution industry, such as weather conditions and other seasonal factors.

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

During the 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 2021 also contributed to our traditional summer patterns continuing into the fourth quarter.

We experienced a change in our typical seasonality trends during the first half of 2022 due to certain lagging effects of COVID-19, including supply constraints and reduced manufacturing output, which impacted normal supply and demand for our products.

While there is uncertainty surrounding certain macro-economic environment developments that may impact our seasonality trends, we expect to return to more normalized seasonality trends in the near term given recent easing supply constraints and increased manufacturing output.

Climate Change

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Sustainability

In addition to participating in the Forestry Stewardship Council, an organization promoting environmentally appropriate, socially beneficial, and economically viable management of the world’s forests, we plan to invest in electric forklifts during fiscal 2023 to use in certain locations and expect to purchase more in the future.

We continue to make progress on utilizing more fuel-efficient tractors in our fleet.

In addition to participating in the Forestry Stewardship Council, an organization promoting environmentally appropriate, socially beneficial, and economically viable management of the world’s forests, we invested in electric forklifts during fiscal 2023 to use in certain locations and expect to purchase more in fiscal 2024.

We continue to make progress on utilizing more

fuel-efficient tractors in our fleet.

We are also replacing our warehouse lighting systems with more environmentally friendly lighting solutions and reducing our landfill waste by prioritizing recycling options, where available.

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In addition, new hires and contract employees undergo safety training during their initial onboarding.

administer post injury/accident corrective action supplemental training as needed and dictated by our investigations.

We also administer post injury/accident corrective action supplemental training as needed and dictated by our investigations.

Accidents and injuries are investigated with corrective actions implemented locally and communicated to key operations personnel across the enterprise to help prevent future occurrences.

As discussed above, in order to enhance the safety and capabilities of our fleet, we made significant investments in upgrading our fleet in fiscal 2022.

As discussed above, in order to enhance the safety and capabilities of our fleet, we made investments in upgrading our fleet in fiscal 2023.

Department of Transportation (“DOT”) regulates our operations in domestic interstate commerce.

We are subject to safety requirements governing interstate operations prescribed by the DOT.

We are subject to safety requirements governing interstate operations prescribed by DOT.

We are also subject to the oversight of the Federal Motor Carrier Safety Administration (“FMCSA”).

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Through a partnership with their local DOT enforcement agencies, our branches continue to host DOT troopers to conduct training walk-around inspections of our equipment to supplement our internal driver training efforts.

The Troopers cover all dimensions DOT compliance with specific focus on vehicle maintenance and load securement safety requirements.

The DOT troopers cover all dimensions of DOT compliance with specific focus on vehicle maintenance and load securement safety requirements.

We also are subject to environmental laws, rules, and regulations that limit discharges into the environment, establish standards for the handling, generation, emission, release, discharge, treatment, storage, and disposal of hazardous materials, substances, and wastes, and require cleanup of contaminated soil and groundwater.

These laws, ordinances, and regulations are complex, change frequently, and have tended to become more stringent over time.

These laws, ordinances, and regulations are complex, can change frequently, and have become more stringent over time.

Many of them provide for substantial fines and penalties, orders (including orders to cease operations), and criminal sanctions for violations.

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Liability under such laws may be imposed jointly and severally, and regardless of fault.

In addition, our operations could in the future be subject to regulations related to climate change.

We have incurred and will continue to incur costs to comply with the requirements of health and safety, transportation, and environmental laws, ordinances, and regulations.

These requirements could become more stringent in the future, and we cannot make assurances that compliance costs may not become material.

These requirements could become more stringent in the future, and compliance costs may become material.

Significant Recent Transactions and Developments

Share Repurchase Program

On August 23, 2021, our Board of Directors approved a stock repurchase program pursuant to which authorized us to repurchase up to $25.0 million of our common stock.

During the first quarter of fiscal 2022, we repurchased 81,331 shares of our common stock under this program at an average price of $79.03 per share.

On May 3, 2022, our Board of Directors increased our share repurchase authorization to $100.0 million and we entered into an Accelerated Share Repurchase Agreement (“ASR Agreement”) with Jefferies LLC to repurchase $60.0 million of our common stock.

Under the ASR Agreement, we received initial delivery of 553,584 shares of common stock on May 3, 2022 representing approximately 65 percent of the total number of shares of common stock initially underlying the ASR Agreement, based on our closing stock price of $70.45 on May 2, 2022.

Final settlement of the shares of common stock repurchased under the ASR Agreement occurred on September 15, 2022 based on the average of the daily volume-weighted average price of our common stock during the repurchase period under the ASR Agreement, less a discount and other adjustments pursuant to the terms and conditions of the ASR Agreement.

At settlement, we received an additional 247,431 shares of common stock.

Under our ASR Agreement, we repurchased a total of 801,015 shares of our common stock at an average price of $74.90 per share.

As of December 31, 2022, we have repurchased a total of 882,346 shares for $66.4 million under our $100.0 million share repurchase program, including 801,015 shares purchased through the ASR Agreement, at an average price of $75.28 per share and we have a remaining authorization amount of $33.6 million.

Acquisition of Vandermeer

On October 3, 2022, we completed the acquisition of Vandermeer Forest Products, Inc.

(“Vandermeer”).

In the transaction, we acquired all of the outstanding capital stock of Vandermeer for an aggregate purchase price of approximately $63.4 million, on a debt-free, cash-free basis, subject to customary post-closing adjustments in respect of net working capital, cash, transaction expenses and indebtedness.

In addition, we acquired Vandermeer’s Spokane, Washington distribution facility and related real

estate from the sole shareholder of Vandermeer for approximately $3.6 million, resulting in an aggregate purchase price of $67.0 million for the business and real property, which we funded with cash on hand.

For further information about this acquisition, see Note 2, Business Combination .

Purchase of Real Estate Properties Previously Contributed to the BlueLinx Defined Benefit Pension Plan

In October 2022, we notified participants of the BlueLinx Corporation Hourly Retirement Plan (the “plan”) that, after careful consideration, we intended to terminate the plan and transfer the management and delivery of continuing benefits associated with the plan to a highly rated and qualified insurance company with pension termination experience.

The process for terminating a pension plan involves several regulatory steps and approvals, and typically takes 12 to 18 months to complete.

During fiscal 2013, and as previously disclosed, we contributed two properties to the plan in lieu of a cash contribution and entered into a lease for each of these properties.

As a component of our plan to terminate the plan, we repurchased these two real estate properties that were held by the plan for $11.1 million, which terminated the associated leases.

The repurchase in 2022 included certain land and buildings, located in Charleston, S.C.

and Buffalo, N.Y., valued at approximately $11.1 million by independent appraisals prior to the purchase.

At the time of repurchase, we were leasing the contributed properties from the plan for an initial term of 20 years with two five-year extension options and had continued to use the properties in our distribution operations since their contribution in fiscal 2013.

Each lease provided us a right of first refusal on any subsequent sale by the plan and a repurchase option.

At the time of our initial contribution of the properties, the plan engaged an independent fiduciary who managed the properties on behalf of the plan.

The plan’s independent fiduciary evaluated the property purchase on behalf of the plan and negotiated the terms of the sale.

The repurchase amount is included in pension contributions within the operating activities section of our consolidated statements of cash flow for the year ended December 31, 2022.

This transaction is discussed in more detail in Note 11, Employee Benefits .

On October 31, 2023, the Company’s Board of Directors authorized a new share repurchase program for $100 million, which follows the Company’s previous $100 million share repurchase program under which repurchase authority remained as of early October 2023.

Under the new share repurchase program, the Company may repurchase its common stock from time to time, without prior notice, subject to prevailing market conditions and other considerations.

Repurchases may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, accelerated share repurchase programs, tender offers or pursuant to a trading plan that may be adopted in accordance with the Securities and Exchange Commission Rule 10b5-1.

During fiscal 2023 and fiscal 2022, we used cash of $42.1 million and $66.4 million, respectively, to repurchase our common shares.

As of December 30, 2023, there was $91.4 million of remaining capacity to repurchase our common shares under our share repurchase program.

Settlement of our Frozen Defined Benefit Pension Plan

During the fourth quarter of fiscal 2023, we settled our frozen defined benefit pension plan by transferring future financial responsibilities for the plan to a highly rated insurance company through the purchase of an annuity.

The accounting for this settlement resulted in the non-cash reclassification of $34.9 million, including net deferred income taxes of $4.5 million, from accumulated other comprehensive loss to earnings.

The settlement also required the Company, as plan sponsor, to make a final $6.9 million cash contribution to the plan trust in order for the plan trust to have sufficient assets to purchase the annuity from the insurance company.

Some of our union employees continue to participate in multi-employer pension plans, and those plans were not impacted by the settlement of the frozen defined benefit pension plan.

Securities Exchange Act Reports

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These include our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and proxy statements.

Additionally, our code of ethical conduct, the board committee charter for each of our audit committee, human capital and compensation committee, and nominating and governance committee, and our corporate governance guidelines are available on our website.

Additionally, our code of ethical conduct, the board committee charter for each of our audit committee, human capital and compensation committee, and nominating and corporate governance committee, and our corporate governance guidelines are available on our website.

If we amend our code of ethical conduct, or grant any waiver, including any implicit waiver, for any board member, our chief executive officer, our chief financial officer, or any other executive officer, we will disclose such amendment or waiver on our website.

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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