What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-20 compared with 2023-02-21 · 823 added, 677 removed, 496 unchanged (75% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm s (PCAOB ID:

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Report of Independent Registered Public Accounting Firms (PCAOB ID:

Consolidated Statements of Operations and Comprehensive Income

Consolidated Balance Sheets

Consolidated Statements of Stockholders’ Equity (Deficit)

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies

Business Combination

Revenue Recognition

Goodwill and Other Intangible Assets

Property, Plant and Equipment

Debt and Finance Leases

Employee Retirement Plans

Share-Based Compensation

Stockholders’ Equity, Earnings Per Share and Share Repurchases

Lease Commitments

Commitments and Contingencies

Accumulated Other Comprehensive Income (Loss)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited the accompanying consolidated balance sheets of BlueLinx Holdings Inc.

(the Company) as of December 31, 2022 and January 1, 2022, the related consolidated statements of operations and comprehensive income, stockholders’ equity (deficit) and cash flows for each of the two fiscal years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and January 1, 2022, and the results of its operations and its cash flows for each of the two fiscal years in the period ended December 31, 2022 in conformity with U.S.

(the Company) as of December 30, 2023 and December 31, 2022, the related consolidated statements of operations and comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 30, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 30, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 30, 2023 in conformity with U.S.

generally accepted accounting principles.

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The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments.

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of the Pension Benefit Obligation

Valuation of Goodwill

Description of the Matter

As discussed in Note 11 of the consolidated financial statements, the Company’s pension benefit obligation was $82.7 million and exceeded the fair value of pension plan assets of $81.2 million, resulting in an unfunded obligation of $1.5 million.

The estimation of the pension benefit obligation is dependent on actuarial methods and the selection of assumptions, such as the applicable discount rate and mortality rates.

Auditing the valuation of the pension benefit obligation was complex due to the judgmental nature of the actuarial assumptions used in the valuation process.

These assumptions have a significant effect on the pension benefit obligation.

As of December 30, 2023, the Company's goodwill balance was $55.4 million.

As discussed in Note 5 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level on the first day of the fiscal fourth quarter or more frequently if events or change in circumstances indicate that it is more likely than not to be impaired.

This requires management to estimate the fair value of the reporting unit based on a combination of the discounted cash flow method and guideline public company method.

Auditing management's annual goodwill impairment test involved especially subjective judgments due to the significant estimation required in determining the fair value of the reporting unit.

In particular, the estimates of the fair value for the reporting unit are sensitive to assumptions, such as the weighted average cost of capital, gross margin, and capital expenditures, which are affected by expectations about future market or economic conditions.

How We Addressed the Matter in Our Audit

We tested controls that address the risks of material misstatements related to the valuation of the pension benefit obligation.

For example, we tested controls over management’s review of the methodology used, significant actuarial assumptions, including management’s review of the selected discount and mortality rates with the Company’s external actuary, and the completeness and accuracy of the data inputs provided to the external actuary.

To test the pension benefit obligation, our audit procedures included, among others, evaluating the methodology used, the significant actuarial assumptions discussed above, and the underlying data used by the Company.

We compared the actuarial assumptions used by management to its historical accounting practices and evaluated the change in the pension benefit obligation from the prior year due to the change in interest cost, actuarial loss and benefits paid.

In addition, we involved an actuarial specialist to assist with our procedures.

For example, the discount rate reflects the rates at which benefits could effectively be settled and is based on current investment yields of high-quality corporate bonds.

The Company uses an actuarially-developed full yield curve approach in establishing its discount rate.

We evaluated management’s methodology for determining the discount rate that reflects the maturity and duration of the benefit payments.

As part of this assessment, we developed an upper and lower yield curve using high quality bonds with characteristics appropriate for testing the development of the Company’s yield curve to evaluate its reasonability.

To evaluate the mortality rate, we assessed whether the information was consistent with publicly available information, and whether any entity-specific adjustments were applied.

We also tested the completeness and accuracy of the underlying data, including the participant data provided to management’s actuarial specialists.

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process.

For example, we tested controls over the estimation of the fair value of the reporting unit, including the Company’s controls over the valuation model, the mathematical accuracy of the valuation model, the development of underlying assumptions used to estimate such fair values of the reporting unit.

We also tested management’s review of the reconciliation of the estimated fair value of the reporting unit to the market capitalization of the Company.

To test the estimated fair value of the Company’s reporting unit we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions and the underlying data used by the Company in its analysis.

We compared the significant assumptions used by management to current industry and economic trends and evaluated whether changes to these factors would affect the significant assumptions.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions.

We involved valuation specialists to assist in our evaluation of the valuation methodology and the significant assumptions, including the weighted average cost of capital used in determining the fair value of the reporting unit.

/s/ Ernst & Young LLP

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February 20, 2024

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

BLUELINX HOLDINGS INC.

and subsidiaries

Marietta, Georgia

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statement of stockholders’ equity (deficit) of BlueLinx Holdings, Inc.

(the “Company”) as of January 2, 2021, the related consolidated statements of operations and comprehensive income and cash flows for the year ended January 2, 2021 and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 2, 2021, and the results of its operations and its cash flows for the year then ended , in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ BDO USA, LLP

We served as the Company's auditor from 2015 until 2021.

Atlanta, Georgia

March 3, 2021

BLUELINX HOLDINGS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME

Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022 Fiscal Year Ended January 2, 2021

(In thousands, except per share data)

Fiscal Year Ended December 30, 2023 Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022

(In thousands, except per share amounts)

Net sales $ 3,136,381 $ 4,450,214 $ 4,277,178

Cost of sales 3,617,230 3,498,751 2,619,594

Cost of products sold 2,609,364 3,617,230 3,498,751

Gross profit 527,017 832,984 778,427

Operating expenses:

Operating expenses (income):

Selling, general, and administrative 355,819 366,305 322,205

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Amortization of deferred gains on real estate ( 3,934 ) ( 3,934 ) ( 3,935 )

Gains from sales of property ( 144 ) ( 8,427 ) ( 10,529 )

Gain from sale of properties, net — ( 144 ) ( 8,427 )

Other operating expenses 4,640 4,057 2,315

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Interest expense, net 23,746 42,272 45,507

Settlement of frozen defined benefit pension plan 30,440 — —

Other expense (income), net 2,377 2,054 ( 1,306 )

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Net income $ 48,536 $ 296,176 $ 296,133

Basic income per share $ 31.75 $ 30.80 $ 8.58

Diluted income per share $ 31.51 $ 29.99 $ 8.55

Basic earnings per share $ 5.40 $ 31.75 $ 30.80

Diluted earnings per share $ 5.39 $ 31.51 $ 29.99

Comprehensive income:

Net income $ 48,536 $ 296,176 $ 296,133

Other comprehensive (loss) income:

Actuarial gain (loss) on defined benefit plan, net of tax ( 3,057 ) 5,546 ( 2,202 )

Amortization of unrecognized pension gain, net of tax 627 1,064 788

Other comprehensive income (loss):

Actuarial (loss) gain on defined benefit plan, net of tax of $ 1,090 , $ 1,016 and $( 1,771 ), respectively

( 3,119 ) ( 3,057 ) 5,546

Amortization of unrecognized pension gain, net of tax of $( 325 ), $( 208 ) and $( 340 ), respectively

882 627 1,064

Settlement of frozen defined benefit pension plan, including tax of $ 4,472

Other ( 1,263 ) 378 22

Total other comprehensive (loss) income ( 2,052 ) 6,632 ( 1,429 )

Total other comprehensive income (loss) 31,412 ( 2,052 ) 6,632

Comprehensive income $ 79,948 $ 294,124 $ 302,765

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CONSOLIDATED BALANCE SHEETS

December 31, 2022 January 1, 2022

December 30, 2023 December 31, 2022

(In thousands, except share data)

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Intangible assets, net 30,792 34,989

Deferred tax assets 56,169 60,285

Deferred income tax asset, net 53,256 56,169

Other non-current assets 14,568 15,254

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Taxes payable 9,584 —

Finance lease liabilities - short-term 7,089 7,864

Operating lease liabilities - short-term 7,432 5,145

Real estate deferred gains - short-term 3,935 3,934

Pension benefit obligation - short-term 1,521 —

Finance lease liabilities - current 11,178 7,089

Operating lease liabilities - current 6,284 7,432

Real estate deferred gains - current 3,935 3,935

Other current liabilities 15,377 18,039

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293,743 292,424

Finance lease liabilities - long-term 265,986 266,853

Operating lease liabilities - long-term 40,011 44,526

Real estate deferred gains - long-term 70,403 74,206

Pension benefit obligation - long-term — 11,605

Finance lease liabilities - non-current 274,248 265,986

Operating lease liabilities - non-current 32,519 40,011

Real estate deferred gains - non-current 66,599 70,403

Other non-current liabilities 17,644 20,512

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STOCKHOLDERS’ EQUITY

Preferred Stock, $ 0.01 par value, 30,000,000 shares authorized, none issued

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

9,048,603 and 9,725,760 outstanding on December 31, 2022 and January 1, 2022, respectively

8,650,046 and 9,048,603 outstanding on December 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 165,060 200,748

Accumulated other comprehensive loss — ( 31,412 )

Accumulated stockholders’ equity 420,603 124,427

Retained earnings 469,139 420,603

Total stockholders’ equity 634,286 590,029

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BLUELINX HOLDINGS INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Common Stock Additional

Paid-In Capital Accumulated

Comprehensive Loss Retained Earnings (Accumulated Deficit) Stockholders’ Equity (Deficit) Total

Comprehensive Income (Loss) Retained Earnings (Accumulated Deficit) Total Stockholders’ Equity

Shares Amount

(In thousands)

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

Balance as of beginning of fiscal 2021 9,463 $ 95 $ 266,695 $ ( 35,992 ) $ ( 171,706 ) $ 59,092

Net income — — — — 296,133 296,133

Impact of defined pension plan, net of tax — — — ( 1,414 ) — ( 1,414 )

Other comprehensive income — — — 6,632 — 6,632

Vesting of restricted stock units 379 2 ( 2 ) — — —

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Other — — ( 5 ) — — ( 5 )

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

Balance as of end of fiscal 2021 9,726 97 268,085 ( 29,360 ) 124,427 363,249

Net income — — — — 296,176 296,176

Impact of defined pension plan, net of tax — — — 6,610 — 6,610

Other comprehensive loss — — — ( 2,052 ) — ( 2,052 )

Vesting of restricted stock units 337 3 ( 3 ) — — —

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Repurchase of shares to satisfy employee tax withholdings ( 132 ) ( 1 ) ( 10,533 ) — — ( 10,534 )

Other — — ( 7 ) 22 — 15

Balance, January 1, 2022 9,726 $ 97 $ 268,085 $ ( 29,360 ) $ 124,427 $ 363,249

Common stock repurchases and retirements ( 882 ) ( 9 ) ( 66,418 ) — — ( 66,427 )

Balance as of end of fiscal 2022 9,049 90 200,748 ( 31,412 ) 420,603 590,029

Net income — — — — 48,536 48,536

Impact of defined pension plan, net of tax — — — ( 2,430 ) — ( 2,430 )

Other comprehensive income — — — 31,412 — 31,412

Vesting of restricted stock units 170 2 ( 2 ) — — —

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Repurchase of shares to satisfy employee tax withholdings ( 63 ) — ( 5,279 ) — — ( 5,279 )

Common stock repurchase and retirement ( 882 ) ( 9 ) ( 66,418 ) — — ( 66,427 )

Other — — — 378 — 378

Balance, December 31, 2022 9,049 $ 90 $ 200,748 $ ( 31,412 ) $ 420,603 $ 590,029

Common stock repurchases and retirements ( 506 ) ( 5 ) ( 42,462 ) — — ( 42,467 )

Balance as of end of fiscal 2023 8,650 $ 87 $ 165,060 $ — $ 469,139 $ 634,286

There has been no activity for Preferred Stock.

See the accompanying notes to the consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022 Fiscal Year Ended January 2, 2021

Fiscal Year Ended December 30, 2023 Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022

(In thousands)

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Depreciation and amortization 32,043 27,613 28,192

Settlement of frozen defined benefit pension plan 30,440 — —

Amortization of debt discount and issuance costs 1,319 1,153 1,411

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Gains from sales of property — ( 144 ) ( 8,427 )

Deferred income tax 5,289 356 ( 8,420 )

Provision for deferred income taxes 7,756 5,289 356

Share-based compensation 12,055 9,617 6,590

Amortization of deferred gain from real estate ( 3,934 ) ( 3,935 ) ( 4,008 )

Changes in operating assets and liabilities:

Amortization of deferred gains from real estate ( 3,934 ) ( 3,934 ) ( 3,935 )

Other income statement items ( 909 ) — —

Changes in operating assets and liabilities, net of business acquisition:

Accounts receivable 23,145 101,266 ( 45,994 )

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Taxes payable 9,584 ( 6,138 ) ( 1,709 )

Pension contributions ( 11,876 ) ( 1,100 ) ( 1,493 )

Employer contributions due to the single-employer defined benefit pension plan ( 6,900 ) ( 11,876 ) ( 1,100 )

Other current assets 15,513 ( 11,635 ) 712

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Acquisition of business, net of cash acquired 300 ( 63,767 ) —

Proceeds from sale of assets 964 10,327 12,849

Proceeds from sales of assets and properties 357 964 10,327

Property and equipment investments ( 27,520 ) ( 35,886 ) ( 14,415 )

Net cash provided by (used in) investing activities ( 98,689 ) ( 4,088 ) 9,160

Net cash used in investing activities ( 26,863 ) ( 98,689 ) ( 4,088 )

Cash flows from financing activities:

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Proceeds from senior secured notes — — 295,861

Proceeds from real estate financing transactions — — 78,263

Common stock repurchase and retirement ( 66,427 ) — —

Common stock repurchases ( 42,135 ) ( 66,427 ) —

Debt financing costs — — ( 5,459 )

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Net change in cash and cash equivalents 222,800 213,740 85,121

Cash and cash equivalents at beginning of period 85,203 82 11,643

Cash and cash equivalents at end of period $ 298,943 $ 85,203 $ 82

Cash and cash equivalents at beginning fiscal year 298,943 85,203 82

Cash and cash equivalents at end of fiscal year $ 521,743 $ 298,943 $ 85,203

Supplemental cash flow information:

Net income tax payments during the period $ 111,197 $ 98,855 $ 14,377

Interest paid during the period $ 44,054 $ 33,236 $ 43,502

Noncash transactions:

Additions of fleet assets under finance leases $ 9,092 $ 10,549 $ 3,833

Net income tax payments during the fiscal year $ 19,239 $ 111,197 $ 98,855

Interest paid during the fiscal year $ 43,438 $ 44,054 $ 33,236

See the accompanying notes to the consolidated financial statements.

BLUELINX HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Summary of Significant Accounting Policies

Basis of Presentation

BlueLinx is a leading wholesale distributor of residential and commercial building products in the United States.

We are a “two-step” distributor.

BlueLinx Holdings Inc., including subsidiaries (collectively, the “Company”), is a leading wholesale distributor of residential and commercial building products in the United States.

The Company is a “two-step” distributor.

Two-step distributors purchase products from manufacturers and distribute those products to dealers and other suppliers in local markets, who then sell those products to end users.

We carry a broad portfolio of both branded and private-label stock keeping units (“SKUs”) across two principal product categories:

The Company carries a broad portfolio of both branded and private-label stock keeping units (“SKUs”) across two principal product categories:

specialty products and structural products.

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Structural products include items such as lumber, plywood, oriented strand board, rebar, and remesh.

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.

Our consolidated financial statements include the accounts of BlueLinx Holdings Inc.

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

The Company’s consolidated financial statements include the accounts of BlueLinx Holdings Inc.

and its wholly owned subsidiaries.

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All significant intercompany accounts and transactions have been eliminated.

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 2022 fiscal year contained 52 weeks and ended on December 31, 2022.

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

Fiscal 2020 contained 53 weeks and ended on January 2, 2021.

Reclassification of Prior Period Presentation

For the years ended January 1, 2022 and January 2, 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 year ended December 31, 2022.

Our reclassifications are limited to the operating activities section and include presenting pension contributions, which were previously presented within the change of other assets and liabilities, as an individual item within changes in operating assets and liabilities.

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

The Company operates on a 5-4-4 fiscal calendar.

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

The Company’s 2023 fiscal year contained 52 weeks and ended on December 30, 2023 (fiscal 2023”).

Fiscal 2022 contained 52 weeks and ended on December 31, 2022 (“fiscal 2022”).

Fiscal 2021 contained 53 weeks and ended on January 1, 2022 (“fiscal 2021”).

Use of Estimates

Our financial statements are prepared in conformity with U.S.

GAAP, which requires us to make estimates based on assumptions about current, and for some estimates, future economic and market conditions, which affect reported amounts and related disclosures in our financial statements.

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.

The global impact of the COVID-19 pandemic may also affect our accounting estimates, which may materially change from period to period due to changing market factors.

We regularly evaluate these significant factors and make adjustments where facts and circumstances dictate.

Revenue Recognition

We recognize revenue when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration we expected to be entitled to in exchange for those goods or services.

The Company’s financial statements are prepared in conformity with U.S.

GAAP, which requires management and advisors of the Company to make estimates based on assumptions about current, and for some estimates, future economic and market conditions, which affect reported amounts and related disclosures in its financial statements.

Although these current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from expectations, which could materially affect the Company’s financial position, results of operations and cash flows.

The impacts of national and global events may also affect the Company’s accounting estimates, which may materially change from period to period due to such events.

The Company’s management and its advisors regularly evaluate these significant factors and make adjustments where facts and circumstances dictate.

Revenue Recognition and Cost of Products Sold

The Company recognizes revenue when the following criteria are met:

(1) contract with the customer has been identified;

(2) performance obligations in the contract have been identified;

(3) transaction price has been determined;

(4) the transaction price has been allocated to the performance obligations;

and (5) when (or as) performance obligations are satisfied.

More specifically, revenue is recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company is entitled to receive in exchange for those goods or services.

The timing of revenue recognition largely is dependent on shipping terms.

Revenue is recorded at the time of shipment for terms designated free on board (“FOB”) shipping point.

Revenue is recorded at the time of shipment for terms designated free on board (“FOB”) shipping point, which is a point in time.

For sales transactions designated FOB destination, revenue is recorded when the product is delivered to the customer’s delivery site.

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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 immaterial for each of the reported periods.

In addition, we provide inventory to certain customers through pre-arranged agreements on a consignment basis.

Adjustments to earnings resulting from revisions to estimates on discounts and returns has not been material for each of the reported periods.

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

The Company estimates these amounts based on the expected amount to be provided to customers and then reduces the amount of revenue recognized.

The Company believes that there will not be significant changes to its estimates of variable consideration.

Sales and usage-based taxes are excluded from revenues.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Contracts with customers are generally in the form of standard terms and conditions of sale.

From time to time, the Company may enter into specific contracts, which may affect delivery terms.

Performance obligations in contracts with customers generally consist solely of delivery of goods.

For all sales channel types, consisting of warehouse, direct, and reload sales, the Company typically satisfies its performance obligations upon shipment.

Customer payment terms are typical for the Company’s industry, and may vary by the type and location of customers and by the products or services offered.

The time period between invoicing and when payment is due is not deemed to be significant.

For certain sales channels and/or products, standard payment terms may be as early as ten days.

In addition, the Company provides inventory to certain customers through pre-arranged agreements on a consignment basis.

Customer consigned inventory is maintained and stored by certain customers;

however, ownership and risk of loss remains with us.

Shipping and Handling

Outbound shipping and handling costs included in “Selling, general, and administrative” expenses were $ 160.3 million, $ 149.2 million, and $ 151.2 million for fiscal 2022, fiscal 2021, and fiscal 2020, respectively.

Shipping and handling costs include amounts related to the administration of our logistical infrastructure, handling of material in our warehouses, and amounts pertaining to the delivery of products to our customers, such as fuel and maintenance costs for our mobile fleet, wages for our drivers, and third party freight charges.

however, ownership and risk of loss remains with the Company.

Costs to obtain customer contracts are generally expensed as incurred.

The Company generally expenses sales commissions when incurred because the amortization period would typically be one year or less.

These costs are recorded within selling, general, and administrative (“SG&A”)expense.

The Company has made an accounting policy election to treat outbound shipping and handling activities as an SG&A expense.

Shipping and handling costs include amounts related to the administration of the Company’s logistical infrastructure, handling of material in its warehouses, and amounts pertaining to the delivery of products to customers, such as fuel and maintenance costs for its mobile fleet, wages for its drivers, and third-party freight charges.

Substantially all of the amount reported in Cost of products sold on the Company’s consolidated statement of operations is composed of cost to purchase inventory for resale to customers, including the cost of inbound freight, volume incentives, and inventory adjustments.

During fiscal 2023, 2022 or 2021, no one supplier represented more than 10% of the Company’s consolidated Cost of products sold.

Cash and Cash Equivalents

Cash equivalents consist of short-term investments that have an original maturity of three months or less at the date of purchase.

At December 31, 2022 and January 1, 2022, the majority of our cash and cash equivalents were comprised of money market funds that are broadly diversified and invested in high-quality, short-duration securities, including U.S.

government agency securities, and similar instruments.

We have significant amounts of cash and cash equivalents that are in excess of federally insured limits.

Though we have not experienced any losses on our cash and cash equivalents to date and we do not anticipate incurring any losses, we cannot be assured that we will not experience losses on our cash and cash equivalents.

Accounts Receivable

As of December 30, 2023 and December 31, 2022, the majority of the Company’s cash and cash equivalents were comprised of short-term funds that the Company can liquidate on demand.

These funds invest in instruments that have a weighted-average maturity of three months or less, including cash, U.S.

Treasury bills, notes and other obligations issued or guaranteed as to principal and interest by the U.S.

Government or its agencies, and repurchase agreements secured by such obligations or cash.

The Company’s policy is to classify such short-term highly liquid investments as cash equivalents.

Also, the Company has cash deposits with financial institutions that are typically in excess of federally insured limits.

Though the Company has not experienced any losses on its cash deposits to date and does not currently anticipate incurring any such losses, there can be no assurance that the Company will not experience losses in the future.

Based on the legal form and nature of any restrictions that may be placed by third parties on certain amounts of cash transferred by the Company to external entities, the Company’s accounting policy is to classify such unexpended amounts as either restricted cash, other current assets, or other assets in its consolidated balance sheet.

As of December 30, 2023 and December 31, 2022, the Company had $ 10.5 million and $ 10.4 million, respectively, reported within Other non-current assets on its consolidated balance sheets for amounts transferred to a third party related to certain of the Company’s self-insured risks for events that have occurred but have not been settled by, or are not yet known to, the Company.

See the subsequent section of this note under the heading, Self Insurance.

The Company had no amounts reported as restricted cash on it consolidated balance sheets as of December 30, 2023 and December 31, 2022.

Accounts Receivable and Allowance

Accounts receivable are stated at net realizable value, do not bear interest, and consist of amounts owed for orders shipped to customers.

Management establishes an overall credit policy for sales to customers.

The allowance for doubtful accounts is determined based on a number of factors including specific customer account reviews, historical loss experience, current economic trends, and the creditworthiness of significant customers based on ongoing credit evaluations.

The Company has established an overall credit policy for sales to customers.

Under the provisions of ASC No.

323, Financial Instruments-Credit Losses , that apply to the Company’s trade accounts receivable, a current expected credit loss (“CECL”) model is required.

The CECL impairment model requires an estimate of expected credit losses, measured over the contractual life of a trade receivable, that considers forecasts of future economic conditions in addition to information about past events and current conditions.

The Company’s allowance for doubtful accounts is determined based on a number of factors including specific customer account reviews, historical loss experience, current economic trends, and the creditworthiness of significant customers based on ongoing credit evaluations.

The Company believes that its accounts receivable are homogenous and concluded that they can be grouped into one pool when applying the CECL model.

The Company determined that historical loss information is a reasonable basis on which to determine expected credit

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

losses for accounts receivable because the composition of the receivables at the most recent reporting date is consistent with that used in developing the historical credit-loss percentages.

During fiscal year 2023 and 2022, the Company recorded provisions for doubtful accounts of $ 0.6 million and $ 0.7 million , respectively, and recorded charge offs net of recoveries of $ 0.6 million and $ 1.3 million, respectively, against the allowance for accounts receivable.

Inventory Valuation

The Company’s inventory is comprised of substantially finished goods that we purchase for resale to our customers.

The cost of all inventories is determined by the moving average cost method.

We have included all material charges directly or indirectly 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 or net realizable value, which also considers items that may be considered damaged, excess, and obsolete inventory.

As of December 31, 2022, we recorded a lower of cost or net realizable value reserve of $ 2.6 million and no reserve as of January 1, 2022.

The Company includes all material charges directly or indirectly incurred in bringing inventory to its existing condition and location.

Inventory carrying values are evaluated at the end of each fiscal 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.

As of December 31, 2022 and December 30, 2023, the Company had a lower-of-cost-or-net-realizable-value inventory reserve of $ 2.6 million and zero , respectively.

Consideration Received from Vendors and Paid to Customers

Each fiscal year, we enter into agreements with many of our vendors providing for inventory purchase rebates, generally based on achievement of specified volume purchasing levels.

We also receive rebates related to price protection and various marketing allowances that are common industry practice.

We accrue for the receipt of vendor rebates based on purchases, and also reduce inventory to reflect the net acquisition cost (purchase price less expected purchase rebates).

In addition, we enter into agreements with many of our customers to offer customer rebates, generally based on achievement of specified sales levels and various marketing allowances that are common industry practice.

We accrue for the payment of customer rebates based on sales to the customer, and also reduce sales to reflect the net sales (sales price less expected customer rebates).

Adjustments to earnings resulting from revisions to rebate estimates have been immaterial.

Each fiscal year, the Company enters into agreements with certain vendors to provide inventory purchase rebates, generally based on achievement of specified volume purchasing levels.

The Company also receives rebates related to price protection and various marketing allowances that are common industry practice.

The Company accrues for the receipt of vendor rebates based on purchases, and also reduce the carrying value of the related inventory to reflect the net acquisition cost (purchase price less expected purchase rebates).

In addition, the Company enters into agreements with many of its customers to offer customer rebates, generally based on achievement of specified sales levels and various marketing allowances that are common industry practice.

The Company accrues for the payment of customer rebates based on sales to the customer, and also reduce its sales to report net sales (sales price less expected customer rebates).

Adjustments to earnings resulting from revisions to rebate estimates have historically not been material.

Property and Equipment

Property and equipment are recorded at cost.

Lease obligations for which we assume or retain substantially all the property rights and risks of ownership are capitalized.

Lease obligations for which the Company assumes or retain substantially all the property rights and risks of ownership are capitalized.

Amortization of assets recorded under finance leases is included in “Depreciation and amortization” expense.

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Upon retirement or disposition of assets, cost and accumulated depreciation are removed from the related accounts and any gain or loss is included in income.

We assess long-lived assets other than goodwill for impairment whenever facts and circumstances indicate that the carrying amount may not be fully recoverable.

If it is determined that the carrying amount of an asset is not recoverable, we compare the carrying amount of the asset to its fair value as estimated using discounted expected future cash flows, market values or replacement values for similar assets.

The Company assesses long-lived assets other than goodwill for impairment whenever facts and circumstances indicate that the carrying amount may not be fully recoverable.

If it is determined that the carrying amount of an asset is not recoverable, the Company compares the carrying amount of the asset to its fair value as estimated using discounted expected future cash flows, market values or replacement values for similar assets.

The amount by which the carrying amount exceeds the fair value of the asset, if any, is recognized as an impairment loss.

Assets Held for Sale

Certain assets and liabilities met the held for sale classification criteria as of January 1, 2022.

Assets and liabilities held for sale are recorded at the lower of their carrying value or fair value less estimated cost to sell and are classified within other current assets and other current liabilities, respectively, in the consolidated balance sheets.

Depreciation is suspended on assets upon classification as held for sale.

As of December 31, 2022, we had no assets or liabilities classified as held for sale.

Assets held for sale as of January 1, 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 were be transferred with the assets held for sale.

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

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Goodwill and Other Intangible Assets

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

Since the Company operates within one single reporting unit, goodwill is assessed at the enterprise level.

The Company performs its annual assessment of goodwill as of the first day of its fourth fiscal quarter, which was October 1, 2023 for fiscal 2023.

Since the Company operates within a single reporting unit, goodwill is evaluated at the enterprise level.

The annual assessment for fiscal 2023 utilized a quantitative approach and was performed by the Company with the assistance of independent third-party experts.

An assessment under the quantitative approach requires the Company to determine the enterprise’s fair value and then compare that fair value to the carrying value of the enterprise, including goodwill, in order to determine if goodwill is impaired.

Based on this assessment, the estimated fair value of the enterprise exceeded its carrying value, including goodwill.

Therefore, the Company concluded that goodwill was not impaired.

For fiscal 2022, the Company conducted its annual impairment assessment for goodwill using a qualitative approach.

A qualitative approach requires an assessment that evaluates various factors that are specific to the Company, as well as industry and macroeconomic factors, in order to determine whether impairment indicators are present.

If impairment indicators are present, the Company must then determine if such indicators are more likely than not to cause the fair value of the enterprise to be less than its carrying amount.

Based on the qualitative analysis performed in fiscal 2022, the Company concluded that no such impairment indicators were present, and therefore goodwill was not impaired.

In addition, the Company will evaluate the carrying value of goodwill for impairment between annual impairment assessments if an event occurs or circumstances change that would indicate the carrying amount may be impaired.

Such events and indicators may include significant declines in the industries in which our products are used, significant changes in capital market conditions, or significant changes in our market capitalization.

No such material indicators were noted during fiscal 2023 and fiscal 2022 between the annual impairment assessments.

Other Intangible Assets

For all reporting periods presented, the Company’s other intangible assets have estimated finite lives and are therefore subject to amortization.

These assets are subject to impairment testing if events or circumstances occur that indicate the carrying amounts may be impaired.

No such indicators were noted in fiscal 2023 or fiscal 2022, and therefore no impairments were recorded.

Self-Insurance

The Company is self-insured for its non-union and certain unionized employee health benefits.

We have purchased stop-loss insurance in order to establish certain limits to our exposure on a per claim basis, both individually and in the aggregate.

The Company purchases stop-loss insurance in order to establish certain limits to its exposure on a per claim basis, both individually and in the aggregate.

Health benefits for some unionized employees for fiscal 2023, 2022 and 2021 were paid directly to a union trust, depending upon the union-negotiated benefit arrangement.

The Company is also self-insured, up to certain limits, for workers’ compensation losses, general liability, and automotive liability losses, all subject to varying “per occurrence” retentions or deductible limits.

It is the Company’s policy to self-insure, up to certain limits, traditional risks including workers’ compensation, comprehensive general liability, and auto liability.

The Company’s self-insured deductible for each claim involving workers’ compensation, comprehensive general liability (including product liability claims), and auto liability is limited to $ 0.8 million, $ 0.8 million, and $ 2.0 million, respectively.

The Company is also self-insured up to certain limits for the majority of its medical benefit plans ($ 0.3 million per occurrence).

A provision for claims under this self-insured program, based on our estimate of the aggregate liability for claims incurred, is revised and recorded annually.

The estimate is derived from both internal and external sources including but not limited to actuarial estimates.

The actuarial estimates are subject to uncertainty from various sources, including, among others, changes in claim reporting patterns, claim settlement patterns, judicial decisions, legislation, and economic conditions.

Although the Company believes that the actuarial estimates are reasonable, significant differences related to the items noted above could materially affect the Company’s self-insurance obligations, future expense and cash flow.

As of December 30, 2023 and December 31, 2022, the self-insurance liabilities totaled $ 13.8 million and $ 15.3 million, respectively.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company provides for estimated costs to settle both known claims and claims incurred but not yet reported by making periodic prepayments, considering our retention and stop loss limits.

Liabilities of the Company associated with these claims are estimated, in part, by considering the frequency and severity of historical claims, both specific to us, as well as industry-wide loss experience and other actuarial assumptions.

We determine our insurance obligations with the assistance of actuarial firms.

Liabilities of the Company associated with these claims are estimated, in part, by considering the frequency and severity of historical claims, both specific to the Company, as well as industry-wide loss experience and other actuarial assumptions.

The Company determines its insurance obligations with the assistance of actuarial firms.

Since there are many estimates and assumptions involved in recording insurance liabilities, and in the case of workers’ compensation, a significant period of time elapses before the ultimate resolution of claims, differences between actual future events, and prior estimates and assumptions could result in adjustments to these liabilities.

The Company has deposits on hand with certain third-party insurance administrators and insurance carriers to cover its obligation for future payment of claims.

These deposits are recorded in other current and non-current assets in our consolidated balance sheets.

We are the lessee in a lease contract when we obtain the right to control an asset associated with a particular lease.

For operating leases, we record a right-of-use ("ROU") asset that represents our right to use an underlying asset for the lease term, and a corresponding lease liability that represents our obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date.

These deposits are recorded in other current and non-current assets in the Company’s consolidated balance sheets.

The Company is the lessee in a lease contract when it obtains the right to control an asset associated with a particular lease.

For operating leases, the Company records a right-of-use ("ROU") asset that represents its right to use an underlying asset for the lease term, and a corresponding lease liability that represents the Company’s obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date.

Financing ROU assets associated with finance leases are included in property and equipment.

Leases with a lease term of 12 months or less at inception are not recorded on our consolidated balance sheet and are expensed on a straight-line basis over the lease term in our consolidated statement of operations and comprehensive income.

We determine the lease term by assuming the exercise of renewal options that are reasonably certain.

As most of our leases do 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 lease payments.

When our contracts contain lease and non-lease components, we account for both components as a single lease component.

See Note 14, Lease Commitments, for further discussion.

We account for deferred income taxes using the liability method.

Accordingly, we recognize deferred tax assets and liabilities based on the tax effects of temporary differences between the financial statement and tax bases of assets and liabilities, as measured by current enacted tax rates.

All deferred tax assets and liabilities are classified as noncurrent in our consolidated balance sheet.

A valuation allowance is recorded to reduce deferred tax assets when necessary.

For additional information about our income taxes, see Note 8, Income Taxes .

We sponsor a noncontributory defined benefit pension plan administered solely by us (the “pension plan”).

Most of the participants in the plan are inactive, with all remaining active participants no longer accruing benefits, and the plan is closed to new entrants.

Our funding policy for the pension plan is based on actuarial calculations and the applicable requirements of federal law.

Benefits under the pension plan primarily are related to years of service.

We are involved in various multiemployer pension plans (“MEPPs”) that provide retirement benefits to certain union employees in accordance with certain collective bargaining agreements (“CBAs”).

As one of many participating employers in these MEPPs, we are generally responsible with the other participating employers for any plan underfunding.

Our contributions

to a particular MEPP are established by the applicable CBAs;

however, our required contributions may increase based on the funded status of an MEPP and legal requirements such as those of the Pension Act, which requires substantially underfunded MEPPs to implement a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) to improve their funded status.

Leases with a lease term of 12 months or less at inception are not recorded on the Company’s consolidated balance sheet and are expensed on a straight-line basis over the lease term in the consolidated statement of operations and comprehensive income.

The Company determines the lease term by assuming the exercise of renewal options that are reasonably certain to occur.

As most of the Company’s leases do not provide an implicit interest rate, the Company’s incremental borrowing rate, based on the information available at the commencement date, is used in determining the present value of future lease payments.

When contracts contain lease and non-lease components, both components are accounted for as a single lease component.

See Note 13, Lease Commitments, for additional information.

The Company accounts for deferred income taxes using the liability method.

Accordingly, deferred tax assets and liabilities are recognized based on the tax effects of temporary differences between the financial statement and tax bases of assets and liabilities, as measured by current enacted tax rates.

All deferred tax assets and liabilities are classified as noncurrent in the Company’s consolidated balance sheet.

A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not (likelihood of more than 50%) that some portion or all the deferred tax asset will not be realized.

For additional information, see Note 7, Income Taxes .

Pension Plans

Prior to December 5, 2023, the Company sponsored a noncontributory defined benefit pension plan (the “DB Pension Plan”).

Most of the participants in the DB Pension Plan are inactive, with all remaining active participants no longer accruing benefits, and the plan is closed to new entrants.

The funding policy for the DB Pension Plan is based on actuarial calculations and the applicable requirements of federal law.

Benefits under the plan primarily are related to years of service.

The Company’s accounting policy election is to measure plan assets and benefit obligations as of December 31, which is the month-end that is closest to the Company’s fiscal year-end.

As further disclosed in Note 10, Employee Retirement Plans , the Company, as sponsor, settled the frozen DB Pension Plan in December 2023.

The Company is involved in various multiemployer pension plans (“MEPPs”) that provide retirement benefits to certain union employees in accordance with certain collective bargaining agreements (“CBAs”).

As one of many participating employers in these MEPPs, the Company is generally responsible with the other participating employers for any plan underfunding.

The Company’s contributions to a particular MEPP are established by the applicable CBAs;

however, the Company’s required contributions may increase based on the funded status of an MEPP and legal requirements such as those of the Pension Act, which requires substantially underfunded MEPPs to implement a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) to improve their funded status.

The settlement of the DB Pension Plan did not result in any changes to the multi-employer pension plans in which some of the Company’s union employees participate.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

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• Level 3 - Inputs are unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions

The fair value measurement guidance also establishes, as a practical expedient, that certain investments are not to be classified in the fair value hierarchy when they are measured at fair value using net asset value ("NAV").

The carrying value of the Company’s cash, cash equivalents, trade receivables, and trade payables approximate their fair values because of their short-term nature.

See Note 10, Fair Value Measurements , for additional information with respect to the Company’s fair value measurements.

Assets acquired and liabilities assumed by the Company through a business combination are initially recorded at their acquisition-date fair values.

For the Company’s frozen defined benefit pension plan that was settled on December 5, 2023, the funded position of this plan, which was reflected in the Company’s consolidated balance sheet prior to settlement, is determined in part by the fair value of the assets held by the pension plan at the end of each reporting period.

As of December 31, 2022, the underfunded position was $ 1.5 million.

As of December 30, 2023, this amount was zero due to the settlement.

See Note 10, Employee Retirement Plans.

The Company has no assets or liabilities for which their carrying values are remeasured to fair value at the end of each reporting period.

However, the Company is required to disclose the fair values for certain assets and liabilities.

See Note 9, Fair Value , for additional information.

Business Combinations

We account for business combinations by recognizing the assets acquired and liabilities assumed at the acquisition date fair value.

The Company accounts for business combinations by recognizing the assets acquired and liabilities assumed at the acquisition-date fair value.

In valuing certain acquired assets and liabilities, fair value estimates use Level 3 inputs, including future expected cash flows and discount rates.

Goodwill is measured as the excess of consideration transferred over the fair values of the assets acquired and the liabilities assumed.

While we use our best estimates and assumptions to value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement.

As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

While the Company, sometimes with the assistance of third-party experts, uses its best estimates and assumptions to value assets acquired and liabilities assumed at the acquisition date, such estimates are inherently uncertain and subject to refinement.

As a result, during the measurement period, which can last up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Upon the conclusion of the measurement period, any subsequent adjustments arising from new facts and circumstances are recorded to the consolidated statements of operations.

The results of operations of acquisitions are reflected in our consolidated financial statements from the date of acquisition.

The results of operations of acquisitions are reflected in the Company’s consolidated financial statements from the date of acquisition.

Share-Based Compensation Expense

The Company recognizes compensation expense equal to the grant-date fair value, which is generally based on the fair market value of the Company’s common stock on the date of grant, for all share-based payment awards that are expected to vest.

For service-based grants, expense is recorded on a straight-line basis over the requisite service period of the entire award.

For performance-based awards, the Company recognizes compensation expense over each separate vesting tranche to the extent the achievement of the performance goal is deemed to be probable at the end of each reporting period.

Forfeitures are accounted for as they actually occur, and compensation expense is adjusted accordingly so that it reflects cumulative expense only for the number of grants that actually vested prior to the forfeiture event.

Compensation expense related to share-based payment awards is generally recorded in SG&A expense in the consolidated statements of operations.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Repurchases of Common Stock

The Company may make authorized repurchases of 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.

Repurchased shares of the Company’s common stock are retired by the Company and are not reported as treasury stock.

The portion of the cost to repurchase common stock that is in excess of par value is charged to additional paid-in capital within stockholders’ equity.

Direct costs incurred by the Company to repurchase its common stock, such as broker commissions and excise taxes, are considered part of the cost to repurchase the common stock.

Effective January 1, 2023, if the cost of net share repurchases made by publicly traded U.S.

company exceeds $1 million annually, the cost of the repurchased shares is subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022.

For any reporting period, the costs of repurchased shares reported on the Company’s consolidated statement of stockholders’ equity may differ from the amount reported on the Company’s consolidated statement of cash flows due to the timing of remittances for excise taxes which are made in accordance with applicable law.

Advertising Cost

Advertising costs are expensed as incurred and totaled $ 2.1 million, $ 2.6 million, and $ 1.8 million for the fiscal years 2023, 2022 and 2021, respectively.

Recent Accounting Standards - Adopted

The Company did not adopt any new accounting standards during fiscal 2023.

The following accounting standards were adopted during fiscal 2022 and fiscal 2021.

Credit Impairment Losses.

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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.

This replaces the former incurred loss model 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.

We adopted this standard in the first quarter of 2022 and the implementation did not have a material impact to our consolidated financial statements.

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 consolidated financial statements.

Reference Rate Reform .

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

Our revolving credit agreement, as further discussed in Note 9, Long-Term Debt , to these 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 Company’s revolving credit agreement, as further discussed in Note 8, Long-Term Debt , to these consolidated financial statements, was amended on June 27, 2023, to replace references to LIBOR with Secured Overnight Financing Rate (“SOFR”) for determining interest payable on current and future borrowings.

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.

We adopted this standard prospectively in the first quarter of 2022.

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

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 on the Company’s condensed consolidated financial statements or to any key terms of our revolving credit agreement other than the discontinuation of LIBOR.

Income Taxes.

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Simplifying the Accounting for Income Taxes.” This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Accounting Standards Codification (“ASC”) 740 and also clarifies and amends existing guidance to improve consistent application.

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

We adopted this standard effective for fiscal year 2021.

The adoption of the standard did not have a material impact on our consolidated financial statements.

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

The Company adopted this standard effective for fiscal year 2021.

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

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Standards - Adoption Pending

Segment Reporting Improvements .

On November 27, 2023, the FASB issued ASU No.

2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

The FASB issued the new guidance primarily to provide financial statement users with more disaggregated expense information about a public business entity’s (“PBE”) reportable segment(s).

This ASU will require PBEs to provide incremental disclosures related to the entity’s reportable segment(s), including disclosures for expenses that are both 1) significant to each reportable segment and are provided regularly to the Chief Operating Decision Maker (“CODM”) or easily computed from information regularly provided to the CODM and 2) included in the reported measure of segment profit or loss used by the CODM to assess performance and allocate resources.

If a PBE does not disclose any significant segment expenses for a reportable segment, it is required to disclose narratively the nature of the expenses used by the CODM to manage each segment’s operations.

Under the provisions of this ASU, all of the disclosures required in the segment guidance, including disclosing a measure of segment profit or loss used by the CODM and reporting significant segment expenses, applies to all PBEs, including those with a single operating or reportable segment.

However, this ASU does not change the definition of a segment, the method for determining segments, or the criteria for aggregating operating segments into reportable segments.

ASU 2023-07 will be effective for the Company’s annual reporting periods beginning in fiscal 2024 and all interim reporting periods beginning in fiscal 2025.

At adoption, the disclosures are retrospectively presented for all comparative periods presented.

Since this new ASU addresses only disclosures, the Company does not expect the adoption of this ASU to have any material effects on its financial condition, results of operations or cash flows.

The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-07.

Income Tax Disclosure Improvement.

On December 14, 2023, the FASB issued ASU No.

2023-09, Improvements to Income Tax Disclosures , which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements.

Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation.

They must also further disaggregate income taxes paid.

The ASU’s disclosure requirements apply to all entities subject to ASC 740.

The overall objective of these disclosure requirements is for an entity, particularly an entity operating in multiple jurisdictions, to disclose sufficient information to enable users of financial statements to understand the nature and magnitude of factors contributing to the difference between the effective tax rate and the statutory tax rate.

ASU 2023-09 will be effective for the Company for the fiscal 2025 annual reporting period.

Since this new ASU addresses only disclosures, the Company does not expect the adoption of this ASU to have any material effects on its financial condition, results of operations or cash flows.

The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-09.

Business Combination

On October 3, 2022, we acquired all the outstanding stock of Vandermeer Forest Products (“Vandermeer”), a premier wholesale distributor of building products, for preliminary total consideration of $ 69.3 million.

Preliminary total consideration includes a purchase price of $ 67.0 million plus a preliminary estimate for cash acquired and net adjustments for working capital related to the transaction.

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 transaction.

The acquisition was funded with cash on hand.

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 provides us with direct access to customers within Seattle and Portland, two of the top 15 highest growth repair and remodel and new construction markets in the United States.

Additionally, with our acquisition of Vandermeer, we now have coast-to-coast reach and serve all 50 states.

The Vandermeer acquisition has been accounted for as a business combination using the acquisition method, and the Vandermeer results of operations are included in our results of operations from the October 3, 2022 acquisition date through the end of fiscal 2022.

Vandermeer contributed revenues of $ 25.5 million from October 3, 2022 through the end of fiscal 2022.

As previously disclosed, on October 3, 2022 the Company acquired all the outstanding stock of Vandermeer Forest Products (“Vandermeer”), a wholesale distributor of building products, for preliminary consideration of $ 69.3 million, which included $ 5.5 million of cash acquired.

The purchase price also included $ 3.6 million for a distribution facility and real estate located in Spokane, Washington, which were acquired in this transaction.

During the first quarter of fiscal 2023, $ 0.3 million was received by the Company for adjustments to Vandermeer’s working capital balances, reducing total consideration from $ 69.3 million to $ 69.0 million.

The measurement period is now closed.

The acquisition of Vandermeer provides the Company with direct access to customers in the states of Oregon and Washington.

With the acquisition of Vandermeer, the Company now serves all 50 states.

Vandermeer’s results of operations are included in the Company’s results of operations beginning on the October 3, 2022 acquisition date.

Vandermeer contributed revenues of $ 25.5 million from the October 3, 2022 acquisition date through the end of fiscal 2022.

The acquisition was accounted for as a business combination using the acquisition method.

The assets acquired and liabilities assumed were recognized at their acquisition date fair values.

The acquisition accounting, including fair value estimations, is subject to change as we finalize all assessments over the assets and liabilities that were acquired on the acquisition date.

The primary area of the preliminary acquisition accounting that is not yet finalized relates to settlement of the holdback liability, specifically as it relates to adjustments for final working capital balances.

The following table summarizes the components of the preliminary consideration:

Preliminary Consideration Transferred

(In thousands)

Cash consideration paid to and on behalf of shareholder $ 62,929

Holdback liability (1)

Total preliminary consideration transferred 69,273

(1) Included in the total preliminary consideration as of December 31, 2022 is a $ 6.3 million holdback liability held in escrow for general representations and warranties of the seller that is scheduled to be settled approximately 18 months after the acquisition date.

The excess of total purchase price, which includes the aggregate cash consideration paid in excess of the fair value of the tangible and intangible assets acquired, was recorded as goodwill.

The goodwill recognized is attributable to the expected operating synergies and growth potential that we expect to realize from the acquisition.

Goodwill also includes certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce.

We intend to make a 338(h)(10) tax election which will allow us to deduct goodwill generated from the acquisition for tax purposes.

When determining the fair values of assets acquired and liabilities assumed, management made estimates, judgments and assumptions.

The following table summarizes the preliminary values of the assets acquired and liabilities assumed at the date of the acquisition:

Preliminary Allocation as of Acquisition Date

The following table summarizes the components of the consideration, as adjusted in the first quarter of 2023 for the working capital adjustment:

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands)

5 unchanged sentences

Prepaid expenses and other assets 101

Intangible assets and goodwill:

Intangible assets:

Customer relationships 23,000

1 unchanged sentence

Non-compete agreements 700

Goodwill 7,600

Accounts payable ( 1,738 )

2 unchanged sentences

Other current liabilities ( 75 )

Total estimated fair value of net assets acquired $ 69,273

The estimated useful life for the customer relationships, trade names, and non-compete agreements is 12 years, three years , and five years , respectively.

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

The cost of all inventories is determined by the moving average cost method.

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

As of the end of fiscal 2022, we recorded a lower of cost or net realizable value reserve of $ 2.6 million as a result of the decrease in the value of our structural lumber and panel inventory related to the decline in wood-based commodity prices as of the end of the period.

As of the end of fiscal 2021, we assessed the carrying value of our inventory and determined it was presented at the lower of cost or net realizable value and that a reserve was not necessary.

Total identifiable net assets 61,373

Goodwill 7,600

Total consideration $ 68,973

The excess of total purchase price, which includes the aggregate cash consideration paid in excess of the fair value of the tangible and intangible assets acquired, was recorded as goodwill.

The goodwill recognized is attributable to the expected operating synergies and growth potential that we expect to realize from the acquisition.

Goodwill also includes certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce.

The Company made a 338(h)(10) tax election to allow for the deductibility of goodwill recognized from the acquisition.

At acquisition, $ 6.3 million of the cash consideration paid by the Company was placed into a bank escrow account for the purpose of paying third parties for obligations that were assumed by the seller.

During the third quarter of fiscal 2023, $ 1.6 million of this escrow balance was returned to the seller under the terms of the stock purchase agreement and the escrow arrangement that provide for scheduled return of the unused balance in the escrow account.

As of December 30, 2023, the remaining balance in the escrow account is $ 4.8 million and any unused amount remaining in this escrow account will be released to the seller approximately 18 months after the acquisition date.

The estimated useful life for the customer relationships, trade names, and non-compete agreements is 12 years, 3 years, and 5 years, respectively.

The Company’s inventories as of the end of fiscal 2023 and fiscal 2022 consisted almost entirely of finished goods inventory, with an immaterial amount of work-in-process inventory.

As of the end of fiscal 2022, the Company had a lower-of-cost-or-net-realizable-value inventory reserve of $ 2.6 million as a result of the decrease in the value of our structural lumber and panel inventory related to the decline in wood-based commodity prices.

As of December 30, 2023, the Company had no inventory reserve.

Revenue Recognition

We recognize revenue when the following criteria are met:

(1) contract with the customer has been identified;

(2) performance obligations in the contract have been identified;

(3) transaction price has been determined;

(4) the transaction price has been allocated to the performance obligations;

and (5) when (or as) performance obligations are satisfied.

Contracts with our customers are generally in the form of standard terms and conditions of sale.

From time to time, we may enter into specific contracts, which may affect delivery terms.

Performance obligations in our contracts generally consist solely of delivery of goods.

For all sales channel types, consisting of warehouse, direct, and reload sales, we typically satisfy our performance obligations upon shipment.

Our customer payment terms are typical for our industry, and may vary by the type and location of our customer and the products or services offered.

The term between invoicing and when payment is due is not deemed to be significant by us.

For certain sales channels and/or products, our standard terms of payment may be as early as ten days.

In addition, we provide inventory to certain customers through pre-arranged agreements on a consignment basis.

Customer consigned inventory is maintained and stored by certain customers;

however, ownership and risk of loss remains with us.

All revenues recognized are net of trade allowances (i.e., rebates), cash discounts, and sales returns.

Cash discounts and sales returns are estimated using historical experience.

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.

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

We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized.

We believe that there will not be significant changes to our estimates of variable consideration.

The following table presents our revenues disaggregated by revenue source.

The following table presents the Company’s revenues disaggregated by revenue source.

Sales and usage-based taxes are excluded from revenues.

No single customer of the Company generated 10% or more of the Company’s total net sales during fiscal years 2023, 2022 or 2021.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Year Ended

December 31, 2022 January 1, 2022 January 2, 2021

December 30, 2023 December 31, 2022 January 1, 2022

(In thousands)

2 unchanged sentences

Total net sales $ 3,136,381 $ 4,450,214 $ 4,277,178

The following table presents our revenues disaggregated by sales channel.

Warehouse sales are delivered from our warehouses.

Reload sales are similar to warehouse sales but are shipped from non-warehouse locations, most of which are operated by third-parties, where we store owned products to enhance our 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.

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.

Sales and usage-based taxes are excluded from revenues.

The following table presents the Company’s revenues disaggregated by sales channel.

Warehouse sales are delivered from the Company’s warehouses.

Reload sales are similar to warehouse sales but are shipped from non-warehouse locations, most of which are operated by third parties, where the Company stores owned products to enhance operating efficiencies.

The reload channel is employed primarily to service strategic customers that are less economical to service from Company warehouses, and to distribute large volumes of imported products from port facilities.

Direct sales are shipped from the manufacturer to the customer and therefore the Company does not take taking physical possession of the inventory and, as a result, typically generate lower margins than the warehouse and reload distribution channels.

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

Fiscal Year Ended

December 31, 2022 January 1, 2022 January 2, 2021

December 30, 2023 December 31, 2022 January 1, 2022

(In thousands)

3 unchanged sentences

Total net sales $ 3,136,381 $ 4,450,214 $ 4,277,178

Practical Expedients and Exemptions

We generally expense sales commissions when incurred because the amortization period would have been one year or less.

These costs are recorded within selling, general, and administrative expense.

We have made an accounting policy election to treat outbound shipping and handling activities as a selling, general and administrative expense.

The Company generally expenses sales commissions when incurred because the amortization period would typically be one year or less.

These costs are recorded within SG&A expense.

The Company has made an accounting policy election to treat outbound shipping and handling activities as an SG&A expense.

Shipping and handling costs include amounts related to the administration of the Company’s logistical infrastructure, handling of material in its warehouses, and amounts pertaining to the delivery of products to customers, such as fuel and maintenance costs for mobile fleet, wages for drivers, and third party freight charges.

These expenses were $ 152.3 million, $ 160.3 million, and $ 149.2 million for fiscal 2023, fiscal 2022, and fiscal 2021, respectively.

Goodwill and Other Intangible Assets

As of December 31, 2022 and January 1, 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.

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

This test requires us to assign goodwill to a reporting unit and to determine if the fair value of the reporting unit’s goodwill is less than its carrying amount.

We evaluate goodwill for impairment as of the first day of our fourth quarter, which was October 2, 2022 for fiscal 2022.

completed our annual assessment of goodwill in the fourth quarter of fiscal 2022 using a qualitative approach.

The qualitative goodwill impairment assessment requires us to evaluate factors, based on the weight of evidence, to determine whether our single reporting unit's carrying value would more likely than not exceed its fair value.

As part of our goodwill qualitative testing process for our reporting unit, we evaluate various factors that are specific to the reporting unit, as well as industry and macroeconomic factors, in order to determine whether they are reasonably likely to have a material impact on the fair value of our reporting unit.

Based on the qualitative analysis performed in fiscal 2022, we concluded that there were no changes that were reasonably likely to cause the fair value of our reporting unit to be less than its carrying value and determined that there was no impairment of our goodwill.

In addition, we will evaluate the carrying value of goodwill for impairment between annual impairment tests if an event occurs or circumstances change that would indicate the carrying amounts may be impaired.

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 in fiscal 2022 and fiscal 2021.

The following table provides information related to the carrying amount of our goodwill:

As of December 30, 2023 and December 31, 2022, our intangible assets consist of goodwill and other intangible assets including customer relationships, noncompete agreements, and trade names.

The Company’s goodwill as of December 30, 2023 originated as follows:

$ 47.8 million from the 2018 acquisition of Cedar Creek and $ 7.6 million from the 2022 acquisition of Vandermeer.

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

Since the Company operates within a single reporting unit, goodwill is evaluated at the enterprise level.

The Company evaluates goodwill for impairment as of the first day of its fiscal fourth quarter, which was October 1, 2023 for fiscal 2023.

The annual assessment for fiscal 2023 utilized a quantitative approach and was performed by the Company with the assistance of a independent third-party expert.

Based on this assessment, the Company concluded that its goodwill was not impaired and therefore no impairment charge was needed.

The Company completed its annual assessment of goodwill in the fourth quarter of fiscal 2022 using a qualitative approach.

Based on the qualitative analysis performed in fiscal 2022, the Company noted no changes that were reasonably likely to cause the fair value of the enterprise to be less than its carrying value and therefore concluded that goodwill was not impaired.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In addition, the Company must evaluate the carrying value of goodwill for impairment between annual impairment tests if an event occurs or circumstances change that would indicate that the carrying amount of goodwill may be impaired.

Such events and indicators may include significant declines in the industries in which the Company’s products are used, significant changes in capital market conditions, and significant changes in the Company’s market capitalization.

No such indicators were identified in fiscal 2023 or fiscal 2022.

The following table provides information related to the carrying amount of the Company’s goodwill:

Total Carrying Amount

(In thousands)

Balance at January 2, 2021 $ 47,772

Acquisitions —

Balance at January 1, 2022 $ 47,772

Acquisitions 7,600

Balance at December 31, 2022 $ 55,372

Balance as of January 1, 2022 $ 47,772

Business combination 7,600

Balance as of December 31, 2022 $ 55,372

Balance as of December 30, 2023 $ 55,372

Definite-Lived Intangible Assets

The gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets at December 31, 2022 were as follows:

The gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets as of December 30, 2023 were as follows:

Weighted Average Remaining Useful Lives Gross Carrying Amounts Accumulated Amortization (1)

Net Carrying Amounts

(In thousands)

($ amounts in thousands)

Customer relationships 9 $ 48,500 $ ( 18,816 ) $ 29,684

4 unchanged sentences

Certain of our customer relationships are amortized on a double declining balance method and certain others are amortized on a straight line basis.

The gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets at January 1, 2022 were as follows:

The gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets as of December 31, 2022 were as follows:

Weighted Average Remaining Useful Lives Gross Carrying Amounts Accumulated Amortization (1)

Net Carrying Amounts

(In thousands)

($ amounts in thousands)

Customer relationships 10 $ 48,500 $ ( 15,093 ) $ 33,407

4 unchanged sentences

Customer relationships are amortized on a double declining balance method.

Definite-lived intangible assets are subject to impairment testing if events or circumstances occur that indicate the carrying amounts may be impaired.

No such indicators were present in fiscal 2023 and fiscal 2022.

Amortization Expense

Amortization expense for the definite-lived intangible assets was $ 3.4 million, $ 5.3 million, and $ 7.5 million for the years ended December 31, 2022, January 1, 2022, and January 2, 2021, respectively.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Amortization expense for the definite-lived intangible assets was $ 4.2 million, $ 3.4 million, and $ 5.3 million for the years ended December 30, 2023, December 31, 2022, and January 1, 2022, respectively.

Estimated annual amortization expense for definite-lived intangible assets over the next five fiscal years is as follows:

1 unchanged sentence

(In thousands)

Property, Plant and Equipment

Property, plant and equipment as of December 31, 2022 and January 1, 2022, consisted of the following:

December 31, 2022 January 1, 2022

Property and Equipment

Property, plant and equipment as of December 30, 2023 and December 31, 2022, consisted of the following:

December 30, 2023 December 31, 2022

(In thousands)

6 unchanged sentences

Property and equipment, net $ 225,987 $ 205,609

Depreciation expense was $ 24.2 million, $ 22.8 million, and $ 21.3 million for the years ended December 31, 2022, January 1, 2022, and January 2, 2021, respectively.

Assets Held for Sale

As of December 31, 2022, we had no assets or liabilities classified as held for sale.

As of January 1, 2022, the net book value of total assets classified as held for sale was $ 2.6 million and was included in other current assets in our consolidated balance sheet.

As of January 1, 2022, the book value of total liabilities classified as held for sale was $ 1.9 million and was included in other current liabilities in our consolidated balance sheet.

Assets classified as held for sale as of January 1, 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 as of January 1, 2022 included current liabilities, such as accounts payable, directly associated with those assets held for sale that were to be transferred with the assets held for sale.

As of January 1, 2022, we planned to sell these assets and transfer these liabilities within the next 12 months.

During the second quarter of 2022, we completed the sale of assets and liabilities previously classified as held for sale.

In fiscal 2022, our statutory rate was 25.4 percent and it was comprised of the federal statutory income tax rate of 21.0 percent and our blended state statutory rate of 4.4 percent.

In fiscal 2021, our statutory rate was 25.8 percent and it was comprised of the federal statutory income tax rate of 21.0 percent and our blended state statutory rate of 4.8 percent.

In fiscal 2020, our statutory rate was 25.8 percent and it was comprised of the federal statutory income tax rate of 21.0 percent and our blended state statutory rate of 4.8 percent.

Our blended state rate is impacted by the mix of our income earned in various states and our federal taxable income, both of which may differ from year to year.

Our effective tax rate is impacted by the effects of permanent differences occurring throughout our fiscal year.

For fiscal 2022, fiscal 2021, and fiscal 2020, our effective tax was 25.0 percent, 24.8 percent, and 14.9 percent, respectively.

Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022 Fiscal Year Ended January 2, 2021

(In thousands)

Depreciation expense for property, plant and equipment was $ 27.8 million, $ 24.2 million, and $ 22.8 million for the years ended December 30, 2023, December 31, 2022, and January 1, 2022, respectively.

See Note 13 , Lease Commitments, for disclosure about the Company’s property and equipment that is held under finance lease obligations.

In fiscal 2023, the Company’s statutory income tax rate was 25.3 percent and it was comprised of the federal statutory income tax rate of 21.0 percent and the blended state statutory income tax rate of 4.3 percent.

In fiscal 2022, the Company’s statutory income tax rate was 25.4 percent and it was comprised of the federal statutory income tax rate of 21.0 percent and the blended state statutory income tax rate of 4.4 percent.

In fiscal 2021, the Company’s statutory income tax rate was 25.8 percent and it was comprised of the federal statutory income tax rate of 21.0 percent and the blended state statutory income rate of 4.8 percent.

The Company’s blended state income tax rate is impacted by the mix of income earned in various states and by the Company’s federal taxable income, both of which may differ from year to year.

The Company’s effective income tax rate is impacted by the effects of permanent differences occurring throughout the fiscal year.

For fiscal 2023, fiscal 2022, and fiscal 2021, the Company’s effective income tax rate was 40.7 percent, 25.0 percent, and 24.8 percent, respectively.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Year Ended December 30, 2023 Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022

($ amounts in thousands)

Income before provision for income taxes $ 81,886 $ 394,761 $ 393,876

7 unchanged sentences

Effective tax rate 40.7 % 25.0 % 24.8 %

Our provision for income taxes is reconciled to the federal statutory amount as follows:

Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022 Fiscal Year Ended January 2, 2021

The accounting for the one-time settlement for the single-employer defined benefit pension plan increased the effective income tax rate for fiscal 2023 by 14.8 %.

The Company’s provisions for income taxes are reconciled to the federal statutory amounts as follows:

Fiscal Year Ended December 30, 2023 Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022

(In thousands)

2 unchanged sentences

Valuation allowance change arising from state net operating losses ( 621 ) ( 193 ) ( 3,018 )

Valuation allowance change arising from interest deduction limitation — — ( 4,806 )

Pension plan settlement (1)

Uncertain tax positions ( 356 ) ( 333 ) 91

2 unchanged sentences

Provision for income taxes $ 33,350 $ 98,585 $ 97,743

At December 31, 2022, we recorded an income tax receivable of $ 9.9 million and is included within other current assets on our consolidated balance sheets.

Our financial statements contain certain deferred tax assets which primarily result from other temporary differences related to certain reserves, pension obligations, differences between book and tax depreciation and amortization, and state net operating losses.

We record a valuation allowance against our net deferred tax assets when we determine that, based on the weight of available evidence, it is more likely than not that our net deferred tax assets will not be realized.

For fiscal 2022 and fiscal 2021, the components of our net deferred income tax assets are as follows:

December 31, 2022 January 1, 2022

(1) $ 4.5 million was reclassified from accumulated other comprehensive income (loss)

As of December 30, 2023, an income tax payable of $ 8.5 million is included on the Company’s consolidated balance sheet along with $ 1.1 million attributed to franchise taxes payable for a total of $ 9.6 million.

As of December 31, 2022, a current income tax receivable of $ 9.9 million is included within Other current assets on the Company’s consolidated balance sheet.

The Company’s financial statements contain certain deferred tax assets which primarily result from other temporary differences related to certain reserves, accrued liabilities, pension obligations, differences between book and tax depreciation and amortization, and state net operating losses.

The Company records a valuation allowance against deferred tax assets when it is determined, based on the weight of available evidence, that it is more likely than not that some or all of the Company’s deferred tax assets will not be realized in the future.

For fiscal 2023 and fiscal 2022, components of the Company’s deferred income tax assets and deferred income tax liabilities are as follows:

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 30, 2023 December 31, 2022

(In thousands)

5 unchanged sentences

Operating lease liability 10,086 13,134

Pension 2,885 4,415

Pension plans 2,832 2,885

Benefit from net operating loss carryovers

9 unchanged sentences

Deferred income tax asset, net $ 53,256 $ 56,169

Activity in our deferred tax asset valuation allowance for fiscal 2022 and 2021 was as follows:

December 31, 2022 January 1, 2022

Activity in the Company’s deferred tax asset valuation allowance for fiscal 2023 and 2022 was as follows:

December 30, 2023 December 31, 2022

(In thousands)

Balance as of beginning of the fiscal year $ 4,076 $ 4,269

Valuation allowance provided for taxes related to:

Valuation allowance increases (decreases) related to:

State net operating loss carryforwards ( 620 ) ( 193 )

Balance as of end of the fiscal year $ 3,456 $ 4,076

We have recorded income tax and related interest liabilities where we believe certain of our tax positions are not more likely than not to be sustained if challenged.

These balances are included in other noncurrent liabilities in our consolidated balance sheets.

The Company has recorded income tax and related interest liabilities where it believe certain tax positions are not more likely than not to be sustained if challenged.

These balances are included in other noncurrent liabilities in the Company’s consolidated balance sheets.

The following table summarizes the activity related to our gross unrecognized tax benefits:

December 31, 2022 January 1, 2022

December 30, 2023 December 31, 2022

(In thousands)

Balance at beginning of the fiscal year $ 1,872 $ 2,205

Additions for tax positions of current year 1,765 —

Reductions due to lapse of applicable statute of limitations ( 356 ) ( 333 )

Balance at end of the fiscal year $ 3,281 $ 1,872

Included in the unrecognized tax benefits as of December 31, 2022 and January 1, 2022, were approximately $ 1.9 million and $ 2.2 million, respectively of tax benefits that, if recognized, would reduce our annual effective tax rate for fiscal 2022 and 2021.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Included in the unrecognized tax benefits as of December 30, 2023 and December 31, 2022, were approximately $ 1.5 million and $ 1.9 million, respectively of tax benefits that, if recognized, would reduce the Company’s annual effective tax rate for fiscal 2023 and 2022.

No penalties were accrued for either 2023 or 2022.

We have accrued interest associated with our unrecognized tax benefits which we release as those benefits are realized due to the lapse of applicable statute of limitations.

Interest expense associate with our unrecognized tax benefits is reported as interest expense, net in our consolidated statement of operations and comprehensive income.

Impacts of the Tax Act and CARES

In December of 2017, the U.S.

enacted comprehensive tax legislation under the Tax Cuts and Jobs Act, (“The Tax Act”), which made broad and complex changes to the tax code.

During fiscal 2019, we recorded a valuation allowance of $ 4.8 million primarily related to interest disallowed for deduction related to changes included in the Tax Act.

In March of 2020, the U.S.

enacted the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.

CARES included a provision which raised the level of deductibility for previously disallowed interest which had been enacted under the Tax Act.

During fiscal 2020, because of the provision included in CARES, we benefited from the release of the $ 4.8 million in valuation allowance which we had recorded during fiscal 2019 under the provisions of the Tax Act.

We had no impact to our income tax provision in fiscal 2021 or 2022 from either The Tax Act nor CARES.

The Company has accrued interest associated with its unrecognized tax benefits which it releases as those benefits are realized due to the lapse of applicable statute of limitations.

Interest expense associated with the Company’s unrecognized tax benefits is reported as interest expense, net in the Company’s consolidated statement of operations and comprehensive income.

Such interest expense has not been material in any reporting period presented herein.

Net Operating Losses

At the end of fiscal 2021, our gross state net operating loss carryovers were $ 98.6 million and our tax-effected state net operating loss carryovers were $ 5.4 million, of which $ 4.3 million was subject to a valuation allowance arising from expiration date when considered in conjunction with state limitations related to Internal Revenue Code (“IRC”) Section 382.

At the end of fiscal 2022, our gross state net operating loss carryovers were $ 92.2 million and our tax-effected state net operating loss carryovers were $ 5.0 million, of which $ 4.1 million was subject to a valuation allowance arising from expiration dates when considered in conjunction with state limitation related to IRC Section 382.

Our state net operating loss carryovers will expire in 1 to 20 years.

During fiscal 2021, we reversed $ 3.0 million in valuation allowance against our state net operating losses.

Based on our taxable income for 2021 in the states where we have net operating loss carryforwards, we believe we will be able to utilize this amount of state net operating losses that were previously reserved by this valuation allowance.

At the end of fiscal 2023, the Company’s gross state net operating loss carryovers were $ 81.0 million and its tax-effected state net operating loss carryovers were $ 4.3 million, of which $ 3.5 million was subject to a valuation allowance arising from expiration dates when considered in conjunction with state limitations related to Internal Revenue Code (“IRC”) Section 382.

At the end of fiscal 2022, the Company’s gross state net operating loss carryovers were $ 92.2 million and tax-effected state net operating loss carryovers were $ 5.0 million, of which $ 4.1 million was subject to a valuation allowance arising from expiration dates when considered in conjunction with state limitation related to IRC Section 382.

The Company’s state net operating loss carryovers will expire in 1 to 20 years.

Federal and State Tax Filings

The Company files U.S.

federal and state income tax returns in jurisdictions with varying statutes of limitations and may be subject to audit based on periods that are not limited by applicable statutes.

The Company’s U.S.

federal income tax returns for tax years 2020, 2021 and 2022 remain subject to audit under the federal statute of limitations.

Our auditable state income tax returns vary depending on the jurisdiction and its applicable statute of limitations.

Although we believe our estimates are reasonable in the carrying value of our valuation allowances against our deferred tax items, the ultimate determination of the appropriate amounts of valuation allowance involves significant judgement.

Assessing our 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 fiscal 2022, we considered the recent reported income in the current year, as well as the reported income for 2021 and 2020, 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.

We also considered evidence related to the four sources of taxable income, to determine whether such positive evidence outweighed the negative evidence.

The Company’s auditable state income tax returns vary depending on the jurisdiction and its applicable statute of limitations.

Assessing Deferred Tax Assets

Quarterly, the Company assesses the carrying value of its deferred tax assets for impairment by evaluating the weight of available evidence at the end of each fiscal quarter.

In the evaluation of the weight of available evidence at the end of fiscal 2023, the Company considered the recent reported income in the current year, as well as the reported income for 2022 and 2021, 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 evaluated.

The Company also considered evidence related to the four sources of taxable income, to determine whether such positive evidence outweighed the negative evidence.

The evidence considered included:

3 unchanged sentences

• tax planning strategies.

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

At the end of fiscal 2022 and 2021, in our evaluation of the weight of available evidence, we concluded that our deferred tax assets were not impaired other than $ 4.1 million of the state net operating losses.

Long-Term Debt

As of December 31, 2022, and January 1, 2022, long-term debt consisted of the following:

December 31, 2022 January 1, 2022

In addition to the positive evidence discussed above, the Company considered as positive evidence forecasted future taxable income, the future timing of the reversal of its deferred tax assets and liabilities, and the evidence from business and tax planning strategies.

At the end of fiscal 2023 and fiscal 2022, in the Company’s evaluation of the weight of available evidence, the Company concluded that its deferred tax assets were not impaired other than $ 3.5 million of the state net operating losses.

Although the Company believes its estimates are reasonable in the carrying value of its valuation allowances against our deferred tax items, the ultimate determination of the appropriate amounts of valuation allowance involves significant judgement.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Debt and Finance Leases

As of December 30, 2023, and December 31, 2022, outstanding debt and finance leases consisted of the following:

December 30, 2023 December 31, 2022

(In thousands)

6 unchanged sentences

Unamortized debt issuance costs (4)

( 3,246 ) ( 4,057 )

Unamortized bond discount costs (4)

( 3,011 ) ( 3,519 )

current maturities of long-term debt 7,089 7,864

Long-term debt, net of current maturities $ 558,410 $ 558,124

(1) As of December 31, 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 balance sheet at $ 292.4 million and $ 291.3 million at December 31, 2022 and January 1, 2022, respectively.

This presentation is net of their discount of $ 3.5 million and $ 4.0 million and the combined carrying value of our debt issuance costs of $ 4.1 million and $ 4.7 million at December 31, 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 2.5 percent for the years ended December 31, 2022 and January 1, 2022, respectively.

579,169 565,499

current portions of finance leases 11,178 7,089

Total debt and finance leases, net of current portions $ 567,991 $ 558,410

(1) As of December 30, 2023 and December 31, 2022, long-term 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 the Company’s consolidated balance sheets at $ 293.7 million and $ 292.4 million as of December 30, 2023 and December 31, 2022, respectively.

This presentation is net of discount of $ 3.0 million and $ 3.5 million and the combined carrying value of debt issuance costs of $ 3.2 million and $ 4.1 million as of December 30, 2023 and December 31, 2022, respectively.

The senior secured notes are presented in the above table at face value and have an annual interest rate of 6.0 % through maturity.

(2) No borrowings were outstanding during fiscal 2023 or fiscal 2022.

Available borrowing capacity under this revolving credit facility was $ 346.5 million and $ 346.5 million on December 30, 2023 and December 31, 2022, respectively.

The available borrowing capacity reflects undrawn letters of credit.

(3) Refer to Note 13, Lease Commitments , for interest rates associated with finance lease obligations.

(4) Interest expense, net on the Company’s consolidated statement of operations for fiscal 2023 and 2022 reflects amortization of debt issuance costs and bond discount costs of $ 1.3 million and $ 1.2 million, respectively.

Senior Secured Notes

In October 2021, we completed a private offering of $ 300.0 million of our six percent senior secured notes due 2029 (the “2029 Notes”), and in connection therewith we entered into an indenture (the “Indenture”) with the guarantors party thereto and Truist Bank, as trustee and collateral agent.

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, as defined below.

In October, 2021, the Company and certain subsidiaries completed a private offering of $ 300.0 million of 6.0 % percent senior secured notes due 2029 (the “2029 Notes”), and in connection therewith entered into an indenture (the “Indenture”) with the subsidiary guarantors and Truist Bank, as trustee and collateral agent.

The 2029 Notes were issued to investors at 98.625 percent of their principal amount.

The 2029 Notes are secured by a first-priority security interest in substantially all of the Company’s assets, other than accounts receivables, inventory, deposit accounts, securities accounts, business interruption insurance and other related assets.

The majority of net proceeds from the offering of the 2029 Notes were used to repay borrowings under the Company’s Revolving Credit Facility, as described below.

The 2029 Notes will mature on November 15, 2029, however at the sole discretion of the Company, the notes may be redeemed, in whole or in part, prior to scheduled maturity.

Early redemptions made by the Company prior to November 15, 2026 would require the Company to pay a redemption premium, as defined in the Indenture.

Interest expense for the 2029 Notes totaled $ 18.0 million for fiscal 2023 and fiscal 2022.

Revolving Credit Facility

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”).

In October 2021, in conjunction with the offering of our 2029 Notes, we reduced the credit limit of the Revolving Credit Facility from $ 600.0 million to $ 350.0 million.

In conjunction with the reduction in the credit limit of our Revolving Credit Facility, we expensed approximately $ 1.6 million of debt issuance costs during the fourth quarter of 2021.

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

The Revolving Credit Facility provides for a senior secured asset-based revolving loan and letter of credit facility of up to $ 350.0 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.

Our Revolving Credit Facility includes available interest rate options based on LIBOR, which will be discontinued as an available rate option after June 30, 2023.

Under the terms of the facility, LIBOR will be replaced with the Secured Overnight

Financing Rate (“SOFR”) with respect to the applicable variable rate interest options thereunder, with effect on or before June 30, 2023.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In April 2018, the Company and certain subsidiaries entered into the Amended and Restated Credit Agreement for a revolving credit facility with Wells Fargo Bank, National Association, as administrative agent (“the Agent”), and certain other financial institutions.

In August 2021, the Company entered into a second amendment to this 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, and in June 2023, the Company entered into a third amendment to this revolving credit facility to, among other things, replace the interest rate based on the London interbank offered rate (“LIBOR”) thereunder with an interest rate based on the secured overnight financing rate (“SOFR”) and a customary spread adjustment (as amended, the “Revolving Credit Facility”).

In October 2021, in conjunction with the offering of the 2029 Notes, the Company reduced the credit limit of the Revolving Credit Facility from $ 600.0 million to $ 350.0 million.

In conjunction with the reduction in the credit limit of the Revolving Credit Facility, the Company expensed approximately $ 1.6 million of unamortized debt issuance costs during the fourth quarter of fiscal 2021.

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

The Revolving Credit Facility provides for a senior secured asset-based revolving loan and letter of credit facility of up to $ 350.0 million, as amended.

The obligations under the Revolving Credit Facility are secured by a security interest in substantially all of the Company’s and its subsidiaries’ assets (other than real property), including inventories, accounts receivable, and proceeds from those items, under the Amended and Restated Guaranty and Security Agreement.

From and after June 30, 2023, borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to (i) Adjusted Term SOFR (calculated as SOFR plus 0.1 %) 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 SOFR, 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.

Prior to June 30, 2023, borrowings under the Revolving Credit Facility bore 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 Company would be required to repay the Revolving Credit Facility to the extent that such revolving borrowings 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 December 30, 2023, we had zero outstanding borrowings and excess availability, including cash in qualified accounts, of $ 868.2 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.

Available borrowing capacity under our Revolving Credit Facility was $ 346.5 million on December 31, 2022 and January 1, 2022, respectively.

Our average effective interest rate under the facility was zero percent and 2.5 percent for the years ended December 31, 2022 and January 1, 2022, 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 December 31, 2022.

Term Loan Facility

On April 2, 2021, we repaid the remaining outstanding principal balance of our former term loan facility, and, as a result, as of January 1, 2022 and December 31, 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.

As of December 31, 2022, we had zero outstanding borrowings and excess availability, including cash in qualified accounts, of $ 645.4 million under our Revolving Credit Facility.

Available borrowing capacity under our Revolving Credit Facility was $ 346.5 million and $ 346.5 million on December 30, 2023 and December 31, 2022, respectively.

During fiscal 2023 and fiscal 2022, the Company incurred no interest expense for the Revolving Credit Facility since no borrowings were outstanding during either fiscal year.

During fiscal 2023 and fiscal 2022, the Company incurred $ 1.0 million and $ 1.0 million, respectively, of fees associated with the Revolving Credit Facility, primarily unused line fees.

These expenses are included in Interest expense, net on the Company‘s consolidated statement of operations.

Debt Covenants

The Revolving Credit Facility and the 2029 Notes contain various covenants and restrictions, including customary financial covenants.

The Company’s right to make draws on the Revolving Credit Facility may be conditioned upon, among other things, compliance with these covenants.

The Company was in compliance with all covenants as of December 30, 2023.

These covenants also limit the Company’s ability to, among other things:

incur additional debt;

grant liens on assets;

make investments;

repurchase stock;

pay dividends and make distributions;

sell or acquire assets, including certain real estate assets, outside the ordinary course of business;

engage in transactions with affiliates;

and make fundamental business changes.

Former Term Loan Facility

On April 2, 2021, the Company repaid the remaining outstanding principal balance of its former term loan facility, the Credit and Guaranty Agreement, as amended .

In connection with this repayment, the Company expensed $ 5.8 million of unamortized

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

debt issuance costs associated with the former term loan facility.

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

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 and 8.0 percent for the years ended December 31, 2022 and January 1, 2022, respectively.

Finance Lease Obligations

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For more information on our finance lease obligations, refer to Note 13, Lease Commitments .

Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Disclosures are required for certain assets and liabilities that are measured at fair value on a nonrecurring basis in periods after initial recognition.

Such measurements of fair value relate primarily to assets and liabilities measured at fair value in connection with business combinations and asset impairments.

For more information on business combinations, see Note 2, Business Combination .

There were no material long-lived asset impairments during the fiscal years 2022, 2021, and 2020.

Fair Value of Debt

The estimated fair value of the Company’s 2029 Notes, as defined above, was determined based on Level 2 input using observable market prices in less active markets.

The carrying amount of the Company’s Revolving Credit Facility approximates its fair value as the interest rate is variable and reflective of market rates.

The following table presents the carrying value and fair value of the Company’s 2029 Notes:

December 31, 2022 January 1, 2022

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of December 31, 2022, the underfunded position was $ 1.5 million.

As of December 30, 2023, this amount was zero due to the settlement.

See Note 10, Employee Retirement Plans .

The Company has no other assets or liabilities for which the carrying value is remeasured to fair value at the end of each reporting period.

The Company has not elected the fair value reporting option for any of its financial instruments.

Fair Value Disclosures

The fair value of cash, cash equivalents, accounts receivable, accounts payable and accrued liabilities, to the extent the underlying liability will be settled in cash, approximates the carrying values because of the short-term nature of these instruments.

The estimated fair value of the Company’s 2029 Notes was determined based on Level 2 input using observable market prices in less active markets and is presented below:

December 30, 2023 December 31, 2022

Carrying Value Fair Value Carrying Value Fair Value

1 unchanged sentence

2029 Notes $ 300,000 $ 273,182 $ 300,000 $ 283,558

Fair Value of Defined Benefit Pension Plan

The fair value hierarchy not only is applicable to assets and liabilities that are included in our consolidated balance sheets, but also is applied to certain other assets that indirectly impact our consolidated financial statements.

For example, we sponsor and contribute to a single-employer defined benefit pension plan (see Note 11, Employee Benefits ).

Assets contributed by us become the property of the pension plan.

Even though the Company no longer has control over these assets, we are indirectly impacted by subsequent fair value adjustments to these assets.

The actual return on these assets impacts our future net periodic benefit cost, as well as amounts recognized in our consolidated balance sheets.

The Company uses the fair value hierarchy to measure the fair value of assets held by our pension plan where applicable.

Certain investments are measured using the net asset value ("NAV") per share as a practical expedient and have not been classified in the fair value hierarchy.

Employee Benefits

The fair values of the 2029 Notes as of December 30, 2023 and December 31, 2022 were significantly influenced by the 6.0 % annual interest rate borne by the 2029 Notes, which was below market interest rates as of both dates.

The carrying amount of the Company’s Revolving Credit Facility, which had no borrowings outstanding during fiscal 2023 or fiscal 2022, approximates its fair value as the interest rate is variable and reflective of market interest rates.

Employee Retirement Plans

Multiemployer Pension Plans

The Company is involved in various multiemployer pension plans (“MEPPs”) that provide retirement and certain disability benefits to certain union employees in accordance with certain collective bargaining agreements (“CBAs”).

As one of many participating employers in these MEPPs, the Company is generally responsible with the other participating employers for any plan underfunding.

The Company’s contributions to a particular MEPP are established by the applicable CBAs;

however, required contributions may increase based on the funded status of an MEPP and legal requirements such as those of the Pension Act, which requires substantially underfunded MEPPs to implement a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) to improve their funded status.

Factors that could impact funded status of an MEPP include, without limitation, investment performance, changes in the participant demographics, decline in the number of contributing employers, changes in actuarial assumptions, and the utilization of extended amortization provisions.

A FIP or RP requires a particular MEPP to adopt measures to correct its underfunded status.

These measures may include, but are not limited to:

an increase in the Company’s contribution rate to the applicable CBA, a reallocation of the contributions already being made by participating employers for

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

various benefits to individuals participating in the MEPP, and/or a reduction in the benefits to be paid to future and/or current retirees.

The Company could also be obligated to make future payments to MEPPs if it either ceases to have an obligation to contribute to the MEPP or significantly reduces its contributions to the MEPP because the Company reduced its number of employees who are covered by the relevant MEPP for various reasons, including, but not limited to, layoffs or closures, assuming the MEPP has unfunded vested benefits.

The amount of such payments (known as a complete or partial withdrawal liability) generally would equal the Company’s proportionate share of the plan’s unfunded vested benefits.

The following table lists the Company’s participation in its multiemployer plans which the Company deems significant.

“Contributions” represent the amounts contributed to the plan during the fiscal years presented:

Contributions (In millions)

Pension Fund:

EIN/Pension Plan Number Pension Act Zone Status FIP/RP Status (1)

Surcharge 2023 2022 2021

Central States, Southeast and Southwest Areas Pension Fund 366044243 Critical and Declining

(January 1, 2020) RP No $ 0.3 $ 0.4 $ 0.3

Total $ 0.3 $ 0.4 $ 0.3

(1) Funding Improvement Plan or Rehabilitation Plan, as defined by the Pension Protection Act of 2006

The Company’s contributions to this plan are approximately 0.1 % of total contributions, which is less than the required disclosure threshold of five percent of total plan contributions.

However, this plan is deemed significant for disclosure as it is severely underfunded.

The current CBA that requires contributions to the plan expires on December 31, 2025.

In May 2020, the Company received a demand letter for payment resulting from its partial withdrawal in 2018 from the Central States Plan and started making payments in June 2020.

These payments are payable monthly for a period of 20 years.

The Company’s liability for the remainder of these payments was $ 6.8 million as of December 30, 2023.

The Company may, in the future, record an additional liability if required by an event of our complete withdrawal from the plan or a mass withdrawal.

The Company’s most recent contingent withdrawal liability was estimated at approximately $ 45.0 million for a complete withdrawal occurring in 2023.

In the case of a complete withdrawal or a mass withdrawal, the Central States Plan could demand yearly payments of approximately $ 1.1 million, which do not include payments for the partial withdrawal of approximately $ 0.6 million annually.

In a complete withdrawal, the payments would not amortize the liability fully;

however, payments for a complete withdrawal are limited to a 20 -year period.

In the case of a mass withdrawal, the liability would not amortize fully under current government regulations, and payments would continue indefinitely.

Defined Contribution Plans

The Company’s employees also participate in two defined contribution plans:

the BlueLinx Corporation Hourly Savings Plan covering hourly employees, and the BlueLinx Corporation Salaried Savings Plan covering salaried employees.

Discretionary contributions to the plans are based on employee contributions and compensation, and, in certain cases, participants in the hourly savings plan also receive employer contributions based on union negotiated match amounts.

Employer contributions to the hourly savings plan for fiscal years 2023 and 2022 were approximately $ 0.9 million and $ 0.8 million, respectively.

Employer contributions to the salaried savings plan for fiscal 2023 were approximately $ 2.5 million, of which $ 0.0 million was for fiscal 2022.

Employer contributions to the salaried savings plan for fiscal 2022 were approximately $ 4.0 million, of which $ 2.1 million were for fiscal 2021.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Single-Employer Defined Benefit Pension Plan

We sponsor a noncontributory defined benefit pension plan administered solely by us (the “plan”).

Most of the participants in the plan are inactive, with all remaining active participants no longer accruing benefits, and the plan is closed to new entrants.

Our funding policy for the plan is based on actuarial calculations and the applicable requirements of federal law.

Benefits under the plan primarily are related to years of service.

In October 2022, we notified participants of 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.

As previously disclosed, in October 2022, the Company, as sponsor, notified participants in its noncontributory defined benefit pension plan (the “DB Plan”) that the Company intended to transfer financial responsibility for the management and delivery of continuing benefits associated with the DB Plan to a highly rated insurance company with pension settlement experience.

Most of the participants in the DB Plan are inactive, with all remaining active participants no longer accruing benefits, and the DB Plan is closed to new entrants.

The DB Plan’s accumulated benefit obligation and its projected benefit obligation are the same amount (a “frozen” plan), and the Company has not incurred service cost under the plan since fiscal year 2019.

Benefits under the plan were primarily related to years of service.

The DB Plan’s assets were maintained in a separate trust entity prior to settlement, and then used to fund the settlement transaction as described below.

Effective December 5, 2023, the Company settled the frozen DB Plan by purchasing an irrevocable nonparticipating annuity contract with an insurance company (the “buy-out contract”).

The buyout contract met the requirements for a settlement, as that term is defined in ASC No.

715, Compensation-Retirement Benefits , and the DB Plan and Company, as sponsor, have been relieved of primary responsibility for the benefits obligations.

Participants of the DB Plan who had a vested benefit of less than $ 5,000 were paid a one-time and final lump sum distribution, including the option to roll over their vested balance to an individual retirement account at a financial institution.

Immediately before the settlement, benefit obligations and plan assets of the DB Plan were $ 78.7 million and $ 78.7 million, respectively.

The plan assets included a final cash contribution of $ 6.9 million made by the Company, as sponsor, at the time the buy-out contract was purchased.

Other than the aforementioned $ 6.9 million, the Company was not required to and did not make any contributions in fiscal 2023 or fiscal 2022 to the DB Plan.

Substantially all of the plan assets were used to purchase the buyout contract from the insurance company on December 5, 2023.

Just prior to settlement, the Company’s accumulated other comprehensive loss included unrecognized pension cost of $ 30.4 million plus unrecognized deferred taxes of $ 4.5 million, for a total of $ 34.9 million and these amounts were reclassified into earnings at settlement in fourth quarter of fiscal 2023.

As previously disclosed, during fiscal 2013 the Company contributed two properties to the DB Plan in lieu of a cash contribution, and then entered into a lease for each of these properties and continued to use the properties in the Company’s distribution operations.

The DB Plan engaged an independent fiduciary to manage the properties on behalf of the DB Plan.

During fiscal 2022 and in anticipation of the settlement of the DB Plan, the Company repurchased these two real estate properties from the DB Plan for $ 11.1 million and 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.

Our actuarial assumptions for the plan as of fiscal year ended December 31, 2022 include considerations for termination of the plan.

We estimate our plan termination will be completed during fiscal 2023, at which time we expect to record a non-cash, pre-tax pension settlement charge equal to the balance of our accumulated other comprehensive loss, which is $ 27.4 million as of December 31, 2022.

The following tables set forth the change in projected benefit obligation and the change in plan assets for the pension plan:

December 31, 2022 January 1, 2022

and Buffalo, N.Y., valued at approximately $ 11.1 million by independent appraisals.

The repurchase amount is included in pension contributions within the operating activities section of the Company’s consolidated statements of cash flows for the fiscal year ended December 30, 2022.

Actuarial assumptions for the plan during fiscal 2023 and as of December 31, 2022 included considerations for settlement of the DB Plan.

The following tables set forth the change in projected benefit obligation and the change in plan assets for the DB Plan:

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 30, 2023 December 31, 2022

(In thousands)

4 unchanged sentences

Benefits paid ( 6,018 ) ( 5,859 )

Settlement ( 78,732 ) —

Projected benefit obligation at end of period (1)

$ 2,181 $ 82,752

Change in plan assets:

3 unchanged sentences

Benefits paid ( 6,018 ) ( 5,859 )

Settlement ( 78,732 ) —

Fair value of assets at end of period (1)

Net (unfunded) status of plan (1)

The accumulated benefit obligation for the pension plan was $82.7 million and $ 105.9 million at December 31, 2022 and January 1, 2022, respectively.

We recognize the unfunded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of our pension plan in our consolidated balance sheets, with a corresponding adjustment to accumulated other comprehensive income (loss), net of tax.

As of December 31, 2022 and January 1, 2022, the net unfunded status of our benefit plan was $ 1.5 million and $ 11.6 million, respectively.

As discussed above, we estimate our plan termination will be completed during fiscal 2023.

Accordingly, we have recognized the net unfunded status of our benefit plan as of December 31, 2022 as a current liability in our consolidated balance sheet.

We have elected to utilize a full yield curve approach in the estimation service and interest cost components for pension (income)/expense recognized during the fiscal year by applying the specific spot rates along the yield curve used in determination of the benefit obligation to the relevant projected cash flows.

Actuarial gains and losses occur when actual experience differs from the estimates used to determine the components of net periodic pension cost, including the difference between the actual and expected return plan assets and when certain assumptions used to determine the projected benefit obligation are updated for plan re-measurement, including but not limited to, changes in the discount rate, plan amendments, mortality and other assumptions.

We amortize a portion of unrecognized actuarial gains and losses for the pension plan into our consolidated statements of operations and comprehensive income (loss).

The amount recognized in the current year’s operations is based on amortizing the unrecognized gains or losses for the pension plan that exceed the larger of 10% of the projected benefit obligation or the fair value of plan assets, also known as the corridor.

In the current fiscal year, the amount representing the unrecognized gain or loss that exceeds the corridor is amortized over the estimated average remaining life expectancy of participants, as almost all the participants in the plan are inactive.

The net adjustment to other comprehensive income (loss) for fiscal 2022 and fiscal 2021 was a $ 2.4 million net of tax loss and a $ 6.6 million net of tax gain, respectively.

The adjustments in both fiscal years are primarily due to a combination of actuarial adjustments at year end in addition to the amortization of unrealized gain and/or losses throughout the fiscal year.

The decrease in the unfunded obligation for the fiscal year was approximately $ 10.1 million and was primarily comprised of $ 19.7 million of actuarial gain, $ 19.1 million of negative investment returns, $ 11.9 million of pension contributions (comprised of our re-purchase of properties previously contributed to the plan in 2013 and their respective annual lease payments), and a charge of $ 2.4 million due to current year interest cost.

The net periodic pension credit was $ 1.4 million in fiscal 2022 compared to $ 1.3 million in fiscal 2021, driven primarily by a reduction in the interest cost on the projected benefit obligation.

The unfunded status recorded as pension benefit obligation on our consolidated balance sheets for the plan is set forth in the following table, along with the unrecognized actuarial loss, which is presented as part of accumulated other comprehensive loss:

December 31, 2022 January 1, 2022

$ — $ ( 1,521 )

(1) As disclosed above, the DB Plan was settled during fourth quarter of fiscal 2023.

The remaining residual balances in projected benefit obligations and fair value of assets as of December 30, 2023 of $ 2.2 million and $ 2.2 million, respectively, will be used to fund 1) $ 0.5 million for January 2024 benefit payments (annuity will then begin making all subsequent benefit payments), 2) $ 0.6 million for vested benefits and related assets that will be submitted to the Pension Benefit Guaranty Corporation (PBGC) for plan participants who cannot be located, and 3) $ 1.0 million to cover final estimated administrative expenses of the DB Plan.

The Company expects the residual obligations and assets to be resolved in fiscal 2024 without material impact to the Company’s financial conditions, results of operations or cash flows .

The change in the funded status for fiscal year 2023, from underfunded by $ 1.5 million at the end of fiscal 2022 to zero at the end of fiscal 2023, was due to the settlement of December 5, 2023 described above.

The accumulated benefit obligation and the projected benefit obligation for the DB Pension Plan was $ 82.8 million as of December 31, 2022.

The Company recognized the unfunded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of the DB Pension Plan in its consolidated balance sheets, with a corresponding adjustment to accumulated other comprehensive income (loss), net of tax.

As of December 31, 2022, the net unfunded status of the DB Plan was $ 1.5 million.

In anticipation of the plan settlement, the Company reported the net unfunded status of the DB Plan as of December 31, 2022 within Other current liabilities in its consolidated balance sheet.

The Company elected to utilize a full yield curve approach in the estimation service and interest cost components for pension (income)/expense recognized by applying the specific spot rates along the yield curve used in determination of the benefit obligation to the relevant projected cash flows.

Prior to settlement, actuarial gains and losses occurred when actual experience differed from the estimates used to determine the components of net periodic pension cost, including the difference between the actual and expected return plan assets and when certain assumptions used to determine the projected benefit obligation were updated for plan re-measurement, including but not limited to, changes in the discount rate, plan amendments, mortality and other assumptions.

Prior to settlement, the Company amortized a portion of unrecognized actuarial gains and losses for the DB Pension Plan into its consolidated statements of operations and comprehensive income (loss).

The amount recognized in the current year’s operations was based on amortizing the unrecognized gains or losses for the DB Pension Plan that exceed the larger of 10% of the projected benefit obligation or the fair value of plan assets, also known as the corridor.

The amount that represented the unrecognized gain or loss that exceeded the corridor was amortized over the estimated average remaining life expectancy of participants, as almost all the participants in the plan are inactive.

The net adjustment to other comprehensive income (loss) for fiscal 2023 and fiscal 2022 was a $ 32.7 million pre-tax loss and a $ 2.4 million pre-tax gain, respectively.

The amount for fiscal 2023 includes a $ 30.4 million settlement loss.

The remainder of

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the amount for fiscal 2023 and the amount for fiscal 2022 were primarily due to a combination of actuarial adjustments at year end in addition to the amortization of unrealized gain and/or losses throughout the fiscal year.

The funded status recorded as pension benefit obligation on the Company’s consolidated balance sheets for the plan is set forth in the following table, along with the unrecognized actuarial loss, which was presented as part of accumulated other comprehensive loss:

December 30, 2023 December 31, 2022

(In thousands)

6 unchanged sentences

Net amount recognized $ — $ 25,917

The net periodic pension credit for the plan included the following:

Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022

The net periodic pension cost (benefit) for the plan included the following:

Fiscal Year Ended December 30, 2023 Fiscal Year Ended December 31, 2022

(In thousands)

3 unchanged sentences

Amortization of unrecognized loss 1,207 835

Net periodic pension credit for the pension plan $ ( 1,447 ) $ ( 1,258 )

The following assumptions were used to determine the projected benefit obligation at the measurement date and the net periodic pension cost:

December 31, 2022 January 1, 2022

Before settlement (1)

2,377 ( 1,447 )

Settlement loss (2)

Net periodic pension cost (benefit) for the pension plan $ 32,817 $ ( 1,447 )

(1) On the Company’s consolidated statements of operations, reported within Other expenses (income), net

(2) The DB Pension Plan was frozen and no service cost has been incurred for the plan since fiscal 2019.

This one-time non-cash settlement loss is reported as a non-operating expense on the Company’s consolidated statement of operations.

T he following assumptions were used to determine the projected benefit obligation at the measurement date and the net periodic pension cost (credit):

December 30, 2023 December 31, 2022

Projected benefit obligation:

Discount rate 5.34 % 2.90 %

Discount rate N/A 5.34 %

Average rate of increase in future compensation levels N/A N/A

Net periodic pension:

Net periodic pension cost or benefit:

Discount rate 5.34 % 2.38 %

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Expected long-term rate of return on plan assets 4.00 % 5.20 %

Our estimates of the amount and timing of our future funding obligations for our defined benefit pension plan are based upon various assumptions specified above.

As disclosed above, the DB Plan was settled effective December 5, 2023.

The assumptions in the table above for the fiscal year ended December 30, 2023 were used to determine net periodic pension cost in fiscal 2023 prior to the settlement.

The annuity purchase price was used to measure the projected benefit obligation on settlement date.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Prior to settlement, estimates of the amount and timing of the Company’s future funding obligations for the DB Plan were based upon various assumptions specified above.

These assumptions include, but are not limited to, the discount rate, projected return on plan assets, and mortality rates.

The rate of increase in future compensation levels has no effect on both the projected benefit obligation and net periodic pension cost, as almost all the participants in the plan are inactive, the remaining active participants are no longer accruing benefits, and the plan is closed to new entrants.

Assumptions for plan termination settlement liability estimate.

Plan liabilities will be settled through a lump sum offer to certain participants followed by an annuity buyout for remaining participants.

The cost of this settlement is developed relative to the plan-based accounting obligations, segmented by participant status and other demographic subgroups where appropriate.

The primary drivers of cost are lump sum election rates, the cost of lump sums relative to accounting obligations, and the cost to purchase annuities for participants not electing lump sums.

The rate of increase in future compensation levels had no effect on both the projected benefit obligation and net periodic pension cost, as almost all the participants in the plan were inactive, the remaining active participants were no longer accruing benefits, and the plan was closed to new entrants.

Assumptions for plan settlement liability estimate.

As previously disclosed, plan liabilities were settled through a lump sum offer to certain participants followed by an annuity buyout for remaining participants.

The cost of this settlement was developed relative to the plan-based accounting obligations, segmented by participant status and other demographic subgroups where appropriate.

The primary drivers of cost were lump sum election rates, the cost of lump sums relative to accounting obligations, and the cost to purchase annuities for participants not electing lump sums.

Projected return on plan assets.

Pension plan assets are managed under a balanced portfolio allocation policy comprised of two major components:

Prior to settlement, pension plan assets were managed under a balanced portfolio allocation policy comprised of two major components:

a return-seeking portion and a liability-matching portion.

The expected role of return-seeking investments is to achieve a reasonable long-term growth of pension assets with a prudent level of risk, while the role of liability-matching investments is to provide a partial hedge against liability performance associated with changes in interest rates.

The objective within return-seeking investments is to achieve asset diversity in order to balance return and volatility.

We employ a designated fiduciary to manage the day-to-day investment responsibilities for pension plan assets and relationships with certain agents, advisors, and other fiduciaries.

The expected role of return-seeking investments was designed to achieve a reasonable long-term growth of pension assets with a prudent level of risk, while the role of liability-matching investments was designed to provide a partial hedge against liability performance associated with changes in interest rates.

The objective within return-seeking investments was to achieve asset diversity in order to balance return and volatility.

A designated fiduciary is engaged to manage the day-to-day investment responsibilities for pension plan assets and relationships with certain agents, advisors, and other fiduciaries.

The discount rate.

We utilize a full yield curve approach in the estimation of these components by applying the specific spot rates along the yield curve of high-quality corporate bonds used in determination of the benefit obligation to the relevant projected cash flows.

We have made this change to provide a more precise measurement of service and interest costs by improving the correlation between projected benefit cash flows to the corresponding spot yield curve rates.

Prior to settlement, a full yield curve approach was utilized in the estimation of components by applying the specific spot rates along the yield curve of high-quality corporate bonds used in determination of the benefit obligation to the relevant projected cash flows.

Mortality rates.

For fiscal year ended December 31, 2022, in conjunction with our decision to terminate the plan, the valuations and assumptions reflect adoption of the Society of Actuaries RP-2018 mortality tables with generational mortality improvement and adjustments to reflect the characteristics of the plan in conjunction actuarial assumptions customary in the insurance industry.

For fiscal year ended January 1, 2022, the valuations and assumptions reflect adoption of the Society of Actuaries updated RP-2014 mortality tables, with a “blue collar employee” adjustment for non-annuitants and a BlueLinx custom adjustment projected from 2015 for annuitants.

Additionally, we use the most current generational mortality improvement projection scales, which was MP-2021 as of January 1, 2022.

For fiscal years 2023 and 2022, in conjunction with the decision to settle the DB Plan, the valuations and assumptions reflected adoption of the Society of Actuaries RP-2018 mortality tables with generational mortality improvement and adjustments to reflect the characteristics of the plan in conjunction actuarial assumptions customary in the insurance industry.

For fiscal year 2021, the valuations and assumptions reflected adoption of the Society of Actuaries updated RP-2014 mortality tables, with a “blue collar employee” adjustment for non-annuitants and a BlueLinx custom adjustment projected from 2015 for annuitants.

Additionally, we used the most current generational mortality improvement projection scales.

Plan Assets and Long-Term Rate of Return

We base the asset return assumption on current and expected asset allocations, as well as historical and expected returns on the plan asset categories.

The allocation of the plan’s assets impacts our expected return on plan assets.

The expected return on plan assets is based on a targeted allocation consisting of return-seeking securities (including public equity, real assets, and diversified credit investment strategies), liability-matching securities (fixed income), and cash and cash equivalents.

Our net benefit cost increases as the expected return on plan assets decreases.

We believe that our actual long-term asset allocations on average will approximate our targeted allocation.

Our targeted allocation is driven by our investment strategy to earn a reasonable rate of return while maintaining risk at acceptable levels through the diversification of investments across and within various asset categories.

For fiscal 2022, we used a 5.20 % expected rate of return on plan assets.

The investment policy for the pension plan, in general, is to achieve a reasonable long-term rate of return on plan assets with an acceptable level of risk in order to maintain adequate funding levels.

The pension plan’s Investment Committee establishes risk mitigation policies and regularly monitors investment performance and investment allocation policies, with a third-party investment advisor executing on these strategies.

We employ a designated fiduciary to manage the day to day investment responsibilities for pension plan assets and relationships with certain agents, advisors, and other fiduciaries.

In conjunction with the decision to terminate the plan, the target allocation of plan assets was adjusted to mitigate funded status risk and support full settlement of assets and liabilities during fiscal 2023.

The current targets and actual investment allocation by asset category as of December 31, 2022, consisted of the following:

Type Current Target Allocation Actual Allocation, December 31, 2022

Prior to settlement, asset return assumptions were based on current and expected asset allocations, as well as historical and expected returns on the plan asset categories.

The allocation of the DB Plan’s assets impacted expected return on plan assets.

The expected return on plan assets was based on a targeted allocation consisting of return-seeking securities (including public equity, real assets, and diversified credit investment strategies), liability-matching securities (fixed income), and cash and cash equivalents.

Net benefit cost increased as the expected return on plan assets decreased.

Actual long-term asset allocations on average were designed to approximate targeted allocation.

Targeted allocation was driven by investment strategy to earn a reasonable rate of return while maintaining risk at acceptable levels through the diversification of investments across and within various asset categories.

For fiscal 2023 and fiscal 2022, expected rates of return on plan assets of 4.00 % and 5.20 %, respectively, were used.

Prior to settlement, the investment policy for the DB Pension Plan, in general, was to achieve a reasonable long-term rate of return on plan assets with an acceptable level of risk in order to maintain adequate funding levels.

The plan’s investment committee established risk mitigation policies and regularly monitored investment performance and investment allocation policies, with a third-party investment advisor executing on these strategies.

A designated fiduciary was utilized to manage the day-to-day investment responsibilities for plan assets and relationships with certain agents, advisors, and other fiduciaries.

As of December 30, 2023, the residual balance for plan assets had a fair value of $ 2.2 million and was primarily invested in cash.

The fair value was determined based on inputs that are deemed to be Level 1 inputs on the fair value hierarchy.

The Company based the asset return assumption on current and expected asset allocations, as well as historical and expected returns on the plan asset categories.

The allocation of the plan’s assets impacts the expected return on plan assets.

The expected return on plan assets was based on a targeted allocation consisting of return-seeking securities (including public equity, real

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

assets, and diversified credit investment strategies), liability-matching securities (fixed income), and cash and cash equivalents.

Net periodic pension cost increases as the expected return on plan assets decreases.

Actual long-term asset allocations on average approximated targeted allocation.

For fiscal 2022, a 5.20 % expected rate of return on plan assets was used.

The investment policy for the pension plan, in general, was to achieve a reasonable long-term rate of return on plan assets with an acceptable level of risk in order to maintain adequate funding levels.

The pension plan’s investment committee established risk mitigation policies and regularly monitored investment performance and investment allocation policies, with a third-party investment advisor executing on these strategies.

A designated fiduciary was used to manage the day-to-day investment responsibilities for plan assets and relationships with certain agents, advisors, and other fiduciaries.

Target allocation, adjusted to exclude non-GAAP BlueLinx real-estate holdings, and actual investment allocation, by asset category as of December 31, 2022, consisted of the following:

Type Target Allocation Actual Allocation, December 31, 2022

Global equity 4.0 % 2.8 %

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Liability-hedging 87.0 % 73.0 %

Cash 3.0 % 18.8 %

Total 100 % 100 %

The following table sets forth by level, within the fair value hierarchy, as defined in Note 1, Summary of Significant Accounting Policies , and further discussed in Note 10, Fair Value Measurements , pension plan assets at their fair values as of December 31, 2022:

Type Quoted prices in active markets of identical assets

(Level 1) Significant other observable inputs

(Level 2) Significant other unobservable inputs

(Level 3) Assets measured at net asset value (NAV) (3)

(In thousands)

Return-seeking securities

Investments in trusts and funds (1)

$ — $ — $ — $ 6,683 $ 6,683

Liabilities-matching securities:

Investments in trusts and funds (2)

— — — 59,295 59,295

Cash and cash equivalents 3.0 % 18.8 %

Total 100 % 100 %

(1) This category is comprised of a collective investment trust of equity funds that track the MSCI All Country World global equity index, a collective investment trust that holds publicly traded listed infrastructure securities, and a pooled investment fund.

(2) This category consists of a collective investment trust investing in Treasury STRIPS, in addition to a collective investment fund that tracks to U.S.

government bond indexes, and pooled investment funds.

(3) Investments that are measured at net asset value (“NAV”) (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy.

The fair value of the Level 1 assets was based on quoted prices in active markets for the identical assets.

Certain investments are measured at fair value using the net asset value ("NAV") per share as a practical expedient and have not been classified in the fair value hierarchy.

Investment objectives for our pension plan assets are:

• Matching plan liability performance

• Diversifying risk

• Achieving a target investment return

We believe that there are no significant concentrations of risk within our plan assets as of December 31, 2022.

We comply with the rules and regulations promulgated under the Employee Retirement Income Security Act of 1974 (“ERISA”) and we prohibit investments and investment strategies not allowed by ERISA.

We base the asset return assumption on current and expected asset allocations, as well as historical and expected returns on the plan asset categories.

The allocation of the plan’s assets impacts our expected return on plan assets.

Our net benefit cost increases as the expected return on plan assets decreases.

We believe that our actual long-term asset allocations on average will approximate our targeted allocation.

For fiscal 2021, we used a 5.20 % expected rate of return on plan assets.

We employ a designated fiduciary to manage the day to day investment responsibilities for pension plan assets and relationships with certain agents, advisors, and other fiduciaries.

The current targets, adjusted to exclude non-GAAP BlueLinx real-estate holdings, and actual investment allocation, by asset category as of January 1, 2022, consisted of the following:

Type Current Target Allocation Actual Allocation, January 1, 2022

Global equity 44.4 % 47.2 %

Diversified credit 16.7 % 16.5 %

Real assets 8.9 % 10.0 %

Liability-hedging 27.8 % 23.8 %

Cash 2.2 % 2.5 %

Total 100 % 100 %

The following table sets forth by level, within the fair value hierarchy, as defined in Note 1, Summary of Significant Accounting Policies , the plan’s assets at their fair values as of December 31, 2022:

Type Quoted prices in active markets of identical assets

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$ 15,253 $ — $ — $ 65,978 $ 81,231

(1) This category is comprised of a collective investment trust of equity funds that track the MCSI World Index, a collective investment trust that holds publicly traded listed infrastructure securities, and a pooled investment fund.

(2) This category consists of a collective investment trust investing in Treasury STRIPS, in addition to a collective investment fund that tracks to U.S.

(1) This category was comprised of a collective investment trust of equity funds that track the MCSI World Index, a collective investment trust that holds publicly traded listed infrastructure securities, and a pooled investment fund.

(2) This category consisted of a collective investment trust investing in Treasury STRIPS, in addition to a collective investment fund that tracks to U.S.

government bond indexes, and a pooled investment fund.

(3) Investments that are measured at net asset value (“NAV”) (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy.

(3) Investments that are measured at net asset value (“NAV”) (or its equivalent) as a practical expedient were not classified in the fair value hierarchy.

The fair value of the Level 1 assets was based on quoted prices in active markets for the identical assets.

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• Diversifying risk

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

• Achieving a target investment return

We believe that there are no significant concentrations of risk within our plan assets as of January 1, 2022.

Pension Plan Cash Flows

Our estimated future benefit payments to pension plan participants are as follows:

Fiscal Year Ended (In thousands)

2023 $ 82,752

We expect all of the plan’s assets to be distributed in fiscal 2023 in connection with our plan to terminate the plan.

We fund the pension plan liability in accordance with the limits imposed by ERISA, federal income tax laws, and the funding requirements of the Pension Protection Act of 2006 (“Pension Act”).

We are not required to make any cash contributions to the pension plan for fiscal funding year 2022.

Multiemployer Pension Plans

As one of many participating employers in these MEPPs, we are generally responsible with the other participating employers for any plan underfunding.

Our contributions to a particular MEPP are established by the applicable CBAs;

A FIP or RP requires a particular MEPP to adopt measures to correct its underfunded status.

These measures may include, but are not limited to:

an increase in our contribution rate to the applicable CBA, a reallocation of the contributions already being made by participating employers for various benefits to individuals participating in the MEPP, and/or a reduction in the benefits to be paid to future and/or current retirees.

We could also be obligated to make future payments to MEPPs if we either cease to have an obligation to contribute to the MEPP or significantly reduce our contributions to the MEPP because we reduce our number of employees who are covered by the relevant MEPP for various reasons, including, but not limited to, layoffs or closures, assuming the MEPP has unfunded vested benefits.

The amount of such payments (known as a complete or partial withdrawal liability) generally would equal our proportionate share of the plan’s unfunded vested benefits.

The following table lists our participation in our multiemployer plans which we deem significant.

“Contributions” represent the amounts contributed to the plan during the fiscal years presented:

Contributions (In millions)

Pension Fund:

EIN/Pension Plan Number Pension Act Zone Status FIP/RP Status Surcharge 2022 2021

Central States, Southeast and Southwest Areas Pension Fund 366044243 Critical and Declining

(January 1, 2020) RP No $ 0.4 $ 0.3

Total $ 0.4 $ 0.3

Our contributions to this plan are approximately 0.1 percent of total contributions, which is less than the required disclosure threshold of five percent of total plan contributions.

However, this plan is deemed significant for disclosure as it is severely underfunded.

Our current CBA that requires contributions to the plan expired on December 31, 2022.

In May 2020, we received a demand letter for payment resulting from our partial withdrawal in 2018 from the Central States Plan and started making payments in June 2020.

These payments are payable monthly for a period of 20 years.

Our liability for the remainder of these payments was $ 7.0 million as of December 31, 2022.

We may, in the future, record an additional liability if required by an event of our complete withdrawal from the plan or a mass withdrawal.

Our most recent contingent withdrawal liability was estimated at approximately $ 60.4 million for a complete withdrawal occurring in 2023.

In the case of a complete withdrawal or a mass withdrawal, the Central States Plan could demand yearly payments of approximately $ 1.1 million, which do not include

payments for the partial withdrawal of approximately $ 0.6 million annually.

In a complete withdrawal, the payments would not amortize the liability fully;

however, payments for a complete withdrawal are limited to a 20 -year period.

In the case of a mass withdrawal, the liability would not amortize fully under current government regulations, and payments would continue indefinitely.

Defined Contribution Plans

Our employees also participate in two defined contribution plans:

the BlueLinx Corporation Hourly Savings Plan covering hourly employees, and the BlueLinx Corporation Salaried Savings Plan covering salaried employees.

Employer contributions to the hourly savings plan for fiscal years 2022 and 2021 were approximately $ 0.8 million and $ 0.7 million, respectively.

Employer contributions to the salaried savings plan for fiscal 2022 were approximately $ 4.0 million, of which $ 2.1 million was for fiscal 2021.

There were no significant concentrations of risk within the plan’s assets as of December 31, 2022.

The DB Plan was in compliance with the rules and regulations promulgated under the Employee Retirement Income Security Act of 1974 (“ERISA”) and investments and investment strategies not allowed by ERISA were prohibited.

Share-Based Compensation

On May 20, 2021 at the Annual Meeting of Shareholders, our stockholders approved the BlueLinx Holding, Inc.

2021 Long-Term Incentive Plan (the “2021 Plan”), which the Board of Directors had previously approved.

The 2021 Plan permits the grant of nonqualified stock options, incentive stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance shares, performance units, cash-based awards, and other share-based awards to participants of the 2021 Plan selected by our Board of Directors or a committee of the Board that administers the 2021 Plan.

We reserved 750,000 shares of our common stock for issuance under the 2021 Plan.

The terms and conditions of awards under the 2021 Plan are determined by the Human Capital and Compensation Committee.

Some of the awards issued under the 2021 Plan are subject to accelerated vesting in the event of a change in control as such an event is defined in the respective Plan documents.

Shares are available for new issuance only under the 2021 Plan.

The 2006 and 2016 Plans have no shares remaining for issuance.

Remaining 2006 and 2016 Plan shares are outstanding only for the vesting of outstanding equity awards.

The 2021 Plan is designed to motivate and retain individuals who are responsible for the attainment of our primary long-term performance goals.

The 2021 Plan provides a means whereby the participants develop a further sense of proprietorship and personal involvement in our development and financial success, thereby advancing the interests of the Company and its stockholders.

Although we do not have a formal policy on the matter, we issue new shares of our common stock to participants upon the exercise of options or upon the vesting of restricted stock, restricted stock units, or performance shares, out of the total amount of common shares available for issuance or vesting under the aforementioned plan.

Restricted Stock Units

During fiscal 2022 and fiscal 2021, the directors on our Board of Directors were granted restricted stock units with a one-year vesting period.

These awards are time-based and are not based upon attainment of performance goals.

The grants will settle after one year, although a pro-rated portion of the award may vest and settle prior to the one-year period, with the remainder forfeited if the director is not standing for re-election or upon retirement from the Board of Directors.

During fiscal 2020, the Board of Directors were granted restricted stock units with a one-year vesting period, although a pro-rated portion could vest prior to the one-year period, with the remainder forfeited, if a director chose not to stand for re-election before the one-year vesting period elapsed.

The fiscal 2020 grants settle at the earlier of ten years from the vesting date or retirement from the Board of Directors, whichever comes first.

During fiscal 2022, the Board of Directors granted restricted stock units to certain of our employees and executive officers.

Certain of the restricted stock units granted in fiscal 2022 vest in equal annual increments over the three years after the date of grant and certain others vest on the third anniversary of the date of grant if certain performance conditions are met as of the vesting date.

During fiscal 2021 and fiscal 2020, the Board of Directors granted restricted stock units to certain of our employees and executive officers.

Certain of the restricted stock units granted in fiscal 2021 and fiscal 2020 vest in equal annual increments over the three years after the date of grant.

The following table summarizes activity for our restricted stock units during fiscal 2022:

Restricted Stock Units

On May 20, 2021 at its annual meeting of stockholders, the Company’s stockholders approved the BlueLinx Holdings, Inc.

2021 Long-Term Incentive Plan (the “2021 Plan”), which had already been approved by the Company’s board of directors.

The 2021 Plan permits the grant of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares, performance units, cash-based awards, and other share-based awards to eligible employees and board members who are selected by the Company’s board of directors or a committee of the board of directors.

The Company has reserved 750,000 shares of its common stock for issuance under the 2021 Plan.

At any time, the number of remaining shares available for future grants against the 750,000 share authorization is determined by:

subtracting the number of shares associated with grants that have been issued under the 750,000 share authorization, whether vested or unvested;

adding the number of shares associated with those grants that have been either subsequently forfeited or cancelled;

and adding the number of shares that were repurchased by the Company at vesting to satisfy employee payroll withholding taxes for grants that were issued against the 750,000 share authorization.

Additionally, shares available for issuance under the 2021 Plan include certain shares associated with grants made under the Company’s prior equity compensation plans, as follows:

forfeitures and cancellations of grants that occur after May 20, 2021, and shares repurchased by the Company to satisfy employee payroll withholding taxes for grants that vest after May 20, 2021.

As of December 30, 2023, there were 609,503 shares of common stock available for issuance pursuant to future equity-based compensation awards under the 2021 Plan.

The Company typically issues new shares of its common stock to participants upon the exercise or vesting of vested grants out of the total amount of common shares available for issuance under the aforementioned plan.

The 2021 Plan does not permit the payment of dividends or dividend equivalents on unvested grants that include underlying shares of the Company’s common stock.

During fiscal years 2023, 2022 and 2021, the Company issued service-based and performance-based RSU grants to eligible employees and members of the Company’s board of directors.

Each RSU represents a contingent right to receive one share of our common stock at a future date.

Service-Based Restricted Stock Units

Service-based RSUs were issued to eligible employees and members of the Company’s board of directors during fiscal 2023, 2022 and 2021.

Service-based RSUs issued to members of the Company’s board of directors typically vest over a one-year service vesting period, although a pro-rated portion of the award may vest and settle prior to the one-year period with the remainder forfeited if the director is not standing for re-election or upon retirement from the Company’s board of directors.

Service-based RSUs issued to employees of the Company typically vest ratably over a three-year service vesting period.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes activity for service-based RSUs for fiscal year 2023:

Awards Weighted Average Grant-Date Fair

Outstanding as of January 1, 2022 488,614 $ 26.13

Outstanding as of December 31, 2022 264,360 $ 55.07

Granted 158,276 $ 90.49

( 338,145 ) $ 26.33

Vested ( 170,066 ) $ 50.30

Forfeited ( 50,264 ) $ 75.67

Outstanding as of December 30, 2023 202,306 $ 82.25

(1) The total fair value of restricted stock units vested in fiscal 2022, fiscal 2021, and fiscal 2020 was $ 26.8 million, $ 6.4 million and $ 1.0 million, respectively.

The total fair value of service-based RSUs that vested in fiscal 2023, fiscal 2022, and fiscal 2021 was $ 14.3 million, $ 26.8 million and $ 6.4 million, respectively.

Performance-Based Restricted Stock Units

Performance-based RSUs were issued to eligible employees during fiscal 2023 and 2022.

Performance-based RSUs typically vest over a three-year period based on the achievement of performance goals based on three-year cumulative adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of the Company and three-year average return on working capital (“ROWC”) for the Company.

The grant recipient must also complete a three-year service vesting period.

As of December 30, 2023, the three-year vesting period and metrics have not been achieved for the performance-based RSUs granted in fiscal 2023 and 2022.

The following table summarizes activity for performance-based RSUs for fiscal year 2023:

Awards Weighted Average Grant-Date Fair

Outstanding as of December 31, 2022 61,049 $ 66.81

Granted 77,785 $ 92.44

Forfeited ( 23,436 ) $ 75.11

Outstanding as of December 30, 2023 115,398 $ 82.40

Compensation Expense

We recognize compensation expense equal to the grant-date fair value, which is generally based on the fair market value of our common stock on the date of grant, for all share-based payment awards that are expected to vest.

This expense is recorded on a straight-line basis over the requisite service period of the entire award, unless the awards are subject to market or performance conditions, in which case, we recognize compensation expense over the requisite service period of each separate vesting tranche, to the extent the occurrence of such conditions are probable.

We account for share-based payment award forfeitures as they occur, rather than making estimates of future forfeitures.

All compensation expense related to our share-based payment awards is recorded in “Selling, general, and administrative” expense in the consolidated statements of operations and comprehensive income.

Total share-based compensation expense, net of forfeitures, from our share-based awards was as follows:

Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022 Fiscal Year Ended January 2, 2021

(In thousands)

Restricted Stock Units $ 9,617 $ 6,590 $ 5,992

Total $ 9,617 $ 6,590 $ 5,992

We recognized related income tax benefits in fiscal years 2022, 2021, and 2020 of $ 3.8 million, $ 1.7 million, and $ 1.5 million, respectively, which were fully realized in fiscal years 2022, 2021, and 2020 .

We include the benefits of tax deductions in excess of recognized compensation expense as a component of our provision for income taxes in our consolidated statements of operations and comprehensive income when present.

There were $ 2.1 million and $ 0.9 million of excess tax benefits in fiscal 2022 and fiscal 2021 and no excess tax benefits in fiscal 2020 .

As of December 31, 2022, there was approximately $ 13.4 million of total unrecognized compensation expense related to restricted stock units.

The unrecognized compensation expense is expected to be recognized over a weighted average term of 2.2 years.

Income per Common Share

We calculate basic income per share by dividing net income by the weighted average number of common shares outstanding.

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.

On August 23, 2021, our Board of Directors approved a stock repurchase program pursuant to which we may 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 (the “Transaction Date”) 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.

The initial delivery of 553,584 shares reduced the number of common shares outstanding on the Transaction Date and, as a result, reduced the weighted average number of common shares outstanding used to calculate basic income per share and diluted income per share for fiscal 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, which further reduced the weighted average number of common shares outstanding used to calculate basic income per share and diluted income per share for fiscal 2022.

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.

The reconciliation of basic net income and diluted net income per common share for fiscal 2022, fiscal 2021, and fiscal 2020 were as follows:

During fiscal year 2023, 2022 and 2021, the Company recognized share-based compensation expense of $ 12.1 million, $ 9.6 million, and $ 6.6 million, respectively.

The Company recognized related income tax benefits in fiscal year 2023, 2022 and 2021 of $ 2.6 million, $ 3.8 million, and $ 1.7 million, respectively.

As of December 30, 2023, there was approximately $ 11.7 million and $ 6.2 million of total unrecognized compensation expense related to service-based RSUs and performance-based RSUs, respectively.

The unrecognized compensation expense is expected to be recognized over a weighted average term of 2.2 years and 2.2 years for service-based RSUs and performance-based RSUs, respectively.

Stockholders' Equity, Earnings Per Share and Share Repurchases

Stockholders’ Equity - Common Stock and Preferred Stock

The Company has authorized 20 million shares of common stock with a par value of $ 0.01 per share.

The Company has only one class of common stock authorized and issued.

Holders of the Company’s common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders and there are no cumulative voting rights.

The Company’s common stock has no preemptive, redemption, conversion or subscription rights.

The Company has generally not paid cash dividends on its common stock.

Any future dividend payments would be subject to the discretion of the Company’s board of directors and contractual restrictions under the Company’s revolving credit facility and senior secured notes.

The BlueLinx Holdings Inc.

2021 Long-Term Incentive Plan does not permit the payment of dividends or dividend equivalents on unvested grants that include underlying shares of the Company’s common stock.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company has authorized 30 million shares of preferred stock with a par value of $ 0.01 per share.

The Company has never issued any shares of preferred stock.

The Company’s board of directors is authorized to issue, at any time and from time to time, shares of preferred stock in one or more series.

The shares of preferred stock in any series can have preferences with respect to the Company’s common stock and other series of preferred stock, and such other rights, restrictions or limitations with respect to voting, dividends, conversion, exchange, redemption and any other matters, as may be set forth by the Company’s board of directors.

Earnings Per Share

The Company calculates basic earnings per share by dividing net income for the period by the weighted average number of common shares outstanding for the period.

For rounding purposes when calculating earnings per share, the Company’s policy is to round down to the whole cent.

Diluted earnings per share are calculated using the treasury stock method whereby net income for the period is divided by the weighted average number of common shares outstanding for the period plus the dilutive effect, if any, of shares of stock associated with unvested share-based grants.

However, for performance-based share-based grants, the dilutive effect is included only for grants where the performance goals have been actually achieved.

The reconciliation of basic net income and diluted earnings per common share for fiscal 2023, fiscal 2022, and fiscal 2021 were as follows:

Fiscal Year Ended

December 31, 2022 January 1, 2022 January 2, 2021

($ in thousands, except per share data)

December 30, 2023 December 31, 2022 January 1, 2022

($ amounts in thousands, except per share amounts)

Net income $ 48,536 $ 296,176 $ 296,133

2 unchanged sentences

Weighted average shares outstanding - Diluted 8,994 9,398 9,876

Basic income per share $ 31.75 $ 30.80 $ 8.58

Diluted income per share $ 31.51 $ 29.99 $ 8.55

Approximately 100,000 , 128,000 , and 725,000 weighted-average share-based awards were excluded from the computation of income per share assuming dilution for fiscal years 2022, 2021, and 2020, respectively, as the awards would have been anti-dilutive for the periods presented.

Basic earnings per share $ 5.40 $ 31.75 $ 30.80

Diluted earnings per share $ 5.39 $ 31.51 $ 29.99

Approximately 190,000 , 100,000 , and 128,000 weighted-average share-based awards were excluded from the computation of earnings per share assuming dilution for fiscal years 2023, 2022, and 2021, respectively, as the awards would have been anti-dilutive for the periods presented.

Share Repurchases

2021/2022 Authorization

On August 23, 2021, the Company’s board of directors approved a stock repurchase program that authorized the Company to repurchase up to $ 25.0 million of its common stock.

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

On May 3, 2022, the Company’s board of directors increased the share repurchase authorization to $ 100 million and the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) to repurchase $ 60 million of its common stock.

Under the ASR Agreement, the Company received delivery of 801,015 shares of its common stock in fiscal 2022 at an average price of $ 74.90 per share.

During fiscal 2023, the Company exhausted the remaining available capacity under its stock repurchase program by completing the repurchases of 404,796 shares at an average price of $ 82.91 through October 2023.

2023 Authorization

On October 31, 2023, the Company’s board of directors authorized a new share repurchase program for $ 100 million.

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.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the fourth quarter of fiscal 2023, the Company repurchased 101,516 shares of its common stock at an average price of $ 84.43 .

As of December 30, 2023, there remains $ 91.4 million repurchase capacity under this authorization.

Common stock repurchases of $ 42.5 million for fiscal year 2023, as indicated on the Company’s consolidated statement of stockholders’ equity, includes $ 0.3 million of excise taxes that are included in the cost of the repurchased common stock but have not been remitted per applicable law as of December 30, 2023 and therefore are not included within the $ 42.1 million of cash used for common stock repurchases indicated on the Company’s consolidated statement of cash flows for fiscal year 2023.

Lease Commitments

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 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.

Certain of our leases include provisions for escalating rent based on, among other things, contractually defined increases and/or changes in the Consumer Price Index (“CPI”).

The Company has operating and finance leases for certain of its distribution facilities, office space, land, mobile fleet, and equipment.

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

The majority of these 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 .

These leases generally provide for fixed annual rentals.

Certain leases include provisions for escalating rent based on, among other things, contractually defined increases and/or changes in the Consumer Price Index (“CPI”).

The known changes to lease payments are included in the lease liability at lease commencement.

Unknown changes related to CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.

In addition, a subset of our vehicle lease cost is considered variable.

Some of our leases require us to pay taxes, insurance, and maintenance expenses associated with the leased assets.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We determine if an arrangement is a lease at inception and assess lease classification as either operating or finance at lease inception or modification.

In addition, a subset of vehicle lease cost is considered variable.

Some leases require the Company to pay taxes, insurance, and maintenance expenses associated with the leased assets.

The lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company determines if an arrangement is a lease at inception and assess lease classification as either operating or finance at lease inception or modification.

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

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

We have also made the accounting policy election to not separate lease components from non-lease components related to our mobile fleet asset class.

Finance Lease Liabilities

Our finance lease liabilities consist of leases related to equipment and vehicles, and real estate.

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

The following table presents our assets and liabilities related to our leases as of December 31, 2022 and January 1, 2022:

Lease assets and liabilities December 31, 2022 January 1, 2022

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

The Company has also made the accounting policy election to not separate lease components from non-lease components related to its mobile fleet asset class.

The Company’s finance lease liabilities consist of leases related to equipment and vehicles, and real estate.

A majority of the Company’s finance leases relate to real estate.

During fiscal 2017 and fiscal 2018, the Company entered into real estate financing transactions on certain of its warehouse facilities.

These transactions were completed pursuant to sale-leaseback arrangements, and upon their completion, the Company entered into long-term leases on the properties having renewal options.

The Company accounted for these transactions in accordance with the ASC 840, Leases , which was the lease accounting standard in effect for the Company at the inception of these arrangements.

The Company recorded these transactions as finance lease liabilities on its consolidated balance sheet.

Gains on these sale-leaseback transactions were deferred and are being recognized into the Company’s earnings.

As of December 30, 2023 and December 31, 2022, the remaining unrecognized deferred gains related to these transactions were $ 70.5 million and $ 74.3 million, respectively, and these deferred gains are being recognized in earning on a straight-line basis.

During fiscal 2023, 2022 and 2021, the Company recognized $ 3.9 million, $ 3.9 million, $ 3.9 million, respectively, of these deferred gains.

The following table presents the assets and liabilities related to the Company’s finance and operating leases as of December 30,

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2023 and December 31, 2022:

Lease assets and liabilities December 30, 2023 December 31, 2022

(In thousands)

11 unchanged sentences

Total lease liabilities $ 324,229 $ 320,518

(1) Finance lease right-of-use assets are presented net of accumulated amortization of $ 90.1 million and $ 73.7 million as of December 31, 2022 and January 1, 2022, respectively.

(1) Finance lease right-of-use assets are presented net of accumulated amortization of $ 102.9 million and $ 90.1 million as of December 30, 2023 and December 31, 2022, respectively.

(2) During fiscal 2023, 2022 and 2021, the Company added fleet assets under finance leases of $ 19.9 million, $ 9.1 million and $ 10.5 million, respectively.

These additions did not involve cash outlays and therefore are not included in “Property and equipment investments” within cash flows from investing activities on the Company’s consolidated statements of cash flows.

The components of lease expense were as follows:

Components of lease expense Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022 Fiscal Year Ended January 2, 2021

Components of lease expense Fiscal Year Ended December 30, 2023 Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022

(In thousands)

7 unchanged sentences

Total finance lease costs $ 40,873 $ 40,819 $ 40,030

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cash flow information related to leases was as follows:

Cash flow information Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022 Fiscal Year Ended January 2, 2021

Cash flow information Fiscal Year Ended December 30, 2023 Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022

(In thousands)

4 unchanged sentences

Non-cash supplemental cash flow information related to leases was as follows:

Non-cash information Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022 Fiscal Year Ended January 2, 2021

Non-cash information Fiscal Year Ended December 30, 2023 Fiscal Year Ended December 31, 2022 Fiscal Year Ended January 1, 2022

(In thousands)

3 unchanged sentences

Finance leases 19,861 9,092 10,549

(1) Includes operating lease right-of-use assets obtained in acquisition in fiscal 2022.

(1) Includes operating lease right-of-use assets obtained in acquisition for fiscal year ended December 31, 2022.

See Note 2, Business Combination , for further information.

Supplemental balance sheet information for right-of-use assets related to leases was as follows:

Balance sheet information December 31, 2022 January 1, 2022

(In thousands)

Balance sheet information December 30, 2023 December 31, 2022

($ amounts in thousands)

Finance leases

8 unchanged sentences

Finance leases 8.84 % 8.87 %

The major categories of our finance lease liabilities as of December 31, 2022 and January 1, 2022 are as follows:

Category December 31, 2022 January 1, 2022

The major categories of the Company’s finance lease liabilities as of December 30, 2023 and December 31, 2022 are as follows:

Category December 30, 2023 December 31, 2022

(In thousands)

2 unchanged sentences

Total finance leases $ 285,426 $ 273,075

Under the short-term lease exception provided within ASC 842, we do not record a lease liability or right-of-use asset for any leases that have a lease term of 12 months or less at commencement.

Below is a summary of undiscounted finance and operating lease liabilities that have initial terms in excess of one year as of December 31, 2022.

Under the short-term lease exception provided within ASC 842, the Company does not record a lease liability or right-of-use asset for any lease that has a lease term of 12 months or less at commencement.

Below is a summary of undiscounted finance

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

and operating lease liabilities that have initial terms in excess of one year as of December 30, 2023.

The table also includes a reconciliation of the future undiscounted cash flows to the present value of the finance and operating lease liabilities included in the consolidated balance sheets, including options to extend lease terms that are reasonably certain of being exercised.

11 unchanged sentences

Commitments and Contingencies

Environmental and Legal Matters

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 these matters could be material to operating results in any given quarter, they will not have a materially adverse effect on our long-term financial condition, our results of operations, or our cash flows.

Regulatory Matters

Government and regulatory agencies may have the ability to conduct periodic examinations of, and administrative proceedings regarding, the Company’s business operations.

The United States Customs and Border Protection (“U.S.

Customs”) has gathered initial information from the Company under routine audit procedures, and the initial information gathered suggests that the Company potentially may have underpaid and/or overpaid duties arising from certain classification discrepancies for products imported into the United States as separately entered shipments.

The Company is currently evaluating this matter and is working with the U.S.

The Company believes some loss related to underpaid duties is probable, but at this time the Company is not in a position to estimate amounts that it may be required to pay.

The Company intends to exercise reasonable care to address the matter in an equitable manner.

Environmental Matters

From time to time, the Company is involved in various proceedings incidental to its businesses and the Company is subject to a variety of environmental and pollution control laws and regulations in all jurisdictions in which it operates.

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

The Company further believes that, while the ultimate outcome of these matters could be material to the Company’s financial position, results of operations and cash flows in any given reporting period, they will not have a materially adverse effect on the Company’s long-term financial condition, results of operations, or cash flows.

Collective Bargaining Agreements

As of December 31, 2022, we employed approximately 2,100 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.

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

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

Six CBAs covering approximately 9 % 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.

Commitments to Purchase Inventory

The Company’s purchase orders are based on near-term needs and are typically fulfilled by vendors within short time horizons.

The Company does not have significant agreements for the purchase of inventory specifying minimum quantities or set prices that exceed expected requirements or that cannot be canceled by the Company within 30 to 60 days.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accumulated Other Comprehensive Income (Loss)

Comprehensive income (loss) is a measure of income which includes both net income (loss) and other comprehensive income (loss).

Our other comprehensive income (loss) results from items deferred from recognition into our consolidated statements of operations and comprehensive income (Loss).

Accumulated other comprehensive income (loss) is separately presented on our consolidated balance sheets as part of common stockholders’ equity (deficit).

Other comprehensive income (loss) results from items deferred from recognition in the Company’s consolidated statements of operations.

Accumulated other comprehensive income (loss) is separately presented on the consolidated balance sheet as part of total stockholders’ equity.

The changes in accumulated balances for each component of other comprehensive income (loss) for fiscal 2023, fiscal 2022, and fiscal 2021 were as follows:

Impact of defined benefit pension, net of tax Other, net of tax Total

Impact of defined benefit pension plan, net of tax Other, net of tax Total

(In thousands)

December 28, 2019, ending balance, net of tax $ ( 35,441 ) $ 878 $ ( 34,563 )

Other comprehensive loss, net of tax (1)

( 1,414 ) ( 15 ) ( 1,429 )

January 2, 2021, ending balance, net of tax $ ( 36,855 ) $ 863 $ ( 35,992 )

Balance as of beginning of fiscal 2021, net of tax $ ( 36,855 ) $ 863 $ ( 35,992 )

Other comprehensive income, net of tax (1)

6,610 22 6,632

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

Other comprehensive income (loss), net of tax (3)

Balance as of end of fiscal 2021, net of tax $ ( 30,245 ) $ 885 $ ( 29,360 )

Other comprehensive (loss) income, net of tax (2)

( 2,430 ) 378 ( 2,052 )

December 31, 2022, ending balance, net of tax $ ( 32,675 ) $ 1,263 $ ( 31,412 )

(1) For fiscal 2020, there was $ 1.7 million of impact related to our defined pension for related actuarial adjustments and amortization of unrecognized amounts from the prior year, net of taxes of $ 0.3 million.

There was a tax benefit of $ 0.4 million allocated to the loss from continuing operations and tax expense allocated to the income from other comprehensive income.

(2) For fiscal 2021, there was $ 6.6 million of impact related to our defined pension for related actuarial adjustments and amortization of unrecognized amounts from the prior year, net of taxes of $ 2.1 million.

(3) For fiscal 2022, there was $ 2.4 million of impact related to our defined pension for related actuarial adjustments and amortization of unrecognized amounts from the prior year, net of taxes of $ 0.8 million.

Balance as of end of fiscal 2022, net of tax $ ( 32,675 ) $ 1,263 $ ( 31,412 )

Other comprehensive income (loss), including tax (3)

32,675 ( 1,263 ) 31,412

Balance as of end of fiscal 2023 (4)

(1) For fiscal 2021, included $ 6.6 million of net other comprehensive income, net of deferred taxes of $ 2.1 million, related to the defined benefit pension plan for actuarial adjustments and amortization of unrecognized amounts from prior years.

(2) For fiscal 2022, included $ 2.4 million of net other comprehensive loss, net of deferred tax benefit of $ 0.8 million, related to the defined benefit pension plan for actuarial adjustments and amortization of unrecognized amounts from prior years.

(3) For fiscal 2023, included $ 32.7 million related to the single-employer defined benefit pension plan, as follows:

$( 3.1 ) million net of tax of $ 1.1 million for actuarial adjustments;

$ 0.9 million net of tax of $( 0.3 ) million for amortization of unrecognized amounts from prior years;

and $ 30.4 million plus tax of $ 4.5 million for the settlement of the plan and reclassification of these amounts to earnings.

(4) As of the end of fiscal 2023, the Company no longer has any items recorded in accumulated other comprehensive income (loss).

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data