BlueLinx Announces First Quarter Results

    Business Editors

    ATLANTA--(BUSINESS WIRE)--May 9, 2005--BlueLinx Holdings Inc. (NYSE: BXC), a leading distributor of building products in North America, today reported financial results for the first fiscal quarter ended April 2, 2005.
    Revenues for the first quarter were $1.35 billion, representing a 5.6% increase over the $1.28 billion reported for the first quarter ended April 3, 2004. This increase was driven by 3.4% growth in unit volume, primarily within structural products, and 2.2% growth in price, primarily in specialty products. Net income for the first quarter was $8.4 million, or $0.28 per diluted share, compared to $27.3 million, or $0.91 per diluted share, in the comparable period last year. For purposes of comparison, the prior year first quarter statement of operations is presented on a pro forma basis, as if BlueLinx had been a stand-alone, publicly-traded entity since December 29, 2002.
    Gross profit for the first quarter was $119.3 million compared to $155.9 million in the prior year period. Gross margin fell to 8.8% from 12.2% for the same period last year. In anticipation of falling structural product prices during the quarter, the company distributed a greater proportion of structural product through the direct channel than during the same period last year in order to reduce its inventory risk. This resulted in a decline in the company's structural product gross margins. In addition, gross margins on certain specialty products such as metal and moulding were below last year's levels. For the first quarter of fiscal 2004, gross margin was significantly above the company's historical long-term average gross margin due to inventory profits associated with rapidly escalating structural product and metal prices.
    Selling, general & administrative expenses in the first quarter of fiscal 2005 declined $6.0 million to $91.4 million reflecting reduced variable expenses, including commission expenses, incentive compensation expenses, and materials handling and warehouse expenses associated with distributing more product through the direct channel. Operating income for the first quarter of fiscal 2005 was $23.6 million compared to $54.7 million in the first quarter of 2004.

    As Reported Results

    As reported sales for the quarter ended April 2, 2005 were $1.35 billion compared to $1.28 billion for the same period last year. Gross profit for the first quarter declined to $119.3 million from $154.1 million in the prior-year period primarily due to a decrease in gross margin for structural products, metal products and certain specialty products. Operating income was $23.6 million versus $55.0 million in the first quarter of 2004, reflecting lower gross profit partially offset by lower operating expenses. Net income for the first quarter of 2005 was $8.4 million compared to net income of $34.0 million for the first quarter of fiscal 2004. The company's net income of $34.0 million for the first quarter of 2004 was achieved as a division of Georgia-Pacific Corporation and did not include interest expense and certain corporate overhead expenses that are included in the results for the quarter ended April 2, 2005.
    During the first quarter the company used $81.5 million in cash in operating activities to support seasonal increases in receivables and inventories offset somewhat by a corresponding increase in payables. This compares to $204 million of net cash used by operations in the first quarter of 2004. Cash from financing activities totaled $86.5 million, primarily attributable to the draw down on the company's revolving credit facility to support seasonal working capital increases. This compares to $205 million of cash from investing activities in the first quarter of 2004. During the first quarter of 2004, the division was financed by Georgia-Pacific Corporation.
    "BlueLinx accomplished a great deal during the first quarter, advancing our organic growth strategy to increase unit volume by adding profitable customers, particularly in the under-represented industrial segment, continuing to enlarge the vendor base and increasing customers' share of purchases. Our nationwide presence, broad product offering, diverse customer and vendor base create advantages for us in the building products supply chain that we leverage to deliver value added solutions for customers and vendors alike," said Chuck McElrea, chief executive officer. "Anticipating that structural product prices would decline during the quarter, based on a number of market indicators, we took decisive action to mitigate the risk of holding inventory by increasing the selling velocity of price sensitive products. Our business model has built-in correcting mechanisms to adjust variable expenses to gross margin fluctuations."
    Mr. McElrea concluded, "Our strategy to gain market share is showing results, and we remain sharply focused on executing strategic initiatives to drive unit volume growth and productivity to achieve operational margin leverage and improve working capital utilization."

    Dividend

    The BlueLinx Board of Directors declared a $0.125 dividend on the company's common shares for the quarter ended April 2, 2005, payable on June 30, 2005 to shareholders of record on June 15, 2005.

    Basis of Presentation

    This release provides unaudited financial statements for the first quarter of 2005 and the first quarter of 2004. For purposes of comparison, the statement of operations for the first quarter ended April 3, 2004 is provided on both an as reported and a pro forma basis. Last year's pro forma results reflect the acquisition by BlueLinx of the real estate and operating assets of the building products distribution division of Georgia-Pacific and the Company's subsequent IPO on December 14, 2004. Results have been adjusted to reflect the acquisition transaction, mortgage refinancing transaction, and offering transaction, and are presented as if BlueLinx Holdings had been a standalone entity since December 29, 2002. On a pro forma basis diluted earnings per share is calculated using 30.2 million shares. Detailed reconciliations of all pro forma adjustments are included in a presentation, to be read in conjunction with this release, which can be found on the BlueLinx web site at www.BlueLinxCo.com.

    Conference Call

    BlueLinx will host a conference call today at 10:00 a.m. Eastern Time accompanied by a supporting slide presentation. Investors may listen to the conference call and download the presentation by going to the Investor Relations page of the BlueLinx web site, at www.BlueLinxCo.com. Investors will also be able to access an encore recording of the conference call for one week by calling 706-645-9291, Conference ID# 5587165. The recording will be available two hours after the conference call has concluded. Investors may, alternatively, access a recording of this call on the BlueLinx web site - where a replay of the webcast will be available for 90 days.

    About BlueLinx Holdings Inc.

    Headquartered in Atlanta, Georgia, BlueLinx Holdings Inc., operating through its wholly owned subsidiary BlueLinx Corporation, is a leading distributor of building products in North America. Employing more than 3,400 people in North America, BlueLinx offers 10,000 products from over 750 suppliers to service more than 11,700 customers nationwide, including dealers, industrial manufacturers, manufactured housing producers and home improvement retailers. The Company operates its distribution business from sales centers in Atlanta and Denver, and its network of more than 60 warehouses. Additional information about BlueLinx can be found on its web site at www.BlueLinxCo.com.

    Forward-looking Statements

    This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All of these forward-looking statements are based on estimates and assumptions made by our management that, although believed by BlueLinx to be reasonable, are inherently uncertain. Forward-looking statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of its control, that may cause its business, strategy or actual results to differ materially from the forward-looking statements. These risks and uncertainties may include, among other things: changes in the supply and/or demand for products which we distribute; the activities of competitors; changes in significant operating expenses; changes in the availability of capital; the ability to identify acquisition opportunities and effectively and cost-efficiently integrate acquisitions; general economic and business conditions in the United States; acts of war or terrorist activities; variations in the performance of the financial markets; and other factors described in the "Risk Factors" section in the Company's Annual Report on Form 10-K for the year ended January 1, 2005, and in its periodic reports filed with the Securities and Exchange Commission from time to time. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. BlueLinx undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law.

BlueLinx Holdings Inc. As Reported Statement of Operations 1st Quarter 2005 and Proforma Statement of Operations 1st Quarter 2004

Quarters Ended ----------------------- BlueLinx BlueLinx As Reported Proforma ------------ ----------

April 2, April 3, 2005 2004 ------------ ---------- (in thousands, except per share data) Sales: Net sales $1,351,619 $1,279,882 Cost of sales 1,232,291 1,123,934 ------------ ---------- Gross profit 119,328 155,948 ------------ ---------- Operating expenses: Selling, general, and administrative 91,435 97,373 Depreciation and amortization 4,243 3,836 ------------ ---------- Total operating expenses 95,678 101,209 ------------ ----------

Operating income 23,650 54,739 Non-operating expenses: Interest expense 9,334 8,363 Other expense, net 129 306 ------------ ----------

Income before provision for income taxes 14,187 46,070 Provision for income taxes 5,769 18,751 ------------ ----------

Net income $ 8,418 $ 27,319 ============ ==========

Basic weighted average number of common shares outstanding 30,155 30,185 ============ ==========

Basic net income per share applicable to common stock $ 0.28 $ 0.91 ============ ==========

Diluted weighted average number of common shares outstanding 30,458 30,185 ============ ==========

Diluted net income per share applicable to common stock $ 0.28 $ 0.91 ============ ==========

BlueLinx Holdings Inc. As Reported Statements of Operations 1st Quarter 2005 and 1st Quarter 2004

Quarters Ended BlueLinx BlueLinx As Reported As Reported (Combined) ----------- -----------

April 2, April 3, 2005 2004 ----------- ----------- (in thousands, except per share data) Sales: Net sales $1,351,619 $1,279,882 Cost of sales 1,232,291 1,125,784 ----------- ----------- Gross profit 119,328 154,098 ----------- ----------- Operating expenses: Selling, general, and administrative 91,435 94,681 Depreciation and amortization 4,243 4,431 ----------- ----------- Total operating expenses 95,678 99,112 ----------- -----------

Operating income 23,650 54,986 Non-operating expenses: Interest expense 9,334 - Other expense, net 129 306 ----------- -----------

Income before provision for income taxes 14,187 54,680 Provision for income taxes 5,769 20,717 ----------- -----------

Net income $ 8,418 $ 33,963 ----------- -----------

Basic weighted average number of common shares outstanding 30,155 =========== Basic net income per share applicable to common stock $ 0.28 =========== Diluted weighted average number of common shares outstanding 30,458 =========== Diluted net income per share applicable to common stock $ 0.28 =========== Dividends declared per share of common stock $ 0.125 ===========

BlueLinx Holdings Inc. As Reported Balance Sheets for Periods Ending April 2, 2005 and January 1, 2005 ----------- ----------- BlueLinx BlueLinx As Reported As Reported

----------- ----------- April 2, January 1, 2005 2005 ----------- ----------- (in thousands) Assets: Current assets: Cash $ 18,706 $ 15,572 Receivables 499,423 363,688 Inventories 517,913 500,231 Deferred income taxes 7,151 6,122 Other current assets 35,241 34,203 ----------- ----------- Total current assets 1,078,434 919,816 ----------- -----------

Property, plant, and equipment: Land and land improvements 55,573 55,573 Buildings 93,133 93,133 Machinery and equipment 46,752 41,063 Construction in progress 1,414 5,089 ----------- ----------- Property, plant, and equipment, at cost 196,872 194,858 Accumulated depreciation (11,267) (7,880) ----------- ----------- Property, plant, and equipment, net 185,605 186,978 Other non-current assets 29,747 30,268 ----------- ----------- Total assets $1,293,786 $1,137,062 =========== ===========

Liabilities : Current liabilities: Accounts payable $ 338,358 $ 270,271 Bank overdrafts 38,557 32,033 Accrued compensation 9,303 18,292 Current maturities of long-term debt 153,247 94,103 Other current liabilities 13,091 13,142 ----------- ----------- Total current liabilities 552,556 427,841 ----------- ----------- Noncurrent liabilities: Long-term debt 574,000 558,000 Deferred income taxes 667 740 Other long-term liabilities 11,049 8,989 ----------- ----------- Total liabilities 1,138,272 995,570 ----------- -----------

Shareholders' Equity: Common stock 302 295 Additional paid in capital 130,733 121,306 Accumulated other comprehensive income (844) (789) Retained earnings 25,323 20,680 ----------- ----------- Total shareholders' equity 155,514 141,492 ----------- -----------

----------- ----------- Total liabilities and equity $1,293,786 $1,137,062 =========== ===========

BlueLinx Holdings Inc. As Reported Statements of Cash Flows for Periods Ending April 2, 2005 and April 3, 2004

Quarters Ended BlueLinx BlueLinx As Reported As Reported (Combined) ----------- -----------

April 2, April 3, 2005 2004 ----------- ----------- (in thousands) Cash flows from operating activities: Net income $ 8,418 $ 33,963 Adjustments to reconcile net income to cash used in operations: Depreciation and amortization 4,243 4,431 Amortization of debt issue costs 1,005 - Deferred income tax provision (benefit) (1,102) 4,173 Changes in assets and liabilities: Receivables (135,735) (203,726) Inventories (17,682) (118,904) Accounts payable 68,087 103,568 Changes in other working capital (9,465) (25,793) Other 778 (1,711) ----------- ----------- Net cash used in operating activities $ (81,453) $ (203,999) ----------- -----------

Cash flows from investing activities: Property, plant, and equipment investments (2,048) (1,152) Proceeds from sale of assets 140 203 ----------- ----------- Cash used in investing activities $ (1,908) $ (949) ----------- -----------

Cash flows from financing activities: Net transactions with Georgia-Pacific Corporation - 211,098 Issuance of common stock, net 8,600 - Net increase in revolving credit facility 75,144 - Increase (decrease) in bank overdrafts 6,524 (6,432) Common dividends paid (3,773) - ----------- ----------- Net cash provided by financing activities $ 86,495 $ 204,666 ----------- -----------

Increase (decrease) in cash 3,134 (282) Balance, beginning of period 15,572 506 ----------- ----------- Balance, end of period $ 18,706 $ 224 =========== ===========

Supplemental Cash Flow Information Income taxes paid for the period $ 10,592 $ 16,544 ----------- ----------- Interest paid during the period $ 8,291 $ - =========== ===========

BlueLinx Holdings Inc. As Reported Statements of Operations 1st Quarter 2005 and 1st Quarter 2004 As Reported Reconciliation

Distribution BlueLinx BlueLinx BlueLinx Division As Reported As Reported As Reported As Reported (Combined) ----------- ----------- ------------ ----------- Period from Period from Period from Period from January 2, Inception January 4, January 4, 2005 to (March 8, 2004 to 2004 to April 2, 2004) to April 3, April 3, April 3,

2005 2004 2004 2004 ---------- ----------- ------------ ----------- (in thousands, except per share data) Sales: Net sales $1,351,619 $ - $ 1,279,882 $1,279,882 Cost of sales 1,232,291 - 1,125,784 1,125,784 ---------- ----------- ------------ ----------- Gross profit 119,328 - 154,098 154,098 ---------- ----------- ------------ -----------

Operating expenses: Selling, general, and administrative 91,435 584 94,097 94,681

Depreciation and amortization 4,243 - 4,431 4,431

----------- ----------- ------------ ----------- Total operating expenses 95,678 584 98,528 99,112 ---------- ----------- ------------ ----------- Operating income 23,650 (584) 55,570 54,986

Non-operating expenses: Interest expense 9,334 - - - Other expense net 129 - 306 306 ---------- ----------- ------------ ----------- Income before income taxes 14,187 (584) 55,264 54,680

Provision for income taxes 5,769 (228) 20,945 20,717 ---------- ----------- ------------ -----------

Net income $ 8,418 $ (356) $ 34,319 $ 33,963 ========== =========== ============ ===========

Basic weighted average number of common shares outstanding 30,155 ==========

Basic net income per share applicable to common stock $ 0.28 ==========

Diluted weighted average number of common shares outstanding 30,458 ==========

Diluted net income per share applicable to common stock $ 0.28 ==========

Dividends declared per share of common stock $ 0.125 ==========

BlueLinx Holdings Inc. As Reported Statements of Cash Flows for Periods Ending April 2, 2005 and April 3, 2004 As Reported Reconciliation

Distribution BlueLinx BlueLinx BlueLinx Division As Reported As Reported As Reported As Reported (Combined) ----------- ----------- ----------- ----------- Period from Period from Period from Period from January 2, Inception January 4, Inception 2005 to (March 8, 2004 to (March 8, April 2, 2004) to April 3, 2004) to April 3, April 3,

2005 2004 2004 2004 ---------- ----------- ----------- ----------- (in thousands) Cash flows from operating activities: Net income (loss) $ 8,418 $ (356) $ 34,319 $ 33,963 Adjustments to reconcile net income to cash used in operations: Depreciation and amortization 4,243 - 4,431 4,431 Amortization of debt issue costs 1,005 - - - Deferred income tax provision (benefit) (1,102) (228) 4,401 4,173 Changes in assets and liabilities: Receivables (135,735) - (203,726) (203,726) Inventories (17,682) - (118,904) (118,904) Accounts payable 68,087 3,267 100,301 103,568 Changes in other working capital (9,465) (2,683) (23,110) (25,793) Other 778 - (1,711) (1,711) ---------- ----------- ----------- ----------- Net cash used in operating activities $ (81,453) $ - $ (203,999) $ (203,999) ---------- ----------- ----------- -----------

Cash flows from investing activities: Property, plant, and equipment investments (2,048) - (1,152) (1,152) Proceeds from sale of assets 140 - 203 203 ---------- ----------- ----------- ----------- Cash used in investing activities $ (1,908) $ - $ (949) $ (949) ---------- ----------- ----------- -----------

Cash flows from financing activities: Net transactions with Georgia-Pacific Corporation - - 211,098 211,098 Issuance of common stock, net 8,600 - - - Net increase in revolving credit facility 75,144 - - - Increase (decrease) in bank overdrafts 6,524 - (6,432) (6,432) Common dividends paid (3,773) - ---------- ----------- ----------- ----------- Net cash provided by financing activities $ 86,495 $ - $ 204,666 $ 204,666 ---------- ----------- ----------- -----------

Increase (decrease) in cash 3,134 - (282) (282) Balance, beginning of period 15,572 - 506 506 ---------- ----------- ----------- ----------- Balance, end of period $ 18,706 $ - $ 224 $ 224 ========== =========== =========== ===========

Supplemental Cash Flow Information Income taxes paid for the period $ 10,592 $ - $ 16,544 $ 16,544 ---------- ----------- ----------- ----------- Interest paid during the period $ 8,291 $ - $ - $ - ========== =========== =========== ===========

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CONTACT: BlueLinx Holdings Inc. David Morris, 866-671-5138 or Lippert/Heilshorn & Associates, Inc. Investor Contact: Jody Burfening/Chris Witty, 212-838-3777 cwitty@lhai.com

KEYWORD: GEORGIA INDUSTRY KEYWORD: REAL ESTATE BUILDING/CONSTRUCTION EARNINGS CONFERENCE CALLS SOURCE: BlueLinx Holdings Inc.

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