BlueLinx Holdings Inc. (NYSE: BXC), a leading U.S.
wholesale distributor of building products, announced today that it
has acquired privately-held Vandermeer Forest Products
(“Vandermeer”), a premier wholesale distributor of building
products, for a purchase price of $67.0 million, which includes
$3.6 million for the distribution facility and real estate in
Spokane, Washington and $63.4 million for the business. Based on
preliminary estimates for September 2022 results, this reflects a
purchase price multiple for the business of approximately 3.3x
trailing twelve-month adjusted EBITDA. Vandermeer’s trailing
twelve-month sales were just over $150 million.
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 purchase of Vandermeer was funded through cash on hand and
is expected to be immediately accretive to diluted earnings per
share on a pre-synergy basis. BlueLinx intends to
optimize its treatment of the transaction by making a 338(h)(10)
tax election. After funding the acquisition, BlueLinx’s net
leverage did not materially change and the company continues to
have ample liquidity through a combination of cash on hand and
availability under its undrawn revolving credit
facility.
“We are excited to welcome Vandermeer’s employees to the
BlueLinx team,” said Dwight Gibson, President and CEO of BlueLinx.
“This acquisition is well-aligned to our specialty product growth
strategy, gives us a meaningful growth platform in the Pacific
Northwest, a stated strategic priority, and is consistent with our
disciplined approach to capital allocation. With the addition of
Vandermeer, we now have a footprint that spans coast-to-coast and
serves all 50 states, including direct access to Seattle and
Portland, two of the fastest growing metro areas in the United
States. Additionally, this acquisition further strengthens our
relationships with key strategic suppliers and increases our market
penetration in high-value, specialty product categories,
specifically siding and engineered wood. Notably, there is no
operational overlap, and our team has developed a robust
integration plan to drive commercial and operational
synergies.”
Gibson continued, “Furthermore, this acquisition demonstrates
the rigorous corporate development capabilities that we have
established to identify strategic targets, build strong industry
relationships, and execute acquisitions that align with our
long-term growth strategy. Even after funding this
transaction with cash on hand, our financial position remains
strong with low net leverage and ample liquidity to support future
value creation.”
“We are thrilled to join BlueLinx, a company whose
performance-based culture closely aligns to what we have built at
Vandermeer over the last 50 years,” said Dave Staudacher, President
and CEO of Vandermeer Forest Products. “We believe its scale,
private label products, broader specialty product offering, and
operating efficiencies make BlueLinx the ideal buyer of Vandermeer
and we are excited to become part of this next chapter of growth at
BlueLinx.”
First Hill Securities, LLC served as financial advisor and Ryan,
Swanson & Cleveland PLLC served as legal advisor to Vandermeer
Forest Products in conjunction with this transaction. Kilpatrick
Townsend & Stockton LLP served as legal advisor to BlueLinx
Holdings Inc.
BLUELINX ACQUISITION OF VANDERMEER
CONFERENCE CALL
BlueLinx will host a conference call on October
4, 2022, at 8:30 am Eastern Time, accompanied by a supporting slide
presentation, to discuss the Vandermeer acquisition. A webcast of
the conference call and accompanying presentation materials will be
available in the Investor Relations section of
the BlueLinx website
at https://investors.bluelinxco.com/events-and-presentations/default.aspx,
and a replay of the webcast will be available at the same site
shortly after the webcast is complete.
To participate in the live teleconference:
Domestic Live: |
1-877-407-4018 |
Passcode: |
13733351 |
To listen to a replay of the teleconference, which will be
available through October 18, 2022:
Domestic Replay: |
1-844-512-2921 |
Passcode: |
13733351 |
ABOUT BLUELINX BlueLinx (NYSE:
BXC) is a leading U.S. wholesale distributor of residential and
commercial building products with both branded and private-label
SKUs across product categories such as lumber, panels, engineered
wood, siding, millwork, and industrial products. With a strong
market position, broad geographic coverage footprint servicing 50
states, and the strength of a locally focused sales force, we
distribute our comprehensive range of products to approximately
15,000 customers including national home centers, pro dealers,
cooperatives, specialty distributors, regional and local dealers
and industrial manufacturers. BlueLinx provides a wide range of
value-added services and solutions to our customers and suppliers.
We are headquartered in Georgia, with executive offices located at
1950 Spectrum Circle, Marietta, Georgia, and we operate our
distribution business through a broad network of distribution
centers. BlueLinx encourages investors to visit its website,
www.BlueLinxCo.com, which is updated regularly with financial and
other important information about BlueLinx.
NON-GAAP
MEASURES The Company reports its financial
results in accordance with GAAP. The Company also believes that
presentation of certain non-GAAP measures may be useful to
investors and may provide a more complete understanding of the
factors and trends affecting the business than using reported GAAP
results alone. Any non-GAAP measures used herein are reconciled to
their most directly comparable GAAP measures herein or in the
financial tables accompanying this news release. The Company
cautions that non-GAAP measures should be considered in addition
to, but not as a substitute for, the Company’s reported GAAP
results.
Adjusted EBITDA and Purchase Price to Trailing
Twelve Month Adjusted EBITDA Multiple. BlueLinx defines Adjusted
EBITDA as an amount equal to net income (loss) plus interest
expense and all interest expense related items, income taxes,
depreciation and amortization, and further adjusted for certain
non-cash items and other special items, including compensation
expense from share based compensation, one-time charges associated
with the legal, consulting, and professional fees related to merger
and acquisition activities, gains or losses on sales of properties,
amortization of deferred gains on real estate, and expense
associated with restructuring activities, such as severance, in
addition to other significant and/or one-time, nonrecurring,
non-operating items.
The Company presents its Adjusted EBITDA because
it is a primary measure used by management to evaluate operating
performance. Management believes this metric helps to enhance
investors’ overall understanding of the financial performance and
cash flows of the business. Management also believes Adjusted
EBITDA is helpful in highlighting operating trends. Adjusted EBITDA
is frequently used by securities analysts, investors, and other
interested parties in their evaluation of companies, many of which
present an Adjusted EBITDA measure when reporting their
results.
The Company has presented Adjusted EBITDA for
Vandermeer Forest Products (“Vandermeer”) in this release as a part
of the ratio of the purchase price paid for the Vandermeer business
(exclusive of real estate purchase) to Vandermeer’s trailing
twelve-month Adjusted EBITDA, which the Company refers to as the
Purchase Price to Trailing Twelve Month Adjusted EBITDA Multiple.
The Company presents Purchase Price to Trailing Twelve Month
Adjusted EBITDA Multiple because it is a primary measure used by
management to evaluate the value paid for an acquisition.
Management believes this metric helps to enhance investors’ overall
understanding of the valuation assessed to the acquisition.
Purchase Price to Trailing Twelve Month Adjusted EBITDA Multiple is
commonly used by investment bankers, securities analysts,
investors, and other interested parties in their evaluation of
acquisitions.
Adjusted EBITDA and Purchase Price to Trailing
Twelve Month Adjusted EBITDA Multiple are not presentations made in
accordance with GAAP and are not intended to present superior
measures of financial condition from those measures determined
under GAAP. Adjusted EBITDA and Purchase Price to Trailing Twelve
Month Adjusted EBITDA Multiple, as used herein, are not necessarily
comparable to other similarly titled captions of other companies
due to differences in methods of calculation. These non-GAAP
measures are reconciled in the “Reconciliation of Non-GAAP
Measurements” table later in this release.
FORWARD-LOOKING STATEMENTSThis
press release contains forward-looking statements. Forward-looking
statements include, without limitation, any statement that
predicts, forecasts, indicates or implies future results,
performance, liquidity levels or achievements, and may contain the
words “believe,” “anticipate,” “expect,” “estimate,” “intend,”
“project,” “plan,” “will be,” “will likely continue,” “will likely
result” or words or phrases of similar meaning.
The forward-looking statements in this press
release include statements about our confidence in the Company’s
long-term growth strategy; our areas of focus and management
initiatives; our positioning for long-term value creation; our
efforts and ability to generate profitable growth; our ability to
increase net sales in specialty product categories; our ability to
generate profits and cash from sales of specialty products; our
multi-year capital allocation plans; our efforts and ability to
maintain a disciplined capital structure and capital allocation
strategy; our ability to maintain a strong balance sheet; our
ability to focus on operating improvement initiatives and
commercial excellence.
Forward-looking statements in this press release
are based on estimates and assumptions made by our management that,
although believed by us to be reasonable, are inherently uncertain.
Forward-looking statements involve risks and uncertainties that may
cause our business, strategy, or actual results to differ
materially from the forward-looking statements. These risks and
uncertainties include those discussed in greater detail in our
filings with the Securities and Exchange Commission. We operate in
a changing environment in which new risks can emerge from time to
time. It is not possible for management to predict all of these
risks, nor can it assess the extent to which any factor, or a
combination of factors, may cause our business, strategy, or actual
results to differ materially from those contained in
forward-looking statements. Factors that may cause these
differences include, among other things: pricing and product cost
variability; volumes of product sold; competition; changes in the
supply and/or demand for products that we distribute; the cyclical
nature of the industry in which we operate; housing market
conditions; consolidation among competitors, suppliers, and
customers; disintermediation risk; loss of products or key
suppliers and manufacturers; our dependence on international
suppliers and manufacturers for certain products; potential
acquisitions and the integration and completion of such
acquisitions; business disruptions; effective inventory management
relative to our sales volume or the prices of the products we
produce; information technology security risks and business
interruption risks; the ability to attract, train, and retain
highly qualified associates and other key personnel while
controlling related labor costs; exposure to product liability and
other claims and legal proceedings related to our business and the
products we distribute; natural disasters, catastrophes, fire,
wars, or other unexpected events; successful implementation of our
strategy; wage increases or work stoppages by our union employees;
costs imposed by federal, state, local, and other regulations;
compliance costs associated with federal, state, and local
environmental protection laws; the COVID-19 pandemic and other
contagious illness outbreaks and their potential effects on our
industry; regulations concerning mandatory COVID-19 vaccines;
fluctuations in our operating results; our level of indebtedness
and our ability to incur additional debt to fund future needs; the
covenants of the instruments governing our indebtedness limiting
the discretion of our management in operating the business;
variable interest rate risk under certain indebtedness; the fact
that we have consummated certain sale leaseback transactions with
resulting long-term non-cancelable leases, many of which are or
will be finance leases; the fact that we lease many of our
distribution centers, and we would still be obligated under these
leases even if we close a leased distribution center; inability to
raise funds necessary to finance a required repurchase of our
senior secured notes; inability to successfully execute the ASR; a
lowering or withdrawal of debt ratings; changes in our product mix;
increases in petroleum prices; shareholder activism; changes in
insurance-related deductible/retention reserves based on actual
loss experience; the possibility that the value of our deferred tax
assets could become impaired; changes in our expected annual
effective tax rate could be volatile; changes in actuarial
assumptions for our pension plan; the costs and liabilities related
to our participation in multi-employer pension plans could
increase; the risk that our cash flows and capital resources may be
insufficient to service our existing or future indebtedness; the
possibility that we could be the subject of securities class action
litigation due to stock price volatility; activities of activist
shareholders; indebtedness terms that limit our ability to pay
dividends on common stock; and changes in, or interpretation of,
accounting principles.
Given these risks and uncertainties, we caution
you not to place undue reliance on forward-looking statements. We
expressly disclaim any obligation to update or revise any
forward-looking statement as a result of new information, future
events or otherwise, except as required by law.
INVESTOR & MEDIA CONTACTS
Ryan Taylor, VP Investor Relations & TreasuryBlueLinx Holdings
Inc.investor@bluelinxco.com
Seth Freeman, VP Marketing &
CommunicationsBlueLinx Holdings Inc.Seth.Freeman@bluelinxco.com
Vandermeer Forest ProductsFor the Trailing
Twelve-Month Period |
September 2022 |
(in millions) |
|
|
Net Income |
$18.6 |
Adjustments: |
|
Depreciation and Amortization
Expense |
$0.1 |
Other, net |
$0.5 |
Adjusted
EBITDA |
$19.3 |
|
|
Purchase Price of
Business |
$63.4 |
Adjusted EBITDA |
$19.3 |
Purchase Price to
Adjusted EBITDA Multiple |
3.3x |
Note: These calculations are based on unaudited
financials provided by the seller and preliminary estimates of
September 2022 results
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