BlueLinx Holdings Inc. Q4 FY2025 earnings call

• 2025 demonstrated the ability to grow the business despite challenging market headwinds. The company had flat net sales and higher volumes at solid margins. • The acquisition of the Distero Lumber Company is going well. • The specialty products growth strategy led to approximately 70% of net sales and over 80% of gross profit for both the fourth quarter and full year 2025. • Focus on strategic channel growth, including a 19% volume growth in the multifamily channel in 2025. • Progress in the digital transformation journey with phase one completed, and emphasis on aligning e-commerce strategy with channel growth and leveraging AI. • M&A progress with the Distero acquisition, advancing key strategies such as increasing specialty product sales, growing multifamily sales, and strengthening the Western U.S. presence.

Specialty Products: Fourth quarter net sales were $505 million, up over 4% year over year. Gross profit for specialty product sales was $92 million, up 3% year over year. Specialty gross margin was 18.1%. For the full year, specialty sales were up slightly due to higher volumes and the Distero acquisition, with gross profit of $452 million and gross margin of 15.3%. Structural Products: Fourth quarter net sales were $211 million, down 7% compared to the prior-year period. Gross profit from Structural Products was $21 million, a decrease of 14% year over year, and structural gross margin was 10%. For the full year, structural product sales were down slightly as higher volumes were offset by price deflation, with gross profit of $452 million and gross margin of 15.3%.

• For 2026, SG&A expense is expected to increase slightly as a percentage of sales due to the addition of Distero, an increase in strategic sales headcount and material handlers, and inflation in wages and other expenses. • Anticipate a tax rate of approximately 25% of pretax net earnings before $3 million to $4 million of permanent nondeductible items. • Plan to manage CapEx in line with market conditions, focusing on facility improvements, truck and trailer replacement, and technology improvements. • Well positioned to support strategic initiatives including growth with largest customers, multifamily channel, demand pull-through, specialty product expansion, digital transformation, and organic and inorganic growth.

Q: Jeffrey Patrick Stevenson inquired about the primary drivers of the sequential improvement in specialty products gross margin and the pricing outlook.

A: Christopher Kelly Wall mentioned part due to rebate-related true-ups and normalizing, while Shyam K. Reddy added about leveraging value-add services.

Q: Jeffrey Patrick Stevenson asked about the pivot from an internal e-commerce platform to AI and WMS plans.

A: Shyam K. Reddy stated that the rapidly changing tech environment makes traditional e-commerce platform investment unwise, and WMS has a successful pilot with plans to invest in the next 12-24 months.

Q: John McGlade asked about customer conversation shifts and the multifamily activity timeline.

A: Shyam K. Reddy said customers view the value of services differently due to value-add services, and multifamily is expected to continue improving due to the affordability crisis and the company's strategy.

Q: Aditya Madan asked about incremental costs from AI focus vs traditional e-commerce and the M&A pipeline.

A: Shyam K. Reddy said incremental AI costs are unknown, and the M&A strategy is two-pronged for growing specialty product mix and geographic expansion with a pipeline of potential targets.