bxc-20240629

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 29, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-32383


			BlueLinx Holdings Inc.
			(Exact name of registrant as specified in its charter)


Delaware		77-0627356
(State of Incorporation)		(I.R.S. Employer Identification No.)

1950 Spectrum Circle, Suite 300
Marietta	GA	30067
(Address of principal executive offices)		(Zip Code)

(770) 953-7000

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	BXC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically (Section 232.405 of this chapter) every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☑

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of July 26, 2024, there were 8,525,583 shares of BlueLinx Holdings Inc. common stock, par value $0.01, outstanding.

BLUELINX HOLDINGS INC.

Form 10-Q

For the Quarterly Period Ended June 29, 2024

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			PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements — BlueLinx Holdings Inc. (Unaudited)			1
Condensed Consolidated Statements of Operations and Comprehensive Income			1
Condensed Consolidated Balance Sheets			2
Condensed Consolidated Statements of Stockholders' Equity			3
Condensed Consolidated Statements of Cash Flows			4
Notes to Condensed Consolidated Financial Statements			5
Note 1 - Basis of Presentation			5
Note 2 - Inventories			6
Note 3 - Goodwill and Other Intangible Assets			7
Note 4 - Revenue Recognition			7
Note 5 - Debt and Finance Lease Obligations			8
Note 6 - Net Periodic Pension Cost			9
Note 7 - Share-Based Compensation			9
Note 8 - Leases			10
Note 9 - Commitments and Contingencies			13
Note 10 - Accumulated Other Comprehensive Loss			13
Note 11 - Income Taxes			14
Note 12 - Earnings Per Share and Stockholders' Equity			14
Note 13 - Fair Value Disclosures			15

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3. Quantitative and Qualitative Disclosures About Market Risk			25
Item 4. Controls and Procedures			25

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			26
Item 1A. Risk Factors			26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			26
Item 3. Defaults Upon Senior Securities			26
Item 4. Mine Safety Disclosures			26
Item 5. Other Information			26
Item 6. Exhibits			27

Signatures			28

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Net sales	$	768,363	$	815,967	$	1,494,607	$	1,613,871
Cost of products sold	645,919		680,164		1,244,482		1,344,529
Gross profit	122,444		135,803		250,125		269,342
Operating expenses (income):
Selling, general, and administrative	89,453		88,750		180,703		179,924
Depreciation and amortization	10,120		7,951		19,553		15,669
Amortization of deferred gains on real estate	(984)		(984)		(1,968)		(1,968)

Other operating expenses	8		993		322		4,109
Total operating expenses	98,597		96,710		198,610		197,734
Operating income	23,847		39,093		51,515		71,608
Non-operating expenses:
Interest expense, net	4,801		6,311		9,425		13,998
Other expense, net	—		594		—		1,188
Income before provision for income taxes	19,046		32,188		42,090		56,422
Provision for income taxes	4,710		7,722		10,262		14,144
Net income	$	14,336	$	24,466	$	31,828	$	42,278

Basic earnings per share	$	1.65	$	2.70	$	3.68	$	4.67
Diluted earnings per share	$	1.65	$	2.70	$	3.66	$	4.67

Comprehensive income:
Net income	$	14,336	$	24,466	$	31,828	$	42,278
Other comprehensive income:
Amortization of unrecognized pension gain, net of tax	—		225		—		464
Other	—		(11)		—		(22)
Total other comprehensive income	—		214		—		442
Comprehensive income	$	14,336	$	24,680	$	31,828	$	42,720

See accompanying Notes.

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BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)


	June 29, 2024		December 30, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	491,392	$	521,743
Receivables, less allowances of $3,344 and $3,398, respectively	273,537		228,410
Inventories, net	357,573		343,638
Other current assets	36,220		26,608
Total current assets	1,158,722		1,120,399
Property and equipment, at cost	413,905		396,321
Accumulated depreciation	(181,841)		(170,334)
Property and equipment, net	232,064		225,987
Operating lease right-of-use assets	44,418		37,227
Goodwill	55,372		55,372
Intangible assets, net	28,787		30,792
Deferred income tax asset, net	53,677		53,256
Other non-current assets	13,036		14,568
Total assets	$	1,586,076	$	1,537,601
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	179,375	$	157,931
Accrued compensation	12,310		14,273


Finance lease liabilities - current	11,132		11,178
Operating lease liabilities - current	8,460		6,284
Real estate deferred gains - current	3,935		3,935

Other current liabilities	22,250		24,961
Total current liabilities	237,462		218,562

Long-term debt	294,403		293,743
Finance lease liabilities, less current portion	280,206		274,248
Operating lease liabilities, less current portion	37,369		32,519
Real estate deferred gains, less current portion	64,697		66,599

Other non-current liabilities	19,607		17,644
Total liabilities	933,744		903,315
Commitments and Contingencies
STOCKHOLDERS’ EQUITY:
Preferred Stock, $0.01 par value, 30,000,000 shares authorized, none outstanding	—		—
Common Stock, $0.01 par value, 20,000,000 shares authorized, 8,551,462 and 8,650,046 outstanding, respectively	86		87
Additional paid-in capital	151,279		165,060

Retained earnings	500,967		469,139
Total stockholders’ equity	652,332		634,286
Total liabilities and stockholders’ equity	$	1,586,076	$	1,537,601

See accompanying Notes.

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BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Common Stock			Additional Paid-In Capital		Retained Earnings		Stockholders’ Equity Total
	Shares	Amount
Balance, December 30, 2023	8,650	$	87	$	165,060	$	469,139	$	634,286
Net income	—	—		—		17,492		17,492

Vesting of restricted stock units	19	(a)		(a)		—		—
Compensation related to share-based grants	—	—		2,350		—		2,350
Repurchase of shares to satisfy employee tax withholdings	(7)	—		(907)		—		(907)


Balance, March 30, 2024	8,662	87		166,503		486,631		653,221
Net income	—	—		—		14,336		14,336

Vesting of restricted stock units	57	1		(1)		—		—
Compensation related to share-based grants	—	—		1,405		—		1,405
Repurchase of shares to satisfy employee tax withholdings	(16)	(a)		(1,545)		—		(1,545)
Common stock repurchase and retirement	(152)	(2)		(15,083)		—		(15,085)


Balance, June 29, 2024	8,551	$	86	$	151,279	$	500,967	$	652,332

(a) Activity rounds to less than one thousand dollars


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Stockholders’ Equity Total
	Shares	Amount
Balance, December 31, 2022	9,049	$	90	$	200,748	$	(31,412)	$	420,603	$	590,029
Net income	—	—		—		—		17,812		17,812
Other comprehensive income	—	—		—		228		—		228
Vesting of restricted stock units	67	1		(1)		—		—		—
Compensation related to share-based grants	—	—		4,569		—		—		4,569
Repurchase of shares to satisfy employee tax withholdings	(8)	—		(570)		—		—		(570)
Obligation for repurchase of shares to satisfy employee tax withholdings	(19)			(1,319)		—		—		(1,319)


Balance, April 1, 2023	9,089	91		203,427		(31,184)		438,415		610,749
Net income	—	—		—		—		24,466		24,466
Other comprehensive income	—	—		—		214		—		214
Vesting of restricted stock units	95	—		(1)		—		—		(1)
Compensation related to share-based grants	—	—		1,926		—		—		1,926
Repurchase of shares to satisfy employee tax withholdings	(24)	—		(2,071)		—		—		(2,071)
Obligation for repurchase of shares to satisfy employee tax withholdings	(10)	—		(913)		—		—		(913)
Common stock repurchase and retirement	(142)	(1)		(11,598)		—		—		(11,599)

Balance, July 1, 2023	9,008	$	90	$	190,770	$	(30,970)	$	462,881	$	622,771

There has been no activity for Preferred Stock.

See accompanying Notes.

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BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended
	June 29, 2024		July 1, 2023
Cash flows from operating activities:
Net income	$	31,828	$	42,278
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization	19,553		15,669
Amortization of debt discount and issuance costs	660		659


Provision for deferred income taxes	(421)		550
Amortization of deferred gains from real estate	(1,968)		(1,968)
Share-based compensation	3,755		6,495
Changes in operating assets and liabilities:
Accounts receivable	(45,127)		(42,786)
Inventories	(13,935)		105,001
Accounts payable	20,123		38,504


Other current assets	(9,612)		(3,169)
Other assets and liabilities	(188)		(8,115)
Net cash provided by operating activities	4,668		153,118

Cash flows from investing activities:
Proceeds from sale of assets	274		128
Property and equipment investments	(11,901)		(14,039)
Net cash used in investing activities	(11,627)		(13,911)

Cash flows from financing activities:



Common stock repurchase and retirement	(14,529)		(11,599)

Repurchase of shares to satisfy employee tax withholdings	(2,452)		(3,960)
Principal payments on finance lease liabilities	(6,411)		(4,266)
Net cash used in financing activities	(23,392)		(19,825)

Net change in cash and cash equivalents	(30,351)		119,382
Cash and cash equivalents at beginning of period	521,743		298,943
Cash and cash equivalents at end of period	$	491,392	$	418,325

Supplemental cash flow information:

Interest paid during the period	$	22,266	$	21,472
Taxes paid during the period	$	22,093	$	10,821



Non-cash investing and financing activities:
Property and equipment acquired under finance leases	$	11,150	$	3,400
Liabilities for properties and equipment investments	$	1,562	$	—
Obligation for shares repurchases not yet settled	$	556	$	913

See accompanying Notes.

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BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 29, 2024

(Unaudited)

1. Basis of Presentation

BlueLinx Holdings Inc., including consolidated 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 and purchases products from manufacturers and distributes those products to dealers and other suppliers in local markets, who then sell those products to end users. 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. Specialty products include items such as engineered wood, siding, moulding and millwork, outdoor living, specialty lumber and panels, and industrial products. Structural products include items such as lumber, plywood, oriented strand board, rebar, and remesh. 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 unaudited condensed consolidated financial statements and accompanying notes have been prepared using generally accepted accounting principles in the United States (“GAAP”) and the interim reporting guidance of the U.S. Securities and Exchange Commission (“SEC”). The Company is composed of a single reportable segment for financial reporting purposes. The Company’s consolidated balance sheet as of December 30, 2023 contained herein was derived from the audited consolidated balance sheet included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023 (the “2023 Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”) on February 20, 2024. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the Company’s results of operations, financial position, and cash flows for the reporting periods presented.

The Company has condensed or omitted certain notes and other information from the unaudited condensed consolidated financial statements presented in this report. Therefore, these condensed financial statements and accompanying notes should be read in conjunction with the Company’s 2023 Form 10-K. The results for the three and six months ended June 29, 2024 are not necessarily indicative of results that may be expected for the full fiscal year ending December 28, 2024, or any other interim period.

The Company operates on a 5-4-4 fiscal calendar and its fiscal year ends on the Saturday closest to December 31st of each year and may comprise 53 weeks in certain years. Fiscal 2024 contains 52 weeks and will end on December 28, 2024. Fiscal 2023 contained 52 weeks and ended on December 30, 2023.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company’s management 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 the Company’s financial statements. Although current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from management’s expectations, which could materially affect the Company’s results of operations and financial position.

Significant Accounting Policies

The Company has made no material changes to its significant accounting policies described in the notes to its consolidated financial statement included in its 2023 Form 10-K. The Company did not adopt any new accounting standards during the fiscal year ended December 30, 2023 or during the six months ended June 29, 2024.

Recent Accounting Pronouncements - Not Yet Adopted

Segment Reporting Improvements. On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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)

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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 period for 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 (“ASU 2023-09”), 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 Accounting Standards Codification (“ASC”) No. 740, Income Taxes (“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.

2. Inventories

The Company’s inventories consist almost entirely of finished goods inventory, with a very limited amount of work-in-process inventory. The cost of all inventories is determined by the moving average cost method. The Company included all material charges directly incurred in bringing inventory to its existing condition and location, including the cost of inbound freight, volume incentives, inventory adjustments, tariffs, duties and other import fees. The Company evaluates its inventory value at the end of each quarter to ensure that inventory, when viewed by category, is carried at the lower of cost and net realizable value, which also considers items that may be considered damaged, excess, and obsolete inventory.

As of June 29, 2024, the Company recorded a lower of cost and net realizable value provision of $2.4 million as a result of the decrease in the value of the Company’s structural lumber inventory related to the decline in wood-based commodity prices as of the end of the reporting period. As of December 30, 2023, the Company had no such inventory provision.

Substantially all of the amount reported in Cost of products sold on the Company’s consolidated statement of operations is composed of costs incurred to purchase inventory that is subsequently resold to customers, including costs related to import duties and tariffs. Import duties and tariffs are not typically passed through to customers as separately billed charges. Certain import duties are classified by the U.S. Department of Commerce (the “Commerce Department”) as “antidumping or countervailing duties,” and these duties may be subject to periodic review and adjustments by the Commerce Department through a process known as a trade remedy administrative review, which can result in both retroactive and prospective adjustments to duty rates. At the time of importation, the Company tenders antidumping duty and countervailing duty cash deposits (as use of that term has been defined by the Commerce Department) to the U.S. Customs and Border Protection (“U.S. Customs”) and accounts for duties and tariffs based on the then-current rates in effect, and records any retroactive adjustments in the period in which U.S. Customs determines final duty rates at the time entries subject to antidumping and countervailing duties liquidate (as use of that term has been defined by the Commerce Department), typically through the resolution of a trade remedy administrative review proceeding. During the first quarter of fiscal 2024, the Company received refunds of $16.9 million, plus interest of $2.0 million, related to retroactive adjustments associated with certain antidumping duties for imported wood moulding and millwork products. The antidumping duty cash deposits were originally paid and accounted for by the Company in prior reporting periods at the then-current rates. Impacted inventories have since been sold. These adjustment amounts are reflected in Cost of products sold and Interest expense, net, respectively, on the Company’s unaudited condensed consolidated statement of operations for the six months ended June 29, 2024. See Note 9, Commitments and Contingencies, for disclosure concerning another matter related to import duties.

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3. Goodwill and Intangible Assets, net

During the fiscal quarter and year-to-date period ended June 29, 2024, the only change to the carrying values of Goodwill and Intangible assets, net, was the amortization of Intangible assets, all of which have definite lives. Amortization expense for intangible assets was $1.0 million and $2.0 million for the three and six month periods ended June 29, 2024, respectively. For the three and six month periods ended July 1, 2023, amortization expense was $1.0 million and $2.1 million, respectively.

4. Revenue Recognition

The following table presents the Company’s revenues disaggregated by revenue source. Sales and usage-based taxes are excluded from revenues.


	Three Months Ended				Six Months Ended
Product type	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
	(In thousands)
Specialty products	$	539,466	$	570,990	$	1,043,300	$	1,138,828
Structural products	228,897		244,977		451,307		475,043
Total net sales	$	768,363	$	815,967	$	1,494,607	$	1,613,871

The following table presents the Company’s revenues disaggregated by sales channel. Sales and usage-based taxes are excluded from revenues.


	Three Months Ended				Six Months Ended
Sales channel	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
	(In thousands)
Warehouse and reload	$	629,193	$	695,508	$	1,220,961	$	1,382,140
Direct	155,351		135,214		305,101		262,309
Customer discounts and rebates	(16,181)		(14,755)		(31,455)		(30,578)
Total net sales	$	768,363	$	815,967	$	1,494,607	$	1,613,871

Warehouse sales are delivered from Company warehouses. Reload sales are similar to warehouse sales but are shipped from warehouses, most of which are operated by third parties, where the Company stores owned products to enhance operating efficiencies. This channel is employed primarily to service strategic customers that would be 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 without the Company taking physical possession of the inventory and, as a result, typically generate lower margins than warehouse and reload distribution channels but require lower amount of committed capital and fixed costs.

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

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5. Debt and Finance Lease Obligations

As of June 29, 2024, and December 30, 2023, debt and finance lease obligations consisted of the following:


	June 29, 2024		December 30, 2023
	(In thousands)
Senior Secured Notes (“2029 Notes”) (1)	$	300,000	$	300,000
Revolving Credit Facility (2)	—		—

Finance lease obligations (3)	291,338		285,426
	591,338		585,426
Unamortized debt issuance costs	(2,756)		(3,246)
Unamortized bond discount costs	(2,841)		(3,011)
	585,741		579,169
Less: current portion of finance lease obligations	11,132		11,178
Total, net of current portion	$	574,609	$	567,991

(1) As of June 29, 2024 and December 30, 2023, term debt was comprised of $300 million of Senior Secured Notes (“2029 Notes”) issued in October 2021. These notes are presented under the Long-term debt caption of the Company’s unaudited condensed consolidated balance sheets at $294.4 million and $293.7 million as of June 29, 2024 and December 30, 2023, respectively. This balance sheet presentation is net of unamortized discount of $2.8 million and $3.0 million, respectively, and unamortized debt issuance costs of $2.8 million and $3.2 million, respectively, as of June 29, 2024 and December 30, 2023. The Senior Secured Notes are presented in this table at their face value.

(2) Available borrowing capacity under the Revolving Credit Facility was $346.5 million as of June 29, 2024 and December 30, 2023. The available borrowing capacity reflects undrawn letters of credit.

(3) Refer to Note 8, Leases, for interest rates associated with finance lease obligations. Amounts on this line include $125.1 million and $125.0 million as of June 29, 2024 and December 30, 2023, respectively, for sale-leasebacks of real estate in fiscal 2019 and 2020 that did not qualify for sale treatment for accounting purposes.

Interest expense, net on the Company’s unaudited condensed consolidated statements of operations consisted of the following components:


	Three Months Ended				Six Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
	(In thousands)
Interest expense	$	11,180	$	11,286	$	24,290	22,583
Interest income	6,380		4,976		14,865		8,585
Interest expense, net	$	4,801	$	6,311	$	9,425	$	13,998

Interest expense for the reporting periods presented in the above table primarily reflects interest expense for the 2029 Notes, interest expense on finance lease obligations, certain ongoing fees for the Revolving Credit Facility that are classified as interest expense, amortization of debt issuance costs for the 2029 Notes and Revolving Credit Facility, and amortization of original-issue bond discount on the 2029 Notes. Total amortization of debt issuance costs and bond discount costs was $0.3 million and $0.7 million for the three and six months ended June 29, 2024, respectively, and $0.3 million and $0.7 million for the three and six months ended July 1, 2023, respectively. Interest expense for the three and six months ended June 29, 2024 also includes a credit of $0.4 million and expense of $1.2 million, respectively, for estimated interest expense related to import duties that the Company believes it may owe (see Note 9, Commitments and Contingencies).

Interest income for the reporting periods presented in the above table primarily reflects interest earned on the Company’s cash and cash equivalents. Interest income for the six months ended June 29, 2024 also includes $2.0 million received with refunds in the first quarter of fiscal 2024 from U.S. Customs for anti-dumping import duties (see Note 2, Inventories).

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2029 Notes

Interest expense, excluding amortization of debt issuance costs and bond discount, for the 2029 Notes totaled $4.5 million and $9.0 million for the three and six months ended June 29, 2024, respectively, and $4.5 million and $9.0 million for the three and six months ended July 1, 2023, respectively. The 2029 Notes pay interest at a fixed annual rate of 6.0 percent through maturity.

Revolving Credit Facility

As of June 29, 2024 and December 30, 2023, the Company had zero outstanding borrowings under the Revolving Credit Facility. Available borrowing capacity, reduced for undrawn letters of credit, under the Revolving Credit Facility was $346.5 million as of June 29, 2024 and December 30, 2023. Excess availability, which includes availability under the Revolving Credit Facility plus cash and cash equivalents in qualified deposit accounts, was $837.9 million and $868.2 million as of June 29, 2024 and December 30, 2023, respectively.

Debt Covenants

The Revolving Credit Facility and the 2029 Notes contain various covenants and restrictions, including customary financial covenants. The Company was in compliance with all such covenants as of June 29, 2024 and December 30, 2023. The Company’s right to make draws on the Revolving Credit Facility may be conditioned upon, among other things, compliance with these covenants. 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.

Finance Lease Obligations

The Company’s finance lease liabilities consist of leases related to equipment, vehicles, and real estate, with the majority of those finance leases related to real estate. For more information on the Company’s finance lease obligations, refer to Note 8, Leases.

6. Net Periodic Pension Cost

As previously disclosed, effective December 5, 2023, the Company settled its noncontributory defined benefit pension plan (the “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, were relieved of primary responsibility for the benefits obligations. Prior to settlement, during the three and six months ended July 1, 2023 the Company incurred the following net periodic pension cost:


		Three Months Ended		Six Months Ended
		July 1, 2023
	(In thousands)
Service cost (1)		$	—	$	—
Interest cost on projected benefit obligation		1,105		2,209
Expected return on plan assets		(813)		(1,625)
Amortization of unrecognized gain		302		604
Net periodic pension cost (benefit)		$	594	$	1,188

(1) Service cost not a part of net periodic pension benefit as the pension plan was frozen for all participants.

The net periodic pension cost is included in other expense, net in the Company’s unaudited condensed consolidated statement of operations and comprehensive income.

7. Share-Based Compensation

During the three and six months ended June 29, 2024, the Company incurred stock compensation expense of $1.4 million and $3.8 million, respectively. Expense in the three and six months ended June 29, 2024 included a credit of $1.7 million related to

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cumulative adjustments for certain unvested restricted stock unit grants that were granted in June 2022 and are subject to vesting based, in part, on performance criteria that are not expected, as of June 29, 2024, to be fully achieved before the end of the vesting period.

As of June 29, 2024, unearned compensation for share-based grants was $27.1 million, with $16.6 million of this amount associated with grants made in the first six months of fiscal 2024. Under the Company’s 2021 BlueLinx Holdings, Inc. 2021 Long-Term Incentive Plan as of June 29, 2024, 482,563 shares of common stock remain available for future issuance pursuant to equity-based compensation awards.

For the three and six months ended July 1, 2023, the Company incurred stock compensation expense of $1.9 million and $6.5 million, respectively. This expense included expense for the acceleration of unrecognized compensation cost in conjunction with certain changes in the Company’s executive management.

8. Leases

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 typically five years. The Company’s 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 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 assesses 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 Company’s consolidated balance sheets. Finance lease ROU assets are included in property and equipment and the finance lease obligations are presented separately in the Company’s consolidated balance sheets. 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 to determine 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 the 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 June 29, 2024 and December 30, 2023, the remaining unrecognized deferred gains related to these transactions were $68.6 million and $70.5 million, respectively, and these deferred gains are being recognized in earning on a straight-line basis. During the three months ended June 29, 2024 and July 1, 2023, the Company recognized $1.0 million and $1.0 million, respectively, of these deferred gains in each quarter. In the six months ended June 29, 2024 and July 1, 2023, the Company recognized $2.0 million and $2.0 million, respectively, of these deferred gains in each period.

The following table presents the assets and liabilities related to the Company’s leases as of June 29, 2024 and December 30, 2023:

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Lease Assets and Liabilities		June 29, 2024		December 30, 2023
		(In thousands)
Assets	Classification
Operating lease right-of-use assets	Operating lease right-of-use assets	$	44,418	$	37,227
Finance lease right-of-use assets (1)	Property and equipment, net	139,378		138,357
Total lease right-of-use assets		$	183,796	$	175,584

Liabilities
Current portion:
Operating lease liabilities	Operating lease liabilities - current	$	8,460	$	6,284
Finance lease liabilities	Finance lease liabilities - current	11,132		11,178
Non-current portion:
Operating lease liabilities	Operating lease liabilities - noncurrent	37,369		32,519
Finance lease liabilities	Finance lease liabilities - noncurrent	280,206		274,248
Total lease liabilities		$	337,167	$	324,229

(1) Finance lease right-of-use assets are presented net of accumulated amortization of $107.0 million and $102.9 million as of June 29, 2024 and December 30, 2023, respectively.

The components of lease expense were as follows:


	Three Months Ended				Six Months Ended
Components of lease expense	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
	(In thousands)
Operating lease expense:
Operating lease expense before subleases income	$	2,633	$	3,116	$	5,079	$	6,034
Sublease income	(887)		(835)		(1,748)		(1,413)
Operating lease expense	$	1,746	$	2,281	$	3,331	$	4,621

Finance lease expense:
Amortization of right-of-use assets	$	5,026	$	4,693	$	9,762	$	6,782
Interest on lease liabilities	6,410		6,037		12,701		12,081
Total finance lease expense	$	11,436	$	10,730	$	22,463	$	18,863

Supplemental cash flow information related to leases is as follows:


	Three Months Ended				Six Months Ended
Cash flow information	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows, operating leases	$	2,693	$	3,133	$	5,202	$	6,591
Operating cash flows, finance leases	$

SEC Form 10-Q filed by Bluelinx Holdings Inc.