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,~~September 28, 2019



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

Commission file number: 1-32383



	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 or former address, 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 and posted on its corporate Web site, if any, 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 ~~August 5,~~November 4, 2019 there were 9,364,959 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,~~September 28, 2019

INDEX



	PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements — BlueLinx Holdings Inc. (Unaudited)	1
Condensed Consolidated Statements of Operations and Comprehensive Loss	1
Condensed Consolidated Balance Sheets	2
Condensed Consolidated Statements of Cash Flows	3
Condensed Consolidated Statements of ~~Stockholders~~Stockholders’ (Deficit) Equity	4
Notes to Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	2726
Item 4. Controls and Procedures	2726

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	2827
Item 1A. Risk Factors	2827
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2827
Item 3. Defaults Upon Senior Securities	2827
Item 4. Mine Safety Disclosures	2827
Item 5. Other Information	2827
Item 6. Exhibits	2928

~~Signatures~~Signature	3029

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE ~~INCOME (LOSS)~~LOSS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018			September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Net sales	$	706,448		$	892,952		$	1,345,149		$	1,330,439		$	678,665		$	859,776		$	2,023,814		$	2,190,215
Cost of sales	612,281			789,301			1,164,937			1,171,463			584,952			768,021			1,749,889			1,939,484
Gross profit	94,167			103,651			180,212			158,976			93,713			91,755			273,925			250,731
Operating expenses:
Selling, general, and administrative	74,101			91,723			148,511			150,963			79,881			87,692			228,392			238,655
Gains from sales of property	(9,760		)	—			(9,760		)	—			(38		)	—			(9,798		)	—
Depreciation and amortization	7,503			7,444			14,831			10,109			7,577			8,068			22,408			18,177
Total operating expenses	71,844			99,167			153,582			161,072			87,420			95,760			241,002			256,832
Operating income (loss)	22,323			4,484			26,630			(2,096		)	6,293			(4,005		)	32,923			(6,101		)
Non-operating expenses (income):
Interest expense	13,717			12,194			27,118			20,674			13,409			13,273			40,527			33,947
Other (income) expense, net	(45		)	(94		)	105			(188		)
Income (loss) before provision for (benefit from) income taxes	8,651			(7,616		)	(593		)	(22,582		)
Other income, net													(317		)	(94		)	(212		)	(282		)
Loss before provision for (benefit from) income taxes													(6,799		)	(17,184		)	(7,392		)	(39,766		)
Provision for (benefit from) income taxes	2,350			942			(175		)	(597		)	244			(7,288		)	69			(7,885		)
Net income (loss)	$	6,301		$	(8,558	)	$	(418	)	$	(21,985	)
Net loss													$	(7,043	)	$	(9,896	)	$	(7,461	)	$	(31,881	)

Basic earnings (loss) per share	$	0.67		$	(0.93	)	$	(0.04	)	$	(2.40	)
Diluted earnings (loss) per share	$	0.67		$	(0.93	)	$	(0.04	)	$	(2.40	)
Basic loss per share													$	(0.75	)	$	(1.07	)	$	(0.80	)	$	(3.46	)
Diluted loss per share													$	(0.75	)	$	(1.07	)	$	(0.80	)	$	(3.46	)

Comprehensive income (loss):
Net income (loss)	$	6,301		$	(8,558	)	$	(418	)	$	(21,985	)
Comprehensive loss:
Net loss													$	(7,043	)	$	(9,896	)	$	(7,461	)	$	(31,881	)
Other comprehensive income (loss):
Foreign currency translation, net of tax	—			(9		)	7			(3		)	(9		)	—			(2		)	(3		)
Amortization of unrecognized pension loss, net of tax	208			201			431			404
Amortization of unrecognized pension gain (loss), net of tax													(1,834		)	201			(1,403		)	605
Pension curtailment, net of tax	(1,486		)	—			(632		)	—			—			—			(632		)	—
Other	1			—			16			—			(7		)	—			9			—
Total other comprehensive income	(1,277		)	192			(178		)	401
Comprehensive income (loss)	$	5,024		$	(8,366	)	$	(596	)	$	(21,584	)
Total other comprehensive income (loss)													(1,850		)	201			(2,028		)	602
Comprehensive loss													$	(8,893	)	$	(9,695	)	$	(9,489	)	$	(31,279	)

See accompanying Notes.

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)


	June 29, 2019			December 29, 2018			September 28, 2019			December 29, 2018
ASSETS
Current assets:
Cash	$	12,662		$	8,939		$	12,847		$	8,939
Receivables, less allowances of $3,811 and $3,656, respectively	262,042			208,434			243,905			208,434
Inventories, net	358,652			341,851			362,389			341,851
Other current assets	44,066			40,629			42,366			40,629
Total current assets	677,422			599,853			661,507			599,853
Property and equipment, at cost	310,751			308,398			321,004			308,398
Accumulated depreciation	(111,853		)	(103,285		)	(113,740		)	(103,285		)
Property and equipment, net	198,898			205,113			207,264			205,113
Operating lease right-of-use assets	55,240			—			53,689			—
Goodwill	47,772			47,772			47,772			47,772
Intangible assets, net	30,324			35,222			28,354			35,222
Deferred tax assets	52,193			52,645			54,784			52,645
Other non-current assets	19,305			19,284			19,259			19,284
Total assets	$	1,081,154		$	959,889		$	1,072,629		$	959,889
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	174,860		$	149,188		$	179,376		$	149,188
Accrued compensation	7,712			7,974			8,780			7,974
Current maturities of long-term debt, net of discount and debt issuance costs of $64	1,427			1,736
Current maturities of long-term debt, net of discount and debt issuance costs of $74 and $64, respectively							1,790			1,736
Finance leases - short-term	8,166			7,555			8,373			7,555
Real estate deferred gains - short-term	3,935			5,330			4,448			5,330
Operating lease liabilities - short-term	6,690			—			6,381			—
Other current liabilities	18,625			24,985			13,835			24,985
Total current liabilities	221,415			196,768			222,983			196,768
Non-current liabilities:
Long-term debt, net of discount and debt issuance costs of $12,941 and $12,665, respectively	501,909			497,939
Long-term debt, net of discount and debt issuance costs of $12,081 and $12,665, respectively							488,097			497,939
Finance leases - long-term	144,116			143,486			155,258			143,486
Real estate financing obligation	44,822			—			44,725			—
Real estate deferred gains - long-term	83,788			86,011			82,400			86,011
Operating lease liabilities - long-term	48,672			—			47,418			—
Pension benefit obligation	26,089			26,668			27,625			26,668
Other non-current liabilities	23,178			23,680			24,694			23,680
Total liabilities	1,093,989			974,552			1,093,200			974,552
Commitments and Contingencies
STOCKHOLDERS’ DEFICIT:
Common Stock, $0.01 par value, Authorized - 20,000,000 shares, Issued and Outstanding - 9,364,959 and 9,293,794, respectively	94			92			94			92
Additional paid-in capital	259,727			258,596			260,883			258,596
Accumulated other comprehensive loss	(37,307		)	(37,129		)	(39,157		)	(37,129		)
Accumulated stockholders’ deficit	(235,349		)	(236,222		)	(242,391		)	(236,222		)
Total stockholders’ deficit	(12,835		)	(14,663		)	(20,571		)	(14,663		)
Total liabilities and stockholders’ deficit	$	1,081,154		$	959,889		$	1,072,629		$	959,889

See accompanying Notes.

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended						Nine Months Ended
	June 29, 2019			June 30, 2018			September 28, 2019			September 29, 2018
Net cash used in operating activities	$	(67,688	)	$	(98,470	)	$	(54,940	)	$	(59,293	)

Cash flows from investing activities:
Proceeds from sale of assets	10,758			107,960			13,699			107,972
Acquisition of business, net of cash acquired - see Note 2	—			(353,094		)
Acquisition of business, net of cash acquired							—			(353,094		)
Property and equipment investments	(1,784		)	(577		)	(3,321		)	(1,872		)
Net cash provided by (used in) investing activities	8,974			(245,711		)	10,378			(246,994		)

Cash flows from financing activities:
Borrowings on revolving credit facilities	365,519			534,380			512,379			736,254
Repayments on revolving credit facilities	(329,683		)	(267,449		)	(490,842		)	(503,577		)
Borrowings on term loan	—			180,000			—			180,000
Repayments on term loan	(31,899		)	(450		)	(31,899		)	(900		)
Principal payments on mortgage	—			(97,847		)	—			(97,847		)
Proceeds from real estate transactions	44,822			—			44,725			—
Change in outstanding payments	19,706			10,919			22,348			14,671
Debt issuance costs	(1,588		)	(9,775		)	(1,588		)	(10,470		)
Payments on finance lease obligations	(4,232		)	(3,262		)	(6,445		)	(5,890		)
Repurchase of shares to satisfy employee tax withholdings	(208		)	(1,821		)	(208		)	(3,020		)
Net cash provided by financing activities	62,437			344,695			48,470			309,221

Net change in cash	3,723			514			3,908			2,934
Cash at beginning of period	8,939			4,696			8,939			4,696
Cash at end of period	$	12,662		$	5,210		$	12,847		$	7,630

See accompanying Notes.

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(In thousands)

(Unaudited)


	Common Stock				Additional Paid-In Capital				Accumulated Other Comprehensive Loss				Accumulated Deficit				Stockholders’ (Deficit) Equity Total
	Shares		Amount					Common Stock									Stockholders’ (Deficit) Equity Total			Additional Paid-In Capital				Accumulated Other Comprehensive Loss				Accumulated Deficit			Stockholders’ Deficit Total
	(In thousands)																			Additional Paid-In Capital			Shares					Accumulated Deficit		Amount
Balance, December 29, 2018	9,294		$	92	Additional Paid-In Capital			$	Accumulated Other Comprehensive Loss			258,596	Accumulated Deficit			$	(37,129	)		$	(236,222	)		Accumulated Other Comprehensive Loss	$	(14,663	)	9,294		$	Stockholders’ Deficit Total		92			$	258,596			$	(37,129	)	$	(236,222	)	$	(14,663	)
Net loss	—		—		—				—				(6,719		)		(6,719		)	—			—				—			—				(6,719		)		(6,719		)
Adoption of ASC 842, net of tax	—		—		—				—				1,291				1,291			—			—				—			—				1,291				1,291
Foreign currency translation, net of tax	—		—		—				7				—				7			—			—				—			7				—				7
Unrealized gain from pension plan, net of tax	—		—		—				1,077				—				1,077			—			—				—			1,077				—				1,077
Vesting of restricted stock units	49		1		—				—				—				1			49			1				—			—				—				1
Compensation related to share-based grants	—		—		706				—				—				706			—			—				706			—				—				706
Repurchase of shares to satisfy employee tax withholdings	—		—		—				—				—				—
Other	—		—		—				15								15			—			—				—			15								15
Balance, March 30, 2019	9,343		93		259,302				(36,030		)		(241,650		)		(18,285		)	9,343			93				259,302			(36,030		)		(241,650		)		(18,285		)
Net income	—		—		—				—				6,301				6,301			—			—				—			—				6,301				6,301
Foreign currency translation, net of tax	—		—		—				—				—				—
Unrealized gain from pension plan, net of tax	—		—		—				(1,278		)		—				(1,278		)
Unrealized loss from pension plan, net of tax																				—			—				—			(1,278		)		—				(1,278		)
Vesting of restricted stock units	32		1		—				—				—				1			32			1				—			—				—				1
Compensation related to share-based grants	—		—		635				—				—				635			—			—				635			—				—				635
Repurchase of shares to satisfy employee tax withholdings	(10	)	—		(208		)		—				—				(208		)	(10	)		—				(208		)	—				—				(208		)
Other	—		—		(2		)		1				—				(1		)	—			—				(2		)	1				—				(1		)
Balance, June 29, 2019	9,365		$	94	$	259,727			$	(37,307	)		$	(235,349	)		$	(12,835	)	9,365			94				259,727			(37,307		)		(235,349		)		(12,835		)
Net loss																				—			—				—			—				(7,043		)		(7,043		)
Foreign currency translation, net of tax																				—			—				—			(9		)		—				(9		)
Unrealized loss from pension plan, net of tax																				—			—				—			(1,834		)		—				(1,834		)
Compensation related to share-based grants																				—			—				1,156			—				—				1,156
Other																				—			—				—			(7		)		1				(6		)
Balance, September 28, 2019																				9,365			$	94			$	260,883		$	(39,157	)		$	(242,391	)		$	(20,571	)

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(In thousands)

(Unaudited)


	Common Stock				Additional Paid-In Capital				Accumulated Other Comprehensive Loss				Accumulated Deficit				Stockholders’ (Deficit) Equity Total
	Shares		Amount					Common Stock									Stockholders’ (Deficit) Equity Total			Additional Paid-In Capital				Accumulated Other Comprehensive Loss				Accumulated Deficit			Stockholders’ Equity Total
	(In thousands)																			Additional Paid-In Capital			Shares					Accumulated Deficit		Amount
Balance, December 30, 2017	9,101		$	91	Additional Paid-In Capital			$	Accumulated Other Comprehensive Loss			259,588	Accumulated Deficit			$	(36,507	)		$	(188,170	)		Accumulated Other Comprehensive Loss	$	35,002		9,101		$	Stockholders’ Equity Total		91			$	259,588			$	(36,507	)	$	(188,170	)	$	35,002
Net loss	—		—		—				—				(13,427		)		(13,427		)	—			—				—			—				(13,427		)		(13,427		)
Foreign currency translation, net of tax	—		—		—				6				—				6			—			—				—			6				—				6
Unrealized gain from pension plan, net of tax	—		—		—				203				—				203			—			—				—			203				—				203
Vesting of restricted stock units	—		—		—				—				—				—
Vesting of performance shares	109		1		—				—				—				1			109			1				—			—				—				1
Compensation related to share-based grants	—		—		319				—				—				319			—			—				319			—				—				319
Repurchase of shares to satisfy employee tax withholdings	—		—		(1		)		—				—				(1		)	—			—				(1		)	—				—				(1		)
Other	—		—		—				—				(7		)		(7		)	—			—				—			—				(7		)		(7		)
Balance, March 31, 2018	9,210		92		259,906				(36,298		)		(201,604		)		22,096			9,210			92				259,906			(36,298		)		(201,604		)		22,096
Net loss	—		—		—				—				(8,558		)		(8,558		)	—			—				—			—				(8,558		)		(8,558		)
Foreign currency translation, net of tax	—		—		—				(9		)		—				(9		)	—			—				—			(9		)		—				(9		)
Unrealized gain from pension plan, net of tax	—		—		—				201				—				201			—			—				—			201				—				201
Vesting of restricted stock units	11		—		—				—				—				—			11			—				—			—				—				—
Vesting of performance shares	—		—		—				—				—				—
Compensation related to share-based grants	—		—		338				—				—				338			—			—				338			—				—				338
Repurchase of shares to satisfy employee tax withholdings	(2	)	—		(1,719		)		—				—				(1,719		)	(2	)		—				(1,719		)	—				—				(1,719		)
Other	—		—		—				—				7				7			—			—				—			—				7				7
Balance, June 30, 2018	9,219		$	92	$	258,525			$	(36,106	)		$	(210,155	)		$	12,356		9,219			92				258,525			(36,106		)		(210,155		)		12,356
Net loss																				—			—				—			—				(9,896		)		(9,896		)
Unrealized gain from pension plan, net of tax																				—			—				—			201				—				201
Vesting of restricted stock units																				70			—				—			—				—				—
Compensation related to share-based grants																				—			—				635			—				—				635
Repurchase of shares to satisfy employee tax withholdings																				—			—				(1,068		)	—				—				(1,068		)
Other																				—			—				(4		)	—				—				(4		)
Balance, September 29, 2018																				9,289			$	92			$	258,088		$	(35,905	)		$	(220,051	)		$	2,224

See accompanying Notes.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~June 29,~~September 28, 2019

(Unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of BlueLinx Holdings Inc. and its wholly owned subsidiaries (the “Company”). These financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted (“GAAP”) in the United States (“U.S.”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K (the “Annual Report on Form 10-K”) for the year ended December 29, 2018, as filed with the Securities and Exchange Commission on March 13, 2019.

Our financial condition as of, and our operating results for, the three and ~~six-month~~nine-month periods ended ~~June 29,~~September 28, 2019, are not necessarily indicative of the financial condition and results that may be expected for the full year ending December 28, 2019, or any other interim period. Certain prior period amounts have been reclassified to conform to the current period's presentation. These reclassifications did not materially impact the Company's operating income (loss) or consolidated net income (loss).

Subsequent Events

We evaluated subsequent events through the date that our Condensed Consolidated Financial Statements were issued. Except as described in Note 13, no matters were identified that required adjustment of the Condensed Consolidated Financial Statements or additional disclosure.

Outstanding Payments

Outstanding payments represent outstanding checks and electronic payments that have not been presented for payment as of the end of the period. These amounts are typically funded within 24 hours. As of ~~June 29,~~September 28, 2019, and December 29, 2018, outstanding payments of ~~$37.1~~$39.8 million and $17.4 million, respectively, were included in accounts payable on our condensed consolidated balance sheets.

Recently Adopted Accounting Standards

Leases. In 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842).” Topic 842 establishes a new lease accounting model. The most significant changes include the clarification of the definition of a lease, the requirement for lessees to recognize, for all leases, a right-of-use asset and a lease liability in the consolidated balance sheet, and additional quantitative and qualitative disclosures which are designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. Lease expenses will continue to be recognized in the consolidated statement of income (loss) in a manner similar to prior accounting guidance. Lessor accounting under the new standard is substantially unchanged. We adopted this standard, and all related amendments thereto, effective December 30, 2018, the first day of our 2019 fiscal ~~2019~~ year, using a modified retrospective approach, which applies the provisions of the new guidance at the effective date without adjusting the comparative periods presented. We have elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical accounting relating to lease identification and classification for existing leases upon adoption. We have made an accounting policy election to keep leases with an initial term of 12 months or less off of the consolidated balance sheet. We implemented internal controls and a lease accounting information system to enable the preparation of financial information required by the new standard. The adoption of Topic 842 had a material impact on our condensed consolidated balance sheets but did not have ana material impact on our condensed consolidated statements of operations and comprehensive loss. The most significant impact was the recognition of right-of-use assets and lease liabilities of $57.5 million inon the condensed consolidated balance sheet. Additionally, $1.7 million of deferred gains associated with sale-leaseback transactions was recorded as a cumulative-effect adjustment to accumulated deficit. See Note 9 “Leases” for additional disclosures regarding our lease commitments.

Comprehensive Income. In February 2018, the FASB issued ASU No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220).” This standard provides an option to reclassify stranded tax effects within accumulated other comprehensive ~~income (loss)~~loss to retained earnings due to the U.S. federal corporate income tax rate change in the Tax Cuts and Jobs Act of 2017. This standard was effective for interim and annual reporting periods beginning after December 15, 2018. We did not exercise the option to make this reclassification.

Accounting Standards Effective in Future Years

Credit Impairment Losses. In June 2016, the FASB issued ASU 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. 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. The standard is effective for reporting periods beginning after December 15, 2019. We have not completed our assessment of the standard but we do not expect the adoption to have a material impact on the Company's consolidated financial position, results of operations or cash flows.

Goodwill. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350).” This ~~standard~~ASU is intended to simplify the test for goodwill impairments by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the new ASU, a goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The accounting standard will be effective for reporting periods beginning after December 15, 2019, and early adoption is permitted. We do not expect the adoption of the standard to have a material impact on the Company's consolidated financial position, results of operations or cash flows.

Fair Value Measurement. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value (“FV”) Measurement (Topic 820).” Among other modifications, ~~the standard~~this ASU removes the requirements to disclose: (i) the amount of and reasons for transfers between Level 1 and Level 2 of the FV hierarchy; (ii) the policy for timing transfers between levels; and (iii) the valuation process for Level 3 FV measurements. The standard will require public entities to disclose: (a) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 FV measurements held at the end of the reporting period; and (b) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 FV measurements. The additional disclosure requirements should be applied prospectively for the most recent interim or annual period presented in the fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented. The amendments in this standard are effective for fiscal years ~~ending~~beginning after December 15, 2019. Early adoption is permitted, and an entity may adopt the removed or modified disclosures and delay the adoption of new disclosures until the effective date. We have not completed our assessment of the standard but we do not expect the adoption to have a material impact on the Company's consolidated financial position, results of operations or cash flows.

Defined Benefit Pension Plan. In August 2018, the FASB issued ASU No. 2018-14, “Compensation-Retirement-Benefits-Defined Benefit Plans-General (Subtopic 715-20).” The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other ~~postretirement~~post-retirement plans by removing six previously required disclosures and adding two. The amendments also clarify certain other disclosure requirements. The amendments in this standard are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. We have not completed our assessment of the standard but we do not expect the adoption to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

2. Acquisition of Cedar Creek

On April 13, 2018, we completed the acquisition of Cedar Creek Holdings, Inc. (“Cedar Creek”) for a purchase price of approximately $361.8 million. The acquisition was completed pursuant to the terms of an Agreement and Plan of Merger (the "Merger Agreement"), dated as of March 9, 2018, by and among BlueLinx Corporation, one of our wholly owned subsidiaries, Panther Merger Sub, Inc., a wholly-owned subsidiary of BlueLinx Corporation ("Merger Sub"), Cedar Creek, and CharlesBank Equity Fund VII, Limited Partnership. Upon closing the transactions contemplated by the Merger Agreement, among other things, Merger Sub was merged with and into Cedar Creek, with Cedar Creek surviving the merger as one of our indirect

wholly-owned subsidiaries. The merger allowed us to expand our product offerings, while maintaining our existing geographical footprint.

Cedar Creek was established in 1977 as a wholesale building materials distribution company that distributes wood products across the United States. Its products include specialty lumber, oriented strand board, siding, cedar, spruce, engineered wood products and other building products.

The acquisition was accounted for under the acquisition method of accounting. The assets acquired, liabilities assumed and results of operations of the acquired business have been included in our consolidated results since April 13, 2018.

The following unaudited consolidated pro forma information presents consolidated information as if the acquisition had occurred on January 1, 2017:


	Pro forma									Pro forma
	Three Months Ended				Six Months Ended					Three Months Ended						Nine Months Ended
(In thousands, except per share data)	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018			September 28, 2019			September 29, 2018			September 28, 2019		September 29, 2018
Net sales	$	706,448	$	948,555	$	1,345,149	$	1,732,822		$	678,665		$	859,776		$	2,023,814	$	2,592,597
Net income (loss)	9,425		9,180		6,118		(1,439		)	(5,194		)	(6,219		)	937		(5,455		)
Earnings (loss) per common share:
Basic	$	1.01	$	1.00	$	0.65	$	(0.16	)	$	(0.55	)	$	(0.67	)	$	0.10	$	(0.59	)
Diluted	1.00		0.98		0.65		(0.16		)	(0.55		)	(0.67		)	0.10		(0.59		)

The pro forma amounts above have been calculated in accordance with GAAP after applying the Company's accounting policies and adjusting the three and ~~six~~nine months ended ~~June 29,~~September 28, 2019, for ~~$4.2~~$1.8 million and ~~$8.8~~$8.4 million, and the three and ~~six~~nine months ended ~~June 30,~~September 29, 2018, for ~~$30.4~~$3.7 million and ~~$34.0~~$40.3 million, respectively, for transaction related costs, net of tax. Due to the net loss for the ~~six-month~~three month period ended ~~June 30, 2018, 164,550~~September 28, 2019, 114,000 incremental shares from share-based compensation arrangements were excluded from the computation of diluted weighted average shares outstanding because their effect would be anti-dilutive. The pro forma amounts do not include any potential synergies, cost savings or other expected benefits of the acquisition, are presented for illustrative purposes only, and are not necessarily indicative of results that would have been achieved had the acquisition occurred as of January 1, 2017, or of future operating performance.

The purchase price of Cedar Creek consisted of the following items:


	(In thousands)		(In thousands)
Consideration paid to shareholders and amounts paid to creditors:
Payments to Cedar Creek shareholders^[1]	$	166,447	$	166,447
Subordinated unsecured note (due to shareholder)^[2]		13,743		13,743
Seller’s transaction costs paid by Company		7,349		7,349
Add: pay off of Cedar Creek debt^[3]		174,213
Repayment of Cedar Creek debt^[3]				174,213
Total cash purchase price	$	361,752	$	361,752

~~_____________~~



^[1]	Payments to Cedar Creek’s shareholders include the purchase of common stock and certain escrow adjustments.



^[2]	The Cedar Creek note payable to a shareholder of $13.7 million was paid in full upon the acquisition of Cedar Creek and included $10 million in subordinated debt and $3.7 million in accrued interest.



^[3]	To finance the acquisition of Cedar Creek, the Company amended and restated its Revolving Credit Facility to increase the capacity thereunder to $600.0 million and also entered into a new $180.0 million senior secured Term Loan ~~Facility~~Facility. (See Note 6).

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 the Company expects to realize from the acquisition. None of the goodwill generated from the acquisition is deductible for tax purposes.

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



(In thousands)	Allocation as of December 29, 2018
Cash and net working capital assets (excluding inventory)	$	88,318
Inventory		159,227
Property and equipment		71,203
Other, net		(1,395	)
Intangible assets and goodwill:
Customer relationships		25,500
Non-compete agreements		8,254
Trade names		6,826
Favorable leasehold interests		800
Goodwill		47,772
Finance leases and other liabilities		(44,753	)
Cash purchase price	$	361,752

3. Goodwill and Other Intangible Assets

In connection with the acquisition of Cedar Creek, we acquired certain intangible assets. As of ~~June 29,~~September 28, 2019, our intangible assets consist of goodwill and other intangible assets including customer relationships, noncompete agreements, and trade names.

Goodwill

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.

As of ~~June 29,~~September 28, 2019, goodwill was $47.8 million.

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 implied fair value of the reporting unit’s goodwill is less than its carrying amount. We evaluate goodwill for impairment during the fourth quarter of each fiscal year. In addition, we will evaluate the carrying ~~values of these assets~~value for impairment between annual impairment tests if an event occurs or circumstances change that would indicate the carrying ~~amounts~~amount 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.

Definite-Lived Intangible Assets.

At ~~June 29,~~September 28, 2019, in connection with the acquisition of Cedar Creek, we had definite-lived intangible assets that related to customer relationships, noncompete agreements, and trade names.

At ~~June 29,~~September 28, 2019, the gross carrying amounts, the accumulated amortization, and the net carrying amounts of our definite-lived intangible assets were as ~~follows (in thousands):~~follows:


	Gross carrying amounts		Accumulated Amortization			^[1]	Net carrying amounts
(In thousands)									Gross carrying amounts		Accumulated Amortization			^[1]	Net carrying amounts
Customer relationships	$	25,500	$	(4,999	)		$	20,501	$	25,500	$	(5,885	)		$	19,615
Noncompete agreements	8,254		(2,500		)		5,754		8,254		(3,016		)		5,238
Trade names	6,826		(2,757		)		4,069		6,826		(3,325		)		3,501
Total	$	40,580	$	(10,256	)		$	30,324	$	40,580	$	(12,226	)		$	28,354

~~____________________~~

^[1] Intangible assets except customer relationships are amortized on straight line basis. Customer relationships are amortized on a double declining balance method.

Amortization Expense

The weighted average estimated useful life remaining for customer relationships, noncompete agreements and trade names is approximately 11 years, 3 years, and 2 years, respectively. Amortization expense for the definite-lived intangible assets was $2.0 million and ~~$4.1~~$6.1 million for the three and ~~six~~nine month periods ended ~~June 29,~~September 28, 2019, respectively. For the three and ~~six~~nine month periods ended ~~June 30,~~September 29, 2018, amortization expense was ~~$1.9~~$2.1 million and $4.0 million.

Estimated ~~annual~~ amortization expense for definite-lived intangible assets ~~over~~for the remaining portion of 2019 and the next five fiscal years is as ~~follows (in thousands):~~follows:


	Estimated Amortization
(In thousands)			Estimated Amortization
2019	$	8,085	$	1,970
2020	7,461		7,461
2021	4,973		4,973
2022	3,111		3,111
2023	1,807		1,807
2024			1,505

4. Revenue Recognition

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

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 with some of our larger customers, 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~~10 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~~remain with us. When the consigned inventory is sold by the customer, we recognize revenue, net of trade allowances.

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 (rebates), 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.

With the acquisition and integration of Cedar Creek, we changed our internal product hierarchy. The following table presents our revenues disaggregated by revenue ~~source (in thousands).~~source. Certain prior year amounts have been reclassified to conform to the current year product mix of structural and specialty products. Sales and usage-based taxes are excluded from revenues.

Three Months Ended Six Months Ended
June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018
Structural products $ 225,056
$ 345,878
$ 422,551
$ 522,359
Specialty products and other 481,392
547,074
922,598
808,080
Total net sales $ 706,448
$ 892,952
$ 1,345,149
$ 1,330,439



	Three Months Ended				Nine Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
	(In thousands)
Structural products	$	225,522	$	312,510	$	646,513	$	833,412
Specialty products	453,143		547,266		1,377,301		1,356,803
Total net sales	$	678,665	$	859,776	$	2,023,814	$	2,190,215

Also, due to the acquisition and integration of Cedar Creek, our reload sales are less distinct from warehouse sales as they have been traditionally classified. The following table presents our revenues disaggregated by sales ~~channel (in thousands).~~channel. Certain prior year amounts have been reclassified to conform to the current year revenues disaggregated by sales channel. Sales and usage-based taxes are excluded from revenues.


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018			September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Warehouse	$	577,000		$	704,328		$	1,081,274		$	1,037,634
													(In thousands)
Warehouse and reload													$	577,172		$	716,604		$	1,693,206		$	1,815,531
Direct	122,262			165,630			245,667			248,573			114,586			153,847			360,252			402,420
Reload and service revenue	16,617			34,914			35,522			63,184
Service revenue													272			981			1,033			2,872
Customer discounts and rebates	(9,431		)	(11,920		)	(17,314		)	(18,952		)	(13,365		)	(11,656		)	(30,677		)	(30,608		)
Total net sales	$	706,448		$	892,952		$	1,345,149		$	1,330,439		$	678,665		$	859,776		$	2,023,814		$	2,190,215

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 any common carrier shipping and handling activities as ~~a fulfillment cost, rather than as a separate obligation or separate promised service.~~an expense.

5. Assets Held for Sale and Net Gain on Disposition

In fiscal 2018, we designated certain non-operating properties as held for sale due to strategic realignments of our business. At the time of designation, we ceased recognizing depreciation expense on these assets. As of December 29, 2018, ~~six~~6 properties were designated as held for sale, with an additional property designated during the first quarter of 2019. During the ~~six~~nine months ended ~~June 29,~~September 28, 2019, ~~two~~3 properties were sold, as further described below. As of ~~June 29,~~September 28, 2019, and December 29, 2018, the net book value of total assets held for sale was ~~$3.3~~$2.1 million and $3.1 million, respectively, and was included in “Other current assets” in our Condensed Consolidated Balance Sheets. Properties held for sale as of ~~June 29,~~September 28, 2019, consisted of land in ~~Connecticut,~~the Northeast, and ~~five~~4 warehouses located in the Midwest and South. We plan to sell these properties within the next 12 months. We continue to actively market all properties that are designated as held for sale.

During the ~~six~~nine months ended ~~June 29,~~September 28, 2019, we sold ~~two~~3 non-operating distribution facilities previously designated as “held for sale”. We recognized a gain of ~~$9.8~~$9.8 million in the Condensed Consolidated Statements of Operations as a result of these sales.

6. Long-Term Debt

As of ~~June 29,~~September 28, 2019, and December 29, 2018, long-term debt consisted of the following:


		June 29,			December 29,				September 28,			December 29,
(In thousands)	Maturity Date	2019			2018			Maturity Date	2019			2018
Revolving Credit Facility (net of discounts and debt issuance costs of $5.2 million and $6.0 million at June 29, 2019 and December 29, 2018, respectively)	October 10, 2022	$	363,898		$	327,319
Term Loan Facility (net of discounts and debt issuance costs of $7.7 million and $6.7 million at June 29, 2019 and December 29, 2018, respectively)	October 13, 2023		139,438			172,356
Revolving Credit Facility (net of discounts and debt issuance costs of $4.9 million and $6.0 million at September 28, 2019 and December 29, 2018, respectively)								October 10, 2022	$	349,982		$	327,319
Term Loan Facility (net of discounts and debt issuance costs of $7.3 million and $6.7 million at September 28, 2019 and December 29, 2018, respectively)								October 13, 2023		139,905			172,356
Total debt			503,336			499,675				489,887			499,675
Less: current portion of long-term debt			(1,427	)		(1,736	)			(1,790	)		(1,736	)
Long-term debt, net		$	501,909		$	497,939			$	488,097		$	497,939

Revolving Credit Facility

On April 13, 2018, we entered into an Amended and Restated Credit Agreement with certain of our subsidiaries as borrowers (together with us, the “Borrowers”) or guarantors thereunder, Wells Fargo Bank, National Association, in its capacity as administrative agent, and certain other financial institutions party thereto (the “Revolving Credit Agreement”). The Revolving Credit Agreement provides for a senior secured asset-based revolving loan and letter of credit facility (the “Revolving Credit Facility”) of up to $600 million and an uncommitted accordion feature that permits the Borrowers to increase the facility by an aggregate additional principal amount of up to $150 million, which would allow borrowings of up to $750 million under the Revolving Credit Facility. Letters of credit in an aggregate amount of up to $30 million are also available under the Revolving Credit Agreement, which would reduce the amount of the revolving loans available under the Revolving Credit Facility. The maturity date of the Revolving Credit Agreement is October 10, 2022. The Borrowers’ obligations under the Revolving Credit Agreement 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 Agreement 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 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.

The Revolving Credit Agreement provides for interest on the loans at a rate per annum equal to (i) LIBOR plus a margin ranging from 1.75 percent to 2.25 percent, with the amount of such margin determined based upon the average of the Borrowers’ excess availability for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on LIBOR, or (ii) the administrative agent’s base rate plus a margin ranging from 0.75 percent to 1.25 percent, with the amount of such margin determined based upon the average of the Borrowers’ excess availability for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on the base rate.

In the event excess availability falls below the greater of (i) $50 million and (ii) 10 percent of the lesser of (a) the Borrowing Base and (b) the maximum permitted credit at such time, the Revolving Credit Agreement requires maintenance of a fixed charge coverage ratio of 1.0 to 1.0 until such time as the Borrowers’ excess availability has been at least the greater of (i) $50 million and (ii) 10 percent of the lesser of (a) the Borrowing Base and (b) the maximum permitted credit at such time for a period of 30 consecutive days.

The Revolving Credit Agreement also contains representations and warranties and affirmative and negative covenants customary for financings of this type, as well as customary events of default.

As of ~~June 29,~~September 28, 2019, we had outstanding borrowings of ~~$369.1~~$354.8 million, excess availability of ~~$100.8~~$98.2 million, and a weighted average interest rate of ~~4.5~~4.4 percent under our Revolving Credit Facility. As of December 29, 2018, our principal balance was $333.3 million, excess availability was $91.7 million, and our weighted average interest rate was ~~4.2~~4.6 percent under our Revolving Credit Facility.

We were in compliance with all covenants under the Revolving Credit Agreement as of ~~June 29,~~September 28, 2019.

Term Loan Facility

On April 13, 2018, in connection with the acquisition of Cedar Creek, we entered into a credit and guaranty agreement with HPS Investment Partners, LLC, as administrative agent and collateral agent (“HPS”) and certain other financial institutions as party thereto. On ~~February 28,~~October 24, 2019, the credit and guaranty agreement was amended to, among other things, permit ~~certain~~ real estate sale leaseback transactions and modify the total net leverage ratio beginning in the ~~first~~third quarter of 2019 (as amended, the “Term Loan Agreement”). The Term Loan Agreement provides for a senior secured first lien loan facility in an aggregate principal amount of $180 million (the “Term Loan Facility”). The maturity date of the Term Loan Agreement is October 13, 2023. The proceeds from the Term Loan Facility were used to fund a portion of the cash consideration payable in connection with the acquisition of Cedar Creek and to fund transaction costs in connection with the acquisition and the Term Loan Facility.

The obligations under the Term Loan Agreement are secured by a security interest in substantially all of our and our subsidiaries’ assets, including inventories, accounts receivable, real property, and proceeds from those items.

The Term Loan Agreement requires monthly interest payments, and quarterly principal payments of $450,000, in arrears. The Term Loan Agreement also requires certain mandatory prepayments of outstanding loans, subject to certain exceptions, including prepayments commencing with the fiscal year ending December 28, 2019, based on a percentage of excess cash flow (as defined in the Term Loan Agreement for such fiscal year). The remaining balance is due on the loan maturity date of October 13, 2023.

The Term Loan Facility may be prepaid in whole or in part from time to time, subject to payment of the “Prepayment Premium” (as such term is defined in the Term Loan Agreement) if such voluntary prepayment does not otherwise constitute an exception to the Prepayment Premium under the Term Loan Agreement and is made on or prior to February 28, 2023, and all breakage costs incurred by any lender thereunder. We used approximately $30 million of the proceeds from the sale-leaseback transactions described in Note 9, Leases, to prepay the Term Loan Facility, resulting in adjusted quarterly principal payments of $372,661.

Borrowings under the Term Loan Agreement may be made as Base Rate Loans or Eurodollar Rate Loans. The Base Rate Loans will bear interest at the rate per annum equal to (i) the greatest of the (a) U.S. prime lending rate published in The Wall Street Journal, (b) the Federal Funds Effective Rate plus 0.50 percent, and (c) the sum of the Adjusted Eurodollar Rate of one month plus 1.00 percent, provided that the Base Rate shall at no time be less than 2.00 percent per annum; and (ii) plus the Applicable Margin, as described below. Eurodollar Rate Loans will bear interest at the rate per annum equal to (i) the ICE Benchmark Administration LIBOR Rate, provided that the Adjusted Eurodollar Rate shall at no time be less than 1.00 percent per annum; plus (ii) the Applicable Margin. The Applicable Margin will be 6.00 percent with respect to Base Rate Loans and 7.00 percent with respect to Eurodollar Rate Loans.

~~The~~With the October 2019 amendment, the Term Loan Agreement required maintenance of a total net leverage ratio of ~~8.25~~7.50 to 1.00 for the fiscal quarter ending ~~June 29,~~September 28, 2019, and such required covenant level generally reduces over the remaining term of the Term Loan Facility as set forth in the amended Term Loan ~~Agreement.~~Agreement; provided, that 2019 fourth quarter and subsequent quarterly covenant levels revert to the higher levels existing prior to the October 2019 amendment if we do not reduce the outstanding principal balance of the Term Loan Facility to approximately $95.3 million by January 31, 2020. As of ~~June 29,~~September 28, 2019, we were in compliance with the total net leverage ratio.

The Term Loan Agreement also contains representations, warranties, affirmative and negative covenants customary for financing transactions of this type, and customary events of default.

Please refer to our risk factor entitled, “The instruments governing our indebtedness contain various covenants limiting the discretion of our management in operating our business, including requiring us to maintain a minimum level of excess liquidity” in our 2018 Annual Report on Form 10-K.

As of ~~June 29,~~September 28, 2019, we had outstanding borrowings of $147.2 million under our Term Loan Credit Facility and an interest rate of ~~9.4~~9.1 percent per annum. At December 29, 2018, our principal balance was $179.1 million with an interest rate of 9.3 percent per annum.

We were in compliance with all covenants under the Term Loan Agreement as of ~~June 29,~~September 28, 2019.

Our remaining scheduled principal ~~payment schedule~~payments for ~~each of~~fiscal 2019 and the ~~next four~~following fiscal years, and thereafter, isare as follows:


(In thousands)	(In thousands)			(In thousands)
2019		$	373		$	527
2020			1,863			2,250
2021			1,491			1,800
2022			1,491			1,800
Thereafter			141,984			140,824

7. Net Periodic Pension Cost

The following table shows the components of our net periodic pension cost:


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
(In thousands)	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
													September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
													(in thousands)
Service cost	$	48		$	133		$	161		$	266		$	29		$	133		$	190		$	399
Interest cost on projected benefit obligation	973			963			2,018			1,926			881			963			2,899			2,889
Expected return on plan assets	(1,295		)	(1,327		)	(2,489		)	(2,654		)	(1,339		)	(1,327		)	(3,828		)	(3,981		)
Amortization of unrecognized loss	279			271			580			542			278			271			857			813
Net periodic pension cost	$	5		$	40		$	270		$	80
Net periodic pension cost (benefit)													$	(151	)	$	40		$	118		$	120

During the first ~~six~~nine months of fiscal 2019, we renegotiated our collective bargaining agreement with 35 unionized locations. This collective bargaining agreement covers a number of specific items such as wages, medical coverage, and certain other benefit programs, including pension plan participation. As a result of these renegotiations, 3849 of the participants in the plan are no longer accruing future years of service under the applicable pension plan, which triggered a curtailment. As a result of the curtailment, we performed a revaluation of plan assets and liabilities. The related pension benefit obligation decreased $0.1 million and $0.3 million for the ~~six~~three and nine months ended ~~June 29,~~September 28, 2019, respectively, as a result of changes in valuation assumptions. An overall increase in plan asset valuation was accompanied by a decrease to accumulated other comprehensive income of ~~$0.2~~$2.5 million and $2.7 million for the three and nine months ended September 28, 2019, respectively, which was recorded in other comprehensive loss on the Condensed Consolidated Statements of Operations and Comprehensive ~~Income (Loss).~~Loss. No intraperiod income tax effect was required to be recorded as a result of the curtailment.

In the third quarter of 2019, we offered a voluntary lump sum payment option to certain qualified former employees or their beneficiaries who are vested participants in the BlueLinx Hourly Pension Plan. Qualified participants had until October 25, 2019 to determine whether to accept the offer. Lump sum payments in connection with the offer are expected to total approximately $9.5 million, and will be completed during the fourth quarter of 2019. The payments are being funded with existing plan assets, and no additional contribution by the Company to the plan was required in connection with the offer. The offer, once completed, will have the effect of decreasing our net periodic pension cost and overall projected benefit obligation, which will be reflected in our 2019 year end consolidated financial statements once the offer, and our year end pension valuation, have been completed.

8. Stock Compensation

Cash-Settled Stock Appreciation Rights (“SARs”)

During fiscal 2016, we granted certain executives and employees cash-settled SARs. The cash-settled SARs vested on July 16, 2018. On the vesting date, half of the vested value of the cash-settled SARs became payable within thirty days of the vesting date, and the remainder payable within one year of the vesting date. The exercise price for the cash-settled SARs was amended so that it was based on a 20 day trading average of the Company’s common stock through the vesting date, in excess of the $7.00 grant date valuation.

On ~~June 29,~~September 28, 2019, there was no remaining liability related to the ~~total liability was approximately $7.2 million, which reflected the remaining payable balance.~~cash-settled SARs.

Stock Compensation Expense

During the three months ended ~~June 29,~~September 28, 2019 and ~~June 30,~~September 29, 2018, we incurred stock compensation expense of ~~$0.6~~$1.2 million and ~~$3.8~~$1.7 million, respectively. During the ~~six~~nine months ended ~~June 29,~~September 28, 2019 and ~~June 30,~~September 29, 2018, we incurred stock compensation expense of ~~$1.3~~$2.5 million and ~~$13.0~~$14.7 million, respectively. The decrease in our stock compensation expense for the three and ~~six-month~~nine month periods of fiscal 2019 is attributable to cash-settled SARs expense in the prior year.

9. Leases

Effective December 30, 2018, we adopted ASU No. 2016-02, “Leases (Topic 842)” using the modified retrospective method, which applies the provisions of the new guidance at the effective date without adjusting the comparative periods presented. We have elected the package of practical expedients permitted under the transition guidance within the new standard. This election allowed us to carry forward our historical lease classification. The adoption of this standard resulted in the recording of operating lease right-of-use (“ROU”) assets and corresponding operating lease liabilities of $57.5 million on the condensed consolidated balance sheet as of December 30, 2018 (adoption date), the first day of fiscal 2019, which amortizes over the lease term.

Our operating and finance (formerly capital) lease portfolio includes leases for real estate, certain logistics equipment and vehicles. The majority of our leases have remaining lease terms of 1 year to 15 years, some of which include one or more options to extend the leases for 5 years. Operating lease ROU assets and liabilities are presented separately on the condensed consolidated balance sheets. Finance lease assets are included in property and equipment and the finance lease obligations are presented separately in the condensed consolidated balance sheet. We have also made the accounting policy election to not separate lease components from non lease components related to leases of several trucks during the second and third quarters of 2019.

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.

A portion of our real estate lease cost is generally subject to annual changes in the Consumer Price Index (“CPI”). The changes to the 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.

The components of lease expense were as follows:


(In thousands)	Three Months Ended June 29, 2019		Six Months Ended June 29, 2019
(In thousands)	Three Months Ended June 29, 2019		Six Months Ended June 29, 2019
Operating lease cost	$	2,991	$	6,135
					Three Months Ended September 28, 2019		Nine Months Ended September 28, 2019
					Three Months Ended September 28, 2019		Nine Months Ended September 28, 2019
					(In thousands)
Operating lease cost:					$	2,911	$	9,047
Finance lease cost:
Amortization of right-of-use assets	$	2,995	5,892		$	2,589	$	8,481
Interest on lease liabilities	4,049		7,297		3,467		10,764
Total finance lease costs	$	7,044	$	13,189	$	6,056	$	19,245

Supplemental cash flow information related to leases was as follows:

(In thousands) Three Months Ended June 29, 2019 Six Months Ended June 29, 2019

Cash paid for amounts included in the measurement of lease liabilities
   Operating cash flows from operating leases $ 3,064
$ 5,967
   Operating cash flows from finance leases 3,155
6,403
   Financing cash flows from finance leases 2,045
4,232
Right-of-use assets obtained in exchange for lease obligations
   Operating leases $ —
$ —
   Finance leases 3,462
4,250



	Three Months Ended September 28, 2019		Nine Months Ended September 28, 2019
	Three Months Ended September 28, 2019		Nine Months Ended September 28, 2019
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,990	$	8,957
Operating cash flows from finance leases	3,467		10,764
Financing cash flows from finance leases	2,213		6,445
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	—	$	—
Finance leases	14,403		18,652

Supplemental balance sheet information related to leases was as follows:

(In thousands) June 29, 2019

Finance leases
   Property and equipment $ 156,050
   Accumulated depreciation (19,835 )
Property and equipment, net $ 136,215
Weighted Average Remaining Lease Term (in years)
   Operating leases 12.17
   Finance leases 20.34
Weighted Average Discount Rate
   Operating leases 9.41 %
   Finance leases 10.91 %



(In thousands)	September 28, 2019
(In thousands)	September 28, 2019
Finance leases
Property and equipment	$	168,247
Accumulated depreciation	(22,457		)
Property and equipment, net	$	145,790
Weighted Average Remaining Lease Term (in years)
Operating leases	12.14
Finance leases	20.36
Weighted Average Discount Rate
Operating leases	9.44		%
Finance leases	10.93		%

As of ~~June 29,~~September 28, 2019, maturities of lease liabilities were as follows:



(In thousands)	Operating leases			Finance leases
2019	$	3,380		$	6,232
2020	9,403			22,877
2021	7,485			20,203
2022	6,111			19,216
2023	5,733			18,630
Thereafter	53,118			307,018
Total lease payments	$	85,230		$	394,176
Less: imputed interest	(31,431		)	(230,545		)
Total	$	53,799		$	163,631

(In thousands) Operating leases Finance leases
2019 $ 9,519
$ 10,849
2020 8,790
20,814
2021 6,930
18,140
2022 6,243
17,153
2023 5,276
16,625
Thereafter 50,716
298,650
Total lease payments $ 87,474
$ 382,231
Less: imputed interest (32,112 ) (229,949 )
Total $ 55,362
$ 152,282
16

At December 29, 2018, our total operating lease commitments were as follows:



(In thousands)
2019	$	11,980
2020	9,928
2021	8,435
2022	8,066
2023	7,539
Thereafter	60,847
Total	$	106,795

~~Real Estate Transactions~~

~~During the three months ended~~ ~~June 29, 2019~~ we completed sale-leaseback transactions on two distribution centers. The aggregate gross proceeds for these real estate transactions were $45 million. We determined that the transactions did not qualify as sales in accordance with ASC Topic 842 and, for accounting purposes, the transactions were not accounted for as sale-leaseback transactions. When this occurs, the real estate transaction is accounted for as a financing transaction whereby the cash received is recorded as a financing obligation in our condensed consolidated balance sheets.

~~At June 29, 2019, our future minimum payments related to the financing obligations under these real estate transactions were as follows:~~

(In thousands)
2019 $ 1,833
2020 3,711
2021 3,794
2022 3,880
2023 3,997
Thereafter 47,187
Total $ 64,402

10. 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. Management further believes that, while the ultimate outcome of one or more of these matters could be material to operating results in any given quarter, it will not have a materially adverse effect on our ~~long-term~~consolidated financial condition, our results of operations, or our cash flows.

Collective Bargaining Agreements

As of ~~June 29,~~September 28, 2019, we had over 2,200 employees on a full-time basis, and approximately 20 percent of our employees were represented by various local labor union Collective Bargaining Agreements (“CBAs”). As of ~~June 29,~~September 28, 2019, ~~approximately 4~~less than 1 percent of our employees are covered by CBAs that are up for renewal in fiscal 2019 or are currently expired and under negotiation.

11. Accumulated Other Comprehensive Loss

Comprehensive income (loss) is a measure of income (loss) which includes both net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) results from items deferred from recognition into our Condensed Consolidated Statements of Operations and Comprehensive Loss. Accumulated other comprehensive loss is separately presented on our Condensed Consolidated Balance Sheets as part of stockholders’ deficit.

The changes in balances for each component of accumulated other comprehensive loss for the ~~six~~nine months ended ~~June 29,~~September 28, 2019, were as follows:


(In thousands)	Foreign currency, net of tax		Defined benefit pension plan, net of tax			Other, net of tax		Total Accumulated Other Comprehensive Loss			Foreign currency, net of tax			Defined benefit pension plan, net of tax			Other, net of tax		Total Accumulated Other Comprehensive Loss
December 29, 2018, beginning balance	$	660	$	(38,001	)	$	212	$	(37,129	)	$	660		$	(38,001	)	$	212	$	(37,129	)
Other comprehensive income, net of tax ^[1]	7		(201		)	16		(178		)	(2		)	(2,035		)	9		(2,028		)
June 29, 2019, ending balance, net of tax	$	667	$	(38,202	)	$	228	$	(37,307	)
September 28, 2019, ending balance, net of tax											$	658		$	(40,036	)	$	221	$	(39,157	)

^____^{____________________________}

^[1]For the ~~six~~nine months ended ~~June 29,~~September 28, 2019, the actuarial loss recognized in the Condensed Consolidated Statements of Operations and Comprehensive Loss as a component of net periodic pension cost was ~~$0.3~~$2.7 million, net of tax of ~~$0.1~~$0.7 million. Please see Note 7, Net Periodic Pension Cost, for further information.

12. ~~Earnings (Loss)~~Loss per Share

We calculate basic ~~earnings (loss)~~loss per share by dividing net ~~income (loss)~~loss by the weighted average number of common shares outstanding. We calculate diluted earnings per share 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, and performance units. Due to the financial results for ~~six month period ended June 29, 2019, and~~ the three and ~~six~~nine month periods ended ~~June 30, 2018,~~September 28, 2019, 0.1 million and ~~0.2~~0.0 million, respectively, of incremental shares were excluded from the computation of diluted weighted average shares outstanding, because their effect would be anti-dilutive. For the three and nine month periods ended September 29, 2018, 0.0 million and 0.1 million, respectively, of incremental shares from share-based compensation arrangements were excluded from the computation of diluted weighted average shares outstanding, because their effect would be anti-dilutive.

The reconciliation of basic loss and diluted loss per common share for the ~~six-month~~three- and nine-month periods of fiscal 2019 and 2018 were as follows:


	Three Months Ended					Six Months Ended						Three Months Ended						Nine Months Ended
(in thousands, except per share data)	June 29, 2019		June 30, 2018			June 29, 2019			June 30, 2018			September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Net income (loss)	$	6,301	$	(8,558	)	$	(418	)	$	(21,985	)
Net loss												$	(7,043	)	$	(9,896	)	$	(7,461	)	$	(31,881	)

Weighted-average shares outstanding - basic	9,351		9,215			9,344			9,176			9,366			9,274			9,351			9,209
Dilutive effect of share-based awards	8		—			—			—			—			—			—			—
Weighted-average shares outstanding - diluted	9,359		9,215			$	9,344		$	9,176		9,366			9,274			$	9,351		$	9,209

Basic earnings (loss) per share	$	0.67	$	(0.93	)	$	(0.04	)	$	(2.40	)
Diluted earnings (loss) per share	$	0.67	$	(0.93	)	$	(0.04	)	$	(2.40	)
Basic loss per share												$	(0.75	)	$	(1.07	)	$	(0.80	)	$	(3.46	)
Diluted loss per share												$	(0.75	)	$	(1.07	)	$	(0.80	)	$	(3.46	)

13. Subsequent Events

Third Amendment to Term Loan Facility

On October 24, 2019, we amended our Term Loan Facility by entering into that certain Third Amendment to Credit and Guaranty Agreement (the “Amendment”), by and among the Company, as borrower, certain of the Company’s subsidiaries, as guarantors, the lenders party thereto, and HPS, in its capacity as administrative agent.

Pursuant to the Amendment, we are permitted to enter into additional real estate sale leaseback transactions, effective from the date of the Amendment through the remaining tenor of the Term Loan Facility, with the net proceeds therefrom to be used for repayment of indebtedness under the Term Loan Facility or the Revolving Credit Facility. In addition, any net proceeds from the sale of “Specified Properties” (as such term is defined under the Term Loan Facility) will be used for repayment of indebtedness under the Term Loan Facility and the Revolving Credit Facility. The Amendment also modified the quarterly total net leverage ratio covenant levels over the term of the Term Loan Facility with the 2019 fourth quarter and subsequent quarterly level modifications reverting to the pre-Amendment levels subject to a designated outstanding principal balance level on January 31, 2020. The Amendment also provides that certain post-period prepayment rights will not apply for purposes of calculating compliance with the total net leverage ratio for the fourth quarter of 2019.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a leading distributor of building and industrial products in the U.S. With a combination of market position and geographic coverage, the buying power of certain centralized procurement, and the strength of a locally-focused sales force, BlueLinx is able to provide 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, Suite 300, Marietta, Georgia, and we operate our distribution business through a broad network of distribution centers. We serve many major metropolitan areas in the U.S. and deliver building and industrial products to a variety of wholesale and retail customers. We distribute products in two principal categories: structural products and specialty products. Structural products include primarily plywood, oriented strand board, rebar and remesh, lumber, spruce and other wood products primarily used for structural support, walls, and flooring in construction projects. Structural products represented approximately ~~32%~~33% of our ~~second~~third quarter 2019 net sales. Specialty products include primarily engineered wood products, moulding, siding and trim, cedar, metal products (excluding rebar and remesh) and insulation. Specialty products accounted for approximately ~~68%~~67% of our ~~second~~third quarter 2019 net sales.

Recent Developments

~~During~~Amendment to the ~~second quarter of~~Term Loan Facility

On October 24, 2019 we ~~completed four real estate transactions. We~~amended our Term Loan Facility. Please refer to Note 6, Long-Term Debt, and Note 13, Subsequent Events, for more details.

Recent Sales of Assets

Third Quarter

In the third quarter, we sold ~~two~~a non-operating distribution ~~facilities~~facility previously designated as “held for sale” for a gain of ~~$9.8~~$0.1 million. ~~We also~~

Fourth Quarter

In October 2019, we completed ~~sale-leaseback transactions on two~~the sale of the pre-finishing assets and the transfer of the related real estate lease associated with our former pre-finish facility located near St. Louis, Missouri. Also in October 2019, we sold a non-operating distribution ~~centers. Please see Note 9, Leases~~facility and a parcel of undeveloped land. This non-operating distribution facility was previously designated as “held for ~~further information regarding~~sale.” A total gain of approximately $4.0 million will be recognized in our ~~sale-leaseback transactions.~~2019 fourth quarter and year end consolidated financial statements for these sales.

Industry Conditions

Many of the factors that cause our operations to fluctuate are seasonal or cyclical in nature. Our operating results have historically been correlated with the level of single-family residential housing starts in the U.S. At any time, the demand for new homes is dependent on a variety of factors, including job growth, changes in population and demographics, the availability and cost of mortgage financing, the supply of new and existing homes, and consumer confidence. Since 2011, the U.S. housing market has generally shown improvement. ~~However, single~~Single family housing starts ~~continued a recent trend of unexpected softness, declining 6.2%~~increased 3.7% in the ~~second~~third quarter of 2019 ~~but~~and the builders confidence index remains ~~high, and we~~high. We continue to believe the housing market improvement trend will continue in the long term, and that we are well-positioned to support our customers.

Our operating results are also affected by commodity pricing, and during the third and fourth quarters of 2018, the industry experienced a significant decline in ~~wood based~~wood-based commodity prices, which included panels and framing lumber. ~~After a modest recovery~~Lumber prices generally trended upwards during the ~~first~~third quarter of 2019, ~~prices trended downward during the second quarter, impacting~~enhancing gross margins for structural products. ~~Pricing remains low relative~~Though wood based commodity pricing is returning closer to historical averages, ~~creating~~ sales ~~realizations significantly~~realization in the third quarter of 2019 was below the prior year levels, ~~and~~ resulting in revenue declines compared to the ~~second~~third quarter of 2018. We continue to closely monitor these pricing trends, and work to manage our business, inventory levels, and costs, accordingly.

Factors That Affect Our Operating Results

Our results of operations and financial performance are influenced by a variety of factors, including the following: the integration of the Cedar Creek business with ours and the potential for disruption in distribution relationships, operational performance and sales resulting therefrom; changes in the prices, supply and/or demand for products that we distribute; inventory management and commodities pricing; new housing starts; repair and remodeling activity; general economic and business conditions in the U.S.; disintermediation by our customers and suppliers; acceptance by our customers of our branded and privately branded products; financial condition and credit worthiness of our customers; supply from key vendors; reliability of the technologies we utilize; activities of competitors; changes in significant operating expenses; fuel costs; risk of losses associated with accidents; exposure to product liability claims and other legal proceedings; changes in the availability of capital and interest rates; adverse weather patterns or conditions; acts of cyber intrusion or other disruptions to our information technology systems; and variations in the performance of the financial markets, including the credit markets.

Results of Operations

The following table sets forth our results of operations for the ~~second~~third quarter of fiscal 2019 and fiscal 2018:


(Dollars in thousands)	Second Quarter of Fiscal 2019			% of Net Sales	Second Quarter of Fiscal 2018			% of Net Sales	Third Quarter of Fiscal 2019			% of Net Sales	Third Quarter of Fiscal 2018			% of Net Sales
Net sales	$	706,448		100.0%	$	892,952		100.0%	$	678,665		100.0%	$	859,776		100.0%

Gross profit	94,167			13.3%	103,651			11.6%	93,713			13.8%	91,755			10.7%
Selling, general, and administrative	74,101			10.5%	91,723			10.3%	79,881			11.8%	87,692			10.2%
Gains from sales of property	(9,760		)	(1.4)%	—			—%	(38		)	0.0%	—			0.0%
Depreciation and amortization	7,503			1.1%	7,444			0.8%	7,577			1.1%	8,068			0.9%
Operating income (loss)	22,323			3.2%	4,484			0.5%	6,293			0.9%	(4,005		)	(0.5)%
Interest expense	13,717			1.9%	12,194			1.4%	13,409			2.0%	13,273			1.5%
Other income, net	(45		)	—%	(94		)	—%	(317		)	0.0%	(94		)	0.0%
Income (loss) before provision for (benefit from) income taxes	8,651			1.2%	(7,616		)	(0.9)%
Loss before provision for (benefit from) income taxes									(6,799		)	(1.0)%	(17,184		)	(2.0)%
Provision for (benefit from) income taxes	2,350			0.3%	942			0.1%	244			0.0%	(7,288		)	(0.8)%
Net income (loss)	$	6,301		0.9%	$	(8,558	)	(1.0)%
Net loss									$	(7,043	)	(1.0)%	$	(9,896	)	(1.2)%

The following table sets forth our results of operations for the ~~six-month~~nine-month periods of fiscal 2019 and fiscal 2018:


(Dollars in thousands)	First Six Months of Fiscal 2019			% of Net Sales	First Six Months of Fiscal 2018			% of Net Sales	First Nine Months of Fiscal 2019			% of Net Sales	First Nine Months of Fiscal 2018			% of Net Sales
Net sales	$	1,345,149		100.0%	$	1,330,439		100.0%	$	2,023,814		100.0%	$	2,190,215		100.0%

Gross profit	180,212			13.4%	158,976			11.9%	273,925			13.5%	250,731			11.4%
Selling, general, and administrative	148,511			11.0%	150,963			11.3%	228,392			11.3%	238,655			10.9%
Gains from sales of property	(9,760		)	(0.7)%	—			—%	(9,798		)	(0.5)%	—			0.0%
Depreciation and amortization	14,831			1.1%	10,109			0.8%	22,408			1.1%	18,177			0.8%
Operating income (loss)	26,630			2.0%	(2,096		)	(0.2)%	32,923			1.6%	(6,101		)	(0.3)%
Interest expense	27,118			2.0%	20,674			1.6%	40,527			2.0%	33,947			1.5%
Other expense (income), net	105			—%	(188		)	—%
Income (loss) before provision for (benefit from) income taxes	(593		)	0.0%	(22,582		)	(1.7)%
Other income, net									(212		)	0.0%	(282		)	0.0%
Loss before provision for (benefit from) income taxes									(7,392		)	(0.4)%	(39,766		)	(1.8)%
Provision for (benefit from) income taxes	(175		)	—%	(597		)	—%	69			0.0%	(7,885		)	(0.4)%
Net income (loss)	$	(418	)	0.0%	$	(21,985	)	(1.7)%
Net loss									$	(7,461	)	(0.4)%	$	(31,881	)	(1.5)%

The following table sets forth net sales by product category for the three and ~~six-month~~nine-month periods of fiscal 2019 and 2018 (in thousands):


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018		September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
Structural products	$	225,056	$	345,878	$	422,551	$	522,359	$	225,522	$	312,510	$	646,513	$	833,412
Specialty products and other	481,392		547,074		922,598		808,080
Specialty products									453,143		547,266		1,377,301		1,356,803
Net sales	$	706,448	$	892,952	$	1,345,149	$	1,330,439	$	678,665	$	859,776	$	2,023,814	$	2,190,215

The following table sets forth gross profit and gross margin percentages by product category for the three and ~~six-month~~nine-month periods of fiscal 2019 and 2018 (dollars in thousands):


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018			September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Structural products	$	17,419		$	32,785		$	36,193		$	50,039		$	20,183		$	15,151		$	56,187		$	65,177
Specialty products and other	76,748			81,784			144,019			119,855
Inventory step-up adjustment	—			(10,918		)	—			(10,918		)
Specialty products													73,530			82,625			217,738			202,493
Inventory adjustments^[1]													—			(6,021		)	—			(16,939		)
Gross profit	$	94,167		$	103,651		$	180,212		$	158,976		$	93,713		$	91,755		$	273,925		$	250,731
Gross margin percentage by category
Structural products	7.7		%	9.5		%	8.6		%	9.6		%	8.9		%	4.8		%	8.7		%	7.8		%
Specialty products	15.9		%	14.9		%	15.6		%	14.8		%	16.2		%	15.1		%	15.8		%	14.9		%
Total gross margin percentage	13.3		%	11.6		%	13.4		%	11.9		%
Total, including adjustments													13.8		%	10.7		%	13.5		%	11.4		%

~~Second~~^[1] ”Inventory adjustments” includes an adjustment for lower of cost or net realizable value of $5.2 million for the three and nine- month periods ended September 29, 2018, and inventory acquisition step-up charges of $0.8 million for the three months ended September 29, 2018, and $11.8 million for the nine months ended September 29, 2018.

Third Quarter of Fiscal 2019 Compared to ~~Second~~Third Quarter of Fiscal 2018

Net sales. For the ~~second~~third quarter of fiscal 2019, net sales decreased ~~20.9~~21.1 percent, or ~~$186.5~~$181.1 million, compared to the ~~second~~third quarter of fiscal 2018. The sales decrease was driven by declines in wood-based commodity prices ~~reduced levels of single-family housing starts~~and supplier and sales ~~and supplier disruption~~disruptions in connection with our Cedar Creek integration activities.

Gross profit and gross margin. For the ~~second~~third quarter of fiscal 2019, gross profit ~~decreased~~increased by ~~$9.5~~$2.0 million, or ~~9.1~~2.1 percent, compared to the ~~second~~third quarter of fiscal 2018, primarily due to improved gross margins in our structural products business during the ~~decrease~~quarter. Gross profit was negatively impacted by the lower of cost or net realizable value adjustment on inventory of $5.2 million in ~~sales. During~~the prior year period and the inventory step-up charge related to the Cedar Creek acquisition during the quarter. Gross margin during the same period ~~gross margin~~ was ~~13.3~~13.8 percent, an increase compared to ~~11.6~~10.7 percent in the ~~second~~third quarter of fiscal 2018, driven by ~~synergies from the acquisition of Cedar Creek. Gross margin was also negatively impacted~~improvements in ~~the prior year by the acquisition related inventory step-up charge of $10.9 million.~~our structural products business.

Selling, general, and administrative expenses. The decrease in selling, general, and administrative expenses of ~~19.2~~8.9 percent, or ~~$17.6~~$7.8 million, for the ~~second~~third quarter of fiscal 2019, compared to the ~~second~~third quarter of fiscal 2018, is primarily due to the realization of acquisition synergies, a ~~$3.1~~$0.6 million decrease in stock compensation expense and cost controls for the lower rate of sales.

~~Gains from sales of property.~~ Sales of property with no leaseback in the second quarter of fiscal 2019 resulted in gains recognized of $9.8 million. Gains from the sale and leaseback of property in the second quarter of fiscal 2018 were deferred, due to the rules of accounting for sale and leaseback transactions, and are amortized as a credit to selling, general, and administrative expenses in the amount of approximately $1.3 million per fiscal quarter.

Depreciation and amortization expense. For the ~~second~~third quarter of fiscal 2019, depreciation and amortization expense ~~increased~~decreased by ~~$0.1~~$0.5 million to ~~$7.5~~$7.6 million due to ~~increased capital expenditures in the current year.~~a lower base of depreciable assets.

Interest expense. Interest expense increased by ~~$1.5~~$0.1 million for the ~~second~~third quarter of fiscal 2019, compared to the ~~second~~third quarter of fiscal 2018. The increase was largely attributable to ~~the~~an increase in finance ~~leases and increased interest rates on our debt.~~leases.

Provision for income taxes. Our effective tax rate was ~~27.2~~(3.6) percent and ~~(12.4)~~42.4 percent for the ~~second~~third quarter of fiscal 2019 and 2018, respectively. Our effective tax rate for the ~~second~~third quarter of fiscal 2019 was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and the effect of the partial valuation allowance for separate company state income tax ~~losses. In addition, during the second quarter of fiscal 2019, we recorded~~losses and consolidated interest expense limitation, including a $0.6 million discrete tax expense ~~of $0.2 million for a shortfall on stock vesting which was offset by a $0.2 million discrete tax benefit for claiming state~~

~~tax credits. Our~~related to prior periods. The effective tax rate for the ~~second~~third quarter of fiscal 2018 was impacted by: (i) the inclusion of Cedar Creek’s operations from April 13, 2018, to ~~June 30,~~September 29, 2018; (ii) the permanent addback of certain

nondeductible expenses including transaction costs related to the Cedar Creek acquisition; (iii) the discrete tax benefit of $0.6 million for stock vesting; and ~~(iii)~~(iv) the effect of the valuation allowance for separate company state income tax losses generated during the ~~second~~third quarter of fiscal 2018.

Net ~~income (loss).~~loss. Our net ~~income (loss)~~loss improved over the prior year due to ~~gain on sale of properties~~higher gross margins and reduced costs associated with the acquisition of Cedar Creek, partially offset by the ~~following: (i) lower gross profit due to the~~ decrease in ~~net sales; and (ii) increased interest expense due to higher average interest rates and the increase in finance leases.~~sales.

First ~~Six~~Nine Months of Fiscal 2019 Compared to First ~~Six~~Nine Months of Fiscal 2018

Net sales. For the first ~~six~~nine months of fiscal 2019, net sales ~~increased 1.1~~decreased 7.6 percent, or ~~$14.7~~$166.4 million, compared to the first ~~six~~nine months of fiscal 2018. Sales ~~growth was largely driven~~decreased primarily as a result of lower sales realization for structural products, partially offset by the acquisition of Cedar Creek and the inclusion of Cedar Creek’s sales revenue for the full ~~six~~nine months in 2019, as opposed to only during the period of April 13, 2018, the date of closing, to ~~June 30,~~September 29, 2018, in the prior year period. Supplier and sales disruptions in connection with our Cedar Creek integration activities also contributed to the decrease in sales.

Gross profit and gross margin. For the first ~~six~~nine months of fiscal 2019, gross profit increased by ~~$21.2~~$23.2 million, or ~~13.4~~9.3 percent, with gross margin of ~~13.4~~13.5 percent, compared to ~~11.9~~11.4 percent for the first ~~six~~nine months of fiscal 2018. Gross ~~margin~~profit was negatively impacted in the prior year by the acquisition related inventory step-up charge of ~~$10.9~~$11.8 million and a lower of cost or net realizable value inventory adjustment of $5.2 million.

Selling, general, and administrative expenses. For the first ~~six~~nine months of fiscal 2019, selling, general, and administrative expenses decreased ~~$2.5~~$10.3 million, or ~~1.6~~4.3 percent, compared to the first ~~six~~nine months of fiscal 2018. The inclusion of the Cedar Creek business for the full ~~six~~nine months in 2019, as opposed to the period of April 13, 2018, to ~~June 30,~~September 29, 2018, in the prior year period, increased expenses on a year-over-year basis. This was more than offset by ~~an $11.7~~a $12.2 million decrease in stock compensation expense, synergies realized from the acquisition of Cedar Creek, and decreases in cost ~~decreases~~of sales related to the year-over-year sales decline.

Gains from sales of property. Sales of property with no leaseback in the first ~~six~~nine months of fiscal 2019 resulted in gains recognized of $9.8 million. Gains from the sale and leaseback of property in the first ~~six~~nine months of fiscal 2018 were deferred, due to the rules of accounting for sale and leaseback transactions, and are amortized as a credit to selling, general, and administrative expenses in the amount of approximately ~~$1.3~~$1.0 million per fiscal quarter.

Depreciation and amortization expense. For the first ~~six~~nine months of fiscal 2019, depreciation and amortization expense increased by ~~$4.7~~$4.2 million to ~~$14.8~~$22.4 million due to the acquisition of Cedar Creek, which resulted in a higher depreciable asset base and the addition of depreciable intangible assets.

Interest expense. Interest expense increased by ~~$6.4~~$6.6 million for the first ~~six~~nine months of fiscal 2019, compared to the first ~~six~~nine months of fiscal 2018. The increase was largely attributable to a higher average debt balance over the period, coupled with a higher average interest rate on outstanding debt. We increased our outstanding debt to finance the acquisition of Cedar Creek in the prior year and incurred transaction costs that are amortized as interest expense.

Provision for income taxes. Our effective tax rate was ~~29.5~~(0.9) percent and ~~2.6~~19.8 percent for the first ~~six~~nine months of fiscal 2019 and 2018, respectively. Our effective tax rate for the first ~~six~~nine months of fiscal 2019 was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and the effect of the partial valuation allowance for separate company state income tax ~~losses.~~losses and consolidated interest expense limitation, including a $0.6 million discrete tax expense related to prior periods. In addition, during the first ~~six~~nine months of fiscal 2019, we recorded discrete tax expense of $0.2 million for a shortfall on stock vesting which was offset by a $0.2 million discrete tax benefit for claiming state tax credits. The effective tax rate for the first ~~six~~nine months of fiscal 2018 was impacted by: (i) the inclusion of Cedar Creek’s operations from April 13, 2018, to ~~June 30,~~September 29, 2018; (ii) the permanent addback of certain nondeductible expenses including transaction costs related to the Cedar Creek acquisition; and (iii) the effect of the valuation allowance for separate company state ~~losses; and (iv) the impact of discrete tax expense of $0.4 million for stock options that expired unexercised during the first quarter of fiscal 2018.~~losses.

Net ~~income (loss).~~loss. Net ~~income (loss)~~loss was substantially impacted by the factors described above including: (i) gain on sale of properties in fiscal 2019 of $9.8 million, (ii) higher selling, general and administrative expenses in fiscal 2018 resulting from the acquisition of Cedar Creek and related transaction fees totaling ~~$15.2~~$19.1 million, along with an inventory valuation step-up charge of ~~$10.9~~$11.8 million; (iii) increased interest expense due to higher interest rates on outstanding debt; and (iv) ~~$13.0~~$14.7 million of additional expense recognized for cash-settled stock appreciation rights and other share based compensation in fiscal 2018.

Seasonality

We are exposed to fluctuations in quarterly sales volumes and expenses due to seasonal factors common in the building products distribution industry. The first and fourth fiscal quarters are typically our lower volume quarters, due to the impact of poor weather on the construction market. Our second and third fiscal quarters are typically our higher volume quarters, reflecting an increase in construction, due to more favorable weather conditions. Assuming no change in underlying inventory costs, our working capital generally increases in the fiscal second and third quarters, reflecting increased seasonal demand.

Liquidity and Capital Resources

We expect our primary sources of liquidity to be cash flows from sales in the normal course of our operations and borrowings under our Revolving Credit Facility. We expect that these sources will fund our ongoing cash requirements for the foreseeable future. We believe that sales in the normal course of our operations, and amounts currently available from our Revolving Credit Facility and other sources, will be sufficient to fund our routine operations, including working capital requirements, for at least the next 12 months.

Long-Term Debt

As of ~~June 29,~~September 28, 2019, and December 29, 2018, long-term debt consisted of the following:


		June 29,			December 29,				September 28,			December 29,
(In thousands)	Maturity Date	2019			2018			Maturity Date	2019			2018
Revolving Credit Facility (net of discounts and debt issuance costs of $5.2 million and $6.0 million at June 29, 2019 and December 29, 2018, respectively)	October 10, 2022	$	363,898		$	327,319
Term Loan Facility (net of discounts and debt issuance costs of $7.7 million and $6.7 million at June 29, 2019 and December 29, 2018, respectively)	October 13, 2023		139,438			172,356
Revolving Credit Facility (net of discounts and debt issuance costs of $4.9 million and $6.0 million at September 28, 2019 and December 29, 2018, respectively)								October 10, 2022	$	349,982		$	327,319
Term Loan Facility (net of discounts and debt issuance costs of $7.3 million and $6.7 million at September 28, 2019 and December 29, 2018, respectively)								October 13, 2023		139,905			172,356
Total debt			503,336			499,675				489,887			499,675
Less: current portion of long-term debt			(1,427	)		(1,736	)			(1,790	)		(1,736	)
Long-term debt, net		$	501,909		$	497,939			$	488,097		$	497,939

Revolving Credit Facility

On April 13, 2018, we amended and restated our Revolving Credit Facility to provide for a senior secured revolving loan and letter of credit facility of up to $600 million and an uncommitted accordion feature that permits us to increase the facility by an aggregate additional principal amount of up to $150 million. If we obtain the full amount of the additional increases in commitments, the Revolving Credit Facility will allow borrowings of up to $750 million. Borrowings under the Revolving Credit Facility are subject to availability under the Borrowing Base (as that term is defined in the Revolving Credit Agreement). Letters of credit in an aggregate amount of up to $30 million are also available under the Revolving Credit Agreement, which would reduce the amount of the revolving loans available under the Revolving Credit Facility. The Revolving Credit Agreement provides for interest at a rate per annum equal to (i) LIBOR plus a margin ranging from 1.75 percent to 2.25 percent, with the margin determined based upon average excess availability for the immediately preceding fiscal quarter for loans based on LIBOR, or (ii) the administrative agent’s base rate plus a margin ranging from 0.75 percent to 1.25 percent, with the margin based upon average excess availability for the immediately preceding fiscal quarter for loans based on the base rate.

If excess availability falls below the greater of (i) $50 million and (ii) 10 percent of the lesser of (a) the borrowing base and (b) the maximum permitted credit at such time, the Revolving Credit Agreement requires maintenance of a fixed charge coverage ratio of 1.0 to 1.0 until excess availability has been at least the greater of (i) $50 million and (ii) 10 percent of the lesser of (a) the borrowing base and (b) the maximum permitted credit at such time for a period of 30 consecutive days.

As of ~~June 29,~~September 28, 2019, we had outstanding borrowings of ~~$369.1~~$354.8 million and excess availability of ~~$100.8~~$98.2 million under our Revolving Credit Facility with a weighted average interest rate of ~~4.5~~4.4 percent. As of December 29, 2018 our principal balance was $333.3 million, excess availability was $91.7 million and our stated interest rate was ~~4.2~~4.6 percent under our Revolving Credit Facility.

Term Loan Facility

On April 13, 2018, we entered into the Term Loan Agreement with HPS and certain other financial institutions as party thereto, and on ~~February 28,~~October 24, 2019, we amended the Term Loan Agreement. The Term Loan Agreement provides for a Term Loan Facility of $180 million secured by substantially all of our assets. Borrowings under the Term Loan Agreement may be made as Base Rate Loans or Eurodollar Rate Loans. The Base Rate Loans will bear interest at the rate per annum equal to (i) the greatest of the (a) U.S. prime lending rate published in The Wall Street Journal, (b) the Federal Funds Effective Rate plus 0.50 percent, and (c) the sum of the Adjusted Eurodollar Rate of one month plus 1.00 percent, provided that the Base Rate shall at no time be less than 2.00 percent per annum; and (ii) plus the Applicable Margin, as described below. Eurodollar Rate Loans will bear interest at the rate per annum equal to (i) the ICE Benchmark Administration LIBOR Rate, provided that the Adjusted Eurodollar Rate shall at no time be less than 1.00 percent per annum; plus (ii) the Applicable Margin. The Applicable Margin will be 6.00 percent with respect to Base Rate Loans and 7.00 percent with respect to Eurodollar Rate Loans.

Under the Term Loan Agreement, we are permitted to enter into ~~up to $50 million in certain~~ real estate sale leaseback transactions ~~prior to December 2019,~~ with the ~~first $30 million in~~ net proceeds therefrom to be used for repayment of indebtedness under the Term Loan Facility, subject to payment an applicable prepayment premium, or, under certain circumstances, repayment of indebtedness under our Revolving Credit Facility. In addition, proceeds from the ~~Prepayment Premium and breakage costs, and~~sale of “Specified Properties” (as that term is defined in the ~~remaining net proceeds to~~Term Loan Agreement) will be used ~~to repay~~for the repayment of indebtedness under the Term Loan Facility, subject to payment of an applicable prepayment premium, or, under certain circumstances, repayment of indebtedness under our Revolving Credit ~~Facility. During the second quarter of 2019, we used approximately $30 million of proceeds from real estate transactions to prepay the Term Loan~~ Facility.

As of ~~June 29,~~September 28, 2019, we had outstanding borrowings of $147.2 million under our Term Loan Facility and a stated interest rate of ~~9.4~~9.1 percent per annum. At December 29, 2018, our principal balance was $179.1 million, with a stated interest rate of 9.3 percent per annum under our Term Loan Facility.

Mortgage Payoff and Finance Lease Commitments

On January 10, 2018, we completed sale-leaseback transactions on four distribution centers. We sold these properties for gross proceeds of $110.0 million. As a result of the transactions, we recognized finance lease assets and obligations totaling $95.1 million on these properties, and a total deferred gain of $83.9 million, which will be amortized over the lives of the applicable leases, in accordance with U.S. GAAP. The net proceeds received from the transactions were used to pay the remaining balance of our mortgage of $97.8 million, in its entirety, in the first quarter of fiscal 2018.

Our total finance lease commitments, which substantially relate to leases of property, totaled ~~$152.3~~$163.6 million as of ~~June 29,~~September 28, 2019.

Interest Rates

Our Revolving Credit Facility and our Term Loan Facility include available interest rate options based on the London Inter-bank Offered Rate (LIBOR). It is widely expected that LIBOR will be discontinued after 2021, and the U.S. and other countries are currently working to replace LIBOR with alternative reference rates. The consequences of these developments with respect to LIBOR cannot be entirely predicted; however we do not believe that the discontinuation of LIBOR as a reference rate in our loan agreements will have a material adverse effect on our financial position or materially affect our interest expense.

Sources and Uses of Cash

Operating Activities

Net cash used in operating activities for the first ~~six~~nine months of fiscal 2019 was ~~$67.7~~$54.9 million, compared to net cash used in operating activities of ~~$98.5~~$59.3 million in the first ~~six~~nine months of fiscal 2018. During the first ~~six~~nine months of fiscal 2019, cash used in operating activities decreased primarily from the decrease in working capital from the prior year.

Investing Activities

Net cash provided by investing activities for the first ~~six~~nine months of fiscal 2019 was ~~$9.0~~$10.4 million compared to net cash used in investing activities of ~~$245.7~~$247.0 million in the first ~~six~~nine months of fiscal 2018. The net cash provided in the current year primarily related to the proceeds from the sale of assets of ~~$10.8~~$13.7 million. Net cash used in the prior year primarily related to the $353.1 million of net cash paid for the acquisition of Cedar Creek during the second quarter of 2018, offset by the proceeds from the sale-leaseback transactions in the first quarter of 2018.

Financing Activities

Net cash provided by financing activities totaled ~~$62.4~~$48.5 million for the first ~~six~~nine months of fiscal 2019, compared to ~~$344.7~~$309.2 million for the first ~~six~~nine months of fiscal 2018. The decrease in net cash provided by financing activities is due to the decrease in borrowings in the current year relative to borrowings in the prior year, which included borrowings for the acquisition of Cedar Creek.

Operating Working Capital ^[1]

													Selected financial information (in thousands)
	June 29, 2019		December 29, 2018		June 30, 2018		September 28, 2019		December 29, 2018		September 29, 2018
Current assets:
Cash	$	12,662	$	8,939	$	5,210	$	12,847	$	8,939	$	7,630
Receivables, less allowance for doubtful accounts	262,042		208,434		329,980		243,905		208,434		285,489
Inventories, net	358,652		341,851		409,713		362,389		341,851		401,222
Other current assets	44,066		40,629		43,734		42,366		40,629		44,947
Total current assets	$	677,422	$	599,853	$	788,637	$	661,507	$	599,853	$	739,288

Current liabilities:
Accounts payable	$	174,860	$	149,188	$	188,580	$	179,376	$	149,188	$	190,078
Accrued compensation	7,712		7,974		11,502		8,780		7,974		7,611
Current maturities of long-term debt, net of discount	1,427		1,736		1,736		1,790		1,736		1,736
Finance leases - short-term	8,166		7,555		8,239		8,373		7,555		8,058
Real estate deferred gains - short-term	3,935		5,330		5,330		4,448		5,330		5,330
Operating lease liabilities - short-term	6,690		—		—		6,381		—		—
Other current liabilities	18,625		24,985		21,905		13,835		24,985		21,528
Total current liabilities	$	221,415	$	196,768	$	237,292	$	222,983	$	196,768	$	234,341

Operating working capital	$	457,434	$	404,821	$	553,081	$	440,314	$	404,821	$	506,683

^{___________________________}

^[1] Operating working capital is defined as current assets less current liabilities plus the current portion of long-term debt.

Operating working capital is an important measurement we use to determine the efficiencies of our operations and our ability to readily convert assets into cash. ~~Management of operating working capital helps us monitor our progress in meeting our goals to enhance our return on working capital assets.~~

Operating working capital of ~~$457.4~~$440.3 million at ~~June 29,~~September 28, 2019, compared to $404.8 million as of December 29, 2018, increased on a net basis by approximately ~~$52.6~~$35.5 million. The increase in operating working capital is primarily driven by seasonal increases in accounts receivable and inventory to support expected increases in sales activity during the summer building season, offset by increases in accounts payable.

Operating working capital decreased from ~~June 30,~~September 29, 2018, to ~~June 29,~~September 28, 2019, by ~~$95.6~~$66.4 million, primarily driven by the decrease in ~~sales.~~sales and decline in commodity prices.

Critical Accounting Policies

The preparation of our consolidated financial statements and related disclosures in conformity with GAAP requires our management to make judgments and estimates that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. There have been no material changes to our critical accounting policies from the information provided in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 29, 2018.

Forward-Looking Statements

This report 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 report include statements about the anticipated effects of adopting certain accounting standards; estimated future annual amortization expense; potential changes to estimates made in connection with revenue recognition; the expected outcome of legal proceedings; industry conditions; seasonality; and liquidity and capital resources.

Forward-looking statements 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 under the heading “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 29, 2018, and those discussed elsewhere in this report and in future reports that we file with the SEC. 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: our ability to integrate and realize anticipated synergies from acquisitions; loss of material customers, suppliers, or product lines in connection with acquisitions; our indebtedness and its related limitations; sufficiency of cash flows and capital resources; changes in interest rates; fluctuations in commodity prices; adverse housing market conditions; disintermediation by customers and suppliers; changes in prices, supply and/or demand for our products; inventory management; competitive industry pressures; industry consolidation; product shortages; loss of and dependence on key suppliers and manufacturers; new tariffs; our ability to monetize real estate assets; our ability to successfully implement our strategic initiatives; fluctuations in operating results; sale-leaseback transactions and their effects; real estate leases; exposure to product liability claims; changes in our product mix; petroleum prices; information technology security and business interruption risks; litigation and legal proceedings; natural disasters and unexpected events; activities of activist stockholders; labor and union matters; limits on net operating loss carryovers; pension plan assumptions and liabilities; risks related to our internal controls; retention of associates and key personnel; federal, state, local and other regulations, including environmental laws and ~~retulations;~~regulations; and changes in 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.

2625

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Our management performed an evaluation, as of the end of the period covered by this report on Form 10-Q, under the supervision of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

During the period covered by this report, other than described below, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On April 13, 2018, we acquired Cedar Creek Holdings, Inc. in a business combination. The Company is in the process of integrating the policies, processes, information technology systems and other components of internal controls over financial reporting of the combined business. Management’s assessment of the Company’s internal control over financial reporting for the fiscal year 2019 will include the internal controls over financial reporting of Cedar Creek.

2726

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During the ~~second~~third quarter of fiscal 2019, there were no material changes to our legal proceedings as disclosed in our Annual Report on Form 10-K for the year ended December 29, 2018. Additionally, we are, and from time to time may be, a party to routine legal proceedings incidental to the operation of our business. The outcome of any pending or threatened proceedings is not expected to have a material adverse effect on our financial condition, operating results, or cash flows, based on our current understanding of the relevant facts. Legal expenses incurred related to these contingencies are generally expensed as incurred.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the year ended December 29, 2018.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~The following table summarizes~~We did not repurchase any of our equity securities during the ~~Company’s common stock repurchase activity for each month~~period covered by this report pursuant to any publicly announced plan or program, and no such plan or program is presently in effect. From time to time, we withhold shares upon the vesting of employee equity awards to satisfy certain tax obligations due in connection therewith, and the withholding of shares may be deemed to be repurchases of our equity securities. No such withholding occurred during the third quarter ~~ended June 29, 2019:~~of 2019.

     Total Number
Shares Average Price
Period
Purchased^[1]
  Paid Per Share
March 31 - May 4, 2019 5,420
   $ 25.19
May 5 - June 1, 2019 —
   $ —
June 2 - June 29, 2019 26,868
   $ 19.44
Total 32,288


[1] The Company did not repurchase any of its equity securities during the period covered by this report pursuant to any publicly announced plan or program, and no such plan or program is presently in effect. All purchases reflected in the table above pertain to purchases of common stock by the Company in connection with tax withholding obligations of the Company’s employees upon the vesting of such employees’ restricted stock awards.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

2827

ITEM 6. EXHIBITS



Exhibit Number		Description
10.1		~~Form~~Third Amendment to Credit and Guaranty Agreement, dated October 24, 2019, by and among BlueLinx Holdings Inc., as borrower, certain subsidiaries of ~~Purchase~~BlueLinx Holdings Inc., as guarantors, the lenders party thereto, and ~~Sale Agreement for Sale-Leaseback Transactions with Big Acquisitions~~HPS Investment Partners, LLC, in its capacity as administrative agent
10.2		~~Third Amendment to Purchase~~Form of 2019 Time Based Restricted Stock Unit Award Agreement under the BlueLinx Holdings, Inc. 2016 Amended and ~~Sale Agreement, dated~~Restated Long-Term Incentive Plan, as ~~of May 1, 2019, by and between ABP FL (Yulee) LLC and Big Acquisitions LLC~~amended
10.3		~~Third Amendment to Purchase~~Form of 2019 Performance Based Restricted Stock Unit Award Agreement under the BlueLinx Holdings, Inc. 2016 Amended and ~~Sale Agreement, dated~~Restated Long-Term Incentive Plan, as ~~of May 1, 2019, by and between ABP IL (University Park) and Big Acquisitions LLC~~amended
31.1	*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	**	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	**	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.Def		Definition Linkbase Document.
101.Pre		Presentation Linkbase Document.
101.Lab		Labels Linkbase Document.
101.Cal		Calculation Linkbase Document.
101.Sch		Schema Document.
101.Ins		Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.


	*	Filed herewith.
	**	Exhibit is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended.

2928

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.




		BlueLinx Holdings Inc.
		(Registrant)

Date: ~~August 7,~~November 6, 2019	By:	/s/ Susan C. O’Farrell
		Susan C. O’Farrell
		Senior Vice President, Chief Financial Officer, Treasurer, and Principal Accounting Officer

3029



	(In thousands)
2019	$	1,833
2020	3,711
2021	3,794
2022	3,880
2023	3,997
Thereafter	47,187
Total	$	64,402



		Total Number
		Shares	Average Price
Period		Purchased^[1]	Paid Per Share
March 31 - May 4, 2019		5,420	$	25.19
May 5 - June 1, 2019		—	$	—
June 2 - June 29, 2019		26,868	$	19.44
Total		32,288

[1]	The Company did not repurchase any of its equity securities during the period covered by this report pursuant to any publicly announced plan or program, and no such plan or program is presently in effect. All purchases reflected in the table above pertain to purchases of common stock by the Company in connection with tax withholding obligations of the Company’s employees upon the vesting of such employees’ restricted stock awards.