UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q ~~10-Q~~



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

For the quarterly period ended ~~June 27, 2020~~July 3, 2021



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

Commission file number: 001-32383



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



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

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

(770) 953-7000

(Registrant’s telephone number, including area code)

Not applicable

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

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

Large Accelerated Filer

☐

Accelerated Filer

☑

Non-accelerated Filer

☐

Smaller Reporting Company

☑

Emerging Growth Company

☐

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

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

As of July ~~31, 2020~~,30, 2021, there were ~~9,461,412~~9,723,697 shares of BlueLinx Holdings Inc. common stock, par value $0.01, outstanding.

BLUELINX HOLDINGS INC.

Form 10-Q

For the Quarterly Period Ended ~~June 27, 2020~~July 3, 2021

INDEX



		PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements — BlueLinx Holdings Inc. (Unaudited)		1
Condensed Consolidated Statements of Operations and Comprehensive ~~Loss~~Income		1
Condensed Consolidated Balance Sheets		2
Condensed Consolidated Statements of Stockholders' Equity (Deficit)		3
Condensed Consolidated Statements of Cash Flows		35
~~Condensed Consolidated Statements of Stockholders’ Deficit~~		4
Notes to Condensed Consolidated Financial Statements	56
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1718
Item 3. Quantitative and Qualitative Disclosures About Market Risk		2629
Item 4. Controls and Procedures		2629

PART II. OTHER INFORMATION
Item 1. Legal Proceedings		2730
Item 1A. Risk Factors		2730
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		2931
Item 3. Defaults Upon Senior Securities		2931
Item 4. Mine Safety Disclosures		2931
Item 5. Other Information		2931
Item 6. Exhibits		3032

Signature		3133

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME ~~(LOSS)~~

(In thousands, except per share data)

(Unaudited)

Three Months Ended Six Months Ended
June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
Net sales $ 698,776
$ 706,448
$ 1,360,846
$ 1,345,149
Cost of sales 597,956
612,281
1,166,817
1,164,937
Gross profit 100,820
94,167
194,029
180,212
Operating expenses:

Selling, general, and administrative 69,710
70,150
143,314
139,235
Depreciation and amortization 7,063
7,503
14,698
14,831
Gains from sales of property —
(9,760 ) (525 ) (9,760 )
Other operating expenses 1,962
3,951
6,127
9,276
Total operating expenses 78,735
71,844
163,614
153,582
Operating income 22,085
22,323
30,415
26,630
Non-operating expenses (income):

Interest expense, net 11,535
13,717
25,915
27,118
Other (income) expense, net 417
(45 ) 180
105
Income (loss) before provision for (benefit from) income taxes 10,133
8,651
4,320
(593 )
Provision for (benefit from) income taxes 3,438
2,350
(1,588 ) (175 )
Net income (loss) $ 6,695
$ 6,301
$ 5,908
$ (418 )

Basic income (loss) per share $ 0.71
$ 0.67
$ 0.63
$ (0.04 )
Diluted income (loss) per share $ 0.71
$ 0.67
$ 0.63
$ (0.04 )

Comprehensive income (loss):

Net income (loss) $ 6,695
$ 6,301
$ 5,908
$ (418 )
Other comprehensive income (loss):

Foreign currency translation, net of tax 17
—
20
7
Amortization of unrecognized pension loss, net of tax 114
208
310
431
Pension curtailment, net of tax —
(1,486 ) —
(632 )
Other 2
1
(17 ) 16
Total other comprehensive income (loss) 133
(1,277 ) 313
(178 )
Comprehensive income (loss) $ 6,828
$ 5,024
$ 6,221
$ (596 )


	Three Months Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Net sales	$	1,307,913	$	698,776	$	2,333,382	$	1,360,846
Cost of sales	1,056,741		597,956		1,901,818		1,166,817
Gross profit	251,172		100,820		431,564		194,029
Operating expenses (income):
Selling, general, and administrative	87,010		70,694		162,569		145,281
Depreciation and amortization	7,080		7,063		14,545		14,698
Amortization of deferred gains on real estate	(984)		(984)		(1,967)		(1,967)
Gains from sales of property	0		0		(1,287)		(525)
Other operating expenses	871		1,962		983		6,127
Total operating expenses	93,977		78,735		174,843		163,614
Operating income	157,195		22,085		256,721		30,415
Non-operating expenses (income):
Interest expense, net	9,143		11,535		25,377		25,915
Other expense (income), net	(314)		417		(628)		180
Income before provision for (benefit from) income taxes	148,366		10,133		231,972		4,320
Provision for (benefit from) income taxes	34,908		3,438		56,654		(1,588)
Net income	$	113,458	$	6,695	$	175,318	$	5,908

Basic income per share	$	11.88	$	0.71	$	18.44	$	0.63
Diluted income per share	$	11.61	$	0.71	$	18.15	$	0.63

Comprehensive income:
Net income	$	113,458	$	6,695	$	175,318	$	5,908
Other comprehensive income:
Amortization of unrecognized pension gain, net of tax	246		114		485		310
Other	6		19		17		3
Total other comprehensive income	252		133		502		313
Comprehensive income	$	113,710	$	6,828	$	175,820	$	6,221

See accompanying Notes.

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)


	June 27, 2020			December 28, 2019				July 3, 2021		January 2, 2021
ASSETS	ASSETS						ASSETS
Current assets:							Current assets:
Cash	$	11,530		$	11,643		Cash	$	179	$	82
Receivables, less allowances of $3,911 and $3,236, respectively	264,642			192,872
Receivables, less allowances of $5,140 and $4,123, respectively							Receivables, less allowances of $5,140 and $4,123, respectively	437,217		293,643
Inventories, net	313,979			345,806			Inventories, net	425,714		342,108
Other current assets	26,509			27,718			Other current assets	36,280		32,581
Total current assets	616,660			578,039			Total current assets	899,390		668,414
Property and equipment, at cost	308,616			308,067			Property and equipment, at cost	307,728		299,935
Accumulated depreciation	(122,123		)	(112,299		)	Accumulated depreciation	(127,252)		(121,223)
Property and equipment, net	186,493			195,768			Property and equipment, net	180,476		178,712
Operating lease right-of-use assets	50,802			54,408			Operating lease right-of-use assets	49,478		51,142
Goodwill	47,772			47,772			Goodwill	47,772		47,772
Intangible assets, net	22,591			26,384			Intangible assets, net	15,830		18,889
Deferred tax assets	54,494			53,993			Deferred tax assets	68,743		62,899
Other non-current assets	20,292			15,061			Other non-current assets	19,093		20,302
Total assets	$	999,104		$	971,425		Total assets	$	1,280,782	$	1,048,130
LIABILITIES AND STOCKHOLDERS’ DEFICIT
LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:							Current liabilities:
Accounts payable	$	158,920		$	132,348		Accounts payable	$	227,100	$	165,163
Accrued compensation	11,140			7,639			Accrued compensation	16,267		24,751
Current maturities of long-term debt, net of debt issuance costs of $74 and $74, respectively	2,176			2,176
Taxes payable							Taxes payable	17,941		7,847
Current maturities of long-term debt, net of debt issuance costs of $0 and $74, respectively							Current maturities of long-term debt, net of debt issuance costs of $0 and $74, respectively	0		1,171
Finance lease liabilities - short-term	5,958			6,486			Finance lease liabilities - short-term	6,379		5,675
Operating lease liabilities - short-term	6,633			7,317			Operating lease liabilities - short-term	4,936		6,076
Real estate deferred gains - short-term	4,040			3,935			Real estate deferred gains - short-term	4,040		4,040
Other current liabilities	11,011			11,222			Other current liabilities	13,035		14,309
Total current liabilities	199,878			171,123			Total current liabilities	289,698		229,032
Non-current liabilities:							Non-current liabilities:
Long-term debt, net of debt issuance costs of $10,915 and $12,481, respectively	377,880			458,439
Long-term debt, net of debt issuance costs of $2,184 and $8,936, respectively							Long-term debt, net of debt issuance costs of $2,184 and $8,936, respectively	318,226		321,270
Finance lease liabilities - long-term	266,622			191,525			Finance lease liabilities - long-term	272,817		267,443
Operating lease liabilities - long-term	44,169			47,091			Operating lease liabilities - long-term	44,897		44,965
Real estate deferred gains - long-term	79,984			81,886			Real estate deferred gains - long-term	76,108		78,009
Pension benefit obligation	22,109			23,420			Pension benefit obligation	20,878		22,684
Other non-current liabilities	26,710			24,024			Other non-current liabilities	24,976		25,635
Total liabilities	1,017,352			997,508			Total liabilities	1,047,600		989,038
Commitments and Contingencies							Commitments and Contingencies	0		0
STOCKHOLDERS’ DEFICIT:
Common Stock, $0.01 par value, 20,000,000 shares authorized, 9,461,412 and 9,365,768 outstanding on June 27, 2020 and December 28, 2019, respectively	95			94
STOCKHOLDERS’ EQUITY:							STOCKHOLDERS’ EQUITY:
Common Stock, $0.01 par value, 20,000,000 shares authorized, 9,709,613 and 9,462,774 outstanding on July 3, 2021 and January 2, 2021, respectively							Common Stock, $0.01 par value, 20,000,000 shares authorized, 9,709,613 and 9,462,774 outstanding on July 3, 2021 and January 2, 2021, respectively	97		95
Additional paid-in capital	262,587			260,974			Additional paid-in capital	264,963		266,695
Accumulated other comprehensive loss	(34,250		)	(34,563		)	Accumulated other comprehensive loss	(35,490)		(35,992)
Accumulated stockholders’ deficit	(246,680		)	(252,588		)
Total stockholders’ deficit	(18,248		)	(26,083		)
Total liabilities and stockholders’ deficit	$	999,104		$	971,425
Accumulated stockholders’ equity (deficit)							Accumulated stockholders’ equity (deficit)	3,612		(171,706)
Total stockholders’ equity							Total stockholders’ equity	233,182		59,092
Total liabilities and stockholders’ equity							Total liabilities and stockholders’ equity	$	1,280,782	$	1,048,130

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Equity (Deficit)		Stockholders’ Equity Total
	Shares	Amount
Balance, January 2, 2021	9,463	$	95	$	266,695	$	(35,992)	$	(171,706)	$	59,092
Net income	—	—		—		—		61,860		61,860
Foreign currency translation, net of tax	—	—		—		(6)		—		(6)
Impact of pension plan, net of tax	—	—		—		239		—		239
Vesting of restricted stock units	8	—		—		—		—		—
Compensation related to share-based grants	—	—		1,410		—		—		1,410
Repurchase of shares to satisfy employee tax withholdings	(3)	—		(99)		—		—		(99)
Other	—	—		—		17		—		17
Balance, April 3, 2021	9,468	95		268,006		(35,742)		(109,846)		122,513
Net income	—	—		—		—		113,458		113,458
Foreign currency translation, net of tax	—	—		—		6		—		6
Impact of pension plan, net of tax	—	—		—		246		—		246
Vesting of restricted stock units	355	2		—		—		—		2
Compensation related to share-based grants	—	—		1,992		—		—		1,992
Repurchase of shares to satisfy employee tax withholdings	(113)	—		(5,033)		—		—		(5,033)
Other	—	—		(2)		—		—		(2)
Balance, July 3, 2021	9,710	$	97	$	264,963	$	(35,490)	$	3,612	$	233,182

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Stockholders’ Deficit Total
	Shares	Amount
Balance, December 28, 2019	9,366	$	94	$	260,974	$	(34,563)	$	(252,588)	$	(26,083)
Net loss	—	—		—		—		(787)		(787)
Foreign currency translation, net of tax	—	—		—		3		—		3
Impact of pension plan, net of tax	—	—		—		196		—		196
Vesting of restricted stock units	2	—		—		—		—		—
Compensation related to share-based grants	—	—		1,004		—		—		1,004
Repurchase of shares to satisfy employee tax withholdings	(1)	—		(7)		—		—		(7)
Other	—	—		9		(19)		—		(10)
Balance, March 28, 2020	9,367	94		261,980		(34,383)		(253,375)		(25,684)
Net income	—	—		—		—		6,695		6,695
Foreign currency translation, net of tax	—	—		—		17		—		17
Impact of pension plan, net of tax	—	—		—		114		—		114
Vesting of restricted stock units	122	1		—		—		—		1
Compensation related to share-based grants	—	—		854		—		—		854
Repurchase of shares to satisfy employee tax withholdings	(28)	—		(247)		—		—		(247)
Other	—	—		—		2		—		2
Balance, June 27, 2020	9,461	$	95	$	262,587	$	(34,250)	$	(246,680)	$	(18,248)

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six Months Ended
	July 3, 2021		June 27, 2020
Cash flows from operating activities:
Net income	$	175,318	$	5,908
Adjustments to reconcile net income to cash provided by operations:
Provision for (benefit from) income taxes	56,654		(1,588)
Depreciation and amortization	14,545		14,698
Amortization of debt issuance costs	1,032		1,903
Adjustments to debt issuance costs associated with term loan	5,791		0
Gains from sales of property	(1,287)		(525)
Amortization of deferred gains from real estate	(1,967)		(1,967)
Share-based compensation	3,402		1,858
Changes in operating assets and liabilities:
Accounts receivable	(143,574)		(71,770)
Inventories	(83,606)		31,827
Accounts payable	61,937		26,572
Prepaid and other current assets	(4,509)		(3,200)
Other assets and liabilities	(61,135)		9,185
Net cash provided by operating activities	22,601		12,901

Cash flows from investing activities:
Proceeds from sale of assets	2,100		102
Property and equipment investments	(2,900)		(1,752)
Net cash used in investing activities	(800)		(1,650)

Cash flows from financing activities:
Borrowings on revolving credit facilities	638,183		350,236
Repayments on revolving credit facilities	(606,019)		(354,509)
Repayments on term loan	(43,204)		(77,852)
Proceeds from real estate financing transactions	0		78,263
Debt financing costs	(861)		(2,665)
Repurchase of shares to satisfy employee tax withholdings	(5,132)		(254)
Principal payments on finance lease liabilities	(4,671)		(4,583)
Net cash used in financing activities	(21,704)		(11,364)

Net change in cash	97		(113)
Cash at beginning of period	82		11,643
Cash at end of period	$	179	$	11,530

Supplemental Cash Flow Information
Net income tax payment (refunds) during the period	$	52,615	$	(223)
Interest paid during the period	$	18,744	$	24,416

Six Months Ended
June 27, 2020 June 29, 2019
Cash flows from operating activities:
Net income (loss) $ 5,908
$ (418 )
Adjustments to reconcile net income (loss) to cash provided by (used in) operations:
Benefit from income taxes (1,588 ) (175 )
Depreciation and amortization 14,698
14,831
Amortization of debt issuance costs 1,903
1,614
Gains from sales of property (525 ) (9,760 )
Amortization of deferred gain (1,967 ) (1,902 )
Share-based compensation 1,858
1,341
Changes in operating assets and liabilities:
Accounts receivable (71,770 ) (53,608 )
Inventories 31,827
(16,800 )
Accounts payable 26,572
25,672
Prepaid and other current assets (3,200 ) (8,078 )
Other assets and liabilities 9,185
(5,766 )
Net cash provided by (used in) operating activities 12,901
(53,049 )

Cash flows from investing activities:

Acquisition of business, net of cash acquired —
6,009
Proceeds from sale of assets 102
10,758
Property and equipment investments (1,752 ) (1,784 )
Net cash (used in) provided by investing activities (1,650 ) 14,983

Cash flows from financing activities:

Borrowings on revolving credit facilities 350,236
365,519
Repayments on revolving credit facilities (354,509 ) (329,683 )
Repayments on term loan (77,852 ) (31,899 )
Proceeds from real estate financing transactions 78,263
44,822
Debt financing costs (2,665 ) (2,359 )
Repurchase of shares to satisfy employee tax withholdings (254 ) (208 )
Principal payments on finance lease liabilities (4,583 ) (4,403 )
Net cash (used in) provided by financing activities (11,364 ) 41,789

Net change in cash (113 ) 3,723
Cash at beginning of period 11,643
8,939
Cash at end of period $ 11,530
$ 12,662

Supplemental Cash Flow Information
Net income tax (refunds) payments during the period $ (223 ) $ 3,057
Interest paid during the period $ 24,416
$ 27,278

~~BLUELINX HOLDINGS INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT~~

~~(In thousands)~~

~~(Unaudited)~~

Common Stock
Additional
Paid-In Capital

Accumulated
Other
Comprehensive Loss
Accumulated Deficit Stockholders’ Deficit Total
Shares Amount
Balance, December 28, 2019 9,366
$ 94
$ 260,974
$ (34,563 ) $ (252,588 ) $ (26,083 )
Net loss —
—
—
—
(787 ) (787 )
Foreign currency translation, net of tax —
—
—
3
—
3
Unrealized gain from pension plan, net of tax —
—
—
196
—
196
Vesting of restricted stock units 2
—
—
—
—
—
Compensation related to share-based grants —
—
1,004
—
—
1,004
Repurchase of shares to satisfy employee tax withholdings (1 ) —
(7 ) —
—
(7 )
Other —
—
9
(19 ) —
(10 )
Balance, March 28, 2020 9,367
94
261,980
(34,383 ) (253,375 ) (25,684 )
Net income —
—
—
—
6,695
6,695
Foreign currency translation, net of tax —
—
—
17
—
17
Unrealized gain from pension plan, net of tax —
—
—
114
—
114
Vesting of restricted stock units 122
1
—
—
—
1
Compensation related to share-based grants —
—
854
—
—
854
Repurchase of shares to satisfy employee tax withholdings (28 ) —
(247 ) —
—
(247 )
Other —
—
—
2
—
2
Balance, June 27, 2020 9,461
$ 95
$ 262,587
$ (34,250 ) $ (246,680 ) $ (18,248 )

Common Stock
Additional
Paid-In Capital

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

~~See accompanying Notes.~~

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~June 27, 2020~~July 3, 2021

(Unaudited)

1. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim Condensed Consolidated Financial Statements include the accounts of BlueLinx Holdings Inc. and its wholly owned subsidiaries ~~(“the Company”~~(the “Company”). ~~Our independent registered public accounting firm has not audited the accompanying interim financial statements.~~ We derived the condensed consolidated balance sheet at ~~June 27, 2020,~~July 3, 2021, from the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended ~~December 28, 2019~~January 2, 2021 (the “Fiscal ~~2019~~2020 Form 10-K”), as filed with the Securities and Exchange Commission on March ~~11, 2020.~~3, 2021. In the opinion of our management, the condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of our statements of operations and comprehensive ~~loss~~income for the ~~three~~three- and ~~six months~~six-months ended July 3, 2021, and June 27, 2020, ~~and June 29, 2019,~~ our balance sheets at July 3, 2021, and January 2, 2021, our statements of stockholders’ equity (deficit) for the six months ended July 3, 2021, and June 27, 2020, and ~~December 28, 2019,~~ our statements of cash flows for the six months ended July 3, 2021, and June 27, ~~2020, and June 29, 2019, and our statements of stockholders’ deficit for the three and six months ended June 27, 2020, and June 29, 2019.~~2020.

We have condensed or omitted certain notes and other information from the interim condensed consolidated financial statements presented in this report. Therefore, these condensed consolidated interim financial statements should be read in conjunction with the Fiscal ~~2019~~2020 Form 10-K. In addition, certain prior period amounts have been reclassified to conform to the current period's presentation. These reclassifications did not ~~materially~~ impact operating income or consolidated net ~~income (loss).~~income. The results for the ~~three~~three- and ~~six months~~six-months ended ~~June 27, 2020,~~July 3, 2021 are not necessarily indicative of results that may be expected for the full year ending January ~~2, 2021,~~1, 2022, or any other interim period.

We operate on a 5-4-4 fiscal calendar. Our fiscal year ends on the Saturday closest to December 31 of that fiscal year and may comprise 53 weeks in certain years. Our ~~2020~~2021 fiscal year contains 5352 weeks and ends on January ~~2, 2021~~.1, 2022. Fiscal ~~2019~~2020 contained 5253 weeks and ended on ~~December 28, 2019~~.January 2, 2021.

Our financial statements are prepared in conformity with U.S. generally accepted accounting principles ~~(U.S. GAAP)~~(“U.S. GAAP”), which requires us to make estimates based on assumptions about current and, for some estimates, future economic and market conditions, which affect reported amounts and related disclosures in our financial statements. Although our current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from our expectations, which could materially affect our results of operations and financial position. Some of our estimates may be affected by the ongoing novel coronavirus ~~(COVID-19)~~(“COVID-19”) pandemic. The severity, magnitude, and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly changing, and difficult to predict. As a result, our accounting estimates and assumptions may change over time in response to ~~COVID-19.~~the continuing COVID-19 pandemic.

On April 13, 2018, we completed the acquisition of Cedar Creek Holdings, Inc. (“Cedar Creek”). Results for Cedar Creek are included in the consolidated financial information presented herein.

Reclassification of Prior Period Presentation

An adjustment has been made to the Condensed Consolidated Statements of Cash Flows for the six months ended June 27, 2020, and June 29, 2019, to include outstanding payments as part of the change in accounts payable within cash flows from operating activities. In previous periods, this change was included within cash flows from financing activities.

We have reclassified certain costs within the Condensed Consolidated Statements of Operations and Comprehensive Income ~~(Loss)~~ for the ~~three months~~three- and ~~six months~~six-months ended June 27, 2020, ~~and June 29, 2019,~~ from selling, general and administrative to ~~other operating expenses.~~amortization of deferred gains on real estate. These ~~costs primarily~~amounts relate to the ~~integration~~amortization of deferred gains from real estate transactions in 2017 and 2018. Refer to Note 9, Leases. Additionally, we reclassified amounts in other comprehensive income from foreign currency translation, net of tax, to other, for the ~~acquisition of Cedar Creek.~~six-months ended July 3, 2021, and three- and six-months ended June 27, 2020.

We have reclassified certain payables within the Condensed Consolidated Balance Sheets for the year ended January 2, 2021, from other current liabilities to taxes payable. These payables relate to amounts due to various tax authorities.

Recently Adopted Accounting Standards

~~Leases.~~Income Taxes. In ~~2016,~~December 2019, the Financial Accounting Standards Board ~~(“FASB”~~(the “FASB”) issued Accounting Standards Update (“ASU”) No. ~~2016-02, “Leases~~2019-12, “Income taxes (Topic ~~842).~~740): Simplifying the Accounting for Income Taxes.” ~~Topic 842 establishes a new lease~~This ASU simplifies the accounting ~~model. The most significant changes include~~for income taxes by removing certain exceptions to the ~~clarification of the definition of a lease, the requirement for lessees to recognize for all leases a right-of-use asset and a~~general principles in Accounting Standards

~~corresponding lease liability~~Codification (“ASC”) 740 and also clarifies and amends existing guidance to improve consistent application. The amendments in ~~the consolidated balance sheet,~~this standard are effective for interim periods 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. Expenses are recognized in the consolidated statement of income in a manner similar to prior accounting guidance. Lessor accounting under the new standardfiscal years beginning after December 15, 2020. Early adoption is ~~substantially unchanged.~~permitted. We adopted this standard ~~and all related amendments thereto, effective December 30, 2018,~~for the first ~~day~~fiscal quarter of our 2019 fiscal 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.2021. The adoption of ~~Topic 842 had a material impact on our condensed consolidated balance sheets but~~this standard did not have a material impact on ~~our condensed~~the Company’s consolidated ~~statements~~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 post-retirement plans by removing six previously required disclosures and ~~comprehensive loss.~~adding two. The ~~most significant impact was~~ASU also removes the ~~recognition~~disclosure requirements for the effects of ~~right-of-use assets and lease liabilities of $57.5 million~~a one-percentage-point change on the ~~condensed~~assumed health care costs and the effect of this change in rates on service cost, interest cost, and the benefit obligation for postretirement healthcare benefits. We adopted this standard effective for fiscal year 2020. The adoption of this standard did not have a material impact on the Company's consolidated ~~balance sheet as~~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).” In addition to making certain modifications, the standard removed 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 requires 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 are applied prospectively for the most recent interim or annual period presented in the fiscal year of adoption. All other amendments are applied retrospectively to all periods presented. We adopted this standard effective December 29, 2019, the first day of our 2020 fiscal year. The adoption ~~date. Additionally, $1.7 million~~ of ~~deferred gains associated with sale-leaseback transactions was recorded as~~this standard did not have a ~~cumulative-effect adjustment to accumulated deficit.~~material impact on the Company's consolidated financial position, results of operations, or cash flows.

Accounting Standards Effective in Future Periods

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. ASU 2019-10 extended the effective date of ASU 2016-13 to interim and annual periods beginning after December ~~22,~~15, 2022, for certain public business entities, including smaller reporting companies. 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~~

2. Inventories

~~. In August 2018,~~

Our inventories consist almost entirely of finished goods inventory, with an immaterial amount of work-in-process inventory. The cost of all inventories is determined by 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 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.moving average cost method. We have ~~not completed~~included all material charges directly incurred in bringing inventory to its existing condition and location. We evaluate our ~~assessment~~inventory value at the end of each quarter to ensure that inventory, when viewed by category, is carried at the ~~standard, but~~lower of cost and net realizable value, which also considers items that may be considered damaged, excess, and obsolete inventory. For the three- and six-month periods ended July 3, 2021, we ~~do not expect~~recorded a lower of cost or net realizable value reserve of $16.7 million resulting from the ~~adoption to have a material impact on the Company's consolidated financial position, results~~decrease in value of ~~operations, or cash flows.~~

~~Income Taxes~~. In December 2019, the FASB issued ASU No.2019-12, “Income taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU simplifies the accounting for income taxes by removing certain exceptionsour structural lumber inventory related to the ~~general principles~~decline in ASC 740 and also clarifies and amends existing guidance to improve consistent application. The amendments in this standard are effective for interim periods and fiscal years beginning after December 15, 2020. Early adoption is permitted. We are currently assessingwood-based commodity prices during the ~~impact~~second quarter of ~~the new guidance, but do not expect the adoption to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.~~2021.

2.3. Goodwill and Other Intangible Assets

In connection with the acquisition of Cedar Creek, we acquired certain intangible assets. As of ~~June 27, 2020,~~July 3, 2021, 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 27, 2020,~~July 3, 2021, 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 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 value for impairment between annual impairment tests if an event occurs or circumstances change that would indicate the carrying 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. No such indicators were present during the second quarter of fiscal 2021. Our 1 reporting unit has a fair value that exceeds its ~~book~~carrying value ~~but a negative carrying amount of net assets,~~ as of ~~June 27, 2020.~~July 3, 2021.

Definite-Lived Intangible ~~Assets.~~Assets

On ~~June 27, 2020,~~July 3, 2021, the gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets were as follows:

Gross carrying amounts
Accumulated
Amortization
⁽¹⁾
Net carrying amounts
(In thousands)
Customer relationships $ 25,500
$ (8,393 ) $ 17,107
Noncompete agreements 8,254
(4,564 ) 3,690
Trade names 6,826
(5,032 ) 1,794
Total $ 40,580
$ (17,989 ) $ 22,591


Intangible Asset	Weighted Average Remaining Useful Lives	Gross Carrying Amounts		Accumulated Amortization (1)		Net Carrying Amounts
	(Years)	(In thousands)
Customer relationships	9	$	25,500	$	(11,297)	$	14,203
Noncompete agreements	1	8,254		(6,627)		1,627
Trade names	< 1	6,826		(6,826)		0
Total		$	40,580	$	(24,750)	$	15,830

(1) Intangible assets, except customer relationships, are amortized on a straight-line basis. Customer relationships are amortized on a double declining balance method.

During the second quarter of 2021, our trade names intangible asset became fully amortized.

Amortization Expense

~~The weighted average estimated useful life remaining for customer relationships, noncompete agreements, and trade names is approximately 10 years, 2 years, and 1 year, respectively.~~ Amortization expense for ~~the~~our definite-lived intangible assets was ~~$1.8~~$1.2 million and ~~$3.8~~$3.1 million for the three- and six-month periods ended July 3, 2021, respectively. For the three- and six-month periods ended June 27, 2020, ~~respectively. For the three- and six-month periods ended June 30, 2019,~~ amortization expense was ~~$2.0~~$1.8 million and ~~$4.1~~$3.8 million, respectively.

Estimated amortization expense for definite-lived intangible assets for the remaining portion of ~~2020~~2021 and the next ~~four~~five fiscal years is as follows:


Fiscal year	Estimated Amortization
	(In thousands)
2021	$	2,261
2022	2,763
2023	1,807
2024	1,505
2025	1,423
2026	1,423

Estimated Amortization
(In thousands)
2020 $ 3,645
2021 4,973
2022 3,111
2023 1,807
2024 1,505

4. Revenue Recognition

We recognize revenue when ~~control of promised goods or services is transferred~~the following criteria are met: (1) Contract with the customer has been identified; (2) Performance obligations in the contract have been identified; (3) Transaction price has been determined; (4) Transaction price has been allocated 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.~~performance obligations; and (5) When (or as) performance obligations are satisfied.

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 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 remain with us.

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, 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.

The following table presents our revenues disaggregated by revenue 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
Product type	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
	(In thousands)				(In thousands)
Structural products	$	632,724	$	249,542	$	1,095,571	$	490,310
Specialty products	675,189		449,234		1,237,811		870,536
Total net sales	$	1,307,913	$	698,776	$	2,333,382	$	1,360,846

Three Months Ended Six Months Ended
June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
(In thousands) (In thousands)
Structural products $ 249,571
$ 224,528
$ 490,349
$ 421,314
Specialty products 449,205
481,920
870,497
923,835
Total net sales $ 698,776
$ 706,448
$ 1,360,846
$ 1,345,149

The following table presents our revenues disaggregated by sales channel. Warehouse sales are delivered from our warehouses. Reload sales are similar to warehouse sales but are shipped from third-party warehouses where we store owned products to enhance our operating efficiencies. This channel is employed primarily to service strategic customers that would be less economical to service from our warehouses, and to distribute large volumes of imported products from port facilities. Direct sales are shipped from the manufacturer to the customer without our taking physical possession of the inventory and, as a result, typically generate lower margins than our warehouse and reload distribution channels. This distribution channel requires the lowest amount of committed capital and fixed costs. Following the acquisition and integration of Cedar Creek, our reload sales were less distinct from warehouse sales, as they have been classified in prior periods. In addition, from time to time we may also make changes to certain intercompany allocations amongst sales channels. As a result, certain prior period amounts have been reclassified to conform to the current period revenues disaggregated by sales channel. Such reclassifications do not have an impact on total net sales as reported in any period. Sales and usage-based taxes are excluded from revenues.


	Three Months Ended				Six Months Ended
Sales channel	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
	(In thousands)				(In thousands)
Warehouse and reload	$	1,062,149	$	601,279	$	1,911,569	$	1,163,472
Direct	265,280		107,848		456,409		217,129
Customer discounts and rebates	(19,516)		(10,351)		(34,596)		(19,755)
Total net sales	$	1,307,913	$	698,776	$	2,333,382	$	1,360,846

Three Months Ended Six Months Ended
June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
(In thousands) (In thousands)
Warehouse and reload $ 601,279
$ 594,024
$ 1,163,472
$ 1,117,250
Direct 107,848
121,856
217,129
245,212
Customer discounts and rebates (10,351 ) (9,432 ) (19,755 ) (17,313 )
Total net sales $ 698,776
$ 706,448
$ 1,360,846
$ 1,345,149

~~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 outbound shipping and handling activities as an expense.~~

4.5. Assets Held for Sale

NaN of our non-operating properties were designated as held for sale as of June 27, 2020. These properties consisted of 3 former distribution facilities located in the Midwest and Southeast. We vacated these properties and designated them as held for sale during fiscal 2019 due to their proximity to other locations after the Cedar Creek acquisition. As of ~~June 27, 2020,~~July 3, 2021, and ~~December 28, 2019,~~January 2, 2021, the net book value of total assets held for sale was ~~$1.1~~$0.9 million and $1.3 million, respectively, and was included in “Other current assets” in our Condensed Consolidated Balance Sheets. Only 1 of our non-operating properties was designated as “held for sale” as of July 3, 2021. This property is a former distribution facility located in Houston, Texas. We vacated this property and designated it as held for sale during fiscal 2020. We continue to actively market ~~all properties that are designated as held for sale,~~this property, and we plan to sell ~~these properties~~this property within the next 12 months.

5.6. Long-Term Debt

As of ~~June 27, 2020,~~July 3, 2021, and ~~December 28, 2019,~~January 2, 2021, long-term debt consisted of the following:

June 27, 2020 December 28, 2019
(In thousands)
Revolving Credit Facility ⁽¹⁾
$ 322,223
$ 326,496
Term Loan Facility ⁽²⁾
68,822
146,674
Finance lease obligations ⁽³⁾
272,580
198,011
663,625
671,181
Unamortized debt issuance costs (10,989 ) (12,555 )
652,636
658,626
Less: current maturities of long-term debt 8,134
8,662
Long-term debt, net of current maturities $ 644,502
$ 649,964


Debt categories	July 3, 2021		January 2, 2021
	(In thousands)
Revolving Credit Facility (1)	$	320,410	$	288,247
Term Loan Facility (2)	0		43,204
Finance lease obligations (3)	279,196		273,118
	599,606		604,569
Unamortized debt issuance costs	(2,184)		(9,010)
	597,422		595,559
Less: current maturities of long-term debt	6,379		6,846
Long-term debt, net of current maturities	$	591,043	$	588,713

(1) The average effective interest rate was 2.5 percent and 2.8 percent for the quarters ended July 3, 2021 and January 2, 2021, respectively.

(2)The ~~weighted~~ average interest rate, ~~was 2.6 percent~~exclusive of fees and ~~3.9 percent as of June 27, 2020 and December 28, 2019, respectively.~~

⁽²⁾ ~~The weighted average interest rate~~prepayment premiums, was 8.0 percent ~~and 8.7 percent as of June 27, 2020 and December 28, 2019, respectively.~~for the quarter ended January 2, 2021.

⁽³⁾ Refer to Note 8,9, Leases, for interest rates associated with finance lease obligations.

Revolving Credit Facility

We have a revolving credit facility that we entered into in April 2018 with Wells Fargo Bank, National Association, as administrative agent (“the Agent”), and certain other financial institutions party thereto (the “Revolving Credit Facility”), with a maturity date of October 10, 2022. The Revolving Credit facility includes a committed senior secured asset-based 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. Our obligations under the Revolving Credit Facility are secured by a security interest in substantially all of our assets other than real property.

Loans under the Revolving Credit Facility bear interest 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 our 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 our excess availability for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on the base rate.

~~We amended the~~As of July 3, 2021, we had outstanding borrowings of $320.4 million and excess availability of $276.2 million under our Revolving Credit ~~Facility on~~Facility. As of January ~~31, 2020, to provide that (i)~~2, 2021, we had outstanding borrowings of $288.2 million and excess availability of $184.3 million under our Revolving Credit Facility. Our average effective interest rate under the ~~“Seasonal Period” will run from November 15, 2019, through July 15, 2020,~~facility was 2.5 percent and 2.8 percent for the ~~calendar year 2019,~~quarters ended July 3, 2021 and ~~from December 15 of each calendar year through April 15 of each immediately succeeding calendar year for~~January 2, 2021, respectively. For the ~~calendar year~~quarter ended June 27, 2020, and thereafter, and (ii) the measurement period in the definition of “Cash Dominion Event” will be five consecutive business days instead of three consecutive business days. The adjustment to the Seasonal Period better aligns advance ratesour average effective interest rate under the Revolving Credit Facility ~~with the seasonality in our business and provided us with an enhanced borrowing base and greater liquidity through July 15, 2020.~~

As of June 27, 2020, we had outstanding borrowings of $322.2 million, excess availability of $138.1 million, and a weighted average interest rate of 2.6 percent. As of December 28, 2019, our principal balance was ~~$326.5 million, excess availability was $80.0 million, and our weighted average interest rate was 3.9~~3.1 percent.

The Revolving Credit Facility contains certain financial and other covenants, and our right to borrow under the Revolving Credit Facility is conditioned upon, among other things, our compliance with these covenants. We were in compliance with all covenants under the Revolving Credit Facility as of ~~June 27, 2020.~~July 3, 2021.

On August 2, 2021, we entered into a Second Amendment (“the Amendment”) to the Revolving Credit Facility. The Amendment amends the Revolving Credit Facility to, among other things, (i) extend the maturity date of the facility from October 10, 2022, to August 2, 2026, (ii) reduce the interest rate on borrowings under the facility, (iii) amend the borrowing base to include a certain portion of the assets of acquired companies prior to the conduct of a field exam or appraisals thereof by

Wells Fargo, (iv) modify certain definitions and various affirmative and negative covenants to provide additional flexibility for the Company, and (v) add customary LIBOR replacement language. For more information on the Amendment, refer to Note 14, Subsequent Event.

Term Loan Facility

We ~~have~~previously had a term loan facility that we entered into in April 2018 with HPS Investments Partners, LLC, as administrative and collateral agent, and certain other financial institutions party thereto (the “Term Loan Facility”), with a maturity date of

October 13, 2023. The Term Loan Facility ~~provides~~provided for a senior secured first lien loan facility in an initial aggregate principal amount of $180 million and iswas secured by a security interest in substantially all of our assets.

~~The~~

As of January 2, 2021, we had outstanding borrowings of $43.2 million under the Term Loan ~~Facility requires monthly interest payments, and also requires quarterly principal payments of $402,282, in arrears, with~~Facility. On April 2, 2021, we repaid the remaining ~~balance due on the maturity date. The Term Loan Facility also requires certain mandatory prepayments of~~ outstanding loans, subject to certain exceptions. The Term Loan Facility requires maintenance of a total net leverage ratio of 8.75 to 1.00 for the quarter ending June 27, 2020 and the third quarter of 2020, and 5.25 to 1.00 for the fourth quarter of 2020; ratio levels generally reduce over the remaining termprincipal balance of the Term Loan ~~Facility. We were in compliance with all covenants~~Facility, and, as a result, as of July 3, 2021, we had 0 outstanding borrowings under the Term Loan Facility, aswhich has been extinguished. In connection with our repayment of ~~June 27, 2020.~~

~~Borrowings under~~ the outstanding principal balance in full on April 2, 2021, we expensed $5.8 million of debt issuance costs during the first quarter of 2021 that we had been amortizing in connection with our former Term Loan ~~Facility may be made~~Facility. These costs are included within interest expense, net, on the Condensed Consolidated Statements of Operations and reported separately as ~~Base Rate Loans or Eurodollar Rate Loans. The Base Rate Loans will bear~~an adjustment to net income in our Condensed Consolidated Statements of Cash Flows. Our average 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; plus (ii) 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.

We amended the Term Loan Facility on December 31, 2019, to extend the period for satisfying the designated principal balance level required to maintain the modified total net leverage ratio covenant levels for the 2019 fourth and subsequent quarters thereunder, which was satisfied on January 31, 2020, through repayments from proceeds from the real estate financing transactions described in Note 8. On February 28, 2020, we further amended the Term Loan Facility to provide that we would not be subject to the facility’s total net leverage ratio covenant from and after the time, and then for so long as, the principal balance level under the facility, ~~is less than $45 million. On April 1, 2020, we amended the Term Loan Facility to, among other things, modify the total net leverage ratio covenant levels~~exclusive of fees and prepayment premiums, was approximately 8.0 percent for the ~~2020 second and third quarters. All other total net leverage ratio covenant levels for prior and future quarters were unchanged.~~quarter ended January 2, 2021.

As of June 27, 2020, we had outstanding borrowings of $68.8 million under the Term Loan Facility and an interest rate of 8.0 percent per annum. As of December 28, 2019, our principal balance was $146.7 million with an interest rate of 8.7 percent per annum. The decrease in the outstanding borrowings was due to net proceeds of the real estate financing transactions described in Note 8 being applied to the Term Loan Facility.

Finance Lease Obligations

Our finance lease liabilities consist of leases related to equipment and vehicles, and real estate, with the majority of those finance leases related to real estate. For more information on our finance lease obligations, refer to Note 8,9, Leases.

6.7. Net Periodic Pension ~~(Benefit) Cost~~Benefit

The following table shows the components of our net periodic pension ~~(benefit) cost:~~benefit:


	Three Months Ended				Six Months Ended
Pension-related items	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
	(In thousands)				(In thousands)
Service cost (1)	$	0	$	0	$	0	$	0
Interest cost on projected benefit obligation	505		723		1,010		1,446
Expected return on plan assets	(1,140)		(1,210)		(2,280)		(2,420)
Amortization of unrecognized gain	321		263		642		526
Net periodic pension benefit	$	(314)	$	(224)	$	(628)	$	(448)

Three Months Ended Six Months Ended
June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
(In thousands) (In thousands)
Service cost $ —
$ 48
$ —
$ 161
Interest cost on projected benefit obligation 723
973
1,446
2,018
Expected return on plan assets (1,210 ) (1,295 ) (2,420 ) (2,489 )
Amortization of unrecognized loss 263
279
526
580
Net periodic pension (benefit) cost $ (224 ) $ 5
$ (448 ) $ 270

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

The net periodic pension benefit is included in other expense (income), net, in our Condensed Consolidated Statement of Operations and Comprehensive Income.

8. Stock Compensation

~~Stock Compensation Expense~~

During the ~~three months~~three- and six-month periods ended July 3, 2021, we incurred stock compensation expense of $2.0 million and $3.4 million, respectively. For the three- and six-month periods ended June 27, 2020, ~~and June 29, 2019,~~ we incurred stock compensation expense of $0.9 million and ~~$0.6 million, respectively. During the six months ended June 27, 2020, and June 29, 2019, we incurred stock compensation~~

~~expense of~~ $1.9 ~~million and $1.3 million, respectively.~~million. The increase in our stock compensation expense for the three- and six-month periods isare attributable to having more outstanding equity-based awards during ~~these periods~~this period than in the prior year and the vesting of awards in connection with the departure of certain employees.

We have operating and finance leases for certain of our distribution facilities, office space, land, mobile fleet, and equipment. Many of our leases are non-cancelable and typically have a defined initial lease term, and some provide options to renew at our election ~~to renew~~ for specified periods of time. The majority of our leases have remaining lease terms of 1 year to 15 years, some of which include ~~one~~1 or more options to extend the leases for 5 years. Our leases generally provide for fixed annual rentals. Certain of our leases include provisions for escalating rent based on, among other things, contractually defined increases and/or

changes in the Consumer Price Index (“CPI”). The known changes to lease payments are included in the lease liability at lease commencement. Unknown changes related to CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. In addition, a subset of our vehicle lease cost is considered variable. Some of our leases require us to pay taxes, insurance, and maintenance expenses associated with the leased assets. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We determine if an arrangement is a lease at inception and assess lease classification as either operating or finance at lease inception or modification. Operating lease right-of use (“ROU”) assets and liabilities are presented separately on the condensed consolidated balance sheets. Finance lease ROU assets are included in property and equipment and the finance lease obligations are presented separately in the condensed consolidated balance sheet. 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. We have also made the accounting policy election to not separate lease components from non-lease components related to our mobile fleet asset class.

Finance Lease Liabilities

Our finance lease liabilities consist of leases related to equipment and vehicles, and real estate. As noted in the table below, a majority of our finance leases, formally known as capital leases, relate to real estate.

During 2017 and 2018, we entered into real estate financing transactions on warehouse facilities in Tampa, FL; Ft. Worth, TX; Bellingham, PA; Frederick, MD; Lawrenceville, GA; and Raleigh, NC. These transactions were completed pursuant to sale-leaseback arrangements, and upon their completion, we entered into long-term leases on the properties for initial terms of 15 years with multiple 5-year renewal options, with one having a single 10-year renewal option. We accounted for these transactions in accordance with the ~~Financial Accounting Standards Board’s (“FASB”)~~FASB’s Accounting Standards Codification (“ASC”) Topic 840, which was the lease accounting standard in effect at the inception of these arrangements. We have recorded these transactions as finance lease liabilities on our balance sheet. As of ~~June 27, 2020~~July 3, 2021, and ~~December 28, 2019,~~January 2, 2021, total unrecognized deferred gains related to these transactions were ~~$84.0~~$80.1 million and ~~$85.8~~$82.0 million, respectively.

During 2019, we entered into real estate financing transactions on 2 warehouse facilities. On May 19, 2019, we completed a real estate financing transaction on a warehouse facility in University Park, IL for net proceeds of $21.8 million. On June 20, 2019, we completed a real estate financing transaction on a warehouse facility in Yulee, FL for net proceeds of $13.3 million. These ~~two~~2 transactions were completed pursuant to sale-leaseback arrangements, and upon their completion, we entered into long-term leases on the properties for initial terms of 15 years with multiple 5-year renewal options. Gross proceeds of these transactions were $45.0 million.

During fiscal 2020, we completed several real estate financing transactions. On December 31, 2019, we completed real estate financing transactions on warehouse facilities in Madison, TN; Kansas City, MO; Richmond, VA; and Bridgeton, MO for aggregate net proceeds of $27.2 million. On January 31, 2020, we completed real estate financing transactions on warehouse facilities in Charlotte, NC; Memphis, TN; Independence, ~~KY:~~KY; San Antonio, TX; Portland, ME; Denville, NJ; Yaphank, NY; Pensacola, FL; and Tallmadge, OH for aggregate net proceeds of $34.1 million. On February 28, 2020, we completed a real estate financing transaction on a warehouse facility in Elkhart, IN for net proceeds of $7.5 million. These transactions were completed pursuant to sale-leaseback arrangements, and upon their completion, we entered into long-term leases on the properties for initial terms from 15 years to 18 years with multiple 5-year renewal options. Gross proceeds of these transactions were $78.3 million.

We determined that the transactions in fiscal 2019 and ~~in the current fiscal year~~2020 did not qualify as sales in accordance with ASC 842. Therefore, for accounting purposes, the transactions were not accounted for as sale-leaseback transactions, and no gain or loss was recorded. We determined that these leases qualified for finance lease treatment and recorded them accordingly. The net book value of the assets related to these transactions remains on our books as property and equipment and we continue to depreciate the assets over their remaining useful lives.

During the first and second quarters of 2021, we recorded finance leases of $10.2 million and $0.3 million, respectively, related to new tractors put into service as part of our mobile fleet. These leases were entered into for a period of four years each.

Additionally, during the second quarter of 2021, we recorded operating leases totaling $5.0 million related to warehouse facilities in Milwaukee, WI, and Statesville, NC. Each lease was entered into for an initial period of ten years, and has 2 five-year renewal options.

A portion of our real estate lease cost is generally subject to annual changes in the Consumer Price Index (“CPI”). The known changes to lease payments are included in the lease liability at lease commencement. Unknown changes related to CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. In addition, a subset of our vehicle lease cost is considered variable.

The following table presents our assets and liabilities related to our leases as of ~~June 27, 2020~~July 3, 2021 and ~~December 28, 2019:~~January 2, 2021:

Finance lease right-of-use assets ⁽¹⁾

Finance lease right-of-use assets (1)

⁽¹⁾ Finance lease right-of-use assets are presented net of accumulated amortization of ~~$51.3~~$66.8 million and ~~$30.8~~$58.6 million as of ~~June 27, 2020~~July 3, 2021 and ~~December 28, 2019,~~January 2, 2021, respectively.

The components of lease expense were as follows:

Three Months Ended Six Months Ended
June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
(In thousands) (In thousands)
Operating lease cost: $ 2,977
$ 2,991
$ 6,098
$ 6,135
Finance lease cost:
Amortization of right-of-use assets $ 3,513
$ 3,220
$ 6,878
$ 6,117
Interest on lease liabilities 6,557
4,130
12,721
7,378
Total finance lease costs $ 10,070
$ 7,350
$ 19,599
$ 13,495


	Three Months Ended				Six Months Ended
Components of lease expense	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
	(In thousands)				(In thousands)
Operating lease cost:	$	2,934	$	2,977	$	5,984	$	6,098
Finance lease cost:
Amortization of right-of-use assets	$	4,210	$	3,513	$	8,197	$	6,878
Interest on lease liabilities	6,241		6,557		12,399		12,721
Total finance lease costs	$	10,451	$	10,070	$	20,596	$	19,599

Supplemental cash flow information related to leases was as follows:


	Three Months Ended				Six Months Ended
Cash flow information	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
	(In thousands)				(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,807	$	2,860	$	5,372	$	5,663
Operating cash flows from finance leases	6,241		6,557		12,399		12,721
Financing cash flows from finance leases	$	2,542	$	2,403	$	4,671	$	4,583
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	5,106	$	0	$	5,106	$	0
Finance leases	$	338	$	0	$	10,549	$	0

Three Months Ended Six Months Ended
June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019

(In thousands)
(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
   Operating cash flows from operating leases $ 2,860
$ 3,064
$ 5,633
$ 5,967
   Operating cash flows from finance leases 6,557
3,236
12,721
6,484
   Financing cash flows from finance leases 2,403
2,216
4,583
4,403
Right-of-use assets obtained in exchange for lease obligations
   Operating leases $ —
$ —
$ —
$ —
   Finance leases —
3,462
—
4,250

Supplemental balance sheet information related to leases was as follows:

June 27, 2020 December 28, 2019
(In thousands)
Finance leases
   Property and equipment $ 204,431
$ 172,720
   Accumulated depreciation (51,255 ) (30,798 )
Property and equipment, net $ 153,176
$ 141,922
Weighted Average Remaining Lease Term (in years)
   Operating leases 11.66
11.71
   Finance leases 16.58
17.12
Weighted Average Discount Rate
   Operating leases 9.40 % 9.34 %
   Finance leases 9.75 % 10.11 %


Balance sheet information	July 3, 2021			January 2, 2021
	(In thousands)
Finance leases
Property and equipment	$	219,264		$	207,147
Accumulated depreciation	(66,754)			(58,586)
Property and equipment, net	$	152,510		$	148,561
Weighted Average Remaining Lease Term (in years)
Operating leases	10.94			11.14
Finance leases	16.19			16.08
Weighted Average Discount Rate
Operating leases	8.98		%	9.28		%
Finance leases	9.83		%	9.87		%

The major categories of our finance lease liabilities as of ~~June 27, 2020~~July 3, 2021 and ~~December 28, 2019~~January 2, 2021 are as follows:

June 27, 2020 December 28, 2019
(In thousands)
Equipment and vehicles $ 29,162
$ 32,471
Real estate 243,418
165,540
Total finance leases $ 272,580
$ 198,011


Category	July 3, 2021		January 2, 2021
	(In thousands)
Equipment and vehicles	$	36,080	$	29,434
Real estate	243,116		243,684
Total finance leases	$	279,196	$	273,118

As of ~~June 27, 2020,~~July 3, 2021, maturities of lease liabilities were as follows:


Fiscal year	Operating leases		Finance leases
	(In thousands)
2021	$	10,429	$	16,744
2022	9,589		32,495
2023	8,349		32,191
2024	7,877		31,575
2025	7,878		27,850
Thereafter	43,766		380,072
Total lease payments	$	87,888	$	520,927
Less: imputed interest	(38,055)		(241,731)
Total	$	49,833	$	279,196

Operating leases Finance leases
(In thousands)
2020 $ 11,109
$ 15,385
2021 8,821
29,150
2022 7,876
28,449
2023 6,794
28,121
2024 6,441
27,793
Thereafter 47,514
408,524
Total lease payments $ 88,555
$ 537,422
Less: imputed interest (37,753 ) (264,842 )
Total $ 50,802
$ 272,580

On ~~December 28, 2019,~~January 2, 2021, maturities of lease liabilities were as follows:


Fiscal year	Operating leases		Finance leases
	(In thousands)
2021	$	11,215	$	30,159
2022	9,161		29,453
2023	8,400		29,189
2024	7,283		28,649
2025	7,392		28,102
Thereafter	44,092		380,511
Total lease payments	$	87,543	$	526,063
Less: imputed interest	(36,502)		(252,945)
Total	$	51,041	$	273,118

Operating leases Finance leases
(In thousands)
2020 $ 11,348
$ 24,002
2021 10,111
23,052
2022 8,048
22,230
2023 7,330
21,854
2024 6,413
21,380
Thereafter 50,901
327,439
Total lease payments $ 94,151
$ 439,957
Less: imputed interest (39,743 ) (241,946 )
Total $ 54,408
$ 198,011

9.10. 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 and receivables recorded for expected receipts from settlements. Management further believes that, while the ultimate outcome of one or more of these matters could be material to our operating results in any given quarter, it will not have a materially adverse effect on our consolidated financial condition, our results of operations, or our cash flows.

Collective Bargaining Agreements

As of ~~June 27, 2020,~~July 3, 2021, we ~~had 2,000~~employed approximately 2,100 employees and less than 1 percent of our employees are employed on a ~~full-time basis, and approximately 21~~part-time basis. Approximately 23 percent of our employees were represented by various local labor ~~union~~unions with terms and conditions of employment subject to Collective Bargaining Agreements (“CBAs”)~~. Approximately 1~~ negotiated between the Company and local labor unions. NaN CBAs covering approximately 6 percent of our employees ~~are covered by three CBAs that~~ are up for renewal in fiscal ~~2020. As of June 27, 2020, one of these CBAs was renewed and~~2021, with 2 having been successfully renegotiated earlier this year. We expect to renegotiate the remaining ~~two are expected to be renegotiated later this~~CBAs by the end of the year.

~~10.~~11. Accumulated Other Comprehensive Loss

Comprehensive ~~loss~~income includes both net income ~~(loss)~~ and other comprehensive ~~income (loss).~~income. Other comprehensive income ~~(loss)~~ results from items deferred from recognition into our Condensed Consolidated Statements of Operations and Comprehensive ~~Loss.~~Income. 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 months ended ~~June 27, 2020,~~July 3, 2021, were as follows:

Foreign currency, net
of tax

Defined
benefit pension
plan, net of tax

Other,
net of tax
Total Accumulated Other Comprehensive Loss
(In thousands)
December 28, 2019, beginning balance $ 666
$ (35,441 ) $ 212
$ (34,563 )
Other comprehensive income, net of tax ⁽¹⁾
20
310
(17 ) 313
June 27, 2020, ending balance, net of tax $ 686
$ (35,131 ) $ 195
$ (34,250 )


	Foreign currency, net of tax		Defined benefit pension plan, net of tax		Other, net of tax		Total Accumulated Other Comprehensive Loss
	(In thousands)
January 2, 2021, beginning balance, net of tax	$	660	$	(36,855)	$	203	$	(35,992)
Other comprehensive income, net of tax (1)	0		485		17		502
July 3, 2021, ending balance, net of tax	$	660	$	(36,370)	$	220	$	(35,490)

(1) For the six months ended ~~June 27, 2020,~~July 3, 2021, the actuarial ~~loss~~gain recognized in the Condensed Consolidated Statements of Operations and Comprehensive ~~Loss~~Income as a component of net periodic pension ~~cost~~benefit was ~~$0.5~~$0.7 million, net of tax of ~~$0.2 million~~.$0.2 million. Please see Note 6,7, Net Periodic Pension ~~(Benefit) Cost~~Benefit, for further information.

Our effective tax rate for the three months ended July 3, 2021, and June 27, 2020, ~~and June 29, 2019,~~ was ~~33.9~~23.5 percent and ~~27.2~~33.9 percent, respectively. Our effective tax rate for the ~~three~~six months ended July 3, 2021, and June 27, 2020, was 24.4 percent and (36.8) percent, respectively.

Our effective tax rate for the three- and six-months ended July 3, 2021 was impacted by ~~(i) recording discrete tax expense of $0.4 million for a shortfall on the vesting of our restricted stock units, (ii)~~ the permanent addback of certain nondeductible expenses, including meals and entertainment and ~~officer’s~~executive compensation, ~~and (iii)~~slightly offset by the ~~effect~~partial release of the ~~partial~~ valuation allowance for ~~separate company~~ state net operating loss carryforwards we anticipate being able to utilize based on our taxable income through the end of the second quarter of fiscal 2021, combined with a benefit from the vesting of restricted stock units, which occurred during the period.

Our effective tax ~~losses~~rate for the three- and ~~previously~~six-months ended June 27, 2020 was primarily impacted by a discrete tax benefit of $3.9 million resulting from the release of the valuation allowance associated with nondeductible interest expense under Section 163(j) of the Internal Revenue Code (“IRC”). as a result of changes allowed under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act that was enacted on March 27, 2020 which raised the allowable percentage of deductible interest from 30 percent to 50 percent of adjusted taxable income. Our effective tax rate for the ~~three months ended June 29, 2019,~~same periods was further 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, we recorded discrete tax~~losses, combined with expense ~~of $0.2 million for a shortfall on~~related to the vesting of ~~our~~ restricted stock ~~units, which was offset by a $0.2 million discrete tax benefit for claiming tax credits.~~units.

~~Our effective tax rate was (36.8) percent and 29.5 percent, for~~Deferred Tax Assets

Quarterly, we assess the first six months of fiscal 2020 and 2019, respectively. Our effective tax rate for the six months ended June 27, 2020 was impacted by (i) the discrete tax benefit of $3.9 million resulting from the release of the valuation allowance associated with the nondeductible interest expense under Section 163(j) of the IRC as a result of changes under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was enacted on March 27, 2020, and contained, among other things, several tax-based measures meant to counteract the effects of the COVID-19 pandemic, to increase the allowable percentage from 30 percent of adjusted taxable income to 50 percent of adjusted taxable income, (ii) recording discrete tax expense of $0.4 million for a shortfall on the vestingcarrying value of our restricted stock units, (iii) the permanent addback of certain nondeductible expenses, including meals and entertainment and nondeductible compensation, and (iv) the effect of the partial valuation allowance for separate company state income tax losses and previously nondeductible interest expense under Section 163(j) of the IRC. Our effective tax rate for the six months ended June 29, 2019, was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation and the effect of the valuation allowance for separate company state income tax losses. In addition, during the first six months of fiscal 2019, we recorded discrete tax expense of $0.2 million for a shortfall on vesting of our restricted stock units, which was offset by a $0.2 million discrete tax benefit for claiming state tax credits.

~~Our financial statements contain certain~~ deferred tax assets which primarily resulted from tax benefits associated with the loss before income taxes in prior years, as well as net deferred income tax assets resulting from other temporary differences related to certain reserves, pension obligations, and differences between book and tax depreciation and amortization. We record a valuation allowance against our net deferred tax assets when we determine that, based onfor impairment by evaluating the weight of available evidence it is more likely than not that our net deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences can be carried forward under tax law. Currently, we have a valuation allowance that covers (i) our separate company state net operating loss carryforwards and (ii) disallowed interest calculated pursuant to the changes made by the Tax Cuts and Jobs Act of 2017, as adjusted by the CARES Act.

Atat the end of each ~~quarter, we evaluate~~fiscal quarter. In our evaluation of the weight of available evidence ~~(both positive and negative). We~~at the end of the current quarter, we considered the recent reported income ~~generated~~ in the current quarter, as well as the reported income for 2020 and ~~prior years (adjusted~~the reported losses for ~~unusual one-time items)~~2019 and 2018, which resulted in a three-year cumulative income ~~generated in 2017, including~~situation as positive evidence which carried substantial weight. While this was substantial, it was not the ~~prior year income from Cedar Creek.~~only evidence we evaluated. We also considered evidence related to the four sources of taxable income to determine whether such positive evidence outweighed the negative evidence. The evidence considered included:

•future taxable income exclusive of reversing temporary differences and carryforwards;

•taxable income in prior carryback years, if carryback is permitted under the tax law; and

•tax planning strategies.

At the end of the first two fiscal quarters of 2020 and 2019, in our evaluation of the weight of available evidence, we concluded that the weight of the positive evidence outweighed the negative evidence. In addition to the positive evidence discussed above, we considered as positive evidence forecasted ~~future~~ taxable income, the detail scheduling of ~~the~~ timing of the reversal of our deferred tax assets and liabilities, and the evidence from business and tax planning ~~strategies described below. Although we believe~~strategies. As of July 3, 2021, in our ~~estimates are reasonable, the ultimate determination~~evaluation of the ~~appropriate amount~~weight of ~~valuation allowance involves significant judgments. We believe~~available evidence, we concluded that ~~the change in control under IRC Section 382 resulting from the completion of the secondary offering on October 23, 2017, will~~our net deferred tax assets were not cause any of our federal net operating losses to expire unused because management has been effectively implementing a real estate strategy involving the sale and leaseback of real estate. This strategy is further supported by the transactions involving four warehouses in January 2018 and two warehouses during 2019. In the first quarter of 2020, the Company executed three more sale and leaseback transactions, involving a total of fourteen warehouse locations. Additionally, the acquisition of Cedar Creek did not generate any limitations under IRC Section 382 on Cedar Creek’s tax assets. We will continue to monitor any changes to our results of operations that may affect our estimates, including any impact of COVID-19 if applicable.impaired.

~~12.~~13. Income ~~(Loss)~~ per Share

We calculate basic income ~~(loss)~~ per share by dividing net income ~~(loss)~~ by the weighted average number of common shares outstanding. We calculate diluted income ~~(loss)~~ per share using the treasury stock method, by dividing net income ~~(loss)~~ 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 the six month period ended June 27, 2019, 0.1 million of incremental shares were excluded from the computation of diluted weighted averages outstanding, because their effect would be anti-dilutive.

The reconciliation of basic net income ~~(loss)~~ and diluted net income ~~(loss)~~ per common share for the three- and six-month periods ended July 3, 2021, and June 27, 2020, ~~and June 29, 2019,~~ were as follows:


	Three Months Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
	(In thousands, except per share data)				(In thousands, except per share data)
Net income	$	113,458	$	6,695	$	175,318	$	5,908

Weighted average shares outstanding - basic	9,549		9,395		9,507		9,381
Dilutive effect of share-based awards	226		7		150		2
Weighted average share outstanding - diluted	9,775		9,402		9,657		9,383

Basic income per share	$	11.88	$	0.71	$	18.44	$	0.63
Diluted income per share	$	11.61	$	0.71	$	18.15	$	0.63

Three Months Ended Six Months Ended
June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
(In thousands, except per share data) (In thousands, except per share data)
Net income (loss) $ 6,695
$ 6,301
$ 5,908
$ (418 )

Weighted-average shares outstanding - basic 9,395
9,351
9,381
9,344
Dilutive effect of share-based awards 7
8
2
—
Weighted-average shares outstanding - diluted 9,402
9,359
$ 9,383
$ 9,344

Basic income (loss) per share $ 0.71
$ 0.67

$ 0.63

$ (0.04 )
Diluted income (loss) per share $ 0.71
$ 0.67

$ 0.63

$ (0.04 )

14. Subsequent Event

On August 2, 2021, we amended the Revolving Credit Facility by entering into a Second Amendment (the “Amendment”) to the Amended and Restated Credit Agreement among the Company, certain of the Company’s subsidiaries, as borrowers (together with the Company, the “Borrowers”) or guarantors thereunder, Wells Fargo Bank, National Association, in its capacity as administrative agent (“Agent”), and certain other financial institutions party thereto (as amended, supplemented or modified from time to time, the “Credit Agreement”).

The Amendment amends the Credit Agreement to, among other things, (i) extend the maturity date of the Revolving Credit Facility from October 10, 2022, to August 2, 2026, (ii) amend the Borrowing Base (as such term is defined in the Credit Agreement) to include a certain portion of the assets of acquired companies prior to the conduct of a field exam or appraisals thereof by the Agent, (iii) modify certain definitions and various affirmative and negative covenants in the Credit Agreement to provide additional flexibility for the Company, and (iv) add customary LIBOR replacement language.

In addition, as amended, the Credit Agreement provides for interest on borrowings under the Revolving Credit Facility at a rate per annum equal to (i) LIBOR plus a margin ranging from 1.25 percent to 1.75 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 Agent, for loans based on LIBOR, or (ii) the base rate plus a margin ranging from 0.25 percent to 0.75 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 Agent, for loans based on the base rate, reflecting a decrease of 0.50 percent to the upper limit of each respective margin tier.

All other material terms of the Credit Agreement, as amended, remain unchanged.

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

~~We are~~BlueLinx is a leading U.S. wholesale distributor of residential and commercial building products with both branded and ~~industrial products in the U.S with~~private-label stock keeping units (“SKUs”). With a ~~combination of~~strong market position, ~~and~~broad geographic coverage ~~the buying power of certain centralized procurement,~~footprint servicing 40 states, and the strength of a locally focused sales ~~force.~~force, we distribute our comprehensive range of products to over 15,000 national, regional, and local dealers, specialty distributors, national home centers, and manufactured housing customers. BlueLinx is able to provide a wide range of ~~value-added~~value added services and solutions to our customers and suppliers. We are headquartered in Georgia, with executive offices located at 1950 Spectrum Circle, Marietta, Georgia, and we operate our distribution business through a broad network of distribution centers. ~~We serve many major metropolitan areas in the U.S.~~

As a “two-step” wholesale distributor of building products, BlueLinx stocks products from leading manufacturers and ~~deliver building and industrial~~supplies these products to a ~~variety~~broad range of ~~wholesale~~customers, including lumber yards, dealers, home centers, and ~~retail customers.~~ hardware stores. These customers then serve residential and commercial builders and contractors in their respective geographic areas. BlueLinx plays a critical role in enabling its lumber yard, dealer, and home center customers to offer a broad range of products and brands, as most of BlueLinx’s customers do not have the capability to purchase and warehouse directly from the manufacturers for such a large set of SKUs. Similarly, BlueLinx provides value to its manufacturing partners by enabling access to the fragmented network of lumber yards and dealers that the manufacturers could not adequately serve directly. Our place in this distribution model of building products provides easy access to the marketplace for our suppliers and the value proposition of rapid delivery on an as-needed basis to our customers from our network of warehouse facilities. In addition to its broad portfolio of building products, BlueLinx also offers a wide array of custom cutting and fabrication services for the wood products industry.

We distribute products in two principal categories: ~~structural~~specialty products and ~~specialty~~structural products. Specialty products include primarily engineered wood products, moulding, siding and trim, cedar, metal products (excluding rebar and remesh), and insulation. Specialty products represented between 49 percent and 60 percent of our net sales over the past twelve months. Structural products include primarily plywood, oriented strand board, rebar and remesh, lumber, spruce and other wood products primarily used for structural support in construction projects. Structural products represented between 3140 percent and 37 percent of our net sales over the past twelve months. Specialty products include primarily engineered wood products, moulding, siding and trim, cedar, metal products (excluding rebar and remesh), and insulation. Specialty products represented between 63 percent and 6951 percent of our net sales over the past twelve months.

On April 13, 2018, we completed the acquisition of Cedar ~~Creek.~~Creek Holdings, Inc. (“Cedar Creek”). Cedar Creek was established in 1977 as a wholesale building materials distribution company that distributed wood products across the United States. Its products included specialty lumber, oriented strand board, siding, cedar, spruce, engineered wood products, and other building products. This acquisition allowed us to expand our product offerings, while maintaining our existing geographical footprint.

Recent Developments - Update on Impact of COVID-19 Pandemic

AOn March 11, 2020, a novel strain of coronavirus ~~(COVID-19) was first identified in December 2019 in certain Far East and European countries. On March 11, 2020, the spread of COVID-19~~(“COVID-19”) was declared a global pandemic by the World Health ~~Organization, with a high concentration of cases in the United States.~~Organization. In response to the pandemic, governmental authorities around the world implemented numerous measures to combat the virus, such as travel bans and restrictions, quarantines, “shelter-in-place” orders, and business shutdowns. ~~Over the course~~These measures had a significant adverse impact on many sectors of the ~~second quarter, these measures~~economy, including distribution services. However, throughout the pandemic, our business was designated as “essential,” and we were successful in containing and reducing the spread of the COVID-19 virus in many locations, and many governmental authorities have begun to ease restrictions and execute plans to re-open businesses. However, the rates of infection, hospitalization, and mortality associated with the virus continue to fluctuate, and in some cases, they have increased, in many U.S. states. The pandemic and these containment measures have had, and are expectedable to continue to ~~have, a substantial negative impact on businesses around the world~~operate and ~~on global, regional, and national economies.~~

~~We began preparations for the pandemic in late February, and in early March we implemented policies and procedures~~provide services to ~~protect our associates, serve~~ our customers and ~~support our~~ suppliers. We also moved quickly to develop plans and take actions designed to give us financial and operating flexibility during the pandemic and over the course of the second quarter we continued to execute on those plans. To date, our business has been designated as “essential” in allIn many states in which we operate, many of these restrictions have lapsed or been rescinded, and weas vaccines have ~~continued~~become widely available in many parts of the United States and other major countries around the world, the impact of the pandemic has subsided to ~~operate and provide service to our customers and suppliers. Also, notably, we have not experienced any significant supply chain disruptions~~some degree. However, as a result of the ~~pandemic, and our supply chain has remained intact in all material respects.~~

During the quarter, our cross-functional COVID-19 Disaster Response Team implemented safety and hygiene protocols consistent with the Centers for Disease Control and Prevention (“CDC”) and local guidance, including mandating the use of face coverings where their use is required by local order; implementing enhanced cleaning and disinfecting procedures; using social distancing guidelines and physical separation where required; establishing more restrictive travel policies; implementing no-contact rules and visitor guidelines; implementing enhanced safety procedures for our drivers such as including contactless delivery procedures; using mobile work arrangements for employees whose work can be done remotely; and developing rapid response procedures for presumptive and confirmed COVID-19 cases at any of our locations.

We also took action on plans designed to reduce our cost structure, strengthen our balance sheet, and further increase liquidity in response to the pandemic. We took steps to reduce operating costs and optimize liquidity by pausing new hiring; limiting non-essential spending; closely monitoring and reviewing credit lines, open orders, overpaid accounts, and receivables aging; making substantial headcount and variable operating expense reductions in local markets correlating to demand declines; closely assessing and monitoring inventory availability and purchasing; placing approximately 15 percent of our corporate workforce on furlough, and making targeted reductions in corporate headcount; utilizing certain provisionsrise of the ~~Coronavirus Aid, Relief, and Economic Security (CARES) Act; and ongoing review and monitoring of payroll and branch expenses. While~~

~~some of these actions are temporary~~COVID-19 variants in ~~nature, we expect to sustain many~~certain parts of the ~~cost reduction actions long-term, and we continue to remain focused on our cost structure and liquidity as~~United States, some governmental authorities are considering the ~~pandemic continues.~~re-institution of various restrictive measures.

Overall, the impact of the pandemic on our business during the second quarter of 2020 was not as significant as we originally anticipated. Net sales and gross margin declined in April relative to the prior year period, but the commodity market for structural products began to stabilize and rebound in May and June. For the second quarter of 2020, net sales declined $7.7 million, primarily driven by the 2019 discontinuation of a siding product, and net income improved $0.4 million compared to the second quarter of 2019. For the first six months of 2020, net sales increased $15.7 million and net income improved $6.3 million as we moved from a net loss for the first six months of 2019 to net income for the first six months of 2020.

The extent of the impact of the pandemic on our business and sales for the ~~second half~~remaining six months of ~~2020~~2021 will depend on future developments, including, among others, the ~~duration~~extent and scope of the ~~pandemic,~~rise of existing and additional COVID-19 variants, the success of vaccination efforts, the success of actions taken by governmental authorities to contain these variants and the pandemic and address ~~its~~their impact, the overall duration of the pandemic, the success of local return to work and business reopening plans, and the impact the COVID-19 pandemic has on demand in the markets we service. The trajectory of the pandemic continues to evolve rapidly, and we cannot predict the extent to which our financial condition, results of operations, or cash flows will ultimately be impacted. We are closely monitoring the development and spread of COVID-19 variants, the impact of the pandemic on industry conditions, the progress of local return to ~~work~~office and reopening plans, and any pandemic-related ~~restrictions that may have an impact on~~restrictions. We are in the process of implementing return to work plans for our ~~business.~~corporate headquarters and warehouse

facilities, and we continue to practice safety and hygiene protocols consistent with the Center for Disease Control and Prevention (“CDC”) and local guidance.

Many of the factors that cause our operations to fluctuate have ~~historically~~ been seasonal or cyclical in nature and we expect that to continue.

Our operating results are affected by commodity markets, primarily in the markets for wood-based commodities that we classify as structural products. Due to supply constraints, lumber and panel commodity index prices started increasing during the third quarter of 2020 and they continued to increase into the second quarter of 2021. Wood-based commodity index prices remained at elevated levels at the beginning of the second quarter as supply constraints continued. Towards the end of the second quarter, lumber commodity pricing decreased as supply increased. However, the increase in supply was limited to lumber inventories and panel commodity prices remained at elevated levels.

Historically, our operating results have ~~historically~~also been generally correlated with the level of single-family residential housing starts in the U.S. However, 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.

The COVID-19 pandemic had a significant negative effect on single family housing starts during the ~~second~~first half of 2020. However, housing starts have rebounded since the third quarter of 2020. The U.S. Census Bureau reported that single family housing starts were ~~down 13~~up 42 percent for the second quarter of ~~2020~~2021 compared to the second quarter of ~~2019. However,~~2020. During the ~~trend showed strong improvement over the course~~second quarter of ~~the quarter. Housing~~2021, housing starts ~~declined 23~~grew 54 percent in April, 1548 percent in May, and 228 percent in June, all compared to the same months in ~~2019.~~2020. Additionally, ~~July~~June 2021 data from the National Association of Home Builders/Wells Fargo Housing Market Index shows a positive outlook in builder confidence in the market for newly built single-family homes. Low interest rates, shortages in existing home inventory, and a potential growing trend toward relocating away from populated metropolitan areas to areas with single-family homes may help drive long-term improvement in single-family housing starts.

Our operating results are also affected by commodity pricing, primarily the markets for wood-based commodities that we classify as structural products. After declining in the early part of April, lumber and panel prices increased for the balance of the quarter, staying at or above price levels from the second quarter of 2019. These market trends resulted in favorable revenue comparisons and enhanced gross margins in the second quarter of 2020 for many of the structural products that we sell.

Factors That Affect Our Operating Results

Our results of operations and financial performance are influenced by a variety of factors, including the following: pricing and product cost variability; volumes of product sold; changes in the prices, supply, and/or demand for products that we distribute; the cyclical nature of the industry in which we operate; housing market conditions; the COVID-19 pandemic and other contagious illness outbreaks and their potential effects on our ~~industry,~~industry; effective inventory management relative to our sales volume or the prices of the products we produce; information technology security and business interruption risks; increases in petroleum prices; consolidation among competitors, suppliers, and ~~supply chains,~~customers; disintermediation risk; loss of products or key suppliers and ~~customers,~~manufacturers; our ~~business, results of operations, cash flows, financial condition,~~dependence on international suppliers and ~~future prospects; changes in the prices, supply and/or demand~~manufacturers 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 brandedcertain 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 and other claims and legal proceedings related to our business and the products we distribute; natural disasters, catastrophes, fire, or other ~~legal proceedings;~~unexpected events; successful implementation of our strategy; wage increases or work stoppages by our union employees; costs imposed by federal, state, local, and other regulations; compliance costs associated with federal, state, and local environmental protection laws; our level of indebtedness and our ability to incur additional debt to fund future needs; the risk that our cash flows and capital resources may be insufficient to service our existing or future indebtedness; the covenants of the instruments governing our indebtedness limiting the discretion of our management in operating our business; the fact that we lease many of our distribution centers, and we would still be obligated under these leases even if we close a leased distribution center; changes in our product mix; shareholder activism; potential acquisitions and the ~~availability~~integration and completion of ~~capital~~such acquisitions; the possibility that the value of our deferred tax assets could become impaired; changes in our expected annual effective tax rate could be volatile; the costs and ~~interest rates; adverse weather patterns or conditions; acts of cyber intrusion or other disruptions~~liabilities related to our ~~information technology systems; tariffs, anti-dumping~~participation in multi-employer pension plans could increase; the possibility that we could be the subject of securities class action litigation due to stock price volatility; and ~~counter-vailing duties, anti-dumping charges, and similar import costs and restrictions; and variations~~changes in, ~~the performance~~or interpretation of, ~~the financial markets, including the credit markets.~~

accounting principles.

Results of Operations

The following table sets forth our results of operations for the second quarter of fiscal ~~2020~~2021 and fiscal ~~2019:~~2020:


	Second Quarter of Fiscal 2021		% of Net Sales	Second Quarter of Fiscal 2020		% of Net Sales
	(In thousands)			(In thousands)
Net sales	$	1,307,913	100.0%	$	698,776	100.0%
Gross profit	251,172		19.2%	100,820		14.4%
Selling, general, and administrative	87,010		6.7%	70,694		10.1%
Depreciation and amortization	7,080		0.5%	7,063		1.0%
Amortization of deferred gains on real estate	(984)		(0.1)%	(984)		(0.1)%
Gains from sales of property	—		—%	—		—%
Other operating expenses	871		0.1%	1,962		0.3%
Operating income	157,195		12.0%	22,085		3.2%
Interest expense, net	9,143		0.7%	11,535		1.7%
Other expense (income), net	(314)		0.0%	417		0.1%
Income before provision for income taxes	148,366		11.3%	10,133		1.5%
Provision for income taxes	34,908		2.7%	3,438		0.5%
Net income	$	113,458	8.7%	$	6,695	1.0%

Second Quarter of Fiscal 2020 % of
Net
Sales Second Quarter of Fiscal 2019 % of
Net
Sales
(In thousands) (In thousands)
Net sales $ 698,776
100.0% $ 706,448
100.0%
Gross profit 100,820
14.4% 94,167
13.3%
Selling, general, and administrative 69,710
10.0% 70,150
9.9%
Depreciation and amortization 7,063
1.0% 7,503
1.1%
Gains from sales of property —
0.0% (9,760 ) (1.4)%
Other operating expenses 1,962
0.3% 3,951
0.6%
Operating income 22,085
3.2% 22,323
3.2%
Interest expense, net 11,535
1.7% 13,717
1.9%
Other expense (income), net 417
0.1% (45 ) 0.0%
Income before provision for income taxes 10,133
1.5% 8,651
1.2%
Provision for income taxes 3,438
0.5% 2,350
0.3%
Net income $ 6,695
1.0% $ 6,301
0.9%

The following table sets forth our results of operations for the first six-month periods of fiscal ~~2020~~2021 and fiscal ~~2019:~~2020:


	First Six Months of Fiscal 2021		% of Net Sales	First Six Months of Fiscal 2020		% of Net Sales
	(In thousands)			(In thousands)
Net sales	$	2,333,382	100.0%	$	1,360,846	100.0%
Gross profit	431,564		18.5%	194,029		14.3%
Selling, general, and administrative	162,569		7.0%	145,281		10.7%
Depreciation and amortization	14,545		0.6%	14,698		1.1%
Amortization of deferred gains on real estate	(1,967)		(0.1)%	(1,967)		(0.1)%
Gains from sales of property	(1,287)		(0.1)%	(525)		0.0%
Other operating expenses	983		0.0%	6,127		0.5%
Operating income	256,721		11.0%	30,415		2.2%
Interest expense, net	25,377		1.1%	25,915		1.9%
Other expense (income), net	(628)		0.0%	180		0.0%
Income before provision for (benefit from) income taxes	231,972		9.9%	4,320		0.3%
Provision for (benefit from) income taxes	56,654		2.4%	(1,588)		(0.1)%
Net income	$	175,318	7.5%	$	5,908	0.4%

First Six Months of Fiscal 2020
% of
Net
Sales
First Six Months of 2019
% of
Net
Sales
(In thousands) (In thousands)
Net sales $ 1,360,846
100.0% $ 1,345,149
100.0%
Gross profit 194,029
14.3% 180,212
13.4%
Selling, general, and administrative 143,314
10.5% 139,235
10.4%
Depreciation and amortization 14,698
1.1% 14,831
1.1%
Gains from sales of property (525 ) 0.0% (9,760 ) (0.7)%
Other operating expenses 6,127
0.5% 9,276
0.7%
Operating income 30,415
2.2% 26,630
2.0%
Interest expense, net 25,915
1.9% 27,118
2.0%
Other expense, net 180
0.0% 105
0.0%
Income (loss) before benefit from income taxes 4,320
0.3% (593 ) 0.0%
Benefit from income taxes (1,588 ) (0.1)% (175 ) 0.0%
Net income (loss) $ 5,908
0.4% $ (418 ) 0.0%

The following table sets forth net sales by product category for the ~~three~~three- and six-month periods ending July 3, 2021, and June 27, ~~2020, and June 29, 2019:~~2020:

Three Months Ended Six Months Ended
June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
(In thousands) (In thousands)
Structural products $ 249,571
$ 224,528
$ 490,349
$ 421,314
Specialty products 449,205
481,920
870,497
923,835
Net sales $ 698,776
$ 706,448

$ 1,360,846

$ 1,345,149


	Three Months Ended						Six Months Ended
	July 3, 2021			June 27, 2020			July 3, 2021			June 27, 2020
Net sales by category	($ in thousands)						($ in thousands)
Structural products	$	632,724		$	249,542		$	1,095,571		$	490,310
Specialty products	675,189			449,234			1,237,811			870,536
Net sales	$	1,307,913		$	698,776		$	2,333,382		$	1,360,846
Percentage of total net sales by category
Structural products	48		%	36		%	47		%	36		%
Specialty products	52		%	64		%	53		%	64		%
Total	100		%	100		%	100		%	100		%

The following table sets forth gross profit and gross margin percentages by product category for the ~~three~~three- and six-month periods of fiscal ~~2020~~2021 and ~~2019:~~

2020:

Three Months Ended Six Months Ended
June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019
(Dollars in thousands) (Dollars in thousands)
Structural products $ 23,100
$ 17,388
$ 47,334
$ 36,121
Specialty products 77,720
76,779
146,695
144,091
Gross profit $ 100,820

$ 94,167

$ 194,029

$ 180,212
Gross margin percentage by category

Structural products 9.3 % 7.7 % 9.7 % 8.6 %
Specialty products 17.3 % 15.9 % 16.9 % 15.6 %
Total 14.4 % 13.3 % 14.3 % 13.4 %


	Three Months Ended						Six Months Ended
	July 3, 2021			June 27, 2020			July 3, 2021			June 27, 2020
Gross profit $ by category	($ in thousands)						($ in thousands)
Structural products	$	86,177		$	23,089		$	158,034		$	47,308
Specialty products	164,995			77,731			273,530			146,721
Gross profit	$	251,172		$	100,820		$	431,564		$	194,029
Gross margin percentage by category
Structural products	13.6		%	9.3		%	14.4		%	9.6		%
Specialty products	24.4		%	17.3		%	22.1		%	16.9		%
Total gross margin %	19.2		%	14.4		%	18.5		%	14.3		%

Second Quarter of Fiscal ~~2020~~2021 Compared to Second Quarter of Fiscal ~~2019~~2020

Net sales. For the second quarter of fiscal ~~2020,~~2021, net sales ~~decreased 1.1~~increased 87.2 percent, or ~~$7.7~~$609.1 million, compared to the second quarter of fiscal ~~2019.~~2020. The sales ~~decrease~~increase was ~~driven by the loss~~primarily a result of ~~$15.9 million of sales related to a siding program that was discontinued~~supply-driven pricing increases in ~~conjunction with~~ our ~~Cedar Creek integration activities~~specialty products category and wood-based commodity price inflation in ~~the prior year,~~our structural products category, partially offset by ~~an increase~~a slight decline in structural sales volume attributable to supply constraints and commodity risk management. In our specialty products categories, sales volumes increased overall versus the prior-year period primarily driven by engineered wood, industrial products, and siding categories, offset by decreases in specialty lumber. Supply disruption continued for many of our specialty product categories which contributed to progressive price increases throughout the second quarter, which when combined with the improvement in sales ~~volume for~~volumes, resulted in significant net sales growth. In our structural products category, imbalances between supply and demand continued throughout most of the second quarter of fiscal 2021, but started to align toward the end of the second quarter, driving lumber commodity prices down in late May and during the month of June. Panel commodity prices, however, did not experience the same price ~~inflation.~~decreases during the period.

Gross profit and gross margin. For the second quarter of fiscal ~~2020,~~2021, gross profit increased ~~by $6.7~~149.1 percent, or $150.4 million, ~~or 7.1 percent,~~ compared to the second quarter of fiscal ~~2019, primarily due to improved gross margins on both our specialty and structural products businesses.~~2020. Gross margin ~~during~~percentage increased to 19.2 percent, for the ~~same period was 14.4 percent, an increase~~second quarter of fiscal 2021, compared to ~~13.3~~14.4 percent in the second quarter of fiscal ~~2019.~~2020. Gross margin percentage increased due to the overall continued increase in market pricing compared to the same period in the prior year, which is a result of demand continuing to exceed supply. Gross margin percentages for our specialty products increased to 24.4 percent for the second quarter of fiscal 2021, compared to 17.3 percent in the second quarter of fiscal 2020. Specialty gross profit also benefited from increased volume in our engineered wood, industrial products, and siding categories in the second quarter of fiscal 2021.

Gross margin percentages for our structural products increased to 13.6 percent for the second quarter of fiscal 2021, compared to 9.3 percent in the second quarter of fiscal 2020. Our structural gross margin for the second quarter of fiscal 2021 was impacted by a lower of cost or net realizable reserve of $16.7 million resulting from the decline in value of our structural lumber inventory related to the decrease in wood-based commodity prices during the period. This reserve will be included in structural gross profit in the third quarter of fiscal 2021 as the inventory associated with the adjustment is sold to customers.

Selling, general, and administrative expenses. ~~The decrease in~~For the second quarter of fiscal 2021, selling, general, and administrative expenses ~~of 0.6~~increased 23.1 percent, or ~~$0.4~~$16.3 million, ~~for the second quarter of fiscal 2020,~~ compared to the second quarter of fiscal ~~2019,~~2020. The increase in sales, general, and administrative expenses is ~~primarily~~ due to ~~decreases~~increases in our ~~operational~~sales commissions and ~~logistics expenses, along with reductions in our fixed cost structure, partially offset by an increase in incentive compensation~~incentives of approximately ~~$4.0~~$8.4 million, warehouse and delivery costs of approximately $4.9 million, and general and administrative costs of approximately $3.0 million.

Depreciation and amortization expense. For the second quarter of fiscal ~~2020,~~2021, depreciation and amortization expense ~~decreased by $0.4 million~~increased 0.2 percent, compared to ~~$7.1 million~~the second quarter of fiscal 2020. The increase in depreciation and amortization is due to additional depreciation related the new trucks added to our mobile fleet under finances leases in the first quarter of 2021, which was partially offset by a lower base of depreciable ~~assets.~~

~~Gains from sales of property.~~ ~~Gains from sales of property decreased by $9.8 million for~~assets throughout the second quarter of ~~fiscal 2020,~~2021 when compared to the second ~~fiscal~~ quarter of ~~2019, as we sold no property during the second quarter of~~fiscal 2020.

Other operating expenses. For the second quarter of fiscal ~~2020,~~2021, other operating expenses decreased ~~by $2.0~~55.6 percent, or $1.1 million, ~~or 50.3 percent,~~ compared to the second quarter of fiscal ~~2019,~~2020 primarily due to a decrease in spending related to the integration of the Cedar Creek acquisition ~~partially offset by severance expense incurred~~and restructuring related costs reported in ~~relation to headcount reductions that occurred during~~ the ~~quarter.~~second quarter of 2020.

Interest expense, net. ~~Interest expense decreased by $2.2 million for~~For the second quarter of fiscal ~~2020,~~2021, interest expense, net, decreased by 20.7 percent, or $2.4 million, compared to the second quarter of fiscal ~~2019.~~2020. The decrease ~~was largely attributable~~is primarily due to the reduction of debt, including the repayment in full of our former Term Loan Facility at the end of the first quarter of 2021, under which borrowings bore a higher interest rate than under our Revolving Credit Facility.

Other expense (income), net. For the second quarter of fiscal 2021, other expense (income), net, decreased $0.7 million compared to the second quarter of fiscal 2020. The decrease is due to a ~~decrease~~higher level of pension benefit amortization in the ~~average debt balance, as well as a reduction~~second quarter of fiscal 2021 compared to the second quarter of fiscal 2020, offset by the absence of other immaterial expenses incurred in the ~~variable LIBOR rate that is a component of the interest rate on the Revolving Credit Facility and Term Loan Facility.~~prior year period.

Provision for income taxes. Our effective tax rate was ~~33.9~~23.5 percent and ~~27.2~~33.9 percent for the second quarter of fiscal 2021 and 2020, respectively. Our effective tax rate for the second quarter of fiscal 2021 was impacted by the permanent addback of certain nondeductible expenses, including meals and ~~2019, respectively.~~entertainment and executive compensation, slightly offset by a benefit from the vesting of restricted stock units, which occurred during the period. Our effective tax rate for the second quarter of fiscal 2020 was primarily impacted by ~~(i)~~a discrete tax ~~expense~~benefit of ~~$0.4~~$3.9 million ~~for a shortfall on restricted stock unit vesting, (ii)~~resulting from the ~~permanent addback of certain nondeductible expenses, including meals and entertainment and officer’s compensation, and (iii) the effect~~release of the ~~partial~~ valuation allowance ~~for separate company state income tax losses and previously~~associated with nondeductible interest expense under Section 163(j) of the ~~IRC.~~Internal Revenue Code (“IRC”) as a result of changes allowed under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act that was enacted on March 27, 2020 which raised the allowable percentage of deductible interest from 30 percent to 50 percent of adjusted taxable income. Our effective tax rate for the ~~second quarter of fiscal 2019~~same periods was further 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, we recorded discrete tax expense of $0.2 million for a shortfall on vesting of our restricted stock units, which was offset by a $0.2 million discrete tax benefit for claiming state tax credits.

Net income. Our net income ~~improved over~~increased by $106.8 million from the prior year period due primarily to increased sales and gross product margins ~~and reduced costs.~~resulting from price inflation.

First Six Months of Fiscal ~~2020~~2021 Compared to First Six Months of Fiscal ~~2019~~2020

Net sales. For the first six months of fiscal ~~2020,~~2021, net sales increased ~~1.2~~71.5 percent, or ~~$15.7~~$972.5 million, compared to the first six months of fiscal ~~2019.~~2020. The sales increase was ~~driven by higher sales volumes~~primarily a result of supply-driven pricing increases in our specialty products category and wood-based commodity price inflation in our structural products category, partially offset by a slight decline in overall sales volume generally attributable to supply constraints. In our specialty products category, sales volumes increased overall primarily driven by engineered wood, industrial products, and siding categories, offset by decreases in specialty lumber. Supply disruptions continued for many of our specialty product categories which contributed to progressive price increases throughout the ~~loss~~first six months of ~~$47.8 million~~fiscal 2021, which when combined with the improvement in sales volumes resulted in improved net sales growth. In our structural products category, demand continued to exceed supply throughout most of ~~sales related~~the first six months of fiscal 2021, but started to ~~a siding program that was discontinued~~align toward the end of first six months of fiscal 2021, driving lumber commodity prices down in ~~conjunction with our Cedar Creek integration activities in~~late May and during the ~~prior year.~~month of June. Panel commodity prices, however, did not experience the same price decreases during the period.

Gross profit and gross margin. For the first six months of fiscal ~~2020,~~2021, gross profit increased ~~by $13.8~~122.4 percent, or $237.5 million, ~~or 7.7 percent,~~ compared to the first six months of fiscal ~~2019, primarily~~2020. Gross margin percentage increased to 18.5 percent, for the first six months of fiscal 2021, compared to 14.3 percent for the first six months of fiscal 2020. Gross margin percentage increased due to ~~increased sales revenue and improved gross margins on both our specialty and structural products businesses. Gross margin during~~the overall continued increase in market pricing compared to the same period ~~was 14.3~~in the prior year, which is a result of a continued

increase in demand, paired with continued low supply. Gross margin percentages for our specialty products increased to 22.1 percent ~~an increase~~for the first six months of fiscal 2021, compared to ~~13.4~~16.9 percent in the first six months of fiscal ~~2019.~~2020.

Gross margin percentages for our structural products increased to 14.4 percent for the first six months of fiscal 2021, compared to 9.6 percent in the first six months of fiscal 2020. Our structural gross margin for the first six months of fiscal 2021 was impacted by a lower of cost or net realizable value reserve of $16.7 million resulting from the decline in value of our structural lumber inventory related to the decrease in wood-based commodity prices during the second quarter of fiscal 2021. This reserve will be included in structural gross profit in the third quarter of fiscal 2021 as the inventory associated with the adjustment is sold to customers.

Selling, general, and administrative expenses. ~~The increase in selling, general, and administrative expenses of 2.9 percent, or $4.1 million, for~~For the first six months of fiscal ~~2020,~~2021, selling, general, and administrative expenses increased 11.9 percent, or $17.3 million, compared to the first six months of fiscal ~~2019,~~2020. The increase in sales, general, and administrative expenses is ~~primarily~~ due to ~~an increase~~increases in ~~incentive compensation~~our sales commissions and incentives of approximately ~~$4.0~~$11.7 million, warehouse and delivery costs of approximately $1.0 million, and general and administrative costs of approximately $4.6 million.

Depreciation and amortization expense. For the first six months of fiscal ~~2020,~~2021, depreciation and amortization expense decreased ~~by $0.1 million to $14.7~~1.0 percent, or $0.2 million, compared to the first six months of fiscal ~~2019,~~2020. The decrease in depreciation and amortization expense is due to a lower base of depreciable ~~assets.~~assets throughout the first six months of fiscal 2021 when compared to the first six months of fiscal 2020.

Gains from sales of property. ~~Gains~~For the first six months of fiscal 2021, gains from sales of property ~~decreased by $9.2~~increased $0.8 million ~~for~~compared to the first six months of fiscal 2020 ~~compared~~due to the sale of our non-operating facility in Birmingham during the first quarter of 2021 and no property sales during the first six months of fiscal ~~2019, due to only minor adjustments to previous transactions being recorded in~~ 2020.

Other operating expenses. For the first six months of fiscal ~~2020,~~2021, other operating expenses decreased ~~by $3.1~~84.0 percent, or $5.1 million, ~~or 33.9 percent,~~ compared to the first six months of fiscal ~~2019,~~2020 primarily due to a decrease in spending related to the integration of the Cedar Creek acquisition ~~partially offset by severance expense incurred in relation to headcount reductions that occurred~~and restructuring related costs reported during the ~~quarter.~~first six months of fiscal 2020.

Interest ~~expense.~~expense, net. ~~Interest expense decreased by $1.2 million for~~For the first six months of fiscal ~~2020,~~2021, interest expense, net, decreased by 2.1 percent, or $0.5 million, compared to the first six months of fiscal ~~2019.~~2020. The decrease ~~was largely attributable~~is primarily due to ~~a decrease~~reduction of debt, including the repayment in full of our former Term Loan Facility at the ~~average debt balance, as well as a reduction in the variable LIBOR rate that is a component~~end of the first quarter of 2021, under which borrowings bore a higher interest rate ~~on the~~than under our Revolving Credit ~~Facility and~~Facility. This was offset by the $5.8 million in debt issuance costs expensed during the first quarter of fiscal 2021 related to the extinguishment of our former Term Loan Facility.

~~Benefit from~~Other expense (income), net. For the first six months of fiscal 2021, other expense (income), net, decreased $0.8 million compared to the first six months of fiscal 2020. The decrease is due to a higher level of pension benefit amortization in the second quarter of fiscal 2021 compared to the second quarter of fiscal 2020, offset by the absence of other immaterial expenses incurred in the prior year period.

Provision for (benefit from) income taxes. Our effective tax rate was ~~(36.8)~~24.4 percent and ~~29.5~~(36.8) percent for the first six months of fiscal ~~2020~~2021 and ~~2019,~~2020, respectively. Our effective tax rate for the first six months of fiscal 2021 was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, slightly offset by a benefit from the vesting of restricted stock units, which occurred during the period. Our effective tax rate for the first six months of fiscal 2020 was primarily impacted by ~~(i) the~~a discrete tax benefit of $3.9 million resulting from the release of the valuation allowance associated with the nondeductible interest expense under IRC Section 163(j) as a result of the CARES Act changing the allowable percentage from 30 percent of adjusted taxable income to 50 percent of adjusted taxable income, (ii) recording discrete tax expense of $0.4 million for a shortfall on vesting of our restricted stock units, (iii) the permanent addback of certain nondeductible expenses, including meals and entertainment and nondeductible compensation, and (iv) the effect of the partial valuation allowance for separate company state income tax losses and previously nondeductible interest expense under Section 163(j) of the ~~IRC.~~Internal Revenue Code (“IRC”) as a result of changes allowed under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act that was enacted on March 27, 2020 which raised the allowable percentage of deductible interest from 30 percent to 50 percent of adjusted taxable income. Our effective tax rate for the ~~first six months of fiscal 2019~~same periods was further 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, we recorded discrete tax expense of $0.2 million for a shortfall on vesting of our restricted stock units, which was offset by a $0.2 million discrete tax benefit for claiming state tax credits.

Net ~~income (loss).~~income. Our net ~~loss improved to net~~ income increased $169.4 million from the prior year period due primarily to ~~higher sales,~~ increased gross product margins resulting from price inflation and ~~reduced costs associated with~~scarcity of products and secondarily to the ~~acquisition~~Company’s policies pursuing increased margins on sales of ~~Cedar Creek.~~products.

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~~less favorable 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~~In past years, assuming no change in underlying inventory costs, our working capital ~~generally increases~~has increased in the fiscal second and third quarters, reflecting ~~increased~~general increases in seasonal demand. During the fiscal second and third quarters of 2020, our inventory working capital balance decreased despite increasing commodity prices, reflecting enhancements in our working capital management throughout the year. However, during the fourth quarter of 2020 and the first and second quarters of 2021, our inventory working capital balance increased largely due to increased sales levels resulting from wood-based commodity market inflation as well as supply driven pricing increases for many of our specialty products. Given recent market volatility in the ~~COVID-19 pandemic,~~industry, it remains a possibility that we could experience ~~disruptions~~changes to our typical seasonality trends during the rest of ~~2020.~~2021.

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 ~~assuming that our operations are not significantly impacted by the COVID-19 pandemic for a prolonged period,~~ our 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 twelve months.

Revolving Credit Facility

In April 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 Facility). Letters of credit in an aggregate amount of up to $30 million are also available under the Revolving Credit Facility, which would reduce the amount of the revolving loans available thereunder. Borrowings under the Revolving Credit Facility bear 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 Facility 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.

We amended the Revolving Credit Facility on January 31, 2020, to provide that (i) the “Seasonal Period” will run from November 15, 2019, through July 15, 2020, for the calendar year 2019, and from December 15 of each calendar year through April 15 of each immediately succeeding calendar year for the calendar year 2020 and thereafter, and (ii) the measurement period in the definition of “Cash Dominion Event” will be five consecutive business days instead of three consecutive business days.

As of ~~June 27, 2020,~~July 3, 2021, we had outstanding borrowings of ~~$322.2~~$320.4 million and excess availability of ~~$138.1~~$276.2 million ~~and a weighted average interest rate of 2.6 percent~~ under ~~the~~our Revolving Credit Facility. As of ~~December 28, 2019, our principal balance was $326.5~~January 2, 2021, we had outstanding borrowings of $288.2 million and excess availability ~~was $80.0~~of $184.3 million ~~and our weighted~~under out Revolving Credit Facility. Our average effective interest rate was ~~3.9~~2.5 percent and 2.8 percent for the quarters ended July 3, 2021 and January 2, 2021, respectively. For the quarter ended June 27, 2020, our average effective interest rate was 3.1 percent.

We were in compliance with all covenants under the Revolving Credit Facility as of ~~June 27, 2020.~~July 3, 2021.

Term Loan Facility

~~In April 2018,~~We previously had a term loan facility that we entered into ~~our~~in April 2018 with HPS Investments Partners, LLC, as administrative and collateral agent, and certain other financial institutions party thereto (the “Term Loan Facility”), with a maturity date of October 13, 2023. The Term Loan Facility ~~with HPS Investment Partners, LLC, and other financial institutions as party thereto, which provides~~provided for a ~~term~~senior secured first lien loan facility in an initial aggregate principal amount of $180 million and was secured by a security interest in substantially all of our assets. ~~Borrowings~~

As of January 2, 2021, we had outstanding borrowings of $43.2 million under the Term Loan Facility. On April 2, 2021, we repaid the remaining outstanding principal balance of the Term Loan Facility and, as a result, as of July 3, 2021, we had no outstanding borrowings under the Term Loan Facility, ~~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~~which has been extinguished. In connection with our repayment of the ~~(a) U.S. prime lending~~outstanding principal balance in full on April 2, 2021, we expensed $5.8 million debt issuance costs during the first quarter of 2021 that we had been amortizing in connection with our former Term Loan Facility. These costs are included within interest expense, net, on the Condensed Consolidated Statements of Operations and reported separately as an adjustment to net income in our Condensed Consolidated Statements of Cash Flows. Our average interest rate ~~published in The Wall Street Journal, (b)~~under the ~~Federal Funds Effective Rate plus 0.50~~facility, exclusive of fees and prepayment premiums, was approximately 8.0 percent ~~and (c)~~for 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; plus (ii) 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.quarter ended January 2, 2021.

We ~~amended~~made no prepayment premiums associated with the repayment of indebtedness for the three-month period ended July 3, 2021 as we terminated the Term Loan Facility ~~on December 31, 2019, to extend~~during the first quarter of 2021. For the three-month period for satisfying the designated principal balance level required to maintain the modified total net leverage ratio covenant levels for the 2019 fourth and subsequent quarters thereunder, which was satisfied on January 31, 2020, through repayments from proceeds from the real estate financing transactions described in Note 8. On February 28, 2020, we further amended the Term Loan Facility to provide that we would not be subject to the facility’s total net leverage ratio covenant from and after the time, and then for so long as, the principal balance level under the facility is less than $45 million. On April 1, 2020, we amended the Term Loan Facility by, among other

~~things, modifying the total net leverage ratio covenant levels for the 2020 second and third quarters. All other total net leverage ratio covenant levels for prior and future quarters were unchanged.~~

The Term Loan Facility permits us to enter into real estate sale leaseback transactions with the net proceeds therefrom to be used for repayment of indebtedness under the facility, subject to payment of an applicable prepayment premium. In addition, proceeds from the sale of “Specified Properties” will be used 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.

~~Unless and until the total net leverage ratio covenant is eliminated, the Term Loan Facility requires maintenance of a total net leverage ratio of 8.75 to 1.00 for the quarter ending~~ended June 27, 2020, prepayment premiums were $0.2 million. Prepayment premiums were $0.9 million and ~~the third quarter of 2020, and 5.25 to 1.00~~$2.3 million for the ~~fourth quarter of 2020, with ratio levels generally reducing over the remaining term of the Term Loan Facility.~~

~~The calculation of the total net leverage ratio for any period is generally determined by taking our “Consolidated Total Debt”~~six-month periods ended July 3, 2021 and dividing it by our “Consolidated EBITDA,” as those terms are defined in the Term Loan Facility. “Consolidated Total Debt” is generally determined by adding the balance of our term loan, the prior month’s average balance of our Revolving Credit Facility, and our equipment finance lease liability, and reducing that amount by unrestricted cash up to $10.0 million. On June 27, 2020, the Term Loan Facility balance was $68.8 million, the average balance of the Revolving Credit Facility for the prior month was $320.1 million, our equipment finance lease liability was $29.2 million, and unrestricted cash was $10.0 million. Liabilities related to sale-leaseback transactions are excluded from the calculation. “Consolidated EBITDA” is generally determined by taking the Adjusted EBITDA that we report for the most recent four consecutive quarters and adjusting items specified under the Term Loan Facility. The adjustments to Adjusted EBITDA for calculating Consolidated EBITDA under the Term Loan Facility as of the end of the second quarter of 2020 for the most recent four consecutive quarters were approximately $3.0 million.respectively.

~~We were in compliance with all covenants under the Term Loan Facility as of June 27, 2020.~~

~~As of June 27, 2020~~, we had outstanding borrowings of $68.8 million under our Term Loan Facility and an interest rate of 8.0 percent per annum. As of December 28, 2019, our principal balance was $146.7 million with an interest rate of 8.7 percent per annum. The decrease in the outstanding borrowings was due to net proceeds of the real estate financing transactions described in Note 8 being applied to the Term Loan Facility.

Finance Lease Commitments

Our finance lease liabilities consist of leases related to equipment and vehicles, and to real estate, with the majority of those finance lease commitments relating to the real estate financing transactions that we have completed in recent years. During fiscal 2017 and 2018, we completed real estate financing transactions on six warehouse facilities; during fiscal 2019, we completed real estate financing transactions on two warehouse facilities; and, ~~to date in~~during fiscal 2020, we completed real estate financing transactions on fourteen warehouse facilities. We recognized finance lease assets and obligations as a result of each of these transactions. In addition, during the second quarter of 2021, we recorded finance leases of $0.3 million related to new tractors put into service as part of our mobile fleet. Our total finance lease commitments, including the properties associated with ~~these~~the aforementioned transactions, totaled ~~$272.6~~$279.2 million as of ~~June 27, 2020.~~July 3, 2021. Of the $279.2 million of finance lease commitments as of July 3, 2021, $243.1 million related to real estate and $36.1 million related to equipment.

Interest Rates

Our Revolving Credit Facility ~~and our Term Loan Facility include~~includes available interest rate options based on the London Inter-bank Offered Rate ~~(LIBOR)~~(“LIBOR”). ~~It is widely expected that~~Certain LIBOR rates will be discontinued after 2021, ~~and the~~while other rates will be discontinued in 2023. 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~~agreement 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 provided by operating activities for the first six months of fiscal ~~2020~~2021 was ~~$12.9~~$22.6 million, compared to net cash ~~used in~~provided by operating activities of ~~$53.0~~$12.9 million in the first six months of fiscal ~~2019.~~2020. The increase in cash provided by operating activities during the first six months of fiscal ~~2020~~2021 was primarily a result of ~~reporting~~the increase in net income ~~for~~and our accounts payable balance compared to the ~~current~~prior year period, partially offset by increases in our accounts receivable and ~~a decrease in working capital~~inventory balances compared to the prior year period.

Investing Activities

Net cash used in investing activities for the first six months of fiscal ~~2020~~2021 was ~~$1.7~~$0.8 million compared to net cash ~~provided by~~used in investing activities of ~~$15.0~~$1.7 million in the first six months of fiscal ~~2019.~~2020. The decrease in net cash ~~provided~~used by investing activities ~~in the prior year~~ was primarily due to ~~$6.0 million that was returned~~an increase in proceeds received from ~~escrow after~~ the ~~Cedar Creek acquisition was finalized and $10.8 million~~sale of ~~proceeds from asset sales,~~several assets during the second quarter of 2021, combined

with the sale of our non-operating facility in Birmingham during the first quarter of 2021, both of which were partially offset by ~~cash paid for~~an increase in investments in property and ~~equipment investments of $1.8 million; cash paid for property and equipment investments was consistent in both periods.~~equipment.

Financing Activities

Net cash used in financing activities totaled $21.7 million for the first six months of fiscal 2021, compared to net cash used in financing activities of $11.4 million for the first six months of fiscal ~~2020, compared to net cash provided by financing activities of $41.8 million for the first six months of fiscal 2019.~~2020. The ~~decrease~~increase in net cash ~~provided by~~used in financing activities is primarily due to an increase of $216.9 million in repayments on our Revolving Credit Facility and Term Loan Facility, including the repayment of ~~$70.8 million and a reduction in borrowings~~the remaining outstanding balance on our ~~Revolving Credit~~Term Loan Facility, and reduction of ~~$15.3~~$78.3 million ~~offset by an increase~~ in proceeds from real estate financing transactions completed in the first six months of ~~$33.4 million.~~fiscal 2020, with no such transactions completed in the first six months of fiscal 2021, partially offset by an increase in borrowings of $287.9 million from our Revolving Credit Facility.

Operating Working Capital⁽¹⁾

Selected financial information
June 27, 2020 December 28, 2019 June 29, 2019
(In thousands)
Current assets:
Cash $ 11,530
$ 11,643
$ 12,662
Receivables, less allowance for doubtful accounts 264,642
192,872
262,042
Inventories, net 313,979
345,806
358,652
$ 590,151
$ 550,321
$ 633,356

Current liabilities:

Accounts payable ⁽²⁾
$ 158,920
$ 132,348
$ 174,860
$ 158,920
$ 132,348
$ 174,860

Operating working capital $ 431,231
$ 417,973
$ 458,496

⁽¹⁾ ~~Operating working capital is defined as the sum of cash, receivables, and inventory less accounts payable.~~

⁽²⁾Accounts payable includes outstanding payments of $19.5 million, $16.1 million, and $37.1 million as of June 27, 2020, December 28, 2019, and June 29, 2019, respectively. 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.

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. Operating working capital is defined as the sum of cash, receivables, and inventory, less accounts payable. Management of working capital helps us monitor our progress in meeting our goals to enhance working capital assets.


Selected financial information
	July 3, 2021		January 2, 2021		June 27, 2020
	(In thousands)
Current assets:
Cash	$	179	$	82	$	11,530
Receivables, less allowance for doubtful accounts	437,217		293,643		264,642
Inventories, net	425,714		342,108		313,979
	$	863,110	$	635,833	$	590,151

Current liabilities:
Accounts payable	$	227,100	$	165,163	$	158,920
	$	227,100	$	165,163	$	158,920

Operating working capital	$	636,010	$	470,670	$	431,231

Operating working capital of ~~$431.2 million on June 27, 2020, compared to $418.0~~$636.0 million as of ~~December 28, 2019,~~July 3, 2021, compared to $470.7 million as of January 2, 2021, increased on a net basis by approximately ~~$13.3~~$165.3 million. The increase in operating working capital iswas primarily driven by ~~seasonal increases~~an increase in accounts receivable ~~offset by decreases~~and an increase in inventory, both of which balances were higher due to the ~~company’s tighter management of inventory levels.~~inflationary environment impacting our net sales and product costs. The net increase in current assets was offset by an increase in accounts payable, also due to ~~recent inventory purchases during~~ the ~~month~~inflation of ~~June.~~

product costs.

Operating working capital of ~~$431.2~~$636.0 million ~~on June 27, 2020,~~as of July 3, 2021, compared to ~~$458.5~~$431.2 million as of June ~~29, 2019, decreased~~27, 2020, increased by ~~$27.3 million,~~$204.8 million. The increase in operating working capital was primarily driven by ~~decreases~~an increase in ~~the company’s~~accounts receivable and an increase in inventory, ~~level,~~ offset by ~~a decrease~~an increase in accounts ~~payable.~~payable, both largely due to the inflationary environment in our industry impacting our net sales and product costs.

Investments in Capital Assets

Our investments in capital assets consist of cash paid for owned assets and the inception of financing lease arrangements for long-lived assets to support our distribution infrastructure. The gross value of these assets are included in “Property and equipment, at cost” on our condensed consolidated balance sheet. During the second quarter of fiscal 2021, we invested $1.8 million in cash in investments in long-lived assets and entered into finance leases related to new tractors put into service as part of our mobile fleet totaling approximately $0.3 million, for a total investment of $2.1 million in capital assets during the quarter. For the first six months of fiscal 2021, we invested $2.9 million in cash and entered into finance leases totaling $10.5 million, for a total investment of $13.4 million.

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 28, 2019.~~January 2, 2021.

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. Forward-looking statements involve risks and uncertainties that may cause our business, strategy, or actual results to differ materially from the forward-looking statements. The forward-looking statements in this report include statements about the COVID-19 pandemic, its duration and effects, and its potential effects on our business and results of operations; 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 28, 2019,~~January 2, 2021, and those discussed elsewhere in this report (including Item 1A of Part II of 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:

•the risk that we may experience pricing and product cost variability;

•the fact that our earnings are highly dependent on volumes;

•the fact that our industry is highly fragmented and competitive and, that if we are unable to compete effectively, our net sales and operating results may be reduced;

•the fact that our industry is highly cyclical, and prolonged periods of weak demand or excess supply may reduce our net sales and/or margins, which may cause us to incur losses or reduce out net income;

•the risk that adverse housing market conditions may negatively impact our business, liquidity, and results of operations, and increase the credit risk from our customers;

•the full effect of the COVID-19 pandemic ~~and other contagious illness outbreaks and their potential effects~~ on our ~~industry, suppliers~~business is unknown, and ~~supply chain, and customers, and~~it may adversely affect our business and results from operations;

•our ability to effectively manage our inventory relative to our sales volume or as the prices of ~~operations, cash flows,~~the products we distribute fluctuate, which could affect our business, financial condition, and ~~future prospects;~~operating results;

•information technology security risks and business interruption risks, which may cause us to incur increasing costs in an effort to minimize and/or respond to those risks;

•the risk of increases in petroleum prices, which could adversely affect our ~~ability to integrate~~results of operations;

•consolidation among competitors, suppliers, and ~~realize anticipated synergies from acquisitions;~~customers could negatively impact our business;

•the risk of disintermediation;

•the risk of loss of ~~material customers, suppliers,~~key products or product lines in connection with acquisitions; operational disruption in connection with the integration of acquisitions; our indebtedness and its related limitations; sufficiency of cash flows and capital resources; our ability to monetize real estate assets; 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; import taxes~~manufacturers could affect our financial health;

•our dependence on international suppliers and ~~costs, including new or increased tariffs, anti-dumping duties, countervailing duties or similar duties;~~manufacturers for certain products exposes us to risks that could affect our ~~ability to successfully implement our strategic initiatives; fluctuations in operating results; sale-leaseback transactions and their effects; real estate leases; changes in interest rates;~~financial condition;

•business disruptions;

•the risk of exposure to product liability ~~claims; our ability to complete offerings under our shelf registration statement on favorable terms, or at all; changes in our product mix; petroleum prices; information technology security~~ and ~~business interruption risks; litigation~~other claims 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; risksproceedings related to our ~~internal controls; retention~~business and the products we distribute, which may exceed the coverage of ~~associates~~our insurance;

•the risk that our business operations could suffer significant losses from natural disasters, catastrophes, fire, or other unexpected events;

•that fact that a significant percentage of our employees are unionized, and ~~key personnel;~~wage increases or work stoppages by our unionized employees may reduce our results of operations;

•the risk that federal, state, local, and other regulations ~~including~~could impose substantial costs and restrictions on our operations that would reduce our net income;

•the fact that we are subject to federal, state, and local environmental protection laws and ~~regulations;~~may have to incur significant costs to comply with these laws and regulations in the future;

•our level of indebtedness could limit our financial and operating activities and adversely affect our ability to incur additional debt to fund future needs;

•our cash flows and capital resources may be insufficient to make required payments on our indebtedness or future indebtedness;

•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;

•borrowings under our revolving credit facility bear interest at a variable rate, which subjects us to interest rate risk, which could cause our debt service obligations to increase significantly;

•we may still incur more debt, which could increase the risks relating to indebtedness;

•the fact that we have sold and leased back certain of our distribution centers under long-term non-cancelable leases, and may enter into similar transactions in the future;

•the fact that many of our distribution centers are leased, and if we close a leased distribution center, we will still be obligated under the applicable lease;

•changes in our product mix could adversely affect our results of operations;

•the risk of adjustments in the future based on actual development experience because we establish insurance-related deductible/retention reserves based on historical loss development factors;

•our strategy includes pursuing acquisitions, which we may be unsuccessful in making and integrating mergers, acquisitions, and investments, and completing divestitures;

•the risk that the activities of activist stockholders could have a negative impact on our business and results of operations;

•the risk that the value of our deferred tax assets could become impaired, which could materially and adversely affect our operating results;

•the risk that our expected annual effective tax rate could be volatile and materially change as a result of changes in mix of earnings and other factors;

•the risk that changes in actuarial assumptions for our pension plan could impact our financial results, and funding requirements are mandated by the federal government;

•the risk that costs and liabilities related to our participation in multi-employer pension plans could increase;

•the risk that we could be the subject of securities class action litigation due to stock price volatility, which could divert management’s attention and adversely affect our results of operations; and

•the risk that changes in, or interpretation of, accounting ~~principles.~~ principles could result in unfavorable accounting changes.

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.

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.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During the second quarter of fiscal ~~2020,~~2021, there were no material changes to our legal proceedings as disclosed in our Annual Report on Form 10-K for the year ended ~~December 28, 2019.~~January 2, 2021. 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

~~In addition~~There have been no material changes to the ~~other information set forth in this report, you should carefully consider the~~risk factors ~~discussed~~disclosed in Part I, "Item 1A.Risk Factors" in ~~our~~the Company’s Annual Report on Form 10-K for the year ended December 28, 2019, as updated and supplemented below, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.January 2, 2021.

~~Our business, results of operations, and financial condition may be materially adversely impacted by the COVID-19 pandemic.~~

A novel strain of coronavirus (COVID-19) was first identified in December 2019 in certain Far East and European countries. On March 11, 2020, the spread of COVID-19 was declared a global pandemic by the World Health Organization, with a high concentration of cases in the United States. On March 13, 2020, the United States declared a national emergency concerning the pandemic, and many U.S. states and municipalities have declared public health emergencies. In response, U.S. federal, state, and local governments and agencies have enacted wide-ranging actions to combat the pandemic, including “shelter-in-place” orders and quarantines, social distancing mandates, and face covering and hygiene protocols. In addition, some U.S. states and municipalities have placed significant limits on non-essential construction projects. These actions have substantially restricted daily activities for individuals and businesses, and have caused many businesses to curtail or cease normal operations.

The widespread health crisis created by the COVID-19 pandemic and the actions taken to combat it have had a significant adverse effect on the economies and financial markets of the U.S. and many other countries. The U.S. has experienced deteriorating economic conditions in many major markets, including increased unemployment, decreases in disposable income, declines in consumer confidence, general economic slowdowns, and significant volatility in financial markets. These deteriorating economic conditions may reduce demand for our products, which could materially reduce our sales and profitability. In addition, any bankruptcy or financial distress of our customers or suppliers due to deterioration in economic conditions could result in other significant negative impacts to our business including reduced sales, decreased collectability of accounts receivable, impaired credit, an ineffective supply chain, loss of credit from our suppliers, and a reduction in certain key product brands. Deteriorating economic conditions and reduced sales and profitability could also limit the availability of credit, or increase our borrowing costs, including by requiring additional collateral. We also may be required to record impairment charges with respect to assets whose fair values may be negatively affected by the effects of the pandemic on our operations.

In addition, although our operations and those of most of our direct customers and suppliers are currently considered “essential” and are therefore exempt from state and local business closure orders, these exemptions may not mitigate the impact to our markets caused by the COVID-19 pandemic, and they may be curtailed or revoked in the future. If these exemptions are curtailed or revoked, it could require us, or our customers or suppliers, to further limit our operations or suspend them altogether, which would adversely impact our business, operating results, and financial condition. The pandemic has also caused, and may continue to cause, disruption to the global supply chain, which could impact our ability to source products from our suppliers, many of whom are located outside of the United States, including China.

In response to the pandemic, we have instituted a number of actions to protect our workforce, including restricting business travel, imposing mandatory quarantine periods for employees who have traveled to areas impacted by the pandemic, modifying office functions to allow employees to work remotely, and modifying our warehouse and delivery operations to enforce enhanced safety protocols around social distancing, hygiene, and health screening. While all of these steps are necessary and appropriate in light of the pandemic, they, coupled with state and local business closure orders and regulations, do impact our ability to operate our business in its ordinary and traditional course, and they have and may continue to cause us to experience reductions in productivity and disruptions to our business routines while they remain in place.

While many states have begun the process of lifting or curtaining shelter-in-place, business closure, and related orders, the rates of infection, hospitalization, and mortality associated with the COVID-19 virus continue to fluctuate, and have increased in some localities. The potential magnitude or duration of the business and economic impacts from this pandemic continue to remain uncertain, and many of the associated negative trends may continue through fiscal 2020. While the initial negative impact on our business from the COVID-19 pandemic has not been as significant as we initially expected, it could become more severe. Any of the negative impacts of the COVID-19 pandemic, including those described above, alone or in combination with others, may have a material adverse effect on our results of operations, financial condition, and cash flows. In addition, any of these negative impacts, alone or in combination with others, could exacerbate many of the risks described in Part I, “Item 1A. Risk Factors”, in our Annual Report on Form 10-K for the year ended December 28, 2019, and the other risks described in this report. The full extent to which the COVID-19 pandemic will negatively affect our results of operations, financial condition, and cash flows will depend on future developments that are highly uncertain and cannot be predicted.

~~We have been notified that we are not in compliance with certain listing standards of the New York Stock Exchange (NYSE), and we may be unable to regain compliance.~~

On April 22, 2020, we were notified by the NYSE that we were not in compliance with the continued listing standards set forth in Section 802.01B of the New York Stock Exchange Listed Company Manual because our average global market capitalization over a consecutive 30 trading-day period was less than $50 million, and, at the same time, our stockholders’ equity was less than $50 million.

On April 28, 2020, we submitted, and on May 14, 2020, the NYSE accepted, our plan to regain conformity with this NYSE listing standard by January 1, 2022, in accordance with NYSE rules. Our common stock will continue to be listed and traded on the NYSE during the cure period, subject to our compliance with other continued listing standards, and we will be subject to quarterly monitoring by the NYSE for compliance with the plan. The NYSE will deem us to have regained compliance if, during the cure period, we comply with the relevant continued listing standards, or qualify under an original listing standard, for a period of two consecutive quarters. Until the NYSE determines that we have regained compliance, our common stock trading symbol of “BXC” will have an added designation of “.BC” to indicate that the status of the common stock is “below compliance” with the NYSE continued listing standards. If we fail to comply with the plan, do not meet continued listing standards at the end of the allowed cure period, or in the event that our common stock trades at levels viewed to be abnormally low by the NYSE, our common stock will be subject to the prompt initiation of NYSE suspension and delisting procedures. There can be no assurance that our plans to regain compliance will be successful.

We believe that the erosion of our average market capitalization was a direct result of the effects of the COVID-19 pandemic on the stock market, and we expect that a return to normalcy in the stock market should return our market capitalization to a compliant level. Our 30 trading-day average global market capitalization was $69.8 million and $91.0 million at June 27, 2020, and July 31, 2020, respectively, in each case in excess of the $50 million required by the listing standard; however, a delisting would have an adverse effect on the liquidity of our common stock and, as a result, the market price for our common stock might decline if our common stock is delisted. Delisting could also make it more difficult for us to raise additional capital.

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

The following table summarizes the Company’s common stock repurchase activity for each month of the quarter ended ~~June 27, 2020:~~July 3, 2021:

     Total Number
Shares Average Price
Period
Purchased⁽¹⁾
  Paid Per Share
March 29 - May 2, 2020 —
   $ —
May 3 - May 30, 2020 —
   $ —
May 31 - June 27, 2020 27,522
   $ 8.98
Total 27,522


(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.


Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share
April 4 - May 8	—	$	—
May 9 - June 5	—	$	—
June 6 - July 3	112,892	$	44.58
Total	112,892

(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 unit awards.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

On August 3, 2020, in light of the performance by the Company during its 2020 second fiscal quarter and July, the Compensation Committee of the Company’s Board of Directors (the “Committee”) rescinded the voluntary reduction of the base salary of the Company’s President and Chief Executive Officer, Mitchell B. Lewis, and reinstated his annual base salary of $850,000 effective August 1, 2020. Mr. Lewis’s base salary had been reduced to, and paid at, $1 per month for the months of April through July 2020 at the request of Mr. Lewis and pursuant to the Committee’s previous approval.None.

ITEM 6. EXHIBITS



Exhibit Number				Description
10.1				~~Sixth Amendment to Credit~~R etirement and ~~Guaranty~~Transition Services Agreement between BlueLinx Corporation and Mitchell B. Lewis, dated April ~~1, 2020,~~15, 2021 (incorporated by reference to Exhibit 10.1 to the Compan y ’s Form 8-K filed with the Securities and Exchange Commi ssion on April 21, 2021). ±
10.2				E mployment Agreement by and among BlueLinx ~~Holdings Inc., as borrower, certain subsidiaries of~~Co rporation, BlueLinx Holdings Inc.~~, as guarantors,~~ and Dwight Gibson, dated April 15, 2021 (incorporated by reference to Exhibit 10.2 to the ~~lenders party thereto,~~Company ’s Form 8-K filed with the Securitie s and ~~HPS Investment Partners, LLC, in its capacity as administrative agent~~Exchange Commi ssion on April 2 1, 2021 ). ±
10.3				Separation Agreement between BlueLinx Corporation and Alexander Averitt, dated June 28, 2021 (incorporated by reference to Exhibit 10.1 to the Company’s Form ~~8‑K~~8-K filed with the Securities and Exchange Commission on July 1, 2021). ±
10.4			*	F irst Amendment to Employment Agreement, by and between BlueLinx Corporation and Dwight Gibson, dated June 24, 2021. ±
10.5			*	Form of 2021 Time-Based Restricted Stock Unit Award Agreement under the BlueLinx Holdings Inc. 2021 Amended and Restated Long-Term Incentive Plan. ±
10.6			*	BlueLinx Holdings Inc. 2021 Long-Term Equity Incentive Plan Restricted Stock Unit Agreement for Non-Employee Directors. ±
10.7			*	Award Agreement between BlueLinx Holdings Inc., BlueLinx Corporation and Dwight Gibson, dated June 24, 2021. ±
10.8				BlueLinx Holdings Inc. 2021 Long-Term Incentive Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement filed with the Securities and Exchange Commission on April ~~7, 2020)~~20, 2021). ±
~~10.2~~31.1			*	~~Letter Agreement, dated March 30, 2020, between BlueLinx Corporation and Alexander Averitt.~~
~~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.
104				The cover page from this Quarterly Report on Form 10-Q for the quarter ended April 3, 2021, formatted in Inline XBRL.

			*	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.
			±	Management contract or compensatory plan or arrangement

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 3, ~~2020~~2021	By:	/s/ Kelly C. Janzen
		Kelly C. Janzen
		Senior Vice President and Chief Financial Officer



	Six Months Ended
	June 27, 2020			June 29, 2019
Cash flows from operating activities:
Net income (loss)	$	5,908		$	(418	)
Adjustments to reconcile net income (loss) to cash provided by (used in) operations:
Benefit from income taxes	(1,588		)	(175		)
Depreciation and amortization	14,698			14,831
Amortization of debt issuance costs	1,903			1,614
Gains from sales of property	(525		)	(9,760		)
Amortization of deferred gain	(1,967		)	(1,902		)
Share-based compensation	1,858			1,341
Changes in operating assets and liabilities:
Accounts receivable	(71,770		)	(53,608		)
Inventories	31,827			(16,800		)
Accounts payable	26,572			25,672
Prepaid and other current assets	(3,200		)	(8,078		)
Other assets and liabilities	9,185			(5,766		)
Net cash provided by (used in) operating activities	12,901			(53,049		)

Cash flows from investing activities:
Acquisition of business, net of cash acquired	—			6,009
Proceeds from sale of assets	102			10,758
Property and equipment investments	(1,752		)	(1,784		)
Net cash (used in) provided by investing activities	(1,650		)	14,983

Cash flows from financing activities:
Borrowings on revolving credit facilities	350,236			365,519
Repayments on revolving credit facilities	(354,509		)	(329,683		)
Repayments on term loan	(77,852		)	(31,899		)
Proceeds from real estate financing transactions	78,263			44,822
Debt financing costs	(2,665		)	(2,359		)
Repurchase of shares to satisfy employee tax withholdings	(254		)	(208		)
Principal payments on finance lease liabilities	(4,583		)	(4,403		)
Net cash (used in) provided by financing activities	(11,364		)	41,789

Net change in cash	(113		)	3,723
Cash at beginning of period	11,643			8,939
Cash at end of period	$	11,530		$	12,662

Supplemental Cash Flow Information
Net income tax (refunds) payments during the period	$	(223	)	$	3,057
Interest paid during the period	$	24,416		$	27,278



	Gross carrying amounts		Accumulated Amortization			⁽¹⁾	Net carrying amounts
	(In thousands)
Customer relationships	$	25,500	$	(8,393	)		$	17,107
Noncompete agreements	8,254		(4,564		)		3,690
Trade names	6,826		(5,032		)		1,794
Total	$	40,580	$	(17,989	)		$	22,591



	Estimated Amortization
	(In thousands)
2020	$	3,645
2021	4,973
2022	3,111
2023	1,807
2024	1,505


		June 27, 2020		December 28, 2019
						Lease assets and liabilities		July 3, 2021		January 2, 2021
		(In thousands)						(In thousands)
						Assets	Classification
Operating lease right-of-use assets	Operating lease right of use assets	$	50,802	$	54,408	Operating lease right-of-use assets		$	49,478	$	51,142
Finance lease right-of-use assets ⁽¹⁾	Property and equipment, net	153,176		141,922		Finance lease right-of-use assets (1)	Property and equipment, net	152,510		148,561
Total lease right-of-use assets		$	203,978	$	196,330	Total lease right-of-use assets		$	201,988	$	199,703

Liabilities						Liabilities
Current portion						Current portion
Operating lease liabilities	Operating lease liabilities - short term	$	6,633	$	7,317	Operating lease liabilities	Operating lease liabilities - short term	$	4,936	$	6,076
Finance lease liabilities	Finance lease liabilities - short term	5,958		6,486		Finance lease liabilities	Finance lease liabilities - short term	6,379		5,675
Non-current portion						Non-current portion
Operating lease liabilities	Operating lease liabilities - long term	44,169		47,091		Operating lease liabilities	Operating lease liabilities - long term	44,897		44,965
Finance lease liabilities	Finance lease liabilities - long term	266,622		191,525		Finance lease liabilities	Finance lease liabilities - long term	272,817		267,443
Total lease liabilities		$	323,382	$	252,419	Total lease liabilities		$	329,029	$	324,159



	Second Quarter of Fiscal 2020		% of Net Sales	Second Quarter of Fiscal 2019			% of Net Sales
	(In thousands)			(In thousands)
Net sales	$	698,776	100.0%	$	706,448		100.0%
Gross profit	100,820		14.4%	94,167			13.3%
Selling, general, and administrative	69,710		10.0%	70,150			9.9%
Depreciation and amortization	7,063		1.0%	7,503			1.1%
Gains from sales of property	—		0.0%	(9,760		)	(1.4)%
Other operating expenses	1,962		0.3%	3,951			0.6%
Operating income	22,085		3.2%	22,323			3.2%
Interest expense, net	11,535		1.7%	13,717			1.9%
Other expense (income), net	417		0.1%	(45		)	0.0%
Income before provision for income taxes	10,133		1.5%	8,651			1.2%
Provision for income taxes	3,438		0.5%	2,350			0.3%
Net income	$	6,695	1.0%	$	6,301		0.9%



	First Six Months of Fiscal 2020			% of Net Sales	First Six Months of 2019			% of Net Sales
	(In thousands)				(In thousands)
Net sales	$	1,360,846		100.0%	$	1,345,149		100.0%
Gross profit	194,029			14.3%	180,212			13.4%
Selling, general, and administrative	143,314			10.5%	139,235			10.4%
Depreciation and amortization	14,698			1.1%	14,831			1.1%
Gains from sales of property	(525		)	0.0%	(9,760		)	(0.7)%
Other operating expenses	6,127			0.5%	9,276			0.7%
Operating income	30,415			2.2%	26,630			2.0%
Interest expense, net	25,915			1.9%	27,118			2.0%
Other expense, net	180			0.0%	105			0.0%
Income (loss) before benefit from income taxes	4,320			0.3%	(593		)	0.0%
Benefit from income taxes	(1,588		)	(0.1)%	(175		)	0.0%
Net income (loss)	$	5,908		0.4%	$	(418	)	0.0%



		Total Number
		Shares	Average Price
Period		Purchased⁽¹⁾	Paid Per Share
March 29 - May 2, 2020		—	$	—
May 3 - May 30, 2020		—	$	—
May 31 - June 27, 2020		27,522	$	8.98
Total		27,522

(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.