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What changed in BlueLinx Holdings Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of BlueLinx Holdings Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+244 added−265 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-20)

Top changes in BlueLinx Holdings Inc.'s 2025 10-K

244 paragraphs added · 265 removed · 204 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeCompetition The U.S. building products distribution market is a highly fragmented market, served by national and multi-regional distributors, regionally focused distributors, and independent local distributors. Local and regional distributors tend to be closely held and often specialize in a limited number of product segments, in which they may offer a broader selection of products.
Biggest changeLocal and regional distributors tend to be closely held and often specialize in a limited number of product segments, in which they may offer a broader selection of products. Some of our national and multi-regional competitors are part of larger companies and, therefore, may have access to greater financial and other resources than those to which we have access.
We carry a broad portfolio of both branded and private-label stock keeping units (“SKUs”) across two principal product categories: specialty products and structural products. Specialty products include items such as engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products. Structural products include items such as lumber, plywood, oriented strand board, rebar, and remesh.
We carry a broad portfolio of both branded and private-label stock keeping units (“SKUs”) across two principal product categories: specialty products and structural products. Specialty products include items such as engineered wood, siding, millwork, outdoor living products, specialty lumber and panels, and industrial products. Structural products include items such as lumber, plywood, oriented strand board, rebar, and remesh.
These include our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and proxy statements. Additionally, our code of ethical conduct, the board committee charter for each of our audit committee, human capital and compensation committee, and nominating and corporate governance committee, and our corporate governance guidelines are available on our website.
These include our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and proxy statements. Additionally, our code of conduct, the board committee charter for each of our audit committee, human capital and compensation committee, and nominating and corporate governance committee, and our corporate governance guidelines are available on our website.
We also provide a wide range of value-added services and solutions to our customers and suppliers including: • providing “less-than-truckload” delivery services; • pre-negotiated program pricing plans; • inventory stocking; • automated order processing through an electronic data interchange, or “EDI,” that provides a direct link between us and our customers; • intermodal distribution services, including railcar unloading and cargo reloading onto customers’ trucks; • milling and fabrication services; and • backhaul services, when otherwise empty trucks are returning from customer deliveries.
We also provide a wide range of value-added services and solutions to our customers and suppliers including: • providing “less-than-truckload” delivery services; • job site delivery services; • pre-negotiated program pricing plans; • inventory stocking; • automated order processing through an electronic data interchange, or “EDI,” that provides a direct link between us and our customers; • intermodal distribution services, including railcar unloading and cargo reloading onto customers’ trucks; • milling and fabrication services; and • backhaul services, when otherwise empty trucks are returning from customer deliveries.
Our position in this distribution model for building products provides easy access to the marketplace for our suppliers and a value proposition of rapid delivery on an as-needed basis to our customers from our network of warehouse facilities. 4 Table of Contents Our Strategy We remain committed to driving a culture of profitable growth within new and existing product lines and geographies, while positioning the Company for long-term value creation.
Our position in this distribution model for building products provides easy access to the marketplace for our suppliers and a value proposition of rapid delivery on an as-needed basis to our customers from our network of warehouse facilities. 4 Table of Contents Our Strategy We remain committed to driving profitable sales growth within new and existing product lines and geographies, while positioning our Company for long-term value creation.
Distribution Channels We sell products through three main distribution channels, consisting of warehouse sales, reload sales, and direct sales. Warehouse sales, which generate the majority of our sales, are delivered from our warehouses to our customers.
Distribution Channels We sell products through three main distribution channels, consisting of warehouse sales, reload sales, and direct sales. Warehouse sales generate the majority of our sales, are delivered from our warehouses to our customers.
These laws also may require the investigation and cleanup of third-party sites at which an entity or its predecessor sent hazardous wastes for disposal, notwithstanding that the original disposal activity accorded with applicable requirements. Liability under such laws may be imposed jointly and severally, and regardless of fault.
These laws also may require the investigation and cleanup of third-party sites at which an entity or its predecessor sent hazardous waste for disposal, notwithstanding that the original disposal activity accorded with applicable requirements. Liability under such laws may be imposed jointly and severally, and regardless of fault.
In addition, copies of this information will be made available, free of charge, on written request, by writing to BlueLinx Holdings Inc., Attn: Corporate Secretary, 1950 Spectrum Circle, Suite 300, Marietta, Georgia, 30067. 9 Table of Contents
In addition, copies of this information will be made available, free of charge, on written request, by writing to BlueLinx Holdings Inc., Attn: Corporate Secretary, 1950 Spectrum Circle, Suite 300, Marietta, Georgia, 30067. 8 Table of Contents
In addition, our operations could in the future be subject to regulations related to climate change. To the extent that climate-related risks materialize, and if we are unprepared for them, we may incur unexpected costs, which could have a material effect on our financial results of operations.
In addition, our operations could in the future be subject to regulations related to climate change. To the extent that climate-related risks materialize, and if we are unprepared for them, we may incur unexpected costs, which could have a material effect on our financial position, results of operations and cash flows.
Certain of these environmental laws, including the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), may require the investigation and cleanup of an entity’s or its predecessor’s current or former properties, even if the associated contamination was caused by the operations of a third party.
Certain of these environmental laws, including the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), may require the investigation and cleanup of an entity’s or its predecessor’s current or former properties, even if 7 Table of Contents the associated contamination was caused by the operations of a third party.
If we amend our code of ethical conduct, or grant any waiver, including any implicit waiver, for any board member, our chief executive officer, our chief financial officer, or any other executive officer, we will disclose such amendment or waiver on our website.
If we amend our code of conduct, or grant any waiver, including any implicit waiver, for any board member, our chief executive officer, our chief financial officer, our interim principal financial officer, or any other executive officer, we will disclose such amendment or waiver on our website.
As a value-added partner in a complex and demanding building products supply chain, we play a critical role in enabling our customers to offer a broad range of products and brands, as most of our customers do not have the capability to purchase and warehouse products directly from manufacturers for such a large set of SKUs.
As a value-added partner in a complex and demanding building products supply chain, we play a critical role in enabling our customers to offer a broad range of products and brands, as most of our customers do not have the capability to purchase warehouse products directly from manufacturers for such a large set of SKUs or do not have enough space to store large bulky building materials that we sell.
Climate Change Climate change presents potential risks and uncertainties for us. Weather-related events, such as hurricanes, tornadoes or extreme temperature changes, can impact our operations and result in lost production, supply chain disruptions and increased material costs. Some of our distribution centers are located in areas at greater risk of tornadoes, hurricanes, and floods.
Weather-related events, such as hurricanes, tornadoes or extreme temperature changes, can impact our operations and result in lost production, supply chain disruptions and increased material costs. Some of our distribution centers are located in areas at greater risk of tornadoes, hurricanes, and floods.
The Company further seeks to maintain a disciplined capital structure while at the same time investing in its business to modernize its distribution facilities, as well as its tractor and trailer fleet, and to improve operational performance.
We further seek to maintain a disciplined capital structure while at the same time investing in our business to modernize our distribution facilities, as well as our tractor and trailer fleet, and to improve operational performance.
Maintain a disciplined capital structure and pursue strategic investments that increase the value of the Company. The Company continues to strategically target acquisition opportunities that grow its specialty products business, expand its geographic reach, or complement its existing capabilities. The Company also continues to identify markets that are potential opportunities for new market development.
Maintain a disciplined capital structure and pursue strategic investments that increase the value of our Company. We continue to strategically target acquisition opportunities that grow our higher-margin specialty products business, expand our geographic reach, or complement our existing capabilities. We also continue to evaluate and identify additional markets that are potential opportunities for new market development.
Sustainability In addition to participating in the Forestry Stewardship Council, an organization promoting environmentally appropriate, socially beneficial, and economically viable management of the world’s forests, we invested in electric forklifts during fiscal 2023 to use in certain locations and expect to purchase more in fiscal 2024.
Sustainability In addition to participating in the Forestry Stewardship Council, an organization promoting environmentally appropriate, socially beneficial, and economically viable management of the world’s forests, we invested in electric forklifts during fiscal 2024 and 2023 in certain locations and expect to purchase more in fiscal 2025. We continue to make progress on utilizing more fuel-efficient tractors in our fleet.
During fiscal 2023, in order to enhance the safety of our material handling fleet, we made a significant investment in refreshing our forklifts across the network that operate more efficiently and have enhanced safety features such as clean electric technology, automated collision detection systems, blue spotlights and multi-facing cameras.
In order to enhance the safety of our material handling fleet, during fiscal 2024 and 2023 we made significant investments in refreshing our forklifts across our network. These enhancements allow more efficient operations and include enhanced safety features such as clean electric technology, automated collision detection systems, blue spotlights and multi-facing cameras.
Structural products, which represented approximately 30 percent, 35 percent, and 41 percent of our fiscal 2023, fiscal 2022, and fiscal 2021 net sales, respectively, include lumber, plywood, 5 Table of Contents oriented strand board, rebar, and remesh and other wood products primarily used for structural support in construction projects. Our structural products are commodity products.
In some cases, these products are branded by us. Structural products, which represented approximately 31 percent, 30 percent, and 35 percent of our fiscal 2024, fiscal 2023, and fiscal 2022 net sales, respectively, include lumber, plywood, oriented strand board, rebar, and remesh and other wood products primarily used for structural support in construction projects. Our structural products are commodity products.
The following strategic initiatives represent key areas of our management team’s focus: 1. Migrate sales mix toward higher-margin specialty product categories. The Company is pursuing a revenue mix increasingly weighted toward higher-margin, specialty product categories such as engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products.
The following strategic initiatives represent key areas of our management team’s focus: 1. Growing our higher-margin specialty product categories. We continue to pursue a revenue mix weighted towards higher-margin, specialty product categories such as engineered wood, siding, millwork, outdoor living products, specialty lumber and panels, and industrial products.
The first and fourth quarters are typically our lower volume quarters due to the impact of unfavorable weather on the residential repair and remodel and residential new home construction markets. Our second and third quarters are typically our higher volume quarters, reflecting an increase in repair and remodel and residential new home construction, due to more favorable weather conditions.
Our second and third quarters are typically our higher volume quarters, reflecting an increase in repair and remodel activity and residential new home construction due to more favorable weather conditions.
BlueLinx has a high-performance culture where associates are expected to live by our core values of teamwork, continuous improvement and integrity each and every day. As of December 30, 2023, we employed approximately 2,000 associates and less than one percent of our associates are employed on a part-time basis.
BlueLinx has a high-performance culture where associates are expected to live every day by our core values of collaboration, respect, integrity, grit, and being customer centric . As of December 28, 2024, we employed approximately 2,000 associates and less than one percent of our associates is employed on a part-time basis.
This includes enhancing the customer experience through technology enablement; accelerating organic growth within specific product and solutions offerings where the Company is uniquely advantaged; enhancing our performance by leveraging our scale and footprint together with pricing, operational and procurement capabilities; and deploying capital to drive sustained margin expansion, grow cash flow and maintain continued profitable growth. 3.
We seek to improve the customer experience through enhanced tools, value-added services, and technology enablement, accelerating organic growth within specific product and solutions offerings where we are uniquely advantaged; increase our performance by leveraging our scale and national footprint together with pricing, operational and procurement capabilities, and deploy capital to drive sustained margin expansion, grow cash flow and maintain continued profitable growth. 4.
During the 2023 fiscal year, we allocated $69.7 million of capital towards the following transactions, both of which were funded with the Company’s cash and cash equivalents: • We invested $27.5 million in capital for our business to improve operational performance and productivity. • We repurchased 506,312 shares of our common stock for $42.1 million under our share repurchase programs at an average price of $83.21 per share, excluding broker commissions.
During the 2024 fiscal year, we allocated $85.1 million of capital towards the following transactions, both of which were funded with the Company’s cash and cash equivalents: • We invested $40.1 million in capital for our business to improve operational performance and productivity. • We repurchased 428,630 shares of our common stock for $45.0 million under our share repurchase programs at an average price of $104.90 per share, including broker commissions but excluding federal excise tax.
We are also subject to the oversight of the Federal Motor Carrier Safety Administration (“FMCSA”). Additionally, among other things, vehicle dimensions and driver hours of service are subject to both federal and state regulation.
Department of Transportation (“DOT”) regulates our operations in domestic interstate commerce. We are subject to safety requirements governing interstate operations prescribed by DOT. We are also subject to the oversight of the Federal Motor Carrier Safety Administration (“FMCSA”). Additionally, vehicle dimensions and driver hours of service, among other things, are subject to both federal and state regulation.
We are proactively replacing our diesel underground storage tanks based on their age to prevent fuel releases to the environment.
We also continue to proactively replace our diesel underground storage tanks based on their age to reduce the chance of fuel releases to the environment.
Specialty products, which represented approximately 70 percent, 65 percent, and 59 percent of our fiscal 2023, fiscal 2022, and fiscal 2021 net sales, respectively, include primarily engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products. In some cases, these products are branded by us.
We distribute products in two principal categories: specialty products and structural products. Specialty products, which represented approximately 69 percent, 70 percent, and 65 percent of our fiscal 2024, fiscal 2023, and fiscal 2022 net sales, respectively, include primarily engineered wood, siding, millwork, outdoor living products, specialty lumber and panels, and industrial products.
Our newest tractors are equipped with collision avoidance systems, dashboard cameras, speed monitoring, blind spot detection and lane departure warning technology, and disc-type brakes to improve stopping distance and driver control. We plan to continue to make significant investments in upgrading our over-the-road and material handling fleet into fiscal 2024 and beyond.
Our newest tractors are equipped with collision avoidance systems, dashboard cameras, speed monitoring, blind spot detection and lane departure warning technology. Our newest tractors and trailers are both equipped with disc-type brakes to improve stopping distance and driver control.
Our safety programs focus on job hazard identification and prevention, coupled with extensive on-going job-specific training. For example, material handlers and DOT-registered drivers follow a monthly individualized training curriculum, with knowledge testing, for injury and accident prevention. In addition, new hires and contract employees undergo safety training during their initial onboarding.
For example, material handlers and DOT-registered drivers follow a monthly individualized training curriculum, with knowledge testing, for injury and accident prevention. In addition, new hires and contract employees undergo safety training during their initial onboarding. We also administer post injury/accident corrective action supplemental training as needed and dictated by our investigations.
We also use our compensation review process, our compensation framework, and third-party compensation data in an effort to compensate associates in the same job, level and location fairly regardless of gender, race and ethnicity. If we identify discrepancies between actual compensation and our policies, we take action to make pay adjustments to close identified gaps.
Additionally, our leaders engage directly with associates through facility visits. We also use our compensation review process, our compensation framework, and third-party compensation data in an effort to compensate associates in the same job, level and location fairly regardless of gender, race and ethnicity.
Seasonality We are exposed to fluctuations in quarterly sales volumes and expenses due to seasonal factors common in the building products distribution industry, such as weather conditions and other seasonal factors.
We plan to continue to make significant investments in upgrading our over-the-road and material handling fleet into fiscal 2025 and beyond. 6 Table of Contents Seasonality We are exposed to fluctuations in quarterly sales volumes and expenses due to seasonal factors common in the building products distribution industry, such as weather conditions and other seasonal factors.
Together, warehouse and reload sales accounted for approximately 83 percent, 82 percent, and 81 percent of our fiscal 2023, fiscal 2022 and fiscal 2021 gross sales, respectively. 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.
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, however, requires the lowest amount of committed capital and fixed costs.
Three of our largest competitors are Boise Cascade Company, Weyerhaeuser Company, and Specialty Building Products. Most major markets in which we operate are served by the distribution arm of at least one of these companies. Governmental Regulations The Company is subject to various federal, state, provincial, and local laws, rules, and regulations.
We compete on the basis of breadth of product offering, consistent availability of product, product price and quality, reputation, service, and distribution facility location. Three of our largest competitors are Boise Cascade Company, Weyerhaeuser Company, and Specialty Building Products. Most major markets in which we operate are served by the distribution arm of at least one of these companies.
We have incurred and will continue to incur costs to comply with the requirements of health and safety, transportation, and environmental laws, ordinances, and regulations.
We have incurred and will continue to incur costs to comply with the requirements of health and safety, transportation, and environmental laws, ordinances, and regulations. These requirements could become more stringent in the future, and compliance costs may become material. Climate Change Climate change presents potential risks and uncertainties for us.
We operate our business from 66 warehouse and office facilities, allowing us to serve 75 percent of the highest growth metropolitan statistical areas as it relates to forecasted housing starts and repair and remodel spend . With the strength of a locally focused sales force, we distribute a comprehensive range of products from over 750 suppliers.
We operate our business from 65 warehouse and storage facilities, allowing us to serve 75 percent of the highest growth metropolitan statistical areas as it relates to forecasted housing starts and repair and remodel spend . We also have a corporate headquarters facility located near Atlanta in Marietta, GA.
Our suppliers include some of the leading manufacturers in the industry, such as Allura, Arauco, Fiberon, Georgia-Pacific, Huber Engineered Woods, Louisiana-Pacific, Oldcastle APG, Ply Gem, Roseburg, Royal and Weyerhaeuser. We supply products to a broad base of customers including national home centers, pro dealers, cooperatives, specialty distributors, regional and local dealers and industrial manufacturers.
With the strength of a locally focused sales force, we distribute a comprehensive range of products from over 750 suppliers. Our suppliers include some of the leading manufacturers in the industry, such as Allura, Arauco, Fiberon, Georgia-Pacific, Huber Engineered Woods, Louisiana-Pacific, Oldcastle APG, Ply Gem, Roseburg, Royal and Weyerhaeuser.
Six CBAs covering approximately nine percent of our associates are up for renewal in fiscal year 2024, of which one has already been renegotiated, one is currently under negotiation, and we expect to renegotiate the remainder before their renewal dates.
Approximately 20% of our associates are represented by various local labor unions with terms and conditions of employment governed by Collective Bargaining Agreements (“CBAs”). Six CBAs covering approximately six percent of our associates are up for renewal in fiscal year 2025, of which one is currently in the renegotiation process. We expect to renegotiate the remainder before their renewal dates.
We are subject to the requirements of the U.S. Department of Labor Occupational Safety and Health Administration (“OSHA”). In order to maintain compliance with applicable OSHA requirements, we have established uniform safety and compliance procedures for our operations, and implemented measures designed to prevent workplace injuries.
In order to maintain compliance with applicable OSHA requirements, we have established uniform safety and compliance procedures for our operations, and implemented measures designed to prevent workplace injuries. Our safety programs focus on job hazard identification and prevention, coupled with extensive on-going job-specific training.
Reload sales are similar to warehouse sales but are shipped from non-warehouse locations, most of which are operated by third parties, where we store owned products to enhance 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.
Reload sales are similar to warehouse sales but are shipped from non-warehouse locations, most of which are operated by third parties, where 5 Table of Contents we store owned products to enhance operating efficiencies.
Some of our union employees continue to participate in multi-employer pension plans, and those plans were not impacted by the settlement of the frozen defined benefit pension plan. Securities Exchange Act Reports The Company maintains a website at www.BlueLinxCo.com. The information on the Company’s website is not incorporated by reference in this Annual Report on Form 10-K.
See Item 1A, Risk Factor s for further discussion of the risks posed by climate change. Securities Exchange Act Reports The Company maintains a website at www.BlueLinxCo.com. The information on the Company’s website is not incorporated by reference in this Annual Report on Form 10-K.
We also administer post injury/accident corrective action supplemental training as needed and dictated by our investigations. Accidents and injuries are investigated with corrective actions implemented locally and communicated to key operations personnel across the enterprise to help prevent future occurrences.
Accidents and injuries are investigated with corrective actions implemented locally and communicated to key operations personnel across the enterprise to help prevent future occurrences. As discussed above, in order to enhance the safety and capabilities of our fleet, we made investments in upgrading our fleet in fiscal 2024 and 2023. The U.S.
Our more extensive annual 6 Table of Contents Company survey had participation from approximately 74 percent of our associates in fiscal 2023, representing a wide cross section of our associate population. Our CEO, along with other executives, conduct periodic leadership town halls where associates are invited to engage with senior leadership.
Annually, we conduct a comprehensive employee survey that addresses our progress on these matters. In the most recent annual employee survey, nearly 75% of our associates elected to participate, and this population represented a wide cross section of our associates. Our CEO, along with other executives, conducts periodic leadership town halls where associates are invited to engage with senior leadership.
We strongly believe that our corporate culture depends on our associates’ engagement and understanding of their contribution to the achievement of our strategic imperatives, vision, and mission. We also seek to connect our leaders across regions and provide them with opportunities to enable collaboration and to connect with the larger organization.
We are committed to ensuring that our associates feel like they matter to BlueLinx, and we manage the business in a manner that fosters this commitment. We strongly believe that our corporate culture depends on our associates’ engagement and understanding of their contribution to the fulfillment of our purpose and the achievement of our strategic imperatives, vision, and mission.
Many of our customers serve residential and commercial builders, contractors and remodelers in their respective geographic areas and local markets. Our headquarters is located near Atlanta in Marietta, Georgia.
We supply products to a broad base of customers including national home centers, pro dealers, cooperatives, specialty distributors, regional and local dealers and industrial manufacturers. Many of our customers serve residential and commercial builders, contractors and remodelers in their respective geographic areas and local markets.
This distribution channel, however, requires the lowest amount of committed capital and fixed costs. Direct sales accounted for approximately 17 percent, 18 percent, and 19 percent of our fiscal 2023, fiscal 2022, and fiscal 2021 gross sales, respectively.
Direct sales accounted for approximately 20 percent, 17 percent, and 18 percent of our fiscal 2024, fiscal 2023, and fiscal 2022 Net sales, respectively. Human Capital Our Associates Our associates are the foundation of our business and are critical to the execution of our strategy.
We continue to make progress on utilizing more 7 Table of Contents fuel-efficient tractors in our fleet. We are also replacing our warehouse lighting systems with more environmentally friendly lighting solutions and reducing our landfill waste by prioritizing recycling options, where available.
We are also replacing our warehouse lighting systems with more environmentally friendly lighting solutions and reducing our landfill waste by prioritizing recycling options, where available. Competition The U.S. building products distribution market is a highly fragmented market, served by national and multi-regional distributors, regionally focused distributors, and independent local distributors.
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Additionally, the Company is expanding its value-added service offerings designed to simplify complex customer sourcing requirements, together with marketing, inventory and pricing services afforded by the Company’s national platform. 2. Foster a performance-driven culture committed to business excellence and profitable growth to be the provider of choice for suppliers and customers.
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Additionally, we are expanding our value-added service offerings designed to simplify complex customer sourcing requirements. 2. Increase share gain in local and national markets. We continue to pursue multi-family project growth, expand our product lines with key national accounts, expand branded product lines into new geographic markets, and launch new product lines.
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As a component of our decision to settle the BlueLinx Corporation Hourly Retirement Plan, we also contributed $6.9 million to the plan in fiscal 2023. This is discussed in more detail in Note 10, Employee Retirement Plans , in Item 8 of this Annual Report. During fiscal 2022, we consummated the acquisition of Vandermeer Forest Products, Inc.
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With our expanded product categories, and our strategic vendor relationships, we seek to be an extension of our customers’ business in a scalable way. 3. Foster a performance-driven culture committed to business excellence and profitable growth to be the provider of choice for both suppliers and customers.
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(“Vandermeer”), which aligns to our specialty products strategy, established a meaningful growth platform in the Pacific Northwest, increased market penetration in key specialty product categories, and strengthened strategic supplier relationships. A distribution facility and real estate located in Spokane, Washington were acquired in this transaction.
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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. Together, warehouse and reload sales accounted for approximately 80 percent, 83 percent, and 82 percent of our fiscal 2024, fiscal 2023 and fiscal 2022 Net sales, respectively.
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This transaction is discussed in more detail in Note 2, Business Combination , in Item 8 of this Annual Report. We distribute products in two principal categories: specialty products and structural products.
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If we identify discrepancies between actual compensation and our policies, we take action to make pay adjustments to close identified gaps. In addition, we support several employee resource groups that facilitate social, development, and community interaction in our workforce. Safety We are committed to providing a safe and healthy working environment for our associates.
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Human Capital Our Commitment to Diversity, Equity, and Inclusion We are committed to diversifying our workforce to ensure that our associates feel like they matter. We realize the value that diversity, equity and inclusion bring to our business.
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The first and fourth quarters are typically our lower volume quarters due to the impact of unfavorable weather on residential repair and remodel activity and the residential new home construction market.
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As of December 30, 2023, employees that identify as female represented 15 percent of our associate population, 20 percent of our executive leadership team, and 22 percent of our Board of Directors.
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Governmental Regulations The Company is subject to various federal, state, provincial, and local laws, rules, and regulations. We are subject to the requirements of the U.S. Department of Labor Occupational Safety and Health Administration (“OSHA”).
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Additionally, employees who identify as racially or ethnically diverse represented 27 percent of our total associate population, 20 percent of our executive leadership team, and 22 percent of our Board of Directors. We are committed to managing the business in a manner that fosters diversity, equity, and inclusion.
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In addition, during fiscal 2023, we supported seven employee resource groups that facilitate social, development, and community interaction in our workforce to foster a more inclusive culture. Our Associates Our associates are the foundation of our business.
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Approximately 28% of our associates are represented by various local labor unions with terms and conditions of employment governed by Collective Bargaining Agreements (“CBAs”).
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In addition to prioritizing regular communications, we are conducting quarterly employee surveys to monitor our culture and employee engagement, while seeking feedback on what is going well and where we can focus our efforts to do more.
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Additionally, our leaders engage directly with associates through facility visits. During fiscal 2023, we continued to invest in our people, and in programs and systems designed to meet the increased demand for talent in a dynamic marketplace.
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We increased our investments in our benefits programs, which included new and improved medical plans with lower deductibles, out of pocket maximums, free and unlimited virtual mental health counseling, enhanced life insurance benefits, and improved short-term disability benefits, as well as student loan repayment benefits.
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We also standardized our Company-wide performance management process for salaried employees, held talent review discussions to further our succession planning efforts, and launched new career development programs for our sales organization. Safety We are committed to providing a safe and healthy working environment for our associates.
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See Item 1A, Risk Factor s for further discussion of the risks posed by climate change.
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Some of our national and multi-regional competitors are part of larger companies and, therefore, may have access to greater financial and other resources than those to which we have access. We compete on the basis of breadth of product offering, consistent availability of product, product price and quality, reputation, service, and distribution facility location.
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As discussed above, in order to enhance the safety and capabilities of our fleet, we made investments in upgrading our fleet in fiscal 2023. The U.S. Department of Transportation (“DOT”) regulates our operations in domestic interstate commerce. We are subject to safety requirements governing interstate operations prescribed by DOT.
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These requirements could become more stringent in the future, and compliance costs may become material. 8 Table of Contents Significant Recent Transactions and Developments Share Repurchase Program On October 31, 2023, the Company’s Board of Directors authorized a new share repurchase program for $100 million, which follows the Company’s previous $100 million share repurchase program under which repurchase authority remained as of early October 2023.
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Under the new share repurchase program, the Company may repurchase its common stock from time to time, without prior notice, subject to prevailing market conditions and other considerations.
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Repurchases may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, accelerated share repurchase programs, tender offers or pursuant to a trading plan that may be adopted in accordance with the Securities and Exchange Commission Rule 10b5-1.
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During fiscal 2023 and fiscal 2022, we used cash of $42.1 million and $66.4 million, respectively, to repurchase our common shares. As of December 30, 2023, there was $91.4 million of remaining capacity to repurchase our common shares under our share repurchase program.
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Settlement of our Frozen Defined Benefit Pension Plan During the fourth quarter of fiscal 2023, we settled our frozen defined benefit pension plan by transferring future financial responsibilities for the plan to a highly rated insurance company through the purchase of an annuity.
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The accounting for this settlement resulted in the non-cash reclassification of $34.9 million, including net deferred income taxes of $4.5 million, from accumulated other comprehensive loss to earnings.
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The settlement also required the Company, as plan sponsor, to make a final $6.9 million cash contribution to the plan trust in order for the plan trust to have sufficient assets to purchase the annuity from the insurance company.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

54 edited+8 added−5 removed136 unchanged
Biggest changeThe factors that influence prices and costs also include, among others: • The use of auction markets, which are based on participants’ perceptions of short-term supply and demand, to determine prices and volumes for many commodities building products; • The use of published indices (including those published by Random Lengths), which may not accurately reflect changes in market conditions, to set selling prices for products; • Labor and freight costs, periodic delays in the delivery of products and inventory levels in various distribution channels ; • Government regulation, trade policies and market speculation; • National and international economic conditions, including inflationary conditions; • The ability of large customers to influence prices of outside building materials suppliers and distributors in a highly fragmented industry; • Consolidation among customers, particularly dealers, and their customers (i.e., home builders), and resulting changes in purchasing policies and payment practices; and • Consolidation among suppliers and its effects on pricing, consignment arrangements, and discount programs. 10 Table of Contents If supply exceeds demand, prices for our products could decline, and our results of operations, cash flows, and financial condition could be adversely affected.
Biggest changeThe factors that influence prices and costs also include, among others: • National and international economic conditions, including inflationary conditions; • Government regulations, trade policies, and market speculation; • Consolidation among customers, particularly dealers, and their customers (i.e., home builders), and resulting changes in purchasing policies and payment practices; • The use of auction markets, which are based on participants’ perceptions of short-term supply and demand, to determine prices and volumes for many commodities building products; • The use of published indices (including those published by Random Lengths), which may not accurately reflect changes in market conditions, to set selling prices for products; • Labor and freight costs, curtailments, periodic delays in the delivery of products and inventory levels in various distribution channels ; and • The ability of large customers to influence prices of outside building materials suppliers and distributors in a highly fragmented industry.
These deferred tax assets include temporary differences arising from such items as property, plant and equipment, accrued compensation, and accounting reserves related to inventory and other items in conjunction with net state operating loss carryovers that can be used to offset taxable income in future periods and reduce income taxes payable in those future periods.
These deferred tax assets include temporary differences arising from such items as property and equipment, accrued compensation, and accounting reserves related to inventory and other items in conjunction with net state operating loss carryovers that can be used to offset taxable income in future periods and reduce income taxes payable in those future periods.
For example, our indebtedness could: • make us more vulnerable to general adverse economic and industry conditions; • limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions, and other general corporate requirements; • expose us to interest rate fluctuations because the interest rate on the debt under our revolving credit facility is variable; • require us to dedicate a substantial portion of our cash flows to payments on our debt, thereby reducing the availability of our cash flows for operations and other purposes; • limit our flexibility in planning for, or reacting to, changes in our business, and the industry in which we operate; and 17 Table of Contents • place us at a competitive disadvantage compared to competitors that may have proportionately less debt, and therefore may be in a better position to obtain more favorable credit terms.
For example, our indebtedness could: • make us more vulnerable to general adverse economic and industry conditions; • limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions, and other general corporate requirements; • expose us to interest rate fluctuations because the interest rate on the debt under our revolving credit facility is variable; 16 Table of Contents • require us to dedicate a substantial portion of our cash flows to payments on our debt, thereby reducing the availability of our cash flows for operations and other purposes; • limit our flexibility in planning for, or reacting to, changes in our business, and the industry in which we operate; and • place us at a competitive disadvantage compared to competitors that may have proportionately less debt, and therefore may be in a better position to obtain more favorable credit terms.
Some of our competitors may have less financial leverage or are part of larger companies, and, therefore, may have access to greater financial and other resources than those to which we have access. Finally, we may not be able to maintain our costs at a level sufficiently low for us to compete effectively.
Some of our competitors may have less financial leverage or are part of larger companies, and may therefore have access to greater financial and other resources than those to which we have access. Finally, we may not be able to maintain our costs at a level sufficiently low enough for us to compete effectively.
Operating Risks We may be unable to effectively manage our inventory relative to our sales volume or as the prices of the products we distribute fluctuate, which could affect our business, financial condition, and operating results . We purchase most of our products directly from manufacturers, which are then sold and distributed to customers.
We may be unable to effectively manage our inventory relative to our sales volume or as the prices of the products we distribute fluctuate, which could affect our business, financial condition, and operating results . We purchase most of our products directly from manufacturers, which are then sold and distributed to customers.
In addition, operating hazards, such as delivering and unloading products, operating large machinery and driving hazards, which are inherent in our business and some of which may be outside of our control, can cause personal injury and loss of life, damage to or destruction of property, plant, and equipment and environmental damage.
In addition, operating hazards, such as delivering and unloading products, operating large machinery and driving hazards, which are inherent in our business and some of which may be outside of our control, can cause personal injury and loss of life, damage to or destruction of property and equipment and environmental damage.
Furthermore, continued consolidation among our suppliers makes it more difficult for us to negotiate favorable pricing, consignment arrangements, and discount programs with our suppliers, thereby resulting in reduced margins and profits. We are subject to disintermediation risk.
Furthermore, continued consolidation among our suppliers may makes it more difficult for us to negotiate favorable pricing, consignment arrangements, and discount programs with our suppliers, thereby resulting in reduced margins and profits. We are subject to disintermediation risk.
Broad market and industry factors may materially harm the market price of our common stock, regardless of our operating performance. In addition, share repurchases pursuant to our new share repurchase program could affect our stock price and increase its volatility.
Broad market and industry factors may materially harm the market price of our common stock, regardless of our operating performance. In addition, share repurchases pursuant to our share repurchase program could affect our stock price and increase its volatility.
Furthermore, the program does not obligate the Company to repurchase any dollar amount or number of shares of common stock, and may be suspended or discontinued at any time and any suspension or discontinuation could cause the market price of our stock to decline. 21 Table of Contents 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 .
Furthermore, the program does not obligate the Company to repurchase any dollar amount or number of shares of common stock, and may be suspended or discontinued at any time and any suspension or discontinuation could cause the market price of our stock to decline. 20 Table of Contents 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 .
Among other things, this consolidation is being driven by customer needs and supplier capabilities, which could cause markets to become more competitive as greater economies of scale are achieved by distributors. Customers are increasingly aware of the total costs of fulfillment and of the need to have consistent sources of supply at multiple locations.
Among other things, this consolidation is being driven in part by customer needs and supplier capabilities, which could cause markets to become more competitive as greater economies of scale are achieved by distributors. Customers are increasingly aware of the total costs of fulfillment and of the need to have consistent sources of supply at multiple locations.
In addition, because of this variability, our operating results for prior periods may not be effective predictors of future performance. 16 Table of Contents Factors associated with our industry, the operation of our business, and the markets for our products may cause our quarterly financial results to fluctuate, including: • general economic conditions, including but not limited to housing starts, construction labor shortages, repair and remodel activity and commercial construction, foreclosure rates, interest rates, unemployment rates, and mortgage availability and pricing, as well as other consumer financing mechanisms, that ultimately affect demand for our products; • supply chain disruptions, including those caused by the spread of contagious illness and geopolitical risks; • the highly competitive nature of our industry; • the commodity nature of many of our products and their price movements, which are driven largely by capacity utilization rates and industry cycles that affect supply and demand; • the cessation or reduction of supplier incentive programs, such as supplier rebates and/or deviation programs, and/or our inability to collect supplier incentives due to us; • disintermediation; • the impact of actuarial assumptions and regulatory activity on pension costs and pension funding requirements; • our creditworthiness in addition to the financial condition and creditworthiness of our customers; • our indebtedness, including the possibility that we may not generate sufficient cash flows from operations or that future borrowings may not be available in amounts sufficient to fulfill our debt obligations and fund other liquidity needs; • cost of compliance with government regulations; • adverse customs and tariff rulings including those relating to anti-dumping, countervailing duty, or circumvention investigations; • protectionist trade policies and import tariffs; • labor disruptions, shortages of skilled and technical labor, or increased labor costs; • the impact of inflation, which may arise from changes in the economic environment; • increased healthcare costs; • the need to successfully implement succession plans for our senior managers and other associates; • our ability to successfully complete potential acquisitions, achieve expected synergies from acquisitions, or efficiently integrate acquired operations; • disruption in our information technology systems; • federal laws and regulations regarding the importation of products may cause us to incur significant costs to comply with such laws and regulations in the future; • significant maintenance issues or failures with respect to our tractors, trailers, forklifts, and other major equipment; • severe weather phenomena such as drought, hurricanes, tornadoes, and fire; • condemnations of all or part of our real property; and • fluctuations in the market for our equity.
Factors associated with our industry, the operation of our business, and the markets for our products may cause our quarterly financial results to fluctuate, including: • general economic conditions, including but not limited to housing starts, construction labor shortages, repair and remodel activity and commercial construction, foreclosure rates, interest rates, unemployment rates, and mortgage availability and pricing, as well as other consumer financing mechanisms, that ultimately affect demand for our products; • supply chain disruptions, including those caused by the spread of contagious illness and geopolitical risks; • the highly competitive nature of our industry; • the commodity nature of many of our products and their price movements, which are driven largely by capacity utilization rates and industry cycles that affect supply and demand; • the cessation or reduction of supplier incentive programs, such as supplier rebates and/or deviation programs, and/or our inability to collect supplier incentives due to us; • disintermediation; • the impact of actuarial assumptions and regulatory activity on pension costs and pension funding requirements; • our creditworthiness in addition to the financial condition and creditworthiness of our customers; • our indebtedness, including the possibility that we may not generate sufficient cash flows from operations or that future borrowings may not be available in amounts sufficient to fulfill our debt obligations and fund other liquidity needs; • cost of compliance with government regulations; • adverse customs and tariff rulings including those relating to anti-dumping, countervailing duty, or circumvention investigations; • protectionist trade policies and new or increased import tariffs; • labor disruptions, shortages of skilled and technical labor, or increased labor costs; • the impact of inflation, which may arise from changes in the economic environment; • increased healthcare costs; • the need to successfully implement succession plans for our senior managers and other associates; • our ability to successfully complete potential acquisitions, achieve expected synergies from acquisitions, or efficiently integrate acquired operations; • disruption in our information technology systems; • federal laws and regulations regarding the importation of products may cause us to incur significant costs to comply with such laws and regulations in the future; • significant maintenance issues or failures with respect to our tractors, trailers, forklifts, and other major equipment; • severe weather phenomena such as drought, hurricanes, tornadoes, and fire; • condemnations of all or part of our real property; and • fluctuations in the market for our equity.
If we close a distribution center that is subject to a non-cancelable lease, we would remain committed to perform our obligations under the applicable lease, which would include, among other things, payment of the base rent, insurance, taxes, and other expenses on the leased property for the balance of the lease term.
If we close a distribution center that is subject to a non-cancelable lease, we would remain committed to perform our obligations under the applicable lease, which would include, among other things, payment of the base rent, insurance, taxes, and 17 Table of Contents other expenses on the leased property for the balance of the lease term.
We believe these customer needs could result in fewer distributors as the remaining distributors become larger and capable of being consistent sources of supply. There can be no assurance that we will be able to take advantage 11 Table of Contents effectively of this trend toward consolidation.
We believe these customer needs could result in fewer distributors as the remaining distributors become larger and capable of being consistent sources of supply. There can be no assurance that we will be able to take advantage effectively of this trend toward consolidation.
These systems may be vulnerable to natural disasters, telecommunications or equipment failures, power outages and similar events, employee errors or to intentional acts of misconduct, such as security breaches or cyber-attacks. The occurrence of any of these events or acts, or any other unanticipated problems, could result in damage to or the unavailability of these systems.
These systems may be vulnerable to natural disasters, telecommunications or equipment failures, power outages and similar events, employee errors or to intentional acts of misconduct, such as security breaches or cyberattacks. The occurrence of any of these events or acts, or any other unanticipated problems, could result in damage to or the unavailability of these systems.
Refer to Note 8, Debt and Finance Leases , in Item 8 of this Annual Report for further details. Despite our current levels of debt, we may still incur more debt, which would increase the risks described in these risk factors relating to indebtedness .
Refer to Note 8, Debt and Finance Lease Obligations , in Item 8 of this Annual Report for further details. Despite our current levels of debt, we may still incur more debt, which would increase the risks described in these risk factors relating to indebtedness .
Our business employs information technology systems to secure confidential information, such as employee personal data, but with the rapidly evolving sophistication of cyber-attacks, we may not be able to anticipate, prevent or mitigate our cybersecurity risks.
Our business employs information technology systems to secure confidential information, such as employee personal data, but with the rapidly evolving sophistication of cyberattacks, we may not be able to anticipate, prevent or mitigate our cybersecurity risks.
The operations at our distribution facilities may be interrupted or impaired by various operating risks, including, but not limited to, risks associated with catastrophic events, such as war, fires, floods, earthquakes, explosions, natural disasters, severe weather, including hurricanes, tornados and droughts, whether a result of climate change or otherwise, pandemics, or other similar occurrences; interruptions in the delivery of products via railroad or other inbound transportation means; adverse government regulations; equipment breakdowns or failures; prolonged power failures; unscheduled maintenance outages; information system disruptions or failures due to any number of causes; violations of our permit requirements or revocation of permits; releases of pollutants and hazardous substances to air, soil, surface water or ground water; disruptions in transportation infrastructure, including roads, bridges, railroad tracks and tunnels; shortages of equipment or spare parts; and labor disputes and shortages.
While we maintain insurance covering our facilities and equipment, including business interruption insurance, the operations at our distribution facilities may be interrupted or impaired by various operating risks, including, but not limited to, risks associated with catastrophic events, such as war, fires, floods, earthquakes, explosions, natural disasters, severe weather, including hurricanes, tornados and droughts, whether a result of climate change or otherwise, pandemics, or other similar occurrences, interruptions in the delivery of products via railroad or other inbound transportation means, adverse government regulations, civil unrest, condemnation, equipment breakdowns or failures, prolonged power failures, unscheduled maintenance outages, information system disruptions or failures due to any number of causes, violations of our permit requirements or revocation of permits, releases of pollutants and hazardous substances to air, soil, surface water or ground water; disruptions in transportation infrastructure, including roads, bridges, railroad tracks and tunnels, shortages of equipment or spare parts, and labor disputes and shortages.
Alternatively, in a rising price environment, our suppliers may increase prices or reduce discounts on the products we distribute, and we may be unable to pass on any cost increase to our customers, thereby resulting in reduced margins and profits. Our earnings are highly dependent on sales volumes.
Alternatively, in a rising price environment, our suppliers may increase prices or reduce discounts on the products we distribute, and we may be unable to pass on any cost increase to our customers, thereby resulting in reduced margins and profits. 10 Table of Contents Our earnings are highly dependent on sales volumes.
A significant percentage of our employees are unionized. Wage increases or work stoppages by our unionized employees may reduce our results of operations . As of December 30, 2023, we employed approximately 2,000 associates and less than one percent of our associates are employed on a part-time basis.
A significant percentage of our employees are unionized. Wage increases or work stoppages by our unionized employees may reduce our results of operations . As of December 28, 2024, we employed approximately 2,000 associates and less than one percent of our associates are employed on a part-time basis.
We are also from time to time subject to casualty, contract, tort, and other claims relating to our business, the products we have distributed in the past or may in the future distribute, and the services we have provided in the past or may in the future provide, either directly or through third parties.
We are also from time to time subject to casualty, contract, tort, and other claims relating to our business, the products we have distributed in the past or may in the future distribute, and the services we have provided in the past or may in the future provide, 13 Table of Contents either directly or through third parties.
In addition to this potential direct impact on our facilities and operations, continuing outbreaks of the virus could negatively impact our industry and end markets as a whole or result in a longer-term economic recession. Any of these factors could negatively affect our business, financial condition, cash flows, profitability, and results of operations.
In addition to this potential direct impact on our facilities and operations, any outbreaks, epidemics or pandemics could negatively impact our industry and end markets as a whole or result in a longer-term economic recession. Any of these factors could negatively affect our business, financial condition, cash flows, profitability, and results of operations.
Management may explore offsets to remaining obligations, such as subleasing opportunities or negotiated lease terminations, but there can be no assurance that we can offset 18 Table of Contents remaining obligations on commercially reasonable terms or at all.
Management may explore offsets to remaining obligations, such as subleasing opportunities or negotiated lease terminations, but there can be no assurance that we can offset remaining obligations on commercially reasonable terms or at all.
Moreover, failure to comply with the regulatory 15 Table of Contents requirements applicable to our business could expose us to litigation and substantial fines and penalties that could adversely affect our financial condition, operating results, and cash flows.
Moreover, failure to comply with the regulatory requirements applicable to our business could expose us to litigation and substantial fines and penalties that could adversely affect our financial condition, operating results, and cash flows.
For example, we were required to evaluate and maintain reasonable valuation allowances against our remaining state net operating loss carryforwards against our U.S. deferred tax assets as of December 30, 2023.
For example, we were required to evaluate and maintain reasonable valuation allowances against our remaining state net operating loss carryforwards against our U.S. deferred tax assets as of December 28, 2024.
Changes in these rules or their interpretation, such as recent changes regarding lease accounting standards, could significantly change our reported results and may even retroactively affect previously reported transactions. Changes resulting from the adoption of new or revised accounting principles may result in materially different financial results and may require that we make changes to our systems, processes, and controls.
Changes in these rules or their interpretation could significantly change our reported results and may even retroactively affect previously reported transactions. Changes resulting from the adoption of new or revised accounting principles may result in materially different financial results and may require that we make changes to our systems, processes, and controls.
This process of disintermediation can put us at risk of losing business from a customer, or of losing entire product lines or categories, or distribution territories, from suppliers. Disintermediation also adversely impacts our ability to obtain favorable pricing from suppliers and optimize margins and revenue with respect to our customers.
This process of disintermediation can put us at 9 Table of Contents risk of losing business from a customer, or of losing entire product lines or categories, or distribution territories, from suppliers. Disintermediation also may also adversely impact our ability to obtain favorable pricing from suppliers and optimize margins and revenue with respect to our customers.
More burdensome regulatory requirements in these or other areas may increase our general and administrative costs and adversely affect our financial condition, operating results, and cash flows.
More burdensome regulatory requirements in these or other areas may increase our general and administrative costs 14 Table of Contents and adversely affect our financial condition, operating results, and cash flows.
As of December 30, 2023, we had no outstanding debt under our revolving credit facility, and approximately $300.0 million of debt outstanding under our senior secured notes. Additionally, as of December 30, 2023, outstanding commitments under our finance leases were approximately $285.4 million. Our level of indebtedness could still have considerable consequences to our financial condition and operating results.
As of December 28, 2024, we had no outstanding debt under our revolving credit facility, and approximately $300.0 million of debt outstanding under our senior secured notes. Additionally, as of December 28, 2024, outstanding commitments under our finance leases were approximately $292.5 million. Our level of indebtedness could still have considerable consequences to our financial condition and operating results.
Thus, compliance with federal laws and regulations regarding the importation of products, import taxes or costs, including new or increased tariffs, anti-dumping duties, countervailing duties, or similar duties, some of which could be applied retroactively, could increase the cost of the products that we distribute.
Thus, compliance with federal laws and regulations regarding the importation of products, import taxes or costs, including new or increased tariffs, anti-dumping duties, countervailing duties, or similar duties, some of which could be applied retroactively, and modification to or withdrawal from free trade agreements or trade relationships, could increase the cost of the products that we distribute.
Climate change, and its effects on weather patterns, the frequency and severity of weather-related events, and temperatures, could adversely impact our business.
Our business operations and financial results could suffer from the impacts of climate change . Climate change, and its effects on weather patterns, the frequency and severity of weather-related events, and temperatures, could adversely impact our business.
In addition, a shortage of qualified drivers could require us to increase driver compensation, let trucks sit idle, utilize third-party freight more so than normal, utilize less experienced drivers, or face difficulty meeting customer demands, all of which could adversely affect our growth and profitability. Furthermore, our success is highly dependent on the continued services of our management team.
In addition, a shortage of qualified drivers could require us to increase driver 12 Table of Contents compensation, let trucks sit idle, utilize third-party freight more so than normal, utilize less experienced drivers, or face difficulty meeting customer demands, all of which could adversely affect our growth and profitability.
These potential changes or increased costs could adversely impact our business and results of operations. The effect of epidemics, global pandemics or other widespread public health crises and governmental rules and regulations could significantly disrupt our operations or those of our customers or suppliers.
The effect of epidemics, global pandemics or other widespread public health crises and governmental rules and regulations could significantly disrupt our operations or those of our customers or suppliers.
In addition, war, terrorism, geopolitical uncertainties, and public health issues could cause damage or disruption to the global economy, and thus could have a material adverse effect on us, our suppliers and our customers. Our business operations and financial results could suffer from the impacts of climate change .
In addition, war, terrorism, geopolitical uncertainties, and public health issues could cause damage or disruption to the global economy, and thus could have a material adverse effect on our financial condition, operating results and cash flows, our suppliers and our customers.
We could incur uninsured losses and liabilities arising from such events, including damage to our reputation, and/or suffer material losses in operational capacity, which could have a material adverse impact on our business, financial condition, and results of operations.
For example, one of our owned warehouse facilities located in Erwin, Tennessee was damaged by Hurricane Helene in late September 2024. We could incur uninsured losses and liabilities arising from such events, including damage to our reputation, and/or suffer material losses in operational capacity, which could have a material adverse impact on our business, financial condition, and results of operations.
Prices for our products are driven and influenced by many factors, including general economic conditions, demand for our products and competitive and other conditions in the industries within which we compete.
We may experience pricing and product cost variability. Prices for our products are driven and influenced by many factors, including general economic conditions, demand for our products and competitive and other conditions in the industries within which we compete. Prices that we pay and charge for our products can be unpredictable and volatile.
If shortages occur in the supply of necessary petroleum products and we are not able to pass along the full impact of increased petroleum prices to our customers or otherwise protect ourselves by entering into forward purchase contracts, then our results of operations would be adversely affected.
If shortages occur in the supply of necessary petroleum products and we are not able to pass along the full impact of increased petroleum prices to our customers or otherwise protect ourselves by entering into forward purchase contracts, then our results of operations would be adversely affected. 18 Table of Contents We establish insurance-related deductible/retention liabilities based on historical loss development factors, which could lead to adjustments in the future based on actual development experience.
Because we have meaningful fixed costs, a decrease in sales and margin generally may have a significant adverse impact on our financial condition, operating results, and cash flows. Consolidation among competitors, suppliers, and customers could negatively impact our business . Our competitors continue to consolidate.
Because we have meaningful fixed costs, a decrease in sales and margin generally may have a significant adverse impact on our financial condition, operating results, and cash flows. Loss of key products or key suppliers and manufacturers could affect our financial health .
In particular, any outbreak or resurgence of COVID-19 or a similar variant or any other future variants, or governmental imposition of mandatory or voluntary closures in areas where our manufacturing facilities, suppliers or customers are located, could severely disrupt our operations.
In particular, any governmental imposition of mandatory or voluntary closures in areas where our manufacturing facilities, suppliers or customers are located, in response to any such disease outbreak, epidemic, pandemic or health crisis, could severely disrupt our operations.
If our quarterly financial results or our predictions of future financial results fail to meet the expectations of securities analysts and investors, our stock price could be negatively affected. Any volatility in our quarterly financial results may make it more difficult for us to raise capital in the future or pursue acquisitions that involve issuances of our stock.
If our quarterly financial results or our predictions of future financial results fail to meet the expectations of securities analysts and investors, our stock price could be negatively affected.
As cyber-attacks become more sophisticated, we may incur significant costs to strengthen our systems from outside intrusions, and/or obtain insurance coverage related to the threat of such attacks. 13 Table of Contents Additionally, our business is reliant upon information technology systems to, among other things, manage and route our sales calls, manage inventories and accounts receivable, make purchasing decisions, monitor our results of operations, place orders with our vendors and process orders from our customers.
Additionally, our business is reliant upon information technology systems to, among other things, manage and route our sales calls, manage inventories and accounts receivable, make purchasing decisions, monitor our results of operations, place orders with our vendors and process orders from our customers.
Future disruptions in these systems could materially impact our ability to buy and sell our products, as well as generally operate our business, which could reduce our revenue. Our success depends on our ability to attract, train, and retain highly qualified associates and other key personnel while controlling related labor costs .
Future disruptions in these systems could materially impact our ability to buy and sell our products, as well as generally operate our business, which could reduce our revenue.
Failure by our suppliers to continue to supply us with products on commercially reasonable terms, or at all, could have a material adverse effect on our financial condition, operating results, and cash flows.
Failure by our suppliers to continue to supply us with products on commercially reasonable terms, or at all, could have a material adverse effect on our financial condition, operating results, and cash flows. 11 Table of Contents Operating Risks We are subject to information technology security risks and business interruption risks and may incur increasing costs in an effort to minimize and/or respond to those risks .
The loss of services of one or more key members of our senior management team could have a material adverse effect on us. We are exposed to product liability and other claims and legal proceedings related to our business and the products we distribute, which may exceed the coverage of our insurance .
We are exposed to product liability and other claims and legal proceedings related to our business and the products we distribute, which may exceed the coverage of our insurance .
As a result, continued disintermediation could have a negative impact on our financial condition and operating results. Loss of key products or key suppliers and manufacturers could affect our financial health .
As a result, continued disintermediation could have a negative impact on our financial condition and operating results. Our dependence on international suppliers and manufacturers for certain products exposes us to risks of new or increased tariffs and other risks that could affect our financial condition and expose us to certain additional risks .
Approximately 28 percent of our associates are represented by various local labor unions with terms and conditions of employment governed by Collective Bargaining Agreements (“CBAs”).
Approximately 20 percent of our associates are represented by various local labor unions with terms and conditions of employment governed by Collective Bargaining Agreements (“CBAs”). Six CBAs covering approximately six percent of our associates are up for renewal in fiscal year 2025, of which one is currently in the renegotiation process.
In the future, if we are unable to effectively manage our inventory, our cash flows may be negatively affected, which could have a material adverse effect on our business, financial condition, and operating results. 12 Table of Contents We may incur business disruptions resulting from a variety of possible causes.
In the future, if we are unable to effectively manage our inventory, our cash flows may be negatively affected, which could have a material adverse effect on our business, financial condition, and operating results. Our success depends on our ability to attract, train, and retain highly qualified associates and other key personnel while controlling related labor costs .
If our larger customers’ financial positions were to become impaired, our ability to fully collect receivables from such customers could be impaired and negatively affect our operating results, cash flows, and liquidity. We may experience pricing and product cost variability. Prices that we pay, and charge, for our products can be unpredictable and volatile.
If our larger customers’ financial positions were to become impaired, our ability to fully collect receivables from such customers could be impaired and negatively affect our operating results, cash flows, and liquidity. Consolidation among competitors, suppliers, and customers could negatively impact our business . Our competitors continue to consolidate.
We establish insurance-related deductible/retention liabilities based on historical loss development factors, which could lead to adjustments in the future based on actual development experience. 19 Table of Contents We retain a significant portion of the accident risk under our vehicle liability and workers’ compensation insurance programs; and we are self-insured for health insurance, the exposure of which is limited by stop-loss coverage.
We retain a significant portion of the accident risk under our vehicle liability and workers’ compensation insurance programs; and we are self-insured for health insurance, the exposure of which is limited by stop-loss coverage. Our self-insurance accruals are based on actuarial estimated, undiscounted cost of claims, which includes claims incurred but not reported.
Our self-insurance accruals are based on actuarial estimated, undiscounted cost of claims, which includes claims incurred but not reported. While we believe our estimation processes are well designed, every estimation process is inherently subject to limitations. Fluctuations in the frequency or amount of claims make it difficult to precisely predict the ultimate cost of claims.
While we believe our estimation processes are well designed, every estimation process is inherently subject to limitations. Fluctuations in the frequency or amount of claims make it difficult to precisely predict the ultimate cost of claims. The actual cost of claims can be different than the historical selected loss development factors because of safety performance, payment patterns, and settlement patterns.
There is no assurance that we could obtain additional capital or refinance our debt on terms acceptable to us, or at all.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell material assets or operations, obtain additional capital, or restructure our debt. There is no assurance that we could obtain additional capital or refinance our debt on terms acceptable to us, or at all.
These factors include, among others: • economic and demand factors affecting the building products distribution industry; • external factors affecting availability of credit; • pricing pressures; • increased operating costs; • competitive conditions; and • other operating difficulties. 20 Table of Contents If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell material assets or operations, obtain additional capital, or restructure our debt.
These factors include, among others: • economic and demand factors affecting the building products distribution industry; • external factors affecting availability of credit; • pricing pressures; 19 Table of Contents • increased operating costs; • competitive conditions; and • other operating difficulties.
The actual cost of claims can be different than the historical selected loss development factors because of safety performance, payment patterns, and settlement patterns. The value of our deferred tax assets could become impaired, which could materially and adversely affect our operating results. As of December 30, 2023, we had $53.3 million in net deferred tax assets.
The value of our deferred tax assets could become impaired, which could materially and adversely affect our operating results. As of December 28, 2024, we had $50.6 million in net deferred tax assets.
These factors can cause short-term fluctuations in the price of our products, or costs related to our products. Increases in prices or costs are sometimes passed on to our customers, but our pricing quotation periods and pricing pressure from our competitors may limit our ability to pass on such price changes.
If supply exceeds demand, prices for our products could decline, and our results of operations, cash flows, and financial condition could be adversely affected. These factors can cause short-term fluctuations in the price of our products, or costs related to our products. We may be limited in our ability to pass on any increases to our customers.
Our dependence on international suppliers and manufacturers for certain products exposes us to risks that could affect our financial condition and expose us to certain additional risks . Many of our suppliers and manufacturers are located outside of the United States.
Many of our suppliers and manufacturers are located outside of the United States.
Removed
We may also be limited in our ability to pass on increases in freight costs for our products.
Added
For example, the U.S. has recently signaled its intention to change U.S. trade policy, including potentially renegotiating or terminating existing trade agreements and leveraging tariffs. In February 2025, the U.S. imposed additional tariffs on imports from China and announced and subsequently paused implementation of tariffs on imports from Canada and Mexico.
Removed
Interruption or impairment of operations at one or more of our facilities could impact our ability to service customers, or could result in the loss of customers, suppliers or inventory, which could adversely affect our financial condition, operating results and cash flows. Our strategy includes pursuing acquisitions. We may be unsuccessful in making and integrating mergers, acquisitions and investments.
Added
These additional tariffs, as well as a government’s adoption of “buy national” policies or retaliation by another government against such tariffs or policies may have introduced significant uncertainty into the market and may affect the prices of and supply of the products available to us.
Removed
We are subject to information technology security risks and business interruption risks and may incur increasing costs in an effort to minimize and/or respond to those risks .
Added
As cyberattacks become more sophisticated, we may incur significant costs to strengthen our systems from outside intrusions, and/or obtain insurance coverage related to the threat of such attacks.
Removed
Our business operations could suffer significant losses from natural disasters, catastrophes, fire, or other unexpected events . 14 Table of Contents While we maintain insurance covering our facilities and equipment, including business interruption insurance, our warehouse facilities could be materially damaged by natural disasters, such as floods, tornadoes, hurricanes, and earthquakes, or by fire, adverse weather conditions, civil unrest, condemnation, or other unexpected events or disruptions to our facilities.
Added
Furthermore, our success is highly dependent on the continued services of our management team. The loss of services of one or more key members of our senior management team could have a material adverse effect on us. Our strategy includes pursuing acquisitions. We may be unsuccessful in making and integrating mergers, acquisitions and investments.
Removed
Six CBAs covering approximately nine percent of our associates are up for renewal in fiscal year 2024, of which one has already been renegotiated, one is currently under negotiation, and we expect to renegotiate the remainder before their renewal dates.
Added
We may incur business disruptions resulting from a variety of possible causes.
Added
We expect to renegotiate the remainder before their renewal dates.
Added
For example, a 2023 EPA rule imposed reporting and recordkeeping requirements on manufacturers and importers of per- and polyfluoroalkyl substances (PFAS), and the EPA has proposed to designate two widely used PFAS as hazardous substances. These potential changes or increased costs could adversely impact our business and results of operations.
Added
Any volatility in our quarterly financial results may make it more difficult for us to raise capital in the future or pursue 15 Table of Contents acquisitions that involve issuances of our stock. In addition, because of this variability, our operating results for prior periods may not be effective predictors of future performance.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+1 added−0 removed9 unchanged
Biggest changeCYBERSECURITY RISK MANAGEMENT Our risk management program includes focused efforts on identifying, assessing and managing cybersecurity risk, including the following: • A robust information security training program that requires all company employees with access to our networks to participate in regular and mandatory training on how to be aware of, and help defend against, cyber risks, combined with periodic testing to measure the efficacy of our training efforts. • Alignment of our program with the National Institute of Standards and Technology Cybersecurity Framework to prevent, detect and respond to cyberattacks. • Continuous and robust testing of our systems to assess our vulnerability to cyber risk, which includes targeted penetration testing, tabletop incident response exercises, periodic audits of our systems by outside industry experts and regular vulnerability scanning. 22 Table of Contents • Engaging external cybersecurity experts in incident response development and management. • Business continuity plans and critical recovery backup systems.
Biggest changeOur risk management program includes focused efforts on identifying, assessing and managing cybersecurity risk, including the following: • A robust information security training program that requires all company employees with access to our networks to participate in regular and mandatory training on how to be aware of, and help defend against, cyber risks, combined with periodic testing to measure the efficacy of our training efforts. • Alignment of our program with the National Institute of Standards and Technology Cybersecurity Framework to identify, protect, detect, respond and recover from cyberattacks. • Real-time and robust testing of our systems to assess our vulnerability to cyber risk, which includes targeted penetration testing, tabletop incident response exercises, disaster recovery, periodic audits of our systems by outside industry experts and continuous vulnerability scanning. 21 Table of Contents • Engaging external cybersecurity experts in incident response development and management. • Business continuity plans and critical recovery backup systems. • Maturity assessment and roadmap to sustain/improve security posture based on risk profile.
The Chief Information Officer presents regular updates to the Audit Committee and the full Board of Directors, on, among other things, the Company’s cyber risks and threats, the status of projects to strengthen the Company’s information security systems, and the emerging threat landscape.
The Chief Information Officer presents regular updates to the Audit Committee and the full Board of Directors, on, among other things, the Company’s cyber risks and threats, and the status of projects in the Company’s multi-year roadmap to strengthen the Company’s information security systems to address the emerging threat landscape.
Added
ITEM 1C. CYBERSECURITY Risk Management We recognize the importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−1 removed0 unchanged
Biggest changeWe also store product in secured outdoor areas at many of our warehouse locations, which increases warehouse distribution and storage capacity. We believe that, collectively, our facilities have sufficient capacity to meet current and projected distribution needs.
Biggest changeWe also store product in secured outdoor areas at many of our warehouse locations, which increases warehouse distribution and storage capacity. We believe that, collectively, our facilities have sufficient capacity to meet current and projected distribution needs. In addition, we lease a corporate headquarters facility near Atlanta in Marietta, GA.
ITEM 2. PROPERTIES We operate our business operations from approximately 66 warehouse facilities, of which 12 are owned and the remainder are leased under multi-year lease arrangements. These warehouse facilities are used to secure and store our products before being sold and delivered to customers.
ITEM 2. PROPERTIES We operate our business operations from approximately 65 warehouse and storage facilities, of which 12 are owned and the remainder are leased under multi-year lease arrangements. These facilities are used to secure and store our products before being sold and delivered to customers.
Removed
In addition to the warehouse facilities and storage facilities described above, we lease our corporate headquarters near Atlanta in Marietta, Georgia and have another administrative office in Lynnwood, Washington.
Added
One of our owned warehouse facilities located in Erwin, Tennessee was damaged by Hurricane Helene in late September 2024. Substantially all of these damages were covered by insurance policies, and cleanup and restoration work is currently underway. We were able to rent nearby properties to mitigate the impact, as well as utilize some of our other facilities to serve customers.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeWe record receivables from expected settlements and estimated liabilities for pending or threatened proceedings when the receipts or costs associated with such proceedings become probable and can be reasonably estimated.
Biggest changeWe record receivables from expected settlements and estimated liabilities for pending or threatened proceedings when the receipts or costs associated with such proceedings become probable and can be reasonably estimated. 22 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStock Performance Graph The graph below compares the cumulative five-year total return of holders of our common stock with the cumulative total returns of the Russell 2000 Index and the S&P 600 Building Products Index.
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans Information concerning our equity compensation plans is set forth in Item 12 of Part III of this Form 10-K. 24 Table of Contents Stock Performance Graph The graph below compares the cumulative five-year total return of holders of our common stock with the cumulative total returns of the Russell 2000 Index and the S&P 600 Building Products Index.
The BlueLinx Holdings Inc. 2021 Long-Term Incentive Plan does not permit the payment of dividends or dividend equivalents on unvested grants that include underlying shares of our common stock. Issuer Repurchases of Equity Securities On October 31, 2023, our Board of Directors authorized a new share repurchase program for $100 million.
The BlueLinx Holdings Inc. 2021 Long-Term Incentive Plan does not permit the payment of dividends or dividend equivalents on unvested grants that include underlying shares of our common stock. Issuer Repurchases of Equity Securities On October 31, 2023, our Board of Directors authorized a share repurchase program for $100 million.
The new share repurchase plan authorized on October 31, 2023, followed the Company’s previous $100 million share authorization that was approved by the Company’s Board of Directors on August 23, 2021 and increased on May 3, 2022. Under that $100 million share repurchase plan, all remaining repurchase authority was utilized during early fiscal October 2023.
The share repurchase plan authorized on October 31, 2023, followed the Company’s previous $100 million share authorization that was approved by the Company’s Board of Directors on August 23, 2021 and increased on May 3, 2022. Under that $100 million share repurchase plan, all remaining repurchase authority was utilized during early fiscal October 2023.
Under this new share repurchase program, we may repurchase our common stock from time to time, without prior notice, subject to prevailing market conditions and other considerations.
Under this share repurchase program, we may repurchase our common stock from time to time, without prior notice, subject to prevailing market conditions and other considerations.
(2) Includes broker commissions associated with the repurchases. Excludes any excise taxes incurred under The Inflation Reduction Act of 2022. For shares withheld by us in connection with tax withholding obligations of our employees upon vesting of such employee’s restricted stock unit awards, the price paid per share is the market price on vesting date.
(2) Includes broker commissions associated with the repurchases. Excludes any excise taxes incurred under The Inflation Reduction Act of 2022. For shares withheld by us in connection with tax withholding obligations of our employees upon vesting of employees’ restricted stock unit awards, the price paid per share is the market price on vesting date.
The comparison of the cumulative total returns for each investment assumes that $100 was invested in our common stock and the respective indices on December 29, 2018, including reinvestment of any dividends, of which BlueLinx paid none, and its relative performance is tracked through December 30, 2023.
The comparison of the cumulative total returns for each investment assumes that $100 was invested in our common stock and the respective indices on December 28, 2019, including reinvestment of any dividends, of which BlueLinx paid none, and its relative performance is tracked through December 28, 2024.
Fiscal 2018 Fiscal 2019 Fiscal 2020 Fiscal 2021 Fiscal 2022 Fiscal 2023 BlueLinx Holdings Inc. $ 100.00 $ 51.96 $ 115.61 $ 378.35 $ 280.96 $ 447.69 Russell 2000 $ 100.00 $ 124.75 $ 147.61 $ 167.82 $ 131.64 $ 151.51 S&P 600 Building Products Index $ 100.00 $ 140.76 $ 177.44 $ 264.04 $ 185.77 $ 294.56
Fiscal 2019 Fiscal 2020 Fiscal 2021 Fiscal 2022 Fiscal 2023 Fiscal 2024 BlueLinx Holdings Inc. $ 100.00 $ 115.61 $ 378.35 $ 280.96 $ 447.69 $ 409.80 Russell 2000 $ 100.00 $ 147.61 $ 167.82 $ 131.64 $ 151.51 $ 167.77 S&P 600 Building Products Index $ 100.00 $ 177.44 $ 264.04 $ 185.77 $ 294.56 $ 323.45
As of December 30, 2023, there were 11 shareowner accounts of record, and, as of that date, we estimate that there were approximately 9,776 beneficial owners holding our common stock in nominee or “street” name. We generally have not paid dividends on our common stock.
As of December 28, 2024, there were 10 share-owner accounts of record, and, as of that date, we estimate that there were approximately 11,700 beneficial owners holding our common stock in nominee or “street” name. We generally have not paid dividends on our common stock.
The following table summarizes the Company’s common stock repurchase activity for each fiscal month of the fiscal quarter ended December 30, 2023: Fiscal monthly period in the fiscal quarter ended December 30, 2023 Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (4) October 1 - November 4 46,584 $ 78.47 46,584 $ 100,000,000 November 5 - December 2 101,893 $ 84.46 101,516 $ 91,429,309 December 3 - December 30 432 $ 106.55 — $ 91,429,309 Total 148,909 148,100 (1) Includes shares withheld by us in connection with tax withholding obligations of our employees upon vesting of such employees’ restricted stock unit awards.
The following table summarizes the Company’s common stock repurchase activity for each fiscal month of the fiscal quarter ended December 28, 2024: Fiscal monthly period in the fiscal quarter ended December 28, 2024 Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs September 29 - November 2 56,867 $ 106.83 56,636 $ 55,405,160 November 3 - November 30 37,687 $ 122.79 37,262 $ 50,829,681 December 1 - December 28 37,021 $ 118.36 36,781 $ 46,474,962 Total 131,575 130,679 (1) Includes shares withheld by us in connection with tax withholding obligations of our employees upon vesting of employees’ restricted stock unit awards.
During fiscal 2023, we repurchased 404,796 shares under this previous plan at an average price of $82.91. Additionally, we occasionally withhold shares of common stock to satisfy tax withholding obligations of employees upon the vesting of such employees’ restricted stock unit awards.
Additionally, we typically withhold shares of common stock to satisfy tax withholding obligations of employees upon the vesting of employees’ restricted stock unit awards.
As of December 30, 2023, we have repurchased a total of 101,516 shares for $8.6 million under our $100 million share repurchase program, at an average price of $84.43 per share and we have a remaining authorization amount of $91.4 million.
As of December 28, 2024, we have repurchased a total of 530,146 shares for $53.5 million under our $100 million share repurchase program, at an average price of $100.99 per share, including broker commissions but excluding excise tax. We have a remaining authorization amount of $46.5 million.
Removed
(3) The 46,584 shares repurchased during the fiscal monthly period October 1 - November 4 were repurchased under the $100 million share repurchase authorization and increase approved by the Company’s Board of Directors on August 23, 2021 and 25 Table of Contents May 3, 2022.
Removed
The 101,516 shares repurchased during the fiscal monthly period November 5 - December 2 were repurchased under the $100 million share repurchase authorization approved by the Company’s Board of Directors on October 31, 2023.
Removed
(4) The $100 million share repurchase authorization and increase approved by the Company’s Board of Directors on August 23, 2021 and May 3, 2022 was completed during the fiscal monthly period October 1 - November 4. The amounts in this column correspond to the $100 million share repurchase authorization approved by the Company’s Board of Directors on October 31, 2023.
Removed
Securities Authorized for Issuance Under Equity Compensation Plans Information concerning our equity compensation plans is set forth in Item 12 of Part III of this Form 10-K.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

84 edited+24 added−28 removed35 unchanged
Biggest changeFiscal 2023 Fiscal 2022 ($ amounts in thousands) Net sales by product category Specialty products $ 2,184,240 69.6 % $ 2,871,628 64.5 % Structural products 952,141 30.4 % 1,578,586 35.5 % Total net sales $ 3,136,381 100.0 % $ 4,450,214 100.0 % The following table sets forth gross margin dollars and percentages by product category versus comparable prior periods. 29 Table of Contents Fiscal 2023 Fiscal 2022 ($ amounts in thousands) Gross profit by product category: Specialty products $ 420,794 $ 640,370 Structural products 106,223 192,614 Total gross profit $ 527,017 $ 832,984 Gross margin % by product category Specialty products 19.3 % 22.3 % Structural products 11.2 % 12.2 % Total gross margin % 16.8 % 18.7 % Discussion of Results of Operations for Fiscal 2023 Compared to Fiscal 2022 For fiscal 2023, we generated net sales of $3.1 billion , a decrease of $1.3 billion when compared to fiscal 2022, and gross margin decreased from 18.7% to 16.8% year over year.
Biggest changeFiscal 2024 Fiscal 2023 ($ amounts in thousands) Gross profit by product category: Specialty products $ 397,625 $ 420,794 Structural products 91,514 106,223 Total gross profit $ 489,139 $ 527,017 Gross Margin % 16.6% 16.8% Gross margin % by product category: Specialty products 19.4% 19.3% Structural products 10.1% 11.2% Fiscal 2024 Compared to Fiscal 2023 For fiscal 2024, we generated net sales of $3.0 billion, a decrease of $184 million, or 5.9 percent, compared to fiscal 2023.
We evaluate our ability to realize the tax benefits associated with deferred tax assets by analyzing our forecasted taxable income using both historical and projected future operating results, the reversal of existing taxable temporary differences, taxable income in prior carryback years (if permitted), and the availability of tax planning strategies.
We evaluate our ability to realize the income tax benefits associated with deferred income tax assets by analyzing our forecasted taxable income using both historical and projected future operating results, the reversal of existing taxable temporary differences, taxable income in prior carryback years (if permitted), and the availability of income tax planning strategies.
Liquidity and Capital Resources We expect our material cash requirements for the foreseeable future, including the next 12 months will be for our: • Periodic estimated income tax payments, as required; • Periodic interest payments associated with our senior secured notes, as discussed in Note 8, Debt and Finance Leases, in Item 8 of this Annual Report; • Lease agreements which have fixed lease payment obligations, as discussed in Note 13, Lease Commitments, in Item 8 of this Annual Report.
Liquidity and Capital Resources We expect our material cash requirements for the foreseeable future, including the next 12 months will be for our: • Periodic estimated income tax payments, as required; • Periodic interest payments associated with our senior secured notes, as discussed in Note 8, Debt and Finance Lease Obligations, in Item 8 of this Annual Report; • Lease agreements which have fixed lease payment obligations, as discussed in Note 13, Lease Commitments, in Item 8 of this Annual Report.
Therefore, our profitability depends, in significant part, on the impact of commodity prices along with inventory levels. In addition to prices, it is also dependent on managing our cost structure, particularly shipping and handling costs, which represent significant components of our operating costs. Composite lumber and panel prices have been historically volatile.
Therefore, our profitability depends, in significant part, on the impact of commodity prices along with inventory levels. In addition to prices, our profitability is also dependent on managing our cost structure, particularly shipping and handling costs, which represent significant components of our operating costs. Composite lumber and panel prices have been historically volatile.
The actual amounts ultimately paid may be different from our estimates, and recorded once they have been determined. Income Taxes Our annual tax rate is based on our income, statutory tax rates, and tax planning opportunities available to us in the various jurisdictions in which we operate.
The actual amounts ultimately paid may be different from our estimates, and recorded once they have been determined. Income Taxes Our annual income tax rate is based on our taxable income, statutory tax rates, and tax planning opportunities available to us in the various jurisdictions in which we operate.
As a result, the annual tax rate reflected in our consolidated financial statements is different from that reported in our tax return (our cash tax rate). Some of these differences are permanent, such as expenses that are not deductible in our tax return, and some differences reverse over time, such as depreciation expense.
As a result, the annual income tax rate reflected in our consolidated financial statements is different from that reported in our income tax return (our cash income tax rate). Some of these differences are permanent, such as expenses that are not deductible in our income tax return, and some differences reverse over time, such as depreciation expense.
We believe our scale, national footprint, strategic supplier relationships, key national customer relationships, and breadth of market leading products and brands position us to serve the residential new construction end market and navigate the changes in the macro-economic environment.
We believe our scale, national footprint, strategic supplier relationships, key national customer relationships, and breadth of market leading products and brands position us to serve the residential new construction market and navigate the changes in the macro-economic environment.
For purposes of evaluating whether or not a tax position is uncertain, (1) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information, (2) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings, and case law and their applicability to the facts and circumstances of the tax position, and (3) each tax position is evaluated without considerations of the possibility of offset or aggregation with other tax positions taken.
For purposes of evaluating whether or not an income tax position is uncertain, (1) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information, (2) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings, and case law and their applicability to the facts and circumstances of the income tax position, and (3) each tax position is evaluated without considerations of the possibility of offset or aggregation with other income tax positions taken.
Settlement of any particular issue would usually require the use of cash. Tax law requires items to be included in the tax return at different times than when these items are reflected in the consolidated financial statements.
Settlement of any particular issue would usually require the use of cash. Income tax law requires items to be included in the income tax return at different times than when these items are reflected in the consolidated financial statements.
Based on the evaluation of available information, we recognize future tax benefits, such as net operating loss carryforwards, to the extent that realizing these benefits is considered more likely than not.
Based on the evaluation of available information, we recognize future income tax benefits, such as net operating loss carryforwards, to the extent that realizing these benefits is considered more likely than not.
Removing the income tax effects related to the one-time settlement of our frozen defined benefit pension plan, our effective income tax rate for fiscal 2023 would have been approximately 25.9%.
Removing the income tax effects related to the one-time settlement of our frozen defined benefit pension plan, our effective income tax rate for fiscal 2023 would have been approximately 25.9 percent.
A valuation allowance is required to be established unless management determines that it is more likely than not that we will ultimately realize the tax benefit associated with a deferred tax asset.
A valuation allowance is required to be established unless management determines that it is more likely than not that we will ultimately realize the income tax benefit associated with a deferred income tax asset.
We believe R&R demand is driven by a myriad of factors including, but not limited to: home prices and affordability; macro-economic conditions and expectations around inflationary rate, unemployment rate, interest rate, and economic output; raw materials prices; the pace of new household formation; savings rates; employment conditions; and emerging trends, such as the increased popularity of home-based remote working environments.
We believe R&R demand is driven by a myriad of factors including, but not limited to: home prices and affordability; macro-economic conditions and expectations around inflationary rate, unemployment rate, interest rate, and economic output; raw materials prices; the pace of new household formations; savings rates; employment conditions; and emerging trends, such as the increased popularity of home-based remote working environments.
Commodity Nature of Our Products Many of the building products we distribute, including lumber, as well as panels, such as oriented strand board (“OSB”) and plywood, are commodities that are widely available from various suppliers with prices and volumes determined frequently in a market based on participants' perceptions and expectations of short-term supply and demand factors.
Commodity Nature of Our Products Many of the building products we distribute including lumber and panels, such as oriented strand board (“OSB”) and plywood, are commodities that are widely available from various suppliers with prices and volumes determined frequently in a market that is based on participants' perceptions and expectations of short-term supply and demand factors.
The tax rates used to determine deferred tax assets or liabilities are the enacted tax rates in effect for the year and manner in which the differences are expected to reverse.
The income tax rates used to determine deferred income tax assets or liabilities are the enacted income tax rates in effect for the year and manner in which the differences are expected to reverse.
These timing differences create deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities.
These timing differences create deferred income tax assets and liabilities. Deferred income tax assets and liabilities are determined based on temporary differences between the financial reporting and income tax bases of assets and liabilities.
The reclassification of $30.4 million to pre-tax earnings resulted in $12.2 million income tax expense (of which $4.5 million was reclassified from accumulated other comprehensive loss) related to the one-time settlement of our frozen defined benefit pension plan, which will not result in cash tax payments.
The reclassification of $30.4 million to pre-tax earnings resulted in $12.2 million income tax expense (of which $4.5 million was reclassified from accumulated other comprehensive loss) related to the one-time settlement of our frozen defined benefit pension plan, which did not result in cash tax payments.
This present value model requires management to estimate future cash flows, the timing of the future cash flows, and a discount rate (based on a weighted-average cost of capital), which represents the time value of money and the inherent risk and uncertainty of the future cash flows. These estimates can have material influences on a goodwill assessment.
This present value model requires management to estimate future gross profit, cash flows, the timing of the future cash flows, and a discount rate (based on a weighted-average cost of capital), which represents the time value of money and the inherent risk and uncertainty of the future cash flows. These estimates can have material influences on a goodwill assessment.
We adjust these reserves, including any impact on the related interest and penalties, in light of changing facts and circumstances, such as the progress of a tax audit. Refer to Note 7, Income Taxes , in Item 8 of this Annual Report.
We adjust these reserves, including any impact on the related interest and penalties, in light of changing facts and circumstances, such as the progress of an income tax audit. Refer to Note 7, Income Taxes , in Item 8 of this Annual Report.
If these conditions change from those expected, it is reasonably possible that the judgments and estimates described below could change, which may result in our recording additional expenses or additional liabilities, among other effects. Management has discussed the development, selection, and disclosure of critical accounting policies and estimates with the audit committee of the Company’s board of directors.
If these conditions change from those expected, it is reasonably possible that the judgments and estimates described below could change, which may result in our recording additional expenses or additional liabilities, among other effects. 33 Table of Contents Management has discussed the development, selection, and disclosure of critical accounting policies and estimates with the audit committee of the Company’s board of directors.
We establish reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine that the positions become uncertain based upon one of the following: (1) the tax position is not “more likely than not” to be sustained; (2) the tax position is “more likely than not” to be sustained, but for a lesser amount; or (3) the tax position is “more likely than not” to be sustained, but not in the financial period in which the tax position was originally taken.
We establish allowances to remove some or all of the income tax benefit of any of our income tax positions at the time we determine that the positions become uncertain based upon one of the following: (1) the tax position is not “more likely than not” to be sustained; (2) the tax position is “more likely than not” to be sustained, but for a lesser amount; or (3) the tax position is “more likely than not” to be sustained, but not in the financial period in which the income tax position was originally taken.
Goodwill is assessed for impairment at the reporting unit level and the assessment must determine if the fair value of the reporting unit, including the goodwill, is less than its carrying value. For entities like us that consists of a single reporting unit, goodwill is assessed at the enterprise level.
Goodwill is assessed for impairment at the reporting unit level and the assessment must determine if the fair value of the reporting unit, including the goodwill, is less than its carrying value. For entities like us that consist of a single reporting unit, goodwill is assessed at the enterprise level.
Between our annual impairment assessment for fiscal 2023 and 2022, we noted no interim events or circumstances to indicate that the carrying value of our goodwill was impaired. Therefore, we relied on our annual assessments.
Between our annual impairment assessment for fiscal 2024 and 2023, we noted no interim events or circumstances to indicate that the carrying value of our goodwill was impaired. Therefore, we relied on our annual assessments.
We expect our primary sources of liquidity for the next 12 months to be cash flows from sales and operating activities in the normal course of our operations and availability from our revolving credit facility, as needed, and we expect that these sources will be sufficient to fund our ongoing cash requirements for the foreseeable future, including at least the next 12 months.
We expect our primary sources of liquidity for the next 12 months to be cash/cash equivalents on hand, cash flows from sales and operating activities in the normal course of our operations, and availability from our revolving credit facility, as needed, and we expect that these sources will be sufficient to fund our ongoing cash requirements for the foreseeable future, including at least the next 12 months.
The changes in working capital components resulted in an increase in cash due to a decrease in accounts receivables of $101.3 million and a decrease inventory of $20.8 million, partially offset by a decrease in accounts payable of $31.8 million.
The changes in working capital components resulted in an increase in cash due to a decrease in accounts receivable of $101.3 million and a decrease in inventory of $20.8 million, partially offset by a decrease in accounts payable of $31.8 million.
The tax benefit that has been previously reserved because of a failure to meet the “more likely than not” recognition threshold would be recognized in our income tax expense in the first interim period when the uncertainty disappears under any one of the following conditions: (1) the tax position is “more likely than not” to be sustained; (2) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation; or (3) the statute of limitations for the tax position has expired.
The income tax benefit that has been previously subject to an allowance because of a failure to meet the “more likely than not” recognition threshold would be recognized in our income tax expense in the first interim period when the uncertainty disappears under any one of the following conditions: (1) the tax position is “more likely than not” to be sustained; (2) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation; or (3) the statute of limitations for the tax position has expired.
Recently Issued Accounting Pronouncements For a summary of recent accounting pronouncements applicable to our consolidated financial statements, see Note 1, Summary of Significant Accounting Policies , in Item 8 of this Annual Report. 36 Table of Contents
Recently Issued Accounting Pronouncements For a summary of recent accounting pronouncements applicable to our consolidated financial statements, see Note 1, Summary of Significant Accounting Policies , in Item 8 of this Annual Report. 35 Table of Contents
These increases in cash from working capital changes were partially offset by a decrease in the change for accounts receivable of $78.1 million for fiscal 2023 due to lower sales in the fourth quarter of fiscal 2023 compared to the fourth quarter of fiscal 2022. 31 Table of Contents Net cash provided by operating activities totaled $400.3 million during fiscal 2022.
These increases in cash from working capital changes were partially offset by a decrease in the change for accounts receivable of $78.1 million for fiscal 2023 due to lower sales in the fourth quarter of fiscal 2023 compared to the fourth quarter of fiscal 2022. Net cash provided by operating activities totaled $400.3 million during fiscal 2022.
This cash activity was primarily driven by net income of $296.2 million combined with changes in our working capital components after adjusting for the impact of working capital related to our acquisition of Vandermeer. See Note 2, Business Combination, in Item 8 of this Annual Report for more information about our acquisition and related working capital amounts acquired.
This cash activity was primarily driven by net income of $296.2 million combined with changes in our working capital components after adjusting for the impact of working capital related to our acquisition of Vandermeer. See Note 2, Business Combination , in Item 8 of this Annual Report for more information about this acquisition.
Substantially all of the amount reported in Cost of products sold is composed of cost to purchase inventory for resale to customers, including the cost of inbound freights, volume incentives, and inventory adjustments. During fiscal 2023, 2022 or 2021, no one supplier represented more than 10% of our consolidated Cost of products sold.
Substantially all of the amount reported in Cost of products sold is composed of cost to purchase inventory for resale to customers, including the cost of inbound freights, volume incentives, and inventory adjustments. During fiscal 2024, 2023 and 2022, no one supplier represented more than 10% of our consolidated Cost of products sold.
Judgment is required in determining our annual tax expense and in evaluating our tax positions.
Judgment is required in determining our annual income tax expense and in evaluating our income tax positions.
Goodwill is measured as the excess of consideration transferred over the fair values of the assets 35 Table of Contents acquired and the liabilities assumed. While we use our best estimates and assumptions to value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement.
Goodwill is measured as the excess of consideration transferred over the fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement.
Results of Operations Fiscal 2023 Compared to Fiscal 2022 The following table sets forth our results of operations for fiscal 2023 and fiscal 2022, both of which were comprised of 52 weeks.
Results of Operations Fiscal 2024 Compared to Fiscal 2023 The following table sets forth our results of operations for fiscal 2024 and fiscal 2023, both of which were comprised of 52 weeks.
Net Working Capital Net working capital is an important measurement we use to determine the efficiencies of our operations and our ability to readily convert assets into cash. Net working capital is defined as the sum of accounts receivable and inventory, less accounts 32 Table of Contents payable.
Net Working Capital Net working capital is an important measurement we use to determine the efficiencies of our operations and our ability to readily convert assets into cash. Net working capital is defined as the sum of accounts receivable and inventory, less accounts payable.
Our effective income tax rate for both fiscal years was impacted by state taxes as well as the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, offset by a benefit from vesting of share-based compensation.
Our effective income tax rates for both fiscal years were impacted by state taxes as well as the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, offset by a benefit from vesting of share-based compensation.
We continue to closely monitor these pricing trends, and work to manage our business, inventory levels, and costs accordingly. 28 Table of Contents Cost and Availability of the Products We Distribute Our gross profit is net sales less the cost of the products sold.
We continue to closely monitor these pricing trends, and work to manage our business, inventory levels, and costs accordingly. Cost and Availability of the Products We Distribute Our gross profit is equal to our net sales less the cost of the products sold.
This presentation is net of their discount of $3.0 million and $3.5 million and the combined carrying value of our debt issuance costs of $3.2 million and $4.1 million as of December 30, 2023 and December 31, 2022, respectively. Our senior secured notes are presented in this table at their face value.
This presentation is net of their discount of $2.5 million and $3.0 million and the combined carrying value of our debt issuance costs of $2.4 million and $3.2 million as of December 28, 2024 and December 30, 2023, respectively. Our senior secured notes are presented in this table at their face value.
The settlement also required the Company, as plan sponsor, to make a final $6.9 million cash contribution to the plan trust in order for the plan trust to have sufficient assets to purchase the annuity from 30 Table of Contents the insurance company.
The settlement also required the Company, as plan sponsor, to make a final $6.9 million cash contribution to the plan trust in order for the plan trust to have sufficient assets to purchase the annuity from the insurance company.
A number of years may elapse before a particular matter for which we have established a reserve is audited and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction.
A number of years may elapse before a particular matter for which we have established an allowance is audited and finally resolved. The number of years with open income tax audits varies depending on the tax jurisdiction.
The Revolving Credit Facility may be prepaid in whole or in part from time to time without penalty or premium but including all breakage costs incurred by any lender thereunder. Available borrowing capacity under our Revolving Credit Facility was $346.5 million on December 30, 2023.
The Revolving Credit Facility may be prepaid in whole or in part from time to time without penalty or premium but including all breakage costs incurred by any lender thereunder. Available borrowing capacity under our Revolving Credit Facility was $346.2 million on December 28, 2024.
Revolving Credit Facility Our amended revolving credit facility matures on August 2, 2026 provided we remain in compliance with the related covenants. As of December 30, 2023, we were in compliance with these covenants.
Revolving Credit Facility Our amended revolving credit facility matures on August 2, 2026 provided we remain in compliance with the related covenants. As of December 28, 2024, we were in compliance with these covenants.
The decrease in cash provided by operating activities during fiscal 2023 was primarily the result of a decrease in net income for the current fiscal year compared to the prior fiscal year, partially offset by higher cash generated from changes in working capital in fiscal 2023.
The decrease in cash provided by operating activities during fiscal 2023 was primarily the result of a decrease in net income in fiscal 2023 compared to fiscal 2022, partially offset by higher cash generated from changes in working capital in fiscal 2023.
Investing Activities Net cash used in investing activities was $26.9 million during fiscal 2023, primarily for capital expenditures. Our investing activities in fiscal 2023 reflected continuing improvements to our distribution facilities and upgrades to our fleet.
Investing Activities Net cash used in investing activities was $39.2 million during fiscal 2024, primarily for capital expenditures. Our investing activities in fiscal 2024 reflected continuing improvements to our distribution facilities, upgrades to our fleet, and digital transformation. Net cash used in investing activities was $26.9 million during fiscal 2023, primarily for capital expenditures.
At certain other times, the selling price may fall below our purchase price for the same reasons, requiring us to incur short-term losses on specific sales transactions and/or recognize a reserve for the lower of cost or net realizable value respective to our inventory of products of a commodity nature.
At certain other times, the selling price may fall below our purchase price for the same reasons, requiring us to incur short-term losses on specific sales transactions and/or recognize a loss provision for the lower-of-cost-or-net-realizable-value position on certain products in our inventory that are of a commodity nature.
Net cash used in financing activities was $87.9 million during fiscal 2022, which was primarily driven by $66.4 million used to repurchase our common stock under our share repurchase program, including the ASR Agreement.
Net cash used in financing activities was $87.9 million for fiscal 2022, which was primarily driven by $66.4 million used to repurchase our common stock under our share repurchase program, including the accelerated share repurchase agreement (the “ASR Agreement”).
As of December 30, 2023, we have $91.4 million of remaining repurchase authorization under the $100 million program approved by our Board of Directors on October 31, 2023. Under this share repurchase program, we may repurchase our common stock from time to time, without prior notice, subject to prevailing market conditions and other considerations.
As of December 28, 2024, we had $46.5 million of remaining repurchase authorization under the $100 million program approved by our Board of Directors on October 31, 2023. Under this share repurchase program, we may repurchase our common stock from time to time, without prior notice, subject to prevailing market conditions and other considerations.
Results of Operations Fiscal 2022 Compared to Fiscal 2021 For a comparison of the Company’s results of operations for the fiscal year ended December 31, 2022 to the fiscal year ended January 1, 2022, refer to Item 7 of the Company’s Annual Report on Form 10-K for fiscal 2022 filed with the SEC on February 21, 2023.
Results of Operations Fiscal 2023 Compared to Fiscal 2022 For a comparison of the Company’s results of operations for the fiscal year ended December 30, 2023 to the fiscal year ended December 31, 2022, refer to Item 7 of the Company’s Annual Report on Form 10-K for fiscal 2023 filed with the SEC on February 20, 2024.
As of December 30, 2023, positive evidence continued to outweigh negative evidence, as such no valuation allowance was deemed necessary except to the extent of certain state net operating losses. The valuation allowance related to our net operating losses as of December 30, 2023 was approximately $3.5 million.
As of December 28, 2024, positive evidence continued to outweigh negative evidence, as such no valuation allowance was deemed necessary except to the extent 34 Table of Contents of certain state net operating losses. The valuation allowance related to our net operating losses as of December 28, 2024 was approximately $3.5 million.
Our 2029 Notes mature on November 15, 2029, and no principal is due until that 33 Table of Contents time as long as we remain in compliance with the related covenants. As of December 30, 2023, we were in compliance with these covenants.
Our 2029 Notes mature on November 15, 2029, and no principal is due until that time as long as we remain in compliance with the related covenants. As of December 28, 2024, we were in compliance with these covenants.
The higher effective rate in fiscal 2023 was due primarily to the one-time accounting for the settlement of our frozen defined benefit pension plan, as described above, which increased the effective income tax rate by 14.8%.
Our effective income tax rate was 24.9 percent and 40.7 percent for fiscal 2024 and fiscal 2023, respectively. The higher effective rate in fiscal 2023 was due primarily to the one-time accounting for the settlement of our frozen defined benefit pension plan, as described above, which increased the effective income tax rate by 14.8 percent.
We perform our annual goodwill assessment as of the first day of our fiscal fourth quarter. Based on the results of our most recent annual assessment, which was quantitative, our goodwill was not impaired. As of December 30, 2023, the carrying value of our goodwill was $55.4 million, which represented less than 4% of our consolidated assets.
We perform our annual goodwill assessment as of the first day of our fiscal fourth quarter. Based on the results of our most recent annual assessment, which was quantitative, our goodwill was not impaired. As of December 28, 2024, the carrying value of our goodwill was $55.4 million, which represented 3.5% of our consolidated assets.
Of this amount $42.1 million was used to repurchase our common stock under authorized share repurchase programs, $5.3 million was used to repurchase shares to satisfy employee payroll and tax withholdings for vesting of share-based compensation, and $9.2 million was used for payments on finance lease obligations.
Net cash used in financing activities was $56.6 million for fiscal 2023. Of this amount $42.1 million was used to repurchase our common stock under authorized share repurchase programs, $5.3 million was used to repurchase shares to satisfy employee payroll and tax withholdings for vesting of share-based compensation, and $9.2 million was used for payments on finance lease obligations.
According to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, for full year 2023 residential housing starts for single family units and multi-family units were down 6% and 13%, respectively, compared to full year 2022.
According to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, for full year 2024 residential housing starts for single family units and multi-family units were up 7% and down 27%, respectively, compared to full year 2023.
We believe our products are more likely to be used in single-family construction than in multi-family units. 27 Table of Contents We believe demand for residential new construction is driven by a myriad of factors including, but not limited to: mortgage rates, which recently reached multi-year highs; lending standards; home affordability; employment conditions; savings rates; the rate of population growth and new household formation; builder activity levels; the level of existing home inventory on the market; and consumer sentiment.
We believe demand for residential new construction is driven by a myriad of factors including, but not limited to: mortgage rates, which recently reached multi-year highs; lending standards; home affordability; employment conditions; savings rates; the rate of population growth and new household formation; builder activity levels; the level of existing home inventory on the market; and consumer sentiment.
We believe the increasing average age of the nation’s approximate 144 million existing homes will continue to drive demand for repair and remodel projects. Residential New Construction We estimate that demand from the residential new construction market, including single-family and multi-family units, accounts for approximately 40 percent of our annual sales.
We believe the increasing average age of the nation’s approximately 145 million existing homes will drive demand for R&R projects. 26 Table of Contents Residential New Construction We estimate that demand from the residential new construction market, including single-family and multi-family units, accounts for approximately 40 percent of our annual sales.
These notes are presented under the long-term debt caption of our balance sheet at $293.7 million and $292.4 million as of December 30, 2023 and December 31, 2022, respectively.
These notes are presented under the long-term debt caption of our balance sheet at $295.1 million and $293.7 million as of December 28, 2024 and December 30, 2023, respectively.
With mortgage rates having risen to multi-year highs, we believe many homeowners who secured a lower interest mortgage will be inclined to stay longer in existing homes, which could benefit R&R demand over the near-to-medium term.
Residential mortgage rates have risen in recent years and we believe many homeowners who secured mortgages with lower interest rates will be inclined to stay longer in existing homes, which could benefit R&R demand over the near-to-medium term.
Share Repurchase Programs As discussed elsewhere in this Form 10-K, during fiscal 2023 and fiscal 2022, we used cash of $42.1 million and $66.4 million, respectively, to repurchase shares of our common stock under repurchase programs authorized by our Board of Directors.
Share Repurchase Programs As discussed elsewhere in this Form 10-K, during fiscal years 2024, 2023, and 2022 we used cash of $45.0 million, $42.1 31 Table of Contents million, and $66.4 million, respectively, to repurchase shares of our common stock under repurchase programs authorized by our Board of Directors, excluding excise tax due on the 2024 and 2023 repurchases.
Our net income for fiscal 2023 was $48.5 million, or $5.39 per diluted share, versus $296.2 million, or $31.51 per diluted share, in the prior fiscal year.
Our net income for fiscal 2024 was $53.1 million, or $6.19 per diluted share, versus $48.5 million, or $5.39 per diluted share, in the prior fiscal year.
Fiscal 2023 % of Net Sales Fiscal 2022 % of Net Sales ($ amounts in thousands) Net sales $ 3,136,381 $ 4,450,214 Gross profit 527,017 16.8% 832,984 18.7% Selling, general, and administrative 355,819 11.3% 366,305 8.2% Depreciation and amortization 32,043 1.0% 27,613 0.6% Amortization of deferred gains on real estate (3,934) (0.1)% (3,934) (0.1)% Gain from sale of properties, net — 0.0% (144) 0.0% Other operating expenses 4,640 0.1% 4,057 0.1% Operating income 138,449 4.4% 439,087 9.9% Interest expense, net 23,746 0.8% 42,272 0.9% Settlement of frozen defined benefit pension plan 30,440 1.0% — 0.0% Other expense (income), net 2,377 0.1% 2,054 0.0% Income before provision for income taxes 81,886 2.6% 394,761 8.9% Provision for income taxes 33,350 1.1% 98,585 2.2% Net income $ 48,536 1.5% $ 296,176 6.7% The following table sets forth changes in net sales by product category.
Fiscal 2024 % of Net Sales Fiscal 2023 % of Net Sales ($ amounts in thousands) Net sales $ 2,952,532 $ 3,136,381 Gross profit 489,139 16.6% 527,017 16.8% Selling, general, and administrative 365,532 12.4% 355,819 11.3% Depreciation and amortization 38,488 1.3% 32,043 1.0% Amortization of deferred gains on real estate (3,934) (0.1)% (3,934) (0.1)% Gain from sale of properties, net (272) —% — —% Other operating expenses 1,755 0.1% 4,640 0.1% Operating income 87,570 3.0% 138,449 4.4% Interest expense, net 19,364 0.7% 23,746 0.8% Settlement of defined benefit pension plan (2,481) (0.1)% 30,440 1.0% Other expense, net — —% 2,377 0.1% Income before provision for income taxes 70,687 2.4% 81,886 2.6% Provision for income taxes 17,571 0.6% 33,350 1.1% Net income $ 53,116 1.8% $ 48,536 1.5% The following table sets forth changes in net sales by product category.
For a discussion of the Company’s significant accounting policies, see Note 1, Summary of Significant Accounting Policies , in Item 8 of this Annual Report. 34 Table of Contents Revenue Recognition We recognize revenue when 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) the transaction price has been allocated to the performance obligations; and (5) when (or as) performance obligations are satisfied.
Revenue Recognition We recognize revenue when 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) the transaction price has been allocated to the performance obligations; and (5) when (or as) performance obligations are satisfied.
Pandemics The impact of disease-related pandemics can affect our operational and financial performance to varying degrees, such as the COVID-19 global pandemic did. The extent of the effects of future public health crises, including a resurgence of COVID, or related containment measures and government responses are highly uncertain and cannot be predicted.
The extent of the effects of future public health crises, including a resurgence of the COVID-19 pandemic, or related containment measures and government responses are highly uncertain and cannot be predicted.
Net cash used in investing activities was $98.7 million during fiscal 2022, which was primarily driven by cash of $63.8 million used for the acquisition of Vandermeer and capital expenditures of $35.9 million throughout fiscal 2022, partially offset by cash received from the sale of real estate of $1.0 million.
Our investing activities in fiscal 2023 reflected continuing improvements to our distribution facilities and upgrades to our fleet. Net cash used in investing activities was $98.7 million during fiscal 2022, which was primarily driven by cash of $63.8 million used for the acquisition of Vandermeer and capital expenditures of $35.9 million throughout fiscal 2022.
While our estimates and assumptions are based on our knowledge of current events and actions we may undertake in the future, actual results ultimately may differ from these estimates and assumptions.
While our estimates and assumptions are based on our knowledge of current events and actions we may undertake in the future, actual results ultimately may differ from these estimates and assumptions. For a discussion of the Company’s significant accounting policies, see Note 1, Summary of Significant Accounting Policies , in Item 8 of this Annual Report.
Our total finance lease commitments totaled $285.4 million and $273.1 million as of December 30, 2023 and December 31, 2022, respectively. Of the $285.4 million of finance lease commitments as of December 30, 2023, $243.2 million related to real estate and $42.3 million related to equipment.
Of the $292.5 million of finance lease commitments as of December 28, 2024, $242.8 million related to real estate and $49.8 million related to equipment. Of the $285.4 million of finance lease commitments as of December 30, 2023, $243.2 million related to real estate and $42.3 million related to equipment.
Senior Secured Notes In October 2021, we completed a private offering of $300.0 million of our six percent senior secured notes due 2029 (the “2029 Notes”). Interest is payable semi-annually.
(3) Refer to Note 13, Lease Commitments , in Item 8 of this Annual Report for interest rates associated with finance lease obligations. 32 Table of Contents Senior Secured Notes In October 2021, we completed a private offering of $300.0 million of our six percent senior secured notes due 2029 (the “2029 Notes”). Interest is payable semi-annually.
Depreciation and amortization expense increased 16.0% compared to fiscal 2022 due to a higher base of amortizable and depreciable assets throughout fiscal 2023 when compared to the prior fiscal year, resulting from our continued focus on capital investment and increased intangible assets related to our Vandermeer acquisition.
Depreciation and amortization expense increased 20.1 percent compared to fiscal 2023 due to a higher base of amortizable and depreciable assets throughout fiscal 2024 when compared to the prior fiscal year, resulting from our continued focus on capital investment. Other operating expenses decreased $2.9 million compared to fiscal 2023 primarily due to lower restructuring related costs, including severance payments.
Certain developments have led to a more challenging macro-economic environment, such as broad-based inflation, the rapid rise in mortgage rates, and home price appreciation. These developments have impacted the U.S. housing market, including the residential repair and remodel and residential new construction end markets, and have contributed to a recent slowdown in the U.S. housing industry.
Certain developments have led to a more challenging macro-economic environment, such as broad-based inflation, the rapid rise in mortgage rates, home price appreciation, and low existing home turnover.
The specialty products we distribute are available from select suppliers from which we have established and cultivated relationships in the specific markets we serve. The structural products we distribute are available from a variety of suppliers in both the U.S. and Canada.
The specialty products we distribute are available from select domestic and international suppliers from which we have established and cultivated relationships.
We expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements. As of December 30, 2023, we had $521.7 million of cash and cash equivalents plus $346.5 million of availability on our revolving credit facility.
We expect to meet our long-term liquidity needs with cash/cash equivalents on hand, cash flows from our operations, and financing arrangements.
Other operating expenses increased $0.6 million compared to fiscal 2022 primarily due to restructuring related costs, including severance payments, incurred in fiscal 2023 due to our leadership transition. Interest expense, net, decreased by 43.8 percent, or $18.5 million, compared to fiscal 2022.
Restructuring related costs incurred in fiscal 2023 included costs related to our leadership transition. 29 Table of Contents Interest expense, net, decreased by 18.5 percent, or $4.4 million, compared to fiscal 2023.
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 completed in recent years.
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. Our total finance lease commitments totaled $292.5 million and $285.4 million as of December 28, 2024 and December 30, 2023, respectively.
Census Bureau and Department of Housing and Urban Development, the median age of an owner-occupied home in the U.S. increased from 23 years in 1985 to 40 years in 2021. Moreover, approximately 75 percent of the current owner-occupied housing stock was built prior to 1999.
As the median age of U.S. housing stock continues to increase over time, we anticipate domestic R&R spending will also increase. According to the U.S. Census Bureau and Department of Housing and Urban Development, the median age of an owner-occupied home in the U.S. increased from 23 years in 1985 to 40 years in 2022.
(2) No borrowings were outstanding during fiscal 2023 or fiscal 2022. Available borrowing capacity under this revolving credit facility was $346.5 million and $346.5 million on December 30, 2023 and December 31, 2022, respectively. (3) Refer to Note 13, Lease Commitments , in Item 8 of this Annual Report for interest rates associated with finance lease obligations.
(2) No borrowings were outstanding during fiscal 2024 or fiscal 2023. Available borrowing capacity under this revolving credit facility was $346.2 million and $346.5 million on December 28, 2024 and December 30, 2023, respectively. Available borrowing capacity is net of undrawn letters of credit commitments.
The following table represents the percentage price changes on a year-over-year basis of the average monthly composite prices for lumber and average monthly composite prices for panels as reflected by Random Lengths, an industry publication, for the periods noted below.
The following table represents the percentage price changes on a year-over-year basis of the average monthly composite prices for lumber and average monthly composite prices for panels as reflected in the industry publication, Random Lengths, for the periods indicated below. 2024 versus 2023 2023 versus 2022 2022 versus 2021 Increase (decrease) in composite lumber prices (2.5)% (47)% (10)% Increase (decrease) in composite panel prices 1.2% (32)% (18)% There is significant uncertainty regarding future trends in lumber and panel index prices.
Debt and Credit Sources As of December 30, 2023, and December 31, 2022, debt and finance leases consisted of the following: December 30, 2023 December 31, 2022 (In thousands) Senior secured notes (1) $ 300,000 $ 300,000 Revolving credit facility (2) — — Finance lease obligations (3) 285,426 273,075 585,426 573,075 Unamortized debt issuance costs (3,246) (4,057) Unamortized bond discount costs (3,011) (3,519) 579,169 565,499 Less: current portions of finance leases 11,178 7,089 Total debt and finance leases, net of current portions $ 567,991 $ 558,410 (1) As of December 30, 2023 and December 31, 2022, our long-term debt was comprised of $300.0 million of senior secured notes issued in October 2021.
Our net working capital as of December 28, 2024 and December 30, 2023 is presented in the following table: December 28, 2024 December 30, 2023 (In thousands) Current assets included in net working capital: Accounts receivable, less allowance for doubtful accounts $ 225,837 $ 228,410 Inventories, net 355,909 343,638 581,746 572,048 Current liabilities included in net working capital: Accounts payable 170,202 157,931 Net working capital $ 411,544 $ 414,117 As of December 28, 2024, and December 30, 2023, debt and finance leases consisted of the following: December 28, 2024 December 30, 2023 (In thousands) Senior secured notes (1) $ 300,000 $ 300,000 Revolving credit facility (2) — — Finance lease obligations (3) 292,543 285,426 592,543 585,426 Unamortized debt issuance costs (2,437) (3,246) Unamortized bond discount costs (2,502) (3,011) 587,604 579,169 Less: current portions of finance leases 12,541 11,178 Total debt and finance leases, net of current portions $ 575,063 $ 567,991 (1) As of December 28, 2024 and December 30, 2023, our long-term debt was comprised of $300.0 million of senior secured notes issued in October 2021.
R&R market remains significant, with total U.S. homeowner improvements and repairs spending expected to be approximately $450 billion in 2024, down from $481 billion in 2023, but still up significantly from $363 billion in 2020. Further, as the median age of U.S. housing stock increases over time, we anticipate domestic R&R spending will also increase. According to the U.S.
The total market size of the U.S. R&R market remains significant, with total U.S. homeowner improvements and repairs spending expected to be approximately $509 billion in 2025, compared to the $503 billion, $510 billion, and $515 billion in 2024, 2023, and 2022, respectively, but up significantly from the $407 billion in 2021 and the $363 billion in 2020.
The settlement of the frozen defined benefit pension plan does not result in any changes to the multi-employer pension plans in which some of our union employees participate. Our effective income tax rate was 40.7% and 25.0% for fiscal 2023 and fiscal 2022, respectively.
During fiscal 2024, we received cash refunds of $2.5 million related to the settlement when the separate pension trust entity was closed. The settlement of the frozen defined benefit pension plan did not result in any changes to the multi-employer pension plans in which some of our union employees participate.
Sources and Uses of Cash Operating Activities Net cash provided by operating activities totaled $306.3 million for fiscal 2023 compared to $400.3 million for fiscal 2022.
Additionally, net income was lower in fiscal 2024 when the non-cash reclassification from accumulated other comprehensive loss of $30.4 million in fiscal 2023 is considered in the net income comparison between fiscal 2024 and fiscal 2023. Net cash provided by operating activities totaled $306.3 million for fiscal 2023 compared to $400.3 million for fiscal 2022.
Our structural gross margin percentage of fiscal 2023 was 11.2%, down from 12.2% in the prior fiscal year, primarily attributable to price deflation in the wood-based commodity markets represented by the aforementioned year-over-year declines in the average composite price of framing lumber and structural panels.
Structural products gross margin percentage for fiscal 2024 was 10.1 percent, down from 11.2 percent in the prior fiscal year, which was primarily attributable to the aforementioned price deflation. Our selling, general, and administrative (“SG&A”) expenses increased 2.7 percent overall, or $9.7 million , compared to fiscal 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe may also be limited in our ability to pass on increases in freight costs on our products. We may enter into derivative financial instruments to mitigate the potential impact of commodity price fluctuations on our results of operations or cash flows; as of December 30, 2023 and December 31, 2022, we had no such derivative financial instruments in place.
Biggest changeWe may also be limited in our ability to pass on increases in freight costs on our products. We may enter into derivative financial instruments to mitigate the potential impact of commodity price fluctuations on our results of operations or cash flows. As of December 28, 2024 and December 30, 2023, we had no such derivative financial instruments in place.
Commodity Price Risk Although we have no material financial instruments as of December 30, 2023 and December 31, 2022 that are directly exposed to commodity price risk, many of the building products that we inventory and distribute, including oriented strand board (“OSB”), plywood, lumber, and rebar, are commodities whose price is determined by the market’s supply and demand for such products.
Commodity Price Risk Although we have no material financial instruments as of December 28, 2024 and December 30, 2023 that are directly exposed to commodity price risk, many of the building products that we inventory and distribute, including oriented strand board (“OSB”), plywood, lumber, and rebar, are commodities whose price is determined by the market’s supply and demand for such products.
We may enter into derivative financial instruments to mitigate the potential impact of interest rate risk on our results of operations or cash flows; as of December 30, 2023 and December 31, 2022, we had no such derivative financial instruments in place.
We may enter into derivative financial instruments to mitigate the potential impact of interest rate risk on our results of operations or cash flows. As of December 28, 2024 and December 30, 2023, we had no such derivative financial instruments in place.
For further discussion of our indebtedness and related interest rate risk, refer to Note 8, Debt and Finance Leases in Item 8 and to Item 1A, Risk Factors of this Annual Report. 37 Table of Contents
For further discussion of our indebtedness and related interest rate risk, refer to Note 8, Debt and Finance Lease Obligations in Item 8 and to Item 1A, Risk Factors of this Annual Report. 36 Table of Contents
As of December 30, 2023 and December 31, 2022, we had no outstanding borrowings on our revolving credit facility.
As of December 28, 2024 and December 30, 2023, we had no outstanding borrowings on our revolving credit facility.

Other BXC 10-K year-over-year comparisons