ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS
The following discussion should be read in conjunction with our consolidatedfinancial statements and related notes and other financial information appearingelsewhere in this Form 10-K. In addition to historical information, thefollowing discussion and other parts of this Form 10-K containforward-looking information that involves risks and uncertainties. Our actual resultscould differ materially from those anticipated by this forward-looking informationdue to the factors discussed under “Risk Factors,” “Cautionary Statement ConcerningForward-Looking Statements,” and elsewhere in this Form 10-K.
Factors That Affect Our Operating Results and Trends
Our results of operations and financial performance are influenced by a variety of factors, including: (i) general economic and industry conditions affecting demand in the housing market; (ii) the commoditized nature of many of the products we manufacture and distribute; and (iii) cost and availability of the products we distribute. These factors, and the related trends and uncertainties, have historically produced cyclicality in our results of operations, and we expect this cyclicality to continue in future periods.
General Economic Conditions Affecting Demand
Many of the factors that cause our operations to fluctuate are seasonal or cyclical in nature. Historically, our operating results have also been correlated with the level of single-family residential housing starts in the U.S. The demand for new homes is dependent on a variety of factors, including unemployment levels, job and wage growth, changes in population and demographics, the availability and cost of mortgage financing, the supply and affordability of new and existing homes, availability and affordability of homeowners insurance coverage, and consumer confidence and demand. 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. These developments have impacted the U.S. housing market, including the residential repair and remodel and residential new construction markets, and have contributed to a slowdown in the U.S. housing industry that continued through 2024 and 2025. In addition, looking ahead, we believe that the demand for our products could face pressure from increases in tariffs and other inflationary pressures, the potential for trade disruption through embargoes, sanctions and import and export controls, and labor shortages and workforce disruption in the home building and remodeling industry due to immigration enforcement activities. However, we believe that several factors, including the current high levels of home equity, the fundamental undersupply of housing in the U.S., potential actions of the U.S. government to address housing availability and affordability, repair and remodel activity, and demographic shifts, among others, will support demand for our products. For additional information regarding the risk factors impacting our business, refer to Part I, Item 1A, Risk Factors, in this Annual Report.
Industry Conditions Affecting Demand
Residential Repair and Remodel
We estimate that demand from the residential repair and remodel market (“R&R”) accounts for approximately 45 percent of our annual sales. Historically, R&R demand conditions have tended to be less cyclical when compared to the residential new construction market, particularly for exterior products that are exposed to the elements and where maintenance is less likely to be deferred for long periods of time. 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. 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. On the other hand, we are experiencing low existing home turnover, which we believe may still be hindering any significant growth in R&R activity.
According to the Joint Center For Housing Studies’ Leading Indicator of Remodeling Activity (“LIRA”) Index, spending for R&R is expected to increase in 2026 over 2025 and 2024. 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 $517 billion in 2026, compared to $511 billion, $501 billion, $510 billion, and $515 billion in 2025, 2024, 2023, and 2022, respectively, but up significantly from the $407 billion and $362 billion in 2021 and 2020, respectively. 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
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41 years in 2023. Moreover, approximately 73 percent of the current owner-occupied housing stock was built prior to 2000. We believe the increasing average age of the nation’s existing homes will drive demand for R&R 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 our products are currently more likely to be used in single-family construction than in multi-family units, and therefore we are actively pursuing multi-family business as part of our sales growth strategy.
We believe demand for new residential construction is driven by a myriad of factors including, but not limited to: mortgage rates, which have recently declined from multi-year highs; lending standards; home affordability; construction cost; 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; consumer sentiment; and actions that may be taken by the U.S. government to increase home construction activity. Based on data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, the rate of residential housing starts for single family units and multi-family units have fluctuated in recent years. However, we believe the U.S. is currently facing a record housing shortage, and we note that the shortfall estimates generally range between 3.8 million and 4.7 million homes. When this shortage begins to correct and home building recovers, we believe our scale, national footprint, strategic supplier relationships, key national customer relationships, and breadth of market leading products and brands will position us to serve a higher demand in the single-family and multifamily residential construction markets.
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 selling price of our commodity products is based on the current market purchase price to replace those products in our inventory, plus adders for our shipping, handling, overhead costs, and our profit margin. At certain times, particularly in a dynamic inflationary commodity market, the selling price for any one or more of the products we distribute, especially those of a commodity nature, may well exceed our purchase price because our prices are based on current replacement cost. 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. 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 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.
Increase (decrease) in composite lumber prices 5.8% (2.5)% (47)%
Increase (decrease) in composite panel prices (16.5)% 1.2% (32)%
There is significant uncertainty regarding future trends in lumber and panel index prices. 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 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 2025, 2024 and 2023, no one supplier represented more than 10% of our consolidated Cost of products sold.
The specialty products we distribute are available from select domestic and international suppliers from which we have established and cultivated relationships. The structural products we distribute are available from a variety of suppliers in both the U.S. and Canada.
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The products we import are subject to various tariffs, including those imposed under each of Section 232 of the Trade Expansion Act of 1962, Section 301 of the Trade Act of 1974, the International Emergency Economic Powers Act (IEEPA) (through February 24, 2026), and Section 122 of the Trade Act of 1974, depending on the product’s material composition and/or origin. We also purchase imported products from domestic companies who then may pass along tariffs in their cost of goods. The products we import, and imported products we purchase domestically, may be subject to new or additional tariffs in addition to those listed above.
Disease Outbreaks and Public Health Crises
The impact of any future disease outbreaks, such as epidemics or pandemics, and other public health crises can affect our operational and financial performance to varying degrees. In addition, any subsequent economic recovery from such events can also affect our operational and financial performance. The extent of any future disease outbreaks or other public health crises or related containment measures and government responses are highly uncertain and cannot be predicted.
Results of Operations
Fiscal 2025 Compared to Fiscal 2024
The following table sets forth our results of operations for fiscal 2025 and fiscal 2024. Fiscal 2025 consisted of 53 weeks and fiscal 2024 consisted of 52 fiscal weeks.
($ amounts in thousands) Fiscal 2025 % ofNetSales Fiscal 2024 % ofNetSales
(53 weeks) (52 weeks)
Recognition of deferred gains on real estate (3,934) (0.1)% (3,934) (0.1)%
Gain from sale of property — —% (272) —%
Settlement of defined benefit pension plan — —% (2,481) (0.1)%
Income before provision (benefit) for income taxes 129 —% 70,687 2.4%
(Benefit) provision for income taxes (90) —% 17,571 0.6%
The following table sets forth changes in Net sales by product category for fiscal 2025 and fiscal 2024.
($ amounts in thousands) Fiscal 2025 Fiscal 2024
(53 weeks) (52 weeks)
Net sales by product category
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The following table sets forth gross margin dollars and percentages by product category for fiscal 2025 and fiscal 2024.
($ amounts in thousands) Fiscal 2025 Fiscal 2024
(53 weeks) (52 weeks)
Gross profit by product category:
Gross margin % by product category:
Structural products 9.2% 10.1%
For fiscal 2025, we generated Net sales of $3.0 billion, an increase of $1.5 million, or 0.05 percent, compared to fiscal 2024.
•The change in the Company’s Net sales was driven by specialty products (up $7.1 million or 0.3 percent), partially offset by a decrease for structural products (down $5.6 million or 0.6 percent). Compared to fiscal 2024, higher overall volume in fiscal 2025 was offset by overall lower pricing driven by external market factors.
The Company’s gross profit for fiscal 2025 decreased $37.5 million, or 7.7%, from $489.1 million in fiscal 2024 to $451.6 million in fiscal 2025.
•This decrease in the Company’s gross profit for fiscal 2025 was attributable to both specialty products and structural products, with specialty products down $28.6 million and structural products down $8.9 million.
•Gross profit in fiscal 2025 was negatively impacted by lower product pricing, partially offset by volume growth and the Disdero acquisition.
•Approximately 82% and 81% of the Company’s gross profit was attributable to specialty products in fiscal 2025 and fiscal 2024, respectively.
•The Company’s gross margin percentage decreased from 16.6 percent in fiscal 2024 to 15.3 percent in fiscal 2025. The decline in fiscal 2025 compared to fiscal 2024 was attributable to both specialty products and structural products, with structural products down 90 basis points and specialty products down 140 basis points.
•As previously disclosed, the Company’s gross profit and gross margin percentage reported for fiscal 2024 benefited by $20.7 million related to changes in retroactive rates for certain anti-dumping or countervailing (“AD/CV”) import duties, and this reduced the Company’s Cost of products sold reported in fiscal 2024. This $20.7 million credit to Cost of products sold was partially offset by $8.0 million of estimated expenses related to import duties in prior periods arising from certain classification discrepancies for products imported into the United States as separately entered shipments. These import duty items resulted in a net benefit of $12.7 million to the Company’s Cost of products sold reported for fiscal 2024 and increased the Company’s gross margin percentage from 16.1% to 16.6% for fiscal 2024. These import duty-related items benefited the operating results for specialty products. The net impact of import duty-related adjustments was not material for fiscal 2025.
Specialty products - Net sales of specialty products, which includes product types such as engineered wood, siding, millwork, outdoor living products, specialty lumber and panels, and industrial products,increased overall by$7.1 million, or 0.3 percent, to $2.1 billionin fiscal 2025.
•The overall increase for specialty products’ Net sales benefited from the incremental Net sales from Disdero.
•Excluding Disdero’s Net sales, the decline in Net sales for specialty products in fiscal 2025 was driven by lower pricing primarily for engineered wood, millwork, and specialty lumber and panels, and by lower volume for industrial products and siding. These declines were partially offset by higher volume for engineered wood products and specialty lumber and panels.
•Specialty products gross profit decreased by$28.6 million, or 7.2%, to $369.0 million in the current year, due primarily to the competitive pricing environment in fiscal 2025 in addition to fiscal 2025 lacking the $12.7 million net benefit related to import duty items, as discussed below.
•Specialty products gross margin percentage decreased to 18.0 percent for fiscal 2025 compared to 19.4 percent for fiscal 2024, due primarily to the reasons noted above for gross profit.
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•Gross profit and gross margin percentage reported in fiscal 2024 for specialty products benefited from the aforementioned $12.7 million net benefit related to import duty items. Excluding this net benefit, gross margin percentage for specialty products was 18.8% for fiscal 2024.
Structural products - Net sales of structural products, which includes product types such as lumber, plywood, oriented strand board, rebar, and remesh, decreased overall by $5.6 million, or 0.6 percent, to $901 million in fiscal 2025.
•This overall decrease in Net sales for structural products was due primarily to pricing decreases for panels, partially offset by increases for lumber pricing and panels volumes.
•Gross profit for structural products decreased in the current year by $8.9 million, or 9.7 percent, to $82.6 million from $91.5 million in the prior year period, due primarily to pricing pressures driven by external market factors.
•Compared to fiscal year 2024, average composite pricing for lumber in the U.S. increased 5.8% and panel prices decreased 16.5% in fiscal 2025.
•Structural products gross margin percentage for fiscal 2025 was 9.2 percent, down from 10.1 percent in the prior fiscal year, which was primarily attributable to the pricing pressures driven by external market forces.
Our selling, general, and administrative (“SG&A”) expensesincreased4.3 percent overall,or by$15.6 million, compared to fiscal 2024. This overall increase in fiscal 2025 was due to the addition of Disdero, the extra week in fiscal 2025, increased sales and logistics expenses driven by our strategic channel growth, including multi-family, as well as continuing technology initiatives associated with our digital transformation, a multi-year initiative aimed at modernizing and integrating our core technologies by improving data quality, strengthening transportation management and operational systems, and digitizing key processes.
Depreciation and amortization expense increased 3.7 percent compared to fiscal 2024 due primarily to a higher base of amortizable and depreciable assets throughout fiscal 2025 when compared to the prior fiscal year, resulting from our continued focus on capital investment and the acquisition of Disdero.
Other operating expenses, net in fiscal 2025 were primarily acquisition-related and other nonrecurring expenses, partially offset by insurance recoveries received in 2025 related to property damaged at our Erwin, Tennessee facility due to Hurricane Helene in late 2024.
Interest expense, net, which includes gross interest expense less interest income, increased by 67.1 percent, or $13.0 million, compared to fiscal 2024, primarily due to changes in interest income.
•Gross interest expense was $49.7 million and $47.2 million in fiscal 2025 and 2024, respectively. Gross interest expense in fiscal 2025 and fiscal 2024 included $0.8 million and $1.2 million, respectively, related to the aforementioned estimate for an accrual initially made and disclosed in the first quarter of 2024 for amounts we believe we may owe for discrepancies in import duties paid in prior years for certain imported goods. Excluding these amounts, gross interest expense in fiscal 2025 and fiscal 2024 would have been $48.9 million and $46.0 million, respectively, an increase of $2.9 million. This $2.9 million increase in the current fiscal year was due to additional net finance leases added in fiscal 2025.
•Gross interest income was $17.3 million and $27.8 million for fiscal 2025 and fiscal 2024, respectively. Interest income in fiscal 2025 and fiscal 2024 included $0.5 million and $2.7 million, respectively, received with the aforementioned import duty refunds related to changes in retroactive rates for certain AD/CV import duties. Excluding these amounts, interest income in the current fiscal period and prior year fiscal period would have been $16.9 million and $25.1 million, respectively, a decrease of $8.3 million in the current fiscal period. This $8.3 million decrease in the current fiscal year was due to lower average balances for interest-bearing deposits of cash/cash equivalents and due to lower interest rates paid on those deposits in the current fiscal year.
Our effective income tax rate was 24.9 percent for fiscal 2024. For fiscal 2025, our pre-tax income and income tax benefit were not material. Our effective income tax rates are impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and adjustments to deferred income tax assets related to stock-based compensation. Our effective income tax rate for fiscal 2024 also benefited from the partial release of a state income tax valuation allowance for deferred income tax assets. On July 4, 2025, the law formally titled “An Act to Provide for the Reconciliation Pursuant to Title II of H. Con. Res. 14” (commonly referred to as the “One Big Beautiful Bill” or “OBBB”) was signed into law. The income tax provisions of the OBBB did not have a material impact on our effective income tax rate for fiscal 2025, and at this time we do not expect to have a material impact on future years. However, the bonus depreciation provisions of the OBBB reduced our cash payments for income taxes by approximately $1.2 million for fiscal 2025, based on additions of qualifying assets in fiscal 2025.
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Our net income for fiscal 2025 was $0.2 million, or $0.02 per diluted share, versus $53.1 million, or $6.19 per diluted share, in the prior fiscal year. Our net income for fiscal 2025 decreased primarily due to the factors discussed above.
Results of Operations
Fiscal 2024 Compared to Fiscal 2023
For a comparison of the Company’s results of operations for the fiscal year ended December 28, 2024 to the fiscal year ended December 30, 2023, refer to Item 7 of the Company’s Annual Report on Form 10-K for fiscal 2024 filed with the SEC on February 18, 2025.
Liquidity and Capital Resources
We expect our material cash requirements for the foreseeable future, including the next 12 months, will be for our:
•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; and
•Periodic estimated income tax payments, as required.
Our purchase orders are based on near-term needs and are typically fulfilled by our vendors within short time horizons. We do nothave significant agreements for the purchase of inventory specifying minimum quantities or set prices that exceed our expected requirements or that cannot be canceled by us within 30 to 60 days.
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. We expect to meet our long-term liquidity needs with cash/cash equivalents on hand, cash flows from our operations, and financing arrangements. As of January 3, 2026, we had $385.8 million of cash and cash equivalents plus $340.1 million of availability on our revolving credit facility.
Sources and Uses of Cash
Operating Activities
Net cash provided by operating activities totaled $59.8 million for fiscal 2025 compared to $85.2 million for fiscal 2024. The decrease in cash provided by operating activities for fiscal 2025 was due primarily to lower cash impacts of net income, partially offset by positive changes in working capital driven by more effective inventory management.
Net cash provided by operating activities totaled $85.2 million for fiscal 2024 compared to $306.3 million for fiscal 2023. The decrease in cash provided by operating activities for fiscal 2024 was primarily the result of changes in working capital, particularly with respect to changes in inventory and other current assets within fiscal 2024 when compared to changes in inventory and other current assets within fiscal 2023. 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. 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. For working capital, the change in inventory increased $120.1 million for fiscal 2023 as a result of lower product cost and our continuing efforts to better manage inventory on hand. The change in accounts payable increased $37.8 million for fiscal 2023 due to the timing of payments. 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.
Investing Activities
Net cash used in investing activities was $119.5 million during fiscal 2025, primarily for our acquisition of Disdero and for capital expenditures. Our investing activities in fiscal 2025 reflected continuing improvements to our distribution facilities, upgrades to our fleet, and digital transformation.
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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. Our investing activities in fiscal 2023 reflected continuing improvements to our distribution facilities and upgrades to our fleet.
Financing Activities
Net cash used in financing activities was $60.1 million for fiscal 2025. Of this amount $38.1 million was used to repurchase our common stock under authorized share repurchase programs and remit excise taxes due on fiscal 2024 share repurchases, $2.5 million was used to repurchase shares to satisfy employee payroll and tax withholdings for vesting of share-based compensation, and $16.3 million was used for principal payments on finance lease obligations.
Net cash used in financing activities was $62.1 million for fiscal 2024. Of this amount $45.3 million was used to repurchase our common stock under authorized share repurchase programs and remit excise taxes due on fiscal 2023 share repurchases, $3.4 million was used to repurchase shares to satisfy employee payroll and tax withholdings for vesting of share-based compensation, and $13.4 million was used for principal 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.
Common Stock Repurchases
During fiscal years 2025, 2024, and 2023 we used cash of $37.8 million, $45.0 million, and $42.1 million, respectively, to repurchase shares of our common stock under repurchase programs authorized by our Board of Directors, excluding excise tax due on the repurchases. The repurchase dollar amounts noted above are based on trade date activity, while the amounts reported on our consolidated statements of cash flows for share repurchases are based on settlement date activity.
As of January 3, 2026, we had $8.7 million of remaining repurchase authorization under the $100 million program approved by our Board of Directors on October 31, 2023. On July 28, 2025, our board of directors authorized a new share repurchase program for $50 million. The 2025 authorization may be used after exhaustion of the 2023 authorization, resulting in a total remaining purchase authorization at the end of fiscal 2025 of $58.7 million under both of our authorized share repurchase programs.
Under our share repurchase programs, we may repurchase our common stock from time to time, without prior notice, subject to prevailing market conditions and other considerations. 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.
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. This metric differs from traditional working capital in that it excludes certain current assets and current liabilities that are reported in our consolidated balance sheet. Our net working capital as of January 3, 2026 and December 28, 2024 is presented in the following table:
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As of
(53 weeks) (52 weeks)
Current assets included in net working capital:
Current liabilities included in net working capital:
As of January 3, 2026, and December 28, 2024, debt and finance leases consisted of the following:
As of
(In thousands)
Revolving credit facilities (2) — —
Unamortized debt issuance costs (1,349) (2,437)
Unamortized bond discount costs (1,991) (2,502)
Less: current portions of finance leases 22,348 12,541
Total debt and finance leases, net of current portions $ 595,591 $ 575,063
(1) As of January 3, 2026 and December 28, 2024, our long-term debt was comprised of $300.0 million of senior secured notes issued in October 2021. These notes are presented under the long-term debt caption of our balance sheet at $296.7 million and $295.1 million as of January 3, 2026 and December 28, 2024, respectively. This presentation is net of their discount of $2.0 million and $2.5 million and the combined carrying value of our debt issuance costs of $1.3 million and $2.4 million as of January 3, 2026 and December 28, 2024, respectively. Our senior secured notes are presented in this table at their face value.
(2) No borrowings were outstanding during fiscal 2025 or fiscal 2024. Available borrowing capacity under our revolving credit facilities was $340.1 million and $346.2 million on January 3, 2026 and December 28, 2024, respectively. Available borrowing capacity is net of undrawn letters of credit commitments. If any borrowings had been outstanding on our revolving credit facility as of January 3, 2026, the borrowings would have incurred interest at the variable rate of 4.77 percent per annum.
(3) Refer to Note 13, Lease Commitments, in Item 8 of this Annual Report.
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. 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 January 3, 2026, we were in compliance with these covenants.
Revolving Credit Facilities
On August 27, 2025, we entered into a new credit agreement with Bank of America, National Association, and certain other financial institutions. The new credit agreement matures August 27, 2030 and initially provides for a senior secured revolving loan and letter of credit facility (collectively, referred to as the “revolving credit facility”) of up to $350 million and includes a $35 million swing line subfacility for letters of credit. Subject to certain conditions and consents, we have the option in the future to increase the revolving credit facility by an aggregate additional principal amount of up to $300 million. If we obtain
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the full amount of the additional increases in commitments in the future, the revolving credit facility could allow total borrowings of up to $650 million.
Our obligations under the new credit agreement are secured by a security interest in substantially all of the Company’s and its subsidiaries’ assets (other than real property), including inventories, accounts receivable, and proceeds from those items.
Any borrowings under the new credit agreement are subject to availability under the “borrowing base” (as such term is defined in the new credit agreement). The new 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.
If borrowings are outstanding under the credit agreement, interest accrues at a rate per annum equal to (i) the then-current Secured Overnight Financing Rate (“SOFR”) plus a margin ranging from 1.25% to 1.75%, with the amount of such margin determined based upon the average of the borrowers’ excess availability (as defined) for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on SOFR, or (ii) the administrative agent’s base rate plus a margin ranging from 0.25% to 0.75%, with the amount of such margin determined based upon the average of the Borrowers’ excess availability (as defined) for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on the base rate.
The new credit agreement replaced our former $350 million secured revolving credit facility, dated April 13, 2018.
No borrowings were outstanding on the former revolving credit facility on August 27, 2025.
As of January 3, 2026, we had zero outstanding borrowings and excess availability, including cash in qualified accounts, of $725.9 million under our new revolving credit facility. Available borrowing capacity under our new revolving credit facility was $340.1 million as of January 3, 2026.
During fiscal 2025, fiscal 2024, and fiscal 2023, the Company incurred no interest expense for its revolving credit facilities since no borrowings were outstanding during those fiscal years. During fiscal 2025, 2024, and 2023, the Company incurred $0.9 million, $1.0 million, and $1.0 million respectively, of fees associated with the revolving credit facilities, primarily unused line fees. These expenses are included in Interest expense, net on the Company‘s consolidated statement of operations.
Finance Lease Commitments
Our finance lease liabilities consist of leases related to equipment, vehicles, and real estate. Our total finance lease commitments totaled $321.3 million and $292.5 million as of January 3, 2026 and December 28, 2024, respectively. Of the $321.3 million of finance lease commitments as of January 3, 2026, $240.6 million related to real estate and $80.6 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. As of January 3, 2026, $22.3 million of our finance leases are classified as current liabilities.
The real estate finance leases noted above include $124.1 million and $125.1 million as of January 3, 2026 and December 28, 2024, respectively, for sale-leasebacks of real estate in fiscal 2019 and 2020 that did not qualify for sale treatment for accounting purposes.
Off-Balance Sheet Arrangements
As of January 3, 2026 and December 28, 2024, we did not have any off-balance sheet arrangements other than short-term inventory commitments in the normal course of our business. Our purchase order commitments are based on near-term needs and are typically fulfilled by vendors within short time horizons. We do not have significant agreements for the purchase of inventory specifying minimum quantities or set prices that exceed expected requirements or that we cannot be cancel within 30 to 60 days.
Critical Accounting Estimates
Our significant accounting policies are disclosed in Note 1, Summary of Significant Accounting Policies to our consolidated financial statements in Item 8 of this Annual Report. The following discussion addresses our most critical accounting estimates, which are those that are both important for the representation of our financial condition and results of operations, and that require significant judgment or use of significant assumptions or complex estimates.
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S., which require management to make estimates, judgments, and assumptions that affect the amounts reported in the consolidated
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financial statements and accompanying notes. Accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our financial statements because they involve significant judgments and uncertainties. All of these estimates reflect our best judgment about current, and for some estimates, future economic and market conditions and their potential effects based on information available as of the date of these financial statements. 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. 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.
We believe that our most critical accounting policies and estimates relate to: (1) revenue recognition; (2) income taxes; (3) business combinations; and (4) goodwill.
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. For us, this generally means that we recognize revenue when title to our products is transferred to our customers. Title usually transfers upon shipment to, or receipt at, our customers’ locations, as determined by the specific sales terms of each transaction. Our customers can earn certain incentives including, but not limited to, cash discounts and rebates. These incentives are deducted from revenue recognized. In preparing the financial statements, management must make estimates related to the contractual terms, customer performance, and sales volume to determine the total amounts recorded as deductions from revenue. Management also considers past results in making such estimates. The actual amounts may be different from our estimates, and such differences are 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. Judgment is required in determining our annual income tax expense and in evaluating our income tax positions. 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. 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. 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.
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 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. 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. 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. 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 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. Based on the evaluation of available information, we recognize
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future income tax benefits, such as net operating loss carryforwards, to the extent that realizing these benefits is considered more likely than not.
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. 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. As of January 3, 2026, 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 January 3, 2026 was approximately $3.4 million. See Note 7, Income Taxes, in Item 8 of this Annual Report.
The effective income tax rate that is calculated from our consolidated statement of operation can differ from statutory income tax rates due in part to certain expenses that are not deductible, in full or partially, on our income tax returns, such as business meals, entertainment, and executive compensation, and due to adjustments to deferred income tax assets related to stock-based compensation. The impact that such differences can have on our effective income tax rate for financial reporting purposes is more material for reporting periods in which either, or both, our pre-tax income or income tax expense (or benefit) are low. For a reconciliation of the impact that these items had on our effective income tax rate for fiscal 2025, see Note 7, Income Taxes, to the consolidated financial statements.
Business Combinations
We account for business combinations using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed are recorded at their respective fair values at the date of acquisition. The determination of the acquisition date fair values of identifiable assets acquired and liabilities assumed requires estimates and the use of valuation techniques when fair value is not readily available and requires a significant amount of management judgment. We must make significant estimates and assumptions about intangible assets, obligations assumed and pre-acquisition contingencies, including uncertain tax positions and tax-related valuation allowances and reserves, where applicable. In valuing certain acquired assets and liabilities, fair value estimates use Level 3 inputs, including future expected cash flows and discount rates. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on the determination of the fair values of the customer relationships intangible assets acquired. The excess of the purchase price over fair values of identifiable assets acquired and liabilities assumed is recorded as goodwill.
For the valuation of intangible assets acquired in a business combination, we typically use an income approach to estimate fair value. Critical inputs and assumptions in valuing certain of the intangible assets include, but are not limited to, future expected cash flows from customer relationships and developed technologies, expected customer attrition rates, discount rates, the acquired Company’s brand and competitive position, as well as assumptions about the period of time the acquired brand will continue to be used in the combined Company’s product portfolio.
When a business combination occurs late in a reporting period, we may utilize a method known as “benchmarking” to provide preliminary estimates for the fair values of intangible assets, goodwill, acquired leases, and inventory for financial reporting purposes in the reporting period in which the business combination occurs. The “benchmarking” method involves utilizing valuation inputs, such as discount rates, royalty rates, etc., from our prior business combinations and/or similar business combination completed by other entities. The preliminary fair value estimates are updated in the subsequent reporting period when additional and more specific information is gathered and analyzed for the acquired business.
After subsequent adjustments are made for any “benchmarking” estimates, and for business combinations where the “benchmarking” method is not utilized, our estimates of fair value assigned to acquired assets and assumed liabilities may be inherently uncertain and subject to refinement. As a result, during the measurement period, which can last up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments arising from new facts and circumstances are recorded to the consolidated statements of operations. The results of operations of acquisitions are reflected in the Company’s consolidated financial statements from the date of acquisition.
Goodwill
Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Estimates are used in the determination of the fair values of identifiable assets acquired, including intangible assets, and liabilities assumed in a business combination, but the initial
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carrying value assigned to goodwill is of a residual nature. Goodwill is not subject to amortization but must be tested for impairment at least annually using either a qualitative method or a quantitative method. Goodwill may also need to be assessed for impairment between the annual assessments if an event occurs or circumstances change that would indicate the carrying value of goodwill may be impaired. Such interim events and circumstances can include significant declines in the industries in which our products are used, significant changes in capital market conditions, and significant changes in our market capitalization.
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. In performing a qualitative assessment, potential impairment indicators must be evaluated to determine if it is “more likely than not that the fair value of the reporting unit is less than its carrying amount.” Such evaluations involve estimates of the significance and materiality of any identified impairment indicators. For a quantitative assessment, we utilize a combination of the present value of expected cash flows and the guideline public companies method to determine the estimated fair value of our enterprise. 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 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. The results of this most recent annual assessment indicated that the estimated fair value of the enterprise exceeded its carrying value by approximately 10% as of the assessment date. The estimation of the fair value of the enterprise was based in part on a discounted cash flows model that utilizes key inputs such as our forecasted gross profit and our cost of capital. Given that the estimated fair value of the enterprise exceeded its carrying value by only 10% as of the most recent assessment date, our goodwill could be impaired in future reporting periods if any one or more of the inputs into the discounted cash flows model, including the aforementioned key inputs, do not meet forecasted expectations.
As of January 3, 2026, the carrying value of our goodwill was $67.2 million, which represented 4.3% of our consolidated assets.
Between our annual impairment assessment for fiscal 2025 and 2024, 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.
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.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks as part of our on-going business operations. Our exposure includes commodity price risk and interest rate risk.
Commodity Price Risk
Although we have no material financial instruments as of January 3, 2026 and December 28, 2024 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. Prices of commodity products can also change as a result of national and international economic conditions, labor and freight costs, competition, market speculation, government regulation, and trade policies, as well as from periodic delays in the delivery of products. Short-term increases in the cost of these materials, some of which are subject to significant fluctuations, 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. We 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 January 3, 2026 and December 28, 2024, we had no such derivative financial instruments in place. For further discussion of commodity price risk, refer to Item 1A, Risk Factors, and to the section under the heading “Commodity Nature of Our Products” within“Factors That Affect Our Operating Results and Trends” in Item 7 of this Annual Report on Form 10-K.
Interest Rate Risk
We may be exposed to changes in interest rates for our outstanding debt. Changes in market interest rates could affect our interest expense. We are exposed to interest rate risk arising from fluctuations in variable-rate SOFR, or other applicable benchmark rate, when we have amounts outstanding on our revolving credit facility. As of January 3, 2026 and December 28, 2024, we had no outstanding borrowings on our revolving credit facility. If any borrowings had been outstanding on our revolving credit facility as of January 3, 2026, the borrowings would have incurred interest at the variable rate of 4.77 percent per annum. Our senior secured notes bear interest at a fixed rate, therefore, our interest expense related to these notes would not be affected by an increase in market interest rates if we remain in compliance with the related debt covenants, but interest rate changes could impact the terms and pricing of any future refinancings of our term debt. 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 January 3, 2026 and December 28, 2024, 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 Lease Obligations in Item 8 and to Item 1A, Risk Factors of this Annual Report.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 40
Consolidated Statements of Operations and Comprehensive Income 42
Consolidated Balance Sheets 43
Consolidated Statements of Stockholders’ Equity 44
Consolidated Statements of Cash Flows 45
Notes to Consolidated Financial Statements
Summary of Significant Accounting Policies 46
Business Combination 54
Revenue Recognition 56
Goodwill and Other Intangible Assets 57
Segment Reporting 59
Property and Equipment 60
Income Taxes 60
Debt and Finance Leases Obligations 64
Fair Value 66
Employee Retirement Plans 67
Share-Based Compensation 69
Stockholders’ Equity, Earnings Per Share and Share Repurchases 72
Lease Commitments 74
Commitments and Contingencies 77
Accumulated Other Comprehensive Income (Loss) 79
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of BlueLinx Holdings Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of BlueLinx Holdings Inc. (the Company) as of January 3, 2026 and December 28, 2024, the related consolidated statements of operations and comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended January 3, 2026, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 3, 2026 and December 28, 2024, and the results of its operations and its cash flows for each of the three years in the period ended January 3, 2026, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 3, 2026, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 24, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of Goodwill
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/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2021.
Atlanta, Georgia
February 24, 2026
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BLUELINX HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
Fiscal Year Ended
(In thousands, except per share amounts) 53 weeks 52 weeks 52 weeks
Operating expenses (income):
Recognition of deferred gains on real estate (3,934) (3,934) (3,934)
Gain from sale of property — (272) —
Non-operating expenses (income):
Settlement of defined benefit pension plan — (2,481) 30,440
Other expense, net — — 2,377
Income before provision (benefit) for income taxes 129 70,687 81,886
Diluted earnings per share $ 0.02 $ 6.19 $ 5.39
Comprehensive income:
Other comprehensive income:
Actuarial loss on defined benefit plan, net of tax $1,090 — — (3,119)
Amortization of unrecognized pension gain, net of tax of $(325) — — 882
Total other comprehensive income — — 31,412
See the accompanying notes to the consolidated financial statements.
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BLUELINX HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
As of
(In thousands, except share data)
ASSETS
Current assets:
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Operating lease liabilities - current 8,969 8,478
Real estate deferred gains - current 3,935 3,935
Non-current liabilities:
Finance lease liabilities - less current portion 298,931 280,002
Operating lease liabilities - less current portion 47,075 40,114
Real estate deferred gains - less current portion 59,362 63,296
Commitments and contingencies
STOCKHOLDERS’ EQUITY
See the accompanying notes to the consolidated financial statements.
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BLUELINX HOLDINGS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Shares Amount
(In thousands)
Vesting of restricted stock units 170 2 (2) — — —
Compensation related to share-based grants — — 12,055 — — 12,055
Common stock repurchases and retirements (506) (5) (42,462) — — (42,467)
Other comprehensive income — — — — — —
Vesting of restricted stock units 105 1 (1) — — —
Compensation related to share-based grants — — 7,749 — — 7,749
Common stock repurchases and retirements (428) (5) (45,340) — — (45,345)
Vesting of restricted stock units 110 1 (1) — — —
Compensation related to share-based grants — — 11,252 — — 11,252
Common stock repurchases and retirements (504) (5) (38,073) — — (38,078)
(a) Activity rounds to less than one thousand dollars
There has been no activity for Preferred Stock.
See the accompanying notes to the consolidated financial statements.
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BLUELINX HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Adjustments to reconcile net income to cash provided by operations:
Settlement of frozen defined benefit pension plan — — 30,440
Amortization of debt discount and issuance costs 1,510 1,318 1,319
Gains from sale of property — (272) —
(Benefit) provision for deferred income taxes (36) 2,678 7,756
Recognition of deferred gains from real estate (3,934) (3,934) (3,934)
Other income statement items — — (909)
Changes in operating assets and liabilities, net of business combination:
Cash flows from investing activities:
Acquisition of business, net of cash acquired (95,210) — 300
Proceeds from sales of property and insurance recoveries 2,656 899 357
Cash flows from financing activities:
Debt financing costs (3,095) — —
Principal payments on finance lease liabilities (16,317) (13,427) (9,208)
Supplemental cash flow information:
Interest paid, including interest for finance leases $ 47,093 $ 44,988 $ 43,438
Noncash transactions:
See the accompanying notes to the consolidated financial statements.
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BLUELINX HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation
BlueLinx Holdings Inc., including consolidated subsidiaries (collectively, the “Company”), is a leading wholesale distributor of residential and commercial building products in the United States. The Company is a two-step distributor and purchases products from manufacturers and distributes those products to dealers and other suppliers in local markets, who then sell those products to end users. The Company carries a broad portfolio of both branded and private-label stock keeping units (“SKUs”) across two principal product categories: specialty products and structural products. Specialty products include items such as engineered wood, siding, moulding and millwork, outdoor living, specialty lumber and panels, and industrial products. Structural products include items such as lumber, plywood, oriented strand board, rebar, and remesh. The Company also provides a wide range of value-added services and solutions aimed at relieving distribution and logistics challenges for its customers and suppliers, while enhancing their marketing and inventory management capabilities.
These financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP” or “GAAP”). The Company’s consolidated financial statements include the accounts of BlueLinx Holdings Inc. and its wholly owned subsidiaries. The Company is composed of a single reportable segment for financial reporting purposes. All significant intercompany accounts and transactions have been eliminated. After close of business on October 31, 2025, the Company’s wholly-owned subsidiary, BlueLinx Corporation, acquired all issued and outstanding membership interests of Disdero Lumber Co., LLC (“Disdero”). The acquisition of Disdero is accounted for by the Company under the provisions of Accounting Standards Codification (“ASC”) No. 805, Business Combinations (“ASC 805”), as a business combination under the acquisition method. The results of operations and cash flows for Disdero are included in the Company’s consolidated financial statements beginning November 1, 2025. See Note 2, Business Combination, to the consolidated financial statements.
The Company operates on a 5-4-4 fiscal calendar. Its fiscal year ends on the Saturday closest to December 31 of each year and may comprise 53 weeks in certain years. The Company’s 2025 fiscal year contained 53 weeks and ended on January 3, 2026 (“fiscal 2025”). Fiscal 2024 contained 52 weeks and ended on December 28, 2024 (“fiscal 2024”). Fiscal 2023 contained 52 weeks and ended on December 30, 2023 (“fiscal 2023”). In a fiscal year with 53 weeks, Net sales, Cost of products sold, and employee compensation costs reflect 53 weeks of activity. However, certain other items, such as non-cash depreciation and amortization expenses that are based on the estimated useful lives of the underlying assets and costs that are incurred on a calendar month basis such as rent, are not adjusted in a 53-week fiscal year when compared to a 52-week fiscal year.
Use of Estimates
The Company’s financial statements are prepared in conformity with U.S. GAAP, which requires management to make estimates based on assumptions about current, and for some estimates, future economic and market conditions, which affect reported amounts and related disclosures in its financial statements. Although these current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from expectations, which could materially affect the Company’s financial position, results of operations and cash flows. The Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in preparing these financial statements in conformity with GAAP.
The impacts of national and global events may also affect the Company’s accounting estimates, which may materially change from period to period due to such events. The Company’s management regularly evaluates these significant factors and makes adjustments where facts and circumstances dictate.
Revenue Recognition and Cost of Products Sold
The Company recognizes 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.
More specifically, revenue is recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company is entitled to receive in exchange for those goods or services. The timing of revenue recognition largely is dependent on shipping terms. Revenue is recorded at the time of shipment for terms designated free on board (“FOB”) shipping point, which is a point in time. For sales transactions designated FOB destination, revenue is recorded when the product is delivered to the customer’s delivery site.
All revenues recognized are net of trade allowances, cash discounts, and sales returns. Cash discounts and sales returns are
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BLUELINX HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
estimated using historical experience. Trade allowances are based on the estimated obligations and historical experience. Adjustments to earnings resulting from revisions to estimates on discounts and returns have not been material in any of the reported periods. Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration. The Company estimates these amounts based on the expected amount to be provided to customers and then reduces the amount of revenue recognized. The Company believes that there will not be significant changes to its estimates of variable consideration. Sales and usage-based taxes are excluded from revenues.
Contracts with customers are generally in the form of standard terms and conditions of sale. From time to time, the Company may enter into specific contracts, which may affect delivery terms. Performance obligations in contracts with customers generally consist solely of delivery of goods. For all sales channel types, consisting of warehouse, direct, and reload sales, the Company typically satisfies its performance obligations upon shipment.
Customer payment terms are typical for the Company’s industry and may vary by the type and location of customers and by the products or services offered. The time period between invoicing and when payment is due is not deemed to be significant. For certain sales channels and/or products, standard payment terms may be as early as ten days and in limited situations we may require a customer to pay at time of delivery.
Costs to obtain customer contracts are generally expensed as incurred. The Company generally expenses sales commissions when incurred because the amortization period would typically be one year or less. These costs are recorded within selling, general, and administrative (“SG&A”) expense.
The Company has made an accounting policy election to treat outbound shipping and handling activities as an SG&A expense. Shipping and handling costs include amounts related to the administration of the Company’s logistical infrastructure, handling of material in its warehouses, and amounts pertaining to the delivery of products to customers, such as fuel and maintenance costs for its mobile fleet, wages for its drivers, and third-party freight charges.
Substantially all of the amount reported in Cost of products sold on the Company’s consolidated statement of operations is composed of cost to purchase inventory for resale to customers, including the cost of inbound freight, volume incentives, and inventory adjustments. During fiscal 2025, 2024 and 2023, no one supplier represented more than 10% of the Company’s consolidated Cost of products sold.
Cash and Cash Equivalents
As of January 3, 2026 and December 28, 2024, the majority of the Company’s cash and cash equivalents were comprised of short-term funds. These funds invest in instruments that have a weighted-average maturity of three months or less, including cash, U.S. Treasury bills, notes and other obligations issued or guaranteed as to principal and interest by the U.S. Government or its agencies, and repurchase agreements secured by such obligations or cash. The Company’s policy is to classify such short-term highly liquid investments as cash equivalents. Also, the Company has cash deposits with financial institutions that are typically in excess of federally insured limits. Though the Company has not experienced any losses on its cash deposits to date and does not currently anticipate incurring any such losses, there can be no assurance that the Company will not experience lossesin the future.
Based on the legal form and nature of any restrictions that may be placed by third parties on certain amounts of cash transferred by the Company to external entities, the Company’s accounting policy is to classify such unexpended amounts as either restricted cash, other current assets, or other non-current assets in its consolidated balance sheets. As of January 3, 2026 and December 28, 2024, the Company had $11.6 million and $11.5 million, respectively, reported within Other non-current assets on its consolidated balance sheets for amounts transferred to a third party related to certain of the Company’s self-insured risks for events that have occurred but have not been settled by, or are not yet known to, the Company. See the subsequent section of this note under the heading, Self Insurance. The Company had no amounts reported as restricted cash on its consolidated balance sheets as of January 3, 2026 and December 28, 2024.
Accounts Receivable and Allowance
Accounts receivable are stated at net realizable value, do not bear interest, and consist of amounts owed for orders shipped to customers. The Company has established an overall credit policy for sales to customers.
Under the provisions of ASC No. 323, Financial Instruments-Credit Losses, that apply to the Company’s trade accounts receivable, a current expected credit loss (“CECL”) model is required. The Company believes that its accounts receivable are homogenous and concluded that they can be grouped into one pool when applying the CECL model. The CECL impairment
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BLUELINX HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
model requires an estimate of expected credit losses, measured over the contractual life of a trade receivable, that considers forecasts of future economic conditions in addition to information about past events and current conditions, including specific customer account reviews, historical loss experience, and the creditworthiness of significant customers based on ongoing credit evaluations. The Company prospectively adopted Accounting Standards Update (“ASU”) No. 2025-05, Financial Instruments-Credit Losses (Topic 326); Measurement Losses for Accounts Receivable and Contract Assets” (“ASU 2025-05”), as of the beginning of its fiscal fourth quarter 2025. The Company elected the practical expedient in ASU 2025-05 that allows an entity to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing a reasonable and supportable forecast for estimating any expected credit losses. As of January 3, 2026 and December 28, 2024, the Company’s allowance for Accounts receivable was $5.0 million and $4.3 million, respectively, and net changes in the allowance were not material for any reporting period presented.
Inventory
The Company’s inventories consist mostly of finished goods inventory, with a very limited amount of work-in-process inventory. The cost of all inventories is determined by the moving average cost method. The Company includes all material charges directly incurred in bringing inventory to its existing condition and location, including the cost of inbound freight, volume incentives, inventory adjustments, tariffs, import duties and other import fees. The Company evaluates its inventory value at the end of each quarter to ensure that inventory, when viewed by category, is carried at the lower-of-cost-or-net-realizable-value (“LCNRV”), which also considers items that may be considered damaged, excess, and obsolete inventory. As of January 3, 2026 and December 28, 2024, the carrying values of the Company’s inventory reported on its consolidated balance sheets did not reflect any adjustments for LCNRV matters.
Most all of the amount reported in Cost of products sold on the Company’s consolidated statement of operations is composed of costs incurred to purchase inventory that is subsequently resold to customers, including costs related to import duties and tariffs. Import duties and tariffs are not typically passed through to customers as separately billed charges. Certain import duties are classified by the U.S. Department of Commerce (the “Commerce Department”) as “antidumping or countervailing duties,” and these import duties may be subject to periodic review and adjustments by the Commerce Department through a process known as a trade remedy administrative review, which can result in both retroactive and prospective adjustments to import duty rates. At the time of importation, the Company tenders antidumping duty and countervailing duty cash deposits (as use of that term has been defined by the Commerce Department) to the U.S. Customs and Border Protection (“U.S. Customs”) and accounts for duties and tariffs based on the then-current rates in effect, and records any retroactive adjustments in the period in which U.S. Customs determines final duty rates at the time entries subject to antidumping and countervailing duties liquidate (as use of that term has been defined by the Commerce Department), typically through the resolution of a trade remedy administrative review proceeding.
During fiscal 2024, the Company recognized refunds of $20.7 million plus interest earnings of $2.7 million related to retroactive adjustments associated with certain antidumping duties for imported wood moulding and millwork products. The antidumping duty cash deposits were originally paid and accounted for by the Company in prior reporting periods at the then-current rates. Impacted inventories have since been sold. These adjustment amounts are reflected in Cost of products sold and Interest expense, net, respectively, on the Company’s consolidated statement of operations for the fiscal year ended December 28, 2024. The net amount for antidumping duties reflected in Cost of products sold on the Company’s consolidated statement of operations was not material for the fiscal year ended January 3, 2026. See Note 14, Commitments and Contingencies, to the consolidated financial statements for disclosure concerning other matters related to import duties.
Consideration Received from Vendors and Paid to Customers
Each fiscal year, the Company enters into agreements with certain vendors to provide inventory purchase rebates, generally based on achievement of specified volume purchasing levels. The Company also receives rebates related to price protection and various marketing allowances that are common industry practice. The Company accrues for the receipt of vendor rebates based on purchases, and also reduces the carrying value of the related inventory to reflect the net acquisition cost (purchase price less expected purchase rebates).
In addition, the Company enters into agreementswith many of its customers to offer customer rebates, generally based on achievement of specified sales levels and various marketing allowances that are common industry practice. The Company accrues for the payment of customer rebates based on sales to the customer, and also reduces its sales to report Net sales (sales price less expected customer rebates). Since these arrangements are typically on a calendar or fiscal year basis, adjustments to earnings resulting from revisions to rebate estimates have historically not been material.
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Property and Equipment
Property and equipment are recorded at cost. Lease obligations for which the Company assumes or retains substantially all the property rights and risks of ownership are capitalized. Amortization of assets recorded under finance leases is included in Depreciation and amortization in the Company’s consolidated statement of operations. Replacements of major units of property are capitalized and the replaced properties are retired. Replacements of minor components of property and repair and maintenance costs are charged to expense as incurred.
Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, which range from seven years to 15 years for land improvements, 15 years to 33 years for buildings, three years to seven years for machinery and equipment, including software. Leasehold improvements are depreciated over the lesser of 15 years or the remaining life of the expected lease term. Upon retirement or disposition of assets, cost and accumulated depreciation are removed from the related accounts and any gain or loss is included in earnings.
The Company assesses long-lived assets other than goodwill for impairment whenever facts and circumstances indicate that the carrying amount may not be fully recoverable. If it is determined that the carrying amount of an asset is not recoverable, the Company compares the carrying amount of the asset to its fair value as estimated using discounted expected future cash flows, market values or replacement values for similar assets. The amount by which the carrying amount exceeds the fair value of the asset, if any, is recognized as an impairment loss.
Goodwill and Other Intangible Assets
Goodwill
Under the acquisition method of accounting for a business combination, goodwill is the excess of the consideration paid to acquire the business over the fair value of the assets acquired and liabilities assumed. Goodwill is not subject to amortization but must be assessed for impairment at least annually and more frequently if indicators of impairment exist. Goodwill must be assessed at the reporting unit level and since the Company operates within one single reporting unit, all of the Company’s goodwill is assessed at the enterprise level. The Company performs its annual goodwill assessment as of the first day of its fiscal fourth quarter. Testing goodwill for impairment requires the Company to compare the fair value of a reporting unit with its carrying amount, including goodwill. The Company typically utilizes the services of a third-party expert for assistance in assessing goodwill.
There are two methods for assessing goodwill: the qualitative method and the quantitative method. The qualitative assessment may give the Company the option to evaluate, based on the weight of evidence, the significance of identified events and circumstances in the context of determining whether it is “more likely than not” (a likelihood of greater than 50%) that the fair value of a reporting unit is less than its carrying amount. ASC 350 provides a list of events and circumstances for the Company to consider when assessing goodwill under the qualitative method. If the Company can concludes based on the qualitative assessment that it is not “more likely than not” that the fair value of a reporting unit is less than its carrying amount, the Company is deemed to have completed its goodwill impairment test and does not need to perform the quantitative impairment test. If the Company concludes based on the qualitative assessment that it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount, the Company is required to perform the quantitative impairment test. The Company may also elect to not perform the qualitative method and instead perform the quantitative test only. An assessment under the quantitative method requires the Company to estimate the enterprise’s fair value through valuation methods that utilize inputs such as projections of discounted cash flows, weighted-average cost of capital, comparisons to similar entities, future market and economic conditions, and market capitalization.
In addition, the Company willevaluate the carrying value of goodwill for impairment between annual impairment assessments if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Such events and indicators may include significant declines in the industries in which our products are used, significant changes in capital market conditions, or significant changes in our market capitalization.
Other Intangible Assets Originating from Business Combinations
The Company’s intangible assets that are deemed to have definitive lives are subject to amortization. These assets are subject to impairment testing if events or circumstances occur that indicate the carrying amounts may be impaired.
Indefinite-lived intangible assets are not amortized, but, like goodwill, must be assessed for impairment at least annually and between annual impairment tests if an event occurs or circumstances change that would indicate that the carrying amount of
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finite-lived intangible asset may be impaired. For the Company’s Disdero business combination (see Note 2, Business Combination), the Company has made a preliminary determination that the acquired Disdero trade name intangible asset has an indefinite life since the Company, at this time, plans to use the Disdero trade name indefinitely in the operations of the acquired Disdero business.
Self-Insurance
The Company is self-insured for its non-union and certain unionized employee health benefits. The Company purchases stop-loss insurance in order to establish certain limits to its exposure on a per claim basis, both individually and in the aggregate. Health benefits for some unionized employees for fiscal 2025, 2024 and 2023 were paid directly to a union trust, depending upon the union-negotiated benefit arrangement.
The Company is also self-insured, up to certain limits, for workers’ compensation losses, general liability, and automotive liability losses, all subject to varying “per occurrence” retentions or deductible limits. It is the Company’s policy to self-insure, up to certain limits, traditional risks including workers’ compensation, comprehensive general liability, and auto liability. The Company’s self-insured deductible for each claim involving workers’ compensation, comprehensive general liability (including product liability claims), and auto liability is limited to $0.8 million, $0.8 million, and $2.0 million, respectively. The Company is also self-insured up to certain limits for the majority of its medical benefit plans ($0.3 million per covered person, per year). A provision for claims under this self-insured program, based on our estimate of the aggregate liability for claims incurred, is revised and recorded at least annually. The estimate is derived from both internal and external sources including but not limited to actuarial estimates. The actuarial estimates are subject to uncertainty from various sources, including, among others, changes in claim reporting patterns, claim settlement patterns, judicial decisions, legislation, and economic conditions. Although the Company believes that the actuarial estimates are reasonable, significant differences related to the items noted above could materially affect the Company’s self-insurance obligations, future expense and cash flow. As of January 3, 2026 and December 28, 2024, the self-insurance liabilities totaled $12.0 million and $11.8 million, respectively.
The Company provides for estimated costs to settle both known claims and claims incurred but not yet reported by making periodic prepayments, considering our retention and stop loss limits. Liabilities of the Company associated with these claims are estimated, in part, by considering the frequency and severity of historical claims, both specific to the Company, as well as industry-wide loss experience and other actuarial assumptions. The Company determines its insurance obligations with the assistance of actuarial firms. Since there are many estimates and assumptions involved in recording insurance liabilities, and in the case of workers’ compensation, a significant period of time elapses before the ultimate resolution of claims, differences between actual future events, and prior estimates and assumptions could result in adjustments to these liabilities. The Company has deposits on hand with certain third-party insurance administrators and insurance carriers to cover its obligation for future payment of claims. These deposits are recorded in non-current assets in the Company’s consolidated balance sheets.
Leases
The Company is the lessee in a lease contract when it obtains the right to control an asset associated with a particular lease. For operating leases, the Company records a right-of-use ("ROU") asset that represents its right to use an underlying asset for the lease term, and a corresponding lease liability that represents the Company’s obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Financing ROU assets associated with finance leases are included in property and equipment. Leases with a lease term of 12 months or less at inception are not recorded on the Company’s consolidated balance sheet and are expensed on a straight-line basis over the lease term in the consolidated statement of operations and comprehensive income. The Company determines the lease term by assuming the exercise of renewal options that are reasonably certain to occur. The Company uses the implicit rate in a lease agreement, and if that rate is not readily determinable, the Company’s incremental borrowing rate is used in determining the present value of future lease payments. When contracts contain lease and non-lease components, both components are accounted for as a single lease component. See Note 13, Lease Commitments, to the consolidated financial statements for additional information.
Income Taxes
The Company accounts for deferred income taxes using the liability method. Accordingly, deferred income tax assets and liabilities are recognized based on the income tax effects of temporary differences between the financial statement and income tax bases of assets and liabilities, as measured by current enacted income tax rates. All deferred income tax assets and liabilities are classified as noncurrent in the Company’s consolidated balance sheet. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not (likelihood of more than 50%) that some portion or all the deferred
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income tax asset will not be realized. For additional information, see Note 7, Income Taxes, to the consolidated financial statements.
Pension Plans
Prior to December 5, 2023, the Company sponsored a noncontributory defined benefit pension plan (the “DB Pension Plan”). Most of the participants in the DB Pension Plan were inactive, with all remaining active participants no longer accruing benefits. The DB Pension Plan was closed to new entrants. The funding policy for the DB Pension Plan was based on actuarial calculations and the applicable requirements of federal law. Benefits under the plan primarily were related to years of service. The Company’s accounting policy election was to measure plan assets and benefit obligations as of December 31, which is the month-end that is closest to the Company’s fiscal year-end. As further disclosed in Note 10, Employee Retirement Plans, the Company, as sponsor, settled the frozen DB Pension Plan in December 2023.
The Company is involved in various multiemployer pension plans (“MEPPs”) that provide retirement benefits to certain union employees in accordance with certain collective bargaining agreements (“CBAs”). As one of many participating employers in these MEPPs, the Company is generally responsible with the other participating employers for any plan underfunding. The Company’s contributions to a particular MEPP are established by the applicable CBAs; however, the Company’s required contributions may increase based on the funded status of an MEPP and legal requirements such as those of the Pension Act, which requires substantially underfunded MEPPs to implement a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) to improve their funded status. The settlement of the DB Pension Plan did not result in any changes to the multi-employer pension plans in which some of the Company’s union employees participate.
Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Authoritative guidance for fair value measurements establishes a three-level hierarchy that prioritizes the inputs to valuation models based upon the degree to which they are observable. The three levels of the fair value measurement hierarchy are as follows:
•Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date
•Level 2 - Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
•Level 3 - Inputs are unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions
Assets acquired and liabilities assumed by the Company through a business combination are initially recorded at their acquisition-date fair values.
The Company has no assets or liabilities for which their carrying values are remeasured to fair value at the end of each reporting period. However, the Company is required to disclose the fair values for certain assets and liabilities. See Note 9, Fair Value, for additional information.
Business Combinations
The Company accounts for business combinations by recognizing the assets acquired and liabilities assumed at the acquisition-date fair value. In valuing certain acquired assets and liabilities, fair value estimates use Level 3 inputs, including future expected cash flows and discount rates. Goodwill is measured as the excess of consideration transferred over the fair values of the assets acquired and the liabilities assumed.
When a business combination occurs late in a reporting period, the Company may utilize a method known as benchmarking to provide preliminary estimates for the fair values of certain assets acquired and liabilities assumed, including intangible assets, inventory, acquired leases, and the residual goodwill. The benchmarking method involves utilizing valuation inputs, such as discount rates, royalty rates, etc., from the Company’s prior business combinations and/or similar business combinations completed by other entities. The preliminary fair value benchmarking estimates are updated in the subsequent reporting period when additional and more specific information is gathered and analyzed for the acquired business.
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After subsequent fair value adjustments are made for any benchmarking estimates, and for business combinations where the benchmarking method is not utilized, the Company’s estimates of fair value assigned to acquired assets and assumed liabilities may be inherently uncertain and subject to refinement. As a result, during the measurement period, which can last up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments arising from new facts and circumstances are recorded to the consolidated statements of operations. The results of operations of acquisitions are reflected in the Company’s consolidated financial statements from the date of acquisition.
Share-Based Compensation Expense
For share-based compensation, the Company recognizes compensation expense equal to the grant-date fair value, which is generally based on the fair market value of the Company’s common stock on the date of grant.
For service-based awards, compensation expense is recognized if the grant recipient provides the requisite service to the Company. Compensation expense is recorded on a straight-line basis over the requisite service period of the entire award. Forfeitures are accounted for as they actually occur, and compensation expense is adjusted accordingly so that it reflects cumulative expense only for the number of grants that actually vested prior to the forfeiture event.
For performance-based awards, prior to vesting compensation expense is recognized for grants that are deemed probable of vesting based on actual or forecasted achievement of the performance metrics as long as the grant recipient continues to provide the requisite service to the Company. At the end of each reporting period, the Company is required to reassess the expected achievement of the performance metrics and adjust cumulative compensation expense accordingly based on the number of grants that have vested or are expected to vest based on achievement of the performance metrics. When a grant recipient stops providing the requisite service to the Company, forfeitures are accounted for as they actually occur and compensation expense is adjusted accordingly so that it reflects cumulative expense only for the number of grants that actually vested prior to the forfeiture event.
For market-based awards, compensation expense is recognized for the grant-date fair value of the award on a straight-line basis as the grant recipient provides the requisite service to the Company, regardless of whether the grant vests or is expected to vest based on achievement of the market-based metrics. When a grant recipient stops providing the requisite service to the Company, forfeitures are accounted for as they actually occur and compensation expense is adjusted accordingly so that it reflects cumulative expense only for the number of grants that actually vested prior to the forfeiture event.
Compensation expense related to share-based payment awards is generally recorded in SG&A expense in the consolidated statements of operations.
Repurchases of Common Stock
On October 31, 2023, the Company’s board of directors authorized a share repurchase program for $100 million, of which $8.7 million remains available for repurchases as of January 3, 2026. On July 28, 2025, the Company’s board of directors authorized a new share repurchase program for $50 million that can be used after exhaustion of the October 31, 2023 authorization. Under the share purchase programs, the Company may make authorized repurchases of its common stock from time to time, without prior notice, subject to prevailing market conditions and other considerations. 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. Repurchased shares of the Company’s common stock are retired by the Company and are not reported as treasury stock. The portion of the cost to repurchase common stock that is in excess of par value is charged to additional paid-in capital within stockholders’ equity.
Direct costs incurred by the Company to repurchase its common stock, such as broker commissions and excise taxes, are considered part of the cost to repurchase the common stock. Effective January 1, 2023, if the cost of net share repurchases made by publicly traded U.S. company exceeds $1 million annually, the cost of the repurchased shares is subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022. For any reporting period, the costs of repurchased shares reported on the Company’s consolidated statement of stockholders’ equity may differ from the amount reported on the Company’s consolidated statement of cash flows due to the timing of remittances for excise taxes which are made in accordance with applicable law.
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Advertising Cost
Advertising costs are expensed as incurred and totaled $1.7 million, $1.8 million, and $2.1 million for the fiscal years 2025, 2024 and 2023, respectively.
Recent Accounting Standards - Adopted
Adopted in Fiscal 2025
Income Tax Disclosure Improvement. ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the income tax rate reconciliation and must disaggregate income taxes paid. The ASU’s disclosure requirements apply to all entities subject to Accounting Standards Codification Topic 740. The overall objective of these disclosure requirements is for an entity, particularly an entity operating in multiple jurisdictions, to disclose sufficient information to enable users of financial statements to understand the nature and magnitude of factors contributing to the difference between the effective income tax rate and the statutory income tax rate. The Company adopted ASU 2023-09 prospectively for the fiscal year ended January 3, 2026. See Note 7, Income Taxes, to the consolidated financial statements. Since this new ASU addresses only disclosures, its adoption did not have any effect on the Company’s financial position, results of operations, or cash flows.
Measurement Losses for Accounts Receivable and Contract Assets. The Company early adopted ASU No. 2025-05, Financial Instruments-Credit Losses (Topic 326); Measurement Losses for Accounts Receivable and Contract Assets” (“ASU 2025-05”), as of the beginning of its fiscal fourth quarter 2025. See the disclosures under the heading “Accounts Receivable and Allowance” presented earlier in this Note 1.
Adopted in Fiscal 2024
Segment Reporting Improvements. On November 27, 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The FASB issued this new guidance primarily to provide financial statement users with more disaggregated expense information about a public business entity’s (“PBE”) reportable segment(s). This ASU requires PBEs to provide incremental disclosures related to the entity’s reportable segment(s), including disclosures for expenses that are both 1) significant to each reportable segment and are provided regularly to the chief operating decision maker (“CODM”) or easily computed from information regularly provided to the CODM and 2) included in the reported measure of segment profit or loss used by the CODM to assess performance and allocate resources. Under the provisions of this ASU, all of the disclosures required in the segment guidance, including disclosing a measure of segment profit or loss used by the CODM and reporting significant segment expenses, applies to all PBEs, including those with a single operating or reportable segment. However, this ASU did not change the definition of a segment, the method for determining segments, or any criteria for aggregating operating segments into reportable segments. The Company adopted ASU 2023-07 at the beginning of fiscal 2024, however it became effective for the Company’s fiscal 2024 annual reporting period and for interim financial reporting periods at the beginning of fiscal 2025. As required, the Company’s annual disclosures for ASU 2023-07 are retrospectively presented for all annual comparative periods beginning in the notes to these annual consolidated financial statements. See Note 5, Segment Reporting, to the consolidated financial statements. Since this ASU addresses only disclosures, the adoption did not have any effects on the Company’s financial condition, results of operations or cash flows.
Recent Accounting Standards - Adoption Pending
Costs and Expenses Disclosures. On November 4, 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which establishes new disaggregation disclosure requirements for certain costs and expenses in the notes to the consolidated financial statements. Under the new guidance, entities must provide details of the components of its expense captions from continuing operations presented on the face of the statement of operations as well as a qualitative description of the amounts remaining that are not separately disaggregated quantitatively. Relevant disclosure categories include purchases of inventory, employee compensation, depreciation and intangible asset amortization. An entity must also disclose the total amount of selling expenses, and in annual reports, its definition thereof. The disclosure of these costs and expenses will be required in addition to and irrespective of their inclusion in other disclosures. An entity is not precluded from providing additional voluntary disclosures that may provide investors with additional decision-useful information. ASU 2024-03 will be effective for the Company for the fiscal 2027 annual reporting period and for interim periods beginning in fiscal 2028, as clarified by ASU 2025-01. Since this new ASU addresses only disclosures, the Company does not expect its
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adoption to have any material effects on its financial condition, results of operations or cash flows. The Company is currently evaluating the new disclosures that will be required upon adoption of ASU 2024-03.
Accounting for and Disclosure of Software Costs. On September 18, 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Accounting for and Disclosure of Software Costs (“ASU 2025-06”) to clarify and modernize the accounting for costs related to internal-use software to better address both linear and non-linear development manners. The new guidance removes all references to project stages that are currently in ASC 350-40 and will instead use threshold requirements that entities must apply to decide when to start capitalizing software costs. Specifically, the guidance will require entities to begin capitalizing software costs, including website development costs, when both of the following occur: 1) management authorizes and commits to funding a software project and 2) it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete” recognition threshold). ASU 2025-06 is effective for the Company beginning in interim and annual reporting periods in fiscal 2028, and early adoption is permitted which the Company is evaluating. Entities may apply the guidance using a prospective, retrospective, or modified transition approach. However, under the prospective approach, entities would still be required to apply the new guidance to all new costs incurred for all software projects, including in-process projects, as of the date of adoption. ASU 2025-06 also specifies that the disclosures under ASC 360-10 (Property, Plant, and Equipment) apply overall to capitalized software costs accounted for under ASC 350-40, regardless of how those costs are presented in the financial statements. The Company is currently evaluating the impacts that ASU 2025-06 may have on its financial position and results of operations, and such impacts may depend in part on the status and type of any in-process software projects at the time of adoption.
Interim Reporting. On December 8, 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow Scope Improvements (“ASU 2025-11”) to clarify the current interim disclosure requirements and the applicability of ASC 270, Interim Reporting. The ASU creates a comprehensive list of interim disclosures in ASC 270 that are required in interim financial statements and the accompanying notes under GAAP. It also incorporates a disclosure principle requiring entities to disclose in interim periods events and changes that occur after the end of the most recent annual reporting period that have a material impact on the entity. ASU 2025-11 also clarifies that SEC registrants are required to refer to existing SEC guidance, such as Rule 10-01 of Regulation S-X, since those rules provide form and content requirements for condensed financial statements (condensed statements). ASU 2025-11 will be effective for interim and annual reporting periods beginning after 2027, which will be first quarter of fiscal 2028 for the Company. Early adoption is permitted, and the guidance can be applied prospectively or retrospectively. Since ASU 2025-11 is disclosure-related only, its adoption is not expected to have an effect on the Company’s financial position, results of operations, or cash flows. The Company is currently evaluating the disclosure guidance in ASU 2025-11 to determine if any new or amended disclosures will be required upon adoption.
2. Business Combination
On October 31, 2025, BlueLinx Corporation, a wholly owned subsidiary of BlueLinx Holdings Inc., entered into an equity purchase agreement (the “Purchase Agreement”) to purchase 100% of the equity interest of Disdero Lumber Co., LLC (“Disdero”). Disdero is engaged in the business of wholesale distribution of premium specialty building materials that include a complete line of clear lumber and distinctive wood architectural elements that are sold into nearly all 50 states. Disdero’s products are used primarily in the construction of high-end, custom homes and decks, as well as upscale multi-family residential and commercial properties. The acquisition of Disdero is expected to serve as a catalyst for the Company’s growth by using the Company’s existing distribution network to offer Disdero’s premium specialty products to many of the Company’s existing customers not currently served by Disdero. Additionally, the Disdero acquisition is expected to enhance the Company’s specialty products focus as well as its geographic expansion and channel diversification strategies.
The purchase price on October 31, 2025 was approximately $95.4 million ($95.2 million net after considering cash acquired), which the Company paid from cash on hand. The purchase price is subject to customary adjustments, such as adjustments for working capital balances.
The acquisition of Disdero was accounted for as a business combination using the acquisition method under ASC 805, Business Combination. The assets acquired and liabilities assumed in the Disdero acquisition are reflected on the Company’s consolidated balance sheet as of the close of business on October 31, 2025. Disdero’s results of operations and cash flows are included in the Company’s consolidated financial results beginning at the start of business on November 1, 2025.
The acquisition of Disdero includes preliminary fair value estimates of $11.9 million for goodwill and $64.3 million for intangible assets (customer relationships, trade name, and non-compete agreements) as of the October 31, 2025 acquisition date.
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In determining these preliminary fair value amounts, the Company utilized a benchmarking approach based on the Company’s prior acquisitions and the prior acquisitions of similar acquirers or acquirees. Upon subsequent completion of the purchase price allocation, any revised fair value amounts assigned to the intangible assets and resulting goodwill may differ materially from the preliminary estimates under the benchmarking process.
After revisions are made to the preliminary fair value amounts estimated under benchmarking as described above, the fair value estimates for inventory, lease obligations, property & equipment, accounts receivable, accounts payable, other assets, and other liabilities are also subject to subsequent changes during the measurement period, as defined and permitted by ASC 805. Any changes to the fair values amounts during the measurement period will be recorded to the applicable assets and liabilities with the residual amount allocated to goodwill. The measurement period cannot extend beyond one year from the acquisition date.
The following table summarizes the components of the consideration for Disdero:
Preliminary Allocation as of Acquisition Date
(In thousands)
Estimated fair value of identifiable assets acquired and liabilities assumed:
Accounts receivable 6,377
Prepaid expenses and other assets 220
Total current assets acquired 22,800
Property & equipment 1,319
Right-of-use lease assets 3,074
Intangible assets:
Customer relationships 47,300
Non-compete agreements 4,700
Total assets acquired 91,493
Accounts payable 1,943
Accrued compensation 1,544
Operating lease obligations 756
Other current liabilities 331
Finance lease obligations 181
Total current liabilities assumed 4,755
Operating lease obligations 2,616
Finance lease obligations 587
Total liabilities assumed 7,958
Net assets acquired 83,535
Less cash acquired (179)
Preliminary purchase price $ 95,210
The excess of total purchase price, which includes the aggregate cash consideration paid in excess of the fair value of the tangible and intangible assets acquired less liabilities assumed, was recorded as goodwill. The goodwill recognized is attributable to the expected operating synergies and growth potential that we expect to realize from the acquisition. Goodwill
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also includes certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce. The goodwill resulting from the Disdero acquisition is expected to be tax deductible.
The estimated useful life for the customer relationships and non-compete agreements is 12 years and 5 years, respectively, based on the benchmarking process described above, and these useful life estimates may subsequently change. At this time, the Company plans to operate the acquired Disdero business under the Disdero trade name indefinitely, and therefore the trade name has been assigned an indefinite life and is not being amortized at this time.
The Company incurred expensed acquisition-related costs for the Disdero acquisition of approximately $1.2 million in fiscal 2025. This amount is reported within Other operating expenses on the Company’s consolidated statement of operations.
3. Revenue Recognition
The following table presents the Company’s revenues disaggregated by revenue source. Sales and usage-based taxes are excluded from revenues. No single customer of the Company generated 10% or more of the Company’s total Net sales during fiscal years 2025, 2024 or 2023.
Fiscal Year Ended
(53 weeks) (52 weeks) (52 weeks)
The following table presents the Company’s revenues disaggregated by sales channel. Warehouse sales are delivered from the Company’s warehouses. Reload sales are similar to warehouse sales but are shipped from non-warehouse locations, most of which are operated by third parties, where the Company stores owned products to enhance operating efficiencies. The reload channel is employed primarily to service strategic customers that are less economical to service from Company warehouses, and to distribute large volumes of imported products from port facilities. Direct sales are shipped from the manufacturer to the customer and therefore the Company does not take physical possession of the inventory and, as a result, typically generate lower margins than the warehouse and reload distribution channels. The direct distribution channel requires the lowest amount of committed capital and fixed costs.
Fiscal Year Ended
(53 weeks) (52 weeks) (52 weeks)
The Company generally expenses sales commissions when incurred because the amortization period would typically be one year or less. These costs are recorded within SG&A expense.
The Company has made an accounting policy election to treat outbound shipping and handling activities as an SG&A expense. Shipping and handling costs include amounts related to the administration of the Company’s logistical infrastructure, handling of material in its warehouses, and amounts pertaining to the delivery of products to customers, such as fuel and maintenance costs for mobile fleet, wages for drivers, and third-party freight charges. These expenses were $165.9 million, $154.3 million, and $152.3 million for fiscal 2025, fiscal 2024, and fiscal 2023, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Goodwill and Other Intangible Assets
Goodwill
The Company’s goodwill as of January 3, 2026 originated as follows: $47.8 million from the 2018 acquisition of Cedar Creek, $7.6 million from the 2022 acquisition of Vandermeer, and $11.9 million (preliminary estimate) from the 2025 acquisition of Disdero.
The Company performed its most recent annual impairment assessment for goodwill as of September 28, 2025, which was the first day of its fiscal fourth quarter for 2025. The annual assessments for fiscal 2025 and fiscal 2024 utilized the quantitative assessment method for goodwill and were performed with the assistance of an independent third-party expert. Based on the assessments, the Company concluded that its goodwill was not impaired and therefore no impairment charge was recorded. The Company has no accumulated goodwill impairment losses as of January 3, 2026 or December 28, 2024.
Between the annual assessment dates in fiscal 2025 and fiscal 2024, no events or circumstances were noted to indicate that it was “more likely than not” the fair value of the enterprise was less than its carrying value.
The activity and carrying amounts of the Company’s goodwill were as follows:
Total Carrying Amount
(In thousands)
Disdero business combination (1) 11,854
(1)Preliminary estimate. See Note 2, Business Combination, to the consolidated financial statements.
Intangible Assets from Business Combinations
The Company has no accumulated impairment charges for intangible assets as of January 3, 2026 or December 28, 2024. The gross carrying amounts, accumulated amortization, and net carrying amounts of our intangible assets as of January 3, 2026 were as follows:
($ amounts in thousands)
Definite-Life:
Indefinite-Life:
(1) Intangible assets are amortized on straight-line basis.
The Net Carrying Amounts in the table above include $46.7 million for customer relationships, $4.6 million for non-compete agreements, and $12.3 million for trade name from the Disdero business combination that occurred on October 31, 2025. These amounts are based on preliminary estimates of the acquisition-date fair values of these assets. See Note 2, Business Combination, to the consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets as of December 28, 2024 were as follows:
($ amounts in thousands)
(1) Intangible assets are amortized on straight-line basis.
The Company’s definitive-life intangible assets are subject to amortization and must also be tested for impairment if events or circumstances indicate the carrying amounts may be impaired. No such indicators were noted in fiscal 2025 or fiscal 2024, and therefore no impairments were recorded.
Amortization Expense
Amortization expense for the definite-lived intangible assets was $4.5 million, $3.9 million, and $4.2 million for the fiscal years ended January 3, 2026, December 28, 2024, and December 30, 2023, respectively.
Estimated annual amortization expense for definite-lived intangible assets over the next five fiscal years is as follows:
Fiscal Year Estimated Amortization
(In thousands)
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5. Segment Reporting
The Company has one reportable segment: building products. The segment sells building products that are grouped into two primary categories: specialty products and structural products. The Company’s CODM is its chief executive officer (CEO). The Company derives substantially all of its revenues from the United States and all of the Company’s assets are located in the United States. No single customer of the Company generated 10% or more of the Company’s total Net sales during fiscal years 2025, 2024 and 2023. The measure of segment assets is reported on the Company’s balance sheet as total consolidated assets. The segment’s accounting policies are the same as the accounting policies for the Company, as described in Note 1, Summary of Significant Accounting Policies.
The CODM’s method under GAAP that is used to assess performance and allocate resources is based on Net income as reported on the Company’s consolidated statement of operations. The following table presents information about Net income and significant expenses that are regularly reviewed by the Company’s CODM:
(53 weeks) (52 weeks) (52 weeks)
Expenses:
Amortization of definite-lived intangible assets 4,481 3,912 4,197
Recognition of deferred gains on real estate (3,934) (3,934) (3,934)
Settlement of frozen defined benefit pension plan — (2,481) 30,440
Reconciliation of profit or loss:
Adjustments and reconciling items — — —
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6. Property and Equipment
Property and equipment as of January 3, 2026 and December 28, 2024, consisted of the following:
As of
(In thousands)
Depreciation expense for property and equipment was $35.4 million, $34.6 million, and $27.8 million for the years ended January 3, 2026, December 28, 2024, and December 30, 2023, respectively. See Note 13, Lease Commitments, to the consolidated financial statementsfor disclosure about the Company’s property and equipment that is held under finance lease obligations.
7. Income Taxes
For fiscal 2025, the Company’s statutory income tax rate was 25.1 percent, and it was comprised of the federal statutory income tax rate of 21.0 percent and the blended state statutory income tax rate of 4.1 percent. In fiscal 2024, the Company’s statutory income tax rate was also 25.1 percent, and it was comprised of the federal statutory income tax rate of 21.0 percent and the blended state statutory income tax rate of 4.1 percent. In fiscal 2023, the Company’s statutory income tax rate was 25.3 percent, and it was comprised of the federal statutory income tax rate of 21.0 percent and the blended state statutory income rate of 4.3 percent. The Company’s blended state income tax rate is impacted by the mix of income earned in various states and by the Company’s federal taxable income, both of which may differ from year to year. The Company’s effective income tax rate is impacted by the effects of permanent differences occurring throughout the fiscal year.
The Company’s income tax (benefit) expense and the effective income tax rates were as follows:
($ amounts in thousands) 53 weeks 52 weeks 52 weeks
Income before provision (benefit) for income taxes $ 129 $ 70,687 $ 81,886
Federal income taxes:
State income taxes:
(Benefit) provision for income taxes $ (90) $ 17,571 $ 33,350
Effective income tax rate (a) 24.9 % 40.7 %
(a) The Company income tax benefit and income before income taxes were not material for fiscal 2025.
The accounting for the one-time settlement for the single-employer defined benefit pension plan increased the effective income tax rate for fiscal 2023 by 14.8%.
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For fiscal 2025, the Company’s benefit for income taxes is reconciled to the federal statutory amount as follows:
($ amounts in thousands) 53 weeks
$ Amount %
Income before income taxes $ 129
Federal income taxes computed at the federal statutory tax rate $ 27 21 %
Increases (decreases) in income tax from:
Domestic state and local income taxes, net of federal benefit (1) (6) (4.7) %
Nontaxable or nondeductible items:
Stock-based compensation - excess income tax benefit (977) (757.4) %
Other:
Adjustment to balances of deferred income taxes 220 170.5 %
Benefit for income taxes $ (90) (69.8) %
(1) For the state income tax effect, taxes were not material for any single state or in the aggregate. Local income taxes were not material.
The Company’s provisions for income taxes are reconciled to the federal statutory amounts as follows for fiscal 2024 and fiscal 2023:
State income taxes, net of federal benefit 4,188 4,609
Valuation allowance change arising from state net operating losses 49 (621)
Pension plan settlement (1) — 12,150
Uncertain tax positions (1,371) (356)
Permanent differences arising from compensation (95) 746
(1) $4.5 million was reclassified from accumulated other comprehensive income in fiscal 2023
The Company’s consolidated financial statements contain certain deferred income tax assets which primarily result from other temporary differences related to certain reserves, accrued liabilities, pension obligations, differences between book and tax depreciation and amortization, and state net operating losses. The Company records a valuation allowance against deferred income tax assets when it is determined, based on the weight of available evidence, that it is more likely than not that some or all of the Company’s deferred income tax assets will not be realized in the future.
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For fiscal 2025 and fiscal 2024, components of the Company’s deferred income tax assets and deferred income tax liabilities are as follows:
As of
(In thousands)
Deferred income tax assets: