OnePager:Build Back Better with Blue Wave Contractor: BlueLinx
Trend Radar:
- Migration from NY and CA to the sun belt drives the housing market -> tax saving allow upgrades
- Remodeling Supply overhang from pandemic lockdowns (LIRA Index and NAHB RMI)
- Breath of a project makes it a long term effort
- Home office is here to stay
- Single-family housing trend is fueled by mortgage rates, low housing inventory, deurbanization, and improving employment conditions
- Commodity volatility extends margins
About Bluelinx: (Source: bluelinxco.com)
BlueLinx (NYSE: BXC) is a leading U.S. wholesale distributor of residential and commercial building products with both branded and private-label SKUs across product categories such as lumber, panels, engineered wood, siding, millwork, metal building products, and other construction materials. With a strong market position, broad geographic coverage footprint servicing 40 states, and the strength of a locally focused sales force, we distribute our comprehensive range of products to over 15,000 national, regional, and local dealers, specialty distributors, national home centers, and manufactured housing customers. BlueLinx is able to provide a wide range of value added services and solutions to our customers and suppliers. We are headquartered in Georgia, with executive offices located at 1950 Spectrum Circle, Marietta, Georgia, and we operate our distribution business through a broad network of distribution centers.
Core invesment case:
- Engages in structural and specialty products
- Significant leverage reduction reduces cyclical risk and daunting interest payments
- No disruption energy like brick & mortars
- Expansion to sun belt
- Insiders hold ~95% of the shares
Valuation:
- Market cap: $507M; EV $1190M
- Sales growth Y/Y Q1: 55%; TTM Y/Y 30%
- TTM AEBITDA: $257M
- TTM net: $144M -> 3.52 MC/E; annualized Q1 $248M -> 2 MC/E
- TTM FCF: $286M -> 1.77 MC /FCF or 4.16x EV/ FCF
The cheap valuation still allows a great run upwhile the supercycle is progressing
