In the face of macroeconomic and housing market uncertainties and price delation across several product categories, Marietta, GA-based building products distributor BlueLinx reported sharp drops in net sales and gross profit for the fourth quarter of 2023.

Net sales in 4Q23 was $713 million, a 16% drop compared to the same quarter in 2022. Gross profit was $118 million, a decrease of $33 million or 21.6% year-over-year.

Adjusted EBITDA was $36.5 million, or 5.1% of net sales, compared to $63.1 million, or 7.4% of net sales in the prior period.

Price Deflation in Specialty & Structural Products

As market conditions normalize several product categories — including those within the distributors’ specialty and structural product segments — have experienced price deflation in 4Q23, BlueLinx officials said in its Feb. 21 earnings report.

Net sales of specialty products, which includes products such as engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products, decreased $105.0 million, or 17.7%, to $487 million. Gross profit from specialty product sales was $94.5 million, a decrease of $30.1 million, or 24.2%, compared to the fourth quarter 2022.

Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, decreased $30.3 million, or 11.8%, to $226.0 million and gross profit from sales of structural products decreased $2.6 million from $26.6 million in the prior year period.

The decreases in structural sales and gross profit were due primarily to price deflation in the average composite price of framing lumber of 15%, partially offset by slightly higher volumes.

“Gross margin on structural product sales was 10.6% in the fourth quarter, up slightly from 10.4% in the prior year period, in part due to our continued focus on pricing discipline and inventory management,” company officials said.

Full Year 2023 Results

• Net sales were $3.1 billion, a decrease of $1.3 billion, or 29.5% year-over-year.
• Gross profit was $527.0 million, a decrease of $306.0 million, or 36.7% year-over-year.
• Gross margin was 16.8%, down 190 basis points.
• Adjusted EBITDA was $182.8 million, or 5.8% of net sales, compared to $477.7 million, or 10.7% of net sales in 2022.
• Net sales of specialty products decreased $687.4 million, or 23.9% to $2.2 billion, and gross profit from specialty product sales was $420.8 million, a decrease of $219.6 million, or 34.3%, year-over-year.
• Net sales of structural products decreased $626.4 million, or 39.7%, to $952.1 million, and gross profit from sales of structural products decreased $86.4 million to $106.2 million.

The decreases in specialty products sales and profit was primarily driven by price deflation combined with lower sales volume across all product categories occurring during normalizing market conditions; while the decreases in structural products sales and profit was primarily driven by price deflation in the wood-based commodity markets represented by the declines in the average composite price of framing lumber and structural panels, which were down 47% and 32%, respectively, in addition to lower volumes.