bxc-20230701

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended July 1, 2023


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

Commission file number: 001-32383


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


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

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

(770) 953-7000

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	BXC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

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

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

Large Accelerated Filer

☐

Accelerated Filer

☑

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

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

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

As of July 28, 2023, there were 9,003,476 shares of BlueLinx Holdings Inc. common stock, par value $0.01, outstanding.

BLUELINX HOLDINGS INC.

Form 10-Q

For the Quarterly Period Ended July 1, 2023

INDEX


			PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements — BlueLinx Holdings Inc. (Unaudited)			1
Condensed Consolidated Statements of Operations and Comprehensive Income			1
Condensed Consolidated Balance Sheets			2
Condensed Consolidated Statements of Stockholders' Equity			3
Condensed Consolidated Statements of Cash Flows			4
Notes to Condensed Consolidated Financial Statements			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3. Quantitative and Qualitative Disclosures About Market Risk			28
Item 4. Controls and Procedures			28

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			29
Item 1A. Risk Factors			29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			30
Item 3. Defaults Upon Senior Securities			30
Item 4. Mine Safety Disclosures			30
Item 5. Other Information			30
Item 6. Exhibits			31

Signature			32

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)


	Three Months Ended				Six Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Net sales	$	815,967	$	1,239,379	$	1,613,871	$	2,541,684
Cost of sales	680,164		1,037,971		1,344,529		2,049,225
Gross profit	135,803		201,408		269,342		492,459
Operating expenses (income):
Selling, general, and administrative	88,750		91,338		179,924		182,627
Depreciation and amortization	7,951		6,518		15,669		13,264
Amortization of deferred gains on real estate	(984)		(984)		(1,968)		(1,968)
Gains from sales of property	—		(144)		—		(144)
Other operating expenses	993		626		4,109		1,464
Total operating expenses	96,710		97,354		197,734		195,243
Operating income	39,093		104,054		71,608		297,216
Non-operating expenses:
Interest expense, net	6,311		11,255		13,998		22,548
Other expense, net	594		139		1,188		1,277
Income before provision for income taxes	32,188		92,660		56,422		273,391
Provision for income taxes	7,722		21,388		14,144		68,710
Net income	$	24,466	$	71,272	$	42,278	$	204,681

Basic income per share	$	2.70	$	7.64	$	4.67	$	21.49
Diluted income per share	$	2.70	$	7.48	$	4.67	$	21.07

Comprehensive income:
Net income	$	24,466	$	71,272	$	42,278	$	204,681
Other comprehensive income:
Amortization of unrecognized pension gain, net of tax	225		156		464		312
Other	(11)		(20)		(22)		—
Total other comprehensive income	214		136		442		312
Comprehensive income	$	24,680	$	71,408	$	42,720	$	204,993

See accompanying Notes.

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)


	July 1, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	418,325	$	298,943
Receivables, less allowances of $3,182 and $3,449, respectively	294,341		251,555
Inventories, net	379,312		484,313
Other current assets	45,290		42,121
Total current assets	1,137,268		1,076,932
Property and equipment, at cost	373,524		360,869
Accumulated depreciation	(163,029)		(155,260)
Property and equipment, net	210,495		205,609
Operating lease right-of-use assets	43,601		45,717
Goodwill	55,372		55,372
Intangible assets, net	32,841		34,989
Deferred tax assets	55,542		56,169
Other non-current assets	15,351		15,254
Total assets	$	1,550,470	$	1,490,042
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	190,130	$	151,626
Accrued compensation	14,110		22,556


Finance lease liabilities - short-term	8,238		7,089
Operating lease liabilities - short-term	7,085		7,432
Real estate deferred gains - short-term	3,935		3,935
Pension benefit obligation - short-term	2,087		1,521
Other current liabilities	19,058		16,518
Total current liabilities	244,643		210,677
Non-current liabilities:
Long-term debt, net of debt issuance costs of $3,651 and $4,057, respectively	293,083		292,424
Finance lease liabilities - long-term	262,950		265,986
Operating lease liabilities - long-term	37,853		40,011
Real estate deferred gains - long-term	68,501		70,403

Other non-current liabilities	20,669		20,512
Total liabilities	927,699		900,013
Commitments and Contingencies
STOCKHOLDERS’ EQUITY:
Common Stock, $0.01 par value, 20,000,000 shares authorized, 9,008,476 and 9,048,603 outstanding on July 1, 2023 and December 31, 2022, respectively	90		90
Additional paid-in capital	190,770		200,748
Accumulated other comprehensive loss	(30,970)		(31,412)
Accumulated stockholders’ equity	462,881		420,603
Total stockholders’ equity	622,771		590,029
Total liabilities and stockholders’ equity	$	1,550,470	$	1,490,042

See accompanying Notes.

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Equity		Stockholders’ Equity Total
	Shares	Amount
Balance, December 31, 2022	9,049	$	90	$	200,748	$	(31,412)	$	420,603	$	590,029
Net income	—	—		—		—		17,812		17,812
Impact of pension plan, net of tax	—	—		—		239		—		239
Vesting of restricted stock units	67	1		(1)		—		—		—
Compensation related to share-based grants	—	—		4,569		—		—		4,569
Repurchase of shares to satisfy employee tax withholdings	(8)	—		(570)		—		—		(570)
Obligation for repurchase of shares to satisfy employee tax withholdings	(19)			(1,319)		—		—		(1,319)

Other	—	—		—		(11)		—		(11)
Balance, April 1, 2023	9,089	$	91	$	203,427	$	(31,184)	$	438,415	$	610,749
Net income	—	—		—		—		24,466		24,466
Impact of pension plan, net of tax	—	—		—		225		—		225
Vesting of restricted stock units	95	—		(1)		—		—		(1)
Compensation related to share-based grants	—	—		1,926		—		—		1,926
Repurchase of shares to satisfy employee tax withholdings	(24)	—		(2,071)		—		—		(2,071)
Obligation for repurchase of shares to satisfy employee tax withholdings	(10)	—		(913)		—		—		(913)
Common stock repurchase and retirement	(142)	(1)		(11,598)		—		—		(11,599)
Other	—	—		—		(11)		—		(11)
Balance, July 1, 2023	9,008	$	90	$	190,770	$	(30,970)	$	462,881	$	622,771


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Equity		Stockholders’ Equity Total
	Shares	Amount
Balance, January 1, 2022	9,726	$	97	$	268,085	$	(29,360)	$	124,427	$	363,249
Net income	—	—		—		—		133,409		133,409
Impact of pension plan, net of tax	—	—		—		156		—		156
Vesting of restricted stock units	11	—		—		—		—		—
Compensation related to share-based grants	—	—		2,162		—		—		2,162
Repurchase of shares to satisfy employee tax withholdings	(5)	—		(393)		—		—		(393)
Common stock repurchase and retirement	(81)	(1)		(6,426)		—		—		(6,427)
Other	—	—		—		20		—		20
Balance, April 2, 2022	9,651	$	96	$	263,428	$	(29,184)	$	257,836	$	492,176
Net income	—	—		—		—		71,272		71,272
Impact of pension plan, net of tax	—	—		—		156		—		156
Vesting of restricted stock units	181	2		—		—		—		2
Compensation related to share-based grants	—	—		1,775		—		—		1,775
Repurchase of shares to satisfy employee tax withholdings	(66)	(1)		(5,777)		—		—		(5,778)
Common stock repurchase and retirement	(554)	(5)		(38,995)		—		—		(39,000)
Forward contract for accelerated share repurchase agreement	—	—		(21,000)		—		—		(21,000)
Other	—	—		134		(20)		—		114
Balance, July 2, 2022	9,212	$	92	$	199,565	$	(29,048)	$	329,108	$	499,717

See accompanying Notes.

BLUELINX HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended
	July 1, 2023		July 2, 2022
Cash flows from operating activities:
Net income	$	42,278	$	204,681
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization	15,669		13,264
Amortization of debt discount and issuance costs	659		493

Gains from sales of property	—		(144)
Deferred income tax	550		(2,752)
Amortization of deferred gains from real estate	(1,968)		(1,968)
Share-based compensation	6,495		3,937
Changes in operating assets and liabilities:
Accounts receivable	(42,786)		(83,022)
Inventories	105,001		(89,190)
Accounts payable	38,504		59,515
Taxes payable	—		10,462
Pension contributions	—		(482)
Other current assets	(3,169)		(3,399)
Other assets and liabilities	(8,115)		(7,965)
Net cash provided by operating activities	153,118		103,430

Cash flows from investing activities:
Proceeds from sale of assets	128		531
Property and equipment investments	(14,039)		(6,882)
Net cash used in investing activities	(13,911)		(6,351)

Cash flows from financing activities:



Common stock repurchase and retirement	(11,599)		(66,427)

Repurchase of shares to satisfy employee tax withholdings	(3,960)		(6,170)
Principal payments on finance lease liabilities	(4,266)		(4,733)
Net cash used in financing activities	(19,825)		(77,330)

Net change in cash and cash equivalents	119,382		19,749
Cash and cash equivalents at beginning of period	298,943		85,203
Cash and cash equivalents at end of period	$	418,325	$	104,952

Supplemental cash flow information:

Interest paid during the period	$	21,472	$	22,707
Taxes paid during the period	$	10,821	$	61,176

Non-cash transactions:
Property and equipment acquired under finance leases	$	3,400	$	2,313
Obligation for repurchase of shares to satisfy employee tax withholdings	$	913	$	—

See accompanying Notes.

BLUELINX HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

July 1, 2023

(Unaudited)

1. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements include the accounts of BlueLinx Holdings Inc. and its wholly owned subsidiaries (the “Company”). We derived the condensed consolidated balance sheet at July 1, 2023, from the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “Fiscal 2022 Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”) on February 21, 2023. In the opinion of our management, the condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of our statements of operations and comprehensive income for the three and six months ended July 1, 2023 and July 2, 2022, our balance sheets at July 1, 2023 and December 31, 2022, our statements of stockholders’ equity for the six months ended July 1, 2023 and July 2, 2022, and our statements of cash flows for the six months ended July 1, 2023 and July 2, 2022.

We have condensed or omitted certain notes and other information from the interim condensed consolidated financial statements presented in this report. Therefore, these condensed consolidated interim financial statements should be read in conjunction with the Fiscal 2022 Form 10-K. The results for the three and six months ended July 1, 2023 are not necessarily indicative of results that may be expected for the full year ending December 30, 2023, or any other interim period.

We operate on a 5-4-4 fiscal calendar. Our fiscal year ends on the Saturday closest to December 31 of that fiscal year and may comprise 53 weeks in certain years. Our 2023 fiscal year contains 52 weeks and ends on December 30, 2023. Fiscal 2022 contained 52 weeks and ended on December 31, 2022.

Our financial statements are prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), which requires us to make estimates based on assumptions about current and, for some estimates, future economic and market conditions, which affect reported amounts and related disclosures in our financial statements. Although our current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from our expectations, which could materially affect our results of operations and financial position.

Reclassification of Prior Period Presentation

For the six months ended July 2, 2022, we have reclassified certain items within the presentation of our statement of cash flows to align with our statement of cash flows presentation for the six months ended July 1, 2023. Our reclassifications are limited to the operating activities section and include presenting pension contributions, which were previously presented within the change of other assets and liabilities, as an individual item within changes in operating assets and liabilities. These reclassifications, we believe, provide an enhanced level of transparency with regards to the presentation of our statement of cash flows.

Recently Adopted Accounting Standards

Credit Impairment Losses. In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses (Topic 326).” This ASU sets forth a current expected credit loss (“CECL”) model which requires the measurement of all expected credit losses for financial instruments or other assets (e.g., trade receivables), held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model, is applicable to the measurement of credit losses on financial assets measured at amortized cost, and applies to some off-balance sheet credit exposures. The standard also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity's portfolio. The Company adopted this standard on a modified retrospective basis in the first quarter of 2022 and the implementation did not have a material impact to the Company’s condensed consolidated financial statements.

Reference Rate Reform. In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The standard provides temporary guidance to ease the

potential burden in accounting for reference rate reform primarily resulting from the discontinuation of the publication of certain tenors of the London Inter-bank Offered Rate (“LIBOR”) on December 31, 2021, with complete elimination of the publication of the LIBOR by June 30, 2023. The amendments in this ASU are elective and apply to all entities that have contracts referencing the LIBOR.

The Company’s revolving credit agreement, as further discussed in Note 6, Long-Term Debt, to these condensed consolidated financial statements, was amended on June 27, 2023, to replace references to LIBOR to Secured Overnight Financing Rate (“SOFR”) for determining interest payable on current and future borrowings. The guidance in this ASU provides a practical expedient which simplifies accounting analyses under current U.S. GAAP for contract modifications if the change is directly related to a change from the LIBOR to a new interest rate index. The Company adopted this standard prospectively in the first quarter of 2022. The implementation did not have a material impact to the Company’s condensed consolidated financial statements or to any key terms of our revolving credit agreement other than the discontinuation of the LIBOR.

2. Business Combinations

On October 3, 2022, we acquired all the outstanding stock of Vandermeer Forest Products, Inc. (“Vandermeer”), a premier wholesale distributor of building products, for preliminary total consideration of $69.3 million. The acquisition has been accounted for as a business combination using the acquisition method. The assets acquired and liabilities assumed were recognized at their acquisition date fair values. The acquisition accounting, including fair value estimations, is subject to change as we finalize all assessments of the assets and liabilities that were acquired on the acquisition date. The primary area of the preliminary acquisition accounting that is not yet finalized relates to settlement of the holdback liability.

As of the date of the acquisition, the holdback liability was $6.3 million. During the first fiscal quarter of 2023, $0.3 million of the holdback liability was returned to the Company for adjustments related to final cash and working capital balances, reducing preliminary total consideration from $69.3 million to $69.0 million. The remaining holdback liability of $6.0 million is scheduled to be settled approximately 18 months after the acquisition date.

3. Inventories

Our inventories consist almost entirely of finished goods inventory, with an immaterial amount of work-in-process inventory. The cost of all inventories is determined by the moving average cost method. We have included all material charges directly incurred in bringing inventory to its existing condition and location. We evaluate our 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, which also considers items that may be considered damaged, excess, and obsolete inventory.

As of July 1, 2023, we assessed the carrying value of our inventory and determined it was presented at the lower of cost or net realizable value and that a reserve was not necessary.

As of December 31, 2022, we recorded a lower of cost or net realizable value reserve of $2.6 million as a result of the decrease in the value of our structural lumber and panel inventory related to the decline in wood-based commodity prices as of the end of the period.

4. Goodwill and Other Intangible Assets

In connection with our past merger and acquisition activity, we acquired certain intangible assets. As of July 1, 2023, our intangible assets consist of goodwill and other intangible assets including customer relationships, noncompete agreements, and trade names.

Goodwill

Goodwill is the excess of the cost of an acquired entity over the fair value of tangible and intangible assets (including customer relationships, noncompete agreements, and trade names) acquired, and liabilities assumed, under acquisition accounting for business combinations. As of July 1, 2023, goodwill was $55.4 million.

Goodwill is not subject to amortization but must be tested for impairment at least annually. This test requires us to assign goodwill to a reporting unit and to determine if the fair value of the reporting unit’s goodwill is less than its carrying amount. We evaluate goodwill for impairment during the fourth quarter of each fiscal year. In addition, we will evaluate the carrying value for impairment between annual impairment tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Such events and indicators may include, without limitation, significant declines in the

industries in which our products are used, significant changes in capital market conditions, and significant changes in our market capitalization. No such indicators were present during the second quarter of fiscal 2023.

The following table provides information related to the carrying amount of our goodwill:


	Total Carrying Amount
	(In thousands)
Balance at December 31, 2022	$	55,372
Acquisitions	—
Balance at April 1, 2023	$	55,372
Acquisitions	—
Balance at July 1, 2023	$	55,372

Definite-Lived Intangible Assets

The gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets at July 1, 2023 were as follows:


Intangible Asset	Weighted Average Remaining Useful Lives (Years)	Gross Carrying Amounts		Accumulated Amortization(1)		Net Carrying Amounts
		(In thousands)
Customer relationships	9	$	48,500	$	(17,004)	$	31,496
Noncompete agreements	4	8,954		(8,359)		595
Trade names	2	7,826		(7,076)		750
Total		$	65,280	$	(32,439)	$	32,841

(1) Intangible assets except customer relationships are amortized on straight line basis. Certain of our customer relationships are amortized on a double declining balance method and certain others are amortized on a straight line basis.

Amortization Expense

Amortization expense for our definite-lived intangible assets was $1.0 million and $2.1 million for the three and six month periods ended July 1, 2023, respectively. For the three and six month periods ended July 2, 2022, amortization expense was $0.6 million and $1.7 million, respectively.

Estimated amortization expense for definite-lived intangible assets for the remaining portion of 2023 and the next five fiscal years is as follows:


Fiscal Year	Estimated Amortization
	(In thousands)
2023	$	2,066
2024	3,930
2025	3,765
2026	3,471
2027	3,340
2028	3,340

5. 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) Transaction price has been allocated to the performance obligations; and (5) When (or as) performance obligations are satisfied.

Contracts with our customers are generally in the form of standard terms and conditions of sale. From time to time, we may enter into specific contracts, which may affect delivery terms. Performance obligations in our contracts generally consist solely of delivery of goods. For all sales channel types, consisting of warehouse, direct, and reload sales, we typically satisfy our performance obligations upon shipment. Our customer payment terms are typical for our industry, and may vary by the type and location of our customer and the products or services offered. The term between invoicing and when payment is due is not deemed to be significant by us. For certain sales channels and/or products, our standard terms of payment may be as early as ten days.

In addition, we provide inventory to certain customers through pre-arranged agreements on a consignment basis. Customer consigned inventory is maintained and stored by certain customers; however, ownership and risk of loss remain with us.

All revenues recognized are net of trade allowances (i.e., rebates), cash discounts, and sales returns. Cash discounts and sales returns are estimated using historical experience. Trade allowances are based on the estimated obligations and historical experience. Adjustments to earnings resulting from revisions to estimates on discounts and returns have been insignificant for each of the reported periods. Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We believe that there will not be significant changes to our estimates of variable consideration.

The following table presents our revenues disaggregated by revenue source. Sales and usage-based taxes are excluded from revenues.


	Three Months Ended				Six Months Ended
Product type	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
	(In thousands)				(In thousands)
Specialty products	$	570,990	$	787,860	$	1,138,828	$	1,555,767
Structural products	244,977		451,519		475,043		985,917
Total net sales	$	815,967	$	1,239,379	$	1,613,871	$	2,541,684

The following table presents our revenues disaggregated by sales channel. Warehouse sales are delivered from our warehouses. Reload sales are similar to warehouse sales but are shipped from warehouses, most of which are operated by third-parties, where we store owned products to enhance our operating efficiencies. This channel is employed primarily to service strategic customers that would be less economical to service from our warehouses, and to distribute large volumes of imported products from port facilities. Direct sales are shipped from the manufacturer to the customer without our taking physical possession of the inventory and, as a result, typically generate lower margins than our warehouse and reload distribution channels. This distribution channel requires the lowest amount of committed capital and fixed costs. Sales and usage-based taxes are excluded from revenues.


	Three Months Ended				Six Months Ended
Sales channel	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
	(In thousands)				(In thousands)
Warehouse and reload	$	695,508	$	1,020,341	$	1,382,140	$	2,098,287
Direct	135,214		240,235		262,309		486,887
Customer discounts and rebates	(14,755)		(21,197)		(30,578)		(43,490)
Total net sales	$	815,967	$	1,239,379	$	1,613,871	$	2,541,684

6. Long-Term Debt

As of July 1, 2023, and December 31, 2022, long-term debt consisted of the following:


	July 1, 2023		December 31, 2022
	(In thousands)
Senior secured notes (1)	$	300,000	$	300,000
Revolving credit facility (2)	—		—

Finance lease obligations (3)	271,188		273,075
	571,188		573,075
Unamortized debt issuance costs	(3,651)		(4,057)
Unamortized bond discount costs	(3,265)		(3,519)
	564,272		565,499
Less: current maturities of long-term debt	8,238		7,089
Long-term debt, net of current maturities	$	556,034	$	558,410

(1)As of July 1, 2023 and December 31, 2022, 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 condensed consolidated balance sheets at $293.1 million and $292.4 million at July 1, 2023 and December 31, 2022, respectively. This presentation is net of their discount of $3.3 million and $3.5 million and the combined carrying value of our debt issuance costs of $3.7 million and $4.1 million at July 1, 2023 and December 31, 2022, respectively. Our senior secured notes are presented in this table at their face value.

(2) The average effective interest rate for our revolving credit facility was zero percent for the quarters ended July 1, 2023 and July 2, 2022.

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

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”), and in connection therewith we entered into an indenture (the “Indenture”) with the guarantors party thereto and Truist Bank, as trustee and collateral agent. The 2029 Notes were issued to investors at 98.625 percent of their principal amount and will mature on November 15, 2029. The majority of net proceeds from the offering of the 2029 Notes were used to repay borrowings under our Revolving Credit Facility, as defined below.

As of July 1, 2023 and December 31, 2022, the fair value of our 2029 Notes was approximately $274.0 million and $283.6 million, respectively, which are designated as Level 2 in the fair value hierarchy. Our valuation technique is based primarily on observable market prices in less active markets.

Revolving Credit Facility

Our revolving credit facility, entered into with Wells Fargo Bank, National Association, as administrative agent (the “Agent”), and certain other financial institutions party thereto, provides for a senior secured asset-based revolving loan and letter of credit facility of up to $350.0 million. Our obligations under the Revolving Credit Facility (as defined below) are secured by a security interest in substantially all of our and our subsidiaries’ assets (other than real property), including inventories, accounts receivable, and proceeds from those items. On June 27, 2023, we entered in to a third amendment to the credit facility to, among other things, replace the interest rate based on LIBOR applicable to borrowings under the Credit Agreement with an interest rate based on the SOFR and a customary spread adjustment (as amended, the “Revolving Credit Facility”).

Our Revolving Credit Facility includes available interest rate options and was previously based on LIBOR, which was discontinued as an available rate option after June 30, 2023.

Borrowings under our Revolving Credit Facility bear interest at a rate per annum equal to (i) Adjusted Term SOFR (calculated as SOFR plus 0.1%) plus a margin ranging from 1.25 percent to 1.75 percent, with the margin determined based upon average excess availability for the immediately preceding fiscal quarter for loans based on SOFR, or (ii) the Agent’s base rate plus a margin ranging from 0.25 percent to 0.75 percent, with the margin based upon average excess availability for the immediately preceding fiscal quarter for loans based on the base rate.

Borrowings under our Revolving Credit Facility are subject to availability under the Borrowing Base (as that term is defined in the Revolving Credit Agreement). The Borrowers are required to repay revolving loans thereunder to the extent that such revolving loans exceed the Borrowing Base then in effect. Our 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.

As of July 1, 2023, we had zero outstanding borrowings and excess availability, including cash in qualified accounts, of $764.8 million under our Revolving Credit Facility. As of December 31, 2022, we had zero outstanding borrowings and excess availability, including cash in qualified accounts, of $645.4 million under our Revolving Credit Facility. Available borrowing capacity under our Revolving Credit Facility was $346.5 million on July 1, 2023 and December 31, 2022. Our average effective interest rate under the Revolving Credit Facility was zero percent for the quarters ended July 1, 2023 and July 2, 2022.

Our Revolving Credit Facility contains certain financial and other covenants, and our right to borrow under the Revolving Credit Facility is conditioned upon, among other things, our compliance with these covenants. We were in compliance with all covenants under our Revolving Credit Facility as of July 1, 2023.

Finance Lease Obligations

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

7. Net Periodic Pension Cost (Benefit)

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


	Three Months Ended				Six Months Ended
Pension-related items	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
	(In thousands)				(In thousands)
Service cost (1)	$	—	$	—	$	—	$	—
Interest cost on projected benefit obligation	1,105

SEC Form 10-Q filed by Bluelinx Holdings Inc.