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BlueLinx announces restructuring plan, sees Q2 charges

BlueLinx Holdings announced a strategic restructuring plan to improve operational efficiency to support its growth initiatives in its key markets. The restructuring plan includes the realignment of headquarters resources and a strategic review of five distribution centers. Based on the company's current analysis of its most attractive market opportunities and geographic footprint, the company has begun exploring various strategic alternatives regarding the future operations of the five distribution centers. The company will consider alternatives to increase stockholder value, which could include various forms of strategic partnering, as well as the possible sale or closure of certain distribution centers. During the process, the company will continue to fully operate the impacted distribution centers. These actions are commencing immediately and are expected to be completed during the fiscal third quarter. In connection with the restructuring plan and the previously announced change in the company's executive leadership, the company expects to recognize aggregate pre-tax restructuring charges in its current fiscal year GAAP financial results in the range of $11.5M-$12.5M. Fiscal second-quarter GAAP financial results are expected to include pre-tax restructuring charges of approximately $5M in severance charges, approximately $3M in stock compensation charges, and approximately $2M in other charges. Fiscal third-quarter GAAP financial results are expected to include in the range of $1.5M-$2.5M of non-cash restructuring charges. Excluding the five distribution centers, the company expects these actions to generate annual payroll related and other cost savings in the range of $9M-$10M. Upon completion, the company expects to generate approximately $25M-$27M in operating cash, a portion of which will be reinvested in its other markets, with the balance used to pay down its long-term debt. "The actions we announced today better focus our business and demonstrate our strong commitment to returning BlueLinx to profitability in the current operating environment, while continuing to invest in the areas of the country that we believe will provide the best return for our stockholders, business partners, and employees," said Howard Cohen, Executive Chairman. The Company also anticipates that the fiscal second quarter GAAP financial results will be impacted by a lower of cost or market reserve charge in the range of $3M-$4M related to a significant decline in prices for structural wood product inventory during the fiscal second quarter.