UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   EXCHANGE ACT OF 1934
  For the quarterly period ended July 1, 2017
 
OR
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   EXCHANGE ACT OF 1934

               BXCLOGOA22.JPG
Commission file number: 1-32383
 
 
 
BlueLinx Holdings Inc.
 
 
(Exact name of registrant as specified in its charter)
 
 
Delaware
77-0627356
(State of Incorporation)
(I.R.S. Employer Identification No.)
 
 
4300 Wildwood Parkway, Atlanta, Georgia
30339
(Address of principal executive offices)
(Zip Code)
 
( 770) 953-7000
(Registrant’s telephone number, including area code)
 
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  þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, 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  þ No o
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 o
 
Accelerated filer o
 
Non-accelerated filer o
 
Smaller reporting company þ
 
 
 
 
(Do not check if a smaller reporting company)
 
 
Emerging growth company o
(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. o
                                                                                             
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o No þ
As of August 10, 2017 there were 9,098,221 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, 2017
 
INDEX
 
PAGE 
 
 
 
 
 
 


1


PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share data)
(Unaudited)
 
 
Three Months Ended
 
Six Months Ended
 
July 1, 2017
 
July 2, 2016
 
July 1, 2017
 
July 2, 2016
Net sales
$
474,001

 
$
509,011

 
$
902,609

 
$
983,337

Cost of sales
413,455

 
451,624

 
787,629

 
868,354

Gross profit
60,546

 
57,387

 
114,980

 
114,983

Operating expenses (income):
 

 
 

 
 

 
 

Selling, general, and administrative
49,012

 
52,678

 
101,925

 
107,855

Gains from sales of property
—

 
(384
)
 
(6,700
)
 
(761
)
Depreciation and amortization
2,253

 
2,396

 
4,616

 
4,871

Total operating expenses
51,265

 
54,690

 
99,841

 
111,965

Operating income
9,281

 
2,697

 
15,139

 
3,018

Non-operating expenses (income):
 

 
 

 
 

 
 

Interest expense
5,367

 
6,250

 
10,610

 
13,457

Other expense (income), net
—

 
135

 
(2
)
 
(237
)
Income (loss) before provision for (benefit from) income taxes
3,914

 
(3,688
)
 
4,531

 
(10,202
)
Provision for (benefit from) income taxes
676

 
(544
)
 
709

 
(913
)
Net income (loss)
$
3,238

 
$
(3,144
)
 
$
3,822

 
$
(9,289
)

 
 
 
 
 
 
 
Basic earnings (loss) per share
$
0.36

 
$
(0.35
)
 
$
0.42

 
$
(1.05
)
Diluted earnings (loss) per share
$
0.35

 
$
(0.35
)
 
$
0.42

 
$
(1.05
)
 
 
 
 
 
 
 
 
Comprehensive income (loss):
 

 
 

 
 

 
 

Net income (loss)
$
3,238

 
$
(3,144
)
 
$
3,822

 
$
(9,289
)
Other comprehensive income (loss):
 

 
 

 
 

 
 

Foreign currency translation, net of tax
2

 
34

 
14

 
306

Amortization of unrecognized pension loss, net of tax
268

 
223

 
536

 
447

Pension curtailment, net of tax
(592
)
 
(12,185
)
 
(592
)
 
(12,185
)
Total other comprehensive loss
(322
)
 
(11,928
)
 
(42
)
 
(11,432
)
Comprehensive income (loss)
$
2,916

 
$
(15,072
)
 
$
3,780

 
$
(20,721
)
 
See accompanying Notes.
 


2


BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 
 
July 1, 2017
 
December 31, 2016
Assets:
 
 
 
Current assets:
 
 
 
Cash
$
4,777

 
$
5,540

Receivables, less allowances of $2,701 and $2,733, respectively
167,570

 
125,857

Inventories, net
220,677

 
191,287

Other current assets
20,228

 
23,126

Total current assets
413,252

 
345,810

Property and equipment:
 

 
 

Land and land improvements
30,703

 
34,609

Buildings
84,772

 
80,131

Machinery and equipment
75,036

 
72,122

Construction in progress
358

 
3,104

Property and equipment, at cost
190,869

 
189,966

Accumulated depreciation
(103,926
)
 
(101,644
)
Property and equipment, net
86,943

 
88,322

Other non-current assets
12,089

 
10,005

Total assets
$
512,284

 
$
444,137

Liabilities:
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
96,363

 
$
82,735

Bank overdrafts
22,296

 
21,696

Accrued compensation
6,047

 
8,349

Current maturities of long-term debt, net of discount of $415 and $201, respectively
56,585

 
29,469

Other current liabilities
13,892

 
12,092

Total current liabilities
195,183

 
154,341

Non-current liabilities:
 

 
 

Long-term debt, net of discount of $1,997 and $2,544, respectively
270,185

 
270,792

Pension benefit obligation
32,879

 
34,349

Other non-current liabilities
39,432

 
14,496

Total liabilities
537,679

 
473,978

Stockholders’ deficit:
 

 
 

Common Stock, $0.01 par value, Authorized - 20,000,000 shares, Issued and Outstanding - 9,098,221 and 9,031,263, respectively
91

 
90

Additional paid-in capital
258,548

 
257,972

Accumulated other comprehensive loss
(36,693
)
 
(36,651
)
Accumulated stockholders’ deficit
(247,341
)
 
(251,252
)
Total stockholders’ deficit
(25,395
)
 
(29,841
)
Total liabilities and stockholders’ deficit
$
512,284

 
$
444,137


See accompanying Notes.

3


BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
Six Months Ended
 
July 1, 2017
 
July 2, 2016
Net cash used in operating activities
$
(54,491
)
 
$
(25,943
)
 
 
 
 
Cash flows from investing activities:
 
 
 
Property and equipment investments
(189
)
 
(344
)
Proceeds from sale of assets
27,598

 
2,197

Net cash provided by investing activities
27,409

 
1,853

 
 
 
 
Cash flows from financing activities:
 

 
 

Repayments on revolving credit facilities
(172,932
)
 
(282,371
)
Borrowings from revolving credit facilities
227,654

 
308,673

Principal payments on mortgage
(28,976
)
 
(9,431
)
Increase in cash held in escrow related to the mortgage
1,490

 
9,118

Other, net
(917
)
 
(1,467
)
Net cash provided by financing activities
26,319

 
24,522

 
 
 
 
(Decrease) increase in cash
(763
)
 
432

Cash, beginning of period
5,540

 
4,808

Cash, end of period
$
4,777

 
$
5,240


See accompanying Notes.

4


BLUELINX HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 1, 2017
(Unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of BlueLinx Holdings Inc. and its wholly owned subsidiaries (the “Company”). These financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted (“GAAP”) in the United States (“U.S.”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K (the “Annual Report on Form 10-K”) for the year ended December 31, 2016 , as filed with the Securities and Exchange Commission.
New Accounting Standards
Revenue from Contracts with Customers. In May 2014,  the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) 605, Revenue Recognition. The new revenue recognition standard requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective on January 1, 2018. We have elected to adopt the revenue recognition standard in the first quarter of 2018 with a cumulative adjustment to retained earnings. We have substantially completed our assessment of the new revenue recognition guidance. Based upon current interpretations, we do not anticipate the adoption of this standard to have a material impact on our financial statements, aside from adding expanded disclosures.
Deferred Gains on Sale and Leaseback Transactions
We amortize deferred gains on the sale and leaseback of real property under operating leases over the lives of these leases. The amortization of these gains is recorded as a reduction to rent expense. We amortize the deferred gains on the sale and leaseback of real property under capital leases over the lease term in proportion to the amortization of the leased asset (i.e. on a straight-line basis) as a reduction of selling, general, and administrative expense. Amortization of all deferred gain was immaterial for the three and six months ended July 1, 2017 .
Upon adoption of ASU 2016-02, “Leases,” which we plan to adopt effective in the first quarter of fiscal 2019, the transition provisions of this accounting standard will allow us to continue to amortize the deferred gains on sale-leaseback transactions currently classified as capital leases, while the remaining deferred gain of approximately $1.6 million at the transition date pertaining to the sole sale-leaseback transaction accounted for as an operating lease will be reclassified to stockholders’ equity at that date.
2. Employee Benefits
The following table shows the components of net periodic pension cost (in thousands):
 
Three Months Ended
 
Six Months Ended
 
July 1, 2017
 
July 2, 2016
 
July 1, 2017
 
July 2, 2016
Service cost
$
183

 
$
252

 
$
366

 
$
504

Interest cost on projected benefit obligation
1,178

 
1,271

 
2,356

 
2,542

Expected return on plan assets
(1,584
)
 
(1,551
)
 
(3,168
)
 
(3,102
)
Amortization of unrecognized loss
268

 
223

 
536

 
447

Net periodic pension cost
$
45

 
$
195

 
$
90

 
$
391

During the first six months of fiscal 2017, we renegotiated our collective bargaining agreement with a unionized location. This collective bargaining agreement covers a number of specific items such as wages, medical coverage, and certain other benefit programs, including pension plan participation. As a result of this renegotiation, a significant percentage of the participants in the plan are no longer accruing future years of service, which triggered a curtailment. As a result of the curtailment, we performed a revaluation of plan assets and liabilities. The pension benefit obligation decreased  $1.5 million  as a result of changes in valuation assumptions; primarily, an increase in the balance of plan assets. The overall increase in plan

5


asset valuation was partially offset by a decrease to accumulated other comprehensive income of  $0.6 million  as a result of a decrease in the discount rate, which was recorded in other comprehensive loss on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). No intraperiod income tax effect was required to be recorded as a result of the curtailment.
Multiemployer Pension Plans
During the first quarter of fiscal 2017, we entered into a new collective bargaining agreement with the Lumber Employees Local 786 union at our Chicago facility. As a result, we provided for a withdrawal from the related multi-employer pension plan, and, accordingly, recorded an estimated $4.5 million withdrawal liability on the Condensed Consolidated Balance Sheet in “other non-current liabilities,” and recorded an offsetting non-cash expense in the Condensed Consolidated Statement of Operations in “selling, general, and administrative” costs. In the second quarter of fiscal 2017, we reassessed our estimate of the withdrawal liability and recorded an additional $1.0 million to the aforementioned liability and expense accounts. Unless a lump sum payment is mutually agreed-upon, we would expect the liability to be paid over a  20 -year period, with payments substantially similar on a total annual basis to those disclosed in our Annual Report on Form 10-K, Item 8, Note 9, for the year ended December 31, 2016. However, we are currently negotiating a final determination of liability with the Plan’s trustees, and may consider alternative arrangements, such as a lump sum or partial lump sum payment, in exchange for a lower liability.
3. Assets Held for Sale and Net Gain on Disposition
We currently have designated two unoccupied properties as held for sale, due to strategic initiatives. At the time of designation as “held for sale,” we ceased recognizing depreciation expense on these assets. As of July 1, 2017 , two properties were designated as held for sale, and as of December 31, 2016 , four properties had been designated as held for sale. During that six months, two properties were sold, as further described below. As of July 1, 2017 , and December 31, 2016 , the net book value of total assets held for sale was $0.8 million and $2.7 million , respectively, and was included in “other current assets” in our Consolidated Balance Sheets. We are actively marketing the remaining two properties that are designated as held for sale.
For the six months ended July 1, 2017 , we sold two non-operating distribution facilities previously designated as “held for sale,” and a parcel of excess land (the “Property Sales”). We recognized a gain of  $6.7 million  in the Condensed Consolidated Statements of Operations as a result of the Property Sales.
4. Fair Value Disclosure
To determine the fair value of our mortgage, we use a discounted cash flow model. We believe the mortgage fair value valuation to be Level 2 in the fair value hierarchy, as the valuation model has inputs that are observable for substantially the full term of the liability. As of July 1, 2017 , the carrying amount and fair value of our mortgage was $97.8 million and $100.8 million , respectively. The difference between the book value and the fair value is derived from the difference between the period-end market interest rate and the stated rate of our fixed-rate mortgage. The fair value of our debt is not indicative of the amounts at which we could settle our debt.
5. Other Non-Current Liabilities

The following table shows the components of other non-current liabilities (in millions):
 
July 1, 2017
 
December 31, 2016
Capital leases - real estate
$
7.9

 
$
—

Deferred gain on sale-leaseback transactions
11.2

 
—

Capital leases - logistics equipment
7.0

 
8.6

Other
13.3

 
5.9

Total
$
39.4

 
$
14.5

6. Earnings per Share
We calculate basic earnings per share by dividing net income by the weighted average number of common shares outstanding, excluding unvested restricted shares. We calculate diluted earnings per share by dividing net income by the weighted average number of common shares outstanding plus the dilutive effect of outstanding share-based awards, including restricted stock awards, restricted stock units, performance shares, and stock options. Antidilutive common stock equivalents excluded from the diluted earnings per share calculation for the quarter and year to date during fiscal 2017 include all outstanding options and performance shares, and an immaterial number of restricted stock units.

6


The following table shows the computation of basic and diluted earnings per share (in thousands, except per share data):
 
Three months ended
 
Six months ended
 
July 1, 2017
 
July 2, 2016 (1)
 
July 1, 2017
 
July 2, 2016 (1)
Net income (loss)
$
3,238

 
$
(3,144
)
 
$
3,822

 
$
(9,289
)
 
 
 
 
 
 
 
 
Basic weighted shares outstanding
9,055

 
8,895

 
9,011

 
8,886

Dilutive effect of share-based awards
135

 
—

 
130

 
—

Diluted weighted average shares outstanding
9,190

 
8,895

 
9,141

 
8,886

 
 
 
 
 
 
 
 
Basic earnings (loss) per share
$
0.36

 
$
(0.35
)
 
$
0.42

 
$
(1.05
)
Diluted earnings (loss) per share
$
0.35

 
$
(0.35
)
 
$
0.42

 
$
(1.05
)
(1) Basic and diluted earnings per share are equivalent for the three and six months ended July 2, 2016 , due to net losses for those periods.
7. Accumulated Other Comprehensive Loss
Comprehensive income (loss) is a measure of income which includes both net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) results from items deferred from recognition into our Consolidated Statements of Operations and Comprehensive Income (Loss). Accumulated other comprehensive loss is separately presented on our Consolidated Balance Sheets as part of common stockholders’ deficit.
The changes in balances for each component of Accumulated Other Comprehensive Loss for the six months ended July 1, 2017 , were as follows (in thousands):
 
Foreign currency, net
of tax
 
Defined
benefit pension
plan, net of tax
 
Other,
net of tax
 
Total Accumulated Other Comprehensive Loss
December 31, 2016, beginning balance
$
660

 
$
(37,523
)
 
$
212

 
$
(36,651
)
Other comprehensive income (loss), net of tax (1)
14

 
(56
)
 
—

 
(42
)
July 1, 2017, ending balance, net of tax
$
674

 
$
(37,579
)
 
$
212

 
$
(36,693
)
(1)  
For the six months ended July 1, 2017 , the actuarial loss recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as a component of net periodic pension cost was significantly offset by the effect of pension curtailment (see Note 2). There was no intraperiod income tax allocation and the deferred tax benefit was fully offset by a valuation allowance.
8. Liquidity and ASU 2014-15
As of  July 1, 2017 , we had outstanding borrowings of  $231.3 million  and excess availability of  $74.2 million  under the terms of the revolving credit facility, including the Tranche A Loan (together, the “revolving credit facility”), based on qualifying inventory and accounts receivable.
A portion of our debt is classified as “Current maturities of long-term debt” on our Condensed Consolidated Balance Sheet as of  July 1, 2017 , since it is due within the next twelve months. These amounts consist of a  $55.0 million  principal reduction of our mortgage, which is due by July 1, 2018, and  $2.0 million  commitment reduction of the Tranche A Loan. We are actively engaged in marketing certain of our real estate holdings in sale and leaseback transactions in order to meet the principal reduction date specified by our mortgage loan.
As stated in our Annual Report on Form 10-K, Note 1, the FASB previously issued ASU 2014-15, which is codified in Accounting Standards Codified (“ASC”) 205, “Presentation of Financial Statements,” which requires footnote disclosures concerning, among other matters, an entity’s ability to repay its obligations through normal operational or other sources over the twelve months following the date of financial statement issuance. We have adopted this accounting standard, as disclosed in our Annual Report on Form 10-K, Note 15. As stated above, our mortgage requires a principal payment of $55.0 million due no later than July 1, 2018. We note that our plans and intentions to satisfy this obligation include sale and leaseback transactions, as well as potentially refinancing the mortgage. Additionally, our revolving credit facility, the entire balance of which is stated

7


above, is due on July 15, 2018. As we have in the past, we expect to extend or refinance the revolving credit facility. However, there can be no assurance that we could extend or refinance our debt on terms that are favorable or acceptable to us, or at all.

8


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) has been derived from our historical financial statements and is intended to provide information to assist you in better understanding and evaluating our financial condition and results of operations. This MD&A section should be read in conjunction with our condensed consolidated financial statements and notes to those statements included in Item 1 of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the year ended December 31, 2016 , as filed with the U.S. Securities and Exchange Commission (the “SEC”). This MD&A section is not a comprehensive discussion and analysis of our financial condition and results of operations, but rather updates disclosures made in the aforementioned filing.
The discussion below contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance, liquidity levels or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” “will be,” “will likely continue,” “will likely result” or words or phrases of similar meaning. All of these forward-looking statements are based on estimates and assumptions made by our management that, although believed by us to be reasonable, are inherently uncertain. Forward-looking statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental, and technological factors outside of our control; that may cause our business, strategy, or actual results to differ materially from the forward-looking statements. These risks and uncertainties may include those discussed under the heading “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016 , as filed with the SEC, and other factors, some of which may not be known to us. We operate in a changing environment in which new risks can emerge from time to time. It is not possible for management to predict all of these risks, nor can it assess the extent to which any factor, or a combination of factors, may cause our business, strategy, or actual results to differ materially from those contained in forward-looking statements. Factors you should consider that could cause these differences include, among other things:
•
changes in the prices, supply and/or demand for products which we distribute;
•
inventory management and commodities pricing;
•
new housing starts and inventory levels of existing homes for sale;
•
general economic and business conditions in the U.S.;
•
acceptance by our customers of our privately branded products;
•
financial condition and creditworthiness of our customers;
•
supply from our key vendors;
•
reliability of the technologies we utilize;
•
activities of competitors;
•
changes in significant operating expenses;
•
fuel costs;
•
risk of losses associated with accidents;
•
exposure to product liability claims;
•
changes in the availability of capital and interest rates;
•
adverse weather patterns or conditions;
•
acts of cyber intrusion;
•
variations in the performance of the financial markets, including the credit markets; and
•
other factors described herein and in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016 , as filed with the SEC.
Given these risks and uncertainties, we caution you not to place undue reliance on forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law.

9


Executive Level Overview
Background
We are a leading distributor of building and industrial products in the U.S. The Company is headquartered in Atlanta, Georgia, and we operate our distribution business through a broad network of distribution centers. We operate in many major metropolitan areas in the U.S. We distribute products in two principal categories: structural products and specialty products. Structural products include plywood, oriented strand board, rebar and remesh, lumber and other wood products primarily used for structural support, walls, and flooring in construction projects. Structural products represented approximately 45% of our second quarter of fiscal 2017 net sales. Specialty products include roofing, insulation, moulding, engineered wood, vinyl products (used primarily in siding), and metal products (excluding rebar and remesh). Specialty products accounted for approximately 55% of our second quarter of fiscal 2017 net sales. 
Industry Conditions
Many of the factors that cause our operations to fluctuate are seasonal or cyclical in nature. Our operating results have historically been closely aligned with the level of residential housing starts in the U.S. At any time, the demand for new homes is dependent on a variety of factors, including job growth, changes in population and demographics, the availability and cost of mortgage financing, the supply of new and existing homes and, importantly, consumer confidence. Since 2011, the U.S. housing market has shown steady improvement. Our opinion is that this trend will continue in the long term, and that we are well-positioned to support our customers.
Results of Operations
The following table sets forth our results of operations for the second quarter of fiscal 2017 and fiscal 2016 :
 
Second Quarter of Fiscal 2017
 
% of
Net
Sales
 
Second Quarter of Fiscal 2016
 
% of
Net
Sales
 
(Dollars in thousands)
Net sales
$
474,001

 
100.0%
 
$
509,011

 
100.0%
Gross profit
60,546

 
12.8%
 
57,387

 
11.3%
Selling, general, and administrative
49,012

 
10.3%
 
52,678

 
10.3%
Gains from sales of property
—

 
—%
 
(384
)
 
(0.1)%
Depreciation and amortization
2,253

 
0.5%
 
2,396

 
0.5%
Operating income
9,281

 
2.0%
 
2,697

 
0.5%
Interest expense
5,367

 
1.1%
 
6,250

 
1.2%
Other expense, net
—

 
—%
 
135

 
—%
Income (loss) before provision for (benefit from) income taxes
3,914

 
0.8%
 
(3,688
)
 
(0.7)%
Provision for (benefit from) income taxes
676

 
0.1%
 
(544
)
 
(0.1)%
Net income (loss)
$
3,238

 
0.7%
 
$
(3,144
)
 
(0.6)%

10


The following table sets forth our results of operations for the first six months of fiscal 2017 and fiscal 2016 :
 
First Six Months of Fiscal 2017
 
% of
Net
Sales
 
First Six Months of Fiscal 2016
 
% of
Net
Sales
 
(Dollars in thousands)
Net sales
$
902,609

 
100.0%
 
$
983,337

 
100.0%
Gross profit
114,980

 
12.7%
 
114,983

 
11.7%
Selling, general, and administrative
101,925

 
11.3%
 
107,855

 
11.0%
Gains from sales of property
(6,700
)
 
(0.7)%
 
(761
)
 
(0.1)%
Depreciation and amortization
4,616

 
0.5%
 
4,871

 
0.5%
Operating income
15,139

 
1.7%
 
3,018

 
0.3%
Interest expense
10,610

 
1.2%
 
13,457

 
1.4%
Other income, net
(2
)
 
—%
 
(237
)
 
—%
Income (loss) before provision for (benefit from) income taxes
4,531

 
0.5%
 
(10,202
)
 
(1.0)%
Provision for (benefit from) income taxes
709

 
0.1%
 
(913
)
 
(0.1)%
Net income (loss)
$
3,822

 
0.4%
 
$
(9,289
)
 
(0.9)%

The following table sets forth net sales by product category versus comparable prior periods:
 
Quarter Ended
 
Six Months Ended
 
July 1, 2017
 
July 2, 2016
 
July 1, 2017
 
July 2, 2016
Sales by category
(In millions)
Structural products
$
214

 
$
202

 
$
405

 
$
390

Specialty products
264

 
314

 
503

 
606

Other (1)
(4
)
 
(7
)
 
(5
)
 
(13
)
Total net sales
$
474

 
$
509

 
$
903

 
$
983

(1)  
“Other” includes unallocated allowances and discounts.
The following table sets forth gross profit and gross margin percentages by product category versus comparable prior periods:
 
Quarter Ended
 
Six Months Ended
 
July 1, 2017
 
July 2, 2016
 
July 1, 2017
 
July 2, 2016
Gross profit by category
(Dollars in millions)
Structural products
$
19

 
$
19

 
$
37

 
$
36

Specialty products
40

 
40

 
75

 
80

Other (1)
2

 
(2
)
 
3

 
(1
)
Total gross profit
$
61

 
$
57

 
$
115

 
$
115

Gross margin % by category
 

 
 

 
 

 
 

Structural products
8.7
%
 
9.5
%
 
9.2
%
 
9.4
%
Specialty products
15.3
%
 
12.8
%
 
14.9
%
 
13.2
%
Total gross margin %
12.8
%
 
11.3
%
 
12.7
%
 
11.7
%
(1)  
“Other” includes unallocated allowances and discounts.


11


The following table sets forth a reconciliation of net sales and gross profit to the non-GAAP measures of adjusted same-center net sales and adjusted same-center gross profit versus comparable prior periods (1) :
 
Quarter Ended
 
Six Months Ended

July 1, 2017
 
July 2, 2016
 
July 1, 2017
 
July 2, 2016
 
(Dollars in thousands)
Net sales
$
474,001

 
$
509,011

 
$
902,609

 
$
983,337

Less: non-GAAP adjustments
—

 
58,222

 
—

 
112,893

Adjusted same-center net sales
$
474,001

 
$
450,789

 
$
902,609

 
$
870,444

Adjusted year-over-year percentage increase - sales
5.1
%
 
 
 
3.7
%
 
 
 
 
 
 
 
 
 
 
Gross profit
$
60,546

 
$
57,387

 
$
114,980

 
$
114,983

Less: non-GAAP adjustments
—

 
224

 
—

 
5,959

Adjusted same-center gross profit
$
60,546

 
$
57,163

 
$
114,980

 
$
109,024

(1)
The schedule presented above includes a reconciliation of net sales and gross profit excluding the effect of operational efficiency initiatives; specifically, facility closures and the SKU rationalization initiative. These operational efficiency initiatives were substantially complete as of December 31, 2016. The above schedule is not a presentation made in accordance with GAAP, and is not intended to present a superior measure of the financial condition from those determined under GAAP. Adjusted sales and adjusted gross profit as used herein, are not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation.
We believe adjusted net sales and adjusted gross profit are helpful in presenting comparability across periods without the effect of our operational efficiency initiatives. We also believe that these non-GAAP metrics are used by securities analysts, investors, and other interested parties in their evaluation of our company, to illustrate the effects of these initiatives. We compensate for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than using GAAP results alone.
Second Quarter of Fiscal 2017 Compared to Second Quarter of Fiscal 2016
Net sales.  For the second quarter of fiscal 2017 , net sales decreased by 6.9% , or $35.0 million , compared to the second quarter of fiscal 2016 . The decrease in sales was largely driven by operational consolidation resulting from distribution center closures in fiscal 2016, and SKU rationalization, as our adjusted same-center net sales increased by approximately $23.2 million . The overall sales decrease for the quarter-over-quarter comparative period was primarily due to a decrease in specialty product sales, partially offset by a slight increase in structural product sales.
Gross profit and gross margin.  For the second quarter of fiscal 2017 , gross profit dollars increased by $3.2 million , or 5.5% , compared to the second quarter of fiscal 2016 . Gross profit increased in the second quarter of fiscal 2017 due to increased margin on specialty products, slightly offset by margin decreases in structural products. Gross margin percentage increased by 150 basis points to 12.8% , primarily due to margin percentage increases on specialty products.
Selling, general, and administrative expenses.  The decrease of 7.0% , or $3.7 million , for the second quarter of fiscal 2017, compared to the second quarter of fiscal 2016, is primarily related to reductions in payroll and related costs, due to a reduction in force in the prior year in connection with distribution center closures, which also resulted in decreases in property taxes, as well as decreases in general maintenance and repair costs.
Interest expense, net . For the second quarter of fiscal 2017 , net interest expense decreased by $0.9 million , or 14.1% , compared to the second quarter of fiscal 2016 . This net decrease in interest expense for the comparable fiscal quarter primarily was attributable to the reduced debt balance on our interest-only mortgage loan. The principal balance on our fixed-rate mortgage loan decreased by approximately $61.0 million to $97.8 million as of July 1, 2017, from $158.8 million as of July 2, 2016.

12


First Six Months of Fiscal 2017 Compared to First Six Months of Fiscal 2016
Net sales.   For the first six months of fiscal 2017, net sales decreased by 8.2% , or  $80.7 million , compared to the first six months of fiscal 2016. The year-over-year six month decrease in sales was primarily driven by planned closures of distribution centers in fiscal 2016, and SKU rationalization, as same center sales increased by $32.2 million for the comparable six month period, an increase of 3.7%. While sales prices increased on both structural and specialty items, comparable unit volumes were relatively flat in the year-over-year period.
Gross profit and gross margin.   For the first six months of fiscal 2017, gross profit dollars were essentially flat. Total gross margin percentage increased 100 basis points over the comparable prior year period, which was driven largely by a 1.7% increase in specialty product gross margin, offset by a 20 basis point decrease in structural product margin.
Selling, general, and administrative expenses.   The decrease of  $5.9 million for the six months of fiscal 2017, compared to the first six months of fiscal 2017, is primarily related to reductions in payroll and related costs, due to a reduction in force in the prior year in connection with distribution center closures, which also resulted in a decrease in general maintenance and repair costs. These overall cost decreases were slightly offset by an increase in strategic costs, year-over-year, as during the first six months of fiscal 2017, we incurred $5.5 million in pension expense as a result of our withdrawal from a multi-employer pension plan, compared to $3.3 million of refinancing related costs in fiscal 2016.
Interest expense, net . For the first six months of fiscal 2017, net interest expense decreased by $2.8 million , or 21.2% , compared to the first six months of fiscal 2016. This net decrease in interest expense was attributable to our substantially reduced debt balances. The principal balance on our fixed-rate mortgage loan decreased by approximately $61.0 million to $97.8 million as of July1, 2017, from $158.8 million as of July 2, 2016. Our principal balance decreased by $15.5 million on the Credit Agreement during that same period, to $231.3 million as of July 1, 2017, while LIBOR-based interest rates pertaining to the Credit Agreement increased by approximately 80 basis points as of July 1, 2017 to approximately 5.0%, compared to approximately 4.2% as of July 2, 2016.
Seasonality
We are exposed to fluctuations in quarterly sales volumes and expenses due to seasonal factors common in the building products distribution industry. The first and fourth fiscal quarters are typically our slowest quarters, due to the impact of poor weather on the construction market. Our second and third fiscal quarters are typically our strongest quarters, reflecting a substantial increase in construction, due to more favorable weather conditions. Our accounts receivable and payable generally peak in the fiscal second quarter, along with inventory, which also generally peaks in the fiscal second quarter in anticipation of the summer building season.
Liquidity and Capital Resources
We expect our primary sources of liquidity to be cash flows from sales in the normal course of our operations and borrowings under our revolving credit facility. We expect that these sources will fund our ongoing cash requirements for the foreseeable future, as we expect to extend or refinance our revolving credit facility (see Item 1, Note 8). We believe that sales in the normal course of our operations and amounts currently available from our revolving credit facility and other sources will be sufficient to fund our routine operations and working capital requirements for at least the next 12 months.
Mortgage
As of July 1, 2017 , the balance on our mortgage loan was $97.8 million . During the second quarter of fiscal 2017, we paid approximately $1.6 million in principal on the mortgage, primarily from proceeds resulting from the sale of excess land sold in the first quarter of fiscal 2017. The mortgage is secured by owned distribution facilities. Our mortgage lender has a first priority pledge of the equity in the Company’s subsidiaries which hold the real property that secures the mortgage loan.
As modified on March 24, 2016, our mortgage is due on July 1, 2019. We pre-paid in its entirety a $60.0 million principal reduction which was due no later than July 1, 2017. The remaining principal reductions include a $55.0 million principal payment due no later than July 1, 2018, with the remaining balance due no later than July 1, 2019. We may perform sale and leaseback transactions on certain of our properties in order to meet the remaining scheduled principal payments, or we may consider other financing options. The mortgage requires monthly interest-only payments, at an annual interest rate of 6.35%.
Revolving Credit Facility
As of July 1, 2017 , we had outstanding borrowings of $231.3 million and excess availability of $74.2 million under the terms of the revolving credit facility, which includes borrowings of $14.0 million under the Tranche A Loan.

13


On August 4, 2006, we entered into the revolving credit facility, as later amended, most recently on November 3, 2016. This amendment to the revolving credit facility extended the maturity date of the revolving credit facility to July 15, 2018, reduced the revolving loan limit by $15.0 million to $335.0 million, and reduced the Tranche A Loan limit by $4.0 million to $16.0 million. Furthermore, the amendment required maintenance of a fixed charge coverage ratio of 1.2 to 1.0 in the event our excess availability falls below $32.5 million through March 31, 2017; and the amendment currently requires maintenance of an excess availability of the greater of a defined range, adjusted on a seasonal basis, of $36.0 million to $42.0 million and an amount equal to 12.5% of the lesser of (a) the sum of the borrowing base and the Tranche A Loan borrowing base or (b) the maximum credit.
The Tranche A Loan limit shall be subject to automatic commitment reductions depending on the time of year, with the balance due and payable by July 15, 2018; provided, that all scheduled commitment reductions on or after August 1, 2017, will be subject to satisfaction of certain conditions including a minimum excess availability threshold of at least $50.0 million after giving effect to any payment required after giving effect to such reduction. If a scheduled commitment reduction is prohibited due to not satisfying those conditions, the required excess availability covenant shall be increased by the amount of any such prohibited commitment reduction.
We were in compliance with all covenants under the revolving credit facility as of  July 1, 2017 .
Sources and Uses of Cash
Operating Activities
Net cash used in operating activities for the first six months of fiscal 2017 was $54.5 million , compared to net cash used in operating activities of $25.9 million in the first six months of fiscal 2016 . Accounts receivable increased by $41.7 million  during the first six months of fiscal 2017 , compared to an increase of $43.0 million in the first six months of the prior fiscal year. This year-over-year comparative decrease in accounts receivable primarily was due to a decrease in overall sales due to closed distribution centers. Inventory increased by $29.4 million in the first six months of fiscal 2017 , which reflects the seasonality of our business, as we enter into the historical peak selling season.
Investing Activities
Net cash provided by investing activities for the first six months of fiscal 2017 was $27.4 million compared to net cash provided by investing activities of $1.9 million in the first six months of fiscal 2016 . Our cash provided by investing activities primarily was related to the sales of certain distribution facilities.
In the future, we may perform further sale and lease back transactions of certain of our owned properties.
Financing Activities
Net cash provided by financing activities of $26.3 million for the first six months of fiscal 2017 , primarily reflected seasonal net borrowings on our revolving credit facility of $54.7 million, offset by principal payments on our mortgage loan of $29.0 million . We may consider further financing transactions in the future, including transactions involving our real estate. Additionally, we expect to extend or refinance the revolving credit facility.

14


Operating Working Capital
Selected financial information (in thousands)
 
July 1, 2017
 
December 31, 2016
 
July 2, 2016
Current assets:
 
 
 
 
 
Cash
$
4,777

 
$
5,540

 
$
5,240

Receivables, less allowance for doubtful accounts
167,570

 
125,857

 
181,623

Inventories, net
220,677

 
191,287

 
214,802

Other current assets
20,228

 
23,126

 
28,562

Total current assets
$
413,252

 
$
345,810

 
$
430,227

 
 
 
 
 
 
Current liabilities:
 

 
 

 
 
Accounts payable
$
96,363

 
$
82,735

 
$
96,830

Bank overdrafts
22,296

 
21,696

 
17,330

Accrued compensation
6,047

 
8,349

 
6,829

Current maturities of long-term debt, net of discount
56,585

 
29,469

 
62,653

Other current liabilities
13,892

 
12,092

 
12,942

Total current liabilities
$
195,183

 
$
154,341

 
$
196,584

 
 
 
 
 
 
Operating working capital
$
274,654

 
$
220,938

 
$
296,296

Operating working capital is an important measurement we use to determine the efficiencies of our operations and our ability to readily convert assets into cash. Operating working capital is defined as current assets less current liabilities plus the current portion of long-term debt. Management of operating working capital helps us monitor our progress in meeting our goals to maximize our return on working capital assets.
Our operating working capital requirements reflect the seasonal nature of our business. Operating working capital of $274.7 million at July 1, 2017 , compared to $220.9 million as of December 31, 2016 , increased on a net basis of $53.7 million as a result of the seasonal nature of our business, which resulted in a $41.7 million increase in accounts receivable and an increase in inventory of $29.4 million , offset by an increase in accounts payable of $13.6 million .
Operating working capital decreased from July 2, 2016 , to July 1, 2017 , by $21.6 million , primarily driven by decreases in accounts receivable of $14.1 million , which reflected the decrease in sales compared to the prior year, as a result of closures of distribution centers during fiscal 2016. Additionally, other current assets decreased by $8.3 million , primarily reflecting the removal of the net book value of “held for sale” properties, as most of our properties held for sale were sold during the period.
Critical Accounting Policies
The preparation of our consolidated financial statements and related disclosures in conformity with GAAP requires our management to make judgments and estimates that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. There have been no material changes to our critical accounting policies from the information provided in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 .
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As stated in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 , disclosures for Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” are not required, as we are a Smaller Reporting Company.
ITEM 4. CONTROLS AND PROCEDURES
Our management performed an evaluation, as of the end of the period covered by this report on Form 10-Q, under the supervision of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.
There were no changes in our internal controls over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting. 

15


PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During the second quarter of fiscal 2017 , there were no material changes to our legal proceedings as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016 . Additionally, we are, and from time to time may be, a party to routine legal proceedings incidental to the operation of our business. The outcome of any pending or threatened proceedings is not expected to have a material adverse effect on our financial condition, operating results, or cash flows, based on our current understanding of the relevant facts. Legal expenses incurred related to these contingencies are generally expensed as incurred.
ITEM 1A. RISK FACTORS
There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 , as filed with the SEC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
 
 
 
Exhibit
Number 
 

Description
 
 
 
10.1
 
Employment Agreement between BlueLinx Corporation and Shyam K. Reddy, dated May 3, 2017.

 
 
 
31.1
 
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
31.2
 
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
32.1*
 
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
32.2*
 
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
101
 
The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended April 2, 2016, formatted in Extensible Business Reporting Language (“XBRL”): (i) Consolidated Statements of Operations and Comprehensive Loss, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows and (iv) Notes to Consolidated Financial Statements (Unaudited).
 
 
 
 
*
Exhibit is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended.

16


SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
BlueLinx Holdings Inc.
 
 
 
(Registrant)
 
 
 
 
 
Date: August 10, 2017
By:
/s/ Susan C. O’Farrell
 
 
 
Susan C. O’Farrell
 
 
 
Senior Vice President, Chief Financial Officer, Treasurer, and Principal Accounting Officer
 


17


EMPLOYMENT AGREEMENT
This Employment Agreement (this “ Agreement ”) is entered into as of May 3, 2017, to be effective as of the Effective Date (as defined herein), between BLUELINX CORPORATION, a Georgia corporation (the “ Company ”), SHYAM K. REDDY (“ Executive ”) and, as to Sections 3(a) and 3(e) only, BLUELINX HOLDINGS INC. (“ BHI ”).
RECITALS:
WHEREAS, the Executive agrees to provide services to BHI and the Company as their Chief Administrative Officer, General Counsel and Corporate Secretary, and BHI and the Company in return agree to provide certain compensation and benefits to Executive; and
WHEREAS, the Company and Executive mutually desire to memorialize the terms of Executive’s employment as Chief Administrative Officer, General Counsel and Corporate Secretary of BHI and the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Certain Definitions . Certain words or phrases with initial capital letters not otherwise defined herein are to have the meanings set forth in Section 8.
2. Employment . The Company shall employ Executive, and Executive accepts employment with the Company upon the terms and conditions set forth in this Agreement for the period beginning on the Effective Date and ending as provided in Section 5 (the “ Employment Period ”). For the purposes of this Agreement, the “ Effective Date ” shall be May 5, 2017.
3. Position and Duties .
(a) During the Employment Period, Executive shall serve as Chief Administrative Officer, General Counsel and Corporate Secretary of BHI and the Company and shall have the normal duties, responsibilities and authority of an executive serving in such position, subject to the power of the Chief Executive Officer of BHI to provide oversight and direction with respect to such duties, responsibilities and authority, either generally or in specific instances.
(b) Intentionally Omitted.
(c) During the Employment Period, Executive shall devote Executive’s reasonable best efforts and Executive’s full professional time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of BHI and the Company and their respective subsidiaries and affiliates. Executive shall perform Executive’s duties and responsibilities to the best of Executive’s abilities in a diligent, trustworthy and business-like manner. However, Executive may continue to serve as a member of the board of directors of the non-profit corporations on which he serves on the Effective Date and may become a member of the board of directors of any other non-profit corporations.
(d) Executive shall perform Executive’s duties and responsibilities from the Company’s headquarters office as located on the Effective Date in the Atlanta, Georgia metropolitan area (the “ Principal Office ”).
(e) Executive as the Chief Administrative Officer, General Counsel and Corporate Secretary of BHI shall report to the Chief Executive Officer of BHI; provided, however, consistent with such reporting relationships, Executive, to the extent required by applicable law or regulation or to the extent required by professional responsibility, nevertheless may provide information directly to the Board of Directors of both BHI and the Company.  

1

4. Compensation and Benefits .

(a) Salary . The Company agrees to pay Executive a salary during the Employment Period in installments (no less frequently than monthly) based on the Company’s payroll practices as may be in effect from time to time. The Executive’s salary is currently set at the rate of $420,000.00 (less applicable withholding and other customary payroll deductions) per year (“ Base Salary ”). The Base Salary may be increased at the sole discretion of the Compensation Committee of BHI’s Board of Directors, but there will not be any decrease in Executive’s Base Salary.
(b) Intentionally Omitted .
(c) Annual Bonus .
(i) Executive shall be eligible to receive an annual bonus, with the annual bonus target to be 65% of his then Base Salary (i.e., 65% upon achievement of annual “target” performance goals), with the “target” based upon satisfaction of performance goals and bonus criteria to be defined and approved by the Compensation Committee of BHI’s Board of Directors for each fiscal year. The Company shall pay any such annual bonus earned to Executive in accordance with the terms of the applicable bonus plan, but in no event later than March 15 of the calendar year following the calendar year in which such bonus is earned.
(ii) During the Employment Period, the Executive will be eligible to participate in long term incentive programs of the Company and BHI now or hereafter made available to similarly situated executives, in accordance with the provisions thereof as in effect from time to time, and as deemed appropriate by the Compensation Committee of BHI’s Board of Directors to be applicable to his position as the Chief Administrative Officer, General Counsel and Corporate Secretary.
(d) Equity Awards . Annual awards of equity and rights to receive equity or equity equivalents under the long term incentive plans of BHI shall be determined in the discretion of the Compensation Committee of the Board of Directors of BHI.
(e) Expense Reimbursement . The Company shall reimburse Executive for all reasonable expenses incurred by Executive during the Employment Period in the course of performing Executive’s duties under this Agreement in accordance with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses, and subject to the Company’s requirements applicable generally with respect to reporting and documentation of such expenses and subject to the Reimbursement Rules. In order to be entitled to expense reimbursement, the Executive must be employed as Chief Administrative Officer, General Counsel and Corporate Secretary of either BHI or the Company on the date the Executive incurred the expense.
(f) Vacation . Executive shall receive annual paid vacation in accordance with the Company’s vacation policy applicable to senior executives, but in no event less than four (4) weeks per year, prorated for partial years.
(g) Executive Benefits Package .
(i) Executive is entitled during the Employment Period to participate, on the same basis as the Company’s other senior executives, in the Company’s Standard Executive Benefits Package. The Company’s “ Standard Executive Benefits Package ” means those benefits (including insurance, vacation and other benefits, but excluding, except as hereinafter provided in Section 6, any broad-based severance pay program or policy of the Company) for which substantially all of the executives of the Company are from time to time generally eligible, as determined from time to time by the Board.

(ii) The Company and BHI will maintain customary and appropriate Directors and Officers Liability Coverage for Executive during his Employment Period and for the 6 year period immediately

2

following his Employment Period, and will afford Executive with the Indemnification set forth in the Amended and Restated Bylaws of BHI, as may be amended from time to time. The provisions of this Section 4(g)(ii) will survive the termination of Executive’s employment and this Agreement notwithstanding any other provision of this Agreement.

(iii) The Company will provide to Executive (a) an allowance of up to $2,500 to cover the cost of an annual physical and (b) training and professional dues as deemed appropriate by the Chief Executive Officer.

(h) Additional Compensation/Benefits . The Compensation Committee of BHI’s Board of Directors, with input from the Chief Executive Officer, will determine any compensation and benefits to be provided to Executive during the Employment Period by BHI or the Company in addition to the compensation and benefits set forth in this Agreement, including, without limitation, any future grant of stock options or other equity awards.
(i) Disgorgement of Compensation . If BHI or the Company is required to prepare an accounting restatement due to material noncompliance by BHI or the Company, as a result of misconduct, with any financial reporting requirement under the federal securities laws, to the extent required by law, Executive will reimburse the Company for (i) any bonus or other incentive-based or equity-based compensation received by Executive from the Company (including such compensation payable in accordance with this Section 4 and Section 6) during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission (whichever first occurs) of the financial document embodying that financial reporting requirement; and (ii) any profits realized by Executive from the improper or unlawful sale of BHI’s securities during that 12-month period.
5. Employment Period .

(a) Subject to Section 5(b), the Employment Period will commence on the Effective Date and will continue until, and will end upon, the first anniversary of the Effective Date (the “ Initial Term ”). The Employment Period shall automatically be extended for successive one year terms (each, a “ Renewal Term ”), unless the Company shall have given Executive written notice of non-extension at least ninety (90) calendar days prior to the expiration of the Initial Term or any Renewal Term.
(b) Notwithstanding Section 5(a), the Employment Period will end upon the first to occur of any of the following events: (i) Executive’s death; (ii) the Company’s termination of Executive’s employment on account of Disability; (iii) the Company’s termination of Executive’s employment for Cause (a “ Termination for Cause ”); (iv) the Company’s termination of Executive’s employment (a) without Cause or (b) upon expiration of the Employment Period solely as a result of the Company’s non-renewal as provided in Section 5(a) (each, a “ Termination without Cause ”); (v) Executive’s termination of Executive’s employment for Good Reason (a “ Termination for Good Reason ”); (vi) Executive’s termination of Executive’s employment at any time for any reason other than Good Reason (a “ Voluntary Termination ”); or (vii) a Change in Control Termination.
(c) Any termination of Executive’s employment under Section 5(b) (other than Section 5(b)(i)) must be communicated by a Notice of Termination delivered by the Company or Executive, as the case may be, to the other party.
(d) Executive will be deemed to have waived any right to a Termination for Good Reason based on the occurrence or existence of a particular event or circumstance constituting Good Reason unless Executive delivers a Notice of Termination within forty-five (45) calendar days after the date Executive first becomes aware of such event or circumstance.
6. Post-Employment Period Payments .

(a) Except as otherwise provided in Section 6(c) below, at the Date of Termination, Executive will be entitled to (i) any Base Salary that has accrued but is unpaid, any annual bonus that has been earned for the fiscal year prior to the year in which the Date of Termination occurs, but is unpaid, any reimbursable expenses that

3

have been incurred but are unpaid, and any unexpired vacation days that have accrued under the Company’s vacation policy but are unused, as of the end of the Employment Period, which amount shall be paid in a lump sum in cash within thirty (30) calendar days of the Date of Termination, in accordance with the Reimbursement Rules, where applicable, (ii) any plan benefits accrued before the termination plus the coverage described in Section 4(g)(ii) plus any benefits that by their terms extend beyond termination of Executive’s employment (but only to the extent provided in any such benefit plan in which Executive has participated as a Company employee and excluding, except as hereinafter provided in Section 6, any Company severance pay program or policy) and (iii) any benefits to which Executive is entitled in accordance with Part 6 of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ COBRA ”). Except as specifically described in this Section 6(a) and in the succeeding subsections of this Section 6 (under the circumstances described in those succeeding subsections), from and after the Date of Termination, Executive shall cease to have any rights to salary, bonus, expense reimbursements or other benefits from the Company, BHI or any of their subsidiaries or affiliates.
(b) If Executive’s employment terminates on account of Executive’s death, Disability, Voluntary Termination, or Termination for Cause in accordance with Section 5(a), the Company will provide no further benefit and make no further payments to Executive except as contemplated in Section 6(a).
(c) If Executive’s employment terminates on account of a Termination without Cause or a Termination for Good Reason, neither of which qualifies as a Change in Control Termination, subject to Section 6(e) below, Executive shall in addition to the benefits and payments described in Section 6(a) be entitled to the following:
(i) a payment equal to one (1) times the Executive’s annual Base Salary in effect immediately prior to the Date of Termination (the “ Severance Amount ”). Subject to delay if required under Section 11(a), the Severance Amount shall be paid in a lump sum no later than ten (10) business days after the Date of Termination;
(ii) a pro-rata portion of Executive’s annual bonus as set forth in Section 4(c)(i) for the performance year in which Executive’s termination occurs (the “ Pro-Rata Bonus Amount ”). The Pro-Rata Bonus Amount shall be determined by multiplying the amount Executive would have received based upon performance had employment continued through the end of the performance year and the performance criteria had been achieved at target by a fraction, the numerator of which is the number of days Executive was employed by the Company during the performance year and the denominator of which is the total number of days in the performance year. Subject to delay if required under Section 11(a), the Pro-Rata Bonus Amount shall be paid in a lump sum no later than ten (10) business days after the Date of Termination;
(iii) all unvested time-vested restricted stock grants shall automatically vest and become non-forfeitable as of the date the Release Agreement becomes irrevocable;
(iv) notwithstanding anything to the contrary in any award agreement or plan, all unvested performance-vested performance share or performance-vested restricted stock grants shall continue to vest and become non-forfeitable based on the actual performance of the Company, in the same manner and at the same time as if Executive remained employed by the Company;
(v) continued participation in the Company’s medical and dental plans, on the same basis as active employees participate in such plans, until the earlier of (1) Executive’s eligibility for any such coverage under another employer’s medical or dental insurance plans or (2) the date that is one (1) year after the Date of Termination; except that in the event that participation in any such plan is barred, the Company shall reimburse Executive on a monthly basis in accordance with the Reimbursement Rules for any premiums paid by Executive to obtain benefits (for Executive and his dependents) equivalent to the benefits he is entitled to receive under the Company’s benefit plans. Executive agrees that the period of coverage under such plans (or the period of reimbursement if participation is barred) shall count against the plans’ obligation to provide continuation coverage pursuant to COBRA; and
(vi) to the extent not theretofore paid or provided, any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or

4

contract or agreement of the Company (such other amounts and benefits shall be hereinafter referred to as the “ Other Benefits ”).
(d) If Executive’s employment is terminated on account of a Change in Control Termination, subject to Section 6(e) below, Executive shall be entitled to the payments and benefits described in Section 6(c) except that:

(i) the payment called for in Section 6(c)(i) shall be equal to two (2) times the Executive’s annual Base Salary in effect immediately prior to the Date of Termination;
(ii) the time period described in Section 6(c)(v) shall be eighteen (18) months instead of one (1) year; and
(iii) notwithstanding anything to the contrary in any equity award agreement or plan, all unvested time-vested awards (whether to be settled in cash or stock) shall automatically vest and become non-forfeitable as of the date the Release Agreement becomes irrevocable.
(e) The Company shall have no obligation to make any of the payments, or deliver any of the benefits, in accordance with Section 6(c) (other than clause (vi) therein) or Section 6(d) if Executive declines to sign and return a Release Agreement, or revokes the Release Agreement or the Release Agreement does not become effective, within the sixty (60) calendar days after the Date of Termination. Notwithstanding any other provision of this Agreement, any payments to be made, or benefits to be delivered, under this Agreement (other than the payments required to be made by the Company pursuant to Sections 6(a) and 6(c)(vi)) prior to Executive’s execution of the Release Agreement and the expiration of the applicable revocation period, without Executive having elected to revoke same, within the 60-day period after the Date of Termination, shall be accumulated and paid in a lump sum or delivered after Executive’s execution of the Release Agreement and the expiration of the applicable revocation period, without Executive having elected to revoke same, on the sixtieth (60 th ) day after the Date of Termination (except that, if such 60-day period spans more than one (1) calendar year, and the payments or benefits constitute deferred compensation subject to Section 409A, the payments shall be paid, and the benefits delivered, in the subsequent calendar year).

(f) Executive is not required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise.

7.     Competitive Activity; Confidentiality; Non-solicitation .
(a) Confidential Information and Trade Secrets .

(i) The Executive shall hold in a fiduciary capacity for the benefit of the Company Group all Confidential Information and Trade Secrets. During his employment and for a period of two (2) years following the termination of the Executive’s employment for any reason, the Executive shall not, without the prior written consent of the Company or BHI or as may otherwise be required by law or legal process, use, communicate or divulge Confidential information other than as necessary to perform his duties for the Company; provided, however, that if the Confidential Information is deemed a trade secret under Georgia law, then the period for nondisclosure shall continue for the applicable period under Georgia Trade Secret laws in effect at the time of Executive’s termination. In addition, except as necessary to perform his duties for the Company, during Executive’s employment and thereafter for the applicable period under the Georgia Trade Secret laws in effect at the time of Executive’s termination, Executive will not, directly or indirectly, transmit or disclose any Trade Secrets to any person or entity, and will not, directly or indirectly, make use of any Trade Secrets, for himself or any other person or entity, without the express written consent of the Company. This provision will apply for so long as a particular Trade Secret retains its status as a trade secret under applicable law. The protection afforded to Trade Secrets and/or Confidential Information by this Agreement is not intended by the parties hereto to limit, and is intended to be in addition to, any protection provided to any such information under any applicable federal, state or local law. Pursuant to the Defend Trade Secrets Act of 2016, Executive understands that: (i) An individual may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (1) in confidence to a federal, state, or local government official,

5

either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding; and (ii) f urther, an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the employer's trade secrets to the attorney and use the trade secret information in the court proceeding if the individual: (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order.
(ii) All files, records, documents, drawings, specifications, data, computer programs, customer or vendor lists, specific customer or vendor information, marketing techniques, business strategies, contract terms, pricing terms, discounts and management compensation of the Company, BHI or any of their respective subsidiaries and affiliates, whether prepared by the Executive or otherwise coming into the Executive’s possession, shall remain the exclusive property of the Company, BHI or any of their respective subsidiaries and affiliates, and the Executive shall not remove any such items from the premises of the Company, BHI or any of their respective subsidiaries and affiliates, except in furtherance of the Executive’s duties.
(iii) It is understood that while employed by the Company, the Executive will promptly disclose to the Company in writing, and assign to the Company the Executive’s interest in any invention, improvement, copyrightable material or discovery made or conceived by the Executive, either alone or jointly with others, which arises out of the Executive’s employment (“ Executive Invention ”). At the Company’s request and expense, the Executive will reasonably assist the Company, BHI or any of their respective subsidiaries and affiliates during the period of the Executive’s employment by the Company and thereafter in connection with any controversy or legal proceeding relating to an Executive Invention and in obtaining domestic and foreign patent or other protection covering an Executive Invention. As a matter of record, Executive hereby states that he has provided below a list of all unpatented inventions in which Executive owns all or partial interest. Executive agrees not to assert any right against the Company, BHI or any of their respective subsidiaries and affiliates with respect to any invention which is not patented or which is not listed.
(iv) As requested by the Company and at the Company’s expense, from time to time and upon the termination of the Executive’s employment with the Company for any reason, the Executive will promptly deliver to the Company, BHI or any of their respective subsidiaries and affiliates all copies and embodiments, in whatever form, of all Confidential Information in the Executive’s possession or within his control (including, but not limited to, memoranda, records, notes, plans, photographs, manuals, notebooks, documentation, program listings, flow charts, magnetic media, disks, diskettes, tapes and all other materials containing any Confidential Information) irrespective of the location or form of such material. If requested by the Company, the Executive will provide the Company with written confirmation that all such materials have been delivered to the Company as provided herein.
(v) This Section 7(a) is not intended to restrict or limit any of the protected rights contained in Section 20 of this Agreement in any way.
(b) Non-Solicitation of Protected Customers . Executive understands and agrees that the relationship between the Company Group and each of its Protected Customers constitutes a valuable asset of the Company Group and may not be converted to Executive’s own use. Executive hereby agrees that, during his employment with the Company and for a period of one (1) year following the termination of the Executive’s employment for any reason, the Executive shall not, directly or indirectly, on Executive’s own behalf or as a Principal or Representative of any other Person, solicit, divert, take away, or attempt to solicit, divert, or take away a Protected Customer with which the Executive had contact while employed with the Company for the purpose of marketing, selling or providing to the Protected Customer any goods or services substantially similar to the goods or services provided by the Company Group.
(c) Non-Solicitation of Employees . Executive understands and agrees that the relationship between the Company Group and each of its Protected Employees constitutes a valuable asset of the Company Group and may not be converted to Executive’s own use. Executive hereby agrees that, during his employment and for a period of two (2) years following the termination of Executive’s employment for any reason, the Executive shall not, directly or indirectly, on Executive’s own behalf or as a Principal or Representative of any other Person, solicit or induce, or

6

attempt to solicit or induce, any Protected Employee to terminate his employment with the Company Group or, for a period of no more than six (6) months after the Protected Employee is no longer employed by any member of the Company Group, to enter into employment with any other Person that is in competition with the Company Group.
(d) Non-Competition . During Executive’s employment and, if the Executive is terminated pursuant to Sections 6(c) or 6(d) or in the event of Executive’s Voluntary Termination, for a period of one (1) year following the termination of the Executive’s employment (the “Restricted Period”), Executive shall not render services substantially the same as the services rendered by Executive to the Company Group to any Person that engages in or owns, invests in any material respect, operates, manages or controls any venture or enterprise which substantially engages or proposes to substantially engage in Competitive Services in the Restricted Territory. Notwithstanding the foregoing, (i) nothing in this Agreement shall be deemed to prohibit the ownership by Executive of not more than five percent (5%) of any class of securities of any corporation having a class of securities registered pursuant to the Securities Exchange Act of 1934, as amended, and (ii) nothing in this Agreement shall be deemed to prohibit the provision of legal services by Executive to any Person in Executive’s capacity as a lawyer.
(e) Remedies: Specific Performance . The parties acknowledge and agree that the Executive’s breach of any of the restrictions set forth in this Section 7 will result in irreparable and continuing damage to the Company Group for which there may be no adequate remedy at law. The parties further agree and acknowledge that the Company, and each member of the Company Group, as applicable, shall be entitled to equitable relief, including specific performance and injunctive relief, as a remedy for any such breach and shall not be required to post bond in connection with obtaining such relief. Such equitable remedies shall be in addition to any and all remedies, including damages, available to the Company, or any member of the Company Group, as applicable, for such breaches by Executive. In addition, without limiting any of the foregoing remedies, and except as otherwise required by law, Executive shall not be entitled to any payments set forth in Section 6 hereof and shall be obligated to repay to the Company the after tax amount of any payments previously made pursuant to Section 6 hereof if Executive commits a Material Breach of any of the covenants set forth in this Section 7 and fails to remedy or cure such Material Breach within fifteen (15) business days after his receipt of written notice thereof from the Company. Subject to and without waiver of Executive’s other rights and remedies, if BHI or the Company or any other member of the Company Group breaches its obligations to Executive under Section 4 or Section 6 or the covenant set forth in Section 7(h), the other covenants set forth in this Section 7 shall have no further force or effect.
(f) Communication of Contents of Agreement . During Executive’s employment and for one (1) year thereafter, Executive will communicate his obligations under this Section 7 to any person, firm, association, partnership, corporation or other entity with which Executive accepts employment or is considering an offer of employment.
(g) No Limitation .     The Company’s rights under this Section 7 are in addition to, and not in lieu of, all other rights the Company may have at law or in equity to protect its confidential information, trade secrets and other proprietary interests.
(h) Non-Disparagement . No member of the Company Group or any of their officers or directors shall disparage in any form or respect Executive.
8.     Definitions .
(a)    “ Cause ” means:

(i) Executive’s Material Breach of the duties and responsibilities of Executive or of any provision of this Agreement, provided, however , that Executive’s engagement in activities prohibited by Section 7 shall constitute Cause regardless of whether such engagement constitutes a Material Breach;
(ii) Executive’s (x) conviction of a felony or (y) conviction of any misdemeanor involving willful misconduct (other than minor violations such as traffic violations) if such misdemeanor causes material damage to the property, business, or reputation of BHI or the Company or their respective subsidiaries and affiliates;

7

(iii) acts of dishonesty by Executive resulting or intending to result in personal gain or enrichment at the expense of the Company, BHI or their respective subsidiaries and affiliates;
(iv) conduct by Executive in connection with his duties hereunder that is fraudulent, unlawful, or willful, and is also materially injurious to the Company, BHI, or their respective subsidiaries and affiliates;
(v) Executive’s failure to cooperate fully, or failure to direct the persons subject to Executive’s management or direction to cooperate fully, with all corporate investigations or independent investigations by the Company, BHI or the BHI Board of Directors, all governmental investigations of the Company or its subsidiaries and affiliates, and all orders involving Executive or the Company (or its subsidiaries and affiliates) entered by a court of competent jurisdiction; or
(vi) Executive’s material violation of BHI’s Code of Conduct (including as applicable to executive officers), or any successor codes, all as provided in writing to Executive.
Notwithstanding the foregoing, no termination of the Executive’s employment shall be for Cause until (A) there shall have been delivered to the Executive a copy of a written notice setting forth the basis for such termination in reasonable detail (the “Cause Notice”) no later than forty-five (45) days after the Company first becomes aware of the facts allegedly constituting Cause, and (B) the Executive shall have been provided an opportunity to be heard in person by BHI’s Board of Directors (with the assistance of the Executive’s counsel if the Executive so desires) following receipt of the Cause Notice. No act, or failure to act, on the Executive’s part shall be considered “willful” unless the Executive has acted or failed to act with a lack of good faith and with a lack of reasonable belief that the Executive’s action or failure to act was in the best interests of the Company, BHI, or their respective subsidiaries and affiliates. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by BHI’s Board of Directors or the Board of Directors of the Company or based upon the advice of counsel for BHI or the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of BHI and the Company. Any termination of the Executive’s employment by BHI or the Company under this Agreement shall be deemed to be a termination other than for Cause unless it meets all requirements of this Section 8(a). The Company may not rely on any evidence allegedly supporting “Cause” unless such evidence is disclosed to Executive in the Cause Notice. In addition, if a court of competent jurisdiction later determines that the reason(s) set forth by the Company in the Cause Notice are improper or otherwise do not meet the definition of Cause set forth in this Section 8(a), the damages to which Executive will be entitled shall be equal to the amounts that would have been paid to Executive had Executive been terminated by the Company without Cause, plus reasonable attorneys’ fees, costs, expenses, and prejudgment interest; provided, however, if a court of competent jurisdiction determines that the reason(s) set forth by the Company in the Cause Notice are proper or otherwise meet the definition of Cause set forth in this Section 8(a), Executive shall reimburse the Company for reasonable attorneys’ fees, costs and expenses incurred by the Company in connection with such lawsuit. Finally, Executive shall have thirty (30) calendar days following receipt of the Cause Notice to address and “cure” any act or omission which might provide the basis for a termination for “Cause” and, if cured within such 30-day period, such acts or omissions shall not provide the basis for a termination for “Cause”. Notwithstanding anything in this Section 8(a) to the contrary, in the event the Company is precluded from providing the Cause Notice due to applicable law or regulation, or an ongoing internal investigation that would be compromised by providing the Cause Notice, the Company shall provide the Cause Notice within ten (10) business days after such impediment to providing the Cause Notice no longer exists.
(b)    “ Change in Control ” means any of the following events:

(i) The acquisition by any individual, entity, or group (a “Person”), including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of twenty percent (20%) or more of either: (i) the then outstanding shares of common stock of BHI (the “Outstanding BHI Common Stock”), or (ii) the combined voting power of the then outstanding securities of BHI entitled to vote generally in the election of directors (the “Outstanding BHI Voting Securities”); excluding, however, the following: (A) any acquisition directly from BHI (excluding any acquisition resulting from the exercise of an exercise, conversion, or exchange privilege unless the security being so exercised, converted, or exchanged was acquired directly from BHI); (B) any acquisition by BHI; (C) any acquisition

8

by an employee benefit plan (or related trust) sponsored or maintained by BHI or any corporation controlled by BHI; or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (x), (y), and (z) of Section 8(b)(iii); provided, however, that no Change in Control shall be deemed to occur if Cerberus Capital Management, L.P. or any of its affiliates continues to own a larger voting interest than any such Person;
(ii) Individuals who, as of the Effective Date, constitute the Board of Directors of BHI (the “Incumbent Board”) cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of BHI subsequent to the Effective Date whose election, or nomination for election by BHI’ s stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of BHI as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board of Directors of BHI shall not be deemed a member of the Incumbent Board;
(iii) Consummation of a reorganization, merger, or consolidation of BHI or sale or other disposition of all or substantially all of the assets of BHI (a “Corporate Transaction”); excluding, however, a Corporate Transaction pursuant to which: (x) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding BHI Stock and the Outstanding BHI Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than sixty percent (60%) of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns BHI or all or substantially all of BHI’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding BHI Common Stock and the Outstanding BHI Voting Securities, as the case may be; (y) no Person (other than BHI; any employee benefit plan (or related trust) sponsored or maintained by BHI or any corporation controlled by BHI; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, thirty percent (30%) or more of the Outstanding BHI Common Stock or the Outstanding BHI Voting Securities, as the case may be) will beneficially own, directly or indirectly, thirty percent (30%) or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors; and (z) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or
(iv) Approval by the stockholders of BHI of a plan of complete liquidation or dissolution of BHI.
(c)    “ Change in Control Termination ” means termination of Executive’s employment by the Company as a result of a Termination without Cause or by Executive as a result of a Termination for Good Reason either within (i) twenty-four (24) calendar months following a Change in Control or (ii) prior to a Change in Control if Executive’s termination was either a condition of the Change in Control or was at the request or insistence of a Person (other than BHI or the Company) related to the Change in Control.
(d)    “ Code ” means the Internal Revenue Code of 1986, as amended.
(e)    “ Company Group ” means the Company, BHI, and each of their respective wholly-owned subsidiaries and affiliates.
(f)    “ Competitive Services ” means selling, marketing or distributing products and/or services through distribution that are substantially similar to any of those sold, marketed, distributed, furnished or supplied by the Company during the term of Executive’s employment with the Company.

9

(g)    “ Confidential Information ” means knowledge or data relating to the Company Group that is not generally known to persons not employed or otherwise engaged by the Company Group, is not generally disclosed by the Company Group, and is the subject of reasonable efforts to keep it confidential. Confidential Information includes, but is not limited to, information regarding product or service cost or pricing, information regarding personnel allocation or organizational structure, information regarding the business operations or financial performance of the Company Group, sales and marketing plans, and strategic initiatives (independent or collaborative), information regarding existing or proposed methods of operation, current and future development and expansion or contraction plans, sale/acquisition plans and non-public information concerning the legal or financial affairs of the Company Group. Confidential Information does not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of the Company Group. This definition is not intended to limit any definition of confidential information or any equivalent term under applicable federal, state or local law.
(h)    “ Date of Termination ” means (i) if Executive’s employment is terminated by the Company for Disability, thirty (30) calendar days after the Company gives Notice of Termination to Executive (provided that Executive has not returned to the performance of Executive’s duties on a full-time basis during this 30-day period), (ii) if Executive’s employment is terminated by Executive for Good Reason, the date specified in the Notice of Termination (but in no event prior to thirty (30) calendar days following the delivery of the Notice of Termination or more than sixty (60) calendar days following the delivery of the Notice of Termination), (iii) if Executive’s employment is terminated by Executive for any reason other than Good Reason, the date on which a Notice of Termination is given to the Company; and (iv) if Executive’s employment is terminated by the Company for any other reason, the date on which a Notice of Termination is given (except as a result of non-renewal by the Company as provided in Section 5(a), in which event the Date of Termination will be the date of the expiration of the Initial Term or the Renewal Term, as applicable). A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits subject to Section 409A of the Code (“Section 409A”) upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A.
(i)    “ Disability ” means the determination (1) by the Company, in accordance with applicable law, based on information provided by a physician selected by the Company or its insurers and reasonably acceptable to Executive or Executive’s legal representative that, as a result of a physical or mental injury or illness, Executive has been unable to perform the essential functions of his job with or without reasonable accommodation for a period of (i) ninety (90) consecutive calendar days or (ii) one hundred eighty (180) calendar days in any one-year period and (2) that Executive is currently eligible to receive long-term disability benefits under the long-term disability plan maintained by BHI or the Company in which Executive is a participant. Notwithstanding the foregoing, in the event that as a result of absence because of mental or physical incapacity the Executive incurs a “separation from service” within the meaning of the term under Section 409A, the Executive shall on such date automatically be terminated from employment because of Disability.
(j)    “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
(k)    “ Good Reason ” means, without the consent of Executive, (A) any material diminution in Executive’s authority, duties or responsibilities that is caused by the Company; (B) a material reduction by the Company of Executive’s Base Salary or the target bonus percentage as set forth in Section 4(c)(i) herein; (C) the Company’s requiring Executive to be based at any office or location which is a material change in geographic location from the Principal Office as described in Section 3(d); or (D) any material violation or non-performance by BHI or the Company of the terms of this Agreement.  Notwithstanding the foregoing, “Good Reason” shall not be deemed to exist for purposes of (A) through (D) if the event or circumstance that constitutes “Good Reason” is rescinded or remedied by BHI or the Company to the reasonable satisfaction of Executive within thirty (30) days after receipt of a Notice of Termination.
(l)    “ Material Breach ” means an intentional act or omission by Executive which constitutes substantial non-performance of Executive’s obligations under this Agreement and causes material damage to the Company.

10

(m)    “ Notice of Termination ” means a written notice that indicates those specific termination provisions in this Agreement relied upon and that sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated. For purposes of this Agreement, no purported termination by either party is to be effective without a Notice of Termination.
(n)    “ Person ” means: any individual or any corporation, partnership, joint venture, limited liability company, association or other entity or enterprise.
(o)    “ Principal or Representative ” means a principal, owner, partner, shareholder, joint venturer, investor, member, trustee, director, officer, manager, employee, agent, representative or consultant.
(p)    “ Protected Customers ” means any then-existing customer to whom the Company Group sold its products or services at any time during Executive’s employment and with respect to whom Executive either (i) had business dealings on behalf of the Company Group; or (ii) supervised or coordinated the dealings between the Company Group and the customer.
(q)    “ Protected Employees ” means any employee of the Company Group who was employed during Executive’s employment and with whom Executive either (i) had a supervisory relationship; or (ii) worked or communicated on a regular basis regarding the Company Group’s business.
(r)    “ Reimbursement Rules ” means the requirement that any amount of expenses eligible for reimbursement under this Agreement be made (i) in accordance with the reimbursement payment date set forth in the applicable provision of the Agreement providing for the reimbursement or (ii) where the applicable provision does not provide for a reimbursement date, thirty (30) calendar days following the date on which Executive incurs the expense, but, in each case, no later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that in no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit.
(s)    “ Release Agreement ” means an agreement, substantially in the form attached hereto as Exhibit B , pursuant to which Executive releases all current or future claims, known or unknown, arising on or before the date of the release against the Company, its subsidiaries and affiliates and its officers.
(t)    “ Restricted Territory ” means continental United States of America.
(u)    “ Trade Secrets ” means all secret, proprietary or confidential information regarding the Company, BHI or any of their respective subsidiaries and affiliates or that meets the definition of “trade secrets” within the meaning set forth in O.C.G.A. § 10-1-761.
9. Executive Representations . Executive represents to the Company that (a) the execution, delivery and performance of this Agreement by Executive does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which Executive is bound and (b) upon the execution and delivery of this Agreement by the Company, this Agreement will be the valid and binding obligation of Executive, enforceable in accordance with its terms.
10. Withholding of Taxes . The Company shall withhold from any amounts payable under this Agreement all federal, state, city or other taxes that the Company is required to withhold under any applicable law, regulation or ruling.
11. Section 409A .
(a) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of Section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service (within the meaning of Section 409A) and if any portion of the

11

payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under Section 409A (that does not qualify for an exemption from Section 409A), any such deferred compensation amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “ Delayed Payments ”) and any such benefits that would be deferred compensation and that would otherwise be provided pursuant to this Agreement (the “ Delayed Benefits ”) during the six-month period immediately following the Executive’s separation from service (such period, the “ Delay Period ”) shall instead be paid or made available on the earlier of (i) the first business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “ Permissible Payment Date ”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits in accordance with the Reimbursement Rules (the “ Additional Delayed Payments ”).
(b) With respect to any amount of expenses eligible for reimbursement under Section 6(a), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit.
(c) Each payment under this Agreement shall be considered a “separate payment” and not of a series of payments for purposes of Section 409A.
(d) Any Delayed Payments shall bear interest at the United States 5-year Treasury Rate plus 2%, which accumulated interest shall be paid to the Executive on the Permissible Payment Date.
12. Excess Parachute Payments .
(a) In the event that it shall be determined, based upon the advice of the independent public accountants for BHI or the Company (the “ Accountants ”), that any payment, benefit or distribution by the Company, BHI or any of their respective subsidiaries or affiliates (a “ Payment ”) constitute “parachute payments” under Section 280G(b)(2) of the Code, as amended, then, if the aggregate present value of all such Payments (collectively, the “ Parachute Amount ”) exceeds 2.99 times the Executive’s “base amount”, as defined in Section 280G(h)(3) of the Code (the “Executive Base Amount”), the amounts constituting “parachute payments” which would otherwise be payable to or for the benefit of Executive shall be reduced to the extent necessary so that the Parachute Amount is equal to 2.99 times the Executive Base Amount (the “Reduced Amount”); provided that such amounts shall not be so reduced if the Executive determines, based upon the advice of the Accountants, that without such reduction Executive would be entitled to receive and retain, on a net after tax basis (including, without limitation, any excise taxes payable under Section 4999 of the Code), an amount which is greater than the amount, on a net after tax basis, that the Executive would be entitled to retain upon his receipt of the Reduced Amount.
(b) If the determination made pursuant to clause (a) of this Section 12 results in a reduction of the payments that would otherwise be paid to Executive except for the application of clause (a) of this Section 12, each particular entitlement of Executive shall be eliminated or reduced as follows: (i) first all cash payments, pro rata; and then (ii) all remaining benefits, pro rata. Within any of these categories, a reduction shall occur first with respect to amounts that are not deemed to constitute a “deferral of compensation” within the meaning of and subject to Code Section 409A (“ Nonqualified Deferred Compensation ”) and then with respect to amounts that are treated as Nonqualified Deferred Compensation, with such reduction being applied in each case to the payments in the reverse order in which they would otherwise be made, that is, later payments shall be reduced before earlier payments.
(c) As a result of the uncertainty in the application of Section 280G of the Code at the time of a determination hereunder, it is possible that payments will be made by the Company which should not have been made under clause (a) of this Section 12 (“ Overpayment ”) or that additional payments which are not made by the Company

12

pursuant to clause (a) of this Section 12 should have been made (“ Underpayment ”). In the event that there is a final determination by the Internal Revenue Service, or a final determination by a court of competent jurisdiction, that an Overpayment has been made and that repayment will eliminate any excise tax otherwise due under Section 4999 of the Code, any such Overpayment shall be repaid by Executive to the Company together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code. In the event that there is a final determination by the Internal Revenue Service, a final determination by a court of competent jurisdiction or a change in the provisions of the Code or regulations pursuant to which an Underpayment arises, any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive, together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code.
13. Successors and Assigns . This Agreement is to bind and inure to the benefit of and be enforceable by Executive, the Company and their respective heirs, executors, personal representatives, successors and assigns, except that neither party may assign any rights or delegate any obligations hereunder without the prior written consent of the other party. Executive hereby consents to the assignment by the Company of all of its rights and obligations under this Agreement to any successor to the Company by merger or consolidation or purchase of all or substantially all of the Company’s assets, provided that the transferee or successor assumes the Company’s liabilities under this Agreement by agreement in form and substance reasonably satisfactory to Executive.
14. Survival . Subject to any limits on applicability contained therein, Section 7 will survive and continue in full force in accordance with its terms notwithstanding any termination of the Employment Period.
15. Choice of Law . This Agreement is to be governed by the internal law, and not the laws of conflicts, of the State of Georgia.
16. Severability . Whenever possible, each provision of this Agreement is to be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, that invalidity, illegality or unenforceability is not to affect any other provision or any other jurisdiction, and this Agreement is to be reformed, construed and enforced in the jurisdiction as if the invalid, illegal or unenforceable provision had never been contained herein.
17. Notices . Any notice provided for in this Agreement is to be in writing and is to be either personally delivered, sent by reputable overnight carrier or mailed by first class mail, return receipt requested, to the recipient at the address indicated as follows:
Notices to Executive:
To the address listed in the personnel records of the Company.
Notices to the Company:
BlueLinx Corporation
4300 Wildwood Parkway
Atlanta, Georgia 30339
Attention: Legal Department
Facsimile: (770) 953-7008
or any other address or to the attention of any other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement is to be deemed to have been given when so delivered, sent or mailed.
18. Amendment and Waiver . The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement is to affect the validity, binding effect or enforceability of this Agreement.

13

19. Complete Agreement . This Agreement embodies the complete agreement and understanding between the parties with respect to the subject matter hereof and effective as of its date supersedes and preempts any prior understandings, agreements or representations by or between the parties, written or oral, that may have related to the subject matter hereof in any way, including, but not limited to, any prior agreements with respect to Executive’s employment or termination of employment with the Company.
20. Protected Rights . Executive understands that nothing contained in this Agreement limits Executive’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“ Government Agencies ”). Executive further understands that this Agreement does not limit Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agencies, nor does this Agreement impact or limit Executive’s eligibility to receive an award for information provided to any Government Agencies.
21. Counterparts . This Agreement may be executed in separate counterparts, each of which is to be deemed to be an original and all of which taken together are to constitute one and the same agreement.


14


The parties are signing this Agreement as of the date first set forth above, to be effective as of the Effective Date.
BLUELINX CORPORATION

By:     /s/ Mitchell B. Lewis
Name: Mitchell B. Lewis
Title: Chief Executive Officer and President

EXECUTIVE

/s/ Shyam K. Reddy
Shyam K. Reddy
BLUELINX HOLDINGS INC.

By:     /s/ Mitchell B. Lewis
Name: Mitchell B. Lewis
Title: Chief Executive Officer and President


LIST OF UNPATENTED INVENTIONS
Executive represents that he has no such inventions by initialing below next to the word “NONE.”
NONE: /s/ SKR


[Signature Page to Employment Agreement]

15

EXHIBIT B
RELEASE
In consideration for the undertakings and promises set forth in that certain Employment Agreement, dated as of __________, 2017 (the “Agreement”), between SHYAM K. REDDY (“Executive”) and BLUELINX CORPORATION (“Company”), Executive (on behalf of himself and his heirs, assigns and successors in interest) unconditionally releases, discharges, and holds harmless Company and its parent, current and former subsidiaries and affiliates and their respective current and former officers, directors, employees, agents, insurers, assigns and successors in interest (collectively, “ Releasees ”) from each and every claim, cause of action, right, liability or demand of any kind and nature, and from any claims which may be derived therefrom (collectively “Released Claims”), that Executive had, has, or might claim to have against Releasees based upon facts occurring up to the time Executive executes this Release, whether presently known or unknown to Executive, including, without limitation, any and all claims listed below, other than any such claims Executive has or might have under the Agreement:
(a) arising from or in connection with Executive’s employment, pay, bonuses, vacation or any other Executive benefits, and other terms and conditions of employment or employment practices of Company;
(b) arising out of or relating to the termination of Executive’s employment with Company or the surrounding circumstances thereof;
(c) based on discrimination and/or harassment on the basis of race, color, religion, sex, national origin, handicap, disability, age or any other category protected by law under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, Executive Order 11246, 42 USC § 1981, the Equal Pay Act, the Age Discrimination in Employment Act, the Older Workers Benefits Protection Act, the Equal Pay Act, the Americans With Disabilities Act, the Rehabilitation Act of 1973, C.O.B.R.A. (as any of these laws may have been amended) or any other similar labor, employment or anti-discrimination law under state, federal or local law;
(d) based on any contract, tort, whistleblower, personal injury wrongful discharge theory or other common law theory; or
(e) arising under the Agreement or any other written or oral agreements between Executive and Company or any of Company’s subsidiaries (other than the Agreement).
Except as otherwise set forth herein, Executive covenants not to sue or initiate any claims in any forum against any of the Releasees on account of or in relation to any Released Claim, or to incite, assist or encourage other persons or entities to bring claims of any nature whatsoever against Company or Releasees. Executive further covenants not to accept, recover or receive any monetary damages or any other form of relief which may arise out of or in connection with any administrative proceedings which may be filed with or pursued independently by any governmental agency or agencies, whether federal, state or local.
Notwithstanding anything herein to the contrary, the Company and Executive acknowledge
and agree that the above release does not waive any rights or claims that may arise based on facts or events occurring after the date of Executive’s execution of this Agreement, nor does it serve to waive any rights or claims that are precluded from being waived by applicable law.

Protected Rights . Executive understands that nothing contained in this Release limits Executive’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). Executive further understands that this Release does not limit Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents

16

or other information, without notice to the Company.  This Release does not limit Executive’s right to receive an award for information provided to any Government Agencies.

In addition, Executive agrees not to file a lawsuit asserting any claims that are waived in this Release. If Executive files such a lawsuit, Executive shall pay all costs incurred by Releasees (or any of them), including reasonable attorney’s fees, in defending against Executive’s claim, and, as a precondition to filing any such lawsuit, shall return all but $500.00 of the severance benefits or payments Executive has received. The preceding two sentences of this paragraph do not apply if Executive files a charge or lawsuit under the Age Discrimination in Employment Act (“ADEA”) challenging the validity of this Release. However, in the event any such ADEA lawsuit is unsuccessful, a court may order Executive to pay attorney’s fees and/or costs incurred by Releasees (or any of them) where authorized by law. In the event any such ADEA lawsuit is successful, the severance benefits or payments Executive received for signing this Release shall serve as restitution, recoupment, or setoff to any monetary award received by Executive.
Executive hereby acknowledges that Executive has no interest in reinstatement, reemployment or employment with Company or any Releasee, and Executive forever waives any interest in or claim of right to any future employment by Company or any Releasee. Executive further covenants not to apply for future employment with Company or any Releasee, or otherwise seek or encourage reinstatement.
By signing this Release, Executive certifies that:
(a) Executive has carefully read and fully understands the provisions of this Release;
(b) Executive was advised by Company in writing, via this Release, to consult with an attorney before signing this Release;
(c) Executive understands that any discussions he may have had with counsel for Company regarding his employment or this Release does not constitute legal advice to him and that he has retained his own independent counsel to render such advice;
(d) Executive understands that this Agreement FOREVER RELEASES Company and all other Releasees to the extent set forth above, except that Executive is not releasing or waiving any claim under the Age Discrimination in Employment Act that may arise after Executive’s execution of this Release;
(e) In signing this Release, Executive DOES NOT RELY ON AND HAS NOT RELIED ON ANY REPRESENTATION OR STATEMENT (WRITTEN OR ORAL) NOT SPECIFICALLY SET FORTH IN THIS RELEASE OR IN THE AGREEMENT by Company or any other Releasee, or by any of their agents, representatives, or attorneys with regard to the subject matter, basis, or effect of this Agreement or otherwise, and Executive agrees that this Release will be interpreted and enforced in accordance with Georgia law;
(f) Company hereby allows Executive no less than twenty-one (21) days from its initial presentation to Executive to consider this Release before signing it, should Executive so desire; and
(g) Executive agrees to its terms knowingly, voluntarily and without intimidation, coercion or pressure.
Executive may revoke this Release within seven (7) calendar days after signing it. To be effective, such revocation must be received in writing by the General Counsel of Company at the offices of Company at 4300 Wildwood Parkway, Atlanta, Georgia 30339. Revocation can be made by hand delivery or facsimile before the expiration of this seven (7) day period.


17


IN WITNESS WHEREOF , the undersigned has executed this Release as of the date set forth below.
“Executive”

                        
Dated: _______________, 20__




18


EXHIBIT 31.1

 CERTIFICATION REQUIRED BY RULE 13a-14(a) OR RULE 15d-14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934

I, Mitchell B. Lewis, certify that:
 
(1)
I have reviewed this quarterly report on Form 10-Q of BlueLinx Holdings Inc.;
(2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4)
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5)
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
August 10, 2017
/s/ Mitchell B. Lewis
 
Mitchell B. Lewis
 
President and Chief Executive Officer
 




EXHIBIT 31.2

CERTIFICATION REQUIRED BY RULE 13a-14(a) OR RULE 15d-14(a) OF THE SECURITIES
 EXCHANGE ACT OF 1934
 
I, Susan C. O’Farrell, certify that:
 
(1)
I have reviewed this quarterly report on Form 10-Q of BlueLinx Holdings Inc.;
(2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4)
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5)
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
August 10, 2017
/s/ Susan C. O’Farrell 
 
Susan C. O’Farrell
 
Chief Financial Officer and Treasurer
 





EXHIBIT 32.1
 
BLUELINX HOLDINGS INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the quarterly report of BlueLinx Holdings Inc. (the “Company”) on Form 10-Q for the period ending July 1, 2017 , as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), I, Mitchell B. Lewis, Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
August 10, 2017
/s/ Mitchell B. Lewis
 
Mitchell B. Lewis
 
President and Chief Executive Officer
 





EXHIBIT 32.2
 
BLUELINX HOLDINGS INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the quarterly report of BlueLinx Holdings Inc. (the “Company”) on Form 10-Q for the period ending July 1, 2017 , as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), I, Susan C. O’Farrell, Chief Financial Officer and Treasurer of the Company, do hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
August 10, 2017
/s/ Susan C. O’Farrell
 
Susan C. O’Farrell
 
Chief Financial Officer and Treasurer