About Our Business

BlueLinx is a leading wholesale distributor of residential and commercial
building products in the United States. We are a "two-step" distributor.
Two-step distributors purchase products from manufacturers and distribute those
products to dealers and other suppliers in local markets, who then sell those
products to end users. We carry a broad portfolio of both branded and
private-label stock keeping units ("SKUs") across two principal product
categories: specialty products and structural products. Specialty products
include items such as engineered wood, industrial products, cedar, moulding,
siding, metal products, and insulation. Structural products include items such
as lumber, plywood, oriented strand board, rebar, and remesh. We also provide a
wide range of value-added services and solutions aimed at relieving distribution
and logistics challenges for our customers and suppliers, while enhancing their
marketing and inventory management capabilities.

We sell products through three main distribution channels, consisting of
warehouse sales, reload sales, and direct sales. Warehouse sales, which generate
the majority of our sales, are delivered from our warehouses to our customers.
Reload sales are similar to warehouse sales but are shipped from warehouses,
most of which are operated by third-parties, where we store owned products to
enhance operating efficiencies. This channel is employed primarily to service
strategic customers that would be less economical to service from our
warehouses, and to distribute large volumes of imported products from port
facilities. Direct sales are shipped from the manufacturer to the customer
without our taking physical possession of the inventory and, as a result,
typically generate lower margins than our warehouse and reload distribution
channels. This distribution channel, however, requires the lowest amount of
committed capital and fixed costs.

With a strong market position, broad geographic coverage footprint servicing
over 40 states, and the strength of a locally focused sales force, as a two-step
wholesale distributor, we distribute a comprehensive range of products from over
750 suppliers, including some of the leading manufacturers in the industry, such
as Ply Gem, Huber Engineered Woods, Georgia-Pacific, Allura, James Hardie,
Fiberon, Royal, Oldcastle APG, Louisiana-Pacific, and Weyerhaeuser. We supply
products to a broad base of over 15,000 national, regional, and local dealers,
specialty distributors, national home centers, and manufactured housing
customers, many of whom then serve residential and commercial builders and
contractors in their respective geographic areas and local markets.

As a value-added partner in a complex and demanding building products supply
chain, we play a critical role in enabling our customers to offer a broad range
of products and brands, as most of our customers do not have the capability to
purchase and warehouse products directly from manufacturers for such a large set
of SKUs. The depth of our geographic footprint supports meaningful customer
proximity across all the markets in which we operate, enabling faster and more
efficient service. Similarly, we provide value to our supplier partners by
enabling access to the large and fragmented network of lumber yards and dealers
that those suppliers could not adequately serve directly. Our position in this
distribution model for building products provides easy access to the marketplace
for our suppliers and the value proposition of rapid delivery on an as-needed
basis to our customers from our network of warehouse facilities.

Industry Overview

Our products are available across large and attractive end markets, including
residential repair and remodel and residential new construction, which together
account for approximately 85 percent of the end market mix for our addressable
building material market served via two-step distribution based on our
estimates. We also estimate the remaining 15 percent is accounted for by
commercial construction. We believe that there are favorable underlying
fundamental factors that will drive long-term growth across the end markets in
which we operate.

Residential Repair and Remodel

We estimate that residential repair and remodel spending accounts for
approximately 45 percent of the end market mix for our addressable building
material market served via two-step distribution. Repair and remodel sales tend
to be less cyclical than new construction, particularly for exterior products
that are exposed to the elements and where maintenance is less likely to be
deferred. We expect that factors including the total installed base of U.S.
homes, overall age of the U.S. housing stock, rising home prices supporting
increased underlying home equity and availability of consumer capital will drive
continued growth in repair and remodel spending. The Leading Indicator of
Remodeling Activity ("LIRA") projects year-over-year increases in spending on
home improvement projects will peak at 19.7 percent in the third quarter of this
year before sliding downward to 15.1 percent in the first quarter of 2023.

                                       17

--------------------------------------------------------------------------------

According to the U.S. Census Bureau and Department of Housing and Urban
Development, the median home age in the U.S. increased from 23 years in 1985 to
39 years in 2019 and approximately 80 percent of the current housing stock was
built prior to 1999. We believe the increasing average age of the nation's 142
million existing homes will continue to drive demand for repair and remodel
projects. The annual U.S. homes installed base is projected to continue to
increase through 2025, which is positive for both residential repair and remodel
spending as well as for residential construction. We are positioned to
capitalize on this projected growth, as repair and remodel spending drives a
significant portion of our sales.

Increased home improvement spending has also benefited from the COVID-19
pandemic, as homeowners are spending more time at home and are investing more in
their homes as a result. Outdoor and exterior projects make heavy use of outdoor
living products like composite decking and fencing, and other aesthetically
focused exterior products like siding and trim, which are key and growing
product categories for us.

Residential New Construction

We estimate that residential new home construction (including single-family and
multi-family homes) accounts for approximately 40 percent of the end market mix
for our addressable building material market served via two-step distribution.
The pace of housing starts, with which our business is correlated, is driven by
demographic and population shifts, mortgage interest rates (which remain at
historic lows), the ability of builders to obtain skilled labor, and builders'
economic outlook. U.S. single family housing starts peaked in 2005, before
experiencing a downturn through 2011. Since 2011, we have experienced the
continuing recovery of residential new construction, which has translated into
increased demand for the products we sell. Our large footprint, strong customer
relationships, and comprehensive offering of leading products and brands
positions us to capitalize on continued growth in the new housing market.

According to the U.S. Census Bureau and the U.S. Department of Housing and Urban
Development, 2021 single family housing starts in the United States were
approximately 1.6 million, an increase of 16 percent above 2020 housing starts.
We believe there is significant pent-up demand for housing and the market will
see continued growth. The monthly single family residential home supply
continues to remain in line with the 20-year average and significantly below the
peak levels observed in 2008 and 2009. For most of the last decade, housing
production has lagged population growth and household formation and Freddie Mac
estimates that the housing supply at the end of 2020 was 3.8 million units short
of the level needed to match long-term demand. Harvard University's Joint Center
for Housing Studies estimates total annual housing construction through 2028
should be on the order of 1.5 million units, or about 120,000 higher than in
2020. Based on these data points, we believe there are fundamental factors
driving significant opportunity in the residential new home construction
end-market for building products of which we are well positioned to serve.

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 quarters are typically our lower volume quarters due to the
impact of unfavorable weather on the construction market. Our second and third
quarters are typically our higher volume quarters, reflecting an increase in
construction, due to more favorable weather conditions. In past years, assuming
no change in underlying inventory costs, our working capital has increased in
the second and third quarters, reflecting general increases in seasonal demand.

Commodity Markets

Our operating results are sensitive to fluctuations in commodity markets,
specifically commodity markets for wood-based commodities that we classify as
structural products. When prices fluctuate in the commodity markets which impact
us, we may immediately adjust the end price of our products to compensate for
the changes in market prices, which is common for businesses with inventories
impacted by commodity price fluctuations. When we change our prices in response
to market fluctuations, we will often see immediate impacts in our operating
results. When market prices increase, this impact can be beneficial. Conversely,
when market prices decrease, the impact can be negative because we are adjusting
the selling prices for inventory often purchased at higher market prices.
Fluctuations in the commodity markets during the last 18 months have had a
significant impact on our operating results for the periods presented in this
quarterly report, of which we discuss in more detail elsewhere in this report.

Supply Constraints

Our operating results are impacted by the availability of the products we sell
in the markets in which we do business. When our inventory supply is
constrained, our operating results may be impacted by lower sales volumes. While
supply constraints may
                                       18

--------------------------------------------------------------------------------

negatively impact our sales volumes, they may also have a positive impact on our
net sales and overall profitability. This is because supply constraints can
cause prices to increase. Under these circumstances, we may sell less product by
volume, but at a higher price which could have a positive impact on our levels
of sales and profitability. Conversely, rapid changes in supply levels, such as
the sudden increase in availability of a product where the supply was previously
constrained, may have a negative impact on our operating results especially in
situations where the demand does not also increase proportionally with supply
increases.

Our Culture and Management Focus

We remain committed to driving a culture of profitable growth within new and
existing product lines and geographies, while positioning the Company for
long-term value creation. The following initiatives represent key areas of our
management team's focus:

1.Foster a performance-driven culture committed to profitable growth. This
includes enhancing the customer experience; accelerating organic growth within
specific product and solutions offerings where the Company is uniquely
advantaged; and deploying capital to drive sustained margin expansion, grow cash
flow and maintain continued profitable growth.

2.Migrate sales mix toward higher-margin specialty product categories. The
Company intends to pursue a revenue mix increasingly weighted toward
higher-margin, specialty product categories such as engineered wood, moulding,
millwork, decking and industrial products. Additionally, the Company intends to
expand its value-added service offerings designed to simplify complex customer
sourcing requirements, together with marketing, inventory and pricing services
afforded by the Company's national platform.

3.Maintain a disciplined capital structure and pursue high-return investments
that increase the value of the Company. The Company intends to maintain a
disciplined capital structure while at the same time investing in its business
to modernize its trailer fleet and distribution facilities and to improve
operational performance. The Company also continues to evaluate potential
acquisition targets that complement its existing capabilities, grow its
specialty products business, increase customer exposure, expand its geographic
reach, or a combination thereof. We invested $2.5 million in our business during
the first quarter of fiscal 2022 to improve operational performance and
productivity.

Factors That Affect Operating Results

Our results of operations and financial performance are influenced by a variety
of factors, including the following: pricing and product cost variability;
volumes of product sold; competition; changes in the supply and/or demand for
products that we distribute; the cyclical nature of the industry in which we
operate; housing market conditions; consolidation among competitors, suppliers,
and customers; disintermediation risk; loss of products or key suppliers and
manufacturers; our dependence on international suppliers and manufacturers for
certain products; potential acquisitions and the integration and completion of
such acquisitions; business disruptions; effective inventory management relative
to our sales volume or the prices of the products we produce; information
technology security risks and business interruption risks; the ability to
attract, train, and retain highly qualified associates and other key personnel
while controlling related labor costs; exposure to product liability and other
claims and legal proceedings related to our business and the products we
distribute; natural disasters, catastrophes, fire, or other unexpected events;
successful implementation of our strategy; wage increases or work stoppages by
our union employees; costs imposed by federal, state, local, and other
regulations; compliance costs associated with federal, state, and local
environmental protection laws; the COVID-19 pandemic and other contagious
illness outbreaks and their potential effects on our industry; regulations
concerning mandatory COVID-19 vaccines; fluctuations in our operating results;
our level of indebtedness and our ability to incur additional debt to fund
future needs; the covenants of the instruments governing our indebtedness
limiting the discretion of our management in operating the business; variable
interest rate risk under certain indebtedness; the fact that we have consummated
certain sale leaseback transactions with resulting long-term non-cancelable
leases, many of which are or will be finance leases; the fact that we lease many
of our distribution centers, and we would still be obligated under these leases
even if we close a leased distribution center; inability to raise funds
necessary to finance a required repurchase of our senior secured notes;
inability to successfully execute the ASR; a lowering or withdrawal of debt
ratings; changes in our product mix; increases in petroleum prices; shareholder
activism; changes in insurance-related deductible/retention reserves based on
actual loss experience; the possibility that the value of our deferred tax
assets could become impaired; changes in our expected annual effective tax rate
could be volatile; changes in actuarial assumptions for our pension plan; the
costs and liabilities related to our participation in multi-employer pension
plans could increase; the risk that our cash flows and capital resources may be
insufficient to service our existing or future indebtedness; the possibility
that we could be the subject of securities class action litigation due to stock
price volatility; activities of activist shareholders; indebtedness terms that
limit our ability to pay dividends on common stock; and changes in, or
interpretation of, accounting principles.

                                       19

--------------------------------------------------------------------------------

Results of Operations

The following table sets forth our results of operations for the first quarter of fiscal 2022 and fiscal 2021:

                                                                      % of                                        % of
                                          First Quarter of            Net             First Quarter of            Net
                                            Fiscal 2022              Sales              Fiscal 2021              Sales
                                           (In thousands)                              (In thousands)
Net sales                                 $   1,302,305              100.0%           $   1,025,469              100.0%

Gross profit                                    291,051              22.3%                  180,392              17.6%
Selling, general, and administrative             91,289               7.0%                   75,560               7.4%
Depreciation and amortization                     6,746               0.5%                    7,465               0.7%
Amortization of deferred gains on real
estate                                             (984)             (0.1)%                    (984)             (0.1)%
Gains from sales of property                          -               0.0%                   (1,287)             (0.1)%
Other operating expenses                            838               0.1%                      112                -%
Operating income                                193,162              14.8%                   99,526               9.7%
Interest expense, net                            11,293               0.9%                   16,234               1.6%
Other expense (income), net                       1,138               0.1%                     (314)             (0.0)%
Income before provision for income taxes        180,731              13.9%                   83,606               8.2%
Provision for income taxes                       47,322               3.6%                   21,746               2.1%
Net income                                $     133,409              10.2%            $      61,860               6.0%

The following table sets forth net sales by product category for the three-month periods ending April 2, 2022, and April 3, 2021:

                                          Three Months Ended
                              April 2, 2022                April 3, 2021
Net sales by category                      ($ in thousands)
Specialty products      $    767,907        59  %    $    563,060        55  %
Structural products          534,398        41  %         462,409        45  %
Net sales               $  1,302,305       100  %    $  1,025,469       100  %

The following table sets forth gross profit and gross margin percentages by product category for the three-month periods of fiscal 2022 and 2021:

                                                Three Months Ended
                                        April 2, 2022       April 3, 2021
Gross profit $ by category                       ($ in thousands)
Specialty products                     $     184,099       $     108,535
Structural products                          106,952              71,857
Gross profit                           $     291,051       $     180,392
Gross margin percentage by category
Specialty products                              24.0  %             19.3  %
Structural products                             20.0  %             15.5  %
Total gross margin %                            22.3  %             17.6  %



                                       20

--------------------------------------------------------------------------------

First Quarter of Fiscal 2022 Compared to First Quarter of Fiscal 2021

For the first quarter of fiscal 2022, we generated net sales of $1.3 billion, an
increase of $276.8 million when compared to the first quarter of fiscal 2021 and
overall gross margin percentage increased from 17.6 percent to 22.3 percent year
over year. Our first quarter net income was $133.4 million, or $13.19 per
diluted share, versus $61.9 million, or $6.28 per diluted share, in the
prior-year period. The continued robust demand for building products and
increased wood-based commodity prices are the primary contributors to the
increase in our overall profitability year over year.

Net sales of specialty products, which includes products such as engineered
wood, industrial products, cedar, moulding, siding, metal products and
insulation, increased $204.8 million to $767.9 million in the first quarter of
fiscal 2022. Continued strong demand for building products, along with continued
supply constraints, contributed to multiple supplier-led price increases
throughout the first quarter of fiscal 2022, resulting in improved revenue
growth.

Specialty products gross profit increased $75.6 million to $184.1 million, with
a year-over-year improvement of 470 basis points in specialty gross margin to
24.0 percent for the first quarter of fiscal 2022, compared to 19.3 percent in
the first quarter of fiscal 2021. The increase in specialty gross margin
percentage over the prior-year period is primarily attributable to substantial
increases in pricing for our specialty products.

Net sales of structural products, which includes products such as lumber,
plywood, oriented strand board, rebar, and remesh, increased $72.0 million to
$534.4 million in the first quarter of fiscal 2022 due to continued strong
demand for building products and increased wood-based commodity prices. Our
structural gross margin percentage for the first quarter of fiscal 2022 was 20.0
percent, up from 15.5 percent in the prior-year period, primarily attributable
to substantial increases in pricing for our structural products.

Our selling, general, and administrative expenses increased 20.8 percent, or
$15.7 million, compared to the first quarter of fiscal 2021. The increase in
sales, general, and administrative expenses is due to increases in our sales
commissions, driven by an increase in gross profit, and incentive programs of
approximately $8.9 million, increases in our delivery and logistical costs of
approximately $5.3 million, and an increase among remaining operating cost
categories of approximately $1.5 million. Depreciation and amortization expense
decreased 9.6 percent, compared to the first quarter of fiscal 2021. Our
decrease in depreciation and amortization is due to a lower base of amortizable
and depreciable assets throughout the first quarter of fiscal 2022 when compared
the prior-year period. The decrease in gains from sales of property in the
amount of $1.3 million is due to the sale of our Birmingham property during the
first quarter of fiscal 2021 compared to no sale of property during the first
quarter of fiscal 2022. Other operating expenses increased $0.7 million compared
to the first quarter of fiscal 2021 primarily due to restructuring related
costs, including severance, incurred in the first quarter of fiscal 2022.

Interest expense, net, decreased by 30.4 percent, or $4.9 million, compared to
the first quarter of fiscal 2021. The decrease is primarily due to $5.8 million
in debt issuance costs expensed in the first quarter of fiscal 2021 related to
the extinguishment of our former term loan facility. Other expense (income),
net, increased $1.5 million compared to the first quarter of fiscal 2021
primarily due to an increase in other non-operating expenses.

Our effective tax rate was 26.2 percent and 26.0 percent for the first quarter
of fiscal 2022 and 2021, respectively. Our effective tax rate for both periods
was impacted by the permanent addback of certain nondeductible expenses,
including meals and entertainment and executive compensation, slightly offset by
a benefit from the vesting of restricted stock units, which occurred during each
period. Our effective tax rate for the three months ended April 3, 2021 also
benefited from the partial release of our valuation allowance for state net
operating loss carryforwards we anticipated being able to utilize based on our
taxable income through the end of the first quarter of fiscal 2021.

For the first quarter of fiscal 2022, our net income increased by $71.5 million
from the prior-year period due primarily to an increase in gross profit driven
by continued demand and beneficial pricing of our products, in conjunction with
lower interest expense. This increase was partially offset by increases in our
selling, general, and administrative and income tax expenses.
                                       21

--------------------------------------------------------------------------------

Liquidity and Capital Resources

We expect our primary sources of liquidity to be cash flows from sales and
operating activities in the normal course of our operations and availability
from our revolving credit facility, as needed. We expect that these sources will
be sufficient to fund our ongoing cash requirements for the foreseeable future.

Senior Secured Notes

In October 2021, we entered into an indenture (the "Indenture") with the
guarantors party thereto and Truist Bank, as trustee and collateral agent, in
connection with a private offering of $300 million of our six percent senior
secured notes due 2029 (the "2029 Notes"). The 2029 Notes were issued to
investors at 98.625 percent of their principal amount and will mature on
November 15, 2029. The majority of net proceeds from the offering of the 2029
Notes were used to repay borrowings under our revolving credit facility.

Revolving Credit Facility

In April 2018, we entered into a revolving credit facility with Wells Fargo
Bank, National Association, as administrative agent ("the Agent"), and certain
other financial institutions party thereto. In August 2021, we entered into a
second amendment to our revolving credit facility to, among other things, extend
the maturity date of the facility to August 2, 2026, and reduce the interest
rate on borrowings under the facility (as amended, the "revolving credit
facility"). As amended, the revolving credit facility provides for a senior
secured asset-based revolving loan and letter of credit facility of up to
$350 million. The Borrowers' obligations under the revolving credit facility are
secured by a security interest in substantially all of our and our subsidiaries'
assets (other than real property), including inventories, accounts receivable,
and proceeds from those items.

Borrowings under the revolving credit facility bear interest at a rate per annum
equal to (i) London Inter-bank Offered Rate ("LIBOR") plus a margin ranging from
1.25 percent to 1.75 percent, with the margin determined based upon average
excess availability for the immediately preceding fiscal quarter for loans based
on LIBOR, or (ii) the Agent's base rate plus a margin ranging from 0.25 percent
to 0.75 percent, with the margin based upon average excess availability for the
immediately preceding fiscal quarter for loans based on the base rate.

Borrowings under the revolving credit facility are subject to availability under
the Borrowing Base (as that term is defined in the revolving credit agreement).
The Borrowers are required to repay revolving loans thereunder to the extent
that such revolving loans exceed the Borrowing Base then in effect. The
revolving credit facility may be prepaid in whole or in part from time to time
without penalty or premium, but including all breakage costs incurred by any
lender thereunder.

As of April 2, 2022, we had zero outstanding borrowings and excess availability,
including cash in qualified accounts, of $420.9 million under our revolving
credit facility. As of January 1, 2022, we had zero outstanding borrowings and
excess availability, including cash in qualified accounts, of $431.7 million
under our revolving credit facility. Our average effective interest rate under
the facility was zero percent and 2.4 percent for the quarters ended April 2,
2022, and April 3, 2021, respectively.

The revolving credit facility contains certain financial and other covenants,
and our right to borrow under the revolving credit facility is conditioned upon,
among other things, our compliance with these covenants. We were in compliance
with all covenants under the revolving credit facility as of April 2, 2022.

Term Loan Facility

On April 2, 2021, we repaid the remaining outstanding principal balance of the
term loan facility, and, as a result, as of January 1, 2022 and April 2, 2022,
we had zero outstanding borrowings under the term loan facility, which has been
extinguished. In connection with our repayment of the outstanding principal
balance in full on April 2, 2021, we expensed $5.8 million of debt issuance
costs that we were amortizing in connection with our former term loan facility.
These costs are included within interest expense, net on the condensed
consolidated statements of operations and reported separately as an adjustment
to net income in our condensed consolidated statements of cash flows.

There were no prepayment premiums associated with the repayment of indebtedness
for the three-month period ended April 2, 2022. Prepayment premiums were $0.9
million for the three-month period ended April 3, 2021.

                                       22

--------------------------------------------------------------------------------

Finance Lease Commitments

Our finance lease liabilities consist of leases related to equipment and
vehicles, and to real estate, with the majority of those finance lease
commitments relating to the real estate financing transactions that we have
completed in recent years. During fiscal 2017 and 2018, we completed real estate
financing transactions on six warehouse facilities; during fiscal 2019, we
completed real estate financing transactions on two warehouse facilities; and,
during fiscal 2020, we completed real estate financing transactions on fourteen
warehouse facilities. We recognized finance lease assets and obligations as a
result of each of these transactions. Our total finance lease commitments
totaled $271.9 million as of April 2, 2022. Of the $271.9 million of finance
lease commitments as of April 2, 2022, $242.0 million related to real estate and
$29.9 million related to equipment.

Interest Rates

Our revolving credit facility includes available interest rate options based on
LIBOR. Certain LIBOR rates were discontinued after 2021, while other rates will
be discontinued in 2023. The U.S. and other countries are currently working to
replace LIBOR with alternative reference rates. The consequences of these
developments with respect to LIBOR cannot be entirely predicted; however, we do
not believe that the discontinuation of LIBOR as a reference rate in our loan
agreement will have a material adverse effect on our financial position or
materially affect our interest expense.

Sources and Uses of Cash

Operating Activities

Net cash provided by operating activities for the first three months of fiscal
2022 was $2.2 million, compared to net cash used in operating activities of
$24.6 million in the first three months of fiscal 2021. The increase in cash
provided by operating activities during the first three months of fiscal 2022
was primarily a result of the increase in net income for the current-year period
compared to the prior-year period and an increase in our taxes payable balance
compared to the prior-year period, partially offset by an increase in accounts
receivable and inventories in the current-year period compared to the prior-year
period.

Investing Activities

Net cash used in investing activities for the first three months of fiscal 2022
was $2.5 million compared to net cash provided by investing activities of $0.7
million in the first three months of fiscal 2021. The increase in net cash used
in investing activities was primarily due to higher proceeds received during the
first quarter of 2021 from the sale of our non-operating facility in Birmingham
and higher spend on property and equipment in the current year-period compared
to the prior-year period.

Financing Activities

Net cash used in financing activities totaled $10.5 million for the first three
months of fiscal 2022, compared to net cash provided by financing activities of
$24.0 million for the first three months of fiscal 2021. The increase in net
cash used in financing activities is primarily due to borrowings of $262.2
million from our revolving credit facility, partially offset by $235.1 million
in repayments on our revolving credit facility and term loan facility, including
the repayment of the remaining outstanding balance on our term loan facility, in
the first three months of fiscal 2021, with no such transactions completed in
the first three months of fiscal 2022. Additionally, we spent $6.4 million
repurchasing our common stock under our announced repurchase program during the
first three months of fiscal 2022, with no such transactions completed in the
first three months of fiscal 2021.

Stock Repurchase Program

On August 23, 2021, we announced that our Board of Directors approved a stock
repurchase program pursuant to which we may repurchase up to $25.0 million of
our common stock. Under the program, we may repurchase our common stock at any
time or from time to time, without prior notice, subject to prevailing market
conditions and other considerations. Our repurchases may be made through a
variety of methods, which may include open market purchases, privately
negotiated transactions or pursuant to a trading plan that may be adopted in
accordance with the Securities and Exchange Commission Rule 10b5-1. As of
April 2, 2022, we have repurchased 81,331 shares for $6.4 million under this
program and we have a remaining authorization amount of $18.6 million.

On May 3, 2022, we announced that our Board of Directors has increased our share
repurchase authorization to $100.0 million, up $75.0 million from the previous
program, and that we have entered into an Accelerated Share Repurchase agreement
("ASR") with Jeffries LLC to repurchase $60.0 million of our common stock.

                                       23

--------------------------------------------------------------------------------

Operating Working Capital

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 the sum of cash, receivables, and
inventory, less accounts payable. Management of working capital helps us monitor
our progress in meeting our goals to enhance working capital assets.

                                       Selected financial information
                                            April 2, 2022           January 1, 2022           April 3, 2021
                                                                    (In thousands)
Current assets:
Cash and cash equivalents                 $       74,438          $         85,203          $          179
Receivables, less allowance for doubtful
accounts                                         497,056                   339,637                 418,815
Inventories, net                                 562,555                   488,458                 376,423
                                          $    1,134,049          $        913,298          $      795,417

Current liabilities:
Accounts payable                          $      230,072          $        180,000          $      218,975
                                          $      230,072          $        180,000          $      218,975

Operating working capital                 $      903,977          $        

733,298 $ 576,442

Operating working capital of $904.0 million as of April 2, 2022, compared to
$733.3 million as of January 1, 2022, increased on a net basis by approximately
$170.7 million. The increase in operating working capital is primarily driven by
an increase in accounts receivable from our continued increase in net sales
along with an increase in inventory, which continues to be affected by the
inflationary environment for building materials. The net increase in current
assets was offset by an increase in accounts payable, also affected by the
inflationary environment for building products.

Operating working capital of $904.0 million as of April 2, 2022, compared to
$576.4 million as of April 3, 2021, increased by $327.5 million. The increase in
operating working capital is primarily driven by an increase in inventory, which
continues to be affected by the inflationary environment for building products,
along with an increase in accounts receivable and cash from our continued
increase in net sales. The net increase in current assets was offset by an
increase in accounts payable, also affected by the inflationary environment for
building products.

Investments in Property and Equipment

Our investments in capital assets consist of cash paid for owned assets and the
inception of financing lease arrangements for long-lived assets to support our
distribution infrastructure. The gross value of these assets are included in
property and equipment, at cost on our condensed consolidated balance sheet. For
the first quarter ended April 2, 2022, we invested $2.5 million in cash
investments in long-lived assets primarily related to investments in our
distribution branches and to a lesser extent, upgrading our fleet.

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 January 1, 2022.

Forward-Looking Statements

This report contains forward-looking statements. Forward-looking statements
include, without limitation, any statement that predicts, forecasts, indicates
or implies 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. Forward-looking statements involve risks
and uncertainties that may cause our business,
                                       24

--------------------------------------------------------------------------------

strategy, or actual results to differ materially from the forward-looking
statements. The forward-looking statements in this report include statements
about the COVID-19 pandemic, its duration and effects, and its potential effects
on our business and results of operations; anticipated effects of adopting
certain accounting standards; estimated future annual amortization expense;
potential changes to estimates made in connection with revenue recognition; the
expected outcome of legal proceedings; industry conditions; seasonality; and
liquidity and capital resources.

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 that may
cause our business, strategy, or actual results to differ materially from the
forward-looking statements. These risks and uncertainties include those
discussed under the heading "Risk Factors" in Item 1A of our Annual Report on
Form 10-K for the year ended January 1, 2022, and those discussed elsewhere in
this report (including Item 1A of Part II of this report) and in future reports
that we file with the SEC. 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
that may cause these differences include, among other things:

•we may experience pricing and product cost variability;
•our earnings are highly dependent on volumes;
•our industry is highly fragmented and competitive and if we are unable to
compete effectively, our net sales and operating results may be reduced;
•our industry is highly cyclical, and prolonged periods of weak demand or excess
supply may reduce our net sales and/or margins, which may cause us to incur
losses or reduce our net income;
•adverse housing market conditions may negatively impact our business,
liquidity, and results of operations, and increase the credit risk from our
customers;
•consolidation among competitors, suppliers, and customers could negatively
impact our business;
•we are subject to disintermediation risk;
•loss of key products or key suppliers and manufacturers could affect our
financial health;
•our dependence on international suppliers and manufacturers for certain
products exposes us to risks that could affect our financial condition;
•our strategy includes pursuing acquisitions, and we may be unsuccessful in
making and integrating mergers, acquisitions and investments, and completing
divestitures;
•we may incur business disruptions resulting from a variety of possible causes;
•we may be unable to effectively manage our inventory relative to our sales
volume or as the prices of the products we distribute fluctuate, which could
affect our business, financial condition, and operating results;
•we are subject to information technology security risks and business
interruption risks and may incur increasing costs in an effort to minimize
and/or respond to those risks;
•our success depends on our ability to attract, train, and retain highly
qualified associates and other key personnel while controlling related labor
costs;
•we are exposed to product liability and other claims and legal proceedings
related to our business and the products we distribute, which may exceed the
coverage of our insurance;
•our business operations could suffer significant losses from climate changes,
natural disasters, catastrophes, fire, or other unexpected events;
•our operating results depend on the successful implementation of our strategy
and we may not be able to implement our strategic initiatives successfully, on a
timely basis, or at all;
•a significant percentage of our employees are unionized, and wage increases or
work stoppages by our unionized employees may reduce our results of operations;
•federal, state, local, and other regulations could impose substantial costs and
restrictions on our operations that would reduce our net income;
•we are subject to federal, state, and local environmental protection laws and
may have to incur significant costs to comply with these laws and regulations in
the future;
•the ongoing effect of the COVID-19 pandemic and other widespread public health
crises may adversely affect our business and results from operations;
•our vaccination policies and governmental regulations concerning mandatory
COVID-19 vaccination of employees could have a material adverse impact on our
business and results of operations;
•our future operating results may fluctuate significantly, and our current
operating results may not be a good indication of our future performance;
•fluctuations in our quarterly financial results could affect our stock price in
the future;
•our level of indebtedness could limit our financial and operating activities
and adversely affect our ability to incur additional debt to fund future needs;
                                       25

--------------------------------------------------------------------------------

•the instruments governing our indebtedness contain various covenants limiting
the discretion of our management in operating our business, including requiring
us to maintain a minimum level of excess liquidity;
•borrowings under our revolving credit facility bear interest at a variable
rate, which subjects us to interest rate risk, which could cause our debt
service obligations to increase significantly;
•despite our current levels of debt, we may still incur more debt, which would
increase the risks described in these risk factors relating to indebtedness;
•we have sold and leased back certain of our distribution centers under
long-term non-cancelable leases, and we may enter into similar transactions in
the future. All of these leases are (or will be) finance leases, and our debt
and interest expense may increase as a result;
•many of our distribution centers are leased, and if we close a leased
distribution center before expiration of the lease, we will still be obligated
under the applicable lease, and we may be unable to renew the leases at the end
of their terms;
•we may not have or be able to raise the funds necessary to finance a required
repurchase of our senior secured notes;
•constraints, volatility or disruptions in the capital markets or other factors
affecting the amount and timing of share repurchases;
•our ability to successfully execute the ASR;
•the number of shares that will be delivered to the Company under the ASR;
•whether or not the Company will continue, and the timing of, any open market
repurchases;
•a lowering or withdrawal of the ratings assigned to our debt securities by
rating agencies may increase our future borrowing costs and reduce our access to
capital;
•a change in our product mix could adversely affect our results of operations;
•if petroleum or energy prices increase, our results of operations could be
adversely affected;
•we establish insurance-related deductible/retention reserves based on
historical loss development factors, which could lead to adjustments in the
future based on actual development experience;
•the value of our deferred tax assets could become impaired, which could
materially and adversely affect our operating results;
•our expected annual effective tax rate could be volatile and materially change
as a result of changes in mix of earnings and other factors;
•changes in actuarial assumptions for our pension plan could impact our
financial results, and funding requirements are mandated by the Federal
government;
•costs and liabilities related to our participation in multi-employer pension
plans could increase;
•our cash flows and capital resources may be insufficient to make required
payments on our indebtedness or future indebtedness;
•we could be the subject of securities class action litigation due to stock
price volatility, which could divert management's attention and adversely affect
our results of operations;
•the activities of activist stockholders could have a negative impact on our
business and results of operations;
•the terms of our revolving credit facility and senior secured notes place
restrictions on our ability to pay dividends on our common stock, so any returns
to stockholders may be limited to the value of their stock;
•changes in, or interpretation of, accounting principles could result in
unfavorable accounting changes.

Given these risks and uncertainties, we caution you not to place undue reliance
on forward-looking statements. We expressly disclaim any obligation to update or
revise any forward-looking statement as a result of new information, future
events or otherwise, except as required by law.

                                       26

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses