DALLAS, Nov. 08, 2017 (GLOBE NEWSWIRE) -- Builders FirstSource, Inc. (Nasdaq:BLDR) today reported its results for the third quarter ended September 30, 2017.
Commenting on third quarter results, CEO Floyd Sherman remarked, “We proved our agility to respond to unexpected challenges, including two major hurricanes and commodity inflation. I am pleased with our results, as we have once again demonstrated our ability to deliver sales and EBITDA growth in a volatile market while executing on our strategic priorities. The Company is positioned to capitalize on the growth opportunity from our national footprint, our strong customer relationships and our end market diversity. We continue our commitment to investments in strategic growth initiatives, including building our sales force and expanding our manufacturing footprint to grow shareholder value, while making further progress in paying down debt and reducing our leverage ratio on a year over year basis.”
The Company has provided supplemental non-GAAP financial information of the consolidated company that is adjusted to exclude one-time integration, facility closure, and other one-time refinancing and other costs (“Adjusted”). As the information below includes non-GAAP financial information, please refer to the accompanying financial schedules for non-GAAP reconciliations to their GAAP equivalents.
Third Quarter 2017 Compared to Third Quarter 2016:
Net Sales
Gross Margin
Selling, General and Administrative Expenses
Interest Expense
Income Tax Expense
Net Income
EBITDA
Year to Date September 30, 2017 Financial Information:
Net Sales
Gross Margin
Selling, General and Administrative Expenses
Interest Expense
Income Tax Expense
Net Income
EBITDA
Capital Structure, Leverage, and Liquidity Information:
Please refer to the accompanying financial schedules for more information.
Peter Jackson, CFO, commented, “The Company rapidly responded to the operational challenges caused by continued lumber and lumber sheet goods inflation and two major hurricanes during the current quarter. After the disruptions and after continuing to make significant growth investments, we delivered strong operating results, and significant year over year reduction in our leverage ratio. Commodity inflation generally benefits our business in the long term, but can cause short term margin pressure when prices rise quickly. I expect that as commodity prices stabilize, the Company will begin to benefit from the higher commodity prices, enhancing our go forward profitability.”
Outlook
Concluding, Chad Crow, President and COO, added, “In this quarter, we demonstrated our ability to absorb the impact of unexpected challenges, meet customer commitments, and deliver strong financial results, while also making investments in the business. The outlook for Builders FirstSource for the balance of 2017 and the years ahead is very promising. The new residential housing market continues to show steady growth in demand. Against this backdrop, we continue to invest to further leverage our scale, to broaden our product portfolio, and expand our geographic and end market diversity to capture growth in the coming years. Furthermore, we are committed to creating meaningful value for our shareholders through the Company’s identified initiatives and a return of the market to a normalized 1.1 million single family housing start environment.
Finally, I would like to thank Floyd for his leadership and guidance over the past 16 years. As you know, Floyd will be stepping down as CEO as of January 1, 2018. Floyd's vision and leadership were instrumental in positioning the business to take advantage of the opportunities that we have today. He will remain as an employee advisor to the Company through March 2019 as we execute the Company’s growth strategy in the coming years.”
Conference Call
Builders FirstSource will host a conference call Thursday, November 9, 2017 at 9:00 a.m. Central Time (CT) and will simultaneously broadcast it live over the Internet. The earnings release presentation will be posted at www.bldr.com under the “investors” section before the call. To participate in the teleconference, please dial into the call a few minutes before the start time: 877-830-2636 (U.S. and Canada) and 785-424-1802 (international), Conference ID: 1685701. A replay of the call will be available at 1:00 p.m. Central Time through November 23rd. To access the replay, please dial 888-203-1112 (U.S. and Canada) and 719-457-0820 (international) and refer to pass code 1685701. The live webcast and archived replay can also be accessed on the Company's website at www.bldr.com under the “Investors” section. The online archive of the webcast will be available for approximately 90 days.
About Builders FirstSource
2016 Sales: $6.4 Billion | Associates: 15 Thousand | Operations in 40 states
Headquartered in Dallas, Texas, Builders FirstSource is the largest U.S supplier of building products, prefabricated components, and value-added services to the professional market segment for new residential construction and repair and remodeling. We provide customers an integrated homebuilding solution, offering manufacturing, supply, delivery and installation of a full range of structural and related building products. We operate in 40 states with 402 locations and have a market presence in 75 of the top 100 Metropolitan Statistical Areas, providing geographic diversity and balanced end market exposure. We service customers from strategically located distribution facilities and manufacturing facilities (certain of which are co-located) that produce value-added products such as roof and floor trusses, wall panels, stairs, vinyl windows, custom millwork and pre-hung doors. Builders FirstSource also distributes dimensional lumber and lumber sheet goods, millwork, windows, interior and exterior doors, and other building products. For more information about Builders FirstSource, visit the Company’s website at www.bldr.com.
Cautionary Notice
Statements in this news release and the schedules hereto that are not purely historical facts or that necessarily depend upon future events, including statements about expected market share gains, forecasted financial performance or other statements about anticipations, beliefs, expectations, hopes, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, oral statements made by our directors, officers and employees to the investor and analyst communities, media representatives and others, depending upon their nature, may also constitute forward-looking statements. As with the forward-looking statements included in this release, these forward-looking statements are by nature inherently uncertain, and actual results may differ materially as a result of many factors. All forward-looking statements are based upon information available to Builders FirstSource, Inc. on the date this release was submitted. Builders FirstSource, Inc. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Any forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements, including risks or uncertainties related to the Company’s growth strategies, including gaining market share, or the Company’s revenues and operating results being highly dependent on, among other things, the homebuilding industry, lumber prices and the economy. Builders FirstSource, Inc. may not succeed in addressing these and other risks. Further information regarding factors that could affect our financial and other results can be found in the risk factors section of Builders FirstSource, Inc.’s most recent annual report on Form 10-K filed with the Securities and Exchange Commission. Consequently, all forward-looking statements in this release are qualified by the factors, risks and uncertainties contained therein.
Contact:
Jennifer Pasquino
SVP Investor Relations
Builders FirstSource, Inc.
(303) 262-8571
Financial Schedules to Follow
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(Unaudited) (In thousands, except per share amounts) | |||||||||||||||
Sales | $ | 1,878,909 | $ | 1,745,958 | $ | 5,255,270 | $ | 4,820,372 | |||||||
Cost of sales | 1,419,587 | 1,308,864 | 3,959,099 | 3,615,199 | |||||||||||
Gross margin | 459,322 | 437,094 | 1,296,171 | 1,205,173 | |||||||||||
Selling, general and administrative expenses | 370,638 | 350,837 | 1,075,869 | 1,019,715 | |||||||||||
Income from operations | 88,684 | 86,257 | 220,302 | 185,458 | |||||||||||
Interest expense, net | 33,836 | 92,290 | 103,703 | 170,316 | |||||||||||
Income (loss) before income taxes | 54,848 | (6,033 | ) | 116,599 | 15,142 | ||||||||||
Income tax expense (benefit) | 15,098 | (131,502 | ) | 35,117 | (122,788 | ) | |||||||||
Net Income | $ | 39,750 | $ | 125,469 | $ | 81,482 | $ | 137,930 | |||||||
Comprehensive Income | $ | 39,750 | $ | 125,469 | $ | 81,482 | $ | 137,930 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 0.35 | $ | 1.13 | $ | 0.73 | $ | 1.25 | |||||||
Diluted | $ | 0.34 | $ | 1.10 | $ | 0.71 | $ | 1.22 | |||||||
Weighted average common shares: | |||||||||||||||
Basic | 112,688 | 111,187 | 112,368 | 110,487 | |||||||||||
Diluted | 115,871 | 114,273 | 115,310 | 113,393 | |||||||||||
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
September 30, 2017 | December 31, 2016 | ||||||
(Unaudited) (In thousands, except per share amounts) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 9,337 | $ | 14,449 | |||
Accounts receivable, less allowances of $12,446 and $11,571 at September 30, 2017 and December 31, 2016, respectively | 724,007 | 569,208 | |||||
Other receivables | 62,128 | 55,781 | |||||
Inventories, net | 627,238 | 541,771 | |||||
Other current assets | 32,889 | 34,772 | |||||
Total current assets | 1,455,599 | 1,215,981 | |||||
Property, plant and equipment, net | 641,143 | 656,101 | |||||
Assets held for sale | 4,493 | 4,361 | |||||
Goodwill | 740,411 | 740,411 | |||||
Intangible assets, net | 139,010 | 159,373 | |||||
Deferred income taxes | 95,149 | 115,320 | |||||
Other assets, net | 17,240 | 18,340 | |||||
Total assets | $ | 3,093,045 | $ | 2,909,887 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Checks outstanding | $ | 12,426 | $ | 35,606 | |||
Accounts payable | 505,810 | 409,759 | |||||
Accrued liabilities | 251,527 | 293,115 | |||||
Current maturities of long-term debt and lease obligations | 12,165 | 16,217 | |||||
Total current liabilities | 781,928 | 754,697 | |||||
Long-term debt and lease obligations, net of current maturities, debt discount and debt issuance costs | 1,839,072 | 1,785,835 | |||||
Other long-term liabilities | 60,040 | 59,735 | |||||
Total liabilities | 2,681,040 | 2,600,267 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Preferred stock, $0.01 par value, 10,000 shares authorized; zero shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | — | — | |||||
Common stock, $0.01 par value, 200,000 shares authorized; 112,931 and 111,564 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 1,129 | 1,115 | |||||
Additional paid-in capital | 539,868 | 527,868 | |||||
Accumulated deficit | (128,992 | ) | (219,363 | ) | |||
Total stockholders' equity | 412,005 | 309,620 | |||||
Total liabilities and stockholders' equity | $ | 3,093,045 | $ | 2,909,887 | |||
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
Nine months ended September 30, | |||||||
2017 | 2016 | ||||||
(Unaudited) (In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 81,482 | $ | 137,930 | |||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||
Depreciation and amortization | 70,796 | 86,901 | |||||
Amortization and write-off of deferred loan costs and debt discount | 5,163 | 5,940 | |||||
Loss on extinguishment of debt | — | 46,105 | |||||
Payment of original issue discount | — | (1,259 | ) | ||||
Deferred income taxes | 29,060 | (124,787 | ) | ||||
Bad debt expense | (272 | ) | 35 | ||||
Stock compensation expense | 9,916 | 7,734 | |||||
Net loss (gain) on sale of assets and asset impairments | 5,079 | (3,254 | ) | ||||
Changes in assets and liabilities: | |||||||
Receivables | (158,345 | ) | (144,342 | ) | |||
Inventories | (85,313 | ) | (62,005 | ) | |||
Other current assets | 2,837 | 423 | |||||
Other assets and liabilities | 3,776 | 4,037 | |||||
Accounts payable and checks outstanding | 71,247 | 77,939 | |||||
Accrued liabilities | (43,024 | ) | (35,115 | ) | |||
Net cash used in operating activities | (7,598 | ) | (3,718 | ) | |||
Cash flows from investing activities: | |||||||
Purchases of property, plant and equipment | (48,060 | ) | (34,127 | ) | |||
Proceeds from sale of property, plant and equipment | 4,802 | 2,816 | |||||
Cash used for acquisitions, net | — | (3,970 | ) | ||||
Net cash used in investing activities | (43,258 | ) | (35,281 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings under revolving credit facility | 894,000 | 707,000 | |||||
Repayments under revolving credit facility | (839,000 | ) | (678,000 | ) | |||
Proceeds from issuance of notes | — | 750,000 | |||||
Repayments of long-term debt and other loans | (8,555 | ) | (755,095 | ) | |||
Payments of debt extinguishment costs | — | (34,369 | ) | ||||
Payments of loan costs | (2,799 | ) | (15,205 | ) | |||
Exercise of stock options | 4,574 | 6,547 | |||||
Repurchase of common stock | (2,476 | ) | (1,092 | ) | |||
Net cash provided by (used in) financing activities | 45,744 | (20,214 | ) | ||||
Net change in cash and cash equivalents | (5,112 | ) | (59,213 | ) | |||
Cash and cash equivalents at beginning of period | 14,449 | 65,063 | |||||
Cash and cash equivalents at end of period | $ | 9,337 | $ | 5,850 |
Supplemental disclosure of non-cash activities
For the nine months ended September 30, 2017 and 2016, the Company retired assets subject to lease finance obligations of $15.0 million and $34.4 million and extinguished the related lease finance obligation of $12.9 million and $39.4 million, respectively.
The Company purchased equipment which was financed through capital lease obligations of $14.2 million and $8.0 million in the nine months ended September 30, 2017 and 2016, respectively.
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES Reconciliation of Adjusted Non-GAAP Financial Measures to their GAAP Equivalents (unaudited) | ||||||||||||||||||||
Note: The company provided detailed explanations of these non-GAAP financial measures in its Form 8-K filed with the Securities and Exchange Commission on November 8, 2017. | ||||||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | Twelve months ended September 30, | ||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | ||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||
Reconciliation to Adjusted EBITDA: | ||||||||||||||||||||
Reported GAAP Net Income | $ | 39.8 | $ | 125.5 | $ | 81.5 | $ | 137.9 | $ | 88.0 | ||||||||||
Integration related expenses | 5.7 | 8.0 | 16.7 | 20.9 | $ | 21.8 | ||||||||||||||
Debt issuance and refinancing cost (1) | - | 53.3 | 2.4 | 47.3 | 12.0 | |||||||||||||||
Increase/(release) of tax valuation allowance | - | (117.6 | ) | - | (128.6 | ) | (3.1 | ) | ||||||||||||
Facility closure costs | - | 0.0 | - | (1.7 | ) | $ | 0.2 | |||||||||||||
Adjusted Net Income | 45.5 | 69.2 | 100.6 | 75.8 | 118.9 | |||||||||||||||
Weighted average diluted common shares (in millions) | 115.9 | 114.3 | 115.3 | 113.4 | ||||||||||||||||
Diluted adjusted net income per share: | $ | 0.39 | $ | 0.61 | $ | 0.87 | $ | 0.67 | ||||||||||||
Reconciling items: | ||||||||||||||||||||
Depreciation and amortization expense | 23.0 | 25.6 | 70.8 | 86.9 | $ | 93.7 | ||||||||||||||
Interest expense, net | 33.8 | 39.0 | 101.3 | 123.0 | $ | 136.0 | ||||||||||||||
Income tax (benefit) expense | 15.1 | (13.9 | ) | 35.1 | 5.8 | $ | 38.3 | |||||||||||||
Stock compensation expense | 3.5 | 2.6 | 9.9 | 7.7 | $ | 12.7 | ||||||||||||||
(Gain)/loss on sale and asset impairments | 1.5 | (4.3 | ) | 4.4 | (3.3 | ) | $ | 7.3 | ||||||||||||
Other management-identified adjustments (2) | (0.4 | ) | 0.1 | 0.0 | 0.9 | 0.0 | ||||||||||||||
Adjusted EBITDA | $ | 122.0 | $ | 118.3 | $ | 322.1 | $ | 296.8 | $ | 406.9 | ||||||||||
Adjusted EBITDA Margin | 6.5 | % | 6.8 | % | 6.1 | % | 6.2 | % | 6.0 | % | ||||||||||
(1) Cost associated with refinancing long term debt. | ||||||||||||||||||||
(2) Primarily relates to severance and one time cost. | ||||||||||||||||||||
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES | ||||||||||||||||
Financial Data | ||||||||||||||||
(adjusted and unaudited) | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(in millions except per share amounts) | ||||||||||||||||
Net sales | 1,878.9 | 1,746.0 | 5,255.3 | 4,820.4 | ||||||||||||
Sales adjustment for closed locations | (3.3 | ) | (12.4 | ) | ||||||||||||
Net sales excluding closed locations | 1,878.9 | 1,742.6 | 5,255.3 | 4,807.9 | ||||||||||||
Gross margin | 459.3 | 437.1 | 1,296.2 | 1,205.2 | ||||||||||||
Gross margin % | 24.4 | % | 25.0 | % | 24.7 | % | 25.0 | % | ||||||||
Adjusted SG&A/Other (excluding depreciation and amortization) as a % of sales (1)(2) | 18.0 | % | 18.3 | % | 18.5 | % | 18.8 | % | ||||||||
Adjusted EBITDA | 122.0 | 118.3 | 322.1 | 296.8 | ||||||||||||
Adjusted EBITDA margin % | 6.5 | % | 6.8 | % | 6.1 | % | 6.2 | % | ||||||||
Depreciation and amortization | (23.0 | ) | (25.6 | ) | (70.8 | ) | (86.9 | ) | ||||||||
Interest expense, net of debt issuance cost and refinancing | (33.8 | ) | (39.0 | ) | (101.3 | ) | (123.0 | ) | ||||||||
Income tax benefit (expense) | (15.1 | ) | 13.9 | (35.1 | ) | (5.8 | ) | |||||||||
Other adjustments | (4.6 | ) | 1.6 | (14.3 | ) | (5.3 | ) | |||||||||
Adjusted Net Income | $ | 45.5 | $ | 69.2 | $ | 100.6 | $ | 75.8 | ||||||||
Basic adjusted net income per share: | $ | 0.40 | $ | 0.62 | $ | 0.89 | $ | 0.69 | ||||||||
Diluted adjusted net income per share: | $ | 0.39 | $ | 0.61 | $ | 0.87 | $ | 0.67 | ||||||||
Weighted average common shares (in millions) | ||||||||||||||||
Basic | 112.7 | 111.2 | 112.4 | 110.5 | ||||||||||||
Diluted | 115.9 | 114.3 | 115.3 | 113.4 | ||||||||||||
Note: The company provided detailed explanations of these non-GAAP financial measures in its Form 8-K filed with the Securities and Exchange Commission on November 8, 2017. | ||||||||||||||||
(1) Adjusted SG&A and other as a percentage of sales is defined as GAAP SG&A less depreciation and amortization, stock comp, acquisition, integration and other expenses. GAAP SG&A in Q3-17 of $370.6M less $23.0M depreciation and amortization, less $5.7M of integration expenses, less $3.5M of stock comp and $1.3M loss from sales, impairments, and other. YTD 2017 GAAP SG&A of $1,075.9M less $70.8M depreciation and amortization, less $16.7M of integration expenses, less $9.9M of stock comp, and $4.6M from the loss from sales, impairments, and other. | ||||||||||||||||
(2) Gross margin % defined as gross margin divided by Net Sales | ||||||||||||||||
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||
Sales Excluding Closed Locations by Product Category | |||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||
Three months ended September 30 | Nine months ended September 30, | ||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||||
Lumber & Lumber Sheet Goods | $ | 679.9 | 36.2 | % | $ | 592.5 | 34.0 | % | $ | 1,867.6 | 35.5 | % | $ | 1,614.6 | 33.6 | % | |||||||||
Manufactured Products | 318.6 | 17.0 | % | 298.3 | 17.1 | % | 900.9 | 17.1 | % | 817.1 | 17.0 | % | |||||||||||||
Windows, Doors & Millwork | 347.5 | 18.5 | % | 337.0 | 19.3 | % | 1,016.7 | 19.3 | % | 960.0 | 20.0 | % | |||||||||||||
Gypsum, Roofing & Insulation | 147.9 | 7.9 | % | 145.6 | 8.4 | % | 409.4 | 7.9 | % | 396.5 | 8.2 | % | |||||||||||||
Siding, Metal & Concrete Products | 183.5 | 9.8 | % | 176.5 | 10.1 | % | 498.9 | 9.5 | % | 476.4 | 9.9 | % | |||||||||||||
Other | 201.5 | 10.7 | % | 192.7 | 11.1 | % | 561.8 | 10.7 | % | 543.3 | 11.3 | % | |||||||||||||
Total adjusted net sales (1) | $ | 1,878.9 | 100.0 | % | $ | 1,742.6 | 100.0 | % | $ | 5,255.3 | 100.0 | % | $ | 4,807.9 | 100.0 | % | |||||||||
(1) Results exclude sales from closed locations | |||||||||||||||||||||||||
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES | |||||||||||
Interest Reconciliation | |||||||||||
(unaudited) | |||||||||||
Three months ended September 30, 2017 | |||||||||||
Interest Expense | Net Debt Outstanding | Adjusted Annual Go Forward Cash Interest (1) | |||||||||
(in millions) | |||||||||||
2024 Secured Notes @ 5.625% Fixed | $ | 10.5 | $ | 750.0 | $ | 42.2 | |||||
2023 Unsecured Notes at 10.75% Fixed | 9.9 | 367.6 | 39.5 | ||||||||
2024 Term Loan @ 4.3% (Floating LIBOR) (2) | 5.1 | 464.1 | 20.0 | ||||||||
Revolving Credit Facility @ 2.9% (Floating LIBOR) (2) | 1.6 | 55.0 | 5.6 | ||||||||
Amortization of deferred loan costs and debt discount | 1.4 | ||||||||||
Lease finance obligations and capital leases | 5.4 | 241.9 | 21.7 | ||||||||
Other | (0.1 | ) | |||||||||
Cash | (9.3 | ) | |||||||||
Total | $ | 33.8 | $ | 1,869.3 | $ | 129.0 | |||||
(1) Excludes issuance cost and one time items. Assumes current or pro forma borrowing rates on variable debt. | |||||||||||
(2) Assumes Q3 balance for the Term Loan and the revolving credit facility for annualized projections. Includes FY benefit of February reprice of the term loan which brought the interest rate down to LIBOR +3.0% with a 100 bp floor. | |||||||||||