Builders FirstSource Reports First Quarter 2014 Results
April 24 2014 - 05:15PM
Builders FirstSource, Inc. (Nasdaq:BLDR), a
leading supplier and manufacturer of structural and related
building products for residential new construction in the United
States, today reported its results for the first quarter ended
March 31, 2014.
First quarter highlights include the following (see financial
schedules for more information, including non-GAAP
reconciliations):
- First quarter 2014 sales increased 8.2 percent to $345.9
million, when compared to the first quarter of 2013.
- Gross margin percentage improved to 21.7 percent, up from 19.5
percent in the first quarter of 2013.
- Adjusted EBITDA was $8.6 million, up from $5.4 million for the
first quarter of 2013.
Floyd Sherman, Builders FirstSource Chief Executive Officer,
stated, "Despite the extreme winter weather that slowed
construction activity across our markets and housing starts being
relatively flat, we successfully grew sales and Adjusted EBITDA on
a year-over-year basis. Our sales increased 8.2 percent and
Adjusted EBITDA increased 59 percent when compared to the first
quarter of 2013. For the same time period, the U.S. Census
Bureau reported actual single-family starts for the South Region
declined slightly by 0.1 percent. In addition, commodity
deflation had a negative impact on our sales for the
quarter. Lumber and lumber sheet goods prices were, on
average, 14 percent lower compared to a year ago, which we estimate
negatively impacted sales for the current quarter by 2 to 3
percent. Our employees did a great job managing through the
difficult weather conditions and again delivered strong financial
results in the first quarter."
Commenting on the first quarter results, Chad Crow, Builders
FirstSource Senior Vice President and Chief Financial Officer
added, "We increased our gross margin percentage by 220 basis
points, primarily due to improved customer pricing and less
intra-quarter price volatility in the commodity lumber markets
compared to a year ago. Lumber and lumber sheet goods prices
rose sharply during the first quarter of 2013 while prices fell
during the first quarter of 2014. Disruptions caused by the winter
weather negatively impacted our operational
efficiency. However, we were still able to surpass our 2013
first quarter results."
First Quarter 2014 Results Compared to First Quarter 2013
(See accompanying financial schedules for full financial details
and reconciliations of Non-GAAP financial measures to their GAAP
equivalents.)
- Sales were $345.9 million, an increase of $26.2 million or 8.2
percent. The increase was largely due to a 10.5 percent
increase in volume, offset somewhat by decreased market prices for
commodity lumber products which were, on average, 14 percent lower
compared to the same period last year.
- Gross margin percentage was 21.7 percent, up from 19.5 percent
last year. Our gross margin percentage increased primarily due
to improved customer pricing and less volatility in commodity
lumber prices versus the first quarter of 2013.
- Selling, general and administrative ("SG&A") expenses
increased $8.2 million, or 13.5 percent. As a percentage of
sales, SG&A expense increased to 20.0 percent compared to 19.1
percent in the first quarter of 2013.
- Interest expense was $8.8 million, a decrease of $3.7 million
when compared to the first quarter of 2013 as a result of our
second quarter of 2013 refinancing. See supplemental schedule
attached.
- We recorded a $0.1 million income tax benefit compared to $0.3
million of expense in the first quarter of 2013. We recorded
an increase in the after-tax, non-cash valuation allowance of $1.0
million and $4.4 million in the first quarters of 2014 and 2013,
respectively. Both were related to our net deferred tax
assets. Absent the valuation allowance, the effective tax rate
would have been 33.1 percent and 36.3 percent in the first quarters
of 2014 and 2013, respectively. As of March 31, 2014, our
gross federal income tax net operating loss available for
carry-forward was approximately $270 million.
- Loss from continuing operations improved to $3.3 million, or
$0.03 loss per diluted share, compared to $11.6 million, or $0.12
loss per diluted share in the first quarter of 2013. Adjusted
loss from continuing operations was $1.1 million, or $0.01 loss per
diluted share, compared to $6.8 million, or $0.07 loss per diluted
share in the first quarter of 2013. See reconciliation
attached.
- Net loss was $3.4 million, or $0.03 loss per diluted share,
compared to $11.8 million, or $0.12 loss per diluted share in the
first quarter of 2013.
- Diluted weighted average shares outstanding were 97.6 million
compared to 96.0 million in the first quarter of 2013.
- Adjusted EBITDA was $8.6 million, or 2.5 percent of sales,
compared to $5.4 million, or 1.7 percent of sales, in the first
quarter of 2013. See reconciliation attached.
Liquidity and Capital Resources
- Total liquidity at March 31, 2014 was approximately $223.9
million, and includes $62.8 million of cash and $161.1 million in
borrowing availability under our revolver. We had no
borrowings during the quarter under our revolver.
- Operating cash flow was positive $13.8 million for the first
quarter of 2014, compared to negative $25.2 million for the first
quarter of 2013. The difference was primarily attributable to
our improved financial performance and a reduction in working
capital during the first quarter of 2014.
- Capital expenditures were $5.3 million compared to $1.0 million
for the first quarter of 2013.
Outlook
Concluding, Mr. Sherman said, "Harsh weather disrupted
construction activity during the first quarter, which directly
impacted our business. However, we believe the underlying
demand for new housing remains strong, and with the weather
problems from earlier this year behind us, the pace of construction
should accelerate over the coming months. We also remain confident
in our ability to use our scale and market share to continue
delivering strong financial results."
Conference Call
Builders FirstSource will host a conference call Friday, April
25, 2014 at 10:00 a.m. Central Time (CT) and will simultaneously
broadcast it live over the Internet. To participate in the
teleconference, please dial into the call a few minutes before the
start time: 888-211-7450 (U.S. and Canada) and 913-312-0381
(international). A replay of the call will be available at
3:00 p.m. CT through April 30th. To access the replay, please
dial 888-203-1112 (U.S. and Canada) and 719-457-0820
(international) and refer to pass code 8883110. 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
Headquartered in Dallas, Texas, Builders FirstSource is a
leading supplier and manufacturer of structural and related
building products for residential new construction. The
company operates 53 distribution centers and 47 manufacturing
facilities in 9 states, principally in the southern and eastern
United States. Manufacturing facilities include plants that
manufacture roof and floor trusses, wall panels, stairs, aluminum
and vinyl windows, custom millwork and pre-hung
doors. Builders FirstSource also distributes windows, interior
and exterior doors, dimensional lumber and lumber sheet goods,
millwork 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, plans to reduce costs, 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. 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.
Financial Schedules to
Follow
BUILDERS
FIRSTSOURCE, INC. AND SUBSIDIARIES |
Condensed
Consolidated Statements of Operations |
(unaudited) |
|
|
Three months
ended |
|
March
31, |
|
2014 |
2013 |
|
(in thousands, except per
share amounts) |
|
|
|
|
|
|
Sales |
$ 345,909 |
$ 319,702 |
Cost of sales |
270,994 |
257,355 |
Gross margin |
74,915 |
62,347 |
|
|
|
|
|
|
Selling, general and administrative expenses
(includes stock-based compensation expense of $982 and $1,335 for
the three months ended in 2014 and 2013, respectively.) |
69,318 |
61,078 |
Facility closure costs |
163 |
59 |
Income from
operations |
5,434 |
1,210 |
Interest expense, net |
8,828 |
12,500 |
Loss from continuing operations
before income taxes |
(3,394) |
(11,290) |
Income tax (benefit) expense |
(82) |
315 |
Loss from continuing
operations |
(3,312) |
(11,605) |
Loss from discontinued operations (net of
income tax expense of $0 in 2014 and 2013, respectively) |
(72) |
(203) |
Net Loss |
$ (3,384) |
$ (11,808) |
|
|
|
Basic and diluted net loss per
share: |
|
|
Loss from continuing
operations |
$ (0.03) |
$ (0.12) |
Loss from discontinued
operations |
(0.00) |
(0.00) |
Net Loss |
$ (0.03) |
$ (0.12) |
|
|
|
Weighted average common shares: |
|
|
Basic and diluted |
97,617 |
95,989 |
|
BUILDERS
FIRSTSOURCE, INC. AND SUBSIDIARIES |
Sales by Product
Category |
(unaudited) |
|
|
Three
months ended March 31, |
|
2014 |
2013 |
|
(in thousands) |
|
|
|
|
|
Prefabricated components |
$ 70,490 |
20.4% |
$ 60,820 |
19.0% |
Windows & doors |
76,275 |
22.0% |
63,605 |
19.9% |
Lumber & lumber sheet goods |
115,515 |
33.4% |
116,797 |
36.5% |
Millwork |
33,468 |
9.7% |
29,053 |
9.1% |
Other building products &
services |
50,161 |
14.5% |
49,427 |
15.5% |
Total sales |
$ 345,909 |
100.0% |
$ 319,702 |
100.0% |
|
BUILDERS
FIRSTSOURCE, INC. AND SUBSIDIARIES |
Condensed
Consolidated Balance Sheets |
(unaudited) |
|
|
March 31, |
December
31, |
|
2014 |
2013 |
|
(in thousands, except per
share amounts) |
|
|
|
ASSETS |
|
|
Current assets: |
|
|
Cash and cash
equivalents |
$ 62,766 |
$ 54,696 |
Accounts receivable, less
allowance of $3,422 and $3,605 at March 31, 2014 and December 31,
2013, respectively |
147,603 |
143,036 |
Inventories |
136,613 |
123,636 |
Other current assets |
8,767 |
9,793 |
Total current assets |
355,749 |
331,161 |
Property, plant and equipment, net |
52,808 |
49,392 |
Goodwill |
111,193 |
111,193 |
Other assets, net |
23,050 |
24,093 |
Total assets |
$ 542,800 |
$ 515,839 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 102,668 |
$ 81,046 |
Accrued liabilities |
51,968 |
45,310 |
Current maturities of long-term
debt |
69 |
67 |
Total current
liabilities |
154,705 |
126,423 |
Long-term debt, net of current
maturities |
353,886 |
353,904 |
Other long-term liabilities |
21,615 |
20,144 |
Total liabilities |
530,206 |
500,471 |
Commitments and contingencies |
|
|
Stockholders' equity: |
|
|
Preferred stock, $0.01 par
value, 10,000 shares authorized; zero shares issued and
outstanding |
-- |
-- |
Common stock, $0.01 par value,
200,000 shares authorized; 97,970 and 97,905 shares issued and
outstanding at March 31, 2014 and December 31, 2013,
respectively |
979 |
973 |
Additional paid-in
capital |
374,022 |
373,418 |
Accumulated deficit |
(362,407) |
(359,023) |
Total stockholders'
equity |
12,594 |
15,368 |
Total liabilities and
stockholders' equity |
$ 542,800 |
$ 515,839 |
|
BUILDERS
FIRSTSOURCE, INC. AND SUBSIDIARIES |
Condensed
Consolidated Statements of Cash Flows |
(unaudited) |
|
|
Three
months ended March 31, |
|
2014 |
2013 |
|
(in thousands) |
Cash flows from operating activities: |
|
|
Net loss |
$ (3,384) |
$ (11,808) |
Adjustments to reconcile net
loss to net cash |
|
|
provided by (used in) operating
activities: |
|
|
Depreciation and
amortization |
1,982 |
2,774 |
Amortization of deferred loan
costs |
585 |
295 |
Amortization of debt
discount |
-- |
588 |
Fair value adjustment of stock
warrants |
1,197 |
426 |
Deferred income taxes |
(48) |
134 |
Bad debt expense |
(36) |
275 |
Stock compensation expense |
982 |
1,335 |
Net gain on sale of assets |
(1) |
(11) |
Changes in assets and
liabilities: |
|
|
Receivables |
(4,531) |
(20,313) |
Inventories |
(12,977) |
(23,831) |
Other current assets |
806 |
1,434 |
Other assets and
liabilities |
183 |
(263) |
Accounts payable |
21,622 |
19,472 |
Accrued liabilities |
7,380 |
4,304 |
Net cash provided by (used in)
operating activities |
13,760 |
(25,189) |
|
|
|
Cash flows from investing activities: |
|
|
Purchases of property, plant
and equipment |
(5,304) |
(981) |
Proceeds from sale of property,
plant and equipment |
2 |
11 |
Decrease in restricted
cash |
-- |
13,030 |
Net cash provided by (used in)
investing activities |
(5,302) |
12,060 |
|
|
|
Cash flows from financing activities: |
|
|
Payments of long-term debt and
other loans |
(16) |
(14) |
Payments of deferred loan
costs |
-- |
(61) |
Exercise of stock options |
904 |
474 |
Repurchase of common stock |
(1,276) |
(1,036) |
Net cash used in financing
activities |
(388) |
(637) |
|
|
|
Net change in cash and cash equivalents |
8,070 |
(13,766) |
Cash and cash equivalents at beginning of
period |
54,696 |
131,432 |
Cash and cash equivalents at end of
period |
$ 62,766 |
$ 117,666 |
|
BUILDERS
FIRSTSOURCE, INC. AND SUBSIDIARIES |
Supplemental
Interest Expense Information |
(unaudited) |
|
|
Three months
ended |
|
March
31, |
|
2014 |
2013 |
|
(in thousands) |
|
|
|
Detail of Interest
Expense: |
|
|
Term loan |
$ -- |
$ 6,469 |
2021 notes |
6,672 |
-- |
2016 notes |
-- |
4,517 |
Credit facility |
201 |
14 |
Change in fair value of stock
warrants (1) |
1,197 |
426 |
Amortization of debt discount
(1) |
-- |
588 |
Amortization of deferred loan
costs (1) |
585 |
295 |
Other |
173 |
191 |
Interest expense,
net |
$ 8,828 |
$ 12,500 |
|
|
|
(1) Non-cash item |
|
BUILDERS FIRSTSOURCE,
INC. AND SUBSIDIARIES |
Reconciliation of
Non-GAAP Financial Measures to their GAAP
Equivalents |
(unaudited - in
thousands, except per share amounts) |
|
|
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 April 24, 2014. |
|
|
|
Three months
ended |
|
|
|
March
31, |
|
|
|
2014 |
2013 |
|
|
|
|
|
|
|
Reconciliation to Adjusted
EBITDA: |
|
|
|
|
Net loss |
$ (3,384) |
$ (11,808) |
|
|
Reconciling items: |
|
|
|
|
Depreciation and amortization
expense |
1,982 |
2,774 |
|
|
Interest expense,
net |
8,828 |
12,500 |
|
|
Income tax (benefit)
expense |
(82) |
315 |
|
|
Loss from discontinued
operations, net of tax |
72 |
203 |
|
|
Facility closure
costs |
163 |
59 |
|
|
Stock compensation
expense |
982 |
1,335 |
|
|
Other |
5 |
(7) |
|
|
Adjusted EBITDA |
$ 8,566 |
$ 5,371 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
|
March
31, |
|
2014 |
2013 |
|
Pre-Tax |
Net of
Tax |
Pre-Tax |
Net of
Tax |
|
|
|
|
|
Reconciliation to Adjusted loss from
continuing operations: |
|
|
|
|
Loss from continuing operations |
|
$ (3,312) |
|
$ (11,605) |
Reconciling items: |
|
|
|
|
Warrant fair value
adjustment |
|
1,197 |
|
426 |
Tax valuation
allowance |
|
1,041 |
|
4,408 |
Adjusted loss from continuing
operations |
|
$ (1,074) |
|
$ (6,771) |
|
|
|
|
|
Weighted average diluted shares
outstanding |
|
97,617 |
|
95,989 |
|
|
|
|
|
Adjusted loss from continuing
operations per diluted share |
|
$ (0.01) |
|
$ (0.07) |
CONTACT: Chad Crow
Senior Vice President and Chief Financial Officer
Builders FirstSource, Inc.
(214) 880-3585
Marcie Hyder
Vice President and Corporate Controller
Builders FirstSource, Inc.
(214) 880-3551
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