DALLAS, Feb. 20, 2020 (GLOBE NEWSWIRE) — Builders FirstSource, Inc. (Nasdaq: BLDR) today reported its results for the fourth quarter and full year ended December 31, 2019.
Fourth Quarter 2019 Highlights:Net sales for the quarter were $1.8 billion, a decline of $52.4 million, a decrease of 2.9%Sales volume grew by an estimated 7.7% with improvement across all three customer segments, led by an 8.7% volume increase in our value-added product categories
Commodity deflation decreased net sales by an estimated 10.6%
Adjusted EBITDA of $109.3 million or 6.2% of net sales
Net income of $41.4 million, or $0.35 per diluted share, and adjusted net income of $47.2 million, or $0.40 per diluted shareNet debt to Adjusted EBITDA ratio of 2.5x, at the low end of our targeted rangeAcquired Raney Components, a vertically-integrated distributor and installer of value-added products in Florida with annual revenue of approximately $140 million.Commenting on the results, CEO Chad Crow remarked, “We delivered another quarter of strong results to end 2019 with a solid foundation to further build on our record of success. Continued focus on our operational excellence initiatives contributed to a robust fourth quarter gross margin, while our full year gross margin improved 230 basis points, allowing us to achieve record annual Adjusted EBITDA of $516 million. Furthermore, we continue to make strategic investments in our operations and acquisitions to drive enhanced growth in margin-accretive products and markets, while preserving our balance sheet strength to support value-enhancing initiatives. We believe we are the strongest company in our industry, which is a real tribute to our team’s hard work and dedication. As we look forward, we are confident that our efforts to further partner with our customers to streamline the construction process will allow us to drive profitable growth in the years to come.”Peter Jackson, CFO, added, “We closed out the decade on a strong footing underpinned by record full year Adjusted EBITDA and free cash flow. I am very pleased with our de-leveraging progress, as we reduced our net leverage ratio by 0.6x year over year to 2.5x, the low end of our targeted range. Our team’s ability to drive profitable growth while generating cash through working capital efficiency validates the strength of our strategic initiatives to produce meaningful value creation.”Fourth Quarter 2019 Compared to Fourth Quarter 2018Net SalesNet sales were $1.8 billion, a 2.9% decrease compared to the same period a year ago driven by the impact of deflation in commodity prices of approximately 10.6%. Lumber and lumber sheet goods sales declined by 16.1%, attributable to the deflation in commodity prices as compared to the same period a year ago. Our remaining product categories, excluding gypsum, roofing and insulation, achieved increased sales on higher volumes.Sales volume, excluding commodity deflation, grew by an overall 7.7%. Our single-family end market grew by an estimated 7.5%, repair and remodel / other by 6.8% and multi-family by 13.3%. Sales volume in our value-added product categories grew by 8.7%, including 10.7% in Manufactured Products and 6.9% in our Windows, Doors and Millwork categories.Gross MarginGross margin was $476.6 million compared to $492.8 million, a decrease of 3.3% over the prior year driven by the commodity deflation impact on net sales, mostly offset by an improved product mix and our continued focus on pricing discipline. Gross margin percentage remained relatively steady at 27.0 % versus 27.1% in the prior year period.Selling, General and Administrative ExpensesSG&A was consistent with the fourth quarter of 2018, as operational efficiencies fully offset increased variable expenses related to higher sales volume.SG&A as a percentage of net sales was 22.8%, an increase of 60 basis points, primarily the result of the impact of commodity price deflation on our net sales.Interest ExpenseInterest expense was $27.5 million in the fourth quarter of 2019, an increase of $4.1 million from the fourth quarter of 2018. This increase was primarily attributable to one-time charges of $3.5 million related to the partial repayment of the term loan in that period.In addition, interest expense for the fourth quarter 2018 included a $3.2 million gain on debt extinguishment. However, these increases were partially offset by reduced interest expense attributable to lower outstanding debt balances in the fourth quarter of 2019 compared to the fourth quarter of 2018.Income Tax ExpenseIncome tax expense was $6.3 million, or an effective tax rate of 13.2%, compared to $15.0 million, or an effective tax rate of 22.4% in the prior year. The year over year decrease was mainly driven by one-time items impacting the rate in the quarter.Adjusted Net IncomeNet income was $41.4 million, or $0.35 per diluted share, compared to $52.0 million, or $0.45 per diluted share, in the same period a year ago.Adjusted net income was $47.2 million, or $0.40 per diluted share, compared to $53.1 million, or $0.46 per diluted share, in the prior year quarter. The decrease was primarily driven by the deflationary impact of commodity prices on net sales.Adjusted EBITDAAdjusted EBITDA declined $15.7 million to $109.3 million, a decrease of 12.6%. The decrease was primarily driven by lower gross margin dollars due to the impact of commodity price deflation on net sales. As a result, Adjusted EBITDA declined to 6.2% of sales in the fourth quarter from 6.9% in the same period a year ago.Full Year December 31, 2019 Financial Information:Net Sales Net sales were $7.3 billion, a 5.8% decrease compared to the prior year, driven by the impact of commodity price deflation. Sales volume increased by an estimated 6.5%, driven by increased volumes across all of our product categories, led by growth in value-added product categories.Gross MarginGross profit increased $53.9 million to $2.0 billion. Our gross margin percentage increased to 27.2% from 24.9% in the prior year period, a 230 basis point improvement. The increase was primarily attributable to an improved product mix, the decline in the cost of commodities relative to our customer pricing commitments, and continued pricing discipline. In addition, sales growth from our higher margin, value-added product categories contributed to increased gross profit dollars and percentage compared to the prior year period.Interest ExpenseInterest expense was $109.6 million in 2019, an increase of $1.3 million from 2018. The increase was due to lower outstanding debt balances offset by $10.2 million in one-time charges related to the debt transactions executed during the year. In addition, interest expense for the full year 2018 included a $3.2 million gain on debt extinguishment.Adjusted Net IncomeNet income was $221.8 million, or $1.90 per diluted share, compared to $205.2 million, or $1.76 per diluted share, in the prior year period, representing an increase of $0.14 per diluted share, or 8.0%.Adjusted net income was $245.1 million, or $2.09 per diluted share, compared to $221.2 million, or $1.90 per diluted share in the year ago period, representing an increase of $0.19 per diluted share. The year over year increase in adjusted net income of $23.9 million, or 10.8%, was primarily driven by the higher gross margin.Adjusted EBITDAAdjusted EBITDA grew $14.5 million to $516.1 million, or 7.1% of net sales, compared to $501.6 million, or 6.5% of sales, attributable to higher gross margin dollars partially offset by increases in variable compensation related to the growth in estimated sales volume and profitability. The 2.9% increase in Adjusted EBITDA, and the 60 basis points improvement in EBITDA margin, were primarily due to the factors described above.Capital Structure, Leverage, and Liquidity Information:Net debt was $1,285.9 million as of December 31, 2019. The net debt to Adjusted EBITDA leverage ratio remained steady at 2.5x compared to September 30, 2019, at the low end of the Company’s previously stated leverage target ratio of between 2.5x and 3.5x. Cash provided by operating activities was $504.0 million in 2019 which was positively impacted by commodity deflation on the value of working capital compared to the prior year period.Cash used in investing activities was $199.2 million in 2019 including $92.9 million used for our acquisitions of Sun State and Raney in 2019 and capital expenditures of $112.9 million.Liquidity as of December 31, 2019 was $695.3 million, consisting of $14.1 million cash on hand and $681.2 million net borrowing availability under our revolving credit facility.In February of 2020, we issued $550.0 million in aggregate principal amount of senior unsecured notes due 2030 to redeem the remaining $503.9 million in aggregate principal amount of our senior secured notes due 2024, as well as, $47.5 million in aggregate principal amount of our senior secured notes due in 2027, and to pay related transaction premiums, fees and expenses.Acquisition Activity:In December 2019, we acquired certain assets and the operations of Raney Components and Raney Construction (“Raney”). Raney manufactures and installs wall panels, roof trusses, roof decking, interior wall framing and other select building products to its customers across Florida, with annual revenue of approximately $140 million.In January 2020, we acquired certain assets and the operations of Bianchi & Company, Inc. (“Bianchi”). Bianchi is a supplier and installer of interior and exterior doors, crown moldings, open stair rail, chair rail, wainscoting, commercial hollow metal frames and doors and other custom millwork to its customers in the Carolina markets. Bianchi has annual revenue of approximately $30 million.Since July 2019, we have completed five tuck-in acquisitions, adding six truss and millwork facilities to supplement organic growth, which in aggregate are expected to generate approximately $240 million in annual value-added net sales.Outlook:Peter Jackson, CFO, concluded, “I am extremely positive on the outlook for Builders FirstSource in the new decade ahead. Our company is well positioned to be the building supply company of choice for builders thanks to our enhanced geographic reach, diversified product offerings, national manufacturing capabilities, and strong partnerships with our customers. We are excited about our plans to drive greater value through our operational excellence initiatives as well as capitalizing on a strong economy and steady growth in the single family housing market. The continued execution of our strategic plan, in combination with an overall positive macroeconomic environment, puts us on firm footing to achieve our full year 2020 objectives. Thank you to all of our associates for their hard work and dedication to help us further advance our premier industry position.”The Company has provided supplemental non-GAAP financial information for the consolidated company that is adjusted to exclude one-time integration, one-time refinancing, and other costs (“Adjusted”). As the information herein includes non-GAAP financial information, please refer to the accompanying financial schedules for non-GAAP reconciliations to their GAAP equivalents. Conference CallBuilders FirstSource will host a conference call Friday, February 21st, 2019 at 9:00 a.m. Central Time (CT) and will simultaneously broadcast it live on the Internet. The earnings release presentation will be posted at www.bldr.com under the “investors” section after the market closes on Thursday, February 20th. To participate in the teleconference, please dial into the call a few minutes before the start time: 800-367-2403 (U.S. and Canada) and 334-777-6978 (international), Conference ID: 8532776. A replay of the call will be available at 1:00 p.m. Central Time through March 7th. To access the replay, please dial 888-203-1112 (U.S. and Canada) and 719-457-0820 (international) and refer to pass code 8532776. 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 FirstSourceHeadquartered 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 approximately 400 locations and have a market presence in 77 of the top 100 Metropolitan Statistical Areas, providing geographic diversity and balanced end market exposure. We service customers from strategically located distribution 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 NoticeStatements 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:
Binit Sanghvi
VP Investor Relations
Builders FirstSource, Inc.
(214) 765-3804BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEET
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF CASH FLOWSSupplemental disclosure of non-cash activitiesFor the years ended December 31, 2019, 2018 and 2017, the Company retired assets subject to other finance obligations of $0.6 million, $0.6 million and $14.0 million and extinguished the related other finance obligations of $0.6 million, $0.7 million and $11.7 million, respectively.The Company purchased equipment which was financed through finance lease obligations of $16.5 million, and capital lease obligations of $10.2 million and $14.2 million in the years ended December 31, 2019, 2018 and 2017, respectively. In addition, purchases of property, plant and equipment included in accounts payable were $3.4 million, $2.4 million and $3.9 million for the years ended December 31, 2019, 2018 and 2017, respectively.
Source: Builders FirstSource, Inc.
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