DALLAS, July 30, 2020 (GLOBE NEWSWIRE) — Builders FirstSource, Inc. (Nasdaq: BLDR) today reported its results for the second quarter ending June 30, 2020.Second Quarter 2020 Highlights:Net sales for the quarter increased by 2.2% compared to the prior year period
– Core organic sales declined 2.1%, excluding acquisitions and commodity impacts
– Acquisitions contributed net sales growth of 2.5%
– Estimated sales volume, which includes core organic and acquisitions, grew by 0.4%
– Commodity inflation increased sales by 1.8%Adjusted EBITDA increased 11.2% to a record $162 million, or 8.3% of net sales driven by disciplined cost managementNet income of $78.9 million, or $0.67 per diluted share, and adjusted net income of $79.2 million, or $0.67 per diluted shareStrong quarter-end balance sheet with a net debt to Adjusted EBITDA ratio of 2.3x and liquidity of $1.2 billion.CEO Chad Crow said, “We are incredibly proud of our team’s ability to overcome the challenges presented by the COVID-19 pandemic and produce record-setting second quarter EBITDA results. During the quarter, we carefully monitored local business conditions in order to safely and effectively deliver critical products and services to our customers, all while preserving as many jobs as possible. As we look at our markets, improvement in housing data, record low mortgage rates, and shifts toward suburban living are all encouraging and continue to support demand for our integrated services. To that end, in June, we experienced a sharp sequential rebound in sales. Going forward, we remain confident in our ability to outperform the market as well as mitigate business disruptions outside of our control related to the COVID-19 pandemic.”CFO Peter Jackson added, “Our proactive actions and focused execution at the onset of the COVID-19 pandemic allowed us to operate effectively throughout a challenging environment. During the first half of the year, we actively enhanced our financial flexibility, liquidity, and cash flow to better position our business for continued success. We are pleased with our progress in de-leveraging and fortifying our balance sheet as we reduced our net leverage ratio to 2.3x, which is below the low end of our targeted range.”Second Quarter 2020 Compared to Second Quarter 2019Net SalesNet sales for the second quarter ending June 30, 2020, were $1.9 billion, a 2.2% increase compared to a year ago. Core organic sales declined by 2.1% and commodity price inflation added 1.8% to net sales.Acquisitions contributed net sales growth of 2.5% attributable to the five acquisitions completed during the prior four quarters.Value-added product sales volume grew by an estimated 0.4%, led by 3.3% growth in our Windows, Doors, and Millwork product category partially offset by a decline of 2.6% in our Manufactured Products.Demand remained resilient across our three customer end markets. Single family and multi-family estimated sales volume declined by 0.6% and 1.4%, respectively, while repair and remodel / other grew estimated sales volume by 4.1%.Gross MarginGross margin was $517.3 million, flat compared with the prior year. Our gross margin percentage decreased to 26.6 percent from 27.2 percent in the prior year period. The decrease was attributable to the expected normalization in our lumber and lumber sheet goods product category gross margin percentage compared to the prior year period.Selling, General and Administrative Expenses
SG&A in the second quarter of 2020 was $388.1 million, a decrease of approximately $13.4 million, driven by disciplined cost reduction which resulted in lower variable compensation and benefit expenses, travel and entertainment expense, as well as lower fuel expense. As a percentage of sales, SG&A decreased by 110 basis points to 19.9 percent.Interest ExpenseInterest expense decreased by $2.6 million to $26.8 million compared to the same period last year. The year over year decrease is largely due to one-time charges related to debt financing transactions executed in the prior year period. Adjusting for the one-time charges in both periods, interest expense increased by $1.7 million due to a higher outstanding debt balance as compared to the prior year quarter, partially offset by the effect of lower interest rates.Income Tax ExpenseIncome tax expense in the second quarter of 2020 was $23.5 million, or an effective tax rate of 23.0%. In the same period of the prior year, income tax expense was $19.7 million, or an effective tax rate of 22.8%.Adjusted Net IncomeNet income was $78.9 million, or $0.67 per diluted share, compared to $66.6 million, or $0.57 per diluted share, in the same period a year ago.Adjusted net income was $79.2 million, or $0.67 per diluted share, compared to $74.1 million, or $0.63 per diluted share, in the second quarter of 2019. The increase in adjusted net income of $5.1 million, or 6.9%, was primarily driven by the reduction in variable SG&A described above.Adjusted EBITDAAdjusted EBITDA grew $16.3 million to $161.9 million, an increase of 11.2%, setting a quarterly record. The increase was driven by our cost management measures during the COVID-19 pandemic. As a result, Adjusted EBITDA improved to 8.3% of sales in the second quarter from 7.6% in the same period a year ago.Year to Date June 30, 2020 Financial Information:Net SalesNet sales year to date were $3.7 billion, a 5.6% increase compared to the first half of 2019, largely driven by the impact of acquisitions of 3.0% while core organic growth contributed 0.6%. Commodity inflation and one additional selling day increased sales by 1.2% and 0.8%, respectively.Estimated sales volume grew 3.6%. Demand increased across our three customer end markets. We grew in all of our product categories with the exception of Gypsum, Roofing and Insulation.Gross MarginGross margin increased $23.6 million to $982.7 million. Our gross margin percentage decreased to 26.3% in the first half of 2020 from 27.1% in the first six months of 2019, an 80 basis point decrease. The decrease was attributable to the expected normalization in our lumber and lumber sheet goods product category gross margin percentage, compared to the prior year period in which we experienced a particularly strong gross margin percentage, due in part to commodity deflation.Adjusted Net IncomeGAAP net income was $87.7 million, or $0.75 per diluted share, compared to $102.3 million, or $0.88 per diluted share, in the first half of 2019, a decrease of $0.13 per diluted share, or 14.9%.
Adjusted net income was $119.4 million, or $1.02 per diluted share, compared to $113.9 million, or $0.98 per diluted share, in the first half of 2019, an increase of $0.04 per diluted share. The increase in adjusted net income of $5.5 million, or 4.8%, was primarily driven by the increase in net sales, partially offset by higher SG&A.
Adjusted EBITDAAdjusted EBITDA for the first half of 2020 grew $12.4 million to a record $258.9 million, or 6.9% percent of sales, compared to $246.5 million, or 7.0% of sales, for the first half of 2019, an increase of 5.0%. The year over year improvement was due to the increased gross margin partially offset by higher SG&A, related to the acquisitions completed over the last four quarters.Capital Structure, Leverage, and Liquidity Information:Adjusted EBITDA, on a trailing twelve-month basis, was $528.0 million and net debt was $1.237 million as of June 30, 2020. Our net leverage ratio decreased to 2.3x net debt to Adjusted EBITDA at June 30, 2020 from 2.8x as of March 31, 2020, a reduction of 0.5x and below the Company’s target leverage ratio of between 2.5x and 3.5x. Cash generated by operating activities was $169.9 million in the first six months of the year. Cash used in investing activities was $69.3 million in the first half of 2020 including capital expenditures, net of proceeds, of $53.4 million and $15.9 million used for our acquisitions.In April of 2020, we completed a private offering of an additional $350.0 million in aggregate principal amount of senior secured notes due 2027 at an issue price of 98.75% of par value. Proceeds were used to repay the funds drawn under our revolving credit facility and to pay related transaction fees and expenses, with the remaining net proceeds available as cash on hand.Liquidity as of June 30, 2020 was $1.2 billion, consisting of $817.8 million in net borrowing availability under the revolving credit facility and $385.5 million cash on hand.OutlookMr. Crow concluded, “Our first half results demonstrate a positive overall homebuilding environment, supported by tailwinds and rising demand across our diverse, national footprint. We are focusing our efforts on disciplined cost management while we work to efficiently meet customer demand, manage the impact of accelerating commodity inflation and generate additional cash flow in the third quarter. We are exceptionally well-positioned to execute on organic and inorganic value-enhancing growth opportunities that advance our long-range plan, and help us win in our markets. I especially thank our fifteen thousand team members for the milestones achieved and the ongoing safety-first emphasis in an unprecedented environment.”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 included herein includes non-GAAP financial information, please refer to the accompanying financial schedules for non-GAAP reconciliations to their GAAP equivalents.Please refer to the accompanying financial schedules for more information.Conference Call
Builders FirstSource will host a conference call Friday, July 31, 2020, 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, July 30th. To participate in the teleconference, please dial into the call a few minutes before the start time: 800-458-4121 (U.S. and Canada) and 323-794-2093 (international), Conference ID: 3901667. A replay of the call will be available at 1:00 p.m. Central Time through August 15th. To access the replay, please dial 888-203-1112 (U.S. and Canada) and 719-457-0820 (international) and refer to pass code 3901667. 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 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 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 recent novel coronavirus disease 2019 (also known as “COVID-19”) pandemic, 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) 765-3804 Financial Schedules to FollowBUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETBUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF CASH FLOWSSupplemental disclosure of non-cash activitiesPurchases of property, plant and equipment included in accounts payable were $1.9 million and $4.0 million for the six months ended June 30, 2020 and 2019, respectively.The Company acquired assets under operating lease obligations of $26.0 million and $35.9 million for the six months ended June 30, 2020 and 2019, respectively. Additionally, the Company acquired assets under finance lease obligations of $10.1 million and $7.0 million for the six months ended June 30, 2020 and 2019, respectively. The Company made cash payments for interest of $55.4 million and $50.0 million for the six months ended June 30, 2020 and 2019, respectively. Additionally, the Company made cash payments for taxes of $0.3 million and $2.8 million for the six months ended June 30, 2020 and 2019, 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 8K filed with the Securities and Exchange Commission on July 30, 2020.
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