EX-99.1 2 d23809dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

For Immediate Release

Builders FirstSource Reports Second Quarter 2015 Results

Second Quarter Adjusted EBITDA increases 36 percent to $27.6 Million

July 23, 2015 (Dallas, TX) – Builders FirstSource, Inc. (NasdaqGS: 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 second quarter ended June 30, 2015.

Second quarter highlights include the following (see financial schedules for more information, including non-GAAP reconciliations):

 

    Second quarter 2015 sales increased to $461.5 million, up 8.2 percent, compared to $426.5 million for the second quarter of 2014.

 

    Gross margin percentage was 24.0 percent, up 200 basis points from 22.0 percent in the second quarter of 2014.

 

    Adjusted EBITDA increased 35.7 percent to $27.6 million, or 6.0 percent of sales, from $20.4 million, or 4.8 percent of sales, for the second quarter of 2014.

 

    Received all third party and governmental consents necessary for the completion of our previously announced acquisition of ProBuild Holdings LLC (“ProBuild”), one of the nation’s largest professional building materials suppliers. The acquisition is expected to close in early August 2015 in conjunction with Builders FirstSource’s previously announced financing transactions.

Commenting on the company’s results, Builders FirstSource CEO Floyd Sherman said, “I am extremely pleased with the performance of our company this quarter. We increased our revenues by 8.2 percent despite the negative year-over-year impact from commodity deflation and the abnormally wet weather conditions during the quarter. Our gross profit margin of 24.0 percent was the highest it’s been since the third quarter of 2007, and our Adjusted EBITDA of $27.6 million represented our highest quarterly Adjusted EBITDA result since the third quarter of 2006, when annualized single family starts were above 1.3 million. These results reinforce our belief that we are continuing to benefit from a strengthening housing market and that Builders FirstSource is well positioned.”

Chad Crow, Builders FirstSource President, COO and CFO, added, “We made significant strides in improving our profitability this quarter. The company demonstrated strong operating leverage with Adjusted EBITDA flow through on incremental sales of 20.8 percent, resulting in our best quarterly Adjusted EBITDA margin in eight years. We believe further operating leverage is possible with continued improvement in the housing market and our increased scale following our acquisition of ProBuild.”

 

1


Builders FirstSource Reports Second Quarter 2015 Results (continued)

 

Second Quarter 2015 Results Compared to Second Quarter 2014

(See accompanying financial schedules for full financial details and reconciliations of Non-GAAP financial measures to their GAAP equivalents.)

 

    Sales were $461.5 million, an increase of $35.0 million or 8.2 percent, which includes a 2.4 percent negative impact of commodity price deflation. We estimate sales volume increased approximately 10.6 percent, of which 4.3 percent related to recent acquisitions and 6.3 percent related to volume growth at legacy locations.

 

    Gross margin percentage was 24.0 percent, up from 22.0 percent last year. Our gross margin percentage increased largely due to improved customer pricing and a higher mix of value-added sales.

 

    Selling, general and administrative (“SG&A”) expenses increased $18.1 million to $94.5 million. As a percentage of sales, SG&A expense increased to 20.5 percent compared to 17.9 percent in the second quarter of 2014. Of the $18.1 million increase, $6.4 million was acquisition costs primarily related to the recently announced ProBuild transaction, $1.5 million related to an increase in depreciation and amortization and $0.7 million related to an increase in stock compensation expense. Excluding these increases, our SG&A expense was 18.6 percent of sales in the current quarter versus 17.9 percent of sales in the same quarter a year ago. This remaining increase was further affected by the negative impact of commodity price deflation on our sales.

 

    Interest expense was $12.6 million, an increase of $6.1 million. The increase was primarily related to a $5.9 million increase in the non-cash, fair value adjustment related to stock warrants issued in conjunction with our 2011 term loan. During the second quarter of 2015, all of the remaining stock warrants were exercised and there were none outstanding as of June 30, 2015. See supplemental schedule attached.

 

    We recorded a $0.2 million income tax benefit compared to $0.2 million of income tax expense in the second quarter of 2014. We recorded a reduction of the after-tax, non-cash valuation allowance on our net deferred tax assets of $1.3 million and $4.1 million in the second quarters of 2015 and 2014, respectively. Absent the valuation allowance, the effective tax rate would have been 33.2 percent and 39.5 percent in the second quarters of 2015 and 2014, respectively. As of June 30, 2015, our gross federal income tax net operating loss available for carry-forward was approximately $257 million.

 

    Income from continuing operations was $3.6 million, or $0.03 per diluted share, compared to $10.6 million, or $0.09 per diluted share, for the year-ago period. Adjusted income from continuing operations was $14.3 million, or $0.14 per diluted share, compared to $9.4 million, or $0.09 per diluted share, in the second quarter of 2014. See reconciliation attached.

 

    Adjusted EBITDA was $27.6 million, or 6.0 percent of sales, compared to $20.4 million, or 4.8 percent of sales. See reconciliation attached.

 

2


Builders FirstSource Reports Second Quarter 2015 Results (continued)

 

Liquidity and Capital Resources

 

    Total liquidity at June 30, 2015 was $143.8 million, including $40.2 million of cash and $103.6 million in borrowing availability under our revolver. We had $55.0 million in outstanding borrowings and $16.4 million in outstanding letters of credit under our revolver as of June 30, 2015.

 

    Operating cash flow was $7.7 million for the second quarter of 2015, compared to negative $13.1 million in the second quarter of 2014, the difference largely due to higher working capital build in the second quarter of 2014.

 

    Capital expenditures were $5.2 million for the second quarter of 2015, compared to $6.8 million for the second quarter of 2014.

 

    On April 13, 2015, we announced that we entered into a definitive purchase agreement to acquire ProBuild Holdings, LLC. For more information related to this transaction and how it may affect our future liquidity, please refer to our Form 8-K filed with the Securities and Exchange Commission on April 13, 2015.

Outlook

Concluding, Mr. Sherman added, “The current macro-economic environment continues to be favorable for the future of Builders FirstSource. Employment gains and improving consumer confidence coupled with low levels of new home inventory and low mortgage rates should lead to an increase in home construction activity. With the acquisition of ProBuild scheduled to close in August, Builders FirstSource stands ready to benefit from this increase in construction activity as the nation’s largest building supply company.”

Conference Call

Builders FirstSource will host a conference call Friday, July 24, 2015 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: 800-306-6784 (U.S. and Canada) and 913-312-9323 (international). A replay of the call will be available at 3:00 p.m. CT through July 29th. To access the replay, please dial 888-203-1112 (U.S. and Canada) and 719-457-0820 (international) and refer to pass code 1223790. 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 55 distribution centers and 55 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.

 

3


Builders FirstSource Reports Second Quarter 2015 Results (continued)

 

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. 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:
Chad Crow Drew Mackintosh
President, COO and CFO Mackintosh Investor Relations
Builders FirstSource, Inc. (512) 243-5009
(214) 880-3585

Financial Schedules to Follow

 

4


BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(unaudited)

 

     Three months ended
June 30,
    Six Months ended
June 30,
 
     2015     2014     2015     2014  
     (in thousands, except per share amounts)  

Sales

   $ 461,521      $ 426,543      $ 832,507      $ 772,452   

Cost of sales

     350,907        332,744        638,160        603,738   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

  110,614      93,799      194,347      168,714   

Selling, general and administrative expenses (includes stock-based compensation expense of $1,602 and $926 for the three months ended in 2015 and 2014, respectively, and $3,369 and $1,908 for the six months ended in 2015 and 2014, respectively.)

  94,543      76,417      177,381      145,735   

Facility closure costs

  131      28      385      191   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

  15,940      17,354      16,581      22,788   

Interest expense, net

  12,573      6,504      20,180      15,332   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

  3,367      10,850      (3,599   7,456   

Income tax expense (benefit)

  (199   230      (3   148   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

  3,566      10,620      (3,596   7,308   

Income (loss) from discontinued operations (net of income tax expense of $0 in 2015 and 2014, respectively)

  10      (11   102      (83
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income (loss)

$ 3,576    $ 10,609    $ (3,494 $ 7,225   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic net income (loss) per share:

Income (loss) from continuing operations

$ 0.04    $ 0.11    $ (0.04 $ 0.07   

Income (loss) from discontinued operations

  0.00      (0.00   0.00      (0.00
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income (loss)

$ 0.04    $ 0.11    $ (0.04 $ 0.07   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income (loss) per share:

Income (loss) from continuing operations

$ 0.03    $ 0.09    $ (0.04 $ 0.07   

Income (loss) from discontinued operations

  0.00      (0.00   0.00      (0.00
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income (loss)

$ 0.03    $ 0.09    $ (0.04 $ 0.07   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares:

Basic

  99,163      98,032      98,677      97,963   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

  102,978      100,759      98,677      100,766   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

5


BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

Sales by Product Category

(unaudited)

 

     Three months ended
June 30,
 
     2015     2014  
     (in thousands)  

Prefabricated components

   $ 102,639         22.3   $ 91,022         21.3

Windows & doors

     100,550         21.8     90,843         21.3

Lumber & lumber sheet goods

     140,302         30.4     143,925         33.8

Millwork

     48,661         10.5     40,075         9.4

Other building products & services

     69,369         15.0     60,678         14.2
  

 

 

    

 

 

   

 

 

    

 

 

 

Total sales

$ 461,521      100.0 $ 426,543      100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

 

     Six months ended June 30,  
     2015     2014  
     (in thousands)  

Prefabricated components

   $ 181,481         21.8   $ 161,512         20.9

Windows & doors

     185,505         22.3     167,118         21.6

Lumber & lumber sheet goods

     254,608         30.6     259,440         33.6

Millwork

     88,188         10.6     73,543         9.5

Other building products & services

     122,725         14.7     110,839         14.4
  

 

 

    

 

 

   

 

 

    

 

 

 

Total sales

$ 832,507      100.0 $ 772,452      100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

 

6


BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)

 

     June 30,
2015
    December 31,
2014
 
     (in thousands, except per share amounts)  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 40,151      $ 17,773   

Accounts receivable, less allowance of $3,148 and $3,153 at June 30, 2015 and December 31, 2014, respectively

     184,675        148,352   

Inventories

     146,227        138,156   

Other current assets

     26,752        27,259   
  

 

 

   

 

 

 

Total current assets

  397,805      331,540   

Property, plant and equipment, net

  86,830      75,679   

Goodwill

  141,090      139,774   

Other assets, net

  36,647      36,072   
  

 

 

   

 

 

 

Total assets

$ 662,372    $ 583,065   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$ 110,538    $ 75,868   

Accrued liabilities

  80,460      66,225   

Current maturities of long-term debt

  55,078      30,074   
  

 

 

   

 

 

 

Total current liabilities

  246,076      172,167   

Long-term debt, net of current maturities

  353,790      353,830   

Other long-term liabilities

  14,363      16,868   
  

 

 

   

 

 

 

Total liabilities

  614,229      542,865   

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.01 par value, 10,000 shares authorized; zero shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively

  —        —     

Common stock, $0.01 par value, 200,000 shares authorized; 99,326 and 98,226 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively

  993      982   

Additional paid-in capital

  391,517      380,091   

Accumulated deficit

  (344,367   (340,873
  

 

 

   

 

 

 

Total stockholders’ equity

  48,143      40,200   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

$ 662,372    $ 583,065   
  

 

 

   

 

 

 

 

7


BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

     Six Months ended
June 30,
 
     2015     2014  
     (in thousands)  

Cash flows from operating activities:

    

Net income (loss)

   $ (3,494   $ 7,225   

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation and amortization

     6,782        4,022   

Amortization of deferred loan costs

     1,232        1,200   

Fair value adjustment of stock warrants

     4,563        19   

Deferred income taxes

     28        80   

Bad debt expense

     161        (336

Stock compensation expense

     3,369        1,908   

Net gain on sale of assets

     (114     (15

Changes in assets and liabilities:

    

Receivables

     (36,129     (21,823

Inventories

     (6,976     (15,438

Other current assets

     1,876        1,728   

Other assets and liabilities

     1,046        (114

Accounts payable

     34,670        19,663   

Accrued liabilities

     10,543        2,573   
  

 

 

   

 

 

 

Net cash provided by operating activities

  17,557      692   
  

 

 

   

 

 

 

Cash flows from investing activities:

Purchases of property, plant and equipment

  (14,331   (12,121

Proceeds from sale of property, plant and equipment

  180      16   

Cash used for acquisitions, net

  (5,797   (8,726
  

 

 

   

 

 

 

Net cash used in investing activities

  (19,948   (20,831
  

 

 

   

 

 

 

Cash flows from financing activities:

Borrowings under revolving credit facility

  25,000      —     

Payments of long-term debt and other loans

  (36   (33

Deferred loan costs

  —        (34

Payments of transaction costs

  (326   —     

Exercise of stock options

  1,117      1,355   

Repurchase of common stock

  (986   (1,306
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

  24,769      (18
  

 

 

   

 

 

 

Net change in cash and cash equivalents

  22,378      (20,157

Cash and cash equivalents at beginning of period

  17,773      54,696   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

$ 40,151    $ 34,539   
  

 

 

   

 

 

 

 

8


BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

Supplemental Interest Expense Information

(unaudited)

 

     Three months ended
June 30,
     Six months ended
June 30,
 
     2015      2014      2015      2014  
     (in thousands)  

Detail of Interest Expense:

           

2021 notes

   $ 6,672       $ 6,672         13,344         13,344   

Credit facility

     411         203         747         404   

Change in fair value of stock warrants (1)

     4,730         (1,178      4,563         19   

Amortization of deferred loan costs (1)

     616         615         1,232         1,200   

Other

     144         192         294         365   
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest expense, net

$ 12,573    $ 6,504    $ 20,180    $ 15,332   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Non-cash item

 

9


BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

Reconciliation of 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 July 23, 2015.

 

     Three months ended
June 30,
 
     2015      2014  
     (in thousands)  

Reconciliation to Adjusted EBITDA:

     

Net income

   $ 3,576       $ 10,609   

Reconciling items:

     

Depreciation and amortization expense

     3,630         2,040   

Interest expense, net

     12,573         6,504   

Income tax expense (benefit)

     (199      230   

Facility closure costs

     131         28   

Stock compensation expense

     1,602         926   

Acquisition related expenses

     6,365         —     

Other

     (57      21   
  

 

 

    

 

 

 

Adjusted EBITDA

$ 27,621    $ 20,358   
  

 

 

    

 

 

 

 

     Three months ended
June 30,
 
     2015      2014  
     Pre-Tax      Net of Tax      Pre-Tax      Net of Tax  

Reconciliation to Adjusted income from continuing operations:

           

Income from continuing operations

      $ 3,566          $ 10,620   

Reconciling items:

           

Acquisition related expenses

     6,365         5,989         —           —     

Warrant fair value adjustment

     —           4,730         —           (1,178
     

 

 

       

 

 

 

Adjusted income from continuing operations

$ 14,285    $ 9,442   
     

 

 

       

 

 

 

Weighted average diluted shares outstanding

  102,978      100,759   
     

 

 

       

 

 

 

Adjusted income from continuing operations per diluted share

$ 0.14    $ 0.09   
     

 

 

       

 

 

 

 

10