EX-99.1 2 d543949dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

For Immediate Release

Builders FirstSource Reports Fourth Quarter and Fiscal 2017 Results

Financial highlights include sales and earnings growth with debt reduction and capital structure improvement

February 28, 2018 (Dallas, TX) – Builders FirstSource, Inc. (NasdaqGS: BLDR) today reported its results for the fourth quarter and Fiscal year ended December 31, 2017.

Commenting on fourth quarter results, CEO Chad Crow remarked, “I am pleased to report we had a strong finish to the year, growing sales per day, excluding closed locations, by 13.2 percent in the fourth quarter. We saw an increase in sales volume in the single family construction end market of 7.5 percent, and 5.2 percent in the repair and remodeling / other end market. Additionally, we saw growth in manufactured products of 11.3 percent.

“We are leveraging our platform strengths to deliver sales growth and strong financial results while executing on our strategic priorities and investing in our future. We continued our investments in manufacturing capacity and talent to drive enhanced growth in margin-accretive products and markets, while making further progress in paying down debt and reducing our leverage ratio on a year over year basis.”

Peter Jackson, CFO, added, “In the quarter, we further refined our capital structure by redeeming our most expensive debt, the 10.75% unsecured notes, reducing go forward interest expense by $35 million annually. I am very pleased with the progress we are making on de-leveraging, as we reduced our leverage ratio by 0.6 times year over year to 4.2 times. Cash flow generation and debt reduction will continue to be a priority for 2018, as we execute on our multi-year plan to de-lever the balance sheet and fund growth initiatives.”

The Company has provided supplemental non-GAAP financial information of the consolidated company that is adjusted to exclude one-time integration, facility closure, one-time refinancing, non-cash release of tax valuation allowance and revaluation of deferred taxes, 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.

Fourth Quarter 2017 Compared to Fourth Quarter 2016:

Net Sales

 

    Net sales for the quarter ended December 31, 2017 were $1.8 billion, a sales increase of 15.0 percent over net sales for the fourth quarter of 2016. Sales per day, excluding closed locations, grew 13.2 percent in the quarter, which was benefited approximately 7.6 percent from the impact of commodity lumber price inflation on our sales and 5.6 percent from sales volume growth. Sales volume per day, excluding commodity inflation and closed locations, grew approximately 7.5 percent in the single family homebuilding end market and 5.2 percent in the repair and remodeling/other end market, offset by expected declines in multi-family.

 

 

1


Builders FirstSource Reports Fourth Quarter and Fiscal 2017 Results (continued)

 

Gross Margin

 

    Gross margin of $431.2 million in the fourth quarter of 2017 increased by $39.6 million over the fourth quarter of 2016. Gross margin percentage was 24.2 percent, a decrease of 110 basis points from 25.3 percent in the fourth quarter of 2016. The gross margin percentage decreased primarily due to the impact of commodity price inflation relative to our short-term customer pricing commitments. Although rapid commodity inflation can cause short term gross margin percentage compression as prices are rising, higher commodity prices generally benefit the Company’s gross profit and EBITDA dollars in the long term.

Selling, General and Administrative Expenses

 

    SG&A in the fourth quarter of 2017 was $366.4 million, or 20.6 percent of sales, a decrease of 140 basis points versus the fourth quarter of 2016. The improvement in SG&A as a percent of sales was driven by cost leverage and continued cost management partially offset by investments the Company made towards growth initiatives, including additional sales associates and new locations.

Interest Expense

 

    GAAP interest expense in the fourth quarter of 2017 was $89.5 million compared to $44.4 million in the fourth quarter of 2016. Interest expense in the fourth quarter of 2017 included $56.3 million related to the one time premium paid to redeem the Company’s 10.75% Senior Notes due 2023, reducing go forward annual interest expense by $35 million.

Income Tax Expense

 

    GAAP income tax expense in the fourth quarter of 2017 was $18.0 million compared to income tax expense of $0.1 million in the fourth quarter of 2016. The year over year increase is primarily attributable to the revaluation of our deferred taxes as a result of the 2017 Tax Act, totaling $29.0 million.

 

    Adjusted income tax expense decreased by $14.2 million compared to 2016, largely attributable to the Company’s refinancing transaction in December 2017.

Net Income

 

    GAAP net loss for the fourth quarter of 2017 was $42.7 million, or ($0.38) per diluted share, compared to a net income of $6.4 million, or $0.06 per diluted share, for the fourth quarter of 2016. Net loss for the fourth quarter of 2017 was impacted by $56.3 million of debt refinancing cost and $29.0 million revaluation expense on the Company’s deferred taxes as a result of the 2017 Tax Act. In the fourth quarter of 2016, GAAP net income was benefited by a release of our tax valuation allowance of $3.1 million against our deferred income tax assets offset by $9.7 million in debt issuance and refinancing costs.

 

    Adjusted net income for the quarter was $46.6 million, or $0.40 per diluted share, compared to Adjusted net income of $18.3 million, or $0.16 per diluted share, in the fourth quarter of 2016. The year over year increase is primarily driven by the Company’s lower adjusted tax expense and improved operating results.

EBITDA

 

    Fourth quarter Adjusted EBITDA grew $12.1 million, or 14.2 percent, to $96.9 million compared to $84.8 million for the fourth quarter of 2016. The year over year improvement was largely driven by sales increases and cost leverage realized, offset by the impact of commodity inflation on gross margin and investments the Company made towards growth initiatives, including an increase in sales associates and new locations.

 

2


Builders FirstSource Reports Fourth Quarter and Fiscal 2017 Results (continued)

 

Fiscal 2017 Compared to Fiscal 2016:

Net Sales

 

    2017 net sales were $7.0 billion, a 10.5 percent increase over 2016. Sales, excluding closed locations, grew 10.7 percent, including 6.2 percent from the impact of commodity price inflation on sales. Sales volume, excluding commodity inflation and closed locations, grew approximately 6.9 percent in the single family homebuilding end market.

Gross Margin

 

    Gross margin of $1.7 billion increased by $130.6 million over 2016. Gross margin percentage was 24.6 percent, down 50 basis points from 25.1 percent in 2016. The decline year over year was driven by gross profit margin compression on commodity products due to inflation in the lumber and lumber sheet good markets during most of 2017.

Selling, General and Administrative Expenses

 

    SG&A was $1.4 billion or 20.5 percent of sales, a decrease of 90 basis points versus 2016. The reduction was largely attributable to cost leverage and declines in depreciation and amortization on acquired ProBuild assets, offset by investments the Company made in growth initiatives, including additional sales associates and new locations.

Interest Expense

 

    GAAP interest expense was $193.2 million in 2017, a decrease of $21.5 million from 2016. The reduction is largely the result of a series of transactions that have reduced overall interest expense. In addition, interest expense for 2017 and 2016 included $58.7 million and $57.0 million, respectively, in charges relating to debt financing transactions executed to take advantage of favorable capital market conditions to lower go forward interest expense.

Income Tax Expense

 

    Although the Company did not pay federal cash taxes in 2017, income tax expense was $53.2 million compared to an income tax benefit of $122.7 million in 2016. In 2017, the Company revalued its deferred taxes as a result of the 2017 Tax Act passed in December, increasing income tax expense by $29.0 million. The Company recorded a $128.6 million benefit in its income tax expense in 2016, which was attributable to the release of the valuation allowance against its deferred income tax assets.

Net Income

 

    GAAP net income was $38.8 million, or $0.34 per diluted share, compared to a net income of $144.3 million, or $1.27 per diluted share, in 2016, a decrease of $0.93 per diluted share. The decrease is primarily driven by the tax valuation allowance of $128.6 million that was released in 2016 and the 2017 Tax Act deferred tax revaluation of $29.0 million.

 

    Adjusted net income was $147.2 million, or $1.27 per diluted share, compared to adjusted net income of $94.2 million, or $0.83 per diluted share, for 2016, an increase of $0.44 per diluted share, or 56.3 percent.

EBITDA

 

    Adjusted EBITDA for 2017 grew $37.4 million to $419.0 million, or 6.0 percent of sales, compared to $381.6 million, or 6.0 percent of sales, in 2016, an increase of 9.8 percent. The year over year improvement was primarily attributable to sales growth and cost leverage, partially offset by the impact of commodity inflation on gross margin and investments the Company made towards growth initiatives, including an increase in sales associates and new locations.

 

3


Builders FirstSource Reports Fourth Quarter and Fiscal 2017 Results (continued)

 

Capital Structure, Leverage, and Liquidity Information:

 

    On December 29, 2017, the Company redeemed all of the outstanding $367.6 million aggregate principal amount of its 10.75% Senior Notes due 2023 in contemplation of the 2017 Tax Act, which limited the future deductibility of interest expense. The redemption price was equal to 100% of the principal amount of the Notes, plus the Applicable Premium, plus accrued and unpaid interest. The Applicable Premium totaled $48.7 million, which included interest due through August 15, 2018 and a call premium of 8.063%, plus $13.0 million of accrued but unpaid interest. The transaction was funded by the Company with a combination of $119.1 million cash generated from operations and investing as well as $310.2 million of borrowing on its revolving credit facility. A certain amount of 2018 interest was paid in 2017 with this transaction, which impacted the cash flow and leverage ratio that the Company expected to achieve as of December 31, 2017. This transaction is expected to generate $35 million in annual go forward cash interest savings.

 

    Adjusted EBITDA in 2017 was $419.0 million and net debt was $1,746.0 million as of December 31, 2017. This leverage ratio of 4.2x net debt / Adjusted EBITDA was down from 4.8x as of December 31, 2016, enabled by a net debt reduction and EBITDA growth. Additionally, the refinancing transaction in December 2017 had a short-term impact on the year end leverage ratio, increasing the ratio by to 0.2 turns to 4.2x.

 

    The Company generated net cash from operations and investing of $119.1 million in 2017, including funding $62.4 million of capital investments. Cash generated was used for debt reduction. Cash from operations was impacted by the prepayment of 2018 interest associated with redeeming our 10.75% Senior Notes due 2023, as disclosed in the Company’s 8K filed on December 14, 2017.

 

    Liquidity at December 31, 2017 was $494.3 million, which consisted of net borrowing availability under the revolving credit facility and cash on hand.

Please refer to the accompanying financial schedules for more information.

Outlook

Concluding, Chad Crow, CEO, added, “I am as excited as ever about the outlook for Builders FirstSource for the years ahead. Demand in the new residential housing market continues to show steady growth. The Company is well positioned to capitalize on the opportunities our national footprint, strong customer relationships and our end market diversity provide. We continue to invest to further leverage our advantaged product portfolio to capture growth in the coming years. We are enthusiastic about our plans to create meaningful value through the Company’s identified initiatives as well as capitalizing on a growing single family housing market.

“As you know, Floyd Sherman stepped down as CEO as of December 29. I would like to acknowledge and personally thank my friend and mentor, Floyd Sherman, for his exceptional leadership over the past 16 years. Floyd will remain as an employee advisor to the Company through March 2019. I am eager to build on the strong platform that we have created.”

 

4


Builders FirstSource Reports Fourth Quarter and Fiscal 2017 Results (continued)

 

Conference Call

Builders FirstSource will host a conference call Thursday, March 1, 2018 at 10:00 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: 888-523-1228 (U.S. and Canada) and 719-325-4891 (international), Conference ID: 1093545. A replay of the call will be available at 1:00 p.m. Central Time through March 15th. To access the replay, please dial 888-203-1112 (U.S. and Canada) and 719-457-0820 (international) and refer to pass code 1093545. 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

2017 Sales: $7.0 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

 

5


BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

 

     Three Months Ended December 31,  
     2017     2016  
     (In thousands, except per share amounts)  

Sales

   $ 1,778,939     $ 1,546,912  

Cost of sales

     1,347,719       1,155,337  
  

 

 

   

 

 

 

Gross margin

     431,220       391,575  

Selling, general and administrative expenses

     366,419       340,697  
  

 

 

   

 

 

 

Income from operations

     64,801       50,878  

Interest expense, net

     89,471       44,351  
  

 

 

   

 

 

 

Income (loss) before income taxes

     (24,670     6,527  

Income tax expense

     18,031       116  
  

 

 

   

 

 

 

Net income (loss)

   $ (42,701   $ 6,411  
  

 

 

   

 

 

 

Comprehensive income (loss)

   $ (42,701   $ 6,411  
  

 

 

   

 

 

 

Net income (loss) per share:

    

Basic

   $ (0.38   $ 0.06  
  

 

 

   

 

 

 

Diluted

   $ (0.38   $ 0.06  
  

 

 

   

 

 

 

Weighted average common shares:

    

Basic

     113,239       111,549  
  

 

 

   

 

 

 

Diluted

     113,239       114,158  
  

 

 

   

 

 

 


BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

 

     Years Ended December 31,  
     2017      2016  
     (In thousands, except per share amounts)  

Sales

   $ 7,034,209      $ 6,367,284  

Cost of sales

     5,306,818        4,770,536  
  

 

 

    

 

 

 

Gross margin

     1,727,391        1,596,748  

Selling, general and administrative expenses

     1,442,288        1,360,412  
  

 

 

    

 

 

 

Income from operations

     285,103        236,336  

Interest expense, net

     193,174        214,667  
  

 

 

    

 

 

 

Income before income taxes

     91,929        21,669  

Income tax expense (benefit)

     53,148        (122,672
  

 

 

    

 

 

 

Net income

   $ 38,781      $ 144,341  
  

 

 

    

 

 

 

Comprehensive income

   $ 38,781      $ 144,341  
  

 

 

    

 

 

 

Net income per share:

     

Basic

   $ 0.34      $ 1.30  
  

 

 

    

 

 

 

Diluted

   $ 0.34      $ 1.27  
  

 

 

    

 

 

 

Weighted average common shares:

     

Basic

     112,587        110,754  
  

 

 

    

 

 

 

Diluted

     115,597        113,585  
  

 

 

    

 

 

 


BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

 

     December 31,  
     2017     2016  
     (In thousands, except per share amounts)  
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 57,533     $ 14,449  

Accounts receivable, less allowances of $11,771 and $11,571 at December 31, 2017 and 2016, respectively

     631,992       569,208  

Other receivables

     71,232       55,781  

Inventories, net

     601,547       541,771  

Other current assets

     33,564       34,772  
  

 

 

   

 

 

 

Total current assets

     1,395,868       1,215,981  

Property, plant and equipment, net

     639,303       656,101  

Assets held for sale

     5,273       4,361  

Goodwill

     740,411       740,411  

Intangible assets, net

     132,567       159,373  

Deferred income taxes

     75,105       115,320  

Other assets, net

     17,597       18,340  
  

 

 

   

 

 

 

Total assets

   $ 3,006,124     $ 2,909,887  
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current liabilities:

    

Checks outstanding

   $ —       $ 35,606  

Accounts payable

     514,282       409,759  

Accrued liabilities

     271,597       293,115  

Current maturities of long-term debt and lease obligations

     12,475       16,217  
  

 

 

   

 

 

 

Total current liabilities

     798,354       754,697  

Long-term debt and lease obligations, net of current maturities, debt discount, and debt issuance costs

     1,771,945       1,785,835  

Other long-term liabilities

     59,616       59,735  
  

 

 

   

 

 

 

Total liabilities

     2,629,915       2,600,267  

Commitments and contingencies

    

Stockholders’ equity:

    

Preferred stock, $0.01 par value, 10,000 shares authorized; zero shares issued and outstanding at December 31, 2017 and 2016

     —         —    

Common stock, $0.01 par value, 200,000 shares authorized; 113,572 and 111,564 shares issued and outstanding at December 31, 2017 and 2016, respectively

     1,136       1,115  

Additional paid-in capital

     546,766       527,868  

Accumulated deficit

     (171,693     (219,363
  

 

 

   

 

 

 

Total stockholders’ equity

     376,209       309,620  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 3,006,124     $ 2,909,887  
  

 

 

   

 

 

 


BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

 

     Years Ended December 31,  
     2017     2016  

Cash flows from operating activities:

    

Net income

   $ 38,781     $ 144,341  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     92,993       109,793  

Amortization and write-off of debt issuance costs and debt discount

     6,092       7,502  

Loss on extinguishment of debt

     56,657       55,776  

Payment of original issue discount

     —         (1,259

Deferred income taxes

     49,104       (124,787

Bad debt expense

     197       1,390  

Stock compensation expense

     13,508       10,549  

Net loss (gain) on sales of assets and asset impairments

     6,965       (336

Changes in assets and liabilities, net of assets acquired and liabilities assumed:

    

Receivables

     (75,870     (45,942

Inventories

     (60,645     (33,965

Other current assets

     8       (4,873

Other assets and liabilities

     8,315       (828

Accounts payable and checks outstanding

     65,764       36,585  

Accrued liabilities

     (23,341     4,281  
  

 

 

   

 

 

 

Net cash provided by operating activities

     178,528       158,227  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of property, plant and equipment

     (62,407     (42,662

Proceeds from sale of property, plant and equipment

     2,981       8,305  

Cash used for acquisitions, net

     —         (3,970
  

 

 

   

 

 

 

Net cash used in investing activities

     (59,426     (38,327
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Borrowings under revolving credit facility

     1,370,000       907,000  

Payments under revolving credit facility

     (1,020,000     (967,000

Proceeds from issuance of notes

     —         750,000  

Repayments of long-term debt and other loans

     (379,926     (807,517

Payments of debt extinguishment costs

     (48,704     (42,869

Payments of loan costs

     (2,799     (15,663

Exercise of stock options

     8,055       6,627  

Repurchase of common stock

     (2,644     (1,092
  

 

 

   

 

 

 

Net cash used in financing activities

     (76,018     (170,514
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     43,084       (50,614

Cash and cash equivalents at beginning of period

     14,449       65,063  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 57,533     $ 14,449  
  

 

 

   

 

 

 

Supplemental disclosure of non-cash activities

For the years ended December 31, 2017 and 2016 the Company retired assets subject to lease finance obligations of $14.0 million and $38.1 million and extinguished the related lease finance obligation of $11.7 million and $41.2 million, respectively.

The Company purchased equipment which was financed through capital lease obligations of $14.2 million and $8.1 million in the years ended December 31, 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 February 28, 2018.

 

     Three months ended
December 31,
    Twelve months ended
December 31,
 
     2017     2016     2017     2016  
     (in millions)     (in millions)  

Reconciliation to Adjusted EBITDA:

        

Reported GAAP Net Income

   $ (42.7   $ 6.4     $ 38.8     $ 144.3  

Integration related expenses

     4.0       5.1       20.7       26.0  

Debt issuance and refinancing cost (1)

     56.3       9.7       58.7       57.0  

(Release) of tax valuation allowance/revaluation of deferred taxes (2)

     29.0       (3.1     29.0       (131.6

Facility closure costs

     —         0.2       —         (1.5
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Net Income

     46.6       18.3       147.2       94.2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average diluted common shares (in millions)

     116.5       114.2       115.6       113.6  

Diluted adjusted net income per share:

   $ 0.40     $ 0.16     $ 1.27     $ 0.83  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciling items:

        

Depreciation and amortization expense

     22.2       22.9       93.0       109.8  

Interest expense, net

     33.2       34.7       134.5       157.7  

Income tax (benefit) expense

     (11.0     3.2       24.1       8.9  

Stock compensation expense

     3.6       2.8       13.5       10.5  

(Gain)/loss on sale and asset impairments

     1.9       2.9       6.3       (0.3

Other management-identified adjustments (3)

     0.4       0.0       0.4       0.8  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 96.9     $ 84.8     $ 419.0     $ 381.6  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA Margin

     5.4     5.5     6.0     6.0

 

(1) Cost associated with refinancing long term debt.
(2) In 2016, the company released the valuation allowance against its net deferred tax asses. In 2017, the company revalued its deferred taxes assets due to the 2017 Tax Act.
(3) Primarily relates to severance and one time cost.


BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

Financial Data

(adjusted and unaudited)

 

     Three months ended
December 31,
    Twelve months ended
December 31,
 
     2017     2016     2017     2016  
     (in millions except per share amounts)  

Net sales

     1,778.9       1,546.9       7,034.2       6,367.3  

Sales adjustment for closed locations

     —         (1.4     —         (13.8
  

 

 

   

 

 

   

 

 

   

 

 

 

Net sales excluding closed locations

     1,778.9       1,545.5       7,034.2       6,353.5  

Gross margin

     431.2       391.6       1,727.4       1,596.8  

Gross margin %

     24.2     25.3     24.6     25.1

Adjusted SG&A/Other (excluding depreciation and amortization) as a % of sales (1)(2)

     18.8     19.8     18.6     19.1

Adjusted EBITDA

     96.9       84.8       419.0       381.6  

Adjusted EBITDA margin %

     5.4     5.5     6.0     6.0

Depreciation and amortization

     (22.2     (22.9     (93.0     (109.8

Interest expense, net of debt issuance cost and refinancing

     (33.2     (34.7     (134.5     (157.7

Income tax benefit (expense)

     11.0       (3.2     (24.1     (8.9

Other adjustments

     (5.9     (5.7     (20.2     (11.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Net Income

   $ 46.6     $ 18.3     $ 147.2     $ 94.2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic adjusted net income per share:

   $ 0.41     $ 0.16     $ 1.31     $ 0.85  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted adjusted net income per share:

   $ 0.40     $ 0.16     $ 1.27     $ 0.83  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares (in millions)

        

Basic

     113.2       111.5       112.6       110.8  

Diluted

     116.5       114.2       115.6       113.6  

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 February 28, 2018.

 

(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 Q4-17 of $366.4M less $22.2M depreciation and amortization, less $4.0M of integration expenses, less $3.6M of stock comp and $2.3M loss from sales, impairments, and other. YTD 2017 GAAP SG&A of $1,442.3M less $93.0M depreciation and amortization, less $20.7M of integration expenses, less $13.5M of stock comp, and $6.7M 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
December 31,
    Twelve months ended
December 31,
 
     2017     2016     2017     2016  
     (in millions)     (in millions)  

Lumber & Lumber Sheet Goods

   $ 643.3        36.2   $ 514.8        33.3   $ 2,510.9        35.7   $ 2,129.4        33.5

Manufactured Products

     307.7        17.3     272.1        17.6     1,208.5        17.2     1,089.2        17.1

Windows, Doors & Millwork

     343.9        19.3     322.8        20.9     1,360.6        19.4     1,282.8        20.2

Gypsum, Roofing & Insulation

     129.0        7.3     123.3        8.0     538.4        7.6     519.8        8.2

Siding, Metal & Concrete Products

     157.0        8.8     145.3        9.4     655.9        9.3     621.7        9.8

Other

     198.1        11.1     167.2        10.8     759.9        10.8     710.6        11.2
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total adjusted net sales (1)

   $ 1,779.0        100.0   $ 1,545.5        100.0   $ 7,034.2        100.0   $ 6,353.5        100.0

 

(1) Results exclude sales from closed locations


BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

Interest Reconciliation

(unaudited)

 

     Three months ended
December 31, 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

     9.7      

2024 Term Loan @ 4.7% (Floating LIBOR) (2)

     5.2       463.0       21.8  

Revolving Credit Facility @ 2.9% (Floating LIBOR) (2)

     1.3       350.0       14.4  

Amortization of deferred loan costs and debt discount (3)

     8.9      

Lease finance obligations and capital leases

     5.3       240.5       21.3  

Redemption premium paid on call of the 2023 Unsecured Notes

     48.7      

Other

     (0.1    

Cash

       (57.5  
  

 

 

   

 

 

   

 

 

 

Total

   $ 89.5     $ 1,746.0     $ 99.7  

 

(1) Excludes issuance cost and one time items. Assumes current or pro forma borrowing rates on variable debt.
(2) Assumes Q4 balance for the Term Loan and the revolving credit facility for annualized projections.
(3) Includes $7.6M of non-cash deferred loan cost and debt discount write-off associated with the extinguishment of debt on our 2023 unsecured notes