10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________

Form 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission file number 001-36050

Stock Building Supply Holdings, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	26-4687975
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
8020 Arco Corporate Drive, Suite 400 Raleigh, North Carolina	27617
(Address of principal executive offices)	(Zip Code)

(919) 431-1000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes xNo o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares outstanding of the Registrant’s common stock, par value $0.01 per share, at April 28, 2014 was 26,112,007 shares.

STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES

Table of Contents to Form 10-Q

	PART I - FINANCIAL INFORMATION
Item 1	Financial Statements
	Condensed Consolidated Balance Sheets (Unaudited) as of March 31, 2014 and December 31, 2013	1
	Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2014 and 2013	2
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2014 and 2013	3
	Notes to Consolidated Financial Statements (Unaudited)	4
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4	Controls and Procedures	18
	PART II - OTHER INFORMATION
Item 1	Legal Proceedings	19
Item 1A	Risk Factors	19
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3	Defaults Upon Senior Securities	19
Item 4	Mine Safety Disclosures	19
Item 5	Other Information	19
Item 6	Exhibits	20
	Signature	21

i

PART I. FINANCIAL INFORMATION

ITEM 1    FINANCIAL STATEMENTS

STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share amounts)	March 31, 2014			December 31, 2013
Assets
Current assets
Cash and cash equivalents	$	7,743		$	1,138
Restricted assets	452			460
Accounts receivable, net	111,449			111,285
Inventories, net	104,868			91,303
Costs in excess of billings on uncompleted contracts	8,928			7,921
Assets held for sale	1,892			2,363
Prepaid expenses and other current assets	8,812			9,332
Deferred income taxes	4,420			3,332
Total current assets	248,564			227,134
Property and equipment, net of accumulated depreciation	60,781			56,039
Intangible assets, net of accumulated amortization	24,226			24,789
Goodwill	7,186			7,186
Restricted assets	860			1,359
Other assets	2,097			2,033
Total assets	$	343,714		$	318,540
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	87,195		$	64,984
Accrued expenses and other liabilities	31,808			30,528
Income taxes payable	839			2,989
Current portion of restructuring reserve	1,595			1,594
Current portion of capital lease obligation	1,164			1,240
Billings in excess of costs on uncompleted contracts	1,579			1,599
Total current liabilities	124,180			102,934
Revolving line of credit	66,619			59,072
Long-term portion of capital lease obligation	5,736			6,011
Deferred income taxes	14,991			15,496
Other long-term liabilities	7,310			7,346
Total liabilities	218,836			190,859
Commitments and contingencies (Note 8)
Stockholders' equity
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding at March 31, 2014 and December 31, 2013	—			—
Common stock, $0.01 par value, 300,000,000 shares authorized, 26,112,007 shares issued and outstanding at March 31, 2014 and December 31, 2013	261			261
Additional paid-in capital	145,055			144,570
Retained deficit	(20,438		)	(17,150		)
Total stockholders' equity	124,878			127,681
Total liabilities and stockholders' equity	$	343,714		$	318,540

The accompanying notes are an integral part of these consolidated financial statements.

1

STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended March 31,
(in thousands, except share and per share amounts)	2014			2013
Net sales	$	279,983		$	248,726
Cost of goods sold	214,741			194,936
Gross profit	65,242			53,790
Selling, general and administrative expenses	67,127			56,802
Depreciation expense	1,468			1,639
Amortization expense	563			547
Impairment of assets held for sale	48			—
Public offering transaction-related costs	448			—
Restructuring expense	7			60
	69,661			59,048
Loss from operations	(4,419		)	(5,258		)
Other income (expense)
Interest expense	(631		)	(1,025		)
Other income, net	243			190
Loss from continuing operations before income taxes	(4,807		)	(6,093		)
Income tax benefit	1,498			1,879
Loss from continuing operations	(3,309		)	(4,214		)
Income from discontinued operations, net of income tax expense of $14 and $109, respectively	21			157
Net loss	(3,288		)	(4,057		)
Redeemable Class B Senior Preferred stock deemed dividend	—			(729		)
Loss attributable to common stockholders	$	(3,288	)	$	(4,786	)
Weighted average common shares, basic and diluted	25,684,014			13,523,270
Basic and diluted (loss) income per share
Loss from continuing operations	$	(0.13	)	$	(0.36	)
Income from discontinued operations	—			0.01
Net loss per share	$	(0.13	)	$	(0.35	)

The accompanying notes are an integral part of these consolidated financial statements.

2

STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Three Months Ended March 31,
(in thousands)	2014			2013
Cash flows from operating activities
Net loss	$	(3,288	)	$	(4,057	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation expense	2,474			2,414
Amortization of intangible assets	563			547
Amortization of debt issuance costs	126			164
Deferred income taxes	(1,593		)	(1,874		)
Non-cash stock compensation expense	485			146
Impairment of assets held for sale	96			—
(Gain) loss on sale of property, equipment and real estate	(1		)	2
Bad debt expense	256			488
Change in assets and liabilities
Accounts receivable	(420		)	(14,802		)
Inventories, net	(13,565		)	(21,642		)
Accounts payable	24,544			15,119
Other assets and liabilities	(1,321		)	5,854
Net cash provided by (used in) operating activities	8,356			(17,641		)
Cash flows from investing activities
Change in restricted assets	507			1,833
Proceeds from sale of property, equipment and real estate	380			7
Purchases of property and equipment	(8,449		)	(374		)
Net cash (used in) provided by investing activities	(7,562		)	1,466
Cash flows from financing activities
Proceeds from revolving line of credit	307,095			273,050
Repayments of proceeds from revolving line of credit	(299,548		)	(252,784		)
Other financing activities	(1,736		)	(1,027		)
Net cash provided by financing activities	5,811			19,239
Net increase in cash and cash equivalents	6,605			3,064
Cash and cash equivalents
Beginning of period	1,138			2,691
End of period	$	7,743		$	5,755

The accompanying notes are an integral part of these consolidated financial statements.

3

STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.    Organization

Stock Building Supply Holdings, Inc. and its subsidiaries (the “Company,” “we,” “us” and “our” ) distributes lumber and building materials to new construction and repair and remodeling contractors. Additionally, we provide solution-based services to our customers, including component design, production specification and installation management services.

Due to the seasonal nature of our industry, sales are usually lower in the first and fourth quarters than in the second and third quarters.

2.    Basis of Presentation

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) that permit reduced disclosure for interim periods. The condensed consolidated balance sheet as of December 31, 2013 was derived from audited financial statements, but does not include all necessary disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The unaudited condensed consolidated financial statements include all accounts of the Company and its subsidiaries and, in the opinion of management, include all recurring adjustments and normal accruals necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the dates and periods presented. These unaudited financial statements should be read in conjunction with the Company’s 2013 Annual Report on Form 10-K. Results for interim periods are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period. All material intercompany accounts and transactions have been eliminated in consolidation.

Comprehensive loss

Comprehensive loss is equal to the net loss for all periods presented.

3.    Discontinued Operations

During certain prior years, the Company ceased operations in certain geographic markets due to declines in residential home building throughout the U.S. and other strategic reasons. The Company will have no further significant continuing involvement in sold operations and exited geographic markets. The cessation of operations in these markets has been treated as discontinued operations as the markets had distinguishable cash flows and operations that have been eliminated from ongoing operations. To determine if cash flows have been (or will be) eliminated from ongoing operations, we evaluate a number of qualitative and quantitative factors, including, but not limited to, proximity of a closing store to any remaining open stores and the potential sales migration from the closed store to any stores remaining open.

The operating results of the discontinued operations for the three months endedMarch 31,2014 and 2013 are as follows:

	Three Months Ended March 31,
(in thousands)	2014			2013
Net sales	$	—		$	—
Restructuring charges	(5		)	(9		)
Gain before income taxes	35			266
Income tax expense	(14		)	(109		)
Net income	21			157

4

The assets and liabilities of discontinued operations reflected on the consolidated balance sheets at March 31, 2014 and December 31, 2013 are as follows:

(in thousands)	March 31,    2014		December 31,    2013
Real estate held for sale	$	652	$	700
Prepaid expenses and other current assets	26		8
Current assets of discontinued operations	678		708
Accrued expenses and other liabilities	76		37
Restructuring reserve	300		295
Current liabilities of discontinued operations	376		332
Long-term restructuring reserve	12		89
Noncurrent liabilities of discontinued operations	$	12	$	89

4.    Restructuring Costs

In addition to discontinuing operations in certain markets, the Company instituted store closures and reductions in headcount in continuing markets (collectively, the “Restructurings”) in certain prior years in an effort to: (i) strengthen the Company’s competitive position; (ii) reduce costs and (iii) improve operating margins within existing markets that management believes have favorable long-term growth demographics. No additional costs, other than interest accretion, are expected to be incurred related to the Restructurings.

The following table summarizes the restructuring expenses incurred in connection with the Restructurings and the remaining reserves as of March 31, 2014:

(in thousands)	Work Force Reductions			Store Closures			Total
Restructuring reserves, December 31, 2013	$	190		$	3,412		$	3,602
Restructuring charges incurred	—			12			12
Cash payments	(41		)	(359		)	(400		)
Restructuring reserves, March 31, 2014	$	149		$	3,065		$	3,214

The remaining accrual for work force reduction of $0.1 million is expected to be fully paid by January 2015. The remaining accrual for store closures of $3.1 million is expected to be fully paid by January 2017 as the related leases expire.

The restructuring reserve at March 31, 2014 consists of a current portion of $1.6 million and a long-term portion of $1.6 million. The long-term portion is included in other long-term liabilities on the consolidated balance sheets.

5.    Accounts Receivable

Accounts receivable consist of the following at March 31, 2014 and December 31, 2013:

(in thousands)	March 31,    2014			December 31,    2013
Trade receivables	$	116,341		$	115,876
Allowance for doubtful accounts	(2,786		)	(2,707		)
Allowance for sales returns and discounts	(2,106		)	(1,884		)
	$	111,449		$	111,285

5

6.    Secured Credit Agreement

On June 30, 2009, the Company entered into a Secured Credit Agreement (the “Credit Agreement”) with Wells Fargo Capital Finance ("WFCF"), which includes a revolving line of credit (the “Revolver”). The Revolver was amended during 2013 and 2014 for changes in financial covenants, maximum availability, maturity date and interest rate. The following is a summary of the significant terms of the Revolver as of March 31, 2014:

Maturity	December 31, 2017
Interest/Usage Rate	Company’s option of Base Rate(a) plus a Base Rate Margin (ranges from 0.50%–1.00% based on Revolver availability) or London Inter Bank Offered Rate ("LIBOR") plus a LIBOR Rate Margin (ranges from 1.50%–2.00% based on Revolver availability)
Maximum Availability	Lesser of $200 million or the borrowing base(b)
Periodic Principal Payments	None

(a) Base Rate is the higher of (i) the Federal Funds Rate plus 0.5% or (ii) the prime rate.

(b) The Revolver’s borrowing base is calculated as the sum of (i) 85% of the Company’s eligible accounts receivable plus (ii) the lesser of 90% of the eligible credit card receivables and $5 million plus (iii) the lesser of $150 million, 65% of the eligible inventory or 85% of the net liquidation value of eligible inventory as defined in the Credit Agreement plus (iv) the lesser of $30 million, 85% of the net liquidation value of eligible fixed assets or the net book value of fixed assets, all as defined in the Credit Agreement, minus (v) reserves from time to time set by the administrative agent. The Company’s borrowing base can also be increased pursuant to certain terms outlined in the Credit Agreement.

The Credit Agreement provides that the Company can use the Revolver availability to issue letters of credit. The fees on any outstanding letters of credit issued under the Revolver include a participation fee equal to the LIBOR Rate Margin. The fee on the unused portion of the Revolver is 0.25%. The Revolver includes a financial covenant that requires the Company to maintain a minimum Fixed Charge Coverage Ratio of 1.00:1.00 as defined by the Credit Agreement. The Fixed Charge Coverage Ratio requirement is only applicable if the sum of (i) availability under the Revolver and (ii) qualified cash ("Adjusted Liquidity") is less than $20 million, and remains in effect until the date on which Adjusted Liquidity has been greater than or equal to $20 million for a period of 30 consecutive days. The Company incurred operating losses for the three months ended March 31, 2014 and 2013 and used cash for operating activities for the three months ended March 31, 2013. While there can be no assurances, based upon the Company’s forecast, the Company does not expect the financial covenants to become applicable during the year ending December 31, 2014.

The Company had outstanding borrowings of $66.6 million and $59.1 million with net availability of $88.6 million and $71.0 million as of March 31, 2014 and December 31, 2013, respectively. The interest rate on outstanding LIBOR Rate borrowings of $61.0 million was 1.7% and the interest rate on outstanding Base Rate borrowings of $5.6 million was 3.8% as of March 31, 2014. The interest rate on outstanding LIBOR Rate borrowings of $52.0 million was 1.9% and the interest rate on outstanding Base Rate borrowings of $7.1 million was 4.0% as of December 31, 2013. The Company had $8.9 million in letters of credit outstanding under the Credit Agreement as of March 31, 2014 and December 31, 2013. The Revolver is collateralized by substantially all assets of the Company. The carrying value of the Revolver at March 31, 2014 and December 31, 2013 approximates fair value as the Revolver contains a variable interest rate. As such, the fair value of the Revolver was classified as a Level 2 measurement in accordance with ASC 820.

7.    Income Taxes

The Company evaluates its deferred tax assets quarterly to determine if valuation allowances are required. In assessing the realizability of deferred tax assets, the Company considers both positive and negative evidence in determining whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company recognized valuation allowances of $2.0 million and $1.9 million against its deferred tax assets related to certain tax jurisdictions as of March 31, 2014 and December 31, 2013, respectively.

During the three months endedMarch 31, 2014 and 2013, the Company recorded additional valuation allowances of $0.1 million and $0.0 million, respectively, against deferred tax assets related to our continuing operations. To the extent the Company generates sufficient taxable income in the future to utilize the tax benefits of the net deferred tax assets on which a valuation allowance is recorded, the effective tax rate may decrease as the valuation allowance is reversed. The Company is not permitted to carry back any of its existing tax net operating losses; therefore, to the extent the Company generates future tax net operating losses, the Company may be required to increase the valuation allowance on net deferred tax assets and income tax benefit would be adversely affected.

6

For the three months endedMarch 31, 2014, the Company’s effective income tax rate including discontinued operations and other discrete items was 31.1%, which varied from the federal statutory rate of 35% primarily due to the unfavorable impact of non-deductible secondary offering transaction costs and a reduction in the annual effective tax rate from a permanent domestic manufacturing deduction under Internal Revenue Code Section 199 (the "Manufacturing Deduction"). For the three months endedMarch 31, 2013, the Company’s effective income tax rate including discontinued operations and other discrete items was 30.4%, which varied from the federal statutory rate of 35% primarily due to state income tax expense and the Manufacturing Deduction. 

The effective income tax rate on continuing operations for the three months endedMarch 31, 2014 was 31.2% compared to an effective income tax rate on continuing operations of 30.8% for the three months endedMarch 31, 2013. The increase in the tax rates for the comparative three-month periods is primarily due to a change in state income tax expense and offsetting differences related to the Manufacturing Deduction, the valuation allowance against the Company's deferred tax assets and the non-deductibility of the secondary offering transaction costs.

The Company has no material uncertain tax positions as of March 31, 2014 and December 31, 2013.

8.    Commitments and Contingencies

From time to time, various claims, legal proceedings and litigation are asserted or commenced against the Company principally arising from alleged product liability, warranty, casualty, construction defect, contract, tort, employment and other disputes. In determining loss contingencies, management considers the likelihood of loss as well as the ability to reasonably estimate the amount of such loss or liability. An estimated loss is recorded when it is considered probable that such a liability has been incurred and when the amount of loss can be reasonably estimated. It is not certain that the Company will prevail in these matters. However, the Company does not believe that the ultimate outcome of any pending matters will have a material adverse effect on its consolidated financial position, results of operations or cash flows.

9.    Stock Based Compensation

The following table highlights the expense related to stock based compensation for the three months endedMarch 31, 2014 and 2013:

	Three Months Ended March 31,
(in thousands)	2014		2013
Nonvested stock	$	201	$	82
Stock options	267		64
Restricted stock units	17		—
Stock based compensation	$	485	$	146

The following is a summary of nonvested stock, restricted stock unit and stock option activity for the three months endedMarch 31, 2014:

	Nonvested Stock			Restricted Stock Units			Stock Options
	Number of Shares Outstanding	Weighted Average Grant Date Fair Value		Number of Units Outstanding	Weighted Average Grant Date Fair Value		Number of Options Outstanding		Weighted Average Exercise Price
December 31, 2013	427,993	$	15.72	10,000	$	13.96	714,484		$	9.98
Granted	—	—		—	—		6,000		18.14
Vested/exercised	—	—		—	—		—		—
Forfeited	—	—		—	—		(1,000	)	14.00
March 31, 2014	427,993	$	15.72	10,000	$	13.96	719,484		$	10.05

7

10.    Segments

ASC 280, Segment Reporting defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company's operating segments consist of the East and West divisions along with Coleman Floor, which offers professional flooring installation services. Due to the similar economic characteristics, nature of products, distribution methods and customers, the Company has aggregated our East and West operating segments into one reportable segment, "Geographic divisions."

In addition to our reportable segment, the Company's consolidated results include "Coleman Floor" and "Other reconciling items." Other reconciling items is comprised of our corporate activities.

The following tables present Net Sales, Adjusted EBITDA and certain other measures for the reportable segment and total continuing operations for the three months endedMarch 31, 2014 and 2013.

	Three Months Ended March 31, 2014
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	268,453	$	63,118	$	2,819	$	8,806
Coleman Floor	11,530		2,124		24		(415		)
Other reconciling items	—		—		193		(8,281		)
	$	279,983	$	65,242	$	3,036

	Three Months Ended March 31, 2013
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	238,503	$	51,517	$	2,622	$	4,584
Coleman Floor	10,223		2,273		32		427
Other reconciling items	—		—		305		(6,232		)
	$	248,726	$	53,790	$	2,959

8

Reconciliation to consolidated financial statements:

	Three Months Ended March 31,
(in thousands)	2014			2013
Net loss, as reported	$	(3,288	)	$	(4,057	)
Interest expense	631			1,025
Income tax benefit	(1,498		)	(1,879		)
Depreciation and amortization	3,036			2,959
Impairment of assets held for sale	48			—
Public offering transaction-related costs	448			—
Restructuring expense	7			60
Discontinued operations, net of taxes	(21		)	(157		)
Management fees	77			406
Non-cash compensation expense	485			146
Acquisition costs	—			103
Severance and other expense related to store closures	185			173
Adjusted EBITDA of Coleman Floor	415			(427		)
Adjusted EBITDA of other reconciling items	8,281			6,232
Adjusted EBITDA of geographic divisions reportable segment	$	8,806		$	4,584

11.    Income (Loss) Per Common Share

Basic net income (loss) per share (“EPS”) is calculated by dividing net income (loss) attributable to common stockholders by the weighted average shares outstanding during the period. Diluted EPS is calculated by adjusting weighted average shares outstanding for the dilutive effect of common share equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted EPS calculation, stock options and nonvested stock awards are considered to be common stock equivalents. During periods of net income, participating securities are allocated a proportional share of net income determined by dividing total weighted average participating securities by the sum of total weighted average common shares and participating securities (“the two-class method”). During periods of net loss, no effect is given to participating securities since they do not share in the losses of the Company.

The basic and diluted EPS calculations for the three months endedMarch 31, 2014 and 2013 are presented below:

	Three Months Ended March 31,
(in thousands, except share and per share amounts)	2014			2013
Loss from continuing operations	$	(3,309	)	$	(4,214	)
Redeemable Class B Senior Preferred stock deemed dividend	—			(729		)
Loss attributable to common stockholders, from continuing operations	(3,309		)	(4,943		)
Income from discontinued operations, net of tax	21			157
Loss attributable to common stockholders	$	(3,288	)	$	(4,786	)
Weighted average common shares outstanding, basic and diluted	25,684,014			13,523,270
Basic and diluted EPS
Loss from continuing operations	$	(0.13	)	$	(0.36	)
Income from discontinued operations	—			0.01
Net loss per share	$	(0.13	)	$	(0.35	)

9

The following table provides the securities that could potentially dilute basic earnings per share in the future, but were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive:

	March 31,    2014	March 31,    2013
Stock option awards	719,484	772,851
Nonvested stock awards	427,993	379,841
Restricted stock units	10,000	—
Convertible Class C Preferred Stock (as converted basis)	—	4,454,889

10

ITEM 2    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read this discussion and analysis in conjunction with our historical consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements included in our 2013 Annual Report on Form 10-K. This discussion and analysis covers periods prior to our initial public offering and related transactions. As a result, the discussion and analysis of historical periods does not reflect the impact that the offering, our conversion to a corporation and other related transactions will have on us. Our historical results may not be indicative of our future performance. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ from those anticipated in these forward-looking statements as a result of many factors. Our risk factors are set forth in “Part II, Item 1A. Risk Factors.”

Business and Executive Overview

We are a large, diversified lumber and building materials distributor and solutions provider that sells to new construction and repair and remodeling contractors. We carry a broad line of products and have operations throughout the United States. Our primary products are lumber & lumber sheet goods, millwork, doors, flooring, windows, structural components such as engineered wood products, trusses and wall panels and other exterior products. Additionally, we provide solution-based services to our customers, including design, product specification and installation management services. We serve a broad customer base, including large-scale production homebuilders, custom homebuilders and repair and remodeling contractors. We offer approximately 40,000 stock keeping units, as well as a broad range of customized products, all sourced through our strategic network of suppliers, which together with our various solution-based services, represent approximately 50% of the construction cost of a typical new home. By enabling our customers to source a significant portion of their materials and services from one supplier, we have positioned ourselves as the supply partner of choice for many of our customers.

We have operations in 14 states, which states accounted for approximately 58% of 2013 U.S. single-family housing permits according to the U.S. Census Bureau. In these 14 states, we operate in 21 metropolitan areas that we believe have an attractive potential for economic growth based on population trends and above-average employment growth.

Our net sales for the three months ended March 31, 2014increased12.6% compared to the prior year period. We estimate sales increased 14.0% due to volume, including acquisitions, and decreased 1.4% due to commodity price deflation. Our gross profit as a percentage of net sales ("gross margin") was 23.3% for the three months ended March 31, 2014 compared to 21.6% for the prior year period. We recorded a loss from operations of $4.4 million during the three months ended March 31, 2014, compared with a loss from operations of $5.3 million during the three months ended March 31, 2013. For further discussion, see “-Operating Results.”

Factors Affecting Our Operating Results

Our operating results and financial performance are influenced by a variety of factors, including, among others, conditions in the housing market and economic conditions generally, changes in the cost of the products we sell (particularly commodity products), pricing policies of our competitors, production schedules of our customers and seasonality. Some of the more important factors are briefly discussed below.

Conditions in the housing and construction market

The building products supply and services industry is highly dependent on new home construction and repair and remodeling activity, which in turn are dependent upon a number of factors, including interest rates, consumer confidence, employment rates, foreclosure rates, housing inventory levels, housing demand, the availability of land, the availability of construction financing and the health of the economy and mortgage markets. According to the U.S. Census Bureau, single-family housing starts decreased approximately 1.7% for the three months ended March 31, 2014 as compared to the same period in the prior year, while single-family houses under construction as of March 31, 2014 increased 14.3% as compared to March 31, 2013.

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Overall economic conditions in the markets where we operate

Economic changes both nationally and locally in our markets impact our financial performance. Unfavorable changes in demographics, credit markets, consumer confidence, health care costs, housing affordability, housing inventory levels, a weakening of the national economy or of any regional or local economy in which we operate and other factors beyond our control could adversely affect consumer spending, result in decreased demand for homes and adversely affect our business. We believe continued employment growth, prospective home buyers’ access to financing and improved consumer confidence will be necessary to increase household formation rates. Improved household formation rates in turn will increase demand for housing and stimulate new construction.

Commodity nature of our products

Many of the building products we distribute, including lumber, oriented strand board ("OSB"), plywood and particleboard, are commodities that are widely available from other manufacturers or distributors with prices and volumes determined frequently based on participants’ perceptions of short-term supply and demand factors.

The following table reflects changes in the average composite framing lumber prices (per thousand board feet) and average composite structural panel prices (per thousand square feet). This composite calculation is based on index prices for OSB and plywood as reported by Random Lengths for the periods noted below.

	Three Months Ended March 31,
	2014 versus 2013		2014 average price
Change in framing lumber prices	(5	%)	$391
Change in structural panel prices	(28	%)	$363

Periods of increasing prices provide the opportunity for higher sales and increased gross profit, while periods of declining prices may result in declines in sales and profitability. In particular, low market prices for wood products over a sustained period can adversely affect our financial condition, operating results and cash flows, as can excessive spikes in market prices. For further discussion of the impact of commodity prices on historical periods, see “-Operating Results.”

Consolidation of large homebuilders

Over the past ten years, the homebuilding industry has undergone consolidation and many larger homebuilders have increased their market share. We expect that trend to continue as larger homebuilders have better liquidity and land positions relative to the smaller, less capitalized homebuilders. Our focus is on maintaining relationships and market share with these customers while balancing the competitive pressures we face in our markets with certain profitability expectations. While we generate significant sales from these homebuilders, our gross margins on sales to them tend to be lower than our gross margins on sales to other market segments. This could impact our gross margins as homebuilding recovers if the market share held by the production homebuilders continues to increase.

Our ability to control expenses

We pay close attention to managing our working capital and operating expenses. We employ a LEAN process operating philosophy, which encourages continuous improvement in our core processes to minimize waste, improve customer service, increase expense productivity, improve working capital and maximize profitability and cash flow. We regularly analyze our workforce productivity to achieve the optimum, cost-efficient labor mix for our facilities. Further, we pay careful attention to our logistics function and have implemented GPS-based technology to improve customer service and improve productivity of our shipping and handling costs.

Mix of products sold

We typically realize greater gross margins on more highly engineered and customized products, or ancillary products that are often purchased based on convenience and are therefore less price sensitive to our customers. For example, sales of lumber & lumber sheet goods tend to generate lower gross margins due to their commodity nature and the relatively low switching costs of sourcing those products from different suppliers. Structural components and millwork & other interior products often generate higher gross margins relative to other products. Homebuilders often use structural components in order to realize increased efficiency and improved quality. Shortening cycle time from start to completion is a key imperative of homebuilders during periods of strong consumer demand or limited availability of framing labor. As the residential new construction market continues to strengthen, we expect the use of structural components by homebuilders to increase.

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Changes in sales mix among construction segments

Our operating results may vary according to the amount and type of products we sell to each of our four primary construction segments: new single-family construction; remodeling; multi-family and light commercial. We tend to realize higher gross margins on sales to the remodeling segment due to the smaller product volumes purchased by those customers, as well as the more customized nature of the projects those customers generally undertake. Gross margins within the new single-family, multi-family and light commercial construction segments can vary based on a variety of factors, including the purchase volumes of the individual customer, the mix of products sold to that customer, the size and selling price of the project being constructed and the number of upgrades added to the project before or during its construction. 

Operating Results

The following tables set forth our operating results in dollars and as a percentage of net sales for the periods indicated:

	Three Months Ended March 31,
(in thousands)	2014					2013
Net sales	$	279,983		100.0	%	$	248,726		100.0	%
Cost of goods sold	214,741			76.7	%	194,936			78.4	%
Gross profit	65,242			23.3	%	53,790			21.6	%
Operating expenses:
Selling, general and administrative expenses	67,127			24.0	%	56,802			22.8	%
Depreciation expense	1,468			0.5	%	1,639			0.7	%
Amortization expense	563			0.2	%	547			0.2	%
Impairment of assets held for sale	48			0.0	%	—			0.0	%
Public offering transaction-related costs	448			0.2	%	—			0.0	%
Restructuring expense	7			0.0	%	60			0.0	%
Loss from operations	(4,419		)	(1.6	)%	(5,258		)	(2.1	)%
Other income (expense)
Interest expense	(631		)	(0.2	)%	(1,025		)	(0.4	)%
Other income, net	243			0.1	%	190			0.0	%
Loss from continuing operations before income taxes	(4,807		)	(1.7	)%	(6,093		)	(2.5	)%
Income tax benefit	1,498			0.5	%	1,879			0.8	%
Loss from continuing operations	(3,309		)	(1.2	)%	(4,214		)	(1.7	)%
Income from discontinued operations, net of income tax expense of $14 and $109, respectively	21			0.0	%	157			0.1	%
Net loss	$	(3,288	)	(1.2	)%	$	(4,057	)	(1.6	)%

Three months ended March 31, 2014 compared to three months ended March 31, 2013

Net sales

For the three months ended March 31, 2014, net sales increased$31.3 million, or 12.6%, to $280.0 million from $248.7 million during the three months ended March 31, 2013. The increase in net sales was primarily driven by increased volume of approximately 14.0%, while the impact of commodity price deflation decreased net sales by approximately 1.4%. We estimate approximately 73% of our net sales for the three months ended March 31, 2014 were to customers engaged in new single-family construction.  According to the U.S. Census Bureau, single-family housing starts decreased approximately 1.7% for the three months ended March 31, 2014 as compared to the same period in the prior year, while single-family houses under construction as of March 31, 2014 increased 14.3% as compared to March 31, 2013. Increases in net sales from Texas, California and Utah represented approximately 81% of the total net sales increase for the three months ended March 31, 2014 as compared to the prior year period.

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The following table shows net sales classified by major product category:

	Three Months Ended   March 31, 2014				Three Months Ended   March 31, 2013
(in thousands)	Net Sales		% of Sales		Net Sales		% of Sales		% Change
Structural components	$	38,016	13.6	%	$	30,565	12.3	%	24.4	%
Millwork & other interior products	52,594		18.8	%	47,415		19.1	%	10.9	%
Lumber & lumber sheet goods	96,420		34.4	%	93,688		37.7	%	2.9	%
Windows & other exterior products	57,537		20.6	%	48,840		19.6	%	17.8	%
Other building products & services	35,416		12.6	%	28,218		11.3	%	25.5	%
Total net sales	$	279,983	100.0	%	$	248,726	100.0	%	12.6	%

Increased sales volume was achieved across all product categories. Average selling prices for lumber & lumber sheet goods were approximately 3.6% lower during the three months ended March 31, 2014 compared to the three months ended March 31, 2013.

Cost of goods sold

For the three months ended March 31, 2014, cost of goods sold increased$19.8 million, or 10.2%, to $214.7 million from $194.9 million during the three months ended March 31, 2013. We estimate our cost of sales increased approximately 12.3% as a result of increased sales volumes, while commodity cost deflation resulted in a 2.1% decrease in cost of goods sold.

Gross profit

For the three months ended March 31, 2014, gross profit increased $11.4 million, or 21.3%, to $65.2 million from $53.8 million for the three months ended March 31, 2013, driven primarily by increased sales volumes. Our gross margin was 23.3% for the three months ended March 31, 2014 and 21.6% for the three months ended March 31, 2013. This increase was primarily driven by improved gross margins on sales of structural components and lumber and lumber sheet goods, as well as a lower percentage of total net sales being derived from commodity products.

Operating expenses

For the three months ended March 31, 2014, selling, general and administrative expenses increased$10.3 million, or 18.2%, to $67.1 million, or 24.0% of net sales, from $56.8 million, or 22.8% of net sales, for the three months ended March 31, 2013. Variable costs to serve higher sales volumes, such as sales commissions, shipping and handling costs and other variable compensation, increased by $3.4 million in the aggregate for the three months ended March 31, 2014 as compared to the three months ended March 31, 2013. For the three months ended March 31, 2014, other salary, wage, benefit and employer taxation costs increased $4.3 million compared to the three months ended March 31, 2013, primarily as a result of headcount additions to serve higher sales volume and generate future growth opportunities. Other general and administrative expenses increased by $1.9 million, primarily as a result of increased insurance premiums and provisions, and other costs associated with our transition to a public company.

For the three months ended March 31, 2014, depreciation expense decreased $0.1 million, or 10.4%, to $1.5 million from $1.6 million during the three months ended March 31, 2013, driven primarily by the full depreciation of certain fixed assets.

For the three months ended March 31, 2014, the Company incurred $0.4 million of public offering transaction-related costs in connection with a secondary offering in which shares were sold by certain stockholders. The Company did not receive any proceeds from the offering.

Other income (expenses)

Interest expense. For the three months ended March 31, 2014, interest expense was $0.6 million compared to $1.0 million for the three months ended March 31, 2013. This decrease relates primarily to a decrease in Revolver borrowings and lower average borrowing rates in 2014.

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Income tax from continuing operations

For the three months ended March 31, 2014, the income tax benefit from continuing operations decreased$0.4 million, or 20.3%, to $1.5 million from $1.9 million for the three months ended March 31, 2013, driven primarily by a reduction in our loss from continuing operations before income taxes. The effective tax rate from continuing operations for the three months ended March 31, 2014 was 31.2% compared to 30.8% for the three months ended March 31, 2013.

Liquidity and Capital Resources

Our primary capital requirements are to fund working capital needs and operating expenses, meet required interest and principal payments and fund capital expenditures. During 2013 and the first quarter of 2014, our capital resources have primarily consisted of cash and cash equivalents, borrowings under our Revolver and proceeds from our initial public offering.

Our liquidity at March 31, 2014 was $96.3 million, which includes $7.7 million in cash and cash equivalents and $88.6 million of unused borrowing capacity under our Revolver.

We believe that our cash flows from operations, combined with our current cash levels, and available borrowing capacity, will be adequate to fund debt service requirements and provide cash, as required, to support our ongoing operations, capital expenditures, lease obligations and working capital for at least the next 12 months.

Historical Cash Flow Information

Adjusted working capital* and net current assets

Adjusted working capital was $116.2 million and $122.6 million as of March 31, 2014 and December 31, 2013, respectively, and net current assets (current assets less current liabilities) were $124.4 million and $124.2 million as of March 31, 2014 and December 31, 2013, respectively, as summarized in the following table:

(in thousands)	March 31, 2014			December 31, 2013
Accounts receivable, net	$	111,449		$	111,285
Inventories, net	104,868			91,303
Other current assets	24,052			22,948
Income taxes payable	(839		)	(2,989		)
Accounts payable, accrued expenses and other current liabilities	(123,341		)	(99,945		)
Total adjusted working capital*	116,189			122,602
Cash and cash equivalents	7,743			1,138
Restricted assets	452			460
Total net current assets	$	124,384		$	124,200

*Adjusted working capital is a non-GAAP financial measure that management uses to assess the Company’s financial position and liquidity. Management believes adjusted working capital provides investors with an additional view of the Company’s liquidity and ability to repay current obligations. We calculate adjusted working capital as current assets, as determined under GAAP, excluding cash and cash equivalents and restricted assets, minus current liabilities, as determined under GAAP, excluding the Revolver. The presentation of this additional information is not meant to be considered superior to, in isolation of or as a substitute for results prepared in accordance with GAAP or as an indication of our performance. Our calculation of adjusted working capital is not necessarily comparable to similarly titled measures reported by other companies.

Accounts receivable, net, increased$0.2 million from December 31, 2013 to March 31, 2014 and days sales outstanding (measured against net sales in the current fiscal quarter of each period) increased from 33 days at December 31, 2013 to 36 days at March 31, 2014 due to seasonal increases in sales in the latter part of the first quarter of 2014.

Inventories, net, increased$13.6 million from December 31, 2013 to March 31, 2014 and inventory days on hand (measured against cost of goods sold in the current fiscal quarter of each period) increased from 36 days at December 31, 2013 to 44 days at March 31, 2014 primarily due to seasonal increases in inventory during the first quarter of 2014.

Income taxes payable decreased$2.2 million from December 31, 2013 to March 31, 2014 due to the payment of federal income taxes to effectively settle an audit of prior taxable years with the Internal Revenue Service.

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Accounts payable, accrued expenses and other liabilities increased$23.4 million from December 31, 2013 to March 31, 2014 primarily due to an increase in the volume of inventory purchases.

Cash flows from operating activities

Net cash provided by (used in) operating activities was $8.4 million and $(17.6) million for the three months ended March 31, 2014 and 2013, respectively, as summarized in the following table:

	Three Months Ended March 31,
(in thousands)	2014			2013
Net loss	$	(3,288	)	$	(4,057	)
Non-cash expenses	3,999			3,761
Change in deferred income taxes	(1,593		)	(1,874		)
Change in working capital and other	9,238			(15,471		)
Net cash provided by (used in) operating activities	$	8,356		$	(17,641	)

Net cash provided by operating activities increased by $26.0 million for the three months ended March 31, 2014 as compared to the three months ended March 31, 2013 primarily due to the following:

• Net loss declined by $0.8 million as discussed in “-Operating Results,” above.

• Change in deferred income taxes declined by $0.3 million due to a reduction in the timing differences between our losses before income taxes under GAAP and our taxable income. The reduction in timing differences primarily resulted from a larger increase in depreciation expense for GAAP than for income tax purposes.

• Changes in working capital and other increased by $24.7 million. The change in accounts receivable during the three months ended March 31, 2014 was $14.4 million lower than the prior year period due to a smaller increase in net sales during the first quarter of 2014 compared to the first quarter of 2013. The change in inventory during the three months ended March 31, 2014 was $8.1 million lower than the prior year period due to the purchase of additional commodity inventory in excess of immediate needs during the first quarter of 2013 in response to rising commodity costs.

Cash flows from investing activities

Net cash (used in) provided by investing activities was $(7.6) million and $1.5 million for the three months endedMarch 31, 2014 and 2013, respectively, as summarized in the following table:

	Three Months Ended March 31,
(in thousands)	2014			2013
Purchases of property and equipment	$	(8,449	)	$	(374	)
Proceeds from sale of property, equipment and real estate	380			7
Change in restricted assets	507			1,833
Net cash (used in) provided by investing activities	$	(7,562	)	$	1,466

Cash used for the purchase of property and equipment for the three months ended March 31, 2014 and 2013 resulted primarily from the purchase of vehicles and equipment to support increased sales volume and replace aged assets.

Cash provided by the sale of property, equipment and real estate for the three months ended March 31, 2014 resulted primarily from the sale of a property that generated proceeds of $0.4 million.

Cash provided by restricted assets during the three months ended March 31, 2014 and 2013 resulted primarily from the release of escrow funds and excess deposits used to pre-fund expected losses for self-insured casualty and health claims incurred by the Company.

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Cash flows from financing activities

Net cash provided by financing activities was $5.8 million and $19.2 million for the three months ended March 31, 2014 and 2013, respectively, as summarized in the following table:

	Three Months Ended March 31,
(in thousands)	2014			2013
Proceeds from Revolver, net of repayments	$	7,547		$	20,266
Payments on capital leases	(351		)	(432		)
Other financing activities, net	(1,385		)	(595		)
Net cash provided by financing activities	$	5,811		$	19,239

Proceeds from the Revolver were primarily used to fund purchases of property and equipment for the three months ended March 31, 2014 and to fund cash used in operating activities for the three months ended March 31, 2013.

Other financing activities, net consists primarily of secured borrowings and payment of debt issuance costs.

Capital expenditures

Capital expenditures vary depending on prevailing business factors, including current and anticipated market conditions. Historically, capital expenditures have for the most part remained at relatively low levels in comparison to the operating cash flows generated during the corresponding periods. We expect our 2014 capital expenditures to be approximately $30 to $40 million (including the incurrence of capital lease obligations) primarily related to rolling stock and equipment, including lease buyouts, and facility and technology investments to support our operations.

Revolving credit facility

On September 30, 2009, we entered into the Credit Agreement with WFCF, which includes the Revolver. The Credit Agreement has subsequently been amended eleven times. The most recent amendment, which was entered into on February 18, 2014, increased the maximum availability under the Revolver and extended the maturity date to December 31, 2017, among other changes. We were in compliance with all debt covenants for the quarter ended March 31, 2014. We are subject to a financial covenant requiring a minimum Fixed Charge Coverage Ratio of 1.00:1.00 if Adjusted Liquidity is less than $20 million. While there can be no assurances, based upon our forecast, we do not expect the financial covenant to become applicable during the year ended December 31, 2014.

We had outstanding borrowings of $66.6 million with net availability of $88.6 million as of March 31, 2014. The interest rate on outstanding LIBOR Rate borrowings of $61.0 million was 1.7% and the interest rate on outstanding Base Rate borrowings of $5.6 million was 3.8% as of March 31, 2014. We had $8.9 million in letters of credit outstanding under the Credit Agreement as of March 31, 2014. The Revolver is collateralized by substantially all of our assets.

Contractual Obligations and Commercial Commitments

Outstanding borrowings under the Revolver increased from $59.1 million at December 31, 2013 to $66.6 million at March 31, 2014.

The Company has entered into contracts to purchase fleet and certain equipment, which are non-cancellable, enforceable and legally binding on us. As of March 31, 2014, these purchase obligations totaled $4.9 million. The Company expects to pay for these assets over the six month period ending September 30, 2014.

Off-Balance Sheet Arrangements

At March 31, 2014 and December 31, 2013, other than operating leases and letters of credit issued under the Credit Agreement, we had no material off-balance sheet arrangements with unconsolidated entities.

Critical Accounting Policies

There have been no significant material changes to the critical accounting policies as disclosed in the Company’s 2013 Annual Report on Form 10-K.

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ITEM 3     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant material changes to the market risks as disclosed in the Company’s 2013 Annual Report on Form 10-K.

ITEM 4    CONTROLS AND PROCEDURES

Disclosure controls and procedures

Our senior management is responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), which are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

We have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report, with the participation of our Chief Executive Officer and Chief Financial Officer, as well as other key members of our management. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2014.

Changes in internal control over financial reporting

There was no change in our internal control over financial reporting during the three months ended March 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1    LEGAL PROCEEDINGS

We are currently involved in various claims, legal proceedings and lawsuits incidental to the conduct of our business in the ordinary course. We are a defendant in various pending lawsuits, legal proceedings and claims arising from assertions of alleged product liability, warranty, casualty, construction defect, contract, tort, employment and other claims. We carry insurance in such amounts in excess of our self-insurance as we believe to be reasonable under the circumstances although insurance may or may not cover any or all of our liabilities in respect of claims and lawsuits. We do not believe that the ultimate resolution of these matters will have a material adverse effect on our consolidated financial position, cash flows or operating results.

ITEM 1A    RISK FACTORS

There have been no material changes in our risk factors from those disclosed in "Part I, Item 1A Risk Factors" in our 2013 Annual Report on Form 10-K. The risks described in our 2013 Annual Report on Form 10-K, in addition to the other information set forth in this report,are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3    DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4    MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5    OTHER INFORMATION

None.

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ITEM 6    EXHIBITS

EXHIBIT INDEX

Exhibit No.	Description
10.1	Amendment No. 11 to Credit Agreement, dated as of February 18, 2014, by and among Stock Building Supply Holdings, Inc., as parent, the subsidiaries of parent party thereto, as borrowers, the lenders party thereto, and Wells Fargo Capital Finance (f/k/a Wells Fargo Foothill, LLC), as the co-lead arranger and administrative agent (incorporated by reference to Exhibit 10.12 to the Stock Building Supply Holdings, Inc. Registration Statement on Form S-1, as amended, filed with the Commission on March 10, 2014 in Commission File No. 333-194291)
10.2	Separation Agreement, dated as of April 4, 2014, between Stock Building Supply Holdings, Inc. and James F. Drexinger
31.1	Certification by Jeffrey G. Rea, President and Chief Executive Officer, pursuant to Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification by James F. Major, Jr., Executive Vice President, Chief Financial Officer and Treasurer, pursuant to Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

_________________

* XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	STOCK BUILDING SUPPLY HOLDINGS, INC.
Date: April 29, 2014	By:	/s/ James F. Major, Jr.
		Executive Vice President, Chief Financial Officer and Treasurer
		(Principal financial and accounting officer and duly authorized officer)

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EX-10.2

SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (this “Agreement”) is made as of April 4, 2014, by and between James F. Drexinger (“Employee”) and Stock Building Supply Holdings, Inc. (the “Company”) (together, the “Parties”).

WHEREAS, Employee has been employed by the Company or one or more of its present or past direct or indirect subsidiaries or their predecessors, successors or affiliates continuously since 2005 in various management, senior management, and officer positions, including as Vice President, Marketing, Executive Vice President and Chief Supply Chain Officer, and, most recently, Divisional President and General Manager – South Division; and

WHEREAS, Employee and the Company desire to terminate their employment relationship and to resolve amicably, fully and finally all matters between them; and

WHEREAS, Employee has agreed to be bound by certain restrictive covenants necessary to protect the Company’s legitimate business interests in exchange for his receipt of a certain payment and other consideration.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

1.    Termination of Employment and Related Duties. The Parties agree that Employee’s employment with the Company and any and all of its affiliates was terminated by Employee Without Good Reason (as defined in that certain Amended and Restated Employment Agreement dated as of April 1, 2012 between Employee and Stock Building Supply Holdings, LLC (“Employment Agreement”)) effective as of April 4, 2014 (the “Separation Date”). Employee hereby resigns as an officer of the Company and each of its affiliates, and also resigns from any committees of any of them, as of the Separation Date, and Employee agrees that he will execute any and all documents necessary to effect such resignations at any time now or in the future.

2.    Payments/Benefits Due to Employee.

(a)    Accrued Obligations. The Company agrees to pay Employee any accrued base salary and accrued but unpaid vacation pay through the Separation Date (and Employee and the Company agree that through the Separation Date, Employee accrued 34.01 hours of unused vacation, which equals $4,294.58 of accrued but unpaid vacation pay). Payment will be made, less applicable taxes and other withholdings, on the Company’s next regular pay date after the Separation Date.

(b)    General Health and Welfare Benefits and Executive Benefits. The Parties acknowledge that Employee may be the owner of certain portable life insurance, disability insurance and long-term care insurance policies and is entitled to retain such policies after the Separation Date upon assumption of the premium payments commencing with the first premium payment due after the Separation Date.

1

Other than as expressly set forth in this Section 2, Employee is not entitled to any wages, benefits or any other amounts under the Employment Agreement or otherwise with respect to his employment through the Separation Date. Any payments or other benefits currently being paid or provided to Employee shall cease as of the Separation Date, and Employee shall not be entitled to any further payment or benefits except as specifically set forth in this Section 2, as specifically set forth in Section 3 below as regards certain restrictive covenants and in consideration of Employee’s General Release (as defined in Section 5 herein).

3.    Proprietary Information; Restrictive Covenants.

(a)    Employee’s Roles and Key Involvement in Business, Financial and Operations Strategies and Decision-Making; Legitimate Business Interests. Employee has been employed by the Company or one or more of its present or past direct or indirect subsidiaries or their predecessors, successors or affiliates (individually and collectively, the “Company Group”) continuously since 2005 and in various management, senior management and officer positions, including but not limited to as Vice President, Marketing, Executive Vice President and Chief Supply Chain Officer, Divisional President and General Manager – Southwest Division, and, most recently, Divisional President and General Manager – South Division. Employee acknowledges and agrees that in and because of these various positions and at various times since 2005, Employee has been afforded, and one or more of the Company Group has made, an extraordinary investment of time, money and resources in Employee’s training, education and personalized development that allowed him to be given substantial duties and responsibilities for the management, direction, generation of goodwill and success of the business and operations of the Company Group including but not limited to serving as a member of the Company Group’s Senior Leadership Team coordinating strategic and operational functions of the Company Group throughout all the states in the United States of America where the Company Group has operated during Employee’s employment, and most recently in North Carolina, Texas, Arkansas and Georgia. Employee further acknowledges and agrees that in his various employment positions, the services he rendered to the Company Group in fulfilling his duties and responsibilities were special, unique or extraordinary based on his particular skill. Such special, unique or extraordinary services have included his direct and substantial involvement and participation in the analysis and development of major business, financial and operational strategies of the Company Group and access to and use of sensitive trade secrets, Proprietary Information (as defined below) and other confidential information it or they have.

(b)    Non-Disclosure of Proprietary Information. Employee and the Company hereby acknowledge and agree that in connection with and because of Employee's positions, duties and responsibilities all as described above, Employee, as an integral part of his positions and his efforts in furtherance of his and the Company Group’s development and maintenance of customers, employees and business success, was provided with and given access to, or was otherwise exposed or privy to and used, certain confidential and proprietary information of one or more of the Company Group that it or they used in their respective operations that only select individuals were permitted to see. Such confidential and proprietary information relates to and includes: business and business development strategies; market and other research and development information; design information; technological innovations; manufacturing and operating processes; customer contacts and relationships and buying patterns; details of vendor and supplier contracts, contracting strategies and relationships; materials requirements; margin development and strategies; pricing

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arrangements; financial information including budget development and approval of expenditures; sales activities and methods; marketing techniques, plans and strategies; customer and vendor negotiation techniques and strategies; program training and process development and strategies. Employee further acknowledges and agrees that some of this information constitutes or contains trade secrets of some or all of the Company Group. Employee further acknowledges and agrees that all of the foregoing, regardless of whether it constitutes or contains trade secrets, are valuable, special and unique assets of one or more of the Company Parties and Company Group and constitute and shall be deemed the Company Parties’ and Company Group’s proprietary information ("Proprietary Information" for purposes of this Agreement). Employee hereby agrees that any and all Proprietary Information is and shall forever remain the exclusive property of the Company Parties and Company Group, and that Employee shall not in any way disclose or reveal or use for his own benefit or the benefit of others the Proprietary Information. The term "Proprietary Information" does not include information that: (i) becomes generally available to the public other than as a result of a disclosure by Employee contrary to the terms of this Agreement; (ii) was available on a non-confidential basis prior to its disclosure; or (iii) becomes available on a non-confidential basis from a source other than Employee, provided that such source is not contractually or otherwise ethically or legally obligated to keep such information confidential.

(c)    Consideration; Restrictive Covenants. Employee acknowledges and agrees that the business in which the Company Group is engaged is intensely competitive and that, as a consequence of Employee’s positions within the Company or one or more of its present or past direct or indirect subsidiaries or their predecessors, successors or affiliates, including but not limited to his most recent position as Divisional President and General Manager – South Division, the Company Group has legitimate business interests that should be protected and that the enforcement of restrictive covenants contained in this Section 3 is necessary to ensure the protection of those legitimate business interests and accordingly, the continuity of the business and goodwill of the Company Group. Therefore, in consideration of Employee’s adherence to the covenant not to disclose Proprietary Information described above as well as: (i) the non-competition covenants in this Section 3; (ii) the customer non-solicitation covenants in this Section 3; (iii) the non-interference covenants in this Section 3; and (iv) the employee and independent contractor non-solicitation covenants in this Section 3, the Company agrees to pay to Employee the total sum of Fifty Thousand and No/100 Dollars ($50,000.00), less applicable taxes and other withholdings, on the first anniversary of the Effective Date (as defined in Section 5(f) of this Agreement) (“Separation Payment”), provided that at that time, the Company has confirmed to its reasonable satisfaction that Employee has complied with the non-competition, non-interference and non-solicitation covenants contained in Sections 3(c)(i), (ii), (iii) and (iv) herein. Employee acknowledges and agrees that he is not otherwise entitled to any separation or severance payments, and that the Company’s payment of the Separation Payment constitutes valid consideration for the non-disclosure and other covenants contained in this Section 3.

(i)    Non-Compete. In consideration of the Company's agreement to make a Separation Payment, and in order to protect the Company Group’s legitimate business interests, Employee agrees that, for the twelve (12)-month period following the Separation Date, Employee will not, without prior written consent of the Company, engage (in any capacity, including proprietor, shareholder, partner, officer, director or employee), either directly or indirectly by instructing or assisting others, in the operation, ownership or management of the activity of any proprietorship,

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partnership, company or other business entity which is competitive with the Company or any of the Company Group in the lumber and building materials supply and service industry for residential single-family or multi-family home building (a “Competing Business”) in:

(A)     each metropolitan statistical area in which the Company or any of the Company Group operate as of the Separation Date;

(B)     the territory where Employee is working at the time of termination; and

(C)     North Carolina, Texas, Arkansas and Georgia.

    (ii)    Customer Non-Solicit. Employee recognizes and agrees that the Company Group's customers are valuable and proprietary resources of the Company. Accordingly, in consideration of the Company's agreement to make a Separation Payment, and in order to protect the Company Group’s legitimate business interests, Employee agrees that, for the twelve (12)-month period following the Separation Date, Employee will not, directly or indirectly by instructing or assisting others, and through Employee's own efforts or through the efforts of another person or entity, for or in connection with any Competing Business, solicit or attempt to solicit business which is the same as or of a similar nature to the Company Group’s business from: (i) any individual or entity which obtained products or services from the Company Group at any time during Employee's employment with the Company; or (ii) from any known potential customer of the Company Group that Employee knows has been the subject of a known written or oral bid, offer or proposal by the Company Group or a substantial preparation with a view to making such a bid, proposal or offer, at the time of such solicitation by the Company Group.

(iii)    Non-Interference. In consideration of the Company's agreement to make a Separation Payment, and in order to protect the Company Group’s legitimate business interests, Employee agrees that, for the twelve (12)-month period following the Separation Date, Employee will not, directly or indirectly by instructing or assisting others: (i) divert, take away or attempt to divert or take away any customer or supplier of the Company Group from the Company Group; or (ii) induce, encourage or attempt to induce or encourage any customer or supplier of the Company Group to cease doing business in whole or in part with the Company Group, or to do business with any other person or entity (besides the Company Group), including a Competing Business.

(iv)    Personnel Non-Solicit. In consideration of the Company's agreement to make a Separation Payment, and in order to protect the Company Group’s legitimate business interests, Employee agrees that, for the twelve (12)-month period following the Separation Date, he shall not, directly or indirectly by instructing or assisting others, for his benefit or for the benefit of himself or any other person, firm or entity, including a Competing Business: (i) solicit or recruit the employment or services of, or hire or attempt to hire, any person who is an employee or independent contractor of the Company Group; or (ii) interfere or attempt to interfere with the relationship between the Company Group and any employee or independent contractor of the Company Group.

(v)    Stipulation. Notwithstanding the foregoing, the Parties hereby agree that Employee shall not be deemed to have breached any of the terms of this Section 3(c) if: (A) Employee becomes employed by or performs services for any manufacturer of lumber, building materials or equipment or appliances, and Employee does not perform duties or services for such person or company that

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are competitive with the business and operations of the Company Group during the twelve (12)-month period following the Separation Date; (B) Employee becomes employed by or performs services for Boise Cascade, Weyerhaeuser, Bluelinx, JELD-WEN, Capitol Window, Metrie, Orepac, James Hardie or Louisiana Pacific, or their affiliates, so long as Employee does not perform duties or services for such companies that are competitive with the business and operations of the Company Group during the twelve (12)-month period following the Separation Date or (C) the Company’s Chief Executive Officer or General Counsel specifically consents in writing for Employee to become employed by or perform services for any person or company and Employee becomes so employed or performs such services.

(d)    Remedies; Reasonableness.

(i)    Employee acknowledges and agrees that a breach by Employee of any of the provisions of this Section 3 will constitute such damage as will be irreparable and the exact amount of which will be impossible to ascertain and, for that reason, agrees that the Company will be entitled to an injunction, without the need to post a bond, to be issued by any court of competent jurisdiction restraining and enjoining Employee from a threatened or actual violation of any of the provisions of this Section 3. The right to an injunction shall be in addition to and not in lieu of any other remedy of any kind or character available to the Company for such breach or threatened breach, including the recovery of damages from Employee, the cessation of all future Separation Payments and full recovery of all Separation Payments already paid to Employee – none of which shall be considered or deemed to be an exclusive remedy and any or all of which may be sought. To the extent any additional relief, including but not limited to the Company’s right to recover any attorneys' fees, expenses and costs incurred in enforcing Section 3(e) below, may be set forth in that Section 3(e), this Section 3(d) is not intended to and does not limit any such relief.

(ii)    Employee expressly acknowledges and agrees that: (i) given his employment positions over the years, his access to and use of confidential and Proprietary Information, and the regular and ongoing contacts he had with customers and vendors all to promote and develop business and business strategies and operations of the Company Parties and Company Group, Employee may likely draw away customers or employees from the Company Group if permitted to compete against the Company Group or solicit customers or employees during the time and within the geographic area described above; (ii) each of the non-disclosure and restrictive covenants contained in this Section 3 is necessary to protect the Company Group's legitimate business interests such as their trade secrets and other confidential information, goodwill of their business and investment in Employee’s training, education and personalized development; (iii) each of the restrictive covenants contained in this Section 3 is reasonable, including but not limited to its being reasonable as to time and geographical area; (iv) each of the restrictive covenants contained in this Section 3 does not place any unreasonable burden upon Employee, especially given the Separation Payment and other consideration described herein; (v) the general public will not be harmed as a result of enforcement of these restrictive covenants; (vi) each of the restrictive covenants contained in this Section 3 do not preclude Employee from gainful employment; (vii) each of the restrictive covenants contained in this Section 3 is supported by good and adequate consideration and was negotiated by and between the Company and Employee in good faith; and (viii) Employee understands and hereby agrees to each and every term and condition of the restrictive covenants set forth in this Agreement.

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(e)    Return of Separation Payment. Employee represents and warrants that he will fully comply or continue to comply with (i) the restrictions on competition and other restrictive covenants set forth in Section 3 of this Separation Agreement, and (ii) all obligations concerning the Company's Proprietary Information. Employee further acknowledges and agrees that Employee's right to receive the Separation Payment is contingent upon the Company confirming to its reasonable satisfaction that Employee has complied with the non-competition, non-interference and non-solicitation covenants contained in Sections 3(c)(i), (ii), (iii) and (iv) herein, and also his compliance with the terms and conditions of Section 3(e)(ii) above, and, in the event of a breach by Employee after receiving the Separation Payment, the Company shall have the right to fully recover the Separation Payment. In addition to all other legal remedies, the Company shall be entitled to recover any reasonable attorneys' fees, expenses and costs incurred in enforcing this section. This section shall not be considered or deemed to an exclusive remedy and is not intended to limit any remedies available to the Company or member of the Company Group of the kind or under the circumstances described in Section 3(d) above.

4.COBRA Health Insurance Coverage. Regardless of whether Employee executes this Agreement, Employee will receive a notification within thirty (30) days of the Separation Date of his rights to elect to continue certain insurance benefits under the Company’s plans pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). Information along with enrollment forms will be sent to Employee’s home address by the Company’s COBRA administrator.

5.    General Release.

(a)Employee, on behalf of Employee, his heirs, beneficiaries, trustees, executors, personal representatives, legal representatives, attorneys-in-fact and administrators, irrevocably assigns, knowingly and unconditionally releases, remises and discharges the Company, its parents, its past, present and future direct and indirect subsidiaries, all current or former affiliated or related companies of the Company and its parent, partnerships, or joint ventures, and, with respect to each of them, all of the Company’s or such related entities’ predecessors and successors, and with respect to each such entity, its past and present officers, directors, managers, employees, stockholders, equity holders, agents, advisors and counsel (collectively, the “Company Parties”) from any and all actions, causes of action, charges, complaints, claims, damages, demands, debts, lawsuits, rights, understandings and obligations of any kind, nature or description whatsoever, known or unknown, in law or equity, and whether or not heretofore asserted (collectively, the “Claims”), arising out of or relating to the Employee’s employment with the Company and/or Employee’s separation from the Company (the “General Release”).

(b)    This General Release by Employee includes, without limitation, (i) all Claims based upon actions or omissions (or alleged actions or omissions) that have occurred up to and including the date of this Agreement, regardless of ripeness or other limitation on immediate pursuit of any Claim in the absence of this Agreement; (ii) all Claims relating to or arising out of Employee’s employment with and separation from the Company, including, without limitation, any Claims arising under the Employment Agreement; (iii) all Claims (including Claims for discrimination, harassment, and retaliation) arising under any federal, state or local statute, regulation, ordinance, or the common law, including without limitation, Claims arising under Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act, the Age Discrimination in Employment Act (as amended by

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the Older Workers Benefit Protection Act), the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974, the Civil Rights Act of 1991, the Equal Pay Act, the Fair Labor Standards Act, 42 U.S.C. § 1981, the North Carolina Retaliation in Employment Discrimination Act, and any amendments to any of them, and any other federal or state law, local ordinance or common law claim, including for wrongful discharge, breach of implied or express contract, intentional or negligent infliction of emotional distress, defamation or other tort; (iv) all Claims for reinstatement, attorney’s fees, interest, costs, or additional compensation; and (v) any claims Employee may have pursuant to an internal grievance procedure at Company (including for the avoidance of doubt, all of its subsidiaries or affiliates).

(c)    For the purpose of implementing a full and complete release, Employee understands and agrees that this General Release is intended to include all claims, if any, which Employee may have and which Employee does not now know or suspect to exist in his favor against the Company Parties and this General Release extinguishes those claims. Accordingly, Employee expressly waives all rights afforded by any state statute or regulation in any applicable jurisdiction prohibiting, limiting, or restricting the waiver of unknown claims. Employee makes this waiver with full knowledge of his rights and with specific intent to release both his known and unknown claims.

(d)    This General Release does not release any Claim that relates to: (i) Employee’s right to enforce this Agreement; (ii) any rights Employee may have to indemnification from personal liability or to protection under any insurance policy maintained by the Company, including without limitation any general liability, EPLI, or directors and officers insurance policy; (iii) Employee’s right, if any, to government-provided unemployment and workers’ compensation benefits; or (iv) Employee’s rights under any Company employee benefit plans (i.e. health, disability or retirement plans), which by their explicit terms survive the termination of Employee’s employment.

(e)    Employee agrees that the consideration set forth in Section 3 above shall constitute the entire consideration provided under this Agreement, and that Employee will not seek from the Company Parties any further compensation or other consideration for any claimed obligation, entitlement, damage, cost or attorneys’ fees in connection with the matters encompassed by this Agreement.

(f)    Employee agrees to the release of all known and unknown claims, including expressly the waiver of any rights or claims arising out of the Federal Age Discrimination in Employment Act, 29 U.S.C. § 621, et seq. and any amendments thereto (“ADEA”), and in connection with such waiver of ADEA claims, and as provided by the Older Worker Benefit Protection Act, Employee understands and agrees as follows:

i. Employee has the opportunity to consult with an attorney before signing this Agreement, and is hereby advised to do so;

ii. Employee shall have a period of twenty-one (21) days from the Separation Date (or from the date of receipt of this Agreement if received after the Separation Date) in which to consider the terms of this Agreement (the “Review Period”). Employee may at his option execute this Agreement at any time during the Review Period. Employee agrees that by signing this Agreement prior to the expiration of the twenty-one (21) day period, he has voluntarily waived his right to consider this Agreement for the full Review Period. If Employee does not

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return the signed Agreement to the Company prior to the expiration of the 21-day period, then the offer of severance benefits set forth in Section 3 above shall lapse and shall be withdrawn by the Company;

iii. Employee may revoke this Agreement at any time during the first seven (7) calendar days following Employee’s execution of this Agreement, and this Agreement and release shall not be effective or enforceable until that seven-day period has expired. Notice of a revocation by the Employee must be made to the designated representative of the Company (as described below) within the seven (7) calendar day period after Employee signs this Agreement. If Employee revokes this Agreement, it shall not be effective or enforceable, and the offer of severance benefits set forth in Section 3 above shall lapse and shall be withdrawn by the Company. Accordingly, the “Effective Date” of this Agreement shall be on the eighth (8^th) calendar day after Employee signs the Agreement and returns it to the Company, and provided that Employee did not revoke the Agreement during the seven (7) day revocation period;

iv. Provided that Employee executes and does not revoke this Agreement, the Company shall pay Employee the amounts provided under Section 3 of this Agreement in consideration of the General Release, including the release of any claims that Employee may have under the ADEA.

v. The Company is paying Employee a portion of the payment received under this Agreement specifically to release any claims that Employee may have under the ADEA. This amount of such payment is $1,000.

In the event Employee elects to revoke this release pursuant to Paragraph 5(f)(iii) above, Employee shall notify Company by hand-delivery, express courier or certified mail, return receipt requested, within seven (7) days after signing this Agreement to: Stock Building Supply Holdings, Inc., 8020 Arco Corporate Drive, Suite 400, Raleigh, North Carolina 27617, Attn: Bryan J. Yeazel, Executive Vice President, Chief Administrative Officer & General Counsel.

6.    Review of Agreement; No Assignment of Claims. Employee represents and warrants that he (a) has carefully read and understands all of the provisions of this Agreement and has had the opportunity for it to be reviewed and explained by counsel, (b) is voluntarily entering into this Agreement, (c) has not relied upon any representation or statement made by the Company or any other person with regard to the subject matter or effect of this Agreement, and (d) has not transferred or assigned any Claims.

7.    No Claims. Employee represents that he has not filed any Claim against the Company or its affiliates with any state, federal or local agency or court and that he will not file any Claim at any time regarding the matters covered by this Agreement; provided, however, that nothing in this Agreement shall be construed to prohibit Employee from filing a Claim with or participating in any investigation or proceeding conducted by the Equal Employment Opportunity Commission or other governmental agency charged with enforcing employment laws; provided, further, that Employee

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acknowledges that he will not be entitled to recover any monetary or other damages in connection with or be entitled to reinstatement as a result of any such agency proceeding.

8.    Taxes; Benefits. The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges which the Company is required by applicable law to withhold, and Employee acknowledges that he is responsible for any federal, state or other taxes due as a result of this Agreement. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise. The Parties acknowledge and agree that the Company will not contest Employee’s filing for unemployment insurance benefits.

9.    Interpretation. This Agreement shall take effect as an instrument under seal and shall be governed and construed in accordance with the laws of the State of Delaware without regard to provisions or principles thereof relating to conflict of laws.

10.    Agreement as Defense. This Agreement may be pleaded as a full and complete defense to any subsequent action or other proceeding arising out of, relating to, or having anything to do with any and all Claims, counterclaims, defenses or other matters capable of being alleged, which are specifically released and discharged by this Agreement. This Agreement may also be used to abate any such action or proceeding and/or as a basis of a cross-complaint for damages.

11.    Nondisclosure of Agreement. The terms and conditions of this Agreement are confidential. Employee agrees not to disclose the terms of this Agreement to anyone except immediate family members and Employee’s attorney and financial adviser. Employee further agrees to inform these people that the Agreement is confidential and must not be disclosed to anyone else. Employee may disclose the terms of this Agreement if compelled to do so by a court, but Employee agrees to notify the Company immediately if anyone seeks to compel Employee’s testimony in this regard, and to cooperate with the Company if the Company decides to oppose such effort. The Parties agree that disclosure by Employee in violation of this Agreement would damage the Company such that money damages could not fully compensate the Company and that the Company would be entitled to injunctive and equitable relief in addition to all other rights and remedies as may be provided by law.

12.    Ongoing Covenants. Employee acknowledges that nothing in this Agreement shall limit or otherwise impact Employee’s continuing obligations of confidentiality to the Company in accordance with Company policy and applicable law, or any applicable Company policies or agreements between the Company and Employee with respect to confidentiality, and with respect to Proprietary Information, non-competition, non-interference and non-solicitation as set forth and described in Section 3 and Section 14 herein, and Employee covenants and agrees to abide by all such continuing obligations. Employee hereby agrees that, if and when requested to do so by the Company, he will make himself reasonably available to, and will cooperate in all reasonable respects with, the Company, its officers and directors, and their respective counsel in connection with any litigation, proceeding, or investigation relating to the Company; it being understood that such cooperation shall take into account and accommodate the Employee’s then-applicable business and professional commitments. Upon written request accompanied by appropriate documentation and confirmation to the Company’s reasonable satisfaction that the requested services were performed,

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the Company agrees to reimburse Employee for any reasonable out-of-pocket expenses incurred by Employee in connection with any actions taken by Employee pursuant to this Section and to pay Employee a consulting fee in the amount of $150 per hour for his time incurred in performing requested services.

13.    No Adverse Comments. Employee shall not make, issue, release or authorize any written or oral statements, derogatory or defamatory in nature, about the Company or its affiliates or their respective products, services, directors, officers or employees. Without Employee’s prior written consent, in response to any inquiries from third parties regarding Employee’s employment with the Company, the Company shall only provide the dates of Employee’s employment and Employee’s position and title while so employed. The Company shall not make, issue, release or authorize any written or oral statements, derogatory or defamatory in nature about Employee.

14.    Integration; Severability.Nothing contained in this Agreement is intended to waive or limit the provisions of Section 6 (Non-Competition and Non-Solicitation) contained in that certain Subscription Agreement dated as of June 11, 2009 by and between Employee and Saturn Acquisition Holdings, LLC (the “Subscription Agreement”), which shall remain in full force and effect, and in the event of any inconsistency between the provisions of Section 6 of the Subscription Agreement and the provisions of this Agreement, to the maximum extent permitted by law the provision that is more restrictive upon Employee shall govern (except as otherwise set forth in Section 3(c)(v) of this Agreement). Additionally, nothing contained in this Agreement is intended to waive or limit the provisions of Section 4.3 (Assignment of Inventions to the Company) contained in the Employment Agreement, which Section shall remain in full force and effect, and nothing contained in this Agreement is intended to waive or limit the terms of that certain Indemnification Agreement made as of May 1, 2009 by and between Stock Building Supply Holdings, LLC and Employee, which shall remain in full force and effect. Subject to the foregoing, the terms and conditions of this Agreement constitute the entire agreement between Company and Employee and supersede all previous communications and agreements, either oral or written, including but not limited to the Employment Agreement, between the Parties with respect to the subject matter of this Agreement. No agreement or understanding varying or extending the terms of this Agreement shall be binding upon either party unless in a writing signed by both Parties. In the event that a court finds any portion of this Agreement, including but not limited to any one of the separate restrictive covenants contained in Section 3, unenforceable for any reason whatsoever, the Company and Employee agree that the other provisions of the Agreement, including but not limited to any other of the separate restrictive covenants contained in Section 3, shall be deemed to be severable and will continue in full force and effect to the fullest extent permitted by law.

15.    Section 409A Compliance. This Agreement and any payments or benefits provided hereunder shall be interpreted, operated and administered in a manner intended to avoid the imposition of additional taxes under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). Further, the Parties acknowledge and agree that the form and timing of the Severance Benefits and the other payments and benefits to be provided pursuant to this Agreement are intended to be exempt from, or to comply with, one or more exceptions to the requirements of Section 409A of the Code. In addition, for purposes of this Agreement, each amount to be paid or benefit to be provided to Employee pursuant to this Agreement shall be construed as a separate identified payment for purposes of Section 409A of the Code. Notwithstanding any provision of this Agreement to the

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contrary, the Company, its affiliates, subsidiaries, successors, and each of their respective officers, directors, employees and representatives, neither represent nor warrant the tax treatment under any federal, state, local, or foreign laws or regulations thereunder (individually and collectively referred to as the “Tax Laws”) of any payment or benefits contemplated by this Separation Agreement including, but not limited to, when and to what extent such payments or benefits may be subject to tax, penalties and interest under the Tax Laws.

16.    Return of Company Property. On or before the Separation Date, Employee shall return to the Company, in proper condition, all Company property in his possession, custody, or control, including, but not limited to, any and all of the following: The Company Group’s proprietary files, memoranda, documents, copies, programs, computers, diskettes, flash drives and other storage devices and computer peripherals, telephones, and pagers as well as credit cards, keys (such as, but not limited to, building and office access keys) and any other Company or Company Group property. In addition, Employee hereby warrants that any Company or Company Group electronically-stored information, including but not limited to, PowerPoint presentations, spreadsheets, electronic mail messages, and any other forms of electronic documents or records of any kind that he may have received or transmitted from any personal computers, mobile phones or other such devices, have been or will be deleted therefrom on or before the Separation Date.

EMPLOYEE ACKNOWLEDGES THE FOLLOWING: HE HAS ENTERED INTO THIS AGREEMENT KNOWINGLY, VOLUNTARILY AND OF HIS OWN FREE WILL WITH A FULL UNDERSTANDING OF ITS TERMS; HE HAS READ THIS AGREEMENT; THAT HE FULLY UNDERSTANDS ITS TERMS; THAT EMPLOYEE IS ADVISED TO CONSULT AN ATTORNEY FOR ADVICE; THAT HE HAS THE RIGHT TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS AGREEMENT; AND THAT HE HAS HAD AMPLE TIME TO CONSIDER HIS DECISION BEFORE ENTERING INTO THE AGREEMENT. EMPLOYEE ACKNOWLEDGES THAT HE IS SATISFIED WITH THE TERMS OF THIS AGREEMENT AND AGREES THAT THE TERMS ARE BINDING UPON HIM.

IN WITNESS WHEREOF, the Parties have executed this Agreement with effect as of the date first above written.

JAMES F. DREXINGER	STOCK BUILDING SUPPLY HOLDINGS, INC.
/s/ James F. Drexinger    ______	By : /s/ Bryan J. Yeazel
	Name: Bryan J. Yeazel
	Title: Executive Vice President, Chief
	Administrative Officer & General Counsel

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EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Jeffrey G. Rea, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Stock Building Supply Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 29, 2014

/s/ Jeffrey G. Rea    
Jeffrey G. Rea
President and Chief Executive Officer
(principal executive officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, James F. Major, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Stock Building Supply Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 29, 2014

/s/ James F. Major, Jr.    
James F. Major, Jr.
Executive Vice President, Chief
Financial Officer and Treasurer
(principal financial officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Stock Building Supply Holdings, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2014, as filed with the Securities and Exchange Commission (the “Report”), I, Jeffrey G. Rea, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 29, 2014

/s/ Jeffrey G. Rea    
Jeffrey G. Rea
President and Chief Executive Officer
(principal executive officer)

A signed original of this written statement required by Section 906 has been provided to Stock Building Supply Holdings, Inc. and will be retained by Stock Building Supply Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Stock Building Supply Holdings, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2014, as filed with the Securities and Exchange Commission (the “Report”), I, James F. Major, Jr., Executive Vice President, Chief Financial Officer and Treasurer of the Company, certify pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 29, 2014

/s/ James F. Major, Jr.    
James F. Major, Jr.
Executive Vice President, Chief
Financial Officer and Treasurer
(principal financial officer)

A signed original of this written statement required by Section 906 has been provided to Stock Building Supply Holdings, Inc. and will be retained by Stock Building Supply Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Segments (Schedule of net sales, adjusted EBITDA and certain other measures by reportable segment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Segment Reporting Information [Line Items]
Net sales	$ 279,983	$ 248,726
Gross profit	65,242	53,790
Depreciation & amortization	3,036	2,959
Operating segments [Member] | Geographic divisions [Member]
Segment Reporting Information [Line Items]
Net sales	268,453	238,503
Gross profit	63,118	51,517
Depreciation & amortization	2,819	2,622
Adjusted EBITDA	8,806	4,584
Operating segments [Member] | Coleman Floor [Member]
Segment Reporting Information [Line Items]
Net sales	11,530	10,223
Gross profit	2,124	2,273
Depreciation & amortization	24	32
Adjusted EBITDA	(415)	427
Other reconciling items [Member] | Other reconciling items [Member]
Segment Reporting Information [Line Items]
Net sales	0	0
Gross profit	0	0
Depreciation & amortization	193	305
Adjusted EBITDA	$ (8,281)	$ (6,232)

XML

Accounts Receivable Accounts Receivable (Accounts Receivable) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Accounts Receivable, Net, Current [Abstract]
Trade receivables	$ 116,341	$ 115,876
Allowance for doubtful accounts	(2,786)	(2,707)
Allowance for sales returns and discounts	(2,106)	(1,884)
Accounts receivable, net	$ 111,449	$ 111,285

XML

Secured Credit Agreement (Tables)

3 Months Ended

Mar. 31, 2014

Debt Disclosure [Abstract]

Schedule of secured credit agreement

The following is a summary of the significant terms of the Revolver as of March 31, 2014:

Maturity	December 31, 2017
Interest/Usage Rate	Company’s option of Base Rate(a) plus a Base Rate Margin (ranges from 0.50%–1.00% based on Revolver availability) or London Inter Bank Offered Rate ("LIBOR") plus a LIBOR Rate Margin (ranges from 1.50%–2.00% based on Revolver availability)
Maximum Availability	Lesser of $200 million or the borrowing base(b)
Periodic Principal Payments	None

(a) Base Rate is the higher of (i) the Federal Funds Rate plus 0.5% or (ii) the prime rate.

(b) The Revolver’s borrowing base is calculated as the sum of (i) 85% of the Company’s eligible accounts receivable plus (ii) the lesser of 90% of the eligible credit card receivables and $5 million plus (iii) the lesser of $150 million, 65% of the eligible inventory or 85% of the net liquidation value of eligible inventory as defined in the Credit Agreement plus (iv) the lesser of $30 million, 85% of the net liquidation value of eligible fixed assets or the net book value of fixed assets, all as defined in the Credit Agreement, minus (v) reserves from time to time set by the administrative agent. The Company’s borrowing base can also be increased pursuant to certain terms outlined in the Credit Agreement.

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Income (Loss) Per Common Share (Basic and Diluted EPS) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Earnings Per Share [Abstract]
Loss from continuing operations	$ (3,309)	$ (4,214)
Redeemable Class B Senior Preferred stock deemed dividend	0	(729)
Loss attributable to common stockholders, from continuing operations	(3,309)	(4,943)
Income from discontinued operations, net of tax	21	157
Loss attributable to common stockholders	$ (3,288)	$ (4,786)
Weighted average common shares outstanding, basic and diluted (in shares)	25,684,014	13,523,270
Basic and Diluted EPS
Loss from continuing operations (in dollars per share)	$ (0.13)	$ (0.36)
Income from discontinued operations (in dollars per share)	$ 0.00	$ 0.01
Net loss per share (in dollars per share)	$ (0.13)	$ (0.35)

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Stock Based Compensation (Summary of non-vested stock and restricted stock units) (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Nonvested stock [Member]
Number of shares outstanding (in shares):
December 31, 2013 (in shares)	427,993
Granted (in shares)	0
Vested/exercised (in shares)	0
Forfeited (in shares)	0
March 31, 2014 (in shares)	427,993
Weighted average grant date fair value (in dollars per share):
December 31, 2013 (in dollars per share)	$ 15.72
Granted (in dollars per share)	$ 0.00
Vested/exercised (in dollars per share)	$ 0.00
Forfeited (in dollars per share)	$ 0.00
March 31, 2014 (in dollars per share)	$ 15.72
Restricted stock units [Member]
Number of shares outstanding (in shares):
December 31, 2013 (in shares)	10,000
Granted (in shares)	0
Vested/exercised (in shares)	0
Forfeited (in shares)	0
March 31, 2014 (in shares)	10,000
Weighted average grant date fair value (in dollars per share):
December 31, 2013 (in dollars per share)	$ 13.96
Granted (in dollars per share)	$ 0
Vested/exercised (in dollars per share)	$ 0
Forfeited (in dollars per share)	$ 0
March 31, 2014 (in dollars per share)	$ 13.96

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Discontinued Operations

3 Months Ended

Mar. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued operations

Discontinued Operations

During certain prior years, the Company ceased operations in certain geographic markets due to declines in residential home building throughout the U.S. and other strategic reasons. The Company will have no further significant continuing involvement in sold operations and exited geographic markets. The cessation of operations in these markets has been treated as discontinued operations as the markets had distinguishable cash flows and operations that have been eliminated from ongoing operations. To determine if cash flows have been (or will be) eliminated from ongoing operations, we evaluate a number of qualitative and quantitative factors, including, but not limited to, proximity of a closing store to any remaining open stores and the potential sales migration from the closed store to any stores remaining open.

The operating results of the discontinued operations for the three months endedMarch 31,2014 and 2013 are as follows:

	Three Months Ended March 31,
(in thousands)	2014			2013
Net sales	$	—		$	—
Restructuring charges	(5		)	(9		)
Gain before income taxes	35			266
Income tax expense	(14		)	(109		)
Net income	21			157

The assets and liabilities of discontinued operations reflected on the consolidated balance sheets at March 31, 2014 and December 31, 2013 are as follows:

(in thousands)	March 31,    2014		December 31,    2013
Real estate held for sale	$	652	$	700
Prepaid expenses and other current assets	26		8
Current assets of discontinued operations	678		708
Accrued expenses and other liabilities	76		37
Restructuring reserve	300		295
Current liabilities of discontinued operations	376		332
Long-term restructuring reserve	12		89
Noncurrent liabilities of discontinued operations	$	12	$	89

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Income (Loss) Per Common Share (Schedule of anti-dilutive securities) (Details)	Mar. 31, 2014	Mar. 31, 2013
Stock option awards [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	719,484	772,851
Nonvested stock awards [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	427,993	379,841
Restricted stock units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	10,000	0
Class C Convertible Preferred Stock (as converted basis) [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	0	4,454,889

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Discontinued Operations (Income Statement) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Net sales	$ 0	$ 0
Restructuring charges	(5)	(9)
Gain before income taxes	35	266
Income tax expense	(14)	(109)
Net income	$ 21	$ 157

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Income (Loss) Per Common Share (Tables)

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Schedule of basic and diluted EPS calculations

The basic and diluted EPS calculations for the three months endedMarch 31, 2014 and 2013 are presented below:

	Three Months Ended March 31,
(in thousands, except share and per share amounts)	2014			2013
Loss from continuing operations	$	(3,309	)	$	(4,214	)
Redeemable Class B Senior Preferred stock deemed dividend	—			(729		)
Loss attributable to common stockholders, from continuing operations	(3,309		)	(4,943		)
Income from discontinued operations, net of tax	21			157
Loss attributable to common stockholders	$	(3,288	)	$	(4,786	)
Weighted average common shares outstanding, basic and diluted	25,684,014			13,523,270
Basic and diluted EPS
Loss from continuing operations	$	(0.13	)	$	(0.36	)
Income from discontinued operations	—			0.01
Net loss per share	$	(0.13	)	$	(0.35	)

Schedule of anti-dilutive securities excluded from computation of earnings per share

The following table provides the securities that could potentially dilute basic earnings per share in the future, but were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive:

	March 31,    2014	March 31,    2013
Stock option awards	719,484	772,851
Nonvested stock awards	427,993	379,841
Restricted stock units	10,000	—
Convertible Class C Preferred Stock (as converted basis)	—	4,454,889

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Discontinued Operations Discontinued Operations (Balance Sheet) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract]
Real estate held for sale	$ 652	$ 700
Prepaid expenses and other current assets	26	8
Current assets of discontinued operations	678	708
Accrued expenses and other liabilities	76	37
Restructuring reserve	300	295
Current liabilities of discontinued operations	376	332
Long-term restructuring reserve	12	89
Noncurrent liabilities of discontinued operations	$ 12	$ 89

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Restructuring Costs (Schedule of restructuring expenses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Restructuring Reserve [Roll Forward]
Restructuring reserves, December 31, 2013	$ 3,602
Restructuring charges incurred	12
Cash payments	(400)
Restructuring reserves, March 31, 2014	3,214
Work force reductions [Member]
Restructuring Reserve [Roll Forward]
Restructuring reserves, December 31, 2013	190
Restructuring charges incurred	0
Cash payments	(41)
Restructuring reserves, March 31, 2014	149
Store closures [Member]
Restructuring Reserve [Roll Forward]
Restructuring reserves, December 31, 2013	3,412
Restructuring charges incurred	12
Cash payments	(359)
Restructuring reserves, March 31, 2014	$ 3,065

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Basis of Presentation

3 Months Ended

Mar. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) that permit reduced disclosure for interim periods. The condensed consolidated balance sheet as of December 31, 2013 was derived from audited financial statements, but does not include all necessary disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The unaudited condensed consolidated financial statements include all accounts of the Company and its subsidiaries and, in the opinion of management, include all recurring adjustments and normal accruals necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the dates and periods presented. These unaudited financial statements should be read in conjunction with the Company’s 2013 Annual Report on Form 10-K. Results for interim periods are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period. All material intercompany accounts and transactions have been eliminated in consolidation.

Comprehensive loss

Comprehensive loss is equal to the net loss for all periods presented.

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Restructuring Costs (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Restructuring Cost and Reserve [Line Items]
Restructuring reserve	$ 3,214,000	$ 3,602,000
Current portion of restructuring reserve	1,595,000	1,594,000
Long-term restructuring reserve	1,600,000
Work force reductions [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring reserve	149,000	190,000
Restructuring reserve completion date	Jan. 31, 2015
Store closures [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring reserve	$ 3,065,000	$ 3,412,000
Restructuring reserve completion date	Jan. 31, 2017

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Segments (Reconciliation of adjusted EBITDA to consolidated financial statements) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Segment Reporting, Revenue Reconciling Item [Line Items]
Net loss, as reported	$ (3,288)	$ (4,057)
Interest expense	631	1,025
Income tax benefit	(1,498)	(1,879)
Depreciation and amortization	3,036	2,959
Impairment of assets held for sale	48	0
Public offering transaction-related costs	448	0
Restructuring expense	7	60
Discontinued operations, net of taxes	(21)	(157)
Management fees	77	406
Non-cash compensation expense	485	146
Acquisition costs	0	103
Severance and other expense related to store closures	185	173
Other reconciling items [Member] | Other reconciling items [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Depreciation and amortization	193	305
Adjusted EBITDA	(8,281)	(6,232)
Operating segments [Member] | Coleman Floor [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Depreciation and amortization	24	32
Adjusted EBITDA	(415)	427
Operating segments [Member] | Geographic divisions [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Depreciation and amortization	2,819	2,622
Adjusted EBITDA	$ 8,806	$ 4,584

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Current assets
Cash and cash equivalents	$ 7,743	$ 1,138
Restricted assets	452	460
Accounts receivable, net	111,449	111,285
Inventories, net	104,868	91,303
Costs in excess of billings on uncompleted contracts	8,928	7,921
Assets held for sale	1,892	2,363
Prepaid expenses and other current assets	8,812	9,332
Deferred income taxes	4,420	3,332
Total current assets	248,564	227,134
Property and equipment, net of accumulated depreciation	60,781	56,039
Intangible assets, net of accumulated amortization	24,226	24,789
Goodwill	7,186	7,186
Restricted assets	860	1,359
Other assets	2,097	2,033
Total assets	343,714	318,540
Current liabilities
Accounts payable	87,195	64,984
Accrued expenses and other liabilities	31,808	30,528
Income taxes payable	839	2,989
Current portion of restructuring reserve	1,595	1,594
Current portion of capital lease obligation	1,164	1,240
Billings in excess of costs on uncompleted contracts	1,579	1,599
Total current liabilities	124,180	102,934
Revolving line of credit	66,619	59,072
Long-term portion of capital lease obligation	5,736	6,011
Deferred income taxes	14,991	15,496
Other long-term liabilities	7,310	7,346
Total liabilities	218,836	190,859
Commitments and contingencies (Note 8)
Stockholders' equity
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding at March 31, 2014 and December 31, 2013	0	0
Common stock, $0.01 par value, 300,000,000 shares authorized, 26,112,007 shares issued and outstanding at March 31, 2014 and December 31, 2013	261	261
Additional paid-in capital	145,055	144,570
Retained deficit	(20,438)	(17,150)
Total stockholders' equity	124,878	127,681
Total liabilities and stockholders' equity	$ 343,714	$ 318,540

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities
Net loss	$ (3,288)	$ (4,057)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation expense	2,474	2,414
Amortization of intangible assets	563	547
Amortization of debt issuance costs	126	164
Deferred income taxes	(1,593)	(1,874)
Non-cash stock compensation expense	485	146
Impairment of assets held for sale	96	0
(Gain) loss on sale of property, equipment and real estate	(1)	2
Bad debt expense	256	488
Change in assets and liabilities
Accounts receivable	(420)	(14,802)
Inventories, net	(13,565)	(21,642)
Accounts payable	24,544	15,119
Other assets and liabilities	(1,321)	5,854
Net cash provided by (used in) operating activities	8,356	(17,641)
Cash flows from investing activities
Change in restricted assets	507	1,833
Proceeds from sale of property, equipment and real estate	380	7
Purchases of property and equipment	(8,449)	(374)
Net cash (used in) provided by investing activities	(7,562)	1,466
Cash flows from financing activities
Proceeds from revolving line of credit	307,095	273,050
Repayments of proceeds from revolving line of credit	(299,548)	(252,784)
Other financing activities	(1,736)	(1,027)
Net cash provided by financing activities	5,811	19,239
Net increase in cash and cash equivalents	6,605	3,064
Cash and cash equivalents
Beginning of period	1,138	2,691
End of period	$ 7,743	$ 5,755

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Income Taxes (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Income Tax Contingency [Line Items]
Valuation allowance	$ 2.0		$ 1.9
Increase (decrease) in valuation allowance from continuing operations	$ 0.1	$ 0
Effective income tax rate reconciliation including discontinued operations	31.10%	30.40%
Income tax expense at statutory rate	35.00%	35.00%
Effective income tax rate on continuing operations	31.20%	30.80%

XML

Discontinued Operations (Tables)

3 Months Ended

Mar. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Schedule of discontinued operations, income statement and balance sheet

The operating results of the discontinued operations for the three months endedMarch 31,2014 and 2013 are as follows:

	Three Months Ended March 31,
(in thousands)	2014			2013
Net sales	$	—		$	—
Restructuring charges	(5		)	(9		)
Gain before income taxes	35			266
Income tax expense	(14		)	(109		)
Net income	21			157

The assets and liabilities of discontinued operations reflected on the consolidated balance sheets at March 31, 2014 and December 31, 2013 are as follows:

(in thousands)	March 31,    2014		December 31,    2013
Real estate held for sale	$	652	$	700
Prepaid expenses and other current assets	26		8
Current assets of discontinued operations	678		708
Accrued expenses and other liabilities	76		37
Restructuring reserve	300		295
Current liabilities of discontinued operations	376		332
Long-term restructuring reserve	12		89
Noncurrent liabilities of discontinued operations	$	12	$	89

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Stock Based Compensation (Stock based compensation expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	$ 485	$ 146
Nonvested stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	201	82
Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	267	64
Restricted stock units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	$ 17	$ 0

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Accounts Receivable Accounts Receivable (Tables)

3 Months Ended

Mar. 31, 2014

Receivables [Abstract]

Schedule of accounts receivable

Accounts receivable consist of the following at March 31, 2014 and December 31, 2013:

(in thousands)	March 31,    2014			December 31,    2013
Trade receivables	$	116,341		$	115,876
Allowance for doubtful accounts	(2,786		)	(2,707		)
Allowance for sales returns and discounts	(2,106		)	(1,884		)
	$	111,449		$	111,285

XML

Organization

3 Months Ended

Mar. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Stock Building Supply Holdings, Inc. and its subsidiaries (the “Company,” “we,” “us” and “our” ) distributes lumber and building materials to new construction and repair and remodeling contractors. Additionally, we provide solution-based services to our customers, including component design, production specification and installation management services.

Due to the seasonal nature of our industry, sales are usually lower in the first and fourth quarters than in the second and third quarters.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Stockholders' Equity:
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	50,000,000	50,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	300,000,000	300,000,000
Common stock, shares issued (in shares)	26,112,007	26,112,007
Common stock, shares outstanding (in shares)	26,112,007	26,112,007

XML

Income (Loss) Per Common Share

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Income (loss) per common share

Income (Loss) Per Common Share

Basic net income (loss) per share (“EPS”) is calculated by dividing net income (loss) attributable to common stockholders by the weighted average shares outstanding during the period. Diluted EPS is calculated by adjusting weighted average shares outstanding for the dilutive effect of common share equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted EPS calculation, stock options and nonvested stock awards are considered to be common stock equivalents. During periods of net income, participating securities are allocated a proportional share of net income determined by dividing total weighted average participating securities by the sum of total weighted average common shares and participating securities (“the two-class method”). During periods of net loss, no effect is given to participating securities since they do not share in the losses of the Company.

The basic and diluted EPS calculations for the three months endedMarch 31, 2014 and 2013 are presented below:

	Three Months Ended March 31,
(in thousands, except share and per share amounts)	2014			2013
Loss from continuing operations	$	(3,309	)	$	(4,214	)
Redeemable Class B Senior Preferred stock deemed dividend	—			(729		)
Loss attributable to common stockholders, from continuing operations	(3,309		)	(4,943		)
Income from discontinued operations, net of tax	21			157
Loss attributable to common stockholders	$	(3,288	)	$	(4,786	)
Weighted average common shares outstanding, basic and diluted	25,684,014			13,523,270
Basic and diluted EPS
Loss from continuing operations	$	(0.13	)	$	(0.36	)
Income from discontinued operations	—			0.01
Net loss per share	$	(0.13	)	$	(0.35	)

The following table provides the securities that could potentially dilute basic earnings per share in the future, but were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive:

	March 31,    2014	March 31,    2013
Stock option awards	719,484	772,851
Nonvested stock awards	427,993	379,841
Restricted stock units	10,000	—
Convertible Class C Preferred Stock (as converted basis)	—	4,454,889

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Document and Entity Information	3 Months Ended
	Mar. 31, 2014	Apr. 28, 2014
Document And Entity Information [Abstract]
Entity Registrant Name	Stock Building Supply Holdings, Inc.
Entity Central Index Key	0001574815
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		26,112,007

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of presentation

Basis of Presentation

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) that permit reduced disclosure for interim periods. The condensed consolidated balance sheet as of December 31, 2013 was derived from audited financial statements, but does not include all necessary disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The unaudited condensed consolidated financial statements include all accounts of the Company and its subsidiaries and, in the opinion of management, include all recurring adjustments and normal accruals necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the dates and periods presented. These unaudited financial statements should be read in conjunction with the Company’s 2013 Annual Report on Form 10-K. Results for interim periods are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period. All material intercompany accounts and transactions have been eliminated in consolidation.

Comprehensive loss

Comprehensive loss

Comprehensive loss is equal to the net loss for all periods presented.

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Income Statement [Abstract]
Net sales	$ 279,983	$ 248,726
Cost of goods sold	214,741	194,936
Gross profit	65,242	53,790
Selling, general and administrative expenses	67,127	56,802
Depreciation expense	1,468	1,639
Amortization expense	563	547
Impairment of assets held for sale	48	0
Public offering transaction-related costs	448	0
Restructuring expense	7	60
Total operating expenses	69,661	59,048
Loss from operations	(4,419)	(5,258)
Other income (expense)
Interest expense	(631)	(1,025)
Other income, net	243	190
Loss from continuing operations before income taxes	(4,807)	(6,093)
Income tax benefit	1,498	1,879
Loss from continuing operations	(3,309)	(4,214)
Income from discontinued operations, net of income tax expense of $14 and $109, respectively	21	157
Net loss	(3,288)	(4,057)
Redeemable Class B Senior Preferred stock deemed dividend	0	729
Loss attributable to common stockholders	$ (3,288)	$ (4,786)
Weighted average common shares, basic and diluted
Weighted average common shares outstanding, basic and diluted (in shares)	25,684,014	13,523,270
Basic and diluted (loss) income per share
Loss from continuing operations (in dollars per share)	$ (0.13)	$ (0.36)
Income from discontinued operations (in dollars per share)	$ 0.00	$ 0.01
Net loss per share (in dollars per share)	$ (0.13)	$ (0.35)

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Secured Credit Agreement

3 Months Ended

Mar. 31, 2014

Debt Disclosure [Abstract]

Secured Credit Agreement

Secured Credit Agreement

On June 30, 2009, the Company entered into a Secured Credit Agreement (the “Credit Agreement”) with Wells Fargo Capital Finance ("WFCF"), which includes a revolving line of credit (the “Revolver”). The Revolver was amended during 2013 and 2014 for changes in financial covenants, maximum availability, maturity date and interest rate. The following is a summary of the significant terms of the Revolver as of March 31, 2014:

Maturity	December 31, 2017
Interest/Usage Rate	Company’s option of Base Rate(a) plus a Base Rate Margin (ranges from 0.50%–1.00% based on Revolver availability) or London Inter Bank Offered Rate ("LIBOR") plus a LIBOR Rate Margin (ranges from 1.50%–2.00% based on Revolver availability)
Maximum Availability	Lesser of $200 million or the borrowing base(b)
Periodic Principal Payments	None

(a) Base Rate is the higher of (i) the Federal Funds Rate plus 0.5% or (ii) the prime rate.

(b) The Revolver’s borrowing base is calculated as the sum of (i) 85% of the Company’s eligible accounts receivable plus (ii) the lesser of 90% of the eligible credit card receivables and $5 million plus (iii) the lesser of $150 million, 65% of the eligible inventory or 85% of the net liquidation value of eligible inventory as defined in the Credit Agreement plus (iv) the lesser of $30 million, 85% of the net liquidation value of eligible fixed assets or the net book value of fixed assets, all as defined in the Credit Agreement, minus (v) reserves from time to time set by the administrative agent. The Company’s borrowing base can also be increased pursuant to certain terms outlined in the Credit Agreement.

The Credit Agreement provides that the Company can use the Revolver availability to issue letters of credit. The fees on any outstanding letters of credit issued under the Revolver include a participation fee equal to the LIBOR Rate Margin. The fee on the unused portion of the Revolver is 0.25%. The Revolver includes a financial covenant that requires the Company to maintain a minimum Fixed Charge Coverage Ratio of 1.00:1.00 as defined by the Credit Agreement. The Fixed Charge Coverage Ratio requirement is only applicable if the sum of (i) availability under the Revolver and (ii) qualified cash ("Adjusted Liquidity") is less than $20 million, and remains in effect until the date on which Adjusted Liquidity has been greater than or equal to $20 million for a period of 30 consecutive days. The Company incurred operating losses for the three months ended March 31, 2014 and 2013 and used cash for operating activities for the three months ended March 31, 2013. While there can be no assurances, based upon the Company’s forecast, the Company does not expect the financial covenants to become applicable during the year ending December 31, 2014.

The Company had outstanding borrowings of $66.6 million and $59.1 million with net availability of $88.6 million and $71.0 million as of March 31, 2014 and December 31, 2013, respectively. The interest rate on outstanding LIBOR Rate borrowings of $61.0 million was 1.7% and the interest rate on outstanding Base Rate borrowings of $5.6 million was 3.8% as of March 31, 2014. The interest rate on outstanding LIBOR Rate borrowings of $52.0 million was 1.9% and the interest rate on outstanding Base Rate borrowings of $7.1 million was 4.0% as of December 31, 2013. The Company had $8.9 million in letters of credit outstanding under the Credit Agreement as of March 31, 2014 and December 31, 2013. The Revolver is collateralized by substantially all assets of the Company. The carrying value of the Revolver at March 31, 2014 and December 31, 2013 approximates fair value as the Revolver contains a variable interest rate. As such, the fair value of the Revolver was classified as a Level 2 measurement in accordance with ASC 820.

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Accounts Receivable Accounts Receivable

3 Months Ended

Mar. 31, 2014

Receivables [Abstract]

Accounts Receivable

Accounts Receivable

Accounts receivable consist of the following at March 31, 2014 and December 31, 2013:

(in thousands)	March 31,    2014			December 31,    2013
Trade receivables	$	116,341		$	115,876
Allowance for doubtful accounts	(2,786		)	(2,707		)
Allowance for sales returns and discounts	(2,106		)	(1,884		)
	$	111,449		$	111,285

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Restructuring Costs (Tables)

3 Months Ended

Mar. 31, 2014

Restructuring and Related Activities [Abstract]

Schedule of restructuring expenses

The following table summarizes the restructuring expenses incurred in connection with the Restructurings and the remaining reserves as of March 31, 2014:

(in thousands)	Work Force Reductions			Store Closures			Total
Restructuring reserves, December 31, 2013	$	190		$	3,412		$	3,602
Restructuring charges incurred	—			12			12
Cash payments	(41		)	(359		)	(400		)
Restructuring reserves, March 31, 2014	$	149		$	3,065		$	3,214

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Income Taxes Income Tax (Policies)

3 Months Ended

Mar. 31, 2014

Income Tax Disclosure [Abstract]

Income taxes

Income Taxes

The Company evaluates its deferred tax assets quarterly to determine if valuation allowances are required. In assessing the realizability of deferred tax assets, the Company considers both positive and negative evidence in determining whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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Stock Based Compensation

3 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock based compensation

Based Compensation

The following table highlights the expense related to stock based compensation for the three months endedMarch 31, 2014 and 2013:

	Three Months Ended March 31,
(in thousands)	2014		2013
Nonvested stock	$	201	$	82
Stock options	267		64
Restricted stock units	17		—
Stock based compensation	$	485	$	146

The following is a summary of nonvested stock, restricted stock unit and stock option activity for the three months endedMarch 31, 2014:

	Nonvested Stock			Restricted Stock Units			Stock Options
	Number of Shares Outstanding	Weighted Average Grant Date Fair Value		Number of Units Outstanding	Weighted Average Grant Date Fair Value		Number of Options Outstanding		Weighted Average Exercise Price
December 31, 2013	427,993	$	15.72	10,000	$	13.96	714,484		$	9.98
Granted	—	—		—	—		6,000		18.14
Vested/exercised	—	—		—	—		—		—
Forfeited	—	—		—	—		(1,000	)	14.00
March 31, 2014	427,993	$	15.72	10,000	$	13.96	719,484		$	10.05

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Income Taxes

3 Months Ended

Mar. 31, 2014

Income Tax Disclosure [Abstract]

Income taxes

Income Taxes

The Company evaluates its deferred tax assets quarterly to determine if valuation allowances are required. In assessing the realizability of deferred tax assets, the Company considers both positive and negative evidence in determining whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company recognized valuation allowances of $2.0 million and $1.9 million against its deferred tax assets related to certain tax jurisdictions as of March 31, 2014 and December 31, 2013, respectively.

During the three months endedMarch 31, 2014 and 2013, the Company recorded additional valuation allowances of $0.1 million and $0.0 million, respectively, against deferred tax assets related to our continuing operations. To the extent the Company generates sufficient taxable income in the future to utilize the tax benefits of the net deferred tax assets on which a valuation allowance is recorded, the effective tax rate may decrease as the valuation allowance is reversed. The Company is not permitted to carry back any of its existing tax net operating losses; therefore, to the extent the Company generates future tax net operating losses, the Company may be required to increase the valuation allowance on net deferred tax assets and income tax benefit would be adversely affected.

For the three months endedMarch 31, 2014, the Company’s effective income tax rate including discontinued operations and other discrete items was 31.1%, which varied from the federal statutory rate of 35% primarily due to the unfavorable impact of non-deductible secondary offering transaction costs and a reduction in the annual effective tax rate from a permanent domestic manufacturing deduction under Internal Revenue Code Section 199 (the "Manufacturing Deduction"). For the three months endedMarch 31, 2013, the Company’s effective income tax rate including discontinued operations and other discrete items was 30.4%, which varied from the federal statutory rate of 35% primarily due to state income tax expense and the Manufacturing Deduction. 

The effective income tax rate on continuing operations for the three months endedMarch 31, 2014 was 31.2% compared to an effective income tax rate on continuing operations of 30.8% for the three months endedMarch 31, 2013. The increase in the tax rates for the comparative three-month periods is primarily due to a change in state income tax expense and offsetting differences related to the Manufacturing Deduction, the valuation allowance against the Company's deferred tax assets and the non-deductibility of the secondary offering transaction costs.

The Company has no material uncertain tax positions as of March 31, 2014 and December 31, 2013.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

Commitments and Contingencies

From time to time, various claims, legal proceedings and litigation are asserted or commenced against the Company principally arising from alleged product liability, warranty, casualty, construction defect, contract, tort, employment and other disputes. In determining loss contingencies, management considers the likelihood of loss as well as the ability to reasonably estimate the amount of such loss or liability. An estimated loss is recorded when it is considered probable that such a liability has been incurred and when the amount of loss can be reasonably estimated. It is not certain that the Company will prevail in these matters. However, the Company does not believe that the ultimate outcome of any pending matters will have a material adverse effect on its consolidated financial position, results of operations or cash flows.

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Segments

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segments

Segments

ASC 280, Segment Reporting defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company's operating segments consist of the East and West divisions along with Coleman Floor, which offers professional flooring installation services. Due to the similar economic characteristics, nature of products, distribution methods and customers, the Company has aggregated our East and West operating segments into one reportable segment, "Geographic divisions."

In addition to our reportable segment, the Company's consolidated results include "Coleman Floor" and "Other reconciling items." Other reconciling items is comprised of our corporate activities.

The following tables present Net Sales, Adjusted EBITDA and certain other measures for the reportable segment and total continuing operations for the three months endedMarch 31, 2014 and 2013.

	Three Months Ended March 31, 2014
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	268,453	$	63,118	$	2,819	$	8,806
Coleman Floor	11,530		2,124		24		(415		)
Other reconciling items	—		—		193		(8,281		)
	$	279,983	$	65,242	$	3,036

	Three Months Ended March 31, 2013
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	238,503	$	51,517	$	2,622	$	4,584
Coleman Floor	10,223		2,273		32		427
Other reconciling items	—		—		305		(6,232		)
	$	248,726	$	53,790	$	2,959

Reconciliation to consolidated financial statements:

	Three Months Ended March 31,
(in thousands)	2014			2013
Net loss, as reported	$	(3,288	)	$	(4,057	)
Interest expense	631			1,025
Income tax benefit	(1,498		)	(1,879		)
Depreciation and amortization	3,036			2,959
Impairment of assets held for sale	48			—
Public offering transaction-related costs	448			—
Restructuring expense	7			60
Discontinued operations, net of taxes	(21		)	(157		)
Management fees	77			406
Non-cash compensation expense	485			146
Acquisition costs	—			103
Severance and other expense related to store closures	185			173
Adjusted EBITDA of Coleman Floor	415			(427		)
Adjusted EBITDA of other reconciling items	8,281			6,232
Adjusted EBITDA of geographic divisions reportable segment	$	8,806		$	4,584

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Secured Credit Agreement (Details) (Revolving Credit Facility [Member], Wells Fargo Capital Finance [Member], USD $)	3 Months Ended
	Mar. 31, 2014		Dec. 31, 2013
Line of Credit Facility [Line Items]
Maturity date	Dec. 31, 2017
Maximum borrowing capacity	$ 200,000,000	[1]
Unused capacity, commitment fee percentage	0.25%
Minimum fixed charge coverage ratio	1.00
Threshold for minimum adjusted liquidity	20,000,000
Minimum adjusted liquidity for 30 consecutive days	20,000,000
Credit facility, amount outstanding	66,600,000		59,100,000
Remaining borrowing capacity	88,600,000		71,000,000
Letters of credit, amount outstanding	8,900,000		8,900,000
85% of eligible accounts receivable [Member]
Line of Credit Facility [Line Items]
Borrowing base, percentage of accounts receivable	85.00%
Lesser of 90% of eligible credit card receivables and $5 million [Member]
Line of Credit Facility [Line Items]
Borrowing base, percentage of credit card receivables	90.00%
Portion of borrowing base	5,000,000
Lesser of $125 million, 65% of the eligible inventory or 85% of the net liquidation value of eligible inventory [Member]
Line of Credit Facility [Line Items]
Borrowing base, percentage of eligible inventory	65.00%
Borrowing base, percentage of net liquidation value of eligible inventory	85.00%
Portion of borrowing base	150,000,000
Lesser of $30 million, 85% of the net liquidation value of eligible fixed assets or the net book value of fixed assets [Member]
Line of Credit Facility [Line Items]
Borrowing base, percentage of net liquidation value of eligible fixed assets	85.00%
Portion of borrowing base	30,000,000
LIBOR [Member]
Line of Credit Facility [Line Items]
Credit facility, amount outstanding	61,000,000		52,000,000
Interest rate at period end	1.70%		1.90%
Base Rate [Member]
Line of Credit Facility [Line Items]
Credit facility, amount outstanding	$ 5,600,000		$ 7,100,000
Interest rate at period end	3.80%		4.00%
Base Rate Option [Member] | Federal Funds Rate [Member]
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.50%
Base Rate Option [Member] | Base Rate [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.50%	[2]
Base Rate Option [Member] | Base Rate [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.00%	[2]
LIBOR Rate Option [Member] | LIBOR [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.50%	[2]
LIBOR Rate Option [Member] | LIBOR [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Basis spread on variable rate	2.00%	[2]

[1] The Revolver’s borrowing base is calculated as the sum of (i) 85% of the Company’s eligible accounts receivable plus (ii) the lesser of 90% of the eligible credit card receivables and $5 million plus (iii) the lesser of $150 million, 65% of the eligible inventory or 85% of the net liquidation value of eligible inventory as defined in the Credit Agreement plus (iv) the lesser of $30 million, 85% of the net liquidation value of eligible fixed assets or the net book value of fixed assets, all as defined in the Credit Agreement, minus (v) reserves from time to time set by the administrative agent. The Company’s borrowing base can also be increased pursuant to certain terms outlined in the Credit Agreement.

[2] Base Rate is the higher of (i) the Federal Funds Rate plus 0.5% or (ii) the prime rate.

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Income (Loss) Per Common Share Income (Loss) Per Common Share (Policies)

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Earnings per share

Income (Loss) Per Common Share

Basic net income (loss) per share (“EPS”) is calculated by dividing net income (loss) attributable to common stockholders by the weighted average shares outstanding during the period. Diluted EPS is calculated by adjusting weighted average shares outstanding for the dilutive effect of common share equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted EPS calculation, stock options and nonvested stock awards are considered to be common stock equivalents. During periods of net income, participating securities are allocated a proportional share of net income determined by dividing total weighted average participating securities by the sum of total weighted average common shares and participating securities (“the two-class method”). During periods of net loss, no effect is given to participating securities since they do not share in the losses of the Company.

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Stock Based Compensation (Tables)

3 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of expenses related to share-based payments

The following table highlights the expense related to stock based compensation for the three months endedMarch 31, 2014 and 2013:

	Three Months Ended March 31,
(in thousands)	2014		2013
Nonvested stock	$	201	$	82
Stock options	267		64
Restricted stock units	17		—
Stock based compensation	$	485	$	146

Schedule of nonvested stock awards, restricted stock units and stock option activity

The following is a summary of nonvested stock, restricted stock unit and stock option activity for the three months endedMarch 31, 2014:

	Nonvested Stock			Restricted Stock Units			Stock Options
	Number of Shares Outstanding	Weighted Average Grant Date Fair Value		Number of Units Outstanding	Weighted Average Grant Date Fair Value		Number of Options Outstanding		Weighted Average Exercise Price
December 31, 2013	427,993	$	15.72	10,000	$	13.96	714,484		$	9.98
Granted	—	—		—	—		6,000		18.14
Vested/exercised	—	—		—	—		—		—
Forfeited	—	—		—	—		(1,000	)	14.00
March 31, 2014	427,993	$	15.72	10,000	$	13.96	719,484		$	10.05

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Segments (Narrative) (Details)	3 Months Ended
	Mar. 31, 2014 segment
Segment Reporting Information [Line Items]
Number of reportable segments	1

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CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Income Statement [Abstract]
Discontinued operations, income tax expense (benefit)	$ 14	$ 109

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Restructuring Costs

3 Months Ended

Mar. 31, 2014

Restructuring and Related Activities [Abstract]

Restructuring costs

Restructuring Costs

In addition to discontinuing operations in certain markets, the Company instituted store closures and reductions in headcount in continuing markets (collectively, the “Restructurings”) in certain prior years in an effort to: (i) strengthen the Company’s competitive position; (ii) reduce costs and (iii) improve operating margins within existing markets that management believes have favorable long-term growth demographics. No additional costs, other than interest accretion, are expected to be incurred related to the Restructurings.

The following table summarizes the restructuring expenses incurred in connection with the Restructurings and the remaining reserves as of March 31, 2014:

(in thousands)	Work Force Reductions			Store Closures			Total
Restructuring reserves, December 31, 2013	$	190		$	3,412		$	3,602
Restructuring charges incurred	—			12			12
Cash payments	(41		)	(359		)	(400		)
Restructuring reserves, March 31, 2014	$	149		$	3,065		$	3,214

The remaining accrual for work force reduction of $0.1 million is expected to be fully paid by January 2015. The remaining accrual for store closures of $3.1 million is expected to be fully paid by January 2017 as the related leases expire.

The restructuring reserve at March 31, 2014 consists of a current portion of $1.6 million and a long-term portion of $1.6 million. The long-term portion is included in other long-term liabilities on the consolidated balance sheets.

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Segments (Tables)

3 Months Ended

Mar. 31, 2014

Mar. 31, 2013

Segment Reporting [Abstract]

Schedule of net sales, adjusted EBITDA and certain other measures by reportable segment

The following tables present Net Sales, Adjusted EBITDA and certain other measures for the reportable segment and total continuing operations for the three months endedMarch 31, 2014 and 2013.

	Three Months Ended March 31, 2014
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	268,453	$	63,118	$	2,819	$	8,806
Coleman Floor	11,530		2,124		24		(415		)
Other reconciling items	—		—		193		(8,281		)
	$	279,983	$	65,242	$	3,036

	Three Months Ended March 31, 2013
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	238,503	$	51,517	$	2,622	$	4,584
Coleman Floor	10,223		2,273		32		427
Other reconciling items	—		—		305		(6,232		)
	$	248,726	$	53,790	$	2,959

Reconciliation to consolidated financial statements:

Reconciliation to consolidated financial statements:

	Three Months Ended March 31,
(in thousands)	2014			2013
Net loss, as reported	$	(3,288	)	$	(4,057	)
Interest expense	631			1,025
Income tax benefit	(1,498		)	(1,879		)
Depreciation and amortization	3,036			2,959
Impairment of assets held for sale	48			—
Public offering transaction-related costs	448			—
Restructuring expense	7			60
Discontinued operations, net of taxes	(21		)	(157		)
Management fees	77			406
Non-cash compensation expense	485			146
Acquisition costs	—			103
Severance and other expense related to store closures	185			173
Adjusted EBITDA of Coleman Floor	415			(427		)
Adjusted EBITDA of other reconciling items	8,281			6,232
Adjusted EBITDA of geographic divisions reportable segment	$	8,806		$	4,584

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Stock Based Compensation Stock Based Compensation (Summary of stock option awards) (Details) (Stock options [Member], USD $)	3 Months Ended
	Mar. 31, 2014
Stock options [Member]
Stock Options, Number of options outstanding (in shares):
December 31, 2013 (in shares)	714,484
Granted (in shares)	6,000
Vested/exercised (in shares)	0
Forfeited (in shares)	(1,000)
March 31, 2014 (in shares)	719,484
Stock Options, Weighted average exercise price (in dollars per share):
December 31, 2013 (in dollars per share)	$ 9.98
Granted (in dollars per share)	$ 18.14
Vested/exercised (in dollars per share)	$ 0
Forfeited (in dollars per share)	$ 14.00
March 31, 2014 (in dollars per share)	$ 10.05

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Commitments and Contingencies Commitments and Contingencies (Policies)

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

Commitments and Contingencies

From time to time, various claims, legal proceedings and litigation are asserted or commenced against the Company principally arising from alleged product liability, warranty, casualty, construction defect, contract, tort, employment and other disputes. In determining loss contingencies, management considers the likelihood of loss as well as the ability to reasonably estimate the amount of such loss or liability. An estimated loss is recorded when it is considered probable that such a liability has been incurred and when the amount of loss can be reasonably estimated.