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 September 30, 2017

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

BMC Stock 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.)
Two Lakeside Commons 980 Hammond Drive NE, Suite 500 Atlanta, Georgia	30328
(Address of principal executive offices)	(Zip Code)

(678) 222-1219

(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 (or for such shorter period that the Registrant was required to file such reports), 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 xNo o

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

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

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 November 8, 2017 was 67,037,404 shares.

BMC STOCK HOLDINGS, INC. AND SUBSIDIARIES

Table of Contents to Form 10-Q

	PART I - FINANCIAL INFORMATION
Item 1	Unaudited Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016	2
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016	3
	Notes to Condensed Consolidated Financial Statements	4
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4	Controls and Procedures	23
	PART II - OTHER INFORMATION
Item 1	Legal Proceedings	24
Item 1A	Risk Factors	24
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3	Defaults Upon Senior Securities	24
Item 4	Mine Safety Disclosures	24
Item 5	Other Information	24
Item 6	Exhibits	25
	Signature	26

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PART I. FINANCIAL INFORMATION

ITEM 1    FINANCIAL STATEMENTS

BMC STOCK HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share amounts)	September 30, 2017			December 31, 2016
Assets
Current assets
Cash and cash equivalents	$	12,117		$	8,917
Accounts receivable, net of allowances	365,989			313,304
Inventories, net	307,685			272,276
Costs in excess of billings on uncompleted contracts	27,415			26,373
Income taxes receivable	—			2,437
Prepaid expenses and other current assets	57,209			43,635
Total current assets	770,415			666,942
Property and equipment, net of accumulated depreciation	303,314			286,741
Deferred income taxes	—			550
Customer relationship intangible assets, net of accumulated amortization	169,637			164,191
Other intangible assets, net of accumulated amortization	1,831			3,024
Goodwill	262,042			254,832
Other long-term assets	15,323			18,734
Total assets	$	1,522,562		$	1,395,014
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	187,519		$	165,540
Accrued expenses and other liabilities	91,620			88,786
Billings in excess of costs on uncompleted contracts	20,021			15,691
Income taxes payable	4,329			—
Interest payable	9,707			5,619
Current portion:
Long-term debt and capital lease obligations	8,137			11,155
Insurance reserves	14,464			16,021
Total current liabilities	335,797			302,812
Insurance reserves	38,006			39,184
Long-term debt	396,246			344,827
Long-term portion of capital lease obligations	16,601			20,581
Deferred income taxes	1,205			—
Other long-term liabilities	7,261			7,009
Total liabilities	795,116			714,413
Commitments and contingencies (Note 8)
Stockholders' equity
Preferred stock, $0.01 par value, 50.0 million shares authorized, no shares issued and outstanding at September 30, 2017 and December 31, 2016	—			—
Common stock, $0.01 par value, 300.0 million shares authorized, 67.1 million and 66.8 million shares issued, and 66.9 million and 66.7 million outstanding at September 30, 2017 and December 31, 2016, respectively	671			668
Additional paid-in capital	656,688			649,280
Retained earnings	72,965			33,182
Treasury stock, at cost, 0.2 million and 0.1 million shares at September 30, 2017 and December 31, 2016, respectively	(2,878		)	(2,529		)
Total stockholders' equity	727,446			680,601
Total liabilities and stockholders' equity	$	1,522,562		$	1,395,014

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

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BMC STOCK HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)	2017			2016			2017			2016
Net sales
Building products	$	671,316		$	613,763		$	1,919,923		$	1,768,834
Construction services	209,696			207,441			605,164			577,335
	881,012			821,204			2,525,087			2,346,169
Cost of sales
Building products	499,182			446,028			1,427,253			1,309,925
Construction services	172,285			172,210			498,405			475,006
	671,467			618,238			1,925,658			1,784,931
Gross profit	209,545			202,966			599,429			561,238
Selling, general and administrative expenses	158,193			149,498			464,870			431,176
Depreciation expense	11,053			9,784			32,555			27,866
Amortization expense	4,026			5,349			11,947			15,882
Merger and integration costs	2,574			4,655			13,339			11,088
Impairment of assets	409			—			435			11,883
	176,255			169,286			523,146			497,895
Income from operations	33,290			33,680			76,283			63,343
Other income (expense)
Interest expense	(6,377		)	(7,668		)	(18,960		)	(24,020		)
Loss on debt extinguishment	—			(12,529		)	—			(12,529		)
Other income, net	1,083			735			2,366			3,601
Income before income taxes	27,996			14,218			59,689			30,395
Income tax expense	9,553			4,982			19,906			9,933
Net income	$	18,443		$	9,236		$	39,783		$	20,462
Weighted average common shares outstanding
Basic	66,958			66,435			66,860			65,873
Diluted	67,442			67,085			67,341			66,455
Net income per common share
Basic	$	0.28		$	0.14		$	0.60		$	0.31
Diluted	$	0.27		$	0.14		$	0.59		$	0.31

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

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BMC STOCK HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended September 30,
(in thousands)	2017			2016
Cash flows from operating activities
Net income	$	39,783		$	20,462
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	40,049			35,215
Amortization of intangible assets	11,947			15,882
Amortization of debt issuance costs	1,263			2,690
Deferred income taxes	1,755			(4,638		)
Non-cash stock compensation expense	4,751			5,544
Loss (gain) on sale of property, equipment and real estate	301			(363		)
Impairment of assets	435			11,883
Loss on debt extinguishment	—			12,529
Amortization of inventory step-up charges	—			2,884
Gain on insurance proceeds	—			(1,003		)
Other non-cash adjustments	463			121
Change in assets and liabilities, net of effects of acquisitions
Accounts receivable, net of allowances	(46,591		)	(43,739		)
Inventories, net	(30,837		)	(35,718		)
Accounts payable	22,633			49,462
Other assets and liabilities	2,228			(7,390		)
Net cash provided by operating activities	48,180			63,821
Cash flows from investing activities
Purchases of property, equipment and real estate	(51,292		)	(26,126		)
Purchases of businesses, net of cash acquired	(38,737		)	—
Proceeds from sale of property, equipment and real estate	3,545			1,066
Insurance proceeds	—			1,151
Net cash used in investing activities	(86,484		)	(23,909		)
Cash flows from financing activities
Proceeds from revolving line of credit	769,458			1,227,050
Repayments of proceeds from revolving line of credit	(717,626		)	(1,352,408		)
Principal payments on other notes	(2,603		)	(2,900		)
Payments on capital lease obligations	(7,753		)	(6,300		)
Payments of debt issuance costs	(38		)	(5,824		)
Proceeds from issuance of senior secured notes	—			350,000
Redemption of senior secured notes	—			(250,000		)
Proceeds from issuance of common stock, net of offering costs	—			13,776
Payments of debt extinguishment costs	—			(8,438		)
Other financing activities, net	66			793
Net cash provided by (used in) financing activities	41,504			(34,251		)
Net increase in cash and cash equivalents	3,200			5,661
Cash and cash equivalents
Beginning of period	8,917			1,089
End of period	$	12,117		$	6,750
Supplemental disclosure of non-cash investing and financing transactions
Assets acquired under capital lease obligations	2,481			8,493

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

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BMC STOCK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.    Organization

These unaudited financial statements represent the financial statements of BMC Stock Holdings, Inc., and its subsidiaries. All references to “BMC,” “we,” “us,” “our” or the “Company” mean BMC Stock Holdings, Inc.

The Company 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, product specification and installation services.

2.    Basis of Presentation

The unaudited 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, 2016 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 Annual Report on Form 10-K for the year ended December 31, 2016 (“2016 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.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Comprehensive income

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

Recently adopted accounting pronouncements

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value. Prior to the issuance of the standard, inventory was measured at the lower of cost or market, where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin. Inventory measured using last-in, first-out (LIFO) and the retail inventory method are not impacted by the new guidance. Prospective application is required and early adoption is permitted. ASU 2015-11 became effective for the Company’s annual and interim periods beginning on January 1, 2017. The adoption of the guidance did not have a material impact on our financial statements.

Recently issued accounting pronouncements not yet adopted

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), and issued subsequent amendments to the initial guidance within Accounting Standards Update 2016-08, Revenue from Contracts with Customers, Principal versus Agent Considerations (“ASU 2016-08”) issued in March 2016, Accounting Standards Update 2016-10, Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing (“ASU 2016-10”) issued in April 2016, Accounting Standards Update 2016-12, Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”) issued in May 2016 and Accounting Standards Update 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (“ASU 2016-20”) issued in December 2016 (ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 collectively “Topic 606”). Topic 606 provides a comprehensive revenue recognition model requiring companies to recognize revenue for the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. In July 2015, the FASB voted to defer the effective date of ASU 2014-09 by one year, and therefore, the standard is effective for the Company’s annual and interim periods beginning on January 1, 2018. The guidance permits the use of either a full retrospective or modified retrospective transition method. We expect to adopt the standard on January 1, 2018 using the modified retrospective transition method, which recognizes the cumulative effect of initially applying the standard in retained earnings on the date of adoption, with the option to utilize certain practical expedients as defined in Topic 606. We do not expect the adoption of the standard to have a material impact on the timing of revenue recognition nor the amount of revenue recognized

4

from our building products contracts. Revenue for our building products contracts will continue to be recognized at a point in time, when control of the promised goods is transferred to our customers, with the exception of certain product offerings which are customized to customer specifications and meet the criteria to be recognized over time, which is consistent with the Company’s current accounting. We are continuing to evaluate the impact of the standard on our contracts with a service element but based on our current assessment, we expect that revenue for our construction services contracts will generally continue to be recognized over time as the Company satisfies the performance obligations in the contracts. We also continue to evaluate the disclosure requirements of the standard, which are expected to be significant and incremental to the current disclosures.

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (“ASU 2016-02”). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for the Company’s annual and interim periods beginning on January 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are in the process of evaluating the impact of the standard on our financial statements. As a lessee, certain of our various leases under existing guidance are classified as operating leases that are not recorded on the balance sheet but are recorded in the statement of operations as expense is incurred. Upon adoption of the standard, we will be required to record substantially all leases on the balance sheet as a ROU asset and a lease liability. The timing of expense recognition and classification in the statement of operations could change based on the classification of leases as either operating or financing.

In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 was issued to decrease the diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows by providing guidance on eight specific cash flow issues. ASU 2016-15 is effective for the Company’s annual and interim periods beginning on January 1, 2018, with early adoption permitted and retrospective application required. The adoption of the standard is not expected to have a material impact on our financial statements.

In November 2016, the FASB issued Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires that the statement of cash flows include restricted cash in the beginning and end-of-period total amounts shown and that the statement of cash flows explain the changes in restricted cash during the period. ASU 2016-18 is effective for the Company's annual and interim periods beginning on January 1, 2018. Retrospective application is required and early adoption is permitted. The adoption of the standard is not expected to have a material impact on our financial statements.

In January 2017, the FASB issued Accounting Standards Update 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-01 provides guidance in determining when a set of assets and activities meets the definition of a business. ASU 2017-01 is effective for the Company's annual and interim periods beginning on January 1, 2018. Early application is permitted for transactions meeting certain criteria and prospective application is required. The adoption of the standard is not expected to have a material impact on our financial statements.

In January 2017, the FASB issued Accounting Standards Update 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires computation of the implied fair value of a reporting unit's goodwill. The amount of a goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for the Company's annual goodwill impairment test and any interim tests during the Company's annual and interim periods beginning on January 1, 2020. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. Prospective application is required. The adoption of the standard is not expected to have a material impact on our financial statements.

In February 2017, the FASB issued Accounting Standards Update 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”). ASU 2017-05 clarifies the scope of Subtopic 610-20, which provides guidance for recognizing gains and losses from the sale or transfer of nonfinancial assets in contracts with noncustomers. ASU 2017-05 also provides guidance for partial sales of nonfinancial assets. ASU 2017-05 is effective for the Company’s annual and interim periods beginning on January 1, 2018 and we are required to adopt ASU 2017-05 at the same time that we adopt ASU 2014-09. The guidance permits the use of either a retrospective or cumulative effect transition method. The adoption of the standard is not expected to have a material impact on our financial statements.

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In May 2017, the FASB issued Accounting Standards Update 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under ASC 718. ASU 2017-09 is effective for the Company’s annual and interim periods beginning on January 1, 2018, with early adoption permitted. ASU 2017-09 is to be applied prospectively to an award modified on or after the adoption date. The adoption of the standard is not expected to have a material impact on our financial statements.

3.    Acquisitions

For all acquisitions, the Company allocates the purchase price to assets acquired and liabilities assumed as of the date of acquisition based on the estimated fair values at the date of acquisition. The excess of the fair value of the purchase consideration over the fair values of the identifiable assets and liabilities is recorded as goodwill. Management makes significant estimates and assumptions when determining the fair value of assets acquired and liabilities assumed. These estimates include, but are not limited to, discount rates, projected future net sales, projected future expected cash flows and useful lives.

Acquisition of Code Plus Components, LLC

On March 27, 2017, the Company acquired substantially all of the assets and assumed certain liabilities of Code Plus Components, LLC (“Code Plus”), a manufacturer of structural components located in Martinsburg, West Virginia, for a purchase price of $7.1 million. This acquisition allowed the Company to add truss manufacturing capability to its value-added offerings in the Washington, DC metro area. The purchase price includes an initial holdback of $0.4 million due to the sellers one year from the closing date. The holdback amount may be reduced under certain circumstances. Additionally, the acquisition includes an earnout provision that would require the Company to pay the sellers up to an additional $0.8 million upon the acquired operations achieving certain performance targets from the acquisition date through December 31, 2018. The Company funded the transaction through borrowings on the Company’s revolving line of credit.

The acquisition was accounted for using the acquisition method of accounting under ASC 805, Business Combinations, whereby the results of operations of Code Plus are included in the Company’s consolidated financial statements beginning on the acquisition date. The preliminary purchase price allocation resulted in the recognition of goodwill of $3.4 million, a customer relationship intangible asset of $2.3 million and a non-compete agreement intangible asset of $0.5 million, as well as other operating assets and liabilities. The customer relationship intangible asset and non-compete agreement intangible asset have useful lives of 12 years and 5 years, respectively. Goodwill represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and non-contractual relationships, as well as expected future synergies. All of the goodwill recognized is expected to be deductible for tax purposes.

For the year ended December 31, 2016, Code Plus generated net sales of approximately $14.2 million. The Company incurred transaction costs of $0 and $0.1 million for the three and nine months ended September 30, 2017, respectively, which are included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations.

Acquisition of Texas Plywood & Lumber Company, Inc.

On April 3, 2017, the Company acquired substantially all of the assets and assumed certain liabilities of Texas Plywood & Lumber Company, Inc. (“TexPly”), a supplier of production millwork and doors in the Dallas-Fort Worth area, for a preliminary purchase price of $32.0 million, of which $2.5 million was deposited in an escrow account to fund post-closing adjustments and other indemnification obligations for a period of one year from the closing date of the acquisition. This acquisition enhances the Company’s value-added offerings and footprint in the Dallas-Fort Worth market.

The acquisition was accounted for using the acquisition method of accounting under ASC 805, Business Combinations, whereby the results of operations of TexPly are included in the Company’s consolidated financial statements beginning on the acquisition date. The preliminary purchase price allocation resulted in the initial recognition of goodwill of $3.8 million, a customer relationship intangible asset of $13.4 million, accounts receivable of $5.2 million, inventory of $4.0 million and real property of $5.4 million, as well as other operating assets and liabilities. The customer relationship intangible asset has a useful life of 13 years. Goodwill represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and non-contractual relationships, as well as expected future synergies. All of the goodwill recognized is expected to be deductible for tax purposes.

For the year ended December 31, 2016, TexPly generated net sales of approximately $55.2 million. The Company incurred transaction costs of $0 and $0.2 million for the three and nine months ended September 30, 2017, respectively, which are included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations.

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The purchase price allocations of Code Plus and TexPly are preliminary and based upon all information available to the Company at the present time, and are subject to change. The Company is in the process of finalizing its valuation of the acquired intangible assets, property and equipment and inventory and therefore, the initial purchase accounting is not complete. As we receive additional information during the measurement period, the fair values assigned to the assets and liabilities may be adjusted.

Net sales for Code Plus and TexPly, in aggregate, included in the unaudited condensed consolidated statements of operations were $18.5 million and $38.0 million for the three and nine months endedSeptember 30, 2017, respectively. Estimated pre-tax earnings of Code Plus and TexPly, in aggregate, included in the unaudited condensed consolidated statements of operations were $1.5 million and $2.6 million for the three and nine months endedSeptember 30, 2017, respectively. The impact of the acquisitions was not considered significant for the reporting of pro forma financial information.

4.    Accounts Receivable

Accounts receivable consist of the following at September 30, 2017 and December 31, 2016:

(in thousands)	September 30,   2017			December 31,   2016
Trade receivables	$	378,104		$	323,725
Allowance for doubtful accounts	(4,436		)	(4,162		)
Other allowances	(7,679		)	(6,259		)
	$	365,989		$	313,304

5.    Impairment of BMHC ERP System

During 2013, Building Materials Holding Corporation (“BMHC” or “Legacy BMHC”) selected a new third-party software vendor for its planned Enterprise Resource Planning (“New ERP”) system and began incurring costs related to design, development and implementation of the New ERP. BMHC also began paying an annual licensing fee. During March 2016, the Company decided to integrate all operations under the Enterprise Resource Planning system utilized by Stock Building Supply Holdings, Inc. (“SBS” and the “Legacy SBS ERP system”) and to discontinue use of the New ERP. In connection with this decision, the Company recorded asset impairment charges of approximately $11.9 million in its unaudited condensed consolidated statement of operations for the nine months ended September 30, 2016 related to capitalized software development costs for New ERP functionality that the Company had intended to implement in future periods. These costs had previously been recorded as construction-in-progress within property and equipment on the condensed consolidated balance sheets.

During June 2017, the Company determined that it had ceased receiving economic benefit from certain non-cancellable license and service contracts related to the New ERP. In accordance with ASC 420, Exit or Disposal Cost Obligations, as of the cease use date, the Company recognized approximately $2.8 million of expense within merger and integration costs in its unaudited condensed consolidated statements of operations for the nine months ended September 30, 2017, consisting of $2.1 million for contractual payments due subsequent to the cease use date, all of which have been paid as of September 30, 2017, and the acceleration of expense recognition of unamortized prepaid costs of $0.7 million.

6.    Debt

Long-term debt as of September 30, 2017 and December 31, 2016 consists of the following:

(in thousands)	September 30,   2017			December 31,   2016
Senior secured notes, due 2024	$	350,000		$	350,000
Revolving credit agreement	51,832			—
Other	360			2,963
	402,192			352,963
Unamortized debt issuance costs related to senior secured notes	(5,848		)	(6,474		)
	396,344			346,489
Less: Current portion of long-term debt	98			1,662
	$	396,246		$	344,827

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Senior Secured Notes

On September 15, 2016, the Company issued $350.0 million of senior secured notes due 2024 (the “Senior Notes”) under an unregistered private placement not subject to the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The Senior Notes were issued by BMC East, LLC, a 100% owned subsidiary of the Company, and are guaranteed by the Company and the other subsidiaries that guarantee our Credit Agreement (as defined below). Each of the subsidiary guarantors is 100% owned, directly or indirectly, by the Company, and all guarantees are full and unconditional and joint and several. The interest rate is fixed at 5.5% and is payable semiannually on April 1 and October 1.

The net cash proceeds from the Senior Notes were used to redeem in full $250.0 million of 9.0% senior secured notes that were issued by BMHC in September 2013 and that were scheduled to mature in September 2018 (the “Extinguished Senior Notes”). In connection with the redemption of the Extinguished Senior Notes, the Company incurred a loss on debt extinguishment of $12.5 million for the nine months ended September 30, 2016, consisting of a call premium of $8.4 million, and the write-off of unamortized debt issuance costs and original issue discount of $4.1 million.

As of September 30, 2017, the estimated market value of the Senior Notes was $16.6 million higher than the carrying amount. The fair value is based on institutional trading activity and was classified as a Level 2 measurement in accordance with ASC 820.

Revolving Credit Agreement

On December 1, 2015, we entered into a senior secured credit agreement with Wells Fargo Capital Finance, as administrative agent, and certain other lenders (the “Credit Agreement”), which includes a revolving line of credit (the “Revolver”). The Credit Agreement, as amended, has an aggregate commitment of $375.0 million. We had outstanding borrowings under the Revolver of $51.8 million with net availability of $256.4 million as of September 30, 2017. The weighted average interest rate on outstanding LIBOR Rate borrowings of $40.0 million was 2.74% and the interest rate on Base Rate borrowings of $11.8 million was 4.75% as of September 30, 2017. We had $66.8 million in letters of credit outstanding under the Credit Agreement as of September 30, 2017.

The carrying value of the Revolver at September 30, 2017 approximates fair value as the rates are comparable to those at which we could currently borrow under similar terms, are variable and incorporate a measure of our credit risk. As such, the fair value of the Revolver was classified as a Level 2 measurement in accordance with ASC 820.

Other

Other long-term debt as of September 30, 2017 consists of a $0.4 million term note secured by real property with a maturity of February 2021. The interest rate is 7.0% and is paid monthly. The estimated market value of other long-term debt approximates the carrying amount.

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 had a valuation allowance of $0.1 million against its deferred tax assets related to certain state tax jurisdictions as of September 30, 2017 and December 31, 2016. To the extent the Company generates future tax net operating losses, the Company may be required to increase the valuation allowance on deferred tax assets, which may unfavorably impact the effective tax rate.

The Company has no material uncertain tax positions as of September 30, 2017 and December 31, 2016.

For the three and nine months endedSeptember 30, 2017, the Company’s effective tax rate was 34.1% and 33.3%, respectively, which varied from the federal statutory rate of 35% primarily due to excess tax windfall benefits from stock compensation and a permanent domestic manufacturing deduction under Internal Revenue Code Section 199 (the “Manufacturing Deduction”). For the three and nine months endedSeptember 30, 2016, the effective tax rate was 35.0% and 32.7%, respectively, which varied from the federal statutory rate of 35% primarily due to the excess tax windfall benefit from stock compensation and the Manufacturing Deduction.

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

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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 currently 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. The Company recorded $3.0 million of expense within selling, general and administrative expenses in its unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2017 in relation to pending litigation. The amount accrued is based upon currently available information, however, the ultimate obligation may be higher.

9.    Stock Based Compensation

The following table highlights the expense related to stock based compensation for the three and nine months endedSeptember 30, 2017 and 2016:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2017		2016		2017		2016
Restricted stock units	$	1,157	$	1,200	$	4,139	$	3,338
Restricted stock	113		400		339		1,376
Stock options	96		251		273		830
Stock based compensation	$	1,366	$	1,851	$	4,751	$	5,544

During the nine months ended September 30, 2017, in addition to grants of service-based restricted stock unit awards, the Company granted performance-based restricted stock units that vest on March 15, 2020.The weighted average grant date fair value of the performance-based restricted stock units was $21.94. Currently, the number of performance-based restricted stock units that are issued on the vesting date could range from zero to a maximum of 246,337, based 50% upon the Company’s average return on invested capital over the three year period from January 1, 2017 through December 31, 2019 and 50% upon the Company’s cumulative adjusted earnings per share (“Adjusted EPS”) over the same three year period.

During the nine months ended September 30, 2016, in addition to grants of service-based restricted stock unit awards, the Company granted performance-based restricted stock units that vest on March 15, 2019. The number of performance-based restricted stock units that are issued on the vesting date could range from zero to a maximum of 206,250, based upon the Company’s cumulative Adjusted EBITDA over the three year period from January 1, 2016 through December 31, 2018.

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 (“CODM”) in deciding how to allocate resources and in assessing performance.

Beginning January 1, 2017, the Company’s operating segments consist of the Mid-Atlantic, Southeast, Texas, Intermountain and Western divisions after the Company realigned certain of its markets, which resulted in the consolidation of the Company’s historical Mountain West division into the Intermountain division. Following the realignment, the CODM continues to review aggregate information to allocate resources and assess performance. Based on this, as well as the similar economic characteristics, nature of products, distribution methods and customers of the divisions both before and after the realignment, the Company has aggregated its operating segments into one reportable segment, “Geographic divisions.”

In addition to our reportable segment, the Company’s consolidated results include “Other reconciling items.” Other reconciling items is comprised of our corporate activities and other income and expenses not allocated to the operating segments.

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The following tables present Net Sales, Adjusted EBITDA and certain other measures for the reportable segment and total Company operations for the three and nine months endedSeptember 30, 2017 and 2016. Adjusted EBITDA is used as a performance metric by the CODM in determining how to allocate resources and assess performance.

	Three Months Ended September 30, 2017
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	881,012	$	209,545	$	16,996	$	70,158
Other reconciling items	—		—		629		(10,861		)
	$	881,012	$	209,545	$	17,625

	Three Months Ended September 30, 2016
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	821,204	$	202,966	$	16,011	$	69,381
Other reconciling items	—		—		1,265		(11,184		)
	$	821,204	$	202,966	$	17,276

	Nine Months Ended September 30, 2017
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	2,525,087	$	599,429	$	50,167	$	188,882
Other reconciling items	—		—		1,829		(36,445		)
	$	2,525,087	$	599,429	$	51,996

	Nine Months Ended September 30, 2016
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	2,346,169	$	561,238	$	47,562	$	190,077
Other reconciling items	—		—		3,535		(40,637		)
	$	2,346,169	$	561,238	$	51,097

Reconciliation to consolidated financial statements:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2017		2016		2017		2016
Income before income taxes	$	27,996	$	14,218	$	59,689	$	30,395
Interest expense	6,377		7,668		18,960		24,020
Depreciation and amortization	17,625		17,276		51,996		51,097
Merger and integration costs	2,574		4,655		13,339		11,088
Non-cash stock compensation expense	1,366		1,851		4,751		5,544
Impairment of assets	409		—		435		11,883
Acquisition costs	—		—		317		—
Loss on debt extinguishment	—		12,529		—		12,529
Inventory step-up charges	—		—		—		2,884
Other items (a)	2,950		—		2,950		—
Adjusted EBITDA of other reconciling items	10,861		11,184		36,445		40,637
Adjusted EBITDA of geographic divisions reportable segment	$	70,158	$	69,381	$	188,882	$	190,077

(a) Represents expense incurred during the three and nine months ended September 30, 2017 related to pending litigation.

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11.    Earnings Per Share

Basic net income per share (“EPS”) is calculated by dividing net income 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 potential common shares, determined using the treasury-stock method. For purposes of the diluted EPS calculation, stock options, restricted stock and restricted stock unit awards are considered to be potential common shares. Performance-based restricted stock units are not included in the calculation of diluted EPS until they are contingently issuable.

The basic and diluted EPS calculations for the three and nine months endedSeptember 30, 2017 and 2016 are presented below:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2017		2016		2017		2016
Income attributable to common stockholders	$	18,443	$	9,236	$	39,783	$	20,462
Weighted average common shares outstanding, basic	66,958		66,435		66,860		65,873
Effect of dilutive securities:
Restricted stock	61		233		68		250
Restricted stock units	248		194		212		109
Stock options	175		223		201		223
Weighted average common shares outstanding, diluted	67,442		67,085		67,341		66,455
Basic income per common share	$	0.28	$	0.14	$	0.60	$	0.31
Diluted income per common share	$	0.27	$	0.14	$	0.59	$	0.31

The following table provides the securities that could potentially dilute EPS in the future, but were not included in the computation of diluted EPS for the periods presented because to do so would have been anti-dilutive. The amounts included in this table exclude performance-based restricted stock units. As of September 30, 2017, the number of currently outstanding performance-based restricted stock units that are issued upon vesting could range from zero to a maximum of 452,587.

	Three Months Ended September 30,		Nine Months Ended September 30,
(in thousands)	2017	2016	2017	2016
Restricted stock units	13	—	13	—
Stock options	1	490	1	490

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

The following discussion and analysis should be read 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 2016 Annual Report on Form 10-K.

Cautionary Statement with Respect to Forward-Looking Statements

Some of the statements contained in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts or present facts or conditions. In many cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or the negative of these terms or other comparable terminology.

The forward-looking statements reflect our views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. These factors include without limitation:

• the state of the homebuilding industry and repair and remodeling activity, the economy and the credit markets;

• seasonality and cyclicality of the building products supply and services industry;

• competitive industry pressures and competitive pricing pressure from our customers and competitors;

• inflation or deflation of prices of our products;

• our exposure to product liability, warranty, casualty, construction defect, contract, tort, employment and other claims and legal proceedings;

• our ability to maintain profitability;

• the impact of our indebtedness;

• the various financial covenants in our secured credit agreement and senior secured notes indenture;

• our concentration of business in the Texas, California and Georgia markets;

• the potential negative impacts from the significant decline in oil prices on employment, home construction and remodeling activity in Texas (particularly the Houston metropolitan area) and other markets dependent on the energy industry;

• our ability to retain our key employees and to attract and retain new qualified employees, while controlling our labor costs;

• product shortages, loss of key suppliers or failure to develop relationships with qualified suppliers, and our dependence on third-party suppliers and manufacturers;

• the implementation of our supply chain and technology initiatives;

• the impact a housing market decline may have on our business, including the potential for impairment losses or the closing or idling of under-performing locations;

• the impact of long-term non-cancelable leases at our facilities;

• our ability to effectively manage inventory and working capital;

• the credit risk from our customers;

• the impact of pricing pressure from our customers;

• our ability to identify or respond effectively to consumer needs, expectations or trends;

• our ability to successfully implement our growth strategy;

• the impact of federal, state, local and other laws and regulations;

• the impact of changes in legislation and government policy;

• the impact of unexpected changes in our tax provisions and adoption of new tax legislation;

• our ability to utilize our net operating loss carryforwards;

• the potential loss of significant customers or a reduction in the quantity of products they purchase;

• natural or man-made disruptions to our distribution and manufacturing facilities;

• our exposure to environmental liabilities and subjection to environmental laws and regulation;

• the impact of disruptions to our information technology systems;

• cybersecurity risks;

• risks related to the continued integration of Building Materials Holdings Corporation and Stock Building Supply Holdings, Inc. and successful operation of the post-merger company; and

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• our ability to operate on multiple ERP information systems and convert multiple systems to a single system.

Certain of these and other factors are discussed in more detail in “Item 1A. Risk Factors” of our 2016 Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. The forward-looking statements included herein are made only as of the date of this Quarterly Report on Form 10-Q and we undertake no obligation to publicly update or review any forward-looking statement made by us or on our behalf, whether as a result of new information, future developments, subsequent events or circumstances or otherwise, unless otherwise required by law.

Overview

We are one of the leading providers of diversified building products and services in the U.S. residential construction market. Our objective is to provide best-in-class customer service and value-added products to our customers, which are primarily single- and multi-family home builders and professional remodelers. Our product offerings include lumber and lumber sheet goods and an array of value-added products including millwork, doors, windows and structural components such as engineered wood products, floor and roof trusses and wall panels. Our whole-house framing solution, Ready-Frame®, which is one of our fastest growing product offerings, saves builders both time and money and improves job site safety. We also offer our customers important services such as design, product specification, installation and installation management.

The 18 states in which we operate accounted for approximately 64% of 2016 U.S. single-family housing permits according to the U.S. Census Bureau. In these 18 states, we operate in 43 metropolitan areas.

Our net sales for the three months ended September 30, 2017increased7.3% compared to the prior year period. Our gross margin was 23.8% for the three months ended September 30, 2017 compared to 24.7% for the prior year period. We recorded income from operations of $33.3 million during the three months ended September 30, 2017 compared to $33.7 million during the three months ended September 30, 2016. See further discussion in “-Operating Results” below.

Factors Affecting Our Operating Results

Our operating results and financial performance are influenced by a variety of factors, including, among others, acquisitions, 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.

Acquisitions

On March 27, 2017, the Company completed the acquisition of Code Plus, a truss manufacturer located in Martinsburg, West Virginia serving the Washington DC market, for a purchase price of $7.1 million. On April 3, 2017, the Company completed the acquisition of TexPly, a supplier of production millwork and doors in the Dallas-Fort Worth area, for a preliminary purchase price of $32.0 million.

Approximately $18.5 million and $38.0 million of the sales increase for the three and nine months ended September 30, 2017, respectively, compared to the prior year period is a result of the Code Plus and TexPly acquisitions.

See Note 3 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for further discussion of the Company’s 2017 acquisitions.

Conditions in the housing and construction market

The building products supply and services industry is highly dependent on new single-family home and multi-family construction and repair and remodeling activity, which in turn are dependent upon a number of factors, including, among other things, 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 in the South and West regions of the United States, which are our primary operating regions, increased approximately 11.2% for the three months ended September 30, 2017 as compared to the same period in the prior year.

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

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employment growth, prospective home buyers’ access to financing and improved consumer confidence will be necessary to increase household formation rates. We believe 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). These prices represent transactions between manufacturers and their customers as reported by Random Lengths and may differ in magnitude or timing from the actual selling prices or cost of goods reported in our operating results. The average composite structural panel prices are based on index prices for OSB and plywood.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017 versus 2016		2017 average price		2017 versus 2016		2017 average price
Framing lumber prices	16.8	%	$	418	18.1	%	$	405
Structural panel prices	20.3	%	$	468	14.3	%	$	423

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” below.

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. We expect that our ability to maintain strong relationships with the larger builders will be vital to our ability to expand into new markets as well as grow our market share. 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-enabled telematics technology across our delivery fleet 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, doors & windows often generate higher gross margins relative to other products. Homebuilders often use structural components in order to realize increased efficiency and improved quality. We believe shortening cycle time from start to completion is a key goal 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 customer sales mix

Our operating results may vary according to the amount and type of products we sell to each of our primary customer types: new single-family homebuilders, professional remodeling contractors, and multi-family builders and light commercial builders. We tend to realize higher gross margins on sales to remodeling contractors 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 on sales to single-family, multi-family and light commercial customers 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. 

Seasonality

Our first and fourth quarters have historically been, and are generally expected to continue to be, adversely affected by weather patterns in some of our markets, causing reduced construction activity. As a result, sales are usually lower in the first and fourth quarters than in the second and third quarters.

Operating Results

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

	Three Months Ended September 30,										Nine Months Ended September 30,
(in thousands)	2017					2016					2017					2016
Net sales	$	881,012		100.0	%	$	821,204		100.0	%	$	2,525,087		100.0	%	$	2,346,169		100.0	%
Cost of sales	671,467			76.2	%	618,238			75.3	%	1,925,658			76.3	%	1,784,931			76.1	%
Gross profit	209,545			23.8	%	202,966			24.7	%	599,429			23.7	%	561,238			23.9	%
Operating expenses:
Selling, general and administrative expenses	158,193			18.0	%	149,498			18.2	%	464,870			18.4	%	431,176			18.4	%
Depreciation expense	11,053			1.3	%	9,784			1.2	%	32,555			1.3	%	27,866			1.2	%
Amortization expense	4,026			0.5	%	5,349			0.7	%	11,947			0.5	%	15,882			0.7	%
Merger and integration costs	2,574			0.3	%	4,655			0.6	%	13,339			0.5	%	11,088			0.5	%
Impairment of assets	409			0.0	%	—			0.0	%	435			0.0	%	11,883			0.5	%
Income from operations	33,290			3.8	%	33,680			4.1	%	76,283			3.0	%	63,343			2.7	%
Other income (expense)
Interest expense	(6,377		)	(0.7	)%	(7,668		)	(0.9	)%	(18,960		)	(0.8	)%	(24,020		)	(1.0	)%
Loss on debt extinguishment	—			0.0	%	(12,529		)	(1.5	)%	—			0.0	%	(12,529		)	(0.5	)%
Other income, net	1,083			0.1	%	735			0.1	%	2,366			0.1	%	3,601			0.2	%
Income before income taxes	27,996			3.2	%	14,218			1.7	%	59,689			2.4	%	30,395			1.3	%
Income tax expense	9,553			1.1	%	4,982			0.6	%	19,906			0.8	%	9,933			0.4	%
Net income	$	18,443		2.1	%	$	9,236		1.1	%	$	39,783		1.6	%	$	20,462		0.9	%

Three months ended September 30, 2017 compared to three months ended September 30, 2016

Net sales

For the three months ended September 30, 2017, net sales increased$59.8 million, or 7.3%, to $881.0 million from $821.2 million during the three months ended September 30, 2016. The increase in net sales was primarily driven by increased volume of approximately 0.5% related to existing operations and the impact of commodity price inflation of approximately 4.5%, while the acquisitions of Code Plus and TexPly increased net sales by approximately 2.3%. The increase in sales volume was negatively impacted by one less selling day during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016, which impacted net sales by approximately 1.6%, and the impact of Hurricanes Harvey and Irma, which is estimated to have decreased net sales by approximately $12.0 million to $15.0 million.

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We estimate approximately 77% of our net sales for the three months ended September 30, 2017 were to customers engaged in new single-family construction. According to the U.S. Census Bureau, single-family housing starts in the South and West regions of the United States, which are our primary operating regions, increased approximately 11.2% for the three months ended September 30, 2017 as compared to the same period in the prior year, while single-family houses completed increased approximately 7.3% during the same period. Increases in net sales from Texas and California accounted for approximately half of the total increase in net sales for the three months ended September 30, 2017, while the Company experienced a decrease in net sales in Georgia of less than 1% of overall net sales.

The following table shows net sales classified by major product category. Certain prior year amounts have been reclassified to conform to the current year presentation.

	Three Months Ended   September 30, 2017				Three Months Ended   September 30, 2016
(in thousands)	Net Sales		% of Sales		Net Sales		% of Sales		% Change
Structural components	$	145,185	16.5	%	$	123,539	15.0	%	17.5	%
Lumber & lumber sheet goods	294,699		33.5	%	248,751		30.3	%	18.5	%
Millwork, doors & windows	225,804		25.6	%	232,292		28.3	%	(2.8	)%
Other building products & services	215,324		24.4	%	216,622		26.4	%	(0.6	)%
Total net sales	$	881,012	100.0	%	$	821,204	100.0	%	7.3	%

The impact of commodity price inflation during the three months ended September 30, 2017 contributed to the increase in net sales in our structural components product category. In addition to commodity price inflation, an increase in single-family home construction also contributed to the growth in our lumber & lumber sheet goods product category. The decrease in our millwork, doors & windows product category was primarily related to reduced sales in Texas and Georgia, in part related to the impact of Hurricanes Harvey and Irma, one less selling day versus the prior year period and a decrease in sales to multi-family contractors.

Cost of sales

For the three months ended September 30, 2017, cost of sales increased$53.2 million, or 8.6%, to $671.5 million from $618.2 million during the three months ended September 30, 2016. We estimate our cost of sales increased approximately 1.4% as a result of increased sales volumes and 5.2% as a result of commodity cost inflation, while the acquisitions of Code Plus and TexPly increased our cost of sales by approximately 2.0%.

Gross profit

For the three months ended September 30, 2017, gross profit increased$6.6 million, or 3.2%, to $209.5 million from $203.0 million for the three months ended September 30, 2016, driven primarily by increased sales volumes. Our gross margin was 23.8% for the three months ended September 30, 2017 and 24.7% for the three months ended September 30, 2016. This decrease primarily related to a decline in gross margin in the lumber & lumber sheet goods product category, and a higher percentage of total net sales being derived from lumber & lumber sheet goods.

Operating expenses

For the three months ended September 30, 2017:

• selling, general and administrative expenses were $158.2 million, up$8.7 million, or 5.8%, from $149.5 million for the three months ended September 30, 2016. Approximately $4.4 million of this increase related to selling, general and administrative expenses of TexPly and Code Plus, $3.0 million related to pending litigation and $1.7 million related to increased health care costs.

• depreciation expense was $11.1 million compared to $9.8 million for the three months ended September 30, 2016. This increase primarily relates to replacements and additions of delivery fleet, material handling equipment and operating equipment.

• amortization expense was $4.0 million compared to $5.3 million for the three months ended September 30, 2016. This decrease resulted from certain intangible assets that became fully amortized, partially offset by the amortization of intangible assets acquired in the Code Plus and TexPly acquisitions.

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• the Company incurred $2.6 million of Merger and integration costs related to the ongoing integration of BMHC and SBS, consisting primarily of severance, system integration costs and professional fees, compared to $4.7 million for the three months ended September 30, 2016.

• the Company recognized asset impairment charges of $0.4 million related to the write down of real estate held for sale to the lower of depreciated cost or estimated fair value less expected disposition costs.

Interest expense

For the three months ended September 30, 2017, interest expense was $6.4 million compared to $7.7 million for the three months ended September 30, 2016. This decrease relates primarily to a decrease in interest expense on the Senior Notes after the Company redeemed $250.0 million of 9.0% senior secured notes with the proceeds from the issuance of $350.0 million of 5.5% Senior Notes during September 2016. Non-cash amortization of debt issuance costs, which is included in interest expense, was $0.4 million and $0.8 million for the three months ended September 30, 2017 and 2016, respectively.

Loss on debt extinguishment

For the three months ended September 30, 2016, the Company incurred a loss on debt extinguishment of $12.5 million related to the redemption of the Extinguished Senior Notes. The loss is made up of a call premium of $8.4 million and the write off of unamortized debt issuance costs and original issue discount of $4.1 million.

Income tax

For the three months ended September 30, 2017, income tax expense was $9.6 million compared to $5.0 million for the three months ended September 30, 2016. The effective tax rate for the three months ended September 30, 2017 was 34.1%, which varied from the federal statutory rate of 35% primarily due to excess tax windfall benefits from stock compensation and the Manufacturing Deduction. The effective tax rate for the three months ended September 30, 2016 was 35.0%, which was consistent with the federal statutory rate of 35%.

Nine months ended September 30, 2017 compared to nine months ended September 30, 2016

Net sales

For the nine months ended September 30, 2017, net sales increased$178.9 million, or 7.6%, to $2,525.1 million from $2,346.2 million during the nine months ended September 30, 2016. The increase in net sales was primarily driven by increased volume of approximately 2.5% related to existing operations and the impact of commodity price inflation of approximately 3.5%, while the acquisitions of Code Plus and TexPly increased net sales by approximately 1.6%. The increase in sales volume was negatively impacted by one less selling day during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 and the impact of Hurricanes Harvey and Irma, which is estimated to have decreased net sales by approximately $12.0 million to $15.0 million.

We estimate approximately 75% of our net sales for the nine months ended September 30, 2017 were to customers engaged in new single-family construction. According to the U.S. Census Bureau, single-family housing starts in the South and West regions of the United States, which are our primary operating regions, increased approximately 9.7% for the nine months ended September 30, 2017 as compared to the same period in the prior year, while single-family houses completed increased approximately 10.0% during the same period. Increases in net sales from Texas accounted for approximately 41% of the total increase in net sales for the nine months ended September 30, 2017, while the Company experienced a decrease in net sales in California and Georgia of less than 1% of overall net sales.

The following table shows net sales classified by major product category. Certain prior year amounts have been reclassified to conform to the current year presentation.

	Nine Months Ended   September 30, 2017				Nine Months Ended   September 30, 2016
(in thousands)	Net Sales		% of Sales		Net Sales		% of Sales		% Change
Structural components	$	393,382	15.6	%	$	353,616	15.1	%	11.2	%
Lumber & lumber sheet goods	829,634		32.9	%	707,113		30.1	%	17.3	%
Millwork, doors & windows	677,554		26.8	%	678,702		28.9	%	(0.2	)%
Other building products & services	624,517		24.7	%	606,738		25.9	%	2.9	%
Total net sales	$	2,525,087	100.0	%	$	2,346,169	100.0	%	7.6	%

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The impact of commodity price inflation during the nine months ended September 30, 2017 contributed to the increase in net sales in our structural components product category. In addition to commodity price inflation, an increase in single-family home construction also contributed to the growth in our lumber & lumber sheet goods product category.

Cost of sales

For the nine months ended September 30, 2017, cost of sales increased$140.7 million, or 7.9%, to $1,925.7 million from $1,784.9 million during the nine months ended September 30, 2016. Cost of sales for the nine months ended September 30, 2016 includes $2.9 million of expense incurred in relation to the sell-through of inventory which was stepped up in value in connection with the Merger. We estimate our cost of sales increased approximately 4.1% as a result of commodity cost inflation, 2.5% as a result of increased sales volumes related to existing operations and 1.5% related to the acquisitions of Code Plus and TexPly, partially offset by a 0.2% decrease as a result of the sell-through of inventory which was stepped up in value.

Gross profit

For the nine months ended September 30, 2017, gross profit increased$38.2 million, or 6.8%, to $599.4 million from $561.2 million for the nine months ended September 30, 2016, driven primarily by increased sales volumes. Our gross margin was 23.7% for the nine months ended September 30, 2017 and 23.9% for the nine months ended September 30, 2016. Gross profit for the nine months ended September 30, 2016 was impacted by $2.9 million, or 0.1% of net sales, in relation to the sell-through of inventory which was stepped up in value in connection with the Merger.

Operating expenses

For the nine months ended September 30, 2017:

• selling, general and administrative expenses were $464.9 million, up$33.7 million, or 7.8%, from $431.2 million for the nine months ended September 30, 2016. Approximately $8.6 million of this increase related to selling, general and administrative expenses of TexPly and Code Plus, $3.0 million related to pending litigation and $2.0 million related to increased health care costs. The remaining increase was primarily due to costs associated with four newly-opened facilities and variable costs to serve higher sales volumes related to existing operations.

• depreciation expense was $32.6 million compared to $27.9 million for the nine months ended September 30, 2016. This increase primarily relates to replacements and additions of delivery fleet, material handling equipment and operating equipment.

• amortization expense was $11.9 million compared to $15.9 million for the nine months ended September 30, 2016. This decrease resulted from certain intangible assets that became fully amortized, partially offset by the amortization of intangible assets acquired in the Code Plus and TexPly acquisitions.

• the Company incurred $13.3 million of Merger and integration costs related to the ongoing integration of BMHC and SBS, consisting primarily of severance, system integration costs and professional fees, compared to $11.1 million for the nine months ended September 30, 2016. This increase relates to approximately $2.8 million of expense recognized during the nine months ended September 30, 2017 related to the discontinuance of the New ERP (see Note 5 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for further description of the New ERP).

• the Company recognized asset impairment charges of $0.4 million related to the write down of real estate held for sale to the lower of depreciated cost or estimated fair value less expected disposition costs. During the nine months ended September 30, 2016, the Company recognized asset impairment charges of $11.9 million. During the first quarter of 2016, the Company decided to integrate all operations under the Legacy SBS ERP system, and to discontinue use of the New ERP (see Note 5 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for further description of the New ERP). In connection with this decision, the Company impaired capitalized software costs that had previously been recorded as construction-in-progress within property and equipment on the unaudited condensed consolidated balance sheets.

Interest expense

For the nine months ended September 30, 2017, interest expense was $19.0 million compared to $24.0 million for the nine months ended September 30, 2016. This decrease relates primarily to reduced borrowings under the Revolver and a decrease in interest expense on the Senior Notes after the Company redeemed $250.0 million of 9.0% senior secured notes with the proceeds from the issuance of $350.0 million of 5.5% Senior Notes during September 2016. Non-cash amortization of debt issuance costs, which

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is included in interest expense, was $1.3 million and $2.7 million for the nine months ended September 30, 2017 and 2016, respectively.

Loss on debt extinguishment

For the nine months ended September 30, 2016, the Company incurred a loss on debt extinguishment of $12.5 million related to the redemption of the Extinguished Senior Notes. The loss is made up of a call premium of $8.4 million and the write off of unamortized debt issuance costs and original issue discount of $4.1 million.

Other income, net

For the nine months ended September 30, 2017, other income, net decreased$1.2 million compared to the nine months ended September 30, 2016. This decrease primarily relates to insurance proceeds received during the nine months ended September 30, 2016 related to a fire at one of the Company’s facilities during 2015.

Income tax

For the nine months ended September 30, 2017, income tax expense was $19.9 million compared to $9.9 million for the nine months ended September 30, 2016. The effective tax rate for the nine months ended September 30, 2017 was 33.3%, which varied from the federal statutory rate of 35% primarily due to excess tax windfall benefits from stock compensation and the Manufacturing Deduction. The effective tax rate for the nine months ended September 30, 2016 was 32.7%, which varied from the federal statutory rate of 35% primarily due to excess tax windfall benefits from stock compensation and the Manufacturing Deduction.

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 2017 and 2016, our capital resources have primarily consisted of cash and cash equivalents generated through operating cash flows, proceeds from the September 2016 issuance of the Senior Notes and borrowings under our Revolver.

Our liquidity at September 30, 2017 was $268.5 million, which includes $12.1 million in cash and cash equivalents and $256.4 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

Net current assets

Net current assets (current assets less current liabilities) were $434.6 million and $364.1 million as of September 30, 2017 and December 31, 2016, respectively, as summarized in the following table:

(in thousands)	September 30, 2017			December 31, 2016
Cash and cash equivalents	$	12,117		$	8,917
Accounts receivable, net of allowances	365,989			313,304
Inventories, net	307,685			272,276
Other current assets	84,624			72,445
Accounts payable, accrued expenses and other current liabilities	(327,660		)	(291,657		)
Current portion of long-term debt and capital lease obligations	(8,137		)	(11,155		)
Total net current assets	$	434,618		$	364,130

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Accounts receivable, net, increased$52.7 million from December 31, 2016 to September 30, 2017 primarily due to seasonal increases in sales. Days sales outstanding (measured against net sales in the current fiscal quarter of each period) were 38 days at December 31, 2016 and September 30, 2017.

Inventories, net, increased$35.4 million from December 31, 2016 to September 30, 2017 primarily due to commodity price inflation and seasonal increases in inventory purchases. Inventory days on hand (measured against cost of sales in the current fiscal quarter of each period) decreased from 43 days at December 31, 2016 to 41 days at September 30, 2017.

Accounts payable, accrued expenses and other current liabilities increased$36.0 million from December 31, 2016 to September 30, 2017 primarily due to an increase in accounts payable related to increased inventory purchases in connection with higher sales volume.

Cash flows from operating activities

Net cash provided by operating activities was $48.2 million and $63.8 million for the nine months ended September 30, 2017 and 2016, respectively, as summarized in the following table:

	Nine Months Ended September 30,
(in thousands)	2017			2016
Net income	$	39,783		$	20,462
Non-cash expenses	58,774			60,970
Change in deferred income taxes	1,755			(4,638		)
Impairment of assets	435			11,883
Loss on debt extinguishment	—			12,529
Change in working capital and other assets and liabilities	(52,567		)	(37,385		)
Net cash provided by operating activities	$	48,180		$	63,821

Net cash provided by operating activities declined by $15.6 million for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 primarily due to the following:

• Net incomeincreased by $19.3 million as discussed in “-Operating Results” above.

• The change in deferred income taxes during the nine months ended September 30, 2017 and 2016 was primarily due to increases in the timing differences of capital lease obligations and accrued bonuses between our income before income taxes under GAAP and our taxable income.

• The Company recognized asset impairment charges of $11.9 million during the nine months ended September 30, 2016 related to the New ERP as discussed in “-Operating Results” above.

• The Company recognized a loss on debt extinguishment of $12.5 million during the nine months ended September 30, 2016 in relation to the redemption of the Extinguished Senior Notes as discussed in “-Operating Results” above.

• Cash outflows from changes in working capital and other assets and liabilities of $52.6 million and $37.4 million for the nine months endedSeptember 30, 2017 and September 30, 2016, respectively, relate primarily to seasonal increases in accounts receivable and inventory offset by increases in accounts payable. See “- Net current assets” above for further discussion.

Cash flows from investing activities

Net cash used in investing activities was $86.5 million and $23.9 million for the nine months endedSeptember 30, 2017 and 2016, respectively, as summarized in the following table:

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	Nine Months Ended September 30,
(in thousands)	2017			2016
Purchases of property, equipment and real estate	$	(51,292	)	$	(26,126	)
Purchases of businesses, net of cash acquired	(38,737		)	—
Proceeds from sale of property, equipment and real estate	3,545			1,066
Insurance proceeds	—			1,151
Net cash used in investing activities	$	(86,484	)	$	(23,909	)

Cash used for the purchase of property and equipment for the nine months ended September 30, 2017 and 2016 resulted primarily from the purchase of vehicles and equipment to support increased sales volume and replace aged assets, and facility and technology investments to support our operations. Proceeds from the sale of property, equipment and real estate during the nine months ended September 30, 2017 relates primarily to proceeds from the sale of real estate of $3.0 million.

Purchases of businesses, net of cash acquired, of $38.7 million relate to the acquisitions of Code Plus and TexPly discussed in “-Factors Affecting our Operating Results” above.

During the nine months ended September 30, 2016, the Company received insurance proceeds related to a fire at one of the Company’s facilities during 2015, of which $1.2 million related to property, plant and equipment damaged in the fire.

Cash flows from financing activities

Net cash provided by (used in) financing activities was $41.5 million and $(34.3) million for the nine months ended September 30, 2017 and 2016, respectively, as summarized in the following table:

	Nine Months Ended September 30,
(in thousands)	2017			2016
Net borrowings (repayments) on Revolver	$	51,832		$	(125,358	)
Payments on capital lease obligations and other notes	(10,356		)	(9,200		)
Payments of debt issuance costs	(38		)	(5,824		)
Proceeds from issuance of Senior Notes	—			350,000
Redemption of Extinguished Senior Notes	—			(250,000		)
Proceeds from issuance of common stock, net of offering costs	—			13,776
Payments of debt extinguishment costs	—			(8,438		)
Other financing activities, net	66			793
Net cash provided by (used in) financing activities	$	41,504		$	(34,251	)

The Company made net borrowings of $51.8 million on the Revolver during the nine months ended September 30, 2017, a portion of which was used to fund the acquisitions of Code Plus and TexPly during March 2017 and April 2017, respectively.

Payments on capital lease obligations and other notes increased by $1.2 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 due primarily to new financing of handling equipment to support higher sales volumes as well as one-time payments during the nine months ended September 30, 2017 related to the payoff of certain other notes.

During September 2016, the Company completed an issuance of $350.0 million of Senior Notes and utilized a portion of the cash proceeds from the issuance to redeem in full the $250.0 million Extinguished Senior Notes. The Company incurred $6.3 million of debt issuance costs related to the Senior Notes, of which $5.5 million was paid prior to September 30, 2016, and paid a call premium of $8.4 million related to the Extinguished Senior Notes. The remaining proceeds from the issuance of the Senior Notes were used to repay borrowings on the Revolver.

During May 2016, the Company commenced a public offering of 5,700,000 shares of its common stock by certain stockholders. In connection with the offering, the Company granted the underwriters an option to purchase up to an additional 855,000 shares of common stock. The underwriters exercised this option, which generated gross proceeds of $14.5 million and net proceeds of $13.8 million, after subtracting $0.7 million of underwriting commissions and other fees.

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Proceeds from the exercise of stock options, which are included in other financing activities, net, were $2.7 million for the nine months ended September 30, 2017 compared to $1.1 million for the nine months ended September 30, 2016. Additionally, other financing activities for the nine months ended September 30, 2017 and 2016 include net repayments of secured borrowings and purchases of treasury shares.

Capital expenditures

Capital expenditures vary depending on prevailing business factors, including current and anticipated market conditions. We expect our 2017 capital expenditures, including the incurrence of capital lease obligations and net of proceeds from the sale of property, equipment and real estate, to be approximately $65.0 million to $75.0 million primarily related to vehicles and equipment, including lease buyouts, and facility and technology investments to support our operations. For the nine months ended September 30, 2017, capital expenditures, including the incurrence of capital lease obligations and net of proceeds from the sale of property, equipment and real estate, were $50.2 million.

Senior secured notes

On September 15, 2016, the Company issued $350.0 million of Senior Notes under an unregistered private placement not subject to the registration requirements of the Securities Act. The Senior Notes mature on October 1, 2024 and are secured by a first priority lien on certain assets of the Company and a second priority lien on the collateral that secures the Credit Agreement, which collectively approximates substantially all assets of the Company. The interest rate is fixed at 5.5% and is payable semiannually on April 1 and October 1. The Indenture contains customary nonfinancial covenants, including restrictions on new indebtedness, issuance of liens and guarantees, investments, distributions to equityholders, asset sales and affiliate transactions. The Senior Notes were issued by BMC East, LLC, a 100% owned subsidiary of the Company, and are guaranteed by the Company and the other subsidiaries that guarantee the Credit Agreement. Each of the subsidiary guarantors is 100% owned, directly or indirectly, by the Company, and all guarantees are full and unconditional and joint and several. We were in compliance with all covenants as of September 30, 2017.

Revolving credit agreement

On December 1, 2015, in connection with the Merger, the Company entered into the Credit Agreement with Wells Fargo Capital Finance, as administrative agent, and certain other lenders. The Credit Agreement, as amended, which includes the Revolver, has an aggregate commitment of $375.0 million and a letters of credit sublimit of $100.0 million. The Revolver matures at the earlier of (i) December 1, 2020 and (ii) the date that is three months prior to the maturity of the Senior Notes, or if the Senior Notes are refinanced or repaid, the date that is three months prior to the new maturity date of the replacement notes or other indebtedness that replaced or refinanced the Senior Notes. The Revolver is subject to an asset-based borrowing formula on eligible accounts receivable, credit card receivables and inventory, in each case reduced by certain reserves.

Borrowings under the Revolver bear interest, at our option, at either the Base Rate (which means the higher of (i) the Federal Funds Rate plus 0.5%, (ii) the LIBOR rate plus 1.0% or (iii) the prime rate) plus a Base Rate Margin (which ranges from 0.25% to 0.75% based on Revolver availability) or LIBOR plus a LIBOR Rate Margin (which ranges from 1.25% to 1.75% based on Revolver availability).

The fee on any outstanding letters of credit issued under the Revolver ranges from 0.75% to 1.25%, depending on whether the letters of credit are fully cash collateralized. The fee on the unused portion of the Revolver is 0.25%. The Credit Agreement contains customary nonfinancial covenants, including restrictions on new indebtedness, issuance of liens, investments, distributions to equityholders, asset sales and affiliate transactions. The Credit Agreement includes a financial covenant that requires us to maintain a minimum Fixed Charge Coverage Ratio of 1.00:1:00, as defined therein. However, the covenant is only applicable if excess availability under the Credit Agreement is less than or equal to the greater of (i) $33.3 million and (ii) 10% of the line cap, and remains in effect until excess availability has been greater than the greater of (i) $33.3 million and (ii) 10% of the line cap for 30 consecutive days. 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, 2017. We were in compliance with all covenants as of September 30, 2017.

We had outstanding borrowings of $51.8 million with net availability of $256.4 million as of September 30, 2017. We had $66.8 million in letters of credit outstanding under the Credit Agreement as of September 30, 2017.

Contractual Obligations and Commercial Commitments

Outstanding borrowings under the Revolver increased to $51.8 million at September 30, 2017 from $0 at December 31, 2016.

During the nine months ended September 30, 2017, the Company acquired assets under capital leases totaling $2.5 million.

The Company was obligated under certain purchase commitments totaling approximately $5.7 million at September 30, 2017 that are non-cancellable, enforceable and legally binding on us. These purchase commitments consist primarily of obligations to purchase vehicles.

Off-Balance Sheet Arrangements

At September 30, 2017 and December 31, 2016, other than operating leases and letters of credit issued under the Credit Agreement, we had no material off-balance sheet arrangements with unconsolidated entities.

Recently Issued Accounting Pronouncements

See Note 2 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for a summary of recently issued accounting pronouncements.

Critical Accounting Policies

There have been no material changes to the critical accounting policies as disclosed in the Company’s 2016 Annual Report on Form 10-K.

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ITEM 3     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to the market risks as disclosed in the Company’s 2016 Annual Report on Form 10-K.

ITEM 4    CONTROLS AND PROCEDURES

Disclosure controls and procedures

Our management is responsible for establishing and maintaining disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These disclosure controls and procedures 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 and principal financial officer, 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 Quarterly Report on Form 10-Q, 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 September 30, 2017.

Changes in internal control over financial reporting

There was no change in our internal control over financial reporting during the three months ended September 30, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations in control systems

The design of any system of control is based upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all future events, no matter how remote, or that the degree of compliance with the policies or procedures may not deteriorate. Because of their inherent limitations, disclosure controls and procedures may not prevent or detect all misstatements. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

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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 or deductibles 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 currently believe that the ultimate resolution of these matters will have a material adverse effect on our consolidated financial position, cash flows or operating results.

On August 30, 2017, Region 10 of the U.S. Environmental Protection Agency (the “EPA”) sent a notice of intent to us, alleging certain violations of the Clean Water Act with respect to industrial stormwater permitting regarding monitoring, inspections, benchmarks and record keeping at our Everett, Washington facility. The EPA has asserted that the alleged violations may subject us to administrative or civil penalties. We are in discussions with the EPA to explore a potential resolution of this matter. We are unable to predict the outcome of this matter, including potential administrative or civil penalties, remedial measures, or other relief, if any, or the potential impact on operations of the Everett facility, including increased capital or operational costs, if any.

ITEM 1A    RISK FACTORS

There have been no material changes to our risk factors from the risk factors disclosed in our 2016 Annual Report on Form 10-K. The risks described in our 2016 Annual Report on Form 10-K, in addition to the other information set forth in this Quarterly Report on Form 10-Q, 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

None.

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	Form of Indemnification Agreement Entered into with Certain Directors and Officers
10.2#	Consulting Agreement with Paul Street dated September 16, 2017 (incorporated by reference to Exhibit 99.1 to the Registrant’s Form 8-K filed with the Commission on September 19, 2017 in Commission File No. 001-36050)
31.1	Certification by Peter C. Alexander, 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

_________________

# Denotes management compensatory plan or arrangement.

* 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 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.

	BMC STOCK HOLDINGS, INC.
Date: November 9, 2017	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-10.1

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made and entered into as of August ___, 2017 between BMC STOCK HOLDINGS, INC., a Delaware corporation (the “Company”), and ____________(“Indemnitee”).

WITNESSETH THAT:

WHEREAS, Indemnitee is either a member of the board of directors of the Company (the “Board”) or an officer of the Company, or both, and in such capacity or capacities is performing a valuable service for the Company;

WHEREAS, the Company is aware that competent and experienced persons are increasingly reluctant to serve as directors or officers of corporations or other business entities unless they are protected by comprehensive indemnification and liability insurance, due to increased exposure to litigation costs and risks resulting from their service to such corporations, and because the exposure frequently bears no reasonable relationship to the compensation of such directors and officers;

WHEREAS, the Board of the Company has concluded that, to retain and attract talented and experienced individuals to serve or continue to serve as officers or directors of the Company, and to encourage such individuals to take the business risks necessary for the success of the Company, it is necessary for the Company contractually to indemnify directors and officers and to assume for itself to the fullest extent permitted by law expenses and damages related to claims against such officers and directors in connection with their service to the Company;

WHEREAS, Section 145 of the General Corporation Law of the State of Delaware (the “DGCL”), under which the Company is organized, empowers the Company to indemnify by agreement its officers, directors, employees and agents, and persons who serve, at the request of the Company, as directors, officers, employees or agents of other corporations or enterprises, and expressly provides that the indemnification provided by the DGCL is not exclusive;

WHEREAS, the Company desires and has requested the Indemnitee to serve or continue to serve as a director or officer of the Company free from undue concern for claims for damages arising out of or related to such services to the Company; and

WHEREAS, Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he or she be indemnified as herein provided;

WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate of Incorporation, the Bylaws and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;

WHEREAS, it is intended that Indemnitee shall be paid promptly by the Company all amounts necessary to effectuate in full the indemnity provided herein; and

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NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as a director or officer from and after the date hereof, the parties hereto agree as follows:

1.Indemnity of Indemnitee. The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time. In furtherance of the foregoing indemnification, and without limiting the generality thereof:

(a)Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a) if, by reason of Indemnitee’s Corporate Status (as hereinafter defined), Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Liabilities and Expenses (each as hereinafter defined) actually incurred by or on behalf of Indemnitee, in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.

(b)Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Liabilities and Expenses actually incurred by or on behalf of Indemnitee, in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, if applicable law so provides, no indemnification against such Liabilities or Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made.

(c)Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually incurred by or on behalf of Indemnitee in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually incurred by or on behalf of Indemnitee in connection with each successfully resolved claim, issue or matter. For purposes of this Section 1(c) and without limitation, the termination of any claim,

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issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

2.Additional Indemnity. In addition to, and without regard to any limitations on, the indemnification provided for in Section 1 of this Agreement, the Company shall and hereby does, to the fullest extent permitted by applicable law, indemnify and hold harmless Indemnitee against all Liabilities and Expenses actually incurred by or on behalf of Indemnitee if, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement, other than those set forth in Section 9 hereof, shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful.

3.Contribution.

(a)Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permitted by applicable law, the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such Proceeding without requiring Indemnitee to contribute to such payment and the Company hereby irrevocably waives and relinquishes any right of contribution it may have against Indemnitee.

(b)Without diminishing or impairing the obligations of the Company set forth in Section 3(a), if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permitted by applicable law, the Company shall contribute to the amount of Liabilities and Expenses actually incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such Proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such Liabilities or Expenses, as well as any other equitable considerations which applicable law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

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(c)To the fullest extent permitted by applicable law, the Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by directors, officers or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.

(d)To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for Liabilities and/or for Expenses, in connection with any claim relating to a Proceeding under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding, and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

4.Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness, or is made (or asked) to respond to discovery requests, in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified against all Expenses actually incurred by or on behalf of Indemnitee in connection therewith.

5.Advancement of Expenses. Notwithstanding any other provision of this Agreement, the Company shall advance, to the extent not prohibited by law, all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within ten (10) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall, if and to the extent required by the DGCL, include or be preceded or accompanied by a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free. In accordance with Sections 7(d) and 7(e) of this Agreement, advances shall include any and all Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed.

6.Procedures and Presumptions for Determination of Entitlement to Indemnification. It is the intent of the parties to this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

(a)To obtain indemnification under this Agreement, Indemnitee shall submit to the Secretary of the Company (or, if the office of Secretary is vacant or the Indemnitee

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is the Secretary, the then highest-ranking officer) a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification. Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and only to the extent that, such failure actually and materially prejudices the interests of the Company.

(b)Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following three methods, which shall be at the election of the Board: (1) by a majority vote of the Disinterested Directors (as hereinafter defined), even though less than a quorum, (2) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum or (3) if there are no Disinterested Directors, or if the Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; provided, however, that if a Change in Control has occurred, the determination with respect to Indemnitee’s entitlement to indemnification shall be made by Independent Counsel.

(c)In the event the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected as provided in this Section 6(c). If a Change in Control has not occurred, the Independent Counsel shall be selected by the Board (including a vote of a majority of the Disinterested Directors if obtainable), and the Company shall give written notice to the Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected. Indemnitee may, within 10 days after such written notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 12 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the Person (as hereinafter defined) so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If a Change in Control has occurred, the Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and approved by the Board within 15 days after notification by Indemnitee. If (i) an Independent Counsel is to make the determination of entitlement pursuant to this Section 6, and (ii) within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected, either the

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Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a Person selected by the court or by such other Person as the court shall designate, and the Person with respect to whom all objections are so resolved or the Person so appointed shall act as Independent Counsel under Section 6(b) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed.

(d)In making a determination with respect to entitlement to indemnification hereunder, the Person making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

(e)Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise (as hereinafter defined), including financial statements, or on information supplied to Indemnitee by the officers, directors, managers, employees, agents or representatives of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(f)If the Person empowered or selected under this Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within forty-five (45) days (or in the case of an advancement of Expenses in accordance with Section 4, twenty (20) days; provided that Indemnitee has, if and to the extent

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required by the DGCL, delivered the undertaking contemplated in Section 4) after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law, and such right to indemnification shall be enforceable by Indemnitee in any court of competent jurisdiction.

(g)Indemnitee shall reasonably cooperate with the Person making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such Person upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel, member of the Board or stockholder of the Company shall act reasonably and in good faith in making a determination regarding Indemnitee’s entitlement to indemnification under this Agreement. Any Expenses incurred by Indemnitee in so cooperating with the Person making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

(h)With respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof the Company will be entitled to participate therein at its own expense.  The Company jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel reasonably satisfactory to Indemnitee; provided, however, that the Company shall not be entitled to assume the defense of any Proceeding if there has been a Change in Control or if Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee with respect to such Proceeding. After notice from the Company to Indemnitee of its election to assume the defense thereof, the Company will not be liable to Indemnitee under this Agreement for any Expenses subsequently incurred by Indemnitee in connection with the defense thereof, other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ Indemnitee’s own counsel in such Proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Indemnitee unless:

(i)the employment of counsel by Indemnitee has been authorized by the Company;

(ii)Indemnitee shall have reasonably concluded that counsel engaged by the Company may not adequately represent Indemnitee due to, among other things, actual or potential differing interests; or

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(iii)the Company shall not in fact have employed counsel to assume the defense in such Proceeding or shall not in fact have assumed such defense and be acting in connection therewith with reasonable diligence; in each of which cases the fees and expenses of such counsel shall be at the expense of the Company.

(i)The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such Proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. The Company shall not settle any Proceeding in any manner unless such settlement (i) provides for a full and final release of all claims against Indemnitee and (ii) does not impose any penalty or limitation on Indemnitee without Indemnitee’s written consent.

(j)The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

7.Remedies of Indemnitee.

(a)Subject to Section 9, in the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b) of this Agreement within forty-five (45) days (or in the case of an advancement of Expenses in accordance with Section 4, twenty (20) days; provided that Indemnitee has, if and to the extent required by the DGCL, delivered the undertaking contemplated in Section 4) after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification,

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contribution or advancement of Expenses. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within one (1) year following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7; provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce Indemnitee’s rights under Section 1(c) of this Agreement. Except as set forth herein, the provisions of Delaware law (without regard to its conflict-of-law rules) shall apply to any such arbitration. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

(b)In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial, or arbitration, on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b). In any judicial proceeding or arbitration commenced pursuant to this Section 7, Indemnitee shall be presumed to be entitled to indemnification under this Agreement and the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be, and the Company may not refer to or introduce into evidence any determination pursuant to Section 6(b) of this Agreement adverse to Indemnitee for any purpose. If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 7 and it is determined in such judicial proceeding or arbitration that Indemnitee must reimburse the Company for advance of expenses, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 5 until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).

(c)If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading, in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.

(d)In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of Indemnitee’s rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on Indemnitee’s behalf, in advance, any and all Expenses (of the types described in the definition of Expenses in Section 12 of this Agreement) actually incurred by Indemnitee in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such

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indemnification, advancement of expenses or insurance recovery, to the fullest extent permitted by applicable law.

(e)The Company shall, to the extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement. It is the intent of the Company that, to the fullest extent permitted by applicable law, Indemnitee not be required to incur Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to Indemnitee hereunder. The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall advance, to the extent not prohibited by law and in accordance with Section 5 of this Agreement, such Expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advancement of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

(f)Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

8.Non-Exclusivity; Survival of Rights; Insurance; Subrogation.

(a)The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation of the Company (the “Charter”), the Bylaws, any agreement, a vote of stockholders, a resolution of directors or otherwise, of the Company. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the DGCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Charter, Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

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(b)

(i)The Company shall, if commercially reasonable, obtain and maintain in effect during the entire period described in Section 10 for which the Company is obligated to indemnify Indemnitee under this Agreement, one or more policies of insurance with reputable insurance companies to provide the directors and officers of the Company with coverage for losses from wrongful acts and omissions and to ensure the Company’s performance of its indemnification obligations under this Agreement (“D&O Insurance”); provided, that in connection with a Change in Control that occurs prior to the termination of the period described in Section 10 for which the Company is obligated to indemnify Indemnitee, the Company shall instead purchase a six (6) year pre-paid “tail policy” (a “Tail Policy”) on terms and conditions (in both amount and scope) providing substantially equivalent benefits to Indemnitee as the D&O Insurance in effect as of the closing of the Change in Control (the “Change in Control Closing Date”) with respect to matters arising on or prior to the earlier of (i) the Change in Control Closing Date and (ii) the date on which Indemnitee ceased serving as a director, officer or fiduciary of the Company, any direct or indirect subsidiary of the Company or of any other corporation, partnership, joint venture, trust or other enterprise at the express written consent of the Company.

(ii)Indemnitee shall be covered by such D&O Policies (including any Tail Policy) in accordance with its or their terms to the maximum extent of the coverage available for any such officer or director under such D&O Policies. In all such D&O Policies, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee with the same rights and benefits as are accorded to the most favorably insured of the Company’s directors and officers. At the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective D&O Policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such D&O Policies.

(c)In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee), who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(d)The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

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(e)The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

9.Exception to Right of Indemnification. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

(a)for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as hereinafter defined), or similar provisions of state statutory law or common law; or

(b)for reimbursement to the Company of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company in each case as required under the Exchange Act; or

(c)in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Company has joined in or the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation, (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law, or (iii) the Proceeding is one to enforce Indemnitee’s rights under this Agreement.

10.Duration of Agreement. All agreements and obligations of the Company contained herein shall continue until and terminate upon the later of (i) ten (10) years after the date that Indemnitee shall have ceased to serve as a director or officer of the Company or a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which Indemnitee served at the request of the Company, and (ii) one (1) year after the final termination of any Proceeding (including any rights of appeal thereto) in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any Proceeding commenced by Indemnitee pursuant to Section 7 of this Agreement relating thereto (including any rights of appeal of any Section 7 Proceeding).

11.Security. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of Indemnitee.

12

12.Definitions. For purposes of this Agreement:

(a)“Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

(i)Acquisition of Stock by Third Party. Any Person, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities, unless the change in relative “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act) of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding securities entitled to vote generally in the election of directors;

(ii)Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in Section 12(a)(i), 12(a)(iii) or 12(a)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;

(iii)Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity; and

(iv)Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, or, if such approval is not required, the decision by the Board to proceed with such a liquidation, sale, or disposition in one transaction or a series of related transactions.

13

(b)“Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company, any direct or indirect subsidiary of the Company, or of any other corporation, partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, that such person is or was serving at the request of the Company; provided, that any person that serves as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise, of at least 50% of whose equity interests are owned by the Company, shall be conclusively presumed to be serving in such capacity at the request of the Company.

(c)“Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(d)“Enterprise” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a director, officer, trustee, partner, managing member, employee, agent or fiduciary.

(e)“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(f)“Expenses” shall include all reasonable direct and indirect costs, including attorneys’ fees, retainers, court costs, transcript costs, fees of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, out-of-pocket expenses and other disbursements and expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, responding to, or objecting to, a request to provide discovery in any Proceeding, or, to the fullest extent permitted by applicable law, successfully establishing a right to indemnification under this Agreement, whether in whole or part. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding and any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent. Expenses, however, shall not include any Liabilities.

(g)“Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporate law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any Person who, under the applicable standards of professional conduct then

14

prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and disbursements of the Independent Counsel referred to above and to fully indemnify such counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

(h)“Liabilities” shall mean damages, losses and liabilities of any type whatsoever, including, but not limited to, any judgments, fines, Employee Retirement Income Security Act excise taxes and penalties, penalties and amounts paid in settlement (including all interest assessments and other charges paid or payable in connection with or in respect of such judgments, fines, penalties or amounts paid in settlement) of any Proceeding.

(i)“Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(j)“Proceeding” includes any actual, threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened, pending or completed proceeding, and any appeal thereof, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the Corporate Status of Indemnitee, by reason of any action taken by Indemnitee or of any inaction on Indemnitee’s part while acting in such Corporate Status, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise; in each case whether or not Indemnitee is acting or serving in any such capacity at the time any Liability or Expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement.

13.Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality, and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (ii) such provision or provisions shall be deemed reformed to the fullest extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (iii) to the fullest extent possible, the provisions of this Agreement (including,

15

without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby. Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable laws. In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

14.Enforcement and Binding Effect.

(a)The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director, officer or key employee of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director, officer or key employee of the Company.

(b)Without limiting any of the rights of Indemnitee under the Charter or Bylaws of the Company as they may be amended from time to time, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

(c)The indemnification and advancement of expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or of any other Enterprise at the Company’s request, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

(d)The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

(e)The Company and Indemnitee agree herein that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled. The Company and Indemnitee further

16

agree that Indemnitee shall be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertaking in connection therewith. The Company acknowledges that in the absence of a waiver, a bond or undertaking may be required of Indemnitee by the court, and the Company hereby waives any such requirement of such a bond or undertaking.

15.Modification and Waiver. No supplement, modification, waiver, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

16.Notice By Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.

17.Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:

(a)To Indemnitee at the address set forth below Indemnitee’s signature hereto.

(b)To the Company at:

BMC Stock Holdings, Inc.
Two Lakeside Commons, Suite 500
980 Hammond Drive NE

Atlanta, Georgia 30328

Attention: General Counsel

Fax: (208) 331-4477

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

17

18.Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

19.Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

20.Governing Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict-of-laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 7 of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) agree that service of process in any such action or proceeding may be effected by notice given pursuant to Section 17 of this Agreement, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum. The foregoing consent to jurisdiction shall not constitute general consent to service of process in the state for any purpose except as provided above, and shall not be deemed to confer rights on any Person other than the parties to this Agreement.

21.Further Action. The parties shall execute and deliver all documents, provide all information, and take or refrain from taking such actions as may be necessary or appropriate to achieve the purposes of this Agreement.

[Signature page follows]

18

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first written above.

BMC STOCK HOLDINGS, INC.

______________________________

By:

Name:    

Title:    

INDEMNITEE

______________________________

Name:    

Address:

19

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Peter C. Alexander, certify that:

1. I have reviewed this quarterly report on Form 10-Q of BMC Stock 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. 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

d. 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: November 9, 2017

/s/ Peter C. Alexander    
Peter C. Alexander
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 BMC Stock 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. 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

d. 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: November 9, 2017

/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 BMC Stock Holdings, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2017, as filed with the Securities and Exchange Commission (the “Report”), I, Peter C. Alexander, 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: November 9, 2017

/s/ Peter C. Alexander    
Peter C. Alexander
President and Chief Executive Officer
(principal executive officer)

A signed original of this written statement required by Section 906 has been provided to BMC Stock Holdings, Inc. and will be retained by BMC Stock 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 BMC Stock Holdings, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2017, 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: November 9, 2017

/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 BMC Stock Holdings, Inc. and will be retained by BMC Stock Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 08, 2017
Document And Entity Information [Abstract]
Entity Registrant Name	BMC Stock Holdings, Inc.
Entity Central Index Key	0001574815
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		67,037,404

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets
Cash and cash equivalents	$ 12,117	$ 8,917
Accounts receivable, net of allowances	365,989	313,304
Inventories, net	307,685	272,276
Costs in excess of billings on uncompleted contracts	27,415	26,373
Income taxes receivable	0	2,437
Prepaid expenses and other current assets	57,209	43,635
Total current assets	770,415	666,942
Property and equipment, net of accumulated depreciation	303,314	286,741
Deferred income taxes	0	550
Customer relationship intangible assets, net of accumulated amortization	169,637	164,191
Other intangible assets, net of accumulated amortization	1,831	3,024
Goodwill	262,042	254,832
Other long-term assets	15,323	18,734
Total assets	1,522,562	1,395,014
Current liabilities
Accounts payable	187,519	165,540
Accrued expenses and other liabilities	91,620	88,786
Billings in excess of costs on uncompleted contracts	20,021	15,691
Income taxes payable	4,329	0
Interest payable	9,707	5,619
Current portion: Long-term debt and capital lease obligations	8,137	11,155
Current portion: Insurance reserves	14,464	16,021
Total current liabilities	335,797	302,812
Insurance reserves	38,006	39,184
Long-term debt	396,246	344,827
Long-term portion of capital lease obligations	16,601	20,581
Deferred income taxes	1,205	0
Other long-term liabilities	7,261	7,009
Total liabilities	795,116	714,413
Commitments and contingencies (Note 8)
Stockholders' equity
Preferred stock, $0.01 par value, 50.0 million shares authorized, no shares issued and outstanding at September 30, 2017 and December 31, 2016	0	0
Common stock, $0.01 par value, 300.0 million shares authorized, 67.1 million and 66.8 million shares issued, and 66.9 million and 66.7 million outstanding at September 30, 2017 and December 31, 2016, respectively	671	668
Additional paid-in capital	656,688	649,280
Retained earnings	72,965	33,182
Treasury stock, at cost, 0.2 million and 0.1 million shares at September 30, 2017 and December 31, 2016, respectively	(2,878)	(2,529)
Total stockholders' equity	727,446	680,601
Total liabilities and stockholders' equity	$ 1,522,562	$ 1,395,014

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares shares in Millions	Sep. 30, 2017	Dec. 31, 2016
Stockholders' Equity:
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	50.0	50.0
Preferred stock, shares issued (in shares)	0.0	0.0
Preferred stock, shares outstanding (in shares)	0.0	0.0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	300.0	300.0
Common stock, shares issued (in shares)	67.1	66.8
Common stock, shares outstanding (in shares)	66.9	66.7
Treasury stock, shares	0.2	0.1

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net sales
Building products	$ 671,316	$ 613,763	$ 1,919,923	$ 1,768,834
Construction services	209,696	207,441	605,164	577,335
Net sales	881,012	821,204	2,525,087	2,346,169
Cost of sales
Building products	499,182	446,028	1,427,253	1,309,925
Construction services	172,285	172,210	498,405	475,006
Cost of sales	671,467	618,238	1,925,658	1,784,931
Gross profit	209,545	202,966	599,429	561,238
Selling, general and administrative expenses	158,193	149,498	464,870	431,176
Depreciation expense	11,053	9,784	32,555	27,866
Amortization expense	4,026	5,349	11,947	15,882
Merger and integration costs	2,574	4,655	13,339	11,088
Impairment of assets	409	0	435	11,883
Total operating expenses	176,255	169,286	523,146	497,895
Income from operations	33,290	33,680	76,283	63,343
Other income (expense)
Interest expense	(6,377)	(7,668)	(18,960)	(24,020)
Loss on debt extinguishment	0	(12,529)	0	(12,529)
Other income, net	1,083	735	2,366	3,601
Income before income taxes	27,996	14,218	59,689	30,395
Income tax expense	9,553	4,982	19,906	9,933
Net income	$ 18,443	$ 9,236	$ 39,783	$ 20,462
Weighted average common shares outstanding
Basic (in shares)	66,958	66,435	66,860	65,873
Diluted (in shares)	67,442	67,085	67,341	66,455
Net income per common share
Basic (in dollars per share)	$ 0.28	$ 0.14	$ 0.60	$ 0.31
Diluted (in dollars per share)	$ 0.27	$ 0.14	$ 0.59	$ 0.31

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities
Net income	$ 39,783	$ 20,462
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	40,049	35,215
Amortization of intangible assets	11,947	15,882
Amortization of debt issuance costs	1,263	2,690
Deferred income taxes	1,755	(4,638)
Non-cash stock compensation expense	4,751	5,544
Loss (gain) on sale of property, equipment and real estate	301	(363)
Impairment of assets	435	11,883
Loss on debt extinguishment	0	12,529
Amortization of inventory step-up charges	0	2,884
Gain on insurance proceeds	0	(1,003)
Other non-cash adjustments	463	121
Change in assets and liabilities, net of effects of acquisitions
Accounts receivable, net of allowances	(46,591)	(43,739)
Inventories, net	(30,837)	(35,718)
Accounts payable	22,633	49,462
Other assets and liabilities	2,228	(7,390)
Net cash provided by operating activities	48,180	63,821
Cash flows from investing activities
Purchases of property, equipment and real estate	(51,292)	(26,126)
Purchases of businesses, net of cash acquired	(38,737)	0
Proceeds from sale of property, equipment and real estate	3,545	1,066
Insurance proceeds	0	1,151
Net cash used in investing activities	(86,484)	(23,909)
Cash flows from financing activities
Proceeds from revolving line of credit	769,458	1,227,050
Repayments of proceeds from revolving line of credit	(717,626)	(1,352,408)
Principal payments on other notes	(2,603)	(2,900)
Payments on capital leases obligations	(7,753)	(6,300)
Payments of debt issuance costs	(38)	(5,824)
Proceeds from issuance of senior secured notes	0	350,000
Redemption of senior secured notes	0	(250,000)
Proceeds from issuance of common stock, net of offering costs	0	13,776
Payments of debt extinguishment costs	0	(8,438)
Other financing activities, net	66	793
Net cash provided by (used in) financing activities	41,504	(34,251)
Net increase in cash and cash equivalents	3,200	5,661
Cash and cash equivalents
Beginning of period	8,917	1,089
End of period	12,117	6,750
Supplemental disclosure of non-cash investing and financing transactions
Assets acquired under capital lease obligations	$ 2,481	$ 8,493

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Organization

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

These unaudited financial statements represent the financial statements of BMC Stock Holdings, Inc., and its subsidiaries. All references to “BMC,” “we,” “us,” “our” or the “Company” mean BMC Stock Holdings, Inc.

The Company 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, product specification and installation services.

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Basis of Presentation

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited 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, 2016 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 Annual Report on Form 10-K for the year ended December 31, 2016 (“2016 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.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Comprehensive income

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

Recently adopted accounting pronouncements

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value. Prior to the issuance of the standard, inventory was measured at the lower of cost or market, where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin. Inventory measured using last-in, first-out (LIFO) and the retail inventory method are not impacted by the new guidance. Prospective application is required and early adoption is permitted. ASU 2015-11 became effective for the Company’s annual and interim periods beginning on January 1, 2017. The adoption of the guidance did not have a material impact on our financial statements.

Recently issued accounting pronouncements not yet adopted

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), and issued subsequent amendments to the initial guidance within Accounting Standards Update 2016-08, Revenue from Contracts with Customers, Principal versus Agent Considerations (“ASU 2016-08”) issued in March 2016, Accounting Standards Update 2016-10, Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing (“ASU 2016-10”) issued in April 2016, Accounting Standards Update 2016-12, Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”) issued in May 2016 and Accounting Standards Update 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (“ASU 2016-20”) issued in December 2016 (ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 collectively “Topic 606”). Topic 606 provides a comprehensive revenue recognition model requiring companies to recognize revenue for the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. In July 2015, the FASB voted to defer the effective date of ASU 2014-09 by one year, and therefore, the standard is effective for the Company’s annual and interim periods beginning on January 1, 2018. The guidance permits the use of either a full retrospective or modified retrospective transition method. We expect to adopt the standard on January 1, 2018 using the modified retrospective transition method, which recognizes the cumulative effect of initially applying the standard in retained earnings on the date of adoption, with the option to utilize certain practical expedients as defined in Topic 606. We do not expect the adoption of the standard to have a material impact on the timing of revenue recognition nor the amount of revenue recognized from our building products contracts. Revenue for our building products contracts will continue to be recognized at a point in time, when control of the promised goods is transferred to our customers, with the exception of certain product offerings which are customized to customer specifications and meet the criteria to be recognized over time, which is consistent with the Company’s current accounting. We are continuing to evaluate the impact of the standard on our contracts with a service element but based on our current assessment, we expect that revenue for our construction services contracts will generally continue to be recognized over time as the Company satisfies the performance obligations in the contracts. We also continue to evaluate the disclosure requirements of the standard, which are expected to be significant and incremental to the current disclosures.

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (“ASU 2016-02”). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for the Company’s annual and interim periods beginning on January 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are in the process of evaluating the impact of the standard on our financial statements. As a lessee, certain of our various leases under existing guidance are classified as operating leases that are not recorded on the balance sheet but are recorded in the statement of operations as expense is incurred. Upon adoption of the standard, we will be required to record substantially all leases on the balance sheet as a ROU asset and a lease liability. The timing of expense recognition and classification in the statement of operations could change based on the classification of leases as either operating or financing.

In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 was issued to decrease the diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows by providing guidance on eight specific cash flow issues. ASU 2016-15 is effective for the Company’s annual and interim periods beginning on January 1, 2018, with early adoption permitted and retrospective application required. The adoption of the standard is not expected to have a material impact on our financial statements.

In November 2016, the FASB issued Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires that the statement of cash flows include restricted cash in the beginning and end-of-period total amounts shown and that the statement of cash flows explain the changes in restricted cash during the period. ASU 2016-18 is effective for the Company's annual and interim periods beginning on January 1, 2018. Retrospective application is required and early adoption is permitted. The adoption of the standard is not expected to have a material impact on our financial statements.

In January 2017, the FASB issued Accounting Standards Update 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-01 provides guidance in determining when a set of assets and activities meets the definition of a business. ASU 2017-01 is effective for the Company's annual and interim periods beginning on January 1, 2018. Early application is permitted for transactions meeting certain criteria and prospective application is required. The adoption of the standard is not expected to have a material impact on our financial statements.

In January 2017, the FASB issued Accounting Standards Update 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires computation of the implied fair value of a reporting unit's goodwill. The amount of a goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for the Company's annual goodwill impairment test and any interim tests during the Company's annual and interim periods beginning on January 1, 2020. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. Prospective application is required. The adoption of the standard is not expected to have a material impact on our financial statements.

In February 2017, the FASB issued Accounting Standards Update 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”). ASU 2017-05 clarifies the scope of Subtopic 610-20, which provides guidance for recognizing gains and losses from the sale or transfer of nonfinancial assets in contracts with noncustomers. ASU 2017-05 also provides guidance for partial sales of nonfinancial assets. ASU 2017-05 is effective for the Company’s annual and interim periods beginning on January 1, 2018 and we are required to adopt ASU 2017-05 at the same time that we adopt ASU 2014-09. The guidance permits the use of either a retrospective or cumulative effect transition method. The adoption of the standard is not expected to have a material impact on our financial statements.

In May 2017, the FASB issued Accounting Standards Update 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under ASC 718. ASU 2017-09 is effective for the Company’s annual and interim periods beginning on January 1, 2018, with early adoption permitted. ASU 2017-09 is to be applied prospectively to an award modified on or after the adoption date. The adoption of the standard is not expected to have a material impact on our financial statements.

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Acquisitions

9 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

Acquisitions

Acquisitions

For all acquisitions, the Company allocates the purchase price to assets acquired and liabilities assumed as of the date of acquisition based on the estimated fair values at the date of acquisition. The excess of the fair value of the purchase consideration over the fair values of the identifiable assets and liabilities is recorded as goodwill. Management makes significant estimates and assumptions when determining the fair value of assets acquired and liabilities assumed. These estimates include, but are not limited to, discount rates, projected future net sales, projected future expected cash flows and useful lives.

Acquisition of Code Plus Components, LLC

On March 27, 2017, the Company acquired substantially all of the assets and assumed certain liabilities of Code Plus Components, LLC (“Code Plus”), a manufacturer of structural components located in Martinsburg, West Virginia, for a purchase price of $7.1 million. This acquisition allowed the Company to add truss manufacturing capability to its value-added offerings in the Washington, DC metro area. The purchase price includes an initial holdback of $0.4 million due to the sellers one year from the closing date. The holdback amount may be reduced under certain circumstances. Additionally, the acquisition includes an earnout provision that would require the Company to pay the sellers up to an additional $0.8 million upon the acquired operations achieving certain performance targets from the acquisition date through December 31, 2018. The Company funded the transaction through borrowings on the Company’s revolving line of credit.

The acquisition was accounted for using the acquisition method of accounting under ASC 805, Business Combinations, whereby the results of operations of Code Plus are included in the Company’s consolidated financial statements beginning on the acquisition date. The preliminary purchase price allocation resulted in the recognition of goodwill of $3.4 million, a customer relationship intangible asset of $2.3 million and a non-compete agreement intangible asset of $0.5 million, as well as other operating assets and liabilities. The customer relationship intangible asset and non-compete agreement intangible asset have useful lives of 12 years and 5 years, respectively. Goodwill represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and non-contractual relationships, as well as expected future synergies. All of the goodwill recognized is expected to be deductible for tax purposes.

For the year ended December 31, 2016, Code Plus generated net sales of approximately $14.2 million. The Company incurred transaction costs of $0 and $0.1 million for the three and nine months ended September 30, 2017, respectively, which are included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations.

Acquisition of Texas Plywood & Lumber Company, Inc.

On April 3, 2017, the Company acquired substantially all of the assets and assumed certain liabilities of Texas Plywood & Lumber Company, Inc. (“TexPly”), a supplier of production millwork and doors in the Dallas-Fort Worth area, for a preliminary purchase price of $32.0 million, of which $2.5 million was deposited in an escrow account to fund post-closing adjustments and other indemnification obligations for a period of one year from the closing date of the acquisition. This acquisition enhances the Company’s value-added offerings and footprint in the Dallas-Fort Worth market.

The acquisition was accounted for using the acquisition method of accounting under ASC 805, Business Combinations, whereby the results of operations of TexPly are included in the Company’s consolidated financial statements beginning on the acquisition date. The preliminary purchase price allocation resulted in the initial recognition of goodwill of $3.8 million, a customer relationship intangible asset of $13.4 million, accounts receivable of $5.2 million, inventory of $4.0 million and real property of $5.4 million, as well as other operating assets and liabilities. The customer relationship intangible asset has a useful life of 13 years. Goodwill represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and non-contractual relationships, as well as expected future synergies. All of the goodwill recognized is expected to be deductible for tax purposes.

For the year ended December 31, 2016, TexPly generated net sales of approximately $55.2 million. The Company incurred transaction costs of $0 and $0.2 million for the three and nine months ended September 30, 2017, respectively, which are included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations.

The purchase price allocations of Code Plus and TexPly are preliminary and based upon all information available to the Company at the present time, and are subject to change. The Company is in the process of finalizing its valuation of the acquired intangible assets, property and equipment and inventory and therefore, the initial purchase accounting is not complete. As we receive additional information during the measurement period, the fair values assigned to the assets and liabilities may be adjusted.

Net sales for Code Plus and TexPly, in aggregate, included in the unaudited condensed consolidated statements of operations were $18.5 million and $38.0 million for the three and nine months endedSeptember 30, 2017, respectively. Estimated pre-tax earnings of Code Plus and TexPly, in aggregate, included in the unaudited condensed consolidated statements of operations were $1.5 million and $2.6 million for the three and nine months endedSeptember 30, 2017, respectively. The impact of the acquisitions was not considered significant for the reporting of pro forma financial information.

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Accounts Receivable

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Accounts Receivable

Accounts Receivable

Accounts receivable consist of the following at September 30, 2017 and December 31, 2016:

(in thousands)	September 30,   2017			December 31,   2016
Trade receivables	$	378,104		$	323,725
Allowance for doubtful accounts	(4,436		)	(4,162		)
Other allowances	(7,679		)	(6,259		)
	$	365,989		$	313,304

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Impairment of BMHC ERP System Impairment of BMHC ERP System

9 Months Ended

Sep. 30, 2017

Property, Plant and Equipment [Abstract]

Impairment of BMHC ERP System

Impairment of BMHC ERP System

During 2013, Building Materials Holding Corporation (“BMHC” or “Legacy BMHC”) selected a new third-party software vendor for its planned Enterprise Resource Planning (“New ERP”) system and began incurring costs related to design, development and implementation of the New ERP. BMHC also began paying an annual licensing fee. During March 2016, the Company decided to integrate all operations under the Enterprise Resource Planning system utilized by Stock Building Supply Holdings, Inc. (“SBS” and the “Legacy SBS ERP system”) and to discontinue use of the New ERP. In connection with this decision, the Company recorded asset impairment charges of approximately $11.9 million in its unaudited condensed consolidated statement of operations for the nine months ended September 30, 2016 related to capitalized software development costs for New ERP functionality that the Company had intended to implement in future periods. These costs had previously been recorded as construction-in-progress within property and equipment on the condensed consolidated balance sheets.

During June 2017, the Company determined that it had ceased receiving economic benefit from certain non-cancellable license and service contracts related to the New ERP. In accordance with ASC 420, Exit or Disposal Cost Obligations, as of the cease use date, the Company recognized approximately $2.8 million of expense within merger and integration costs in its unaudited condensed consolidated statements of operations for the nine months ended September 30, 2017, consisting of $2.1 million for contractual payments due subsequent to the cease use date, all of which have been paid as of September 30, 2017, and the acceleration of expense recognition of unamortized prepaid costs of $0.7 million.

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Debt

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Debt

Debt

Long-term debt as of September 30, 2017 and December 31, 2016 consists of the following:

(in thousands)	September 30,   2017			December 31,   2016
Senior secured notes, due 2024	$	350,000		$	350,000
Revolving credit agreement	51,832			—
Other	360			2,963
	402,192			352,963
Unamortized debt issuance costs related to senior secured notes	(5,848		)	(6,474		)
	396,344			346,489
Less: Current portion of long-term debt	98			1,662
	$	396,246		$	344,827

Senior Secured Notes

On September 15, 2016, the Company issued $350.0 million of senior secured notes due 2024 (the “Senior Notes”) under an unregistered private placement not subject to the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The Senior Notes were issued by BMC East, LLC, a 100% owned subsidiary of the Company, and are guaranteed by the Company and the other subsidiaries that guarantee our Credit Agreement (as defined below). Each of the subsidiary guarantors is 100% owned, directly or indirectly, by the Company, and all guarantees are full and unconditional and joint and several. The interest rate is fixed at 5.5% and is payable semiannually on April 1 and October 1.

The net cash proceeds from the Senior Notes were used to redeem in full $250.0 million of 9.0% senior secured notes that were issued by BMHC in September 2013 and that were scheduled to mature in September 2018 (the “Extinguished Senior Notes”). In connection with the redemption of the Extinguished Senior Notes, the Company incurred a loss on debt extinguishment of $12.5 million for the nine months ended September 30, 2016, consisting of a call premium of $8.4 million, and the write-off of unamortized debt issuance costs and original issue discount of $4.1 million.

As of September 30, 2017, the estimated market value of the Senior Notes was $16.6 million higher than the carrying amount. The fair value is based on institutional trading activity and was classified as a Level 2 measurement in accordance with ASC 820.

Revolving Credit Agreement

On December 1, 2015, we entered into a senior secured credit agreement with Wells Fargo Capital Finance, as administrative agent, and certain other lenders (the “Credit Agreement”), which includes a revolving line of credit (the “Revolver”). The Credit Agreement, as amended, has an aggregate commitment of $375.0 million. We had outstanding borrowings under the Revolver of $51.8 million with net availability of $256.4 million as of September 30, 2017. The weighted average interest rate on outstanding LIBOR Rate borrowings of $40.0 million was 2.74% and the interest rate on Base Rate borrowings of $11.8 million was 4.75% as of September 30, 2017. We had $66.8 million in letters of credit outstanding under the Credit Agreement as of September 30, 2017.

The carrying value of the Revolver at September 30, 2017 approximates fair value as the rates are comparable to those at which we could currently borrow under similar terms, are variable and incorporate a measure of our credit risk. As such, the fair value of the Revolver was classified as a Level 2 measurement in accordance with ASC 820.

Other

Other long-term debt as of September 30, 2017 consists of a $0.4 million term note secured by real property with a maturity of February 2021. The interest rate is 7.0% and is paid monthly. The estimated market value of other long-term debt approximates the carrying amount.

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Income Taxes

9 Months Ended

Sep. 30, 2017

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 had a valuation allowance of $0.1 million against its deferred tax assets related to certain state tax jurisdictions as of September 30, 2017 and December 31, 2016. To the extent the Company generates future tax net operating losses, the Company may be required to increase the valuation allowance on deferred tax assets, which may unfavorably impact the effective tax rate.

The Company has no material uncertain tax positions as of September 30, 2017 and December 31, 2016.

For the three and nine months endedSeptember 30, 2017, the Company’s effective tax rate was 34.1% and 33.3%, respectively, which varied from the federal statutory rate of 35% primarily due to excess tax windfall benefits from stock compensation and a permanent domestic manufacturing deduction under Internal Revenue Code Section 199 (the “Manufacturing Deduction”). For the three and nine months endedSeptember 30, 2016, the effective tax rate was 35.0% and 32.7%, respectively, which varied from the federal statutory rate of 35% primarily due to the excess tax windfall benefit from stock compensation and the Manufacturing Deduction.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2017

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 currently 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. The Company recorded $3.0 million of expense within selling, general and administrative expenses in its unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2017 in relation to pending litigation. The amount accrued is based upon currently available information, however, the ultimate obligation may be higher.

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Stock Based Compensation

9 Months Ended

Sep. 30, 2017

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

Stock Based Compensation

Stock Based Compensation

The following table highlights the expense related to stock based compensation for the three and nine months endedSeptember 30, 2017 and 2016:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2017		2016		2017		2016
Restricted stock units	$	1,157	$	1,200	$	4,139	$	3,338
Restricted stock	113		400		339		1,376
Stock options	96		251		273		830
Stock based compensation	$	1,366	$	1,851	$	4,751	$	5,544

During the nine months ended September 30, 2017, in addition to grants of service-based restricted stock unit awards, the Company granted performance-based restricted stock units that vest on March 15, 2020.The weighted average grant date fair value of the performance-based restricted stock units was $21.94. Currently, the number of performance-based restricted stock units that are issued on the vesting date could range from zero to a maximum of 246,337, based 50% upon the Company’s average return on invested capital over the three year period from January 1, 2017 through December 31, 2019 and 50% upon the Company’s cumulative adjusted earnings per share (“Adjusted EPS”) over the same three year period.

During the nine months ended September 30, 2016, in addition to grants of service-based restricted stock unit awards, the Company granted performance-based restricted stock units that vest on March 15, 2019. The number of performance-based restricted stock units that are issued on the vesting date could range from zero to a maximum of 206,250, based upon the Company’s cumulative Adjusted EBITDA over the three year period from January 1, 2016 through December 31, 2018.

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Segments

9 Months Ended

Sep. 30, 2017

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 (“CODM”) in deciding how to allocate resources and in assessing performance.

Beginning January 1, 2017, the Company’s operating segments consist of the Mid-Atlantic, Southeast, Texas, Intermountain and Western divisions after the Company realigned certain of its markets, which resulted in the consolidation of the Company’s historical Mountain West division into the Intermountain division. Following the realignment, the CODM continues to review aggregate information to allocate resources and assess performance. Based on this, as well as the similar economic characteristics, nature of products, distribution methods and customers of the divisions both before and after the realignment, the Company has aggregated its operating segments into one reportable segment, “Geographic divisions.”

In addition to our reportable segment, the Company’s consolidated results include “Other reconciling items.” Other reconciling items is comprised of our corporate activities and other income and expenses not allocated to the operating segments.

The following tables present Net Sales, Adjusted EBITDA and certain other measures for the reportable segment and total Company operations for the three and nine months endedSeptember 30, 2017 and 2016. Adjusted EBITDA is used as a performance metric by the CODM in determining how to allocate resources and assess performance.

	Three Months Ended September 30, 2017
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	881,012	$	209,545	$	16,996	$	70,158
Other reconciling items	—		—		629		(10,861		)
	$	881,012	$	209,545	$	17,625

	Three Months Ended September 30, 2016
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	821,204	$	202,966	$	16,011	$	69,381
Other reconciling items	—		—		1,265		(11,184		)
	$	821,204	$	202,966	$	17,276

	Nine Months Ended September 30, 2017
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	2,525,087	$	599,429	$	50,167	$	188,882
Other reconciling items	—		—		1,829		(36,445		)
	$	2,525,087	$	599,429	$	51,996

	Nine Months Ended September 30, 2016
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	2,346,169	$	561,238	$	47,562	$	190,077
Other reconciling items	—		—		3,535		(40,637		)
	$	2,346,169	$	561,238	$	51,097

Reconciliation to consolidated financial statements:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2017		2016		2017		2016
Income before income taxes	$	27,996	$	14,218	$	59,689	$	30,395
Interest expense	6,377		7,668		18,960		24,020
Depreciation and amortization	17,625		17,276		51,996		51,097
Merger and integration costs	2,574		4,655		13,339		11,088
Non-cash stock compensation expense	1,366		1,851		4,751		5,544
Impairment of assets	409		—		435		11,883
Acquisition costs	—		—		317		—
Loss on debt extinguishment	—		12,529		—		12,529
Inventory step-up charges	—		—		—		2,884
Other items (a)	2,950		—		2,950		—
Adjusted EBITDA of other reconciling items	10,861		11,184		36,445		40,637
Adjusted EBITDA of geographic divisions reportable segment	$	70,158	$	69,381	$	188,882	$	190,077

(a) Represents expense incurred during the three and nine months ended September 30, 2017 related to pending litigation.

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Earnings Per Share

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic net income per share (“EPS”) is calculated by dividing net income 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 potential common shares, determined using the treasury-stock method. For purposes of the diluted EPS calculation, stock options, restricted stock and restricted stock unit awards are considered to be potential common shares. Performance-based restricted stock units are not included in the calculation of diluted EPS until they are contingently issuable.

The basic and diluted EPS calculations for the three and nine months endedSeptember 30, 2017 and 2016 are presented below:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2017		2016		2017		2016
Income attributable to common stockholders	$	18,443	$	9,236	$	39,783	$	20,462
Weighted average common shares outstanding, basic	66,958		66,435		66,860		65,873
Effect of dilutive securities:
Restricted stock	61		233		68		250
Restricted stock units	248		194		212		109
Stock options	175		223		201		223
Weighted average common shares outstanding, diluted	67,442		67,085		67,341		66,455
Basic income per common share	$	0.28	$	0.14	$	0.60	$	0.31
Diluted income per common share	$	0.27	$	0.14	$	0.59	$	0.31

The following table provides the securities that could potentially dilute EPS in the future, but were not included in the computation of diluted EPS for the periods presented because to do so would have been anti-dilutive. The amounts included in this table exclude performance-based restricted stock units. As of September 30, 2017, the number of currently outstanding performance-based restricted stock units that are issued upon vesting could range from zero to a maximum of 452,587.

	Three Months Ended September 30,		Nine Months Ended September 30,
(in thousands)	2017	2016	2017	2016
Restricted stock units	13	—	13	—
Stock options	1	490	1	490

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of presentation

Basis of Presentation

The unaudited 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, 2016 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 Annual Report on Form 10-K for the year ended December 31, 2016 (“2016 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.

Reclassifications

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Comprehensive income

Comprehensive income

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

Recently issued accounting pronouncements

Recently adopted accounting pronouncements

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value. Prior to the issuance of the standard, inventory was measured at the lower of cost or market, where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin. Inventory measured using last-in, first-out (LIFO) and the retail inventory method are not impacted by the new guidance. Prospective application is required and early adoption is permitted. ASU 2015-11 became effective for the Company’s annual and interim periods beginning on January 1, 2017. The adoption of the guidance did not have a material impact on our financial statements.

Recently issued accounting pronouncements not yet adopted

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), and issued subsequent amendments to the initial guidance within Accounting Standards Update 2016-08, Revenue from Contracts with Customers, Principal versus Agent Considerations (“ASU 2016-08”) issued in March 2016, Accounting Standards Update 2016-10, Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing (“ASU 2016-10”) issued in April 2016, Accounting Standards Update 2016-12, Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”) issued in May 2016 and Accounting Standards Update 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (“ASU 2016-20”) issued in December 2016 (ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 collectively “Topic 606”). Topic 606 provides a comprehensive revenue recognition model requiring companies to recognize revenue for the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. In July 2015, the FASB voted to defer the effective date of ASU 2014-09 by one year, and therefore, the standard is effective for the Company’s annual and interim periods beginning on January 1, 2018. The guidance permits the use of either a full retrospective or modified retrospective transition method. We expect to adopt the standard on January 1, 2018 using the modified retrospective transition method, which recognizes the cumulative effect of initially applying the standard in retained earnings on the date of adoption, with the option to utilize certain practical expedients as defined in Topic 606. We do not expect the adoption of the standard to have a material impact on the timing of revenue recognition nor the amount of revenue recognized from our building products contracts. Revenue for our building products contracts will continue to be recognized at a point in time, when control of the promised goods is transferred to our customers, with the exception of certain product offerings which are customized to customer specifications and meet the criteria to be recognized over time, which is consistent with the Company’s current accounting. We are continuing to evaluate the impact of the standard on our contracts with a service element but based on our current assessment, we expect that revenue for our construction services contracts will generally continue to be recognized over time as the Company satisfies the performance obligations in the contracts. We also continue to evaluate the disclosure requirements of the standard, which are expected to be significant and incremental to the current disclosures.

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (“ASU 2016-02”). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for the Company’s annual and interim periods beginning on January 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are in the process of evaluating the impact of the standard on our financial statements. As a lessee, certain of our various leases under existing guidance are classified as operating leases that are not recorded on the balance sheet but are recorded in the statement of operations as expense is incurred. Upon adoption of the standard, we will be required to record substantially all leases on the balance sheet as a ROU asset and a lease liability. The timing of expense recognition and classification in the statement of operations could change based on the classification of leases as either operating or financing.

In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 was issued to decrease the diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows by providing guidance on eight specific cash flow issues. ASU 2016-15 is effective for the Company’s annual and interim periods beginning on January 1, 2018, with early adoption permitted and retrospective application required. The adoption of the standard is not expected to have a material impact on our financial statements.

In November 2016, the FASB issued Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires that the statement of cash flows include restricted cash in the beginning and end-of-period total amounts shown and that the statement of cash flows explain the changes in restricted cash during the period. ASU 2016-18 is effective for the Company's annual and interim periods beginning on January 1, 2018. Retrospective application is required and early adoption is permitted. The adoption of the standard is not expected to have a material impact on our financial statements.

In January 2017, the FASB issued Accounting Standards Update 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-01 provides guidance in determining when a set of assets and activities meets the definition of a business. ASU 2017-01 is effective for the Company's annual and interim periods beginning on January 1, 2018. Early application is permitted for transactions meeting certain criteria and prospective application is required. The adoption of the standard is not expected to have a material impact on our financial statements.

In January 2017, the FASB issued Accounting Standards Update 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires computation of the implied fair value of a reporting unit's goodwill. The amount of a goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for the Company's annual goodwill impairment test and any interim tests during the Company's annual and interim periods beginning on January 1, 2020. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. Prospective application is required. The adoption of the standard is not expected to have a material impact on our financial statements.

In February 2017, the FASB issued Accounting Standards Update 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”). ASU 2017-05 clarifies the scope of Subtopic 610-20, which provides guidance for recognizing gains and losses from the sale or transfer of nonfinancial assets in contracts with noncustomers. ASU 2017-05 also provides guidance for partial sales of nonfinancial assets. ASU 2017-05 is effective for the Company’s annual and interim periods beginning on January 1, 2018 and we are required to adopt ASU 2017-05 at the same time that we adopt ASU 2014-09. The guidance permits the use of either a retrospective or cumulative effect transition method. The adoption of the standard is not expected to have a material impact on our financial statements.

In May 2017, the FASB issued Accounting Standards Update 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under ASC 718. ASU 2017-09 is effective for the Company’s annual and interim periods beginning on January 1, 2018, with early adoption permitted. ASU 2017-09 is to be applied prospectively to an award modified on or after the adoption date. The adoption of the standard is not expected to have a material impact on our financial statements.

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Acquisitions (Policies)

9 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

Acquisitions

Acquisitions

For all acquisitions, the Company allocates the purchase price to assets acquired and liabilities assumed as of the date of acquisition based on the estimated fair values at the date of acquisition. The excess of the fair value of the purchase consideration over the fair values of the identifiable assets and liabilities is recorded as goodwill. Management makes significant estimates and assumptions when determining the fair value of assets acquired and liabilities assumed. These estimates include, but are not limited to, discount rates, projected future net sales, projected future expected cash flows and useful lives.

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Income Taxes (Policies)

9 Months Ended

Sep. 30, 2017

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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Commitments and Contingencies (Policies)

9 Months Ended

Sep. 30, 2017

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.

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Earnings Per Share (Policies)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Earnings per Share

Earnings Per Share

Basic net income per share (“EPS”) is calculated by dividing net income 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 potential common shares, determined using the treasury-stock method. For purposes of the diluted EPS calculation, stock options, restricted stock and restricted stock unit awards are considered to be potential common shares. Performance-based restricted stock units are not included in the calculation of diluted EPS until they are contingently issuable.

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Accounts Receivable (Tables)

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Schedule of accounts receivable

Accounts receivable consist of the following at September 30, 2017 and December 31, 2016:

(in thousands)	September 30,   2017			December 31,   2016
Trade receivables	$	378,104		$	323,725
Allowance for doubtful accounts	(4,436		)	(4,162		)
Other allowances	(7,679		)	(6,259		)
	$	365,989		$	313,304

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Debt (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Schedule of debt

Long-term debt as of September 30, 2017 and December 31, 2016 consists of the following:

(in thousands)	September 30,   2017			December 31,   2016
Senior secured notes, due 2024	$	350,000		$	350,000
Revolving credit agreement	51,832			—
Other	360			2,963
	402,192			352,963
Unamortized debt issuance costs related to senior secured notes	(5,848		)	(6,474		)
	396,344			346,489
Less: Current portion of long-term debt	98			1,662
	$	396,246		$	344,827

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Stock Based Compensation (Tables)

9 Months Ended

Sep. 30, 2017

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 and nine months endedSeptember 30, 2017 and 2016:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2017		2016		2017		2016
Restricted stock units	$	1,157	$	1,200	$	4,139	$	3,338
Restricted stock	113		400		339		1,376
Stock options	96		251		273		830
Stock based compensation	$	1,366	$	1,851	$	4,751	$	5,544

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Segments (Tables)

9 Months Ended

Sep. 30, 2017

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 Company operations for the three and nine months endedSeptember 30, 2017 and 2016. Adjusted EBITDA is used as a performance metric by the CODM in determining how to allocate resources and assess performance.

	Three Months Ended September 30, 2017
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	881,012	$	209,545	$	16,996	$	70,158
Other reconciling items	—		—		629		(10,861		)
	$	881,012	$	209,545	$	17,625

	Three Months Ended September 30, 2016
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	821,204	$	202,966	$	16,011	$	69,381
Other reconciling items	—		—		1,265		(11,184		)
	$	821,204	$	202,966	$	17,276

	Nine Months Ended September 30, 2017
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	2,525,087	$	599,429	$	50,167	$	188,882
Other reconciling items	—		—		1,829		(36,445		)
	$	2,525,087	$	599,429	$	51,996

	Nine Months Ended September 30, 2016
(in thousands)	Net Sales		Gross Profit		Depreciation & Amortization		Adjusted EBITDA
Geographic divisions	$	2,346,169	$	561,238	$	47,562	$	190,077
Other reconciling items	—		—		3,535		(40,637		)
	$	2,346,169	$	561,238	$	51,097

Reconciliation to consolidated financial statements

Reconciliation to consolidated financial statements:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2017		2016		2017		2016
Income before income taxes	$	27,996	$	14,218	$	59,689	$	30,395
Interest expense	6,377		7,668		18,960		24,020
Depreciation and amortization	17,625		17,276		51,996		51,097
Merger and integration costs	2,574		4,655		13,339		11,088
Non-cash stock compensation expense	1,366		1,851		4,751		5,544
Impairment of assets	409		—		435		11,883
Acquisition costs	—		—		317		—
Loss on debt extinguishment	—		12,529		—		12,529
Inventory step-up charges	—		—		—		2,884
Other items (a)	2,950		—		2,950		—
Adjusted EBITDA of other reconciling items	10,861		11,184		36,445		40,637
Adjusted EBITDA of geographic divisions reportable segment	$	70,158	$	69,381	$	188,882	$	190,077

(a) Represents expense incurred during the three and nine months ended September 30, 2017 related to pending litigation.

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Schedule of basic and diluted EPS calculations

The basic and diluted EPS calculations for the three and nine months endedSeptember 30, 2017 and 2016 are presented below:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2017		2016		2017		2016
Income attributable to common stockholders	$	18,443	$	9,236	$	39,783	$	20,462
Weighted average common shares outstanding, basic	66,958		66,435		66,860		65,873
Effect of dilutive securities:
Restricted stock	61		233		68		250
Restricted stock units	248		194		212		109
Stock options	175		223		201		223
Weighted average common shares outstanding, diluted	67,442		67,085		67,341		66,455
Basic income per common share	$	0.28	$	0.14	$	0.60	$	0.31
Diluted income per common share	$	0.27	$	0.14	$	0.59	$	0.31

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

The following table provides the securities that could potentially dilute EPS in the future, but were not included in the computation of diluted EPS for the periods presented because to do so would have been anti-dilutive. The amounts included in this table exclude performance-based restricted stock units. As of September 30, 2017, the number of currently outstanding performance-based restricted stock units that are issued upon vesting could range from zero to a maximum of 452,587.

	Three Months Ended September 30,		Nine Months Ended September 30,
(in thousands)	2017	2016	2017	2016
Restricted stock units	13	—	13	—
Stock options	1	490	1	490

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Acquisitions (Narrative) (Details) - USD ($) $ in Thousands			3 Months Ended		9 Months Ended		12 Months Ended
	Apr. 03, 2017	Mar. 27, 2017	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Business Acquisition [Line Items]
Goodwill			$ 262,042		$ 262,042		$ 254,832
Acquisition costs			0	$ 0	317	$ 0
Code Plus [Member]
Business Acquisition [Line Items]
Date of acquisition		Mar. 27, 2017
Purchase price		$ 7,100
Initial holdback		400
Earnout provision		800
Goodwill		3,400
Goodwill recognized expected to be deductible for tax		3,400
Pre-acquisition sales							14,200
TexPly [Member]
Business Acquisition [Line Items]
Date of acquisition	Apr. 03, 2017
Purchase price	$ 32,000
Escrow Deposit Related to Property Acquisition	2,500
Goodwill	3,800
Accounts receivable	5,200
Inventories	4,000
Property and equipment	5,400
Goodwill recognized expected to be deductible for tax	3,800
Pre-acquisition sales							$ 55,200
Code Plus and TexPly [Member]
Business Acquisition [Line Items]
Net sales of acquiree since acquisition date			18,500		38,000
Estimated pre-tax earnings of acquiree since acquisition date			1,500		2,600
Customer relationships [Member] | Code Plus [Member]
Business Acquisition [Line Items]
Intangible assets		$ 2,300
Useful life		12 years
Customer relationships [Member] | TexPly [Member]
Business Acquisition [Line Items]
Intangible assets	$ 13,400
Useful life	13 years
Non-compete agreements [Member] | Code Plus [Member]
Business Acquisition [Line Items]
Intangible assets		$ 500
Useful life		5 years
Selling, general and administrative expenses [Member] | Code Plus [Member]
Business Acquisition [Line Items]
Acquisition costs			0		100
Selling, general and administrative expenses [Member] | TexPly [Member]
Business Acquisition [Line Items]
Acquisition costs			$ 0		$ 200

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Accounts Receivable (Accounts Receivable) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Receivables [Abstract]
Trade receivables	$ 378,104	$ 323,725
Allowance for doubtful accounts	(4,436)	(4,162)
Other allowances	(7,679)	(6,259)
Accounts receivable, net	$ 365,989	$ 313,304

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Impairment of BMHC ERP System Impairment of BMCH ERP System (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Property, Plant and Equipment [Line Items]
Impairment of assets	$ 409	$ 0	$ 435	$ 11,883
ERP System [Member]
Property, Plant and Equipment [Line Items]
Impairment of assets				$ 11,883
Contractual payments due subsequent to the cease use date			2,100
Acceleration of expense recognition of unamortized prepaid costs			700
Merger And Integration Costs [Member] | ERP System [Member]
Property, Plant and Equipment [Line Items]
Integration related costs			$ 2,800

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Debt (Debt Table) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Sep. 15, 2016
Debt Instrument [Line Items]
Outstanding borrowings	$ 402,192	$ 352,963
Unamortized debt issuance costs related to senior secured notes	(5,848)	(6,474)
Total debt	396,344	346,489
Less: Current portion of long-term debt	98	1,662
Long-term debt	396,246	344,827
Senior secured notes, due 2024 [Member]
Debt Instrument [Line Items]
Outstanding borrowings	350,000	350,000	$ 350,000
Revolving credit agreement [Member]
Debt Instrument [Line Items]
Outstanding borrowings	51,832	0
Other debt [Member]
Debt Instrument [Line Items]
Outstanding borrowings	$ 360	$ 2,963

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Debt Debt (Narrative) (Details) - USD ($) $ in Thousands			3 Months Ended		9 Months Ended
	Sep. 15, 2016	Dec. 01, 2015	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Debt Instrument [Line Items]
Outstanding borrowings			$ 402,192		$ 402,192		$ 352,963
Loss on debt extinguishment			0	$ 12,529	0	$ 12,529
Payments of debt extinguishment costs					0	8,438
Payments of debt issuance costs					38	$ 5,824
Senior secured notes, due 2024 [Member]
Debt Instrument [Line Items]
Debt issuance date	Sep. 15, 2016
Outstanding borrowings	$ 350,000		350,000		350,000		350,000
Maturity date, year	2024
Interest rate	5.50%
Interest payment dates	payable semiannually on April 1 and October 1
Fair value in excess of carrying value			16,600		16,600
Senior secured notes, due 2018 [Member]
Debt Instrument [Line Items]
Debt issuance date						Sep. 30, 2013
Maturity date						Sep. 30, 2018
Interest rate				9.00%		9.00%
Extinguished senior notes						$ 250,000
Loss on debt extinguishment						12,529
Payments of debt extinguishment costs						8,438
Write off of unamortized debt issuance costs and original issue discount						$ 4,100
Revolving credit agreement [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 375,000
Outstanding borrowings			51,832		51,832		0
Net availability			256,400		256,400
Letters of credit outstanding			66,800		$ 66,800
Date entered into agreement		Dec. 01, 2015
Other debt [Member]
Debt Instrument [Line Items]
Maturity date					Feb. 28, 2021
Outstanding borrowings			$ 360		$ 360		$ 2,963
Interest rate			7.00%		7.00%
LIBOR Rate Option [Member] | Revolving credit agreement [Member]
Debt Instrument [Line Items]
Outstanding borrowings			$ 40,000		$ 40,000
Interest rate			2.74%		2.74%
Base Rate Option [Member] | Revolving credit agreement [Member]
Debt Instrument [Line Items]
Outstanding borrowings			$ 11,800		$ 11,800
Interest rate			4.75%		4.75%
Guarantor Subsidiaries [Member] | Senior secured notes, due 2024 [Member]
Debt Instrument [Line Items]
Ownership percent	100.00%
BMC East, LLC [Member] | Senior secured notes, due 2024 [Member]
Debt Instrument [Line Items]
Ownership percent	100.00%

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Income Taxes (Narrative) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Income Tax Contingency [Line Items]
Valuation allowance	$ 100,000		$ 100,000		$ 100,000
Uncertain tax positions	$ 0		$ 0		$ 0
Income tax expense at statutory rate	35.00%	35.00%	35.00%	35.00%
Effective income tax rate	34.10%	35.00%	33.30%	32.70%

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Commitments and Contingencies (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2017
Pending Litigation [Member] | Selling, general and administrative expenses [Member]
Loss Contingencies [Line Items]
Pending litigation expense	$ 3.0	$ 3.0

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Stock Based Compensation (Stock based compensation expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	$ 1,366	$ 1,851	$ 4,751	$ 5,544
Restricted stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	113	400	339	1,376
Restricted stock units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	1,157	1,200	4,139	3,338
Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	$ 96	$ 251	$ 273	$ 830

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Stock Based Compensation (Narrative) (Details) - Performance-based restricted stock units [Member] - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance-based shares available for vesting	0
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance-based shares available for vesting	452,587
2017 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting date	Mar. 15, 2020
Grant date fair value (in dollars per share)	$ 21.94
Award vesting period (in years)	3 years
Percent of performance measurement based on ROIC	50.00%
Percent of performance measurement based on Adjusted EPS	50.00%
Performance period (start date)	Jan. 01, 2017
Performance period (end date)	Dec. 31, 2019
2017 [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units granted	0
2017 [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units granted	246,337
2016 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting date		Mar. 15, 2019
Award vesting period (in years)		3 years
Performance period (start date)		Jan. 01, 2016
Performance period (end date)		Dec. 31, 2018
2016 [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units granted		0
2016 [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units granted		206,250

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Segments (Schedule of net sales, adjusted EBITDA and certain other measures by reportable segment) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Segment Reporting Information [Line Items]
Net sales	$ 881,012	$ 821,204	$ 2,525,087	$ 2,346,169
Gross profit	209,545	202,966	599,429	561,238
Depreciation & amortization	17,625	17,276	51,996	51,097
Operating segments [Member] | Geographic divisions [Member]
Segment Reporting Information [Line Items]
Net sales	881,012	821,204	2,525,087	2,346,169
Gross profit	209,545	202,966	599,429	561,238
Depreciation & amortization	16,996	16,011	50,167	47,562
Adjusted EBITDA	70,158	69,381	188,882	190,077
Other reconciling items [Member] | Other reconciling items [Member]
Segment Reporting Information [Line Items]
Net sales	0	0	0	0
Gross profit	0	0	0	0
Depreciation & amortization	629	1,265	1,829	3,535
Adjusted EBITDA	$ (10,861)	$ (11,184)	$ (36,445)	$ (40,637)

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Segments (Reconciliation of adjusted EBITDA to consolidated financial statements) (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2017		Sep. 30, 2016	Sep. 30, 2017		Sep. 30, 2016
Segment Reporting, Revenue Reconciling Item [Line Items]
Income before income taxes	$ 27,996		$ 14,218	$ 59,689		$ 30,395
Interest expense	6,377		7,668	18,960		24,020
Depreciation and amortization	17,625		17,276	51,996		51,097
Merger and integration costs	2,574		4,655	13,339		11,088
Non-cash stock compensation expense	1,366		1,851	4,751		5,544
Impairment of assets	409		0	435		11,883
Acquisition costs	0		0	317		0
Loss on debt extinguishment	0		12,529	0		12,529
Inventory step-up charges	0		0	0		2,884
Other items	2,950	[1]	0	2,950	[1]	0
Other reconciling items [Member] | Other reconciling items [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Depreciation and amortization	629		1,265	1,829		3,535
Adjusted EBITDA	10,861		11,184	36,445		40,637
Operating segments [Member] | Geographic divisions [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Depreciation and amortization	16,996		16,011	50,167		47,562
Adjusted EBITDA	$ (70,158)		$ (69,381)	$ (188,882)		$ (190,077)

[1] Represents expense incurred during the three and nine months ended September 30, 2017 related to pending litigation.

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Segments (Narrative) (Details)	9 Months Ended
	Sep. 30, 2017 segment
Segment Reporting [Abstract]
Number of reportable segments	1

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Earnings Per Share (Basic and Diluted EPS) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Income attributable to common stockholders	$ 18,443	$ 9,236	$ 39,783	$ 20,462
Weighted average common shares outstanding, basic (in shares)	66,958	66,435	66,860	65,873
Weighted average common shares outstanding, diluted (in shares)	67,442	67,085	67,341	66,455
Basic income per common share (in dollars per share)	$ 0.28	$ 0.14	$ 0.60	$ 0.31
Diluted income per common share (in dollars per share)	$ 0.27	$ 0.14	$ 0.59	$ 0.31
Restricted stock [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Stock based payment arrangements (in shares)	61	233	68	250
Restricted stock units [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Stock based payment arrangements (in shares)	248	194	212	109
Stock options [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Stock based payment arrangements (in shares)	175	223	201	223

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Earnings Per Share (Schedule of anti-dilutive securities) (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
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)	13	0	13	0
Stock options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	1	490	1	490

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Earnings Per Share Earnings Per Share (Narrative) (Details) - Performance-based restricted stock units [Member]	9 Months Ended
	Sep. 30, 2017 shares
Minimum [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Performance-based shares available for vesting	0
Maximum [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Performance-based shares available for vesting	452,587