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Globe Newswire 28-Feb-2019 4:30 PM
DALLAS, Feb. 28, 2019 (GLOBE NEWSWIRE) -- Builders FirstSource, Inc. (Nasdaq: BLDR) today reported its results for the fourth quarter ending December 31, 2018.
Commenting on the results, CEO Chad Crow remarked, "We generated strong financial results in 2018, delivering record sales, Adjusted EBITDA and net income despite a volatile market. We continued to show double-digit growth in value-added products, partnering with our customers in joint efforts to reduce construction costs and help mitigate labor shortages. Our team also made significant progress on our operational excellence initiatives, driving towards a more agile and efficient operating platform. I am particularly proud of our free cash flow generation as we achieved net financial debt to Adjusted EBITDA of 3.1x, fulfilling the last strategic milestone of the 2015 ProBuild acquisition."
Peter Jackson, CFO, added, "We finished the year with a strong fourth quarter, in which we grew our single family customer segment by 4.5 percent, faster than the single family end market. Our fourth quarter Adjusted EBITDA grew by 29 percent, or $28.1 million, to generate full year Adjusted EBITDA of $502 million. We improved our 2018 Adjusted EBITDA margin by 50 basis points and Adjusted net income by more than 50 percent. Our team's focus on cash and working capital conversion initiatives, generated an impressive $186 million in free cash flow for the full year after funding $101 million in capital investments."
The Company has provided supplemental non-GAAP financial information for the consolidated company that is adjusted to exclude one-time integration, one-time refinancing, and other costs ("Adjusted"). As the information included herein includes non-GAAP financial information, please refer to the accompanying financial schedules for non-GAAP reconciliations to their GAAP equivalents.
Fourth Quarter 2018 Compared to Fourth Quarter 2017:
Net Sales
Gross Margin
Selling, General and Administrative Expenses
Interest Expense
Income Tax Expense
Net Income
Adjusted EBITDA
Full Year December 31, 2018 Financial Information:
Net Sales
Gross margin
Interest Expense
Net Income
Adjusted EBITDA
Capital Structure, Leverage, and Liquidity Information:
Please refer to the accompanying financial schedules for more information.
Outlook
Concluding, Mr. Crow added, "I am very pleased with the performance our team delivered in 2018 by focusing on exceptional customer service and disciplined execution. As overall market growth moderated, we managed to produce solid growth driven by our differentiated platform in the single family end market, delivered on our long-term strategic priority of deleveraging, and demonstrated the strength of our close customer relationships across our national footprint. I am confident that we will continue to deliver strong results from our strategic initiatives in high margin value-added products and operational excellence programs. I thank our team members who worked relentlessly throughout the year to build a more durable, value-added solutions platform that creates enhanced value for our customers, shareholders and other stakeholders and look forward to 2019 as we continue to build on our success."
Conference Call
Builders FirstSource will host a conference call Friday, March 1, 2019 at 9:00 a.m. Central Time (CT) and will simultaneously broadcast it live on the Internet. The earnings release presentation will be posted at www.bldr.com under the "investors" section prior to the call. To participate in the teleconference, please dial into the call a few minutes before the start time: 888-220-8451 (U.S. and Canada) and 323-794-2588 (international), Conference ID: 3163178. A replay of the call will be available at 1:00 p.m. Central Time through March 1st. To access the replay, please dial 888-203-1112 (U.S. and Canada) and 719-457-0820 (international) and refer to pass code 3163178. The live webcast and archived replay can also be accessed on the Company's website at www.bldr.com under the "Investors" section. The online archive of the webcast will be available for approximately 90 days.
About Builders FirstSource
2018 Sales: $7.7 Billion | Associates: 15 Thousand | Operations in 39 States
Headquartered in Dallas, Texas, Builders FirstSource is the largest U.S supplier of building products, prefabricated components, and value-added services to the professional market segment for new residential construction and repair and remodeling. We provide customers an integrated homebuilding solution, offering manufacturing, supply, delivery and installation of a full range of structural and related building products. We operate in 39 states with approximately 400 locations and have a market presence in 75 of the top 100 Metropolitan Statistical Areas, providing geographic diversity and balanced end market exposure. We service customers from strategically located distribution facilities and manufacturing facilities (some of which are co-located) that produce value-added products such as roof and floor trusses, wall panels, stairs, vinyl windows, custom millwork and pre-hung doors. Builders FirstSource also distributes dimensional lumber and lumber sheet goods, millwork, windows, interior and exterior doors, and other building products. For more information about Builders FirstSource, visit the Company's website at www.bldr.com.
Cautionary Notice
Statements in this news release and the schedules hereto that are not purely historical facts or that necessarily depend upon future events, including statements about expected market share gains, forecasted financial performance or other statements about anticipations, beliefs, expectations, hopes, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, oral statements made by our directors, officers and employees to the investor and analyst communities, media representatives and others, depending upon their nature, may also constitute forward-looking statements. As with the forward-looking statements included in this release, these forward-looking statements are by nature inherently uncertain, and actual results may differ materially as a result of many factors. All forward-looking statements are based upon information available to Builders FirstSource, Inc. on the date this release was submitted. Builders FirstSource, Inc. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Any forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements, including risks or uncertainties related to the Company's growth strategies, including gaining market share, or the Company's revenues and operating results being highly dependent on, among other things, the homebuilding industry, lumber prices and the economy. Builders FirstSource, Inc. may not succeed in addressing these and other risks. Further information regarding factors that could affect our financial and other results can be found in the risk factors section of Builders FirstSource, Inc.'s most recent annual report on Form 10-K filed with the Securities and Exchange Commission. Consequently, all forward-looking statements in this release are qualified by the factors, risks and uncertainties contained therein.
Contact:
Binit Sanghvi
VP Investor Relations
Builders FirstSource, Inc.
(214) 765-3804
Financial Schedules to Follow
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME | |||||||
Three Months Ended December 31, |
|||||||
2018 | 2017 | ||||||
(In thousands, except per share amounts) | |||||||
Sales | $ | 1,815,980 | $ | 1,778,939 | |||
Cost of sales | 1,323,201 | 1,347,719 | |||||
Gross margin | 492,779 | 431,220 | |||||
Selling, general and administrative expenses | 402,302 | 366,419 | |||||
Income from operations | 90,477 | 64,801 | |||||
Interest expense, net | 23,408 | 89,471 | |||||
Income (loss) before income taxes | 67,069 | (24,670 | ) | ||||
Income tax expense | 15,048 | 18,031 | |||||
Net income (loss) | $ | 52,021 | $ | (42,701 | ) | ||
Comprehensive income (loss) | $ | 52,021 | $ | (42,701 | ) | ||
Net income (loss) per share: | |||||||
Basic | $ | 0.45 | $ | (0.38 | ) | ||
Diluted | $ | 0.45 | $ | (0.38 | ) | ||
Weighted average common shares: | |||||||
Basic | 114,898 | 113,239 | |||||
Diluted | 116,375 | 113,239 | |||||
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME | ||||||||||||
Years Ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
(In thousands, except per share amounts) | ||||||||||||
Sales | $ | 7,724,771 | $ | 7,034,209 | $ | 6,367,284 | ||||||
Cost of sales | 5,801,831 | 5,306,818 | 4,770,536 | |||||||||
Gross margin | 1,922,940 | 1,727,391 | 1,596,748 | |||||||||
Selling, general and administrative expenses | 1,553,972 | 1,442,288 | 1,360,412 | |||||||||
Income from operations | 368,968 | 285,103 | 236,336 | |||||||||
Interest expense, net | 108,213 | 193,174 | 214,667 | |||||||||
Income before income taxes | 260,755 | 91,929 | 21,669 | |||||||||
Income tax expense (benefit) | 55,564 | 53,148 | (122,672 | ) | ||||||||
Net income | $ | 205,191 | $ | 38,781 | $ | 144,341 | ||||||
Comprehensive income | $ | 205,191 | $ | 38,781 | $ | 144,341 | ||||||
Net income per share: | ||||||||||||
Basic | $ | 1.79 | $ | 0.34 | $ | 1.30 | ||||||
Diluted | $ | 1.76 | $ | 0.34 | $ | 1.27 | ||||||
Weighted average common shares outstanding: | ||||||||||||
Basic | 114,586 | 112,587 | 110,754 | |||||||||
Diluted | 116,554 | 115,597 | 113,585 | |||||||||
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES | ||||||||
CONSOLIDATED BALANCE SHEET | ||||||||
December 31, | ||||||||
2018 | 2017 | |||||||
(In thousands, except per share amounts) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 10,127 | $ | 57,533 | ||||
Accounts receivable, less allowances of $13,054 and $11,771 at December 31, 2018 and 2017, respectively | 654,170 | 631,992 | ||||||
Other receivables | 68,637 | 71,232 | ||||||
Inventories, net | 596,896 | 601,547 | ||||||
Other current assets | 43,921 | 33,564 | ||||||
Total current assets | 1,373,751 | 1,395,868 | ||||||
Property, plant and equipment, net | 670,075 | 639,303 | ||||||
Goodwill | 740,411 | 740,411 | ||||||
Intangible assets, net | 103,154 | 132,567 | ||||||
Deferred income taxes | 22,766 | 75,105 | ||||||
Other assets, net | 22,152 | 22,870 | ||||||
Total assets | $ | 2,932,309 | $ | 3,006,124 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | 423,168 | 514,282 | ||||||
Accrued liabilities | 292,526 | 271,597 | ||||||
Current maturities of long-term debt and lease obligations | 15,565 | 12,475 | ||||||
Total current liabilities | 731,259 | 798,354 | ||||||
Long-term debt and lease obligations, net of current maturities, debt discount, and debt issuance costs | 1,545,729 | 1,771,945 | ||||||
Other long-term liabilities | 58,983 | 59,616 | ||||||
Total liabilities | 2,335,971 | 2,629,915 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Preferred stock, $0.01 par value, 10,000 shares authorized; zero shares issued and outstanding at December 31, 2018 and 2017 | — | — | ||||||
Common stock, $0.01 par value, 200,000 shares authorized; 115,078 and 113,572 shares issued and outstanding at December 31, 2018 and 2017, respectively | 1,151 | 1,136 | ||||||
Additional paid-in capital | 560,221 | 546,766 | ||||||
Retained earnings (accumulated deficit) | 34,966 | (171,693 | ) | |||||
Total stockholders' equity | 596,338 | 376,209 | ||||||
Total liabilities and stockholders' equity | $ | 2,932,309 | $ | 3,006,124 | ||||
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
Years Ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
(In thousands) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 205,191 | $ | 38,781 | $ | 144,341 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 97,906 | 92,993 | 109,793 | |||||||||
Amortization and write-off of debt issuance costs and debt discount | 4,642 | 6,092 | 7,502 | |||||||||
(Gain) loss on extinguishment of debt | (3,170 | ) | 56,657 | 55,776 | ||||||||
Payment of original issue discount | — | — | (1,259 | ) | ||||||||
Deferred income taxes | 51,823 | 49,104 | (124,787 | ) | ||||||||
Stock compensation expense | 14,420 | 13,508 | 10,549 | |||||||||
Net (gain) loss on sales of assets and asset impairments | (1,393 | ) | 6,965 | (336 | ) | |||||||
Changes in assets and liabilities | ||||||||||||
Receivables | (9,221 | ) | (75,673 | ) | (44,552 | ) | ||||||
Inventories | (5,425 | ) | (60,645 | ) | (33,965 | ) | ||||||
Other current assets | (10,356 | ) | 8 | (4,873 | ) | |||||||
Other assets and liabilities | 5,637 | 8,315 | (828 | ) | ||||||||
Accounts payable | (89,392 | ) | 65,764 | 36,585 | ||||||||
Accrued liabilities | 22,168 | (23,341 | ) | 4,281 | ||||||||
Net cash provided by operating activities | 282,830 | 178,528 | 158,227 | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchases of property, plant and equipment | (101,411 | ) | (62,407 | ) | (42,662 | ) | ||||||
Proceeds from sale of property, plant and equipment | 4,753 | 2,981 | 8,305 | |||||||||
Cash used for acquisitions, net | — | — | (3,970 | ) | ||||||||
Net cash used in investing activities | (96,658 | ) | (59,426 | ) | (38,327 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Borrowings under revolving credit facility | 1,662,000 | 1,370,000 | 907,000 | |||||||||
Payments under revolving credit facility | (1,833,000 | ) | (1,020,000 | ) | (967,000 | ) | ||||||
Proceeds from issuance of notes | — | — | 750,000 | |||||||||
Repayments of long-term debt and other loans | (65,312 | ) | (379,926 | ) | (807,517 | ) | ||||||
Proceeds from long-term debt and other loans | 3,818 | — | — | |||||||||
Payments of debt extinguishment costs | (134 | ) | (48,704 | ) | (42,869 | ) | ||||||
Payments of loan costs | — | (2,799 | ) | (15,663 | ) | |||||||
Exercise of stock options | 3,945 | 8,055 | 6,627 | |||||||||
Repurchase of common stock | (4,895 | ) | (2,644 | ) | (1,092 | ) | ||||||
Net cash used in financing activities | (233,578 | ) | (76,018 | ) | (170,514 | ) | ||||||
Net (decrease) increase in cash and cash equivalents | (47,406 | ) | 43,084 | (50,614 | ) | |||||||
Cash and cash equivalents at beginning of period | 57,533 | 14,449 | 65,063 | |||||||||
Cash and cash equivalents at end of period | $ | 10,127 | $ | 57,533 | $ | 14,449 | ||||||
Supplemental disclosure of non-cash activities
For the years ended December 31, 2018, 2017 and 2016, the Company retired assets subject to other finance obligations of $0.6 million, $14.0 million and $38.1 million and extinguished the related other finance obligations of $0.7 million $11.7 million and $41.2 million, respectively.
The Company purchased equipment which was financed through capital lease obligations of $10.2 million, $14.2 million and $8.1 million in the years ended December 31, 2018, 2017 and 2016, respectively. In addition, purchases of property, plant and equipment included in accounts payable were $2.4 million, $3.9 million and $1.8 million for the years ended December 31, 2018, 2017 and 2016, respectively.
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES Reconciliation of Adjusted Non-GAAP Financial Measures to their GAAP Equivalents (unaudited) |
|||||||||||||||
Note: The company provided detailed explanations of these non-GAAP financial measures in its Form 8-K filed with the SEC on February 28, 2019. | |||||||||||||||
Three months ended December 31, |
Twelve months ended December 31, |
||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in millions) | (in millions) | ||||||||||||||
Reconciliation to Adjusted EBITDA: | |||||||||||||||
GAAP Net Income | $ | 52.0 | $ | (42.7 | ) | $ | 205.2 | $ | 38.8 | ||||||
Integration related expenses | 4.3 | 4.0 | 19.2 | 20.7 | |||||||||||
Debt issuance and refinancing cost (1) | (3.2 | ) | 56.3 | (3.2 | ) | 58.7 | |||||||||
Revaluation of NOL (2) | - | 29.0 | - | 29.0 | |||||||||||
Adjusted Net Income | 53.1 | 46.6 | 221.2 | 147.2 | |||||||||||
Weighted average diluted common shares (in millions) | 116.4 | 116.5 | 116.6 | 115.6 | |||||||||||
Diluted adjusted net income per share: | $ | 0.46 | $ | 0.40 | $ | 1.90 | $ | 1.27 | |||||||
Reconciling items: | |||||||||||||||
Depreciation and amortization expense | 25.2 | 22.2 | 97.9 | 93.0 | |||||||||||
Interest expense, net | 26.6 | 33.2 | 111.4 | 134.5 | |||||||||||
Income tax (benefit) expense | 15.0 | (11.0 | ) | 55.6 | 24.1 | ||||||||||
Stock compensation expense | 4.5 | 3.6 | 14.4 | 13.5 | |||||||||||
(Gain)/loss on sale and asset impairments | (0.9 | ) | 1.9 | (1.0 | ) | 6.3 | |||||||||
Other management-identified adjustments (3) | 1.5 | 0.4 | 2.1 | 0.4 | |||||||||||
Adjusted EBITDA | $ | 125.0 | $ | 96.9 | $ | 501.6 | $ | 419.0 | |||||||
Adjusted EBITDA Margin | 6.9 | % | 5.4 | % | 6.5 | % | 6.0 | % | |||||||
(1) Gain or loss associated with refinancing long term debt. | |||||||||||||||
(2) In 2017, the company revalued its NOL tax asset given the tax reform that allows for a lower federal corporate tax rate. | |||||||||||||||
(3) Primarily relates to severance and one time cost. | |||||||||||||||
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES | |||||||||||||||
Financial Data | |||||||||||||||
(adjusted and unaudited) | |||||||||||||||
Three months ended December 31, |
Twelve months ended December 31, |
||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in millions except per share amounts) | |||||||||||||||
Net sales | 1,816.0 | 1,778.9 | 7,724.8 | 7,034.2 | |||||||||||
Gross margin | 492.8 | 431.2 | 1,922.9 | 1,727.4 | |||||||||||
Gross margin % | 27.1 | % | 24.2 | % | 24.9 | % | 24.6 | % | |||||||
Adjusted SG&A/Other (excluding depreciation and amortization) as a % of sales (1) | 20.3 | % | 18.8 | % | 18.4 | % | 18.6 | % | |||||||
Adjusted EBITDA | 125.0 | 96.9 | 501.6 | 419.0 | |||||||||||
Adjusted EBITDA margin % | 6.9 | % | 5.4 | % | 6.5 | % | 6.0 | % | |||||||
Depreciation and amortization | (25.2 | ) | (22.2 | ) | (97.9 | ) | (93.0 | ) | |||||||
Interest expense, net of debt issuance cost and refinancing | (26.6 | ) | (33.2 | ) | (111.4 | ) | (134.5 | ) | |||||||
Income tax expense | (15.0 | ) | 11.0 | (55.6 | ) | (24.1 | ) | ||||||||
Other adjustments | (5.1 | ) | (5.9 | ) | (15.5 | ) | (20.2 | ) | |||||||
Adjusted Net Income | $ | 53.1 | $ | 46.6 | $ | 221.2 | $ | 147.2 | |||||||
Basic adjusted net income per share: | $ | 0.46 | $ | 0.41 | $ | 1.93 | $ | 1.31 | |||||||
Diluted adjusted net income per share: | $ | 0.46 | $ | 0.40 | $ | 1.90 | $ | 1.27 | |||||||
Weighted average common shares (in millions) | |||||||||||||||
Basic | 114.9 | 113.2 | 114.6 | 112.6 | |||||||||||
Diluted | 116.4 | 116.5 | 116.6 | 115.6 | |||||||||||
Note: The company provided detailed explanations of these non-GAAP financial measures in its Form 8-K filed with the SEC on February 28, 2019. | |||||||||||||||
(1) Adjusted SG&A and other as a percentage of sales is defined as GAAP SG&A less depreciation and amortization, stock comp, acquisition, integration and other expenses. GAAP SG&A in Q4-18 of $402.3M less $25.2M depreciation and amortization, less $4.3M of integration expenses, less $4.5M of stock comp and $0.6M loss from sales, impairments, and other. GAAP SG&A in FY18 of $1,554.0M less $97.9M depreciation and amortization, less $19.2M of integration expenses, less $14.4M of stock comp and $1.1M loss from sales, impairments, and other. | |||||||||||||||
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||
Sales by Product Category | |||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
Three months ended December 31, |
Twelve months ended December 31, |
||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
Net Sales | % of Net Sales |
Net Sales | % of Net Sales |
% Change | Net Sales | % of Net Sales |
Net Sales | % of Net Sales |
% Change | ||||||||||||||||||
Lumber & Lumber Sheet Goods | $ | 628.4 | 34.6 | % | $ | 643.3 | 36.2 | % | -2.3 | % | $ | 2,902.2 | 37.6 | % | $ | 2,510.9 | 35.7 | % | 15.6 | % | |||||||
Manufactured Products | 341.1 | 18.8 | % | 307.7 | 17.3 | % | 10.9 | % | 1,392.0 | 18.0 | % | 1,208.5 | 17.2 | % | 15.2 | % | |||||||||||
Windows, Doors & Millwork | 365.7 | 20.1 | % | 343.9 | 19.3 | % | 6.4 | % | 1,445.9 | 18.7 | % | 1,360.6 | 19.4 | % | 6.3 | % | |||||||||||
Gypsum, Roofing & Insulation | 127.6 | 7.0 | % | 129.0 | 7.2 | % | -1.0 | % | 528.4 | 6.9 | % | 538.4 | 7.6 | % | -1.8 | % | |||||||||||
Siding, Metal & Concrete Products | 169.4 | 9.3 | % | 157.0 | 8.8 | % | 8.0 | % | 697.8 | 9.0 | % | 655.9 | 9.3 | % | 6.4 | % | |||||||||||
Other | 183.7 | 10.1 | % | 198.1 | 11.1 | % | -7.3 | % | 758.5 | 9.8 | % | 759.9 | 10.8 | % | -0.2 | % | |||||||||||
Total adjusted net sales | $ | 1,816.0 | 100.0 | % | $ | 1,779.0 | 100.0 | % | 2.1 | % | $ | 7,724.8 | 100.0 | % | $ | 7,034.2 | 100.0 | % | 9.8 | % | |||||||
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES | |||||||
Interest Reconciliation | |||||||
(unaudited) | |||||||
Three months ended December 31, |
|||||||
Interest Expense | Net Debt Outstanding |
||||||
(in millions) | |||||||
2024 Secured Notes @ 5.625% Fixed | $ | 10.2 | $ | 696.4 | |||
2024 Term Loan @ 5.2% (Floating LIBOR) | 6.3 | 458.3 | |||||
Revolving Credit Facility @ 3.9% (Floating LIBOR) | 3.4 | 179.0 | |||||
Amortization of deferred loan costs and debt discount | 1.3 | ||||||
Other finance obligations and capital leases | 5.3 | 243.5 | |||||
Gain on debt extinguishment | (3.2 | ) | |||||
Other | 0.1 | ||||||
Cash | (10.1 | ) | |||||
Total | $ | 23.4 | $ | 1,567.0 | |||