GlobeNewswire
2012-07-20 31.7% Sales Increase - First Positive EBITDA Quarter Since
2007
DALLAS, July 19, 2012 (GLOBE NEWSWIRE) -- Builders FirstSource, Inc.
(Nasdaq:BLDR), a leading supplier and manufacturer of structural and
related building products for residential new construction in the
United States, today reported its results for the second quarter ended
June 30, 2012.
Second Quarter Financial Highlights (unaudited)
Second
Quarter Diluted Second Quarter Diluted
2012 Per Share 2011 Per Share
-------------------------- -------------- ---------------------------- --------------
Sales $ 271.9 million $ 206.4 million
Loss from continuing
operations $(12.0) million $(0.13) $(15.4) million $(0.16)
Included in the calculation
of loss from continuing
operations:
Warrant fair value
adjustment $ 0.6 million $ 0.01 $0.0 million $ 0.00
Facility closure costs $ 0.1 million $ 0.00 $1.9 million $ 0.01
Tax valuation allowance $ 4.3 million $ 0.05 $6.8 million $ 0.07
Adjusted loss from
continuing operations* $(7.1) million $(0.07) $(0.08)
============== $(7.4) million ==============
Adjusted EBITDA* $2.1 million $(1.3) million
========================== ============================
* See reconciliation attached.
"We delivered our best operating performance in nearly five years,
reporting positive Adjusted EBITDA of $2.1 million for the second
quarter, and improving to break-even Adjusted EBITDA June
year-to-date," said Floyd Sherman, Builders FirstSource Chief Executive
Officer. "Our second quarter sales grew 31.7 percent compared to the
second quarter of 2011. Over the same time period, actual single-family
housing starts in the South Region increased 21.3 percent while
single-family units under construction increased 1.5 percent. Our
topline growth far exceeded the increase in residential construction
activity, and we met our primary goal for the quarter of getting back
to positive EBITDA."
Mr. Sherman added, "The broad-based housing recovery that began in the
latter half of 2011 continues, though moderately paced. At the same
time, however, we are seeing meaningful improvements in our financial
results as we continue to grow market share, leverage our strong
competitive position, and provide first-class customer service."
Commenting on the second quarter financial results, Chad Crow, Builders
FirstSource Senior Vice President and Chief Financial Officer, added,
"I am extremely pleased with our sales growth and the fact that we
achieved positive EBITDA. It was, however, a difficult quarter for
gross margins as higher than expected sales volume, combined with
roughly 16 percent commodity lumber price inflation, forced us to
replace inventory during the latter half of the quarter at higher
costs, with limited ability to adjust intra-quarter customer pricing."
Mr. Crow continued, "Our most important goal for the quarter, however,
was to get back to positive EBITDA. We achieved our goal by growing
sales and generating the incremental gross profit dollars necessary to
accomplish this significant financial objective. Congratulations to all
our employees for reaching this important milestone in our journey back
to profitability."
Second Quarter 2012 Results Compared to Second Quarter 2011
(See accompanying financial schedules for full financial details and
reconciliations of Non-GAAP financial measures to their GAAP
equivalents.)
-- Sales were $271.9 million compared to $206.4 million last year, an
increase of $65.5 million, or 31.7 percent. Our sales increase was
primarily attributable to increased sales volume.
-- Gross margin percentage was 19.7 percent, down from 20.7 percent, a 1.0
percentage point decrease. Specifically, our gross margin decreased 1.7
percentage points due to commodity lumber inflation relative to customer
pricing commitments, which was offset somewhat by a 0.7 percentage point
gross margin improvement due to increased sales volume.
-- Selling, general and administrative ("SG&A") expenses increased $6.0
million, or 12.2 percent. However, as a percentage of sales, SG&A
expense decreased from 23.7 percent in the second quarter of 2011, to
20.2 percent in 2012. Salaries and benefits expense, excluding stock
compensation expense, was $34.0 million, an increase of $6.0 million,
primarily related to higher sales commissions and additional staffing
needs to service the increased sales volume.
-- The company recorded $0.1 million of facility closure costs during the
second quarter of 2012. During the second quarter of 2011, the company
recorded $1.9 million of facility closure costs primarily related to the
closure of a distribution facility in Georgia.
-- Interest expense was $10.5 million, an increase of $4.8 million from the
second quarter of 2011. The increase was primarily due to interest
associated with the company's new term loan combined with a $0.6
million, non-cash, fair value adjustment related to stock warrants
issued in connection with the term loan. These increases were partially
offset by the expiration of our interest rate swaps during the second
quarter of 2011.
-- The company recorded $0.1 million of income tax expense in the second
quarter of 2012, compared to $1.7 million in the second quarter of 2011.
The company recorded an after-tax, non-cash tax valuation allowance of
$4.3 million and $6.8 million in 2012 and 2011, respectively, related to
its net deferred tax assets. Absent this valuation allowance, the
effective tax rate would have been 34.9 percent and 37.5 percent in 2012
and 2011, respectively. As of the end of the second quarter of 2012, the
company's gross federal income tax net operating loss available for
carryforward was $212.3 million.
-- Loss from continuing operations was $12.0 million, or $0.13 loss per
diluted share, compared to $15.4 million, or $0.16 loss per diluted
share in the second quarter of 2011. Excluding the fair value adjustment
for stock warrants, facility closure costs and the tax valuation
allowance, loss from continuing operations per diluted share was $0.07.
For the second quarter of 2011, loss from continuing operations per
diluted share was $0.08, when excluding facility closure costs and the
tax valuation allowance.
-- Net loss for the second quarter of 2012 was $12.1 million, or $0.13 loss
per diluted share, compared to net loss of $15.5 million, or $0.16 loss
per diluted share, in the second quarter of 2011.
-- Diluted weighted average shares outstanding were 95.4 million in the
second quarter of 2012 compared to 94.9 million in the same quarter of
2011.
-- Adjusted EBITDA was $2.1 million in the second quarter of 2012, compared
to a loss of $1.3 million last year. See reconciliation attached.
Liquidity and Capital Resources
-- Liquidity at June 30, 2012 was approximately $70.1 million, representing
$105.1 million of cash reduced by the $35.0 million minimum cash
requirement in our term loan.
-- In addition to the $105.1 million of cash, the company had $14.4 million
in restricted cash at June 30, 2012, of which $1.8 million was included
in long-term assets. Restricted cash consists of $13.5 million used to
collateralize letters of credit outstanding under the company's letter
of credit facility and $0.9 million used as collateral for other
casualty insurance obligations.
-- Operating cash flow was negative $22.9 million compared to negative
$13.4 million for the second quarter of 2011, primarily related to
working capital requirements driven by higher sales.
-- Capital expenditures in the second quarter of 2012 were $2.2 million,
compared to $1.1 million in the second quarter of 2011. This increase is
primarily due to capital expenditures relating to capacity expansion of
our Houston, TX window plant and improvements to our two new facilities
in Austin, TX and Clarksville, TN.
Regarding the company's liquidity, Mr. Crow said, "Of the $24.5 million
of cash used in the second quarter, $15.4 million was due to an
increase in working capital and $2.2 million related to capital
expenditures. The remaining $6.9 million was cash used for operations
and cash interest. As of the end of June, our liquidity was in line
with expectations and our cash usage for fiscal 2012 is still expected
to be in the range of $45 - $55 million."
Outlook
Mr. Sherman concluded, "We made significant strides during the first
half of 2012, the result of our employees' efforts over the past
several years positioning the company to take advantage of the improved
housing environment we are finally seeing. We believe we will continue
to see housing gradually recover, which should drive further financial
improvements in our business. Throughout this downturn, we have not
wavered from our commitment to grow market share, improve operating
efficiencies and conserve capital. It is extremely gratifying to see
the hard work and dedication of all our employees translating to
improved financial results."
Conference Call
Builders FirstSource will host a conference call Friday, July 20, 2012,
at 10:00 a.m. Central Time (CT) and will simultaneously broadcast it
live over the Internet. To participate in the teleconference, please
dial into the call a few minutes before the start time: 888-542-1193
(U.S. and Canada) and 719-325-2330 (international). A replay of the
call will be available from 3:00 p.m. through July 25, 2012. To access
the replay, please dial 888-203-1112 (U.S. and Canada) and 719-457-0820
(international). Please refer to pass code 1248841. To access the
webcast, go to www.bldr.com and click on "Investors." The online
archive of the webcast will be available for approximately 90 days.
About Builders FirstSource
Headquartered in Dallas, Texas, Builders FirstSource is a leading
supplier and manufacturer of structural and related building products
for residential new construction. The company operates 53 distribution
centers and 44 manufacturing facilities in 9 states, principally in the
southern and eastern United States. Manufacturing facilities include
plants that manufacture roof and floor trusses, wall panels, stairs,
aluminum and vinyl windows, custom millwork and pre-hung doors.
Builders FirstSource also distributes windows, interior and exterior
doors, dimensional lumber and lumber sheet goods, millwork and other
building products. For more information about Builders FirstSource,
visit the company's website at www.bldr.com.
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, plans to reduce
costs, forecasted financial performance or other statements about
anticipations, beliefs, expectations, hopes, intentions or strategies
for the future, may be forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. Readers
are cautioned not to place undue reliance on forward-looking
statements. All forward-looking statements are based upon information
available to Builders FirstSource, Inc. on the date this release was
submitted. Builders FirstSource, Inc. undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. Any
forward-looking statements involve risks and uncertainties that could
cause actual events or results to differ materially from the events or
results described in the forward-looking statements, including risks or
uncertainties related to the Company's growth strategies, including
gaining market share, or the Company's revenues and operating results
being highly dependent on, among other things, the homebuilding
industry, lumber prices and the economy. Builders FirstSource, Inc. may
not succeed in addressing these and other risks. Further information
regarding factors that could affect our financial and other results can
be found in the risk factors section of Builders FirstSource, Inc.'s
most recent annual report on Form 10-K filed with the Securities and
Exchange Commission. Consequently, all forward-looking statements in
this release are qualified by the factors, risks and uncertainties
contained therein.
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
Three months ended Six months ended
June 30, June 30,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
(in thousands, except per share amounts)
Sales $ 271,919 $ 206,393 $ 491,308 $ 369,222
Cost of sales 218,255 163,590 392,525 294,986
----------- ----------- ----------- -----------
Gross margin 53,664 42,803 98,783 74,236
Selling, general and administrative
expenses (includes stock-based
compensation expense of $922 and $929
for the three months ended in 2012
and 2011, respectively, and $1,725
and $1,980 for the six months ended
in 2012 and 2011, respectively.) 54,960 48,965 105,793 95,666
Facility closure costs 76 1,882 204 1,904
----------- ----------- ----------- -----------
Loss from operations (1,372) (8,044) (7,214) (23,334)
Interest expense, net 10,461 5,665 23,566 11,540
----------- ----------- ----------- -----------
Loss from continuing operations
before income taxes (11,833) (13,709) (30,780) (34,874)
Income tax expense 144 1,666 318 1,649
----------- ----------- ----------- -----------
Loss from continuing operations (11,977) (15,375) (31,098) (36,523)
Loss from discontinued operations (net
of income tax expense of $0 in 2012
and 2011, respectively) (78) (109) (145) (210)
----------- ----------- ----------- -----------
Net loss $ (12,055) $ (15,484) $ (31,243) $ (36,733)
=========== =========== =========== ===========
Basic and diluted net loss per share:
Loss from continuing operations $ (0.13) $ (0.16) $ (0.33) $ (0.39)
Loss from discontinued operations (0.00) (0.00) (0.00) (0.00)
----------- ----------- ----------- -----------
Net loss $ (0.13) $ (0.16) $ (0.33) $ (0.39)
=========== =========== =========== ===========
Weighted average common shares:
Basic and diluted 95,427 94,905 95,344 94,905
=========== =========== =========== ===========
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Sales by Product Category
(unaudited)
Three months ended June 30,
--------------------------------------
2012 2011
------------------ ------------------
(in thousands)
Prefabricated components $ 51,232 18.8% $ 40,227 19.5%
Windows & doors 59,294 21.8% 46,577 22.6%
Lumber & lumber sheet goods 87,942 32.4% 60,739 29.4%
Millwork 26,394 9.7% 21,552 10.4%
Other building products &
services 47,057 17.3% 37,298 18.1%
---------- ------ ---------- ------
Total sales $ 271,919 100.0% $ 206,393 100.0%
========== ====== ========== ======
Six months ended June 30,
--------------------------------------
2012 2011
------------------ ------------------
(in thousands)
Prefabricated components $ 94,681 19.3% $ 71,010 19.2%
Windows & doors 109,020 22.2% 84,842 23.0%
Lumber & lumber sheet goods 154,372 31.4% 108,849 29.5%
Millwork 47,797 9.7% 39,243 10.6%
Other building products &
services 85,438 17.4% 65,278 17.7%
---------- ------ ---------- ------
Total sales $ 491,308 100.0% $ 369,222 100.0%
========== ====== ========== ======
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
December
June 30, 31,
2012
---------- 2011
(in thousands, except
per share amounts)
ASSETS
Current assets:
Cash and cash equivalents $ 105,090 $ 146,833
Restricted cash 12,633 13,229
Accounts receivable, less
allowance of $2,403 and
$2,138 at
June 30, 2012 and December 31,
2011, respectively 113,635 76,429
Inventories 91,035 73,327
Other current assets 9,174 9,843
---------- ----------
Total current assets 331,567 319,661
Property, plant and equipment,
net 47,107 48,224
Goodwill 111,193 111,193
Other assets, net 9,230 9,725
---------- ----------
Total assets $ 499,097 $ 488,803
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 79,528 $ 48,618
Accrued liabilities 29,980 25,183
Current maturities of
long-term debt 57 54
---------- ----------
Total current liabilities 109,565 73,855
Long-term debt, net of current
maturities 298,094 297,455
Other long-term liabilities 20,130 16,269
---------- ----------
Total liabilities 427,789 387,579
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par
value, 10,000 shares
authorized; zero shares
issued and outstanding -- --
Common stock, $0.01 par value,
200,000 shares authorized;
96,690 and 96,806 shares
issued and outstanding at
June 30, 2012 and December
31, 2011, respectively 954 950
Additional paid-in capital 361,073 359,750
Accumulated deficit (290,719) (259,476)
---------- ----------
Total stockholders' equity 71,308 101,224
---------- ----------
Total liabilities and
stockholders' equity $ 499,097 $ 488,803
========== ==========
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
Six months ended June 30,
--------------------------------------------------
2012 2011
------------------------- -----------------------
(in thousands)
Cash flows from operating activities:
Net loss $ (31,243) $ (36,733)
Adjustments to reconcile net loss to
net cash
used in operating activities:
Depreciation and amortization 5,341 7,205
Amortization of deferred loan costs 341 419
Amortization of debt discount 668 --
Fair value adjustment of stock
warrants 3,726 --
Deferred income taxes 226 1,566
Bad debt expense 167 74
Stock compensation expense 1,725 1,980
Net gain on sale of assets (54) (199)
Changes in assets and liabilities:
Receivables (37,373) (25,319)
Inventories (17,708) (5,660)
Other current assets 669 694
Other assets and liabilities (857) 675
Accounts payable 30,910 14,888
Accrued liabilities 5,685 1,646
------------------------- -----------------------
Net cash used in operating
activities (37,777) (38,764)
------------------------- -----------------------
Cash flows from investing activities:
Purchases of property, plant and
equipment (3,988) (1,635)
Proceeds from sale of property, plant
and equipment 58 295
Decrease in restricted cash 675 --
------------------------- -----------------------
Net cash used in investing
activities (3,255) (1,340)
------------------------- -----------------------
Cash flows from financing activities:
Payments of long-term debt and other
loans (26) (25)
Deferred loan costs (287) --
Exercise of stock options 98 --
Repurchase of common stock (496) (2)
------------------------- -----------------------
Net cash used in financing
activities (711) (27)
------------------------- -----------------------
Net change in cash and cash equivalents (41,743) (40,131)
Cash and cash equivalents at beginning
of period 146,833 103,234
------------------------- -----------------------
Cash and cash equivalents at end of
period $ 105,090 $ 63,103
========================= =======================
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Supplemental Interest Expense Information
(unaudited - dollars in thousands)
Three months ended Six months ended
June 30, June 30,
------------------- --------------------
2012 2011 2012 2011
--------- -------- --------- ---------
Detail of Interest Expense:
Term loan $ 4,651 $ -- $ 9,302 $ --
Floating rate notes 4,540 4,626 9,082 9,177
Credit facility 9 310 17 616
Change in fair value of stock
warrants * 578 -- 3,726 --
Amortization of debt discount * 339 -- 667 --
Amortization of deferred loan costs
* 170 209 341 419
Other 174 520 431 1,328
--------- -------- --------- ---------
Interest expense, net $ 10,461 $ 5,665 $ 23,566 $ 11,540
========= ======== ========= =========
* Non-cash item
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to their GAAP Equivalents
(unaudited - dollars in thousands)
Note: The company provided detailed explanations of these non-GAAP financial measures
in its Form 8-K filed with the Securities and Exchange Commission on July 19, 2012.
Three months ended
June 30,
------------------------
2012 2011
----------- -----------
Reconciliation to Adjusted EBITDA:
Net loss $ (12,055) $ (15,484)
Reconciling items:
Depreciation and amortization
expense 2,491 3,520
Interest expense, net 10,461 5,665
Income tax expense 144 1,666
Loss from discontinued operations,
net of tax 78 109
Facility closure costs 76 1,882
Transaction costs 4 274
Stock compensation expense 922 929
Other (17) 128
----------- -----------
Adjusted EBITDA $ 2,104 $ (1,311)
=========== ===========
Adjusted EBITDA as percentage of
sales 0.8% -0.6%
Three months ended
June 30,
2012 2011
------------------------ --------------------
Pre-Tax Net of Tax Pre-Tax Net of Tax
----------- ----------- ------- -----------
Reconciliation to Adjusted loss from continuing operations:
Loss from continuing operations $ (11,977) $ (15,375)
Reconciling items:
Facility closure costs 76 46 1,882 1,151
Warrant fair value adjustment 578 --
Tax valuation allowance 4,269 6,813
----------- -----------
Adjusted loss from continuing
operations $ (7,084) $ (7,411)
=========== ===========
Weighted average diluted shares
outstanding 95,427 94,905
=========== ===========
Adjusted loss from continuing
operations per diluted share $ (0.07) $ (0.08)
=========== ===========
CONTACT: Chad Crow
Senior Vice President and Chief Financial Officer
Builders FirstSource, Inc.
(214) 880-3585
