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 2012 |
Diluted Per Share |
Second Quarter 2011 |
Diluted 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) |
$(7.4) million |
$(0.08) |
|
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) | ||
| June 30, | December 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) | ||