February 19, 2015

Builders FirstSource Reports Fourth Quarter and Fiscal Year 2014 Results

Fiscal Year 2014 Sales Increase 7.7 Percent to $1.6 Billion

DALLAS, Feb. 19, 2015 (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 fourth quarter and fiscal year ended December 31, 2014.

Fourth quarter highlights include the following (see financial schedules for more information, including non-GAAP reconciliations):

  • Fourth quarter 2014 sales increased to $396.7 million, up 7.5%, compared to $369.1 million for the fourth quarter of 2013.
     
  • Gross margin percentage was 22.8 percent, up from 22.4 percent in the fourth quarter of 2013, and up from 22.5 percent in the third quarter of 2014.
     
  • Adjusted EBITDA was $17.7 million, compared to $16.2 million for the fourth quarter of 2013.
     
  • Completed two additional acquisitions within the state of Texas - Trim Tech of Austin and Empire Truss, Ltd. These mark the fourth and fifth acquisitions by the company since mid-2014. Also during the current quarter, we opened a new distribution facility in north Houston.
     
  • Total liquidity at December 31, 2014 was $147.2 million, including $17.8 million of cash and $129.4 million in borrowing availability under our revolver.

Commenting on the company's results, Builders FirstSource CEO Floyd Sherman said, "Though the level of new construction activity was not what we expected in 2014, we were still able to deliver profitable top-line growth while also expanding our product offerings and customer base via multiple acquisitions within very attractive housing markets. We reported sales of approximately $397 million for the fourth quarter of 2014, up 7.5 percent from a year ago. Excluding the impact of recent acquisitions, our fourth quarter sales increased 3.0 percent. Quarter-over-quarter commodity price fluctuations had minimal impact on our sales."

Continuing, Mr. Sherman added, "For fiscal 2014, we reported sales of approximately $1.6 billion, up 7.7 percent over 2013. Excluding the impact of recent acquisitions, our sales for fiscal 2014 increased 5.8 percent compared to last year, as sales volume grew 7.9 percent before a 2.1 percent negative impact of commodity price deflation on our sales. From a single-family housing starts perspective, the Census Bureau reported 2014 actual starts in the South Region, which encompasses all of our markets, increased 6.0 percent compared to 2013."

Chad Crow, Builders FirstSource President, COO and CFO, added, "We produced another solid quarter of gross margin expansion, ending the fourth quarter of 2014 with a gross margin of 22.8 percent. Increasing our gross margins as we continued to grow our top-line was a focal point for us this year, and I'm very pleased to say we improved our margin percentage sequentially each quarter of 2014, resulting in an 80 basis point increase year-over-year. Our cash provided by operating activities increased $26.6 million for fiscal year 2014 when compared to 2013, excluding the $48.4 million of non-recurring interest charges related to our 2013 refinancing."

Fourth Quarter 2014 Results Compared to Fourth Quarter 2013

(See accompanying financial schedules for full financial details and reconciliations of Non-GAAP financial measures to their GAAP equivalents.)

  • Sales were $396.7 million, an increase of $27.6 million or 7.5 percent. Excluding the impact of recent acquisitions, sales increased 3.0 percent largely due to higher sales volume, as commodity price fluctuations had a minimal impact on our sales.
     
  • Gross margin percentage was 22.8 percent, up from 22.4 percent last year. Our gross margin percent increased largely due to improved customer pricing versus the fourth quarter of 2013.  
     
  • Selling, general and administrative ("SG&A") expenses increased $9.4 million, or 13.5 percent. As a percentage of sales, SG&A expense increased to 19.9 percent compared to 18.8 percent. Of the $9.4 million increase in SG&A, $1.3 million related to stock compensation expense and $1.0 million related to depreciation and amortization, both of which are non-cash items. The remaining $7.1 million increase was largely due to investments made in employees and equipment to support current and future sales growth, along with expenses associated with acquisitions.
     
  • Interest expense was $8.6 million for the fourth quarters of 2014 and 2013, respectively. See supplemental schedule attached.
     
  • We recorded $0.5 million of income tax expense compared to $0.2 million in the fourth quarter of 2013. We recorded a reduction of the after-tax, non-cash valuation allowance on our net deferred tax assets of $0.9 million and $2.6 million in the fourth quarters of 2014 and 2013, respectively. As of December 31, 2014, our gross federal income tax net operating loss available for carry-forward was approximately $245 million.
     
  • Income from continuing operations was $2.5 million, or $0.02 per diluted share, compared to $4.6 million, or $0.05 per diluted share.
     
  • Adjusted EBITDA was $17.7 million, or 4.5 percent of sales, compared to $16.2 million, or 4.4 percent of sales. See reconciliation attached.

Liquidity and Capital Resources

  • Total liquidity at December 31, 2014 was $147.2 million, including $17.8 million of cash and $129.4 million in borrowing availability under our revolver. We had no new borrowings under our revolver during the quarter, and had $30 million in outstanding borrowings as of December 31, 2014.
     
  • Operating cash flow was ($3.0) million for the fourth quarter of 2014, compared to $8.6 million in the fourth quarter of 2013. The primary difference relates to a $12.3 million increase in our working capital in the current quarter, while working capital was flat in the fourth quarter of 2013.
     
  • During the fourth quarter of 2014, we used approximately $36.2 million of cash on hand to acquire Trim Tech of Austin and Empire Truss, Ltd.
     
  • Capital expenditures were $11.2 million for the fourth quarter of 2014, an increase of $5.5 million over the same quarter of 2013, and primarily relate to the relocation of an existing facility in San Antonio and the opening of a new facility in north Houston.  

Outlook

Concluding, Mr. Sherman added, "Our outlook is for a steady recovery in the housing market due to factors such as continued job growth, favorable mortgage rates and lending guidelines that appear to be easing. As the economy expands and the housing market moves back towards a stronger level of activity, our focus will remain on profitably growing our revenues while continuing to look for ways to gain share, either organically or through acquisitions, and improve our operating margins."

Conference Call

Builders FirstSource will host a conference call Friday, February 20, 2015 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: 888-819-8045 (U.S. and Canada) and 913-312-0386 (international). A replay of the call will be available at 3:00 p.m. CT through February 25th. To access the replay, please dial 888-203-1112 (U.S. and Canada) and 719-457-0820 (international) and refer to pass code 2277608. 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

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 56 distribution centers and 56 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, 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.

Financial Schedules to Follow

 
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
         
 Three months ended
December 31,
Fiscal year ended
December 31,
 2014201320142013
  (in thousands, except per share amounts)
Sales  $ 396,737  $ 369,111  $ 1,604,096  $ 1,489,892
Cost of sales  306,101  286,264  1,247,099  1,169,972
Gross margin  90,636  82,847  356,997  319,920
Selling, general and administrative expenses (includes stock-based compensation expense of $2,247 and $960 for the three months ended in 2014 and 2013, respectively, and $6,157 and $4,245 for the fiscal year ended in 2014 and 2013, respectively.)  78,810  69,453  306,508  271,885
Facility closure costs  181  79  471  (7)
Income from operations  11,645  13,315  50,018  48,042
Interest expense, net  8,624  8,555  30,349  89,638
Income (loss) from continuing operations before income taxes  3,021  4,760  19,669  (41,596)
Income tax expense  510  183  1,111  769
Income (loss) from continuing operations  2,511  4,577  18,558  (42,365)
Loss from discontinued operations (net of income tax expense of $0 in 2014 and 2013, respectively)  (90)  (48)  (408)  (326)
Net Income (loss)  $ 2,421  $ 4,529  $ 18,150  $ (42,691)
Basic net income (loss) per share:        
Income (loss) from continuing operations  $ 0.02  $ 0.05  $ 0.19  $ (0.44)
Loss from discontinued operations  (0.00)  (0.00)  (0.00)  (0.00)
Net income (loss)  $ 0.02  $ 0.05  $ 0.19  $ (0.44)
Diluted net income (loss) per share:        
Income (loss) from continuing operations  $ 0.02  $ 0.05  $ 0.18  $ (0.44)
Loss from discontinued operations  (0.00)  (0.00)  (0.00)  (0.00)
Net income (loss)  $ 0.02  $ 0.05  $ 0.18  $ (0.44)
Weighted average common shares:        
Basic  98,167  97,458  98,050  96,449
Diluted  99,805  99,468  100,522  96,449
 
 
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Sales by Product Category
(unaudited)
         
 Three months ended December 31,
 20142013
  (in thousands)
Prefabricated components  $ 79,116 19.9%  $ 72,026 19.5%
Windows & doors  92,035 23.2%  82,775 22.4%
Lumber & lumber sheet goods  121,567 30.7%  123,041 33.3%
Millwork  44,042 11.1%  35,212 9.6%
Other building products & services  59,977 15.1%  56,057 15.2%
Total sales  $ 396,737 100.0%  $ 369,111 100.0%
         
         
         
 Fiscal year ended December 31,
 20142013
  (in thousands)
Prefabricated components  $ 330,852 20.6%  $ 294,008 19.7%
Windows & doors  356,897 22.2%  308,607 20.7%
Lumber & lumber sheet goods  522,655 32.6%  526,633 35.4%
Millwork  160,242 10.0%  136,883 9.2%
Other building products & services  233,450 14.6%  223,761 15.0%
Total sales  $ 1,604,096 100.0%  $ 1,489,892 100.0%
 
 
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
     
 Fiscal year ended December 31,
  2014  2013 
  (in thousands, except per share amounts)
ASSETS    
Current assets:    
Cash and cash equivalents  $ 17,773  $ 54,696
Accounts receivable, less allowance of $3,153 and $3,605 at December 31, 2014 and 2013, respectively  148,352  143,036
Inventories  142,620  123,636
Other current assets  22,795  9,793
Total current assets  331,540  331,161
Property, plant and equipment, net  75,679  49,392
Goodwill  139,774  111,193
Other assets, net  36,072  24,093
Total assets  $ 583,065  $ 515,839
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable  $ 75,868  $ 81,046
Accrued liabilities  65,537  45,310
Current maturities of long-term debt  30,074  67
Total current liabilities  171,479  126,423
Long-term debt, net of current maturities  353,830  353,904
Other long-term liabilities  17,556  20,144
Total liabilities  542,865  500,471
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; 98,226 and 97,905 shares issued and outstanding at December 31, 2014 and 2013, respectively  982  973
Additional paid-in capital  380,091  373,418
Accumulated deficit  (340,873)  (359,023)
Total stockholders' equity  40,200  15,368
Total liabilities and stockholders' equity  $ 583,065  $ 515,839
 
 
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
     
 Fiscal year ended
December 31,
 20142013
  (in thousands)
Cash flows from operating activities:    
Net income (loss)  $ 18,150  $ (42,691)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:    
Depreciation and amortization  9,519  9,305
Amortization and write-off of deferred loan costs  2,432  4,067
Amortization and write-off of debt discount  --  7,794
Fair value adjustment of stock warrants  (456)  1,502
Deferred income taxes  524  917
Bad debt expense  (274)  900
Net non-cash income from discontinued operations  --  (195)
Stock compensation expense  6,157  4,245
Net gain on sale of assets  (114)  (284)
Changes in assets and liabilities:    
Receivables  4,503  (26,531)
Inventories  (13,567)  (14,637)
Other current assets  (3,717)  (177)
Other assets and liabilities  (659)  (1,344)
Accounts payable  (5,178)  1,649
Accrued liabilities  10,173  7,904
Net cash provided by (used in) operating activities  27,493  (47,576)
Cash flows from investing activities:    
Purchases of property, plant and equipment  (25,716)  (15,051)
Proceeds from sale of property, plant and equipment  213  2,592
Cash used for acquisitions, net  (69,337)  --
Decrease in restricted cash  --  13,030
Net cash provided by (used in) investing activities  (94,840)  571
Cash flows from financing activities:    
Borrowings under revolving credit facility  30,000  30,000
Payments under revolving credit facility  --  (30,000)
Proceeds from issuance of long term debt  --  350,000
Payments of long-term debt and other loans  (67)  (364,778)
Payments of deferred loan costs  (34)  (15,634)
Payment of recapitalization costs  --  (37)
Exercise of stock options  1,831  1,754
Repurchase of common stock  (1,306)  (1,036)
Net cash provided by (used in) financing activities  30,424  (29,731)
Net change in cash and cash equivalents  (36,923)  (76,736)
Cash and cash equivalents at beginning of period  54,696  131,432
Cash and cash equivalents at end of period  $ 17,773  $ 54,696
 
 
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Supplemental Interest Expense Information
(unaudited)
         
 Three months ended
December 31,
Fiscal year ended
December 31,
 2014201320142013
  (in thousands)
Detail of Interest Expense:        
Term loan  $ --  $ --  $ --  $ 10,638
Prepayment Penalty - Term Loan  --  --  --  39,475
2021 notes  6,672  6,599  26,688  15,716
2016 notes  --  --  --  9,083
Credit facility  317  206  1,001  598
Change in fair value of stock warrants (1)  865  944  (456)  1,502
Amortization of debt discount (1) (2)  --  --  --  7,794
Amortization of deferred loan costs (1) (3)  616  617  2,432  4,067
Other  154  189  684  765
Interest expense, net  $ 8,624  $ 8,555  $ 30,349  $ 89,638
         
 (1) Non-cash item 
 (2) Includes $6,797 write-off of term loan discount for the fiscal year ended December 31, 2013 
 (3) Includes $2,150 write-off of debt issuance costs related to term loan & 2016 notes for the fiscal year ended December 31, 2013 
 
 
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Reconciliation of 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 Securities and Exchange Commission on February 19, 2015.
 Three months ended
December 31,
Fiscal year ended
December 31,
 2014201320142013
  (in thousands) (in thousands)
Reconciliation to Adjusted EBITDA:        
Net income  $ 2,421  $ 4,529  $ 18,150  $ (42,691)
Reconciling items:        
Depreciation and amortization expense  3,106  1,964  9,519  9,305
Interest expense, net  8,624  8,555  30,349  89,638
Income tax expense  510  183  1,111  769
Loss from discontinued operations, net of tax  90  48  408  326
Facility closure costs  181  79  471  (7)
Stock compensation expense  2,247  960  6,157  4,245
Acquisition cost  360  --  604  --
Other  123  (118)  43  (256)
Adjusted EBITDA  $ 17,662  $ 16,200  $ 66,812  $ 61,329
CONTACT: Chad Crow

         President, COO and CFO

         Builders FirstSource, Inc.

         (214) 880-3585

         

         Marcie Hyder

         Vice President and Corporate Controller

         Builders FirstSource, Inc.

         (214) 880-3551


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