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Builders FirstSource Reports Third Quarter 2010 Results

Statements in this news release and the schedules hereto which are not purely historical facts or which necessarily depend upon future events, including statements about the impact of 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   Nine months ended 
  September 30, September 30,
   2010   2009   2010   2009 
   (in thousands, except per share amounts) 
         
 Sales   $ 180,394  $ 188,865  $ 553,250  $ 523,923
 Cost of sales   144,865  149,473  449,555  411,808
 Gross margin   35,529  39,392  103,695  112,115
         
Selling, general and administrative expenses (includes stock-based compensation expense of $1,097 and $540 for the three months ended in 2010 and 2009, respectively, and $3,217 and $2,521 for the nine months ended in 2010 and 2009, respectively)   47,569  49,260  148,460  151,658
Asset impairments   839  --  839  470
Facility closure costs   411  41  420  1,190
Loss from operations   (13,290)  (9,909)  (46,024)  (41,203)
Interest expense, net   6,910  5,930  24,766  19,558
Loss from continuing operations before income taxes   (20,200)  (15,839)  (70,790)  (60,761)
Income tax (benefit) expense   (525)  110  (995)  2,358
 Loss from continuing operations   (19,675)  (15,949)  (69,795)  (63,119)
Income (loss) from discontinued operations (net of income tax benefit of $0  for the three months and nine months ended in 2010 and 2009, respectively)   (795)  703  (1,100)  (5,309)
 Net loss   $ (20,470)  $ (15,246)  $ (70,895)  $ (68,428)
         
Basic and diluted net loss per share:         
Loss from continuing operations   $ (0.21)  $ (0.41)  $ (0.77)  $ (1.61)
Income (loss) from discontinued operations   (0.01)  0.02  (0.01)  (0.14)
Net loss   $ (0.22)  $ (0.39)  $ (0.78)  $ (1.75)
         
Weighted average common shares:         
Basic and diluted   94,895  39,179  90,589  39,114
         
 
 BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES 
 Sales by Product Category 
 (unaudited) 
         
   Three months ended September 30, 
   2010   2009 
   (in thousands) 
         
 Prefabricated components   $ 36,283 20.1%  $ 36,479 19.3%
 Windows & doors   40,923 22.7%  44,728 23.7%
 Lumber & lumber sheet goods   50,053 27.7%  46,611 24.7%
 Millwork   19,605 10.9%  20,545 10.9%
 Other building products & services   33,530 18.6%  40,502 21.4%
 Total sales   $ 180,394 100.0%  $ 188,865 100.0%
         
   Nine months ended September 30, 
   2010   2009 
   (in thousands) 
         
 Prefabricated components   $ 109,434 19.8%  $ 100,559 19.2%
 Windows & doors   124,308 22.5%  127,658 24.4%
 Lumber & lumber sheet goods   160,640 29.0%  125,018 23.9%
 Millwork   59,180 10.7%  55,883 10.6%
 Other building products & services   99,688 18.0%  114,805 21.9%
 Total sales   $ 553,250 100.0%  $ 523,923 100.0%
         
 
 BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES 
 Condensed Consolidated Balance Sheets 
 (unaudited) 
     
     
   September 30,   December 31, 
   2010   2009 
   (in thousands, except per share amounts) 
     
 ASSETS     
Current assets:     
Cash and cash equivalents   $ 121,413  $ 84,098
Trade accounts receivable, less allowance of $3,391 and $4,883 at  September 30, 2010 and December 31, 2009, respectively   67,960  60,723
Other receivables   3,794  39,758
Inventories   58,164  48,022
Other current assets   9,479  7,741
Total current assets   260,810  240,342
Property, plant and equipment, net   60,077  64,025
Goodwill   111,193  111,193
Other assets, net   10,197  19,391
Total assets   $ 442,277  $ 434,951
     
LIABILITIES AND STOCKHOLDERS' EQUITY     
Current liabilities:     
Accounts payable   $ 45,627  $ 39,570
Accrued liabilities   31,796  28,923
Current maturities of long-term debt   51  48
Total current liabilities   77,474  68,541
Long-term debt, net of current maturities   169,063  299,135
Other long-term liabilities   13,200  20,328
Total liabilities   259,737  388,004
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; 96,872  and 36,347 shares issued and outstanding at September 30, 2010 and  December 31, 2009, respectively   949  363
Additional paid-in capital   354,103  150,240
Accumulated deficit   (169,868)  (98,973)
Accumulated other comprehensive loss   (2,644)  (4,683)
Total stockholders' equity   182,540  46,947
Total liabilities and stockholders' equity   $ 442,277  $ 434,951
     
 BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES 
 Condensed Consolidated Statements of Cash Flows 
 (unaudited) 
     
     
   Nine months ended September 30, 
   2010   2009 
   (in thousands) 
Cash flows from operating activities:    
Net loss  $ (70,895)  $ (68,428)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:    
Depreciation and amortization  11,668  13,882
Asset impairments  839  470
Amortization of deferred loan costs  5,055  3,134
Deferred income taxes  (1,091)  302
Bad debt expense  650  1,656
Net non-cash (income) expense from discontinued operations  (3)  732
Stock compensation expense  3,217  2,521
Net gain on sales of assets  (162)  (525)
Changes in assets and liabilities:    
Receivables  28,081  42,035
Inventories  (10,142)  14,080
Other current assets  (1,738)  58
Other assets and liabilities  290  (2,669)
Accounts payable  6,057  11,133
Accrued expenses  4,048  (8,646)
Net cash (used in) provided by operating activities  (24,126)  9,735
     
Cash flows from investing activities:    
Purchases of property, plant and equipment  (8,183)  (1,976)
Proceeds from sale of property, plant and equipment  355  1,702
Net cash used in investing activities  (7,828)  (274)
     
Cash flows from financing activities:    
Payments under revolving credit facility  --   (20,000)
Payments of long-term debt and other loans  (105,176)  (32)
Proceeds from rights offering  180,107  -- 
Payments of recapitalization costs  (5,631)  -- 
Exercise of stock options  --   123
Repurchase of common stock  (31)  (126)
Net cash provided by (used in) financing activities  69,269  (20,035)
     
Net change in cash and cash equivalents  37,315  (10,574)
Cash and cash equivalents at beginning of period  84,098  106,891
Cash and cash equivalents at end of period  $ 121,413  $ 96,317
     
 
 BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES 
 Reconciliation of Non-GAAP Financial Measures to their GAAP Equivalents 
 (unaudited) 
     
Note:  The company provided a detailed explanation of this non-GAAP financial measure in its Form 8-k filed with the Securities and Exchange Commission on October 21, 2010.    
     
   Three months ended 
  September 30,
   2010   2009 
   (in thousands) 
Reconciliation to Adjusted EBITDA:     
Net loss   $ (20,470)  $ (15,246)
Reconciling items:     
Depreciation and amortization expense   3,852  4,359
Interest expense, net   6,910  5,930
Income tax (benefit) expense   (525)  110
(Income) loss from discontinued operations, net of tax   795  (703)
Asset impairments   839  --
Facility closure costs   411  41
Litigation settlement   (1,238)  --
Stock compensation expense   1,097  540
Other   33  123
Adjusted EBITDA   $ (8,296)  $ (4,846)
     
Adjusted EBITDA as a percent of sales  -4.6% -2.6%
     
CONTACT:  Builders FirstSource, Inc.
          M. Chad Crow, Senior Vice President
           and Chief Financial Officer
          (214) 880-3585

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