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Builders FirstSource Reports Fourth Quarter And Fiscal Year 2010 Results

Stocks in this article: BLDR

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 52 distribution centers and 47 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   Fiscal year ended 
  December 31, December 31,
   2010   2009   2010   2009 
   (in thousands, except per share amounts) 
         
         
 Sales   $ 147,093  $ 153,963  $ 700,343  $ 677,886
 Cost of sales   119,032  123,672  568,587  535,480
 Gross margin   28,061  30,291  131,756  142,406
Selling, general and administrative expenses (includes stock-based compensation expense of $1,091 and $340 for the three months ended in 2010 and 2009, respectively, and $4,308 and $2,861 for the fiscal year ended in 2010 and 2009, respectively)   45,632  49,745  194,092  201,403
 Asset impairments   --  --  839  470
 Facility closure costs   138  10  558  1,200
 Loss from operations   (17,709)  (19,464)  (63,733)  (60,667)
 Interest expense, net   6,906  7,487  31,672  27,045
 Loss from continuing operations before income taxes   (24,615)  (26,951)  (95,405)  (87,712)
 Income tax benefit   (117)  (33,181)  (1,112)  (30,823)
 Income (loss) from continuing operations   (24,498)  6,230  (94,293)  (56,889)
 Income (loss) from discontinued operations (net of income tax benefit of $0       
 in 2010 and 2009, respectively)   (115)  344  (1,215)  (4,965)
 Net Income (loss)   $ (24,613)  $ 6,574  $ (95,508)  $ (61,854)
         
 Basic and diluted net loss per share:         
 Income (loss) from continuing operations   $ (0.26)  $ 0.16  $ (1.03)  $ (1.45)
 Income (loss) from discontinued operations   (0.00)  0.01  (0.01)  (0.13)
 Net Income (loss)   $ (0.26)  $ 0.17  $ (1.04)  $ (1.58)
         
 Weighted average common shares:         
 Basic   94,904  39,458  91,676  39,164
 Diluted   94,904  39,886  91,676  39,164
 
 BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES 
 Sales by Product Category 
 (unaudited) 
         
         
   Three months ended December 31, 
   2010   2009 
   (in thousands)       
         
 Prefabricated components   $ 26,035 17.7%  $ 29,222 19.0%
 Windows & doors   36,771 25.0%  36,294 23.6%
 Lumber & lumber sheet goods   40,805 27.7%  39,609 25.7%
 Millwork   16,663 11.3%  16,915 11.0%
 Other building products & services   26,819 18.3%  31,923 20.7%
 Total sales   $ 147,093 100.0%  $ 153,963 100.0%
         
         
   Fiscal year ended December 31, 
   2010   2009 
   (in thousands)       
         
 Prefabricated components   $ 135,469 19.3%  $ 129,781 19.1%
 Windows & doors   161,079 23.0%  163,952 24.2%
 Lumber & lumber sheet goods   201,445 28.8%  164,627 24.3%
 Millwork   75,843 10.8%  72,798 10.7%
 Other building products & services   126,507 18.1%  146,728 21.7%
 Total sales   $ 700,343 100.0%  $ 677,886 100.0%
 
 
 BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES 
 Condensed Consolidated Balance Sheets 
 (unaudited) 
     
     
   December 31,   December 31, 
   2010   2009 
   (in thousands, except per share amounts) 
     
 ASSETS     
 Current assets:     
 Cash and cash equivalents   $ 103,234  $ 84,098
 Trade accounts receivable, less allowance of $2,444 and $4,883 at  December 31, 2010 and 2009, respectively    55,631  60,723
 Other receivables   4,060  39,758
 Inventories   63,810  48,022
 Other current assets   8,614  7,741
 Total current assets   235,349  240,342
 Property, plant and equipment, net   57,068  64,025
 Goodwill   111,193  111,193
 Other assets, net   9,194  19,391
 Total assets   $ 412,804  $ 434,951
     
 LIABILITIES AND STOCKHOLDERS' EQUITY     
 Current liabilities:     
 Accounts payable   $ 44,866  $ 39,570
 Accrued liabilities   26,284  28,923
 Current maturities of long-term debt   5,301  48
 Total current liabilities   76,451  68,541
 Long-term debt, net of current maturities   163,801  299,135
 Other long-term liabilities   13,047  20,328
 Total liabilities   253,299  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; 96,769 and 36,347 shares issued and outstanding at December 31, 2010 and 2009, respectively   949  363
 Additional paid-in capital   355,194  150,240
 Accumulated deficit   (194,481)  (98,973)
 Accumulated other comprehensive loss   (2,157)  (4,683)
 Total stockholders' equity   159,505  46,947
 Total liabilities and stockholders' equity   $ 412,804  $ 434,951
 
 
 BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES 
 Condensed Consolidated Statements of Cash Flows 
 (unaudited) 
     
     
   Fiscal year ended December 31, 
   2010   2009 
   (in thousands) 
Cash flows from operating activities:    
Net loss  $ (95,508)  $ (61,854)
Adjustments to reconcile net loss to net cash    
 used in operating activities:    
 Depreciation and amortization  15,433  17,915
 Asset impairments  839  470
 Amortization of deferred loan costs  5,955  3,763
 Deferred income taxes  (1,235)  411
 Bad debt expense  792  2,711
 Net non-cash (income) expense from discontinued operations  (3)  724
 Stock compensation expense  4,308  2,861
 Net gain on sales of assets  (258)  (601)
Changes in assets and liabilities:    
 Receivables  40,001  23,030
 Inventories  (15,788)  20,846
 Other current assets  (873)  617
 Other assets and liabilities  (280)  (3,555)
 Accounts payable  5,296  4,156
 Accrued expenses  (399)  (14,240)
 Net cash used in operating activities  (41,720)  (2,746)
     
Cash flows from investing activities:    
Purchases of property, plant and equipment  (8,953)  (2,103)
Proceeds from sale of property, plant and equipment  602  1,986
 Net cash used in investing activities  (8,351)  (117)
     
Cash flows from financing activities:    
Payments under revolving credit facility  --   (20,000)
Payments of long-term debt and other loans  (105,188)  (43)
Deferred loan costs  (50)  -- 
Proceeds from rights offering  180,107  -- 
Payments of recapitalization costs  (5,631)  (620)
Exercise of stock options  --   859
Repurchase of common stock  (31)  (126)
 Net cash provided by (used in) financing activities  69,207  (19,930)
     
Net change in cash and cash equivalents  19,136  (22,793)
Cash and cash equivalents at beginning of period  84,098  106,891
Cash and cash equivalents at end of period  $ 103,234  $ 84,098
 
 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 February 17, 2011.         
         
         
   Three months ended   Fiscal year ended 
  December 31, December 31,
   2010   2009   2010   2009 
         
 Reconciliation to Adjusted EBITDA:         
 Net Income (loss)   $ (24,613)  $ 6,574  $ (95,508)  $ (61,854)
 Reconciling items:         
 Depreciation and amortization expense   3,765  4,033  15,433  17,915
 Interest expense, net   6,906  7,487  31,672  27,045
 Income tax benefit   (117)  (33,181)  (1,112)  (30,823)
 Net gain on sale of assets   (96)  (76)  (258)  (601)
 (Income) loss from discontinued operations, net of tax   115  (344)  1,215  4,965
 Asset impairments   --  --  839  470
 Facility closure costs   138  10  558  1,200
 Severance   348  43  499  583
 Litigation settlement   --  --  (1,238)  --
 Recapitalization costs   --  2,958  (43)  3,186
 Stock compensation expense   1,091  340  4,308  2,861
 Adjusted EBITDA   $ (12,463)  $ (12,156)  $ (43,635)  $ (35,053)
         
 Adjusted EBITDA as percentage of sales  -8.5% -7.9% -6.2% -5.2%
         
         
   Three months ended   Three months ended 
  December 31, 2010 December 31, 2009
   Pre-Tax   Net of Tax   Pre-Tax   Net of Tax 
         
 Reconciliation to Adjusted loss from continuing operations:         
 Income (loss) from continuing operations     $ (24,498)    $ 6,230
 Reconciling items:         
 Debt issuance cost write-offs  643  418 0  --
 Recapitalization costs  0  -- 2,958  1,808
 Tax valuation allowance     9,448    (21,130)
 Adjusted loss from continuing operations     $ (14,632)    $ (13,092)
         
 Weighted average diluted shares outstanding     94,904    39,886
         
 Adjusted loss from continuing operations per diluted share     $ (0.15)    $ (0.33)
         
         
   Fiscal year ended   Fiscal year ended 
  December 31, 2010 December 31, 2009
   Pre-Tax   Net of Tax   Pre-Tax   Net of Tax 
         
 Reconciliation to Adjusted loss from continuing operations:         
 Loss from continuing operations     $ (94,293)    $ (56,889)
 Reconciling items:         
 Debt issuance cost write-offs  4,736  3,079 1,220  792
 Recapitalization costs  43  26 3,186  1,948
 Tax valuation allowance     35,393    3,883
 Adjusted loss from continuing operations     $ (55,795)    $ (50,266)
         
 Weighted average diluted shares outstanding     91,676    39,164
         
 Adjusted loss from continuing operations per diluted share     $ (0.61)    $ (1.28)
CONTACT:  M. Chad Crow
          Senior Vice President and Chief Financial Officer
          Builders FirstSource, Inc.
          (214) 880-3585

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