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TheStreet Open House

Builders FirstSource Reports Third Quarter 2012 Results

Stocks in this article: BLDR

Outlook

Concluding, Mr. Sherman added, "We expect the momentum we've achieved from the improvement in the housing industry and our recent market share gains to continue to positively impact our operating results. We remain focused on growing market share and improving our margins in order to drive profitability as the market continues to recover."

Conference Call

Builders FirstSource will host a conference call Friday, October 19, 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: 888-296-4302 (U.S. and Canada) and 719-325-2425 (international).  A replay of the call will be available from 3:00 p.m. through October 24, 2012. To access the replay, please dial 888-203-1112 (U.S. and Canada) and 719-457-0820 (international).  Please refer to pass code 4947290. 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   Nine months ended 
  September 30, September 30,
   2012   2011   2012   2011 
   (in thousands, except per share amounts) 
 Sales   $ 291,780  $ 217,194  $ 783,088  $ 586,416
 Cost of sales   234,067  172,755  626,592  467,741
 Gross margin   57,713  44,439  156,496  118,675
Selling, general and administrative expenses (includes stock-based compensation expense of $947 and $1,665 for the three months ended in 2012 and 2011, respectively, and $2,672 and $3,645 for the nine months ended in 2012 and 2011, respectively.)   58,650  50,200  164,443  145,866
 Facility closure costs   692  115  896  2,019
 Loss from operations   (1,629)  (5,876)  (8,843)  (29,210)
 Interest expense, net   10,618  5,319  34,184  16,859
 Loss from continuing operations before income taxes   (12,247)  (11,195)  (43,027)  (46,069)
 Income tax expense   33  268  351  1,917
 Loss from continuing operations   (12,280)  (11,463)  (43,378)  (47,986)
 Loss from discontinued operations (net of income tax expense of $0 in 2012 and 2011, respectively)   (1,285)  (101)  (1,430)  (311)
 Net loss   $ (13,565)  $ (11,564)  $ (44,808)  $ (48,297)
 Basic and diluted net loss per share:         
 Loss from continuing operations   $ (0.13)  $ (0.12)  $ (0.46)  $ (0.51)
 Loss from discontinued operations   (0.01)  (0.00)  (0.01)  (0.00)
 Net loss   $ (0.14)  $ (0.12)  $ (0.47)  $ (0.51)
 Weighted average common shares:         
 Basic and diluted   95,514  94,976  95,401  94,929
 
 BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES 
 Sales by Product Category 
 (unaudited) 
   Three months ended September 30, 
   2012   2011 
   (in thousands) 
         
 Prefabricated components   $ 56,137 19.2%  $ 41,038 18.9%
 Windows & doors   61,821 21.2%  51,300 23.6%
 Lumber & lumber sheet goods   97,305 33.4%  61,900 28.5%
 Millwork   28,048 9.6%  22,174 10.2%
 Other building products & services   48,469 16.6%  40,782 18.8%
 Total sales   $ 291,780 100.0%  $ 217,194 100.0%
         
   Nine months ended September 30, 
   2012   2011 
   (in thousands) 
         
 Prefabricated components   $ 150,818 19.3%  $ 112,048 19.1%
 Windows & doors   170,841 21.8%  136,142 23.2%
 Lumber & lumber sheet goods   251,677 32.1%  170,749 29.1%
 Millwork   75,845 9.7%  61,417 10.5%
 Other building products & services   133,907 17.1%  106,060 18.1%
 Total sales   $ 783,088 100.0%  $ 586,416 100.0%
 
 BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES 
 Condensed Consolidated Balance Sheets 
 (unaudited) 
     
     
   September 30,   December 31, 
   2012   2011 
   (in thousands, except per share amounts) 
     
 ASSETS     
 Current assets:     
 Cash and cash equivalents   $ 90,675  $ 146,833
 Restricted cash   11,058  13,229
 Accounts receivable, less allowance of $2,747 and $2,138 at September 30, 2012 and December 31, 2011, respectively   123,080  76,429
 Inventories   90,168  73,327
 Other current assets   14,376  9,843
 Total current assets   329,357  319,661
 Property, plant and equipment, net   49,471  48,224
 Goodwill   111,193  111,193
 Other assets, net   8,751  9,725
 Total assets   $ 498,772  $ 488,803
     
 LIABILITIES AND STOCKHOLDERS' EQUITY     
 Current liabilities:     
 Accounts payable   $ 84,173  $ 48,618
 Accrued liabilities   36,346  25,183
 Current maturities of long-term debt   59  54
 Total current liabilities   120,578  73,855
 Long-term debt, net of current maturities   298,433  297,455
 Other long-term liabilities   20,901  16,269
 Total liabilities   439,912  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; 96,813 and 96,806 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively   956  950
 Additional paid-in capital   362,188  359,750
 Accumulated deficit   (304,284)  (259,476)
 Total stockholders' equity   58,860  101,224
 Total liabilities and stockholders' equity   $ 498,772  $ 488,803
 
 BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES 
 Condensed Consolidated Statements of Cash Flows 
 (unaudited) 
     
     
   Nine months ended September 30, 
   2012   2011 
   (in thousands) 
Cash flows from operating activities:    
Net loss  $ (44,808)  $ (48,297)
Adjustments to reconcile net loss to net cash used in operating activities:    
 Depreciation and amortization  8,253  10,569
 Amortization of deferred loan costs  514  628
 Amortization of debt discount  1,022  - 
 Fair value adjustment of stock warrants  4,417  - 
 Deferred income taxes  338  1,692
 Bad debt expense  458  366
 Stock compensation expense  2,672  3,645
 Net gain on sale of assets  (27)  (276)
Changes in assets and liabilities:    
 Receivables  (47,109)  (27,594)
 Inventories  (16,841)  (7,223)
 Other current assets  (4,533)  (2,643)
 Other assets and liabilities  103  340
 Accounts payable  35,555  17,495
 Accrued liabilities  11,140  3,360
 Net cash used in operating activities  (48,846)  (47,938)
     
Cash flows from investing activities:    
Purchases of property, plant and equipment  (9,156)  (2,735)
Proceeds from sale of property, plant and equipment  219  394
Decrease in restricted cash  2,250  - 
 Net cash used in investing activities  (6,687)  (2,341)
     
Cash flows from financing activities:    
Payments of long-term debt and other loans  (39)  (36)
Deferred loan costs  (358)  - 
Exercise of stock options  268  - 
Repurchase of common stock  (496)  (2)
 Net cash used in financing activities  (625)  (38)
     
Net change in cash and cash equivalents  (56,158)  (50,317)
Cash and cash equivalents at beginning of period  146,833  103,234
Cash and cash equivalents at end of period  $ 90,675  $ 52,917
 
 BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES 
 Supplemental Interest Expense Information 
 (unaudited - dollars in thousands) 
         
         
   Three months ended   Nine months ended 
  September 30, September 30,
   2012   2011   2012   2011 
         
 Detail of Interest Expense:         
 Term loan   $ 4,702  $ -  $ 14,004  $ -
 Floating rate notes   4,541  4,625  13,623  13,802
 Credit facility   10  316  27  932
 Change in fair value of stock warrants *   691  -  4,417 -
 Amortization of debt discount *   355  -  1,022  -
 Amortization of deferred loan costs *   174  209  515  628
 Other   145  169  576  1,497
 Interest expense, net   $ 10,618  $ 5,319  $ 34,184  $ 16,859
         
 * 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 October 18, 2012.  
         
   Three months ended     
  September 30,    
   2012   2011     
         
 Reconciliation to Adjusted EBITDA:       
 Net loss   $ (13,565)  $ (11,564)    
 Reconciling items:         
 Depreciation and amortization expense   2,912  3,364    
 Interest expense, net   10,618  5,319    
 Income tax expense   33  268    
 Loss from discontinued operations, net of tax   1,285  101    
 Facility closure costs   692  115    
 Stock compensation expense   947  1,665    
 Other   38  (9)    
 Adjusted EBITDA   $ 2,960  $ (741)    
 Adjusted EBITDA as percentage of sales  1.0% -0.3%    
         
   Three months ended 
   September 30, 
  2012 2011  
   Pre-Tax   Net of Tax   Pre-Tax   Net of Tax 
         
 Reconciliation to Adjusted loss from continuing operations:       
 Loss from continuing operations     $ (12,280)    $ (11,463)
 Reconciling items:         
 Facility closure costs  692  423 115  70
 Warrant fair value adjustment     691    --
 Tax valuation allowance     4,633    4,658
 Adjusted loss from continuing operations   $ (6,533)    $ (6,735)
 Weighted average diluted shares outstanding   95,514    94,976
 Adjusted loss from continuing operations per diluted share   $ (0.07)    $ (0.07)
CONTACT: Chad Crow
         Senior Vice President and Chief Financial Officer
         Builders FirstSource, Inc.
         (214) 880-3585

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