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Builders FirstSource Reports First Quarter 2013 Results

Stocks in this article: BLDR

First Quarter 2013 Results Compared to First Quarter 2012

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

  • Sales were $319.7 million compared to $219.4 million last year, an increase of $100.3 million or 45.7 percent. We estimate sales increased 29.7 percent due to increased volume and 16.0 percent due to price.  
  • Gross margin percentage was 19.5 percent in the current quarter, down from 20.6 percent in the same quarter last year. Our gross margin decreased 1.8 percentage points largely due to commodity lumber inflation during the quarter, which was offset by a 0.7 percentage point gross margin improvement due to increased sales volume.  
  • Selling, general and administrative ("SG&A") expenses increased $10.2 million, or 20.2 percent, in the current quarter. As a percentage of sales, SG&A expense decreased to 19.1 percent in the current quarter, as compared to 23.2 percent in the first quarter of 2012. Our salaries and benefits expense, excluding stock compensation expense, was $37.7 million, or 11.8 percent of sales, in the current quarter compared to $31.1 million, or 14.2 percent of sales, in the first quarter of 2012. Delivery expense increased $1.4 million and other general administrative expense increased $1.2 million, both a result of increased sales volume.  
  • Interest expense was $12.5 million in the current quarter, a decrease of $0.6 million from the first quarter of 2012. The decrease was primarily related to a $2.7 million reduction in the non-cash, fair value adjustment related to stock warrants issued in connection with our term loan, offset by interest on the additional term loan principal borrowed in December 2012.  
  • We recorded $0.3 million of income tax expense in the first quarter of 2013, compared to $0.2 million in the first quarter of 2012. We recorded an after-tax, non-cash valuation allowance of $4.4 million and $7.0 million in the first quarters of 2013 and 2012, respectively, related to our net deferred tax assets. Absent the valuation allowance, the effective tax rate would have been 36.3 percent in both the first quarter of 2013 and 2012. As of the end of the current quarter, the company's gross federal income tax net operating loss available for carry-forward was approximately $245 million.  
  • Loss from continuing operations was $11.6 million, or $0.12 loss per diluted share, compared to $19.1 million, or $0.20 loss per diluted share, in the same quarter last year. Excluding the fair value adjustment for stock warrants and the tax valuation allowance, our loss from continuing operations was $0.07 per diluted share for the current quarter compared to a $0.09 loss per diluted share for the first quarter of 2012. See reconciliation attached.  
  • Net loss for the first quarter of 2013 was $11.8 million, or $0.12 loss per diluted share, compared to $19.2 million, or $0.20 loss per diluted share, in the first quarter of 2012.  
  • Diluted weighted average shares outstanding were 96.0 million in the first quarter of 2013 compared to 95.3 million in the same quarter of 2012.  
  • Adjusted EBITDA was $5.4 million in the current quarter, compared to an Adjusted EBITDA loss of $2.1 million in the same quarter last year. See reconciliation attached.

Liquidity and Capital Resources

  • Liquidity at March 31, 2013 was $102.7 million, which included $117.7 million in cash, reduced by the $15.0 million minimum cash requirement in our amended term loan.  
  • Cash usage for the current quarter was $26.8 million, of which $18.9 million was due to a build in working capital related to our higher sales volumes. The remainder of our cash usage related to $1.0 million of capital expenditures and $10.9 million of cash interest, offset somewhat by cash provided by operations.  
  • During the current quarter, we amended and reduced our existing $20.0 million stand-alone letter of credit ("LC") facility to $10.0 million. In addition, we transferred the $12.4 million of LC's outstanding under the stand-alone facility to our new $15.0 million LC sub-facility. This transfer eliminated the cash collateral requirement for our outstanding LC's and thus increased our overall liquidity at the time by $13.0 million. As of March 31, 2013, we have $12.6 million of LC's outstanding under our sub-facility and nothing outstanding under our stand-alone facility.  
  • Operating cash flow was negative $25.2 million for the current quarter, compared to negative $14.9 million for the first quarter of 2012, the difference primarily attributable to $16.5 million more in working capital build during the first quarter of 2013.  
  • Capital expenditures were $1.0 million for the first quarter of 2013, compared to $1.7 million for the first quarter of 2012.

Outlook

Concluding, Mr. Sherman said, "We are excited about the prospects for the homebuilding industry, and the outlook continues to suggest favorable opportunities for Builders FirstSource. The National Association of Homebuilders ("NAHB") is now predicting a 24.2 percent increase in single-family housing starts for 2013, and an additional 28.8 percent increase in 2014. We believe Builders FirstSource is well positioned to take advantage of this recovery. Our strategy remains focused on increasing our market share and improving our operating margins as we move into the spring and summer building season."

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