EX-99.1 2 c23523exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(BUILDERS FIRSTSOURCE LOGO)
For Immediate Release
Builders FirstSource Reports Third Quarter 2011 Results
October 20, 2011 (Dallas, TX) — Builders FirstSource, Inc. (NasdaqGS: 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 third quarter ended September 30, 2011.
                                 
    Third Quarter Financial Highlights (unaudited)  
    Third             Third        
    Quarter     Diluted     Quarter     Diluted  
    2011     Per Share     2010     Per Share  
Sales
  $ 217.2  million           $ 180.4  million        
Loss from continuing operations
  $ (11.5 ) million   $ (0.12 )   $ (19.7 ) million   $ (0.21 )
 
                               
Included in the calculation of loss from continuing operations:
                               
Tax valuation allowance
  $ 4.7  million   $ 0.05     $ 7.2  million   $ 0.08  
 
                       
 
                               
Adjusted loss from continuing operations
  $ (6.8 ) million   $ (0.07 )   $ (12.4 ) million   $ (0.13 )
 
                       
 
                               
Adjusted EBITDA*
  $ (0.7 ) million           $ (8.3 ) million        
 
                           
     
*   See reconciliation attached.
“Despite the continued sluggish housing market, we saw strong improvement in our third quarter 2011 results as our Adjusted EBITDA loss decreased to only $0.7 million, our best operating performance since the third quarter of 2007. This also marks the third consecutive quarter of improved Adjusted EBITDA results when compared to the same quarter of the prior year, in spite of a very weak housing market,” said Floyd Sherman, Builders FirstSource Chief Executive Officer. “We finished the current quarter with $217.2 million in sales, up 20.4 percent over the prior year, and improved our Adjusted EBITDA results by $7.6 million.”
Mr. Sherman continued, “Though our financial results have continued to show improvement, the housing market remains very challenging, as does the overall state of the economy. The seasonally adjusted annual rate for U.S. single-family housing starts in September 2011 was 425,000, which is down 4.9 percent when compared to September 2010. For the current quarter, actual U.S. single-family housing starts were down 1.4 percent as compared to the third quarter of 2010. In the South Region, as defined by the U.S. Census Bureau, and which includes all of our markets, actual single-family housing starts were up 5.1 percent, while units under construction declined 10.2 percent for the current quarter. Since our potential for revenue begins once a start converts to a unit under construction, we believe the 20.4 percent sales increase during the quarter represents a significant improvement in our financial and operational performance in an otherwise weak housing environment.”

 

 


 

Builders FirstSource Reports Third Quarter 2011 Results (continued)
Commenting on the current quarter, Chad Crow, Builders FirstSource Senior Vice President and Chief Financial Officer, added, “Our gross margin percentage was 20.5%, up 0.8 percentage points from 19.7% in the third quarter of 2010. The improvement is primarily attributable to higher sales volume combined with a decrease in fixed costs within cost of goods sold.” Mr. Crow added, “Our liquidity at the end of the current quarter was approximately $100 million, which consisted of $52.9 million in available cash and $47.1 million in borrowing availability under our revolving credit facility. Cash used in the current quarter was approximately $10.2 million. Of this $10.2 million, $2.9 million was due to an increase in working capital, the result of higher sales during the quarter, while $1.1 million related to capital expenditures. The remaining $6.2 million was used to fund operating losses and cash interest expense, which is a $7.5 million improvement over the $13.7 million of cash used to fund operating losses and interest in the third quarter of 2010. This $7.5 million improvement is due largely to the increase in our sales for the current quarter, as well as improved gross margins.”
Third Quarter 2011 Results Compared to Third Quarter 2010
(See accompanying financial schedules for full financial details and reconciliations of Non-GAAP financial measures to their GAAP equivalents.)
    Sales were $217.2 million compared to $180.4 million last year, an increase of $36.8 million, or 20.4 percent. We estimate sales increased approximately 22 percent due to increased sales volume, and was partially offset by commodity price deflation.
 
    Gross margin percentage was 20.5 percent, up from 19.7 percent, a 0.8 percentage point increase from the third quarter of 2010. Specifically, margins improved 1.1 percentage points due to increased sales volume combined with a decrease of fixed costs in costs of goods sold, which was offset slightly by a 0.4 percentage point decrease in sales price.
 
    Selling, general and administrative (“SG&A”) expenses increased $2.6 million, or 5.5 percent from the same quarter last year. As a percentage of sales, SG&A expense, excluding stock compensation expense and the benefit of a $1.2 million litigation settlement recorded in the third quarter of 2010, decreased from 26.4 percent in the third quarter of 2010, to 22.3 percent in 2011. For the current quarter, our salaries and benefits expense, excluding stock compensation expense, was $28.8 million, an increase of $0.3 million when compared to the third quarter of 2010. Delivery expense increased approximately $0.5 million, largely due to higher fuel costs.
 
    Interest expense was $5.3 million in the current quarter, a decrease of $1.6 million from the third quarter of 2010, which was primarily due to the expiration of our interest rate swaps during 2011.
 
    We recorded $0.3 million of income tax expense in the third quarter of 2011, compared to a $0.5 million income tax benefit in the third quarter of 2010. We recorded an after-tax, non-cash valuation allowance of $4.7 million and $7.2 million in 2011 and 2010, respectively, related to our net deferred tax assets. Absent this valuation allowance, our tax benefit rate would have been 39.2 percent and 38.4 percent in 2011 and 2010, respectively.
 
    Loss from continuing operations was $11.5 million, or $0.12 loss per diluted share, compared to $19.7 million, or $0.21 loss per diluted share, for the third quarter of 2010. Excluding the valuation allowance, our loss from continuing operations per diluted share was $0.07 and $0.13 for 2011 and 2010, respectively.

 

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Builders FirstSource Reports Third Quarter 2011 Results (continued)
    Net loss for the third quarter of 2011 was $11.6 million, or $0.12 loss per diluted share, compared to net loss of $20.5 million, or $0.22 loss per diluted share, in the third quarter of 2010.
 
    Diluted weighted average shares outstanding were 95.0 million compared to 94.9 million in the third quarter of 2010.
 
    Adjusted EBITDA was a loss of $0.7 million compared to a loss of $8.3 million last year. See reconciliation attached.
Liquidity and Capital Resources
    Total liquidity at September 30, 2011 was approximately $100 million, which included $52.9 million of available cash and $47.1 million in borrowing availability under our revolver.
 
    Capital expenditures in the third quarter of 2011 were $1.1 million, compared to $1.6 million in the third quarter of 2010. Capital expenditures for both years relate primarily to buyouts of expiring vehicle and equipment leases.
 
    On October 20, 2011, we repaid the remaining principal balance of $5.3 million on our 2012 notes. Our $150 million senior secured revolving credit facility will mature in December 2012.
 
    We expect our fourth quarter to essentially be cash neutral as cash used to fund operations, pay interest and to repay our remaining 2012 notes should largely be offset by seasonal reductions in working capital. As a result, we expect our cash burn for fiscal year 2011 to approximate $50-$55 million, and expect to end the year with total liquidity of approximately $80 million. We continue to explore various financing alternatives in order to strengthen our liquidity position.
Outlook
Mr. Sherman concluded. “Housing demand remains weak due to the struggling economy, high unemployment, and the limited availability of mortgage financing. Though these conditions persist, we are still optimistic about the long-term outlook of our industry, due largely to the increasing disparity between the current low level of housing starts and the on-going housing demand being created by current demographic trends. Due to the dedicated efforts of our employees, we continue to gain market share and improve our results despite the challenging economic conditions we face, and for their efforts, I am sincerely appreciative.”

 

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Builders FirstSource Reports Third Quarter 2011 Results (continued)
Conference Call
Builders FirstSource will host a conference call Friday, October 21, 2011, 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: 888-430-8701 (U.S. and Canada) and 719-457-2620 (international). A replay of the call will be available from 3:00 p.m. through October 26, 2011. To access the replay, please dial 888-203-1112 (U.S. and Canada) and 719-457-0820 (international). Please refer to pass code 8564693. 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 51 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.
#     #     #
Contact:
M. Chad Crow
Senior Vice President and Chief Financial Officer
Builders FirstSource, Inc.
(214) 880-3585
Financial Schedules to Follow

 

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BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
                                 
    Three months ended     Nine months ended  
    September 30,     September 30,  
    2011     2010     2011     2010  
    (in thousands, except per share amounts)  
Sales
  $ 217,194     $ 180,394     $ 586,416     $ 553,250  
Cost of sales
    172,755       144,865       467,741       449,555  
 
                       
Gross margin
    44,439       35,529       118,675       103,695  
 
Selling, general and administrative expenses (includes stock-based compensation expense of $1,665 and $1,097 for the three months ended in 2011 and 2010, respectively, and $3,645 and $3,217 for the nine months ended in 2011 and 2010, respectively)
    50,200       47,569       145,866       148,460  
Asset impairments
          839             839  
Facility closure costs
    115       411       2,019       420  
 
                       
Loss from operations
    (5,876 )     (13,290 )     (29,210 )     (46,024 )
Interest expense, net
    5,319       6,910       16,859       24,766  
 
                       
Loss from continuing operations before income taxes
    (11,195 )     (20,200 )     (46,069 )     (70,790 )
Income tax expense (benefit)
    268       (525 )     1,917       (995 )
 
                       
Loss from continuing operations
    (11,463 )     (19,675 )     (47,986 )     (69,795 )
Loss from discontinued operations (net of income tax benefit of $0 for the three months and nine months ended in 2011 and 2010, respectively)
    (101 )     (795 )     (311 )     (1,100 )
 
                       
Net Loss
  $ (11,564 )   $ (20,470 )   $ (48,297 )   $ (70,895 )
 
                       
 
                               
Basic and diluted net loss per share:
                               
Loss from continuing operations
  $ (0.12 )   $ (0.21 )   $ (0.51 )   $ (0.77 )
Loss from discontinued operations
    (0.00 )     (0.01 )     (0.00 )     (0.01 )
 
                       
Net Loss
  $ (0.12 )   $ (0.22 )   $ (0.51 )   $ (0.78 )
 
                       
 
                               
Weighted average common shares:
                               
Basic and diluted
    94,976       94,895       94,929       90,589  
 
                       

 

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BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Sales by Product Category
(unaudited)
                                 
    Three months ended September 30,  
    2011     2010  
    (in thousands)  
 
Prefabricated components
  $ 41,038       18.9 %   $ 36,283       20.1 %
Windows & doors
    51,300       23.6 %     40,923       22.7 %
Lumber & lumber sheet goods
    61,900       28.5 %     50,053       27.7 %
Millwork
    22,174       10.2 %     19,605       10.9 %
Other building products & services
    40,782       18.8 %     33,530       18.6 %
 
                       
Total sales
  $ 217,194       100.0 %   $ 180,394       100.0 %
 
                       
                                 
    Nine months ended September 30,  
    2011     2010  
    (in thousands)  
 
Prefabricated components
  $ 112,048       19.1 %   $ 109,434       19.8 %
Windows & doors
    136,142       23.2 %     124,308       22.5 %
Lumber & lumber sheet goods
    170,749       29.1 %     160,640       29.0 %
Millwork
    61,417       10.5 %     59,180       10.7 %
Other building products & services
    106,060       18.1 %     99,688       18.0 %
 
                       
Total sales
  $ 586,416       100.0 %   $ 553,250       100.0 %
 
                       

 

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BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
                 
    September 30,     December 31,  
    2011     2010  
    (in thousands, except per share amounts)  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 52,917     $ 103,234  
Trade accounts receivable, less allowance of $2,138 and $2,444 at September 30, 2011 and December 31, 2010, respectively
    81,883       55,631  
Other receivables
    5,036       4,060  
Inventories
    71,033       63,810  
Other current assets
    11,257       8,614  
 
           
Total current assets
    222,126       235,349  
Property, plant and equipment, net
    49,528       57,068  
Goodwill
    111,193       111,193  
Other assets, net
    8,189       9,194  
 
           
Total assets
  $ 391,036     $ 412,804  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
  $ 62,361     $ 44,866  
Accrued liabilities
    29,093       26,284  
Current maturities of long-term debt
    5,302       5,301  
 
           
Total current liabilities
    96,756       76,451  
Long-term debt, net of current maturities
    163,764       163,801  
Other long-term liabilities
    13,508       13,047  
 
           
Total liabilities
    274,028       253,299  
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; 96,806 and 96,769 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively
    950       949  
Additional paid-in capital
    358,836       355,194  
Accumulated deficit
    (242,778 )     (194,481 )
Accumulated other comprehensive loss
          (2,157 )
 
           
Total stockholders’ equity
    117,008       159,505  
 
           
Total liabilities and stockholders’ equity
  $ 391,036     $ 412,804  
 
           

 

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BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
                 
    Nine months ended September 30,  
    2011     2010  
    (in thousands)  
Cash flows from operating activities:
               
Net loss
  $ (48,297 )   $ (70,895 )
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation and amortization
    10,569       11,668  
Asset impairments
          839  
Amortization of deferred loan costs
    628       5,055  
Deferred income taxes
    1,692       (1,091 )
Bad debt expense
    366       650  
Net non-cash income from discontinued operations
          (3 )
Stock compensation expense
    3,645       3,217  
Net gain on sales of assets
    (276 )     (162 )
Changes in assets and liabilities:
               
Receivables
    (27,594 )     28,081  
Inventories
    (7,223 )     (10,142 )
Other current assets
    (2,643 )     (1,738 )
Other assets and liabilities
    340       290  
Accounts payable
    17,495       6,057  
Accrued expenses
    3,360       4,048  
 
           
Net cash used in operating activities
    (47,938 )     (24,126 )
 
           
 
               
Cash flows from investing activities:
               
Purchases of property, plant and equipment
    (2,735 )     (8,183 )
Proceeds from sale of property, plant and equipment
    394       355  
 
           
Net cash used in investing activities
    (2,341 )     (7,828 )
 
           
 
               
Cash flows from financing activities:
               
Payments of long-term debt and other loans
    (36 )     (105,176 )
Proceeds from rights offering
          180,107  
Payment of recapitalization costs
          (5,631 )
Repurchase of common stock
    (2 )     (31 )
 
           
Net cash provided by (used in) financing activities
    (38 )     69,269  
 
           
 
               
Net change in cash and cash equivalents
    (50,317 )     37,315  
Cash and cash equivalents at beginning of period
    103,234       84,098  
 
           
Cash and cash equivalents at end of period
  $ 52,917     $ 121,413  
 
           

 

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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 20, 2011.
                 
    Three months ended  
    September 30,  
    2011     2010  
 
Reconciliation to Adjusted EBITDA:
               
Net loss
  $ (11,564 )   $ (20,470 )
Reconciling items:
               
Depreciation and amortization expense
    3,364       3,852  
Interest expense, net
    5,319       6,910  
Income tax expense (benefit)
    268       (525 )
Loss from discontinued operations, net of tax
    101       795  
Asset impairments
          839  
Litigation settlement
          (1,238 )
Stock compensation expense
    1,665       1,097  
Other
    106       444  
 
           
Adjusted EBITDA
  $ (741 )   $ (8,296 )
 
           
 
               
Adjusted EBITDA as percentage of sales
    -0.3 %     -4.6 %

 

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