Builders FirstSource Reports Fourth Quarter and Fiscal Year 2012 Results 49% Sales Growth Drove Adjusted EBITDA to $3.4 Million for Fourth Quarter DALLAS, Feb. 21, 2013 (GLOBE NEWSWIRE) -- Builders FirstSource, Inc. (Nasdaq: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 fourth quarter and fiscal year ended December 31, 2012. Highlights include the following (see financial schedules for more information, including non-GAAP reconciliations): *Fourth quarter 2012 sales increased 49.3 percent to $287.6 million. *Adjusted EBITDA was $3.4 million for the fourth quarter and $6.4 million for fiscal year 2012. This compares to Adjusted EBITDA of ($3.3) million for the fourth quarter and ($15.0) million for fiscal year 2011. *The company amended its term loan, allowing it to enhance liquidity by $93 million. Commenting on the company's financial results, Floyd Sherman, Builders FirstSource Chief Executive Officer said, "We are very pleased with our fiscal 2012 financial results, as we ended the year with close to $1.1 billion in sales, up 37.4 percent over fiscal 2011, and reported full year Adjusted EBITDA of $6.4 million, a $21.5 million improvement over last year. For the fourth quarter of 2012, our sales were $287.6 million, an increase of 49.3 percent when compared to the fourth quarter of 2011, which helped generate our first quarter of positive operating income since 2007. As a comparison, actual single-family housing starts in the South Region increased 25.6 percent during the quarter, while single-family units under construction increased 20.2 percent over this same time period. Since 2007, our company, through hard work and sacrifice, and with the unwavering support of our shareholders, has weathered the worst housing recession in our nation's history. To say I am proud of what our employees have accomplished in recent years would be an extreme understatement." Mr. Sherman continued, "The housing industry continues to strengthen. Our sales per day in the fourth quarter exceeded that of the third quarter, which is highly unusual given the seasonality of our business. From a U.S. single-family housing starts perspective, 2012 ended with 534,600 actual starts, up 24.2% over 2011, although that is still well below the historical average of 1.1 million starts per year. On a sequential quarter basis we were able to improve our gross margin by 40 basis points in spite of commodity inflation of over 20% during the current quarter." Chad Crow, Builders FirstSource Senior Vice President and Chief Financial Officer, added, "Our quarter-over-quarter top line growth of over 49 percent was driven by an estimated 38 percent increase in volume and an 11 percent increase in price. Fourth quarter Adjusted EBITDA of $3.4 million was our strongest quarter of the year, and the momentum gained in 2012 appears to have carried into 2013." Mr. Crow continued, "From a liquidity standpoint, we ended the year with unrestricted cash of $131.4 million and net liquidity of $116.4 million, after giving effect to the $15.0 million minimum cash requirement contained in our amended term loan agreement. In conjunction with revisions to our letter of credit "LC" facilities made subsequent to year end, we freed up an additional $13.0 million of liquidity by eliminating the cash collateral requirement on LC's. We did not experience the seasonal reduction in working capital we had anticipated given the robust sales performance we saw during the last three months of 2012.This strong sales performance, combined with commodity price inflation, resulted in our working capital actually increasing during the quarter by approximately $12 million.Components of working capital continued to be strong as our accounts receivable days remained relatively flat for the quarter at 36.0 days, inventory turns improved to 9.2x compared to 8.7x for the fourth quarter of 2011, and our accounts payable days were 30 days." Fourth Quarter 2012 Results Compared to Fourth Quarter 2011 (See accompanying financial schedules for full financial details and reconciliations of Non-GAAP financial measures to their GAAP equivalents.) *Sales were $287.6 million compared to $192.7 million last year, an improvement of $94.9 million or 49.3 percent. We estimate sales increased approximately 38 percent due to increased volume and 11 percent due to price. *Gross margin percentage was 20.2 percent, down from 20.4 percent, a 0.2 percentage point decrease.Our gross margin decreased 1.2 percentage points largely due to commodity lumber inflation during the quarter which was offset by a 1.0 percentage point gross margin improvement due to increased sales volume.On a sequential quarter basis gross margin percentage improved from 19.8 percent to 20.2 percent. *SG&A expenses increased $10.7 million, or 22.8 percent, in the current quarter.We recorded proceeds of $0.6 million from a litigation settlement as a reduction to SG&A expenses during the quarter.As a percentage of sales, SG&A expense decreased from 24.4 percent in the fourth quarter of 2011 to 20.1 percent in the current quarter.Our salaries and benefits expense, excluding stock compensation expense, was $36.8 million, or 12.8 percent of sales, in the current quarter compared to $27.1 million, or 14.1 percent of sales, in the fourth quarter of 2011.Delivery expense increased $1.3 million, or 13.8 percent, as a result of increased sales volume. *Interest expense was $11.0 million in the current quarter, an increase of $2.9 million from the fourth quarter of 2011, primarily due to the issuance of our term loan in December 2011. *We recorded $0.2 million of income tax expense in the fourth quarter of 2012, compared to $0.3 million in the fourth quarter of 2011.We recorded an after-tax, non-cash valuation allowance of $3.6 million and $6.5 million in the fourth quarters of 2012 and 2011, respectively, related to our net deferred tax assets.Absent the valuation allowance, the effective tax rate would have been 31.3 percent and 38.0 percent in the fourth quarters of 2012 and 2011, respectively.As of the end of the current quarter, the company's gross federal income tax net operating loss available for carry-forward was approximately $237 million. *Loss from continuing operations was $11.0 million, or $0.12 loss per diluted share, compared to $16.6 million, or $0.18 loss per diluted share, in the same quarter last year.Excluding facility closure costs, the litigation settlement, the fair value adjustment for stock warrants and the tax valuation allowance, our loss from continuing operations was $0.08 per diluted share for the current quarter.For the fourth quarter of 2011, loss from continuing operations per diluted share was $0.09, when excluding facility closure costs, debt issuance cost write-offs, the fair value adjustment for stock warrants and the tax valuation allowance.See reconciliation attached. *Loss from discontinued operations was $1.0 million, or $0.01 loss per diluted share, compared to a loss of $0.1 million, or $0.00 per diluted share, for the fourth quarter of 2011.Loss from discontinued operations in the current quarter was primarily related to an adjustment to record held for sale real estate at its fair market value. *Net loss for the fourth quarter of 2012 was $12.0 million, or $0.13 loss per diluted share, compared to $16.7 million, or $0.18 loss per diluted share, in the fourth quarter of 2011. *Diluted weighted average shares outstanding were 95.6 million in the fourth quarter of 2012 compared to 95.0 million in the same quarter of 2011. *Adjusted EBITDA was $3.4 million in the current quarter, compared to an Adjusted EBITDA loss of $3.3 million in the same quarter last year. See reconciliation attached. Liquidity and Capital Resources *On December 17, 2012, we amended our $160.0 million first-lien term loan agreement to enhance our liquidity position to support both current and anticipated increases in sales volume.Terms of the amendment included increasing the principal amount by $65.0 million, reducing the minimum cash requirement from $35.0 million to $15.0 million, adding a new $15.0 million LC facility, and increasing the minimum specified collateral value to $225.0 million, contingent upon maintaining certain levels of qualified cash.These amendments to our term loan increased our liquidity by approximately $80 million. *Liquidity at December 31, 2012 was $116.4 million, which included $131.4 million in cash, reduced by the $15.0 million minimum cash requirement in our amended term loan. *In addition to the $131.4 million of cash, the company had $14.0 million in restricted cash at December 31, 2012, of which $1.9 million was included in long-term assets.Restricted cash consists of approximately $13 million used to collateralize outstanding LC's and $0.9 million used as collateral for other casualty insurance obligations. *In conjunction with the term loan amendment, subsequent to year-end we were able to eliminate the cash collateral requirement for our outstanding LC's, thus increasing our liquidity by an additional $13.0 million.We also amended our existing stand-alone $20.0 million LC facility down to $10.0 million.Had these terms been in place at December 31, 2012, our unrestricted cash would have been $144.4 million and our net liquidity would have been $129.4 million. *Capital expenditures were $1.2 million for the current quarter, compared to $2.1 million for the fourth quarter of 2011. Outlook Mr. Sherman concluded, "We believe the housing industry will continue to recover in 2013 and that Builders FirstSource is well positioned to take advantage of this recovery.The recent amendment to our term loan gives us substantial additional liquidity to continue growing our business at an accelerated rate.We look forward to building on what was a very successful 2012." Conference Call Builders FirstSource will host a conference call Friday, February 22, 2013 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: 888-481-2862 (U.S. and Canada) and 719-325-2338 (international).A replay of the call will be available at 3:00 p.m. CT through February 27^th.To access the replay, please dial 888-203-1112 (U.S. and Canada) and 719-457-0820 (international) and refer to pass code 9404867. The live webcast and archived replay can also be accessed on the company's website at www.bldr.com under the "Investors" section.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 Section21E 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 sectionof Builders FirstSource, Inc.'s most recent annual report on Form10-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. Financial Schedules to Follow BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (unaudited) Three months ended Fiscal year ended December 31, December 31, 2012 2011 2012 2011 (in thousands, except per share amounts) Sales $287,588 $192,677 $1,070,676 $779,093 Cost of sales 229,518 153,407 856,110 621,148 Gross margin 58,070 39,270 214,566 157,945 Selling, general and administrative expenses (includes stock-basedcompensation expense of $956 and $914 for 57,820 47,093 222,263 192,959 the three months ended in 2012 and 2011, respectively, and $3,628 and $4,559 for the fiscal year ended in 2012 and 2011, respectively.) Asset impairments 48 -- 48 -- Facility closure costs 62 442 958 2,461 Income (loss) from 140 (8,265) (8,703) (37,475) operations Interest expense, net 10,955 8,080 45,139 24,939 Loss from continuing operations before income (10,815) (16,345) (53,842) (62,414) taxes Income tax expense 226 300 577 2,217 Loss from continuing (11,041) (16,645) (54,419) (64,631) operations Loss from discontinued operations (net of income tax (1,007) (53) (2,437) (364) expense of $0in 2012 and 2011, respectively) Net loss $(12,048) $(16,698) $(56,856) $(64,995) Basic and diluted net loss per share: Loss from continuing $(0.12) $(0.18) $(0.57) $(0.68) operations Loss from discontinued (0.01) (0.00) (0.03) (0.00) operations Net loss $(0.13) $(0.18) $(0.60) $(0.68) Weighted average common shares: Basic and diluted 95,645 95,011 95,463 94,950 BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES Sales by Product Category (unaudited) Three months ended December 31, 2012 2011 (in thousands) Prefabricated components $52,869 18.4% $35,560 18.4% Windows & doors 62,270 21.7% 47,171 24.5% Lumber & lumber sheet goods 96,455 33.5% 54,253 28.2% Millwork 28,320 9.8% 20,160 10.5% Other building products & services 47,674 16.6% 35,533 18.4% Total sales $287,588 100.0% $192,677 100.0% Fiscal year ended December 31, 2012 2011 (in thousands) Prefabricated components $203,687 19.0% $147,608 18.9% Windows & doors 233,111 21.8% 183,313 23.5% Lumber & lumber sheet goods 348,132 32.5% 225,002 28.9% Millwork 104,165 9.7% 81,577 10.5% Other building products & services 181,581 17.0% 141,593 18.2% Total sales $1,070,676 100.0% $779,093 100.0% BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (unaudited) December 31, December 31, 2012 2011 (in thousands, except per share amounts) ASSETS Current assets: Cash and cash equivalents $131,432 $146,833 Restricted cash 12,068 13,229 Accounts receivable, less allowance of $2,831 and $2,138 atDecember 31, 2012 and 2011, 117,405 76,429 respectively Inventories 108,999 77,085 Other current assets 9,968 8,361 Total current assets 379,872 321,937 Property, plant and equipment, net 44,084 48,224 Goodwill 111,193 111,193 Other assets, net 15,692 12,440 Total assets $550,841 $493,794 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $79,397 $48,618 Accrued liabilities 37,778 27,459 Current maturities of long-term debt 60 54 Total current liabilities 117,235 76,131 Long-term debt, net of current maturities 360,895 297,455 Other long-term liabilities 24,615 18,984 Total liabilities 502,745 392,570 Commitments and contingencies Stockholders' equity: Preferred stock, $0.01 par value, 10,000 shares authorized; zero sharesissued and -- -- outstanding Common stock, $0.01 par value, 200,000 shares authorized; 96,916and 96,806 shares issued 957 950 and outstanding at December 31, 2012 and2011, respectively Additional paid-in capital 363,471 359,750 Accumulated deficit (316,332) (259,476) Total stockholders' equity 48,096 101,224 Total liabilities and stockholders' equity $550,841 $493,794 BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited) Fiscal year ended December 31, 2012 2011 (in thousands) Cash flows from operating activities: Net loss $(56,856) $(64,995) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 11,120 14,041 Asset impairments 48 -- Amortization of deferred loan costs 744 1,344 Amortization of debt discount 1,425 106 Fair value adjustment of stock warrants 4,992 736 Deferred income taxes 458 1,817 Bad debt expense 751 437 Net non-cash expense from discontinued 1,064 -- operations Stock compensation expense 3,628 4,559 Net gain on sale of assets (38) (212) Changes in assets and liabilities: Receivables (41,727) (17,175) Inventories (31,914) (13,275) Other current assets (710) 1,792 Other assets and liabilities (195) 384 Accounts payable 30,779 3,752 Accrued liabilities 9,581 281 Net cash used in operating activities (66,850) (66,408) Cash flows from investing activities: Purchases of property, plant and equipment (10,398) (4,792) Proceeds from sale of property, plant and 230 349 equipment Decrease (Increase) in restricted cash 1,135 (14,165) Net cash used in investing activities (9,033) (18,608) Cash flows from financing activities: Payments under revolving credit facility -- (20,000) Proceeds from issuance of long term debt 62,075 155,200 Payments of long-term debt and other loans (54) (5,298) Deferred loan costs (1,639) (1,285) Exercise of stock options 596 -- Repurchase of common stock (496) (2) Net cash provided by financing activities 60,482 128,615 Net change in cash and cash equivalents (15,401) 43,599 Cash and cash equivalents at beginning of 146,833 103,234 period Cash and cash equivalents at end of period $131,432 $146,833 BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES Supplemental Interest Expense Information (unaudited - dollars in thousands) Three months ended Fiscal year ended December 31, December 31, 2012 2011 2012 2011 Detail of Interest Expense: Term loan $5,014 $1,533 $19,018 $1,533 Floating rate notes 4,541 4,553 18,164 18,355 Credit facility 11 217 38 1,149 Change in fair value of stock 576 736 4,992 736 warrants * Amortization of debt discount * 402 106 1,425 106 Amortization of deferred loan costs 229 715 744 1,344 * Other 182 220 758 1,716 Interest expense, net $10,955 $8,080 $45,139 $24,939 * 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 February 21, 2013. Three months ended Fiscal year ended December 31, December 31, 2012 2011 2012 2011 Reconciliation to Adjusted EBITDA: Net loss $(12,048) $(16,698) $(56,856) $(64,995) Reconciling items: Depreciation and 2,867 3,472 11,120 14,041 amortization expense Interest expense, net 10,955 8,080 45,139 24,939 Income tax expense 226 300 577 2,217 Loss from discontinued operations, net of 1,007 53 2,437 364 tax Facility closure 62 442 958 2,461 costs Litigation settlement (637) -- (637) -- proceeds Stock compensation 956 914 3,628 4,559 expense Other 40 135 45 1,373 Adjusted EBITDA $3,428 $(3,302) $6,411 $(15,041) Adjusted EBITDA as 1.2% -1.7% 0.6% -1.9% percentage of sales Three months ended December 31, 2012 2011 Pre-Tax Net of Tax Pre-Tax Net of Tax Reconciliation to Adjusted loss from continuing operations: Loss from continuing operations $(11,041) $(16,645) Reconciling items: Facility closure 62 38 442 270 costs Litigation settlement (637) (389) -- proceeds Debt issuance cost write-offs -- 517 336 Warrant fair value adjustment 576 736 Tax valuation allowance 3,611 6,507 Adjusted loss from continuing $(7,205) $(8,796) operations Weighted average diluted shares 95,645 95,011 outstanding Adjusted loss from continuing $(0.08) $(0.09) operations per diluted share Fiscal year ended December 31, 2012 2011 Pre-Tax Net of Tax Pre-Tax Net of Tax Reconciliation to Adjusted loss from continuing operations: Loss from continuing operations $(54,419) $(64,631) Reconciling items: Facility closure 958 586 2,461 1,504 costs Litigation settlement (637) (389) -- proceeds Debt issuance cost write-offs -- 517 336 Warrant fair value adjustment 4,992 736 Tax valuation allowance 19,559 26,090 Adjusted loss from continuing $(29,671) $(35,965) operations Weighted average diluted shares 95,463 94,950 outstanding Adjusted loss from continuing $(0.31) $(0.38) operations per diluted share CONTACT: Chad Crow Senior Vice President and Chief Financial Officer Builders FirstSource, Inc. (214) 880-3585
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Builders FirstSource Reports Fourth Quarter and Fiscal Year 2012 Results
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