Stock Building Supply Announces Third Quarter 2013 Results

Stock Building Supply Announces Third Quarter 2013 Results

Adjusted EBITDA of $10.4 Million on Net Sales Increase of 28.4%

RALEIGH, N.C., Oct. 30, 2013 (GLOBE NEWSWIRE) -- Stock Building Supply
Holdings, Inc. (Nasdaq:STCK), a large, diversified lumber and building
materials distributor and solutions provider that sells primarily to new
construction and repair and remodel contractors, today reported its financial
results for the third quarter ended September 30, 2013.

Third Quarter Financial Highlights

  *Net sales of $328.5 million, up 28.4%, compared to $255.8 million in the
    prior year period
  *Adjusted EBITDA of $10.4 million, compared to $4.3 million in the prior
    year period
  *Net loss of $5.5 million, including $9.3 million of initial public
    offering ("IPO") transaction-related costs, compared to net income of
    $0.04 million in the prior year period
  *Completed its IPO on August 14, 2013, yielding approximately $46.8 million
    of proceeds that were used to repay borrowings under the Company's
    revolver
  *Cash provided by operating activities of $4.2 million, including the
    payment of $9.3 million of IPO transaction-related costs, compared to cash
    used in operating activities of $5.4 million in the prior year period
  *Improved liquidity to approximately $92.0 million

"In the third quarter, our business performance continued its positive trend
of strong revenue growth and increases in Adjusted EBITDA. Additionally we
completed our transition to a public company with a successful IPO on August
14th which helped improve our liquidity and strengthen our balance sheet,"
stated Jeff Rea, Chief Executive Officer of Stock Building Supply. "We believe
our growth rate continues to outperform our industry benchmarks as revenues
from new single-family construction increased approximately 31%, while repair
and remodel revenues increased 28% compared to third quarter 2012."

Commenting on the third quarter results, Jim Major, Executive Vice President
and Chief Financial Officer, added, "Our third quarter performance reflects
significant improvements in our operating results and capital structure. We
once again leveraged our cost structure to reduce selling, general and
administrative expenses as a percentage of net sales to 20.4% in the third
quarter of 2013, compared to 21.9% in the third quarter of 2012. The
completion of our IPO in August combined with effective working capital
management resulted in total debt, net of cash and cash equivalents, at
September 30, 2013 of $57.2 million as compared to $116.6 million at the
beginning of the quarter. We believe our current capital structure will allow
us to make the required investments in our business to support our anticipated
future growth."

Third Quarter 2013 Financial Results Compared to Prior Year Period

Net sales for the third quarter of 2013 totaled $328.5 million, up $72.7
million, or 28.4%, compared to $255.8 million in the third quarter of 2012. We
estimate our net sales increased 23.4% related to increased volume and 5.0%
due to increased selling prices. The increase in sales volume was primarily
driven by increased single-family housing starts and increased demand arising
from higher repair and remodel activity.

Gross profit in the third quarter of 2013 was $75.4 million, up $16.9 million,
or 28.8%, compared to $58.5 million in the third quarter of 2012, primarily as
a result of increased sales volumes. The gross margin percentage of 22.9% was
unchanged compared to the prior year period.

Selling, general and administrative ("SG&A") expenses during the third quarter
of 2013 were $66.9 million, up $10.9 million, or 19.6%, from $56.0 million in
the third quarter of 2012. This increase was primarily driven by variable
costs to serve higher sales volumes, such as sales commissions, shipping and
handling costs and other variable compensation, which increased by $5.8
million. Other increases in SG&A related to incremental expenses from acquired
operations and other strategic investments to better serve our customers and
support the growth of our business.

Operating loss in the third quarter of 2013 was $2.9 million, compared to
operating income of $0.2 million in the third quarter of 2012. Net loss during
the quarter totaled $5.5 million, or ($0.30) per diluted share, compared to
net income of $0.04 million, or ($0.08) per diluted share, in the third
quarter of 2012. During the three months ended September 30, 2013, the
Company's operating loss and net loss were impacted by $9.3 million of IPO
transaction-related costs, which included a $9.0 million fee for terminating
our management services agreement with The Gores Group, LLC ("Gores").
Approximately $9.2 million of the IPO transaction-related costs were not
deductible for tax purposes and this was one of the factors that resulted in
an effective tax rate from continuing operations of (55.0)% for the third
quarter of 2013.

Adjusted EBITDA in the third quarter of 2013 totaled $10.4 million, up $6.1
million, compared to $4.3 million in the third quarter of 2012. Adjusted
income from continuing operations for the third quarter of 2013 increased $3.8
million to $4.2 million, compared to $0.4 million in the third quarter of
2012. A reconciliation of non-GAAP (adjusted) financial measures to comparable
GAAP financial measures is provided as an appendix to this release.

Total liquidity as of September 30, 2013 was approximately $92.0 million,
which includes cash and cash equivalents of $10.5 million and $81.5 million of
borrowing availability under our existing revolver. Borrowings under the
revolver decreased during the third quarter of 2013, primarily related to
$46.8 million in IPO proceeds used to pay down the existing balance.

Outlook

Concluding, Mr. Rea said, "While we expect the normal seasonal and weather
related slow-down in our business as we enter the winter months, we believe
macroeconomic trends remain favorable for year-over-year improvement in our
core markets. With the short- and mid-term objective of accelerating both our
revenue growth and profitability, we plan to continue to invest in our
strategic initiatives to better serve our core customers, expand our capacity
and increase our operating capabilities."

Conference Call

Stock Building Supply will host a conference call on Wednesday, October 30,
2013 at 8:30 a.m. Eastern Time 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: 877-407-0784 (U.S.) and 201-689-8560
(international). A replay of the call will be available through November 5th.
To access the replay, please dial 877-870-5176 (U.S.) and 858-384-5517
(international) and refer to pass code 10000618. The live webcast and archived
replay can also be accessed on the Company's investor relations website at
ir.stocksupply.com. The online archive of the webcast will be available for
approximately 90 days.

About Stock Building Supply

Stock Building Supply operates in 20 metropolitan areas in 13 states primarily
in the South and West regions of the United States (as defined by the U.S.
Census Bureau). Today, we serve our customers from 66 strategically located
facilities. We offer over 39,000 products including lumber and lumber sheet
goods, millwork, doors, flooring, windows, structural components, engineered
wood products, trusses, wall panels and other exterior products. Our customer
base includes production homebuilders, custom homebuilders and repair and
remodel contractors.

Non-GAAP Financial Measures

This press release presents Adjusted EBITDA and Adjusted income (loss) from
continuing operations, which are non-GAAP financial measures within the
meaning of applicable Securities and Exchange Commission rules and
regulations. For a reconciliation of Adjusted EBITDA and Adjusted income
(loss) from continuing operations under generally accepted accounting
principles and for a discussion of the reasons why the Company believes that
these non-GAAP financial measures provide information that is useful to
investors, see the tables below under "Reconciliation of GAAP to Non-GAAP
Measures."

Forward-Looking Statements

This press release contains forward-looking statements, which are subject to
substantial risks, uncertainties and assumptions. You should not place
reliance on these statements. These statements often include words such as
"believe," "expect," "anticipate," "intend," "plan," "estimate," "seek,"
"will," "may" or similar expressions. These risks include, but are not limited
to, the following:(i) the state of the homebuilding industry and repair and
remodel activity; (ii) seasonality and cyclicality of the building products
supply and services industry; (iii) competitive industry pressures and
competitive pricing pressure from our customers; (iv) inflation or deflation
of commodity prices; (v) litigation or warranty claims relating to our
products and services; (vi)our ability to maintain profitability; (vii) our
ability to attract and retain key employees and (vii) product shortages and
relationships with key suppliers. Further information regarding factors that
could impact our financial and other results can be found in the Risk Factors
section of our Prospectus dated August 8, 2013 filed with the Securities and
Exchange Commission.These statements are based on certain assumptions that we
have made in light of our experience in the industry as well as our
perceptions of expected future developments and other factors we believe are
appropriate in these circumstances. As you read and consider this press
release, you should understand that these statements are not guarantees of
performance or results. Many factors could affect our actual performance and
results and could cause actual results to differ materially from those
expressed in the forward-looking statements.All forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the foregoing cautionary statements. All such statements
speak only as of the date made, and we undertake no obligation to update or
revise publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.

STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
                                                                
                                                                
                                  Three months ended    Nine months ended
                                   September 30,         September 30,
(in thousands of dollars, except   2013       2012       2013       2012
share and per share amounts)
Net sales                          $328,468   $255,833   $891,847   $690,264
Cost of goods sold                 253,087    197,317    691,166    533,263
Gross profit                       75,381     58,516     200,681    157,001
Selling, general and               66,931     55,962     188,458    163,567
administrative expenses
Depreciation expense               1,456      1,803      4,716      5,902
Amortization expense               563        364        1,672      1,093
IPO transaction-related costs      9,322      —          10,008     —
Restructuring expense              31         145        130        166
                                  78,303     58,274     204,984    170,728
Income (loss) from operations      (2,922)    242        (4,303)    (13,727)
Other income, net                                                
Interest expense                   (892)      (1,022)    (3,150)    (3,070)
Other income, net                  200        137        596        36
Loss from continuing operations    (3,614)    (643)      (6,857)    (16,761)
before income taxes
Income tax benefit (expense)       (1,989)    394        (1,076)    5,950
Loss from continuing operations    (5,603)    (249)      (7,933)    (10,811)
Income from discontinued
operations, net of tax provision   90         289        341        48
of ($54), ($168), ($237) and
($25), respectively
Net income (loss)                  (5,513)    40         (7,592)    (10,763)
Redeemable Class B Senior          (363)      (1,144)    (1,836)    (3,366)
Preferred stock deemed dividend
Accretion of beneficial conversion
feature on Convertible Class C     —          —          —          (5,000)
Preferred stock
Loss attributable to common        $(5,876)   $(1,104)   $(9,428)   $(19,129)
stockholders
Weighted average common shares     19,813,209 13,361,512 15,718,667 13,079,851
outstanding, basic and diluted
Basic and diluted income (loss)                                  
per share
Loss from continuing operations    $(0.30)    $(0.10)    $(0.62)    $(1.46)
Income from discontinued           —          0.02       0.02       —
operations
Net loss per share                 $(0.30)    $(0.08)    $(0.60)    $(1.46)


STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
                                                               
                                                               
                                                  September30, December31,
                                                  2013          2012
(in thousands of dollars, except share and per                  (as restated)
share amounts)
Assets                                                          
Current assets                                                  
Cash and cash equivalents                          $10,526       $2,691
Restricted assets                                  567           3,821
Accounts receivable, net                           125,413       90,297
Inventories, net                                   95,043        73,918
Costs in excess of billings on uncompleted         9,059         5,176
contracts
Assets held for sale                               2,795         6,198
Prepaid expenses and other current assets          8,902         8,682
Deferred income taxes                              5,952         3,562
Total current assets                               258,257       194,345
Property and equipment, net of accumulated         52,880        55,076
depreciation
Intangible assets, net of accumulated amortization 25,353        25,865
Goodwill                                           7,186         6,511
Restricted assets                                  2,233         2,202
Other assets                                       2,160         2,013
Total assets                                       $348,069      $286,012
Liabilities and Stockholders' Equity                            
Current liabilities                                             
Accounts payable                                   $87,954       $74,231
Accrued expenses and other liabilities             34,459        25,277
Revolving line of credit                           —             72,218
Income taxes payable                               6,100         2,939
Current portion of restructuring reserve           1,572         1,513
Current portion of capital lease obligation        1,343         1,329
Billings in excess of costs on uncompleted         2,877         1,239
contracts
Total current liabilities                          134,305       178,746
Revolving line of credit                           60,073        —
Long-term portion of capital lease obligation      6,265         5,635
Deferred income taxes                              15,650        16,983
Other long-term liabilities                        7,528         9,007
Total liabilities                                  223,821       210,371
Commitments and contingencies                                   
Redeemable Class A Junior Preferred stock, $.01
par value, 10,000 shares authorized and issued, 0  —             —
and 5,100 shares outstanding at September 30, 2013
and December 31, 2012, respectively
Redeemable Class B Senior Preferred stock, $.01
par value, 500,000 shares authorized, 75,000
shares issued, 0 and 36,388 shares outstanding at  —             36,477
September 30, 2013 and December 31, 2012,
respectively
Convertible Class C Preferred stock, $.01 par
value, 5,000 shares authorized and issued, 0 and   —             5,000
5,000 shares outstanding at September 30, 2013 and
December 31, 2012, respectively
Stockholders' equity                                            
Class A common stock, $.01 par value, 22,725,500
shares authorized and issued, 0 and 11,590,005     —             116
shares outstanding at September 30, 2013 and
December 31, 2012, respectively
Class B common stock, $.01 par value, 3,246,500
shares authorized, 2,870,712 shares issued, 0 and  —             29
2,870,712 shares outstanding at September 30, 2013
and December 31, 2012, respectively
Common stock, $.01 par value, 300,000,000 shares
authorized, 26,107,231 and 0 shares issued and     261           —
outstanding at September 30, 2013 and December 31,
2012, respectively
Additional paid-in capital                         144,094       46,534
Retained deficit                                   (20,107)      (12,515)
Total stockholders' equity                         124,248       34,164
Total liabilities and stockholders' equity         $348,069      $286,012


STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)

                                                             
                                              Nine months ended September 30,
(in thousands of dollars)                      2013            2012
Cash flows from operating activities                          
Net loss                                       $(7,592)        $(10,763)
Adjustments to reconcile net loss to net                      
cashused in operating activities
Depreciation expense                           7,389           7,865
Amortization of intangible assets              1,672           1,093
Amortization of debt issuance costs            465             685
Change in deferred income taxes                (3,723)         (3,196)
Noncash stock compensation expense             573             1,069
Impairment of assets held for sale             —               101
Gain on sale of property, equipment and real   (270)           (567)
estate held for sale
Bad debt expense                               1,316           1,435
Change in assets and liabilities                              
Accounts receivable                            (35,401)        (34,319)
Inventories, net                               (20,598)        (30,622)
Accounts payable                               14,735          25,761
Other assets and liabilities                   6,904           16,774
Net cash used in operating activities          (34,530)        (24,684)
Cash flows from investing activities                          
Change in restricted assets                    3,223           3,458
Purchase of business                           (2,373)         —
Proceeds from sale of property, equipment and  3,070           922
real estate held for sale
Purchases of property and equipment            (2,574)         (2,382)
Net cash provided by investing activities      1,346           1,998
Cash flows from financing activities                          
Proceeds from revolving line of credit         961,160         753,580
Repayments of proceeds from revolving line of  (973,305)       (726,120)
credit
Proceeds from issuance of common stock, net of 55,821          —
offering costs
Other financing activities                     (2,657)         (1,277)
Net cash provided by financing activities      41,019          26,183
Net increase in cash and cash equivalents      7,835           3,497
Cash and cash equivalents                                     
Beginning of period                            2,691           4,957
End of period                                  $10,526         $8,454


STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
Sales by Product Category
(unaudited)
                                                                 
                                                                 
                             Three months ended Three months ended  
                              September 30, 2013  September 30, 2012
(in thousands of dollars)     Sales    % of Sales Sales    % of Sales % Change
Structural components         $46,335  14.1%      $28,978  11.3%      59.9%
Millwork & other interior     58,215   17.7%      47,956   18.7%      21.4%
products
Lumber& lumber sheet goods   114,147  34.8%      91,394   35.7%      24.9%
Windows & other exterior      71,463   21.8%      54,803   21.4%      30.4%
products
Other building products&     38,308   11.6%      32,702   12.9%      17.1%
services
Total sales                   $328,468 100.0%     $255,833 100.0%     28.4%
                                                                 
                             Nine months ended  Nine months ended  
                              September 30, 2013  September 30, 2012
(in thousands of dollars)     Sales    % of Sales Sales    % of Sales % Change
Structural components         $117,367 13.2%      $77,818  11.3%      50.8%
Millwork & other interior     161,213  18.1%      130,793  18.9%      23.3%
products
Lumber& lumber sheet goods   329,744  37.0%      240,884  34.9%      36.9%
Windows & other exterior      182,062  20.4%      150,335  21.8%      21.1%
products
Other building products&     101,461  11.3%      90,434   13.1%      12.2%
services
Total sales                   $891,847 100.0%     $690,264 100.0%     29.2%

            STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
                 Reconciliation of GAAP to Non-GAAP Measures
                                 (unaudited)

EBITDA is defined as net income (loss) before interest, income tax expense
(benefit) and depreciation and amortization. Adjusted EBITDA is defined as
EBITDA plus discontinued operations, net of taxes, restructuring expense, IPO
transaction-related costs, management fees, non-cash compensation expense,
acquisition costs, severance and other expenses related to store closures and
business optimization and other expense resulting from the reduction of a tax
indemnification asset. Adjusted income (loss) from continuing operations is
defined as net income as adjusted for the same items deducted from EBITDA in
calculating Adjusted EBITDA, and after tax effecting those items. Adjusted
EBITDA and Adjusted income (loss) from continuing operations are intended as
supplemental measures of our performance that are not required by, or
presented in accordance with, generally accepted accounting principles in the
United States ("GAAP"). We believe that Adjusted EBITDA and Adjusted income
(loss) from continuing operations provide useful information to management and
investors regarding certain financial and business trends relating to our
financial condition and operating results. Our management uses Adjusted EBITDA
to compare our performance to that of prior periods for trend analyses, for
purposes of determining management incentive compensation and for budgeting
and planning purposes. Adjusted EBITDA is used in monthly financial reports
prepared for management and our board of directors. We believe that the use of
Adjusted EBITDA and Adjusted income (loss) from continuing operations provide
additional tools for investors to use in evaluating ongoing operating results
and trends and in comparing our financial measures with other distribution and
retail companies, which may present similar non-GAAP financial measures to
investors. However, our calculation of Adjusted EBITDA and Adjusted income
(loss) from continuing operations are not necessarily comparable to similarly
titled measures reported by other companies. Our management does not consider
Adjusted EBITDA or Adjusted income (loss) from continuing operations in
isolation or as alternatives to financial measures determined in accordance
with GAAP. The principal limitation of Adjusted EBITDA is that it excludes
significant expenses and income that are required by GAAP to be recorded in
the Company's financial statements. Some of these limitations are:
(i)Adjusted EBITDA does not reflect changes in, or cash requirements for, our
working capital needs; (ii)Adjusted EBITDA does not reflect our interest
expense, or the requirements necessary to service interest or principal
payments on our debt; (iii)Adjusted EBITDA does not reflect our income tax
expenses or the cash requirements to pay our taxes; (iv)Adjusted EBITDA does
not reflect historical cash expenditures or future requirements for capital
expenditure or contractual commitments and (v)although depreciation and
amortization charges are non-cash charges, the assets being depreciated and
amortized will often have to be replaced in the future and Adjusted EBITDA
does not reflect any cash requirements for such replacements. In order to
compensate for these limitations, management presents Adjusted EBITDA in
conjunction with GAAP results. You should review the reconciliation of net
income (loss) to Adjusted EBITDA and to Adjusted income (loss) from continuing
operations below, and should not rely on any single financial measure to
evaluate our business.

STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Measures (continued)
(unaudited)
                                                               
The following is a reconciliation of net income (loss) to EBITDA and Adjusted
EBITDA.
                                                               
                                                               
                                Three months ended     Nine months ended
                                 September 30,          September 30,
(in thousands of dollars)        2013         2012      2013       2012
Net income (loss), as reported   $(5,513)     $40       $(7,592)   $(10,763)
Interest expense                 892          1,022     3,150      3,070
Income tax expense (benefit)     1,989        (394)     1,076      (5,950)
Depreciation and amortization    3,032        2,778     9,058      8,839
EBITDA                           $400         $3,446    $5,692     $(4,804)
Discontinued operations, net of  (90)         (289)     (341)      (48)
taxes
IPO transaction-related costs    9,322        —         10,008     —
Restructuring expense            31           145       130        166
Management fees (a)              239          330       1,205      1,097
Non-cash compensation expense    309          389       573        1,069
Acquisition costs (b)            —            —         257        46
Severance and other expenses
related to store closures and    229          231       721        1,035
business optimization (c)
Reduction of tax indemnification —            —         —          347
asset (d)
Adjusted EBITDA                  $10,440      $4,252    $18,245    $(1,092)


STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Measures (continued)
(unaudited)
                                                                
The following is a reconciliation of net income (loss) to Adjusted income
(loss) from continuing operations.
                                                                
                                                                
                              Three months ended        Nine months ended
                               September 30,             September 30,
(in thousands of dollars)      2013           2012       2013       2012
Net income (loss), as reported $(5,513)       $40        $(7,592)   $(10,763)
Discontinued operations, net   (90)           (289)      (341)      (48)
of taxes
IPO transaction-related costs  9,322          —          10,008     —
Restructuring expense          31             145        130        166
Management fees (a)            239            330        1,205      1,097
Non-cash compensation expense  309            389        573        1,069
Acquisition costs (b)          —              —          257        46
Severance and other expenses
related to store closures and  229            231        721        1,035
business optimization (c)
Reduction of tax               —              —          —          347
indemnification asset (d)
Tax effect of adjustments to   (297)          (412)      (1,218)    (1,323)
continuing operations (e)
Adjusted income (loss) from    $4,230         $434       $3,743     $(8,374)
continuing operations
                                                                
(a) Represents the expense for management services provided by Gores and its
affiliates.
                                                                
(b) Represents $0.2 million and $0.1 million related to the acquisitions of
(i) Chesapeake Structural Systems, Inc., Creative Wood Products, LLC and
Chestruc, LLC and (ii) Total Building Services Group, LLC, respectively, for
the nine months ended September30, 2013.
                                                                
(c) Represents (i)$0.0 million, $0.0 million, $0.2 million and $0.3 million
of severance expense for the three months ended September30, 2013 and 2012
and the nine months ended September30, 2013 and 2012, respectively, and
(ii)$0.2 million, $0.2 million, $0.5 million and $0.7 million related to
closed locations, consisting of post-closure expenses for the three months
ended September30, 2013 and 2012 and the nine months ended September30, 2013
and 2012, respectively.
                                                                
(d) Includes $0.3 million of expense related to the reduction of a tax
indemnification asset, with a corresponding increase in income tax benefit,
for the nine months ended September30, 2012. This indemnification asset
corresponds to the long-term liability related to uncertain tax positions for
which Wolseley plc had indemnified the Company, which was reduced upon the
expiration of the statute of limitations for certain tax periods.
                                                                
(e) The tax effect of adjustments to continuing operations, excluding
approximately $9.2 million of non-deductible IPO transaction-related costs,
was based on the respective transactions' income tax rate, which was 33.2%,
37.7%, 33.3% and 35.2% for the three months ended September30, 2013 and 2012
and the nine months ended September30, 2013 and 2012, respectively.

CONTACT: Investor Relations Contact
         Stock Building Supply Holdings, Inc.
         Mark Necaise
        
         or
        
         Solebury Communications Group LLC
         Richard Zubek
         (919) 431-1133

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