DALLAS, April 24, 2008 (PRIME NEWSWIRE) -- Builders FirstSource, Inc. (Nasdaq:BLDR) today reported a net loss of $15.8 million, or ($0.45) per diluted share on sales of $270.5 million for the first quarter ended March 31, 2008. These results compare to net income of $0.2 million, or $0.01 per diluted share, on sales of $411.1 million for the first quarter ended March 31, 2007.
Other First Quarter Financial Highlights
----------------------------------------
First Quarter First Quarter
(in millions, except gross margin data) 2008 2007
------------- -------------
Gross margin, as a percentage of sales 22.3% 25.4%
Diluted weighted average shares outstanding 35.5 36.2
Operating cash flow $ (16.1) $ 21.7
"The macroeconomic conditions that affect our industry have deteriorated for eight consecutive quarters. Housing starts in our markets fell 39.1% in the quarter ending March 2008 when compared to the quarter ending March 2007. On a sequential basis, actual housing starts in our markets were down an estimated 17.9 percent, but we saw a slight seasonal improvement in March," said Floyd Sherman, Builders FirstSource Chief Executive Officer. "With the prolonged decline in macroeconomic conditions, we are experiencing pricing pressure from both our customers and competitors. As a result of these pricing pressures and the de-leveraging of our fixed costs within our manufacturing operations, we experienced a 310 basis point decline in margins."
Mr. Sherman continued, "In spite of the continued difficult macroeconomic conditions and highly competitive pricing environment, market share gains had a 4.1 percent positive effect on our sales. In addition, we reduced salaries and benefits including stock compensation expense by 22.3 percent and selling, general and administrative expenses by 18.4 percent from the first quarter of 2007. Our employees' efforts to operate as efficiently as possible and to seek new business opportunities have surpassed my expectations in this very difficult environment."
First Quarter 2008 Results Compared to First Quarter 2007
(See accompanying financial schedules for full financial details and reconciliations of Non-GAAP financial measures to their GAAP equivalents.)
* Sales were $270.5 million compared to $411.1 million. Sales
declined $140.6 million year-over-year, or 34.2 percent. Our
sales volume dropped 32.8 percent due to continued weakness in the
housing market. Overall we estimate that housing activity in our
markets fell an estimated 39.1 percent. Also, commodity lumber and
lumber sheet goods prices had a 0.7 percent negative effect on
sales. These non-controllable sales drivers were partially offset
by sales growth attributable to market share gains of approximately
4.1 percent and sales growth from new operations of 1.5 percent.
* Gross margin percentage declined to 22.3 percent, compared to 25.4
percent in the first quarter of 2007. As industry conditions
continue to be difficult, we are experiencing pricing pressures
not only from our customers, but from our competitors with
liquidity constraints, who are monetizing their inventory. The
de-leveraging of fixed costs within our manufacturing operations
lowered gross margins by 157 basis points, while lower prices on
commodity lumber products contributed 10 basis points to the
decline.
* Selling, general and administrative ("SG&A") expenses decreased
$17.9 million. As a percentage of sales, however, SG&A increased
from 23.7 percent in 2007 to 29.4 percent in 2008 which is
reflective of fixed cost items becoming a larger percentage of our
SG&A. Average full-time equivalent employees for the first
quarter 2008 were 23.6 percent lower than the first quarter 2007
and 9.3 percent lower than the fourth quarter 2007. Our salaries
and benefits, excluding stock compensation expense, fell $14.1
million, or 23.8 percent, compared to a 32.8 percent volume decline.
Our salaries and benefits expense did not flex as well as in
previous quarters as we are beginning to reach a core level of
staffing given our number of facilities and operations.
* Net loss was $15.8 million, or ($0.45) per diluted share, compared
to net income of $0.2 million, or $0.01 per diluted share.
* Diluted weighted average shares outstanding were 35.5 million
compared to 36.2 million.
* Adjusted EBITDA was ($11.1) million, or (4.1) percent of sales,
compared to $14.7 million, or 3.6 percent of sales.
* As of March 31, 2008, the company's cash on hand was $81.8 million,
available borrowing capacity was $129.5 million with no amounts
currently drawn, and funded debt was $275 million.
* Operating cash flow was ($16.1) million compared to $21.7 million.
* Capital expenditures were $1.2 million compared to $2.6 million.
Commenting on the first quarter results, Charles Horn, Builders FirstSource Senior Vice President and Chief Financial Officer, said, "We ended the quarter with over $210 million in liquidity. We used cash in operating activities during the quarter as we experienced a slight build in our inventories in March as our sales per ship day increased 6.7% over December 2007 levels. Other receivables also increased as a result of an increase in income taxes receivable. In addition, our 2007 annual bonuses paid in February 2008 lowered our accrued liabilities by $5.9 million. These declines were expected and operating cash flow should improve in the second quarter. We anticipate receiving $5 to $7 million in tax refunds in the second quarter of 2008 and $7 to $10 million of additional tax refunds in the third quarter of 2008."
Mr. Horn continued, "Our performance improved as the quarter progressed nearing break-even Adjusted EBITDA in March. In addition, we made improvements in our accounts receivable aging decreasing our day sales outstanding to 40.3 days for the current quarter from 42.4 days in the fourth quarter of 2007. We continue to do all we can to reduce headcount, drive operational improvements, rationalize physical capacity, and restructure underperforming locations."
Outlook
The company expects the difficult market conditions to negatively affect its operating results at least through the first half of 2009. Additionally, increased competitive pressure arising from the current operating conditions will likely continue to hurt gross margins for the foreseeable future.
Mr. Sherman concluded, "Although we have seen some stabilization in annualized starts, we are cautious. We believe there is a possibility we could see further declines in annualized starts. Without meaningful legislation, the over three million homes on the verge of foreclosure and an illiquid mortgage market are a further threat to the macroeconomic factors that affect our business. We have been careful to protect our liquidity since the downturn began which we believe will allow us to effectively manage through this down cycle. Protecting our liquidity also allows us to invest in ourselves, so when the market conditions improve, we can effectively ramp up our operations."
Conference Call
Builders FirstSource will host a conference call tomorrow, April 25, 2008 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: 888-204-4368 (U.S. and Canada) and 913-312-1513 (international). A replay of the call will be available from 1:00 p.m. CT April 25 through May 9, 2008. To access the replay, please dial 888-203-1112 (U.S. and Canada) and 719-457-0820 (international). Please refer to pass code 9885724. 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 in 13 states, principally in the southern and eastern United States, and has 66 distribution centers and 62 manufacturing facilities, many of which are located on the same premises as our distribution facilities. 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 Web site at www.bldr.com.
Cautionary Notice
Statements in this news release and the schedules hereto which are not purely historical facts or which necessarily depend upon future events, including statements about the impact of 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
March 31,
-------------------
2008 2007
--------------------------------------------------------------------
(in thousands, except per share amounts)
Sales $ 270,511 $ 411,143
Cost of sales 210,110 306,592
-----------------------
Gross margin 60,401 104,551
Selling, general and
administrative expenses
(includes stock-based
compensation expense of $2,107
and $1,598 for the three months
ended in 2008 and 2007,
respectively) 79,571 97,470
-----------------------
(Loss) income from operations (19,170) 7,081
Interest expense, net 6,470 6,712
-----------------------
(Loss) income before income taxes (25,640) 369
Income tax (benefit) expense (9,794) 137
-----------------------
Net (loss) income $ (15,846) $ 232
=======================
Net (loss) income per share:
Basic $ (0.45) $ 0.01
=======================
Diluted $ (0.45) $ 0.01
=======================
Weighted average common shares:
Basic 35,460 34,633
=======================
Diluted 35,460 36,206
=======================
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Sales by Product Category
(unaudited)
Three months ended March 31,
-----------------------------------------
2008 2007
--------------------------------------------------------------------
(dollars in thousands)
Prefabricated components $ 53,832 19.9% $ 84,155 20.5%
Windows & doors 68,237 25.2% 92,611 22.5%
Lumber & lumber sheet goods 64,517 23.9% 114,683 27.9%
Millwork 28,630 10.6% 39,242 9.5%
Other building products & services 55,295 20.4% 80,452 19.6%
---------------- ----------------
Total sales $ 270,511 100.0% $ 411,143 100.0%
================ ================
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
March 31, December 31,
2008 2007
---------------------------------------------------------------------
(in thousands, except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents $ 81,825 $ 97,574
Accounts receivable, less allowances
of $6,504 and $7,209, respectively 151,862 149,482
Inventories 95,719 95,038
Other current assets 24,509 26,672
-------- --------
Total current assets 353,915 368,766
Property, plant and equipment, net 91,809 96,358
Goodwill 155,588 155,588
Other assets, net 25,932 26,711
-------- --------
Total assets $627,244 $647,423
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 71,272 $ 65,811
Accrued liabilities 36,178 47,626
Current maturities of long-term debt 41 40
-------- --------
Total current liabilities 107,491 113,477
Long-term debt, net of current maturities 279,216 279,226
Other long-term liabilities 14,579 13,173
-------- --------
401,286 405,876
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; 36,038 and 35,701
shares issued and outstanding at March 31,
2008 and December 31, 2007, respectively 356 351
Additional paid-in capital 140,729 138,476
Retained earnings 86,529 102,375
Accumulated other comprehensive income (1,656) 345
-------- --------
Total stockholders' equity 225,958 241,547
-------- --------
Total liabilities and stockholders'
equity $627,244 $647,423
======== ========
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Accounts Receivable Detail
(unaudited)
March 31, December 31,
2008 2007
---------------------------------------------------------------------
(in thousands)
Trade receivables $ 129,253 $ 133,639
Other 29,113 23,052
--------- ---------
Accounts receivable 158,366 156,691
Less: allowance for returns and
doubtful accounts (6,504) (7,209)
--------- ---------
Accounts receivable, net $ 151,862 $ 149,482
========= =========
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
--------------------------
2008 2007
------------------------------------------------------------------
(in thousands)
Cash flows from operating
activities:
Net (loss) income $ (15,846) $ 232
Adjustments to reconcile net
(loss) income to net cash
(used in) provided by
operating activities:
Depreciation and
amortization 5,930 6,068
Amortization of deferred
loan costs 703 659
Deferred income taxes 44 8
Bad debt expense 298 201
Non-cash stock based
compensation 2,107 1,598
Net gain on sales
of assets (400) (288)
Changes in assets and
liabilities:
Accounts receivable (3,695) 1,417
Inventories (681) 2,899
Other current assets 1,953 2,675
Other assets and liabilities (745) (2,340)
Accounts payable 5,461 22,751
Accrued liabilities (11,218) (14,168)
--------- ---------
Net cash (used in) provided
by operating activities (16,089) 21,712
--------- ---------
Cash flows from investing activities:
Purchases of property, plant
and equipment (1,246) (2,573)
Proceeds from sale of property,
plant and equipment 577 493
--------- ---------
Net cash used in investing
activities (669) (2,080)
--------- ---------
Cash flows from financing activities:
Payments of long-term debt (9) (110)
Deferred loan costs (245) --
Exercise of stock options 1,662 2,319
Repurchase of common stock (399) (483)
--------- ---------
Net cash provided by financing
activities 1,009 1,726
--------- ---------
Net change in cash and cash
equivalents (15,749) 21,358
Cash and cash equivalents at
beginning of period 97,574 93,258
--------- ---------
Cash and cash equivalents at
end of period $ 81,825 $ 114,616
========= =========
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 April 24, 2008
Three months ended
March 31,
--------------------
2008 2007
---------------------------------------------
Reconciliation to
EBITDA:
Net (loss) income $ (15,846) $ 232
Reconciling items:
Depreciation and
amortization expense 5,930 6,068
Interest expense 6,470 6,712
Income tax (benefit)
expense (9,794) 137
--------------------
EBITDA (13,240) 13,149
Stock compensation
expense 2,107 1,598
--------------------
Adjusted EBITDA $ (11,133) $ 14,747
Adjusted EBITDA
as percentage
of sales -4.1% 3.6%
Last twelve months ended
March 31,
-------------------------
2008 2007
---------------------------------------------------------------------
Reconciliation to Return on Net Assets:
Net (loss) income $ (39,830) $ 49,807
Reconciling items:
Interest expense 27,485 28,254
Income tax (benefit) expense (26,781) 30,705
-------------------------
(Loss) earnings before interest
and taxes $ (39,126) $ 108,766
=========================
Average net assets $ 463,430 $ 496,980
Return on net assets -8.4% 21.9%