Value-Added Products and Acquisitions Drive Double-Digit Volume Growth in Fourth Quarter
Record Gross Profit and Cash Generation for 2019
Fourth Quarter 2019 Highlights
Full Year 2019 Highlights
RALEIGH, N.C., Feb. 27, 2020 (GLOBE NEWSWIRE) -- BMC Stock Holdings, Inc. (Nasdaq: BMCH) (“BMC” or the “Company”), one of the leading providers of diversified building products, services and innovative solutions in the U.S. residential construction market, today announced results for the fourth quarter and full year ended December 31, 2019. “2019 was a year of significant accomplishment, leveraging our strong culture, innovation and continuous improvement efforts to drive enhancements in safety, customer service, pricing and productivity,” said Dave Flitman, President and CEO of BMC. “I’m proud of our team’s execution of our strategic initiatives during the year in the face of significant commodity deflation. Looking ahead to 2020, we believe we have strong underlying strength in our core business segments which, coupled with our strategic acquisitions and record cash generation, positions us well to expect 2020 to be a year of solid revenue and earnings growth. I’d like to thank our employees for their focused execution during the year and am excited about our momentum heading into 2020.”
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
(in thousands, except per share data) | 2019 | 2018 | Variance | 2019 | 2018 | Variance | |||||||||||||||||
Net sales | $ | 890,564 | $ | 859,521 | $ | 31,043 | $ | 3,626,593 | $ | 3,682,448 | $ | (55,855 | ) | ||||||||||
Net income and EPS | |||||||||||||||||||||||
Net income (GAAP) | 20,199 | 28,116 | (7,917 | ) | 109,845 | 119,738 | (9,893 | ) | |||||||||||||||
Diluted earnings per share (GAAP) | 0.30 | 0.41 | (0.11 | ) | 1.63 | 1.77 | (0.14 | ) | |||||||||||||||
Adjusted net income (non-GAAP) | 25,003 | 32,295 | (7,292 | ) | 128,159 | 134,544 | (6,385 | ) | |||||||||||||||
Adjusted diluted earnings per share (non-GAAP) | 0.37 | 0.48 | (0.11 | ) | 1.90 | 1.99 | (0.09 | ) | |||||||||||||||
Adjusted EBITDA (non-GAAP) | 57,046 | 65,502 | (8,456 | ) | 259,433 | 265,879 | (6,446 | ) | |||||||||||||||
Adjusted EBITDA margin (non-GAAP) | 6.4 | % | 7.6 | % | (1.2 | )% | 7.2 | % | 7.2 | % | — | % | |||||||||||
Net cash provided by operating activities | 47,436 | 99,387 | (51,951 | ) | 245,853 | 210,025 | 35,828 | ||||||||||||||||
Fourth Quarter 2019 Financial Results Compared to Prior Year Period
Full Year 2019 Financial Results Compared to Full Year 2018
Liquidity and Capital Resources
Total liquidity as of December 31, 2019 was approximately $527.8 million, which included cash and cash equivalents of $165.5 million and $362.3 million of borrowing availability under the Company’s asset-backed revolver. Capital expenditures during the fourth quarter and full year 2019 totaled $21.8 million and $89.4 million, respectively. These expenditures were primarily used to fund purchases of vehicles and equipment to support increased sales volume and replace aged assets and facility, innovation and technology investments to support our operations.
Fourth Quarter and Full Year 2019 Acquisitions
On December 2, 2019, the Company completed the acquisition of DeFord Lumber (“DeFord”), a leading and highly-respected provider of building materials, primarily to custom and regional homebuilders in the Dallas-Fort Worth market. DeFord generated approximately $75 million in total net sales for the twelve months ended September 30, 2019. The addition of DeFord enhances BMC’s value-added offerings and customer mix.
During 2019, the Company completed six acquisitions with annualized sales of approximately $275 million.
Stock Repurchase Authorization
On November 26, 2018, the Company announced that its board of directors authorized a $75.0 million share repurchase program, which was to expire on November 20, 2019. During October 2019, the Company’s board of directors authorized extending this share repurchase program for one year, such that it will expire on November 20, 2020. In the fourth quarter of 2019, the Company did not repurchase any shares. As of February 27, 2020, the Company had approximately $55.7 million of capacity remaining under the current share repurchase authorization.
2020 Outlook
For 2020, BMC expects net sales to grow to a range of $3.85 billion to $4.0 billion or approximately 6% to 10% over its 2019 net sales of $3.6 billion. BMC also expects Adjusted EBITDA to be in a range of $280 million to $295 million or approximately 8% to 14% over its 2019 Adjusted EBITDA of $259.4 million.
This outlook is based on several assumptions, including the following:
BMC’s Adjusted EBITDA outlook and full-year forecast for its effective tax rate on operations exclude the impact of certain income and expense items that management believes are not part of underlying operations. These items may include, but are not limited to, loss on early extinguishment of debt, restructuring charges, certain tax items, and charges associated with non-recurring professional and legal fees associated with acquisitions. BMC’s management cannot estimate on a forward-looking basis without unreasonable effort the impact these income and expense items will have on its reported Net income and its reported effective tax rate because these items, which could be significant, are difficult to predict and may be highly variable. As a result, BMC does not provide a reconciliation to the most comparable GAAP financial measure for its Adjusted EBITDA outlook or its effective tax rate on operations forecast. Please see the Forward-Looking Statements section of this release for a discussion of certain risks relevant to BMC’s outlook.
Conference Call Information
BMC will host a conference call on Thursday, February 27, 2020 at 8:30 a.m. Eastern Time and will simultaneously broadcast it live over the Internet. Prior to the call, an earnings release presentation will be posted on the Company’s investor relations website - ir.buildwithbmc.com - in the “Events and Presentations” tab under the heading “Presentation Archive.” The conference call can be accessed by dialing 877-407-0784 (domestic) or 201-689-8560 (international). A telephonic replay will be available approximately three hours after the call and can be accessed by dialing 844-512-2921, or for international callers, 412-317-6671. The passcode for both the live call and the replay is 13698724. The telephonic replay will be available until 11:59 p.m. (Eastern Time) on March 5, 2020. The live webcast of the conference call can be accessed on the Company’s investor relations website at ir.buildwithbmc.com and will be available for approximately 90 days.
About BMC Stock Holdings, Inc.
With $3.6 billion in 2019 net sales, BMC is a leading provider of diversified building products, services and innovative solutions to builders, contractors and professional remodelers in the U.S. residential housing market. Headquartered in Raleigh, North Carolina, the Company’s comprehensive portfolio of products and solutions spans building materials, including millwork and structural component manufacturing capabilities, consultative showrooms and design centers, value-added installation management services and an innovative eBusiness platform. BMC serves 45 metropolitan areas across 18 states, principally in the South and West regions.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this document may include, without limitation, statements regarding sales growth, price changes, earnings performance, strategic direction and the demand for our products. Forward-looking statements are typically identified by words or phrases such as "may," "might," "predict," "future," "seek to," "assume," "goal," "objective," "continue," "will," "could," "should," "would," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "prospects," "guidance," "possible," "predict," "propose," "potential" and "forecast," or the negative of such terms and other words, terms and phrases of similar meaning. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties, many of which are outside BMC's control. BMC cautions readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement; therefore, investors and shareholders should not place undue reliance on such statement. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this communication.
A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. These factors include without limitation:
All such factors are difficult to predict and are beyond BMC’s control. All forward-looking statements attributable to BMC or persons acting on BMC’s behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and BMC undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless otherwise required by law.
Investor Relations Contact
BMC Stock Holdings, Inc.
Michael Neese
(919) 431-1796
1 This earnings release includes several metrics, including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted diluted earnings per share, which are non-GAAP financial measures within the meaning of applicable SEC rules and regulations. For a reconciliation of such non-GAAP financial measures to the most comparable GAAP measures and a discussion of the reasons why the Company believes that these non-GAAP financial measures provide information that is useful to investors, see “Reconciliation of GAAP to Non-GAAP Measures.”
BMC STOCK HOLDINGS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (unaudited) | ||||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Net sales | $ | 890,564 | $ | 859,521 | $ | 3,626,593 | $ | 3,682,448 | ||||||||
Cost of sales | 655,926 | 630,291 | 2,675,289 | 2,773,232 | ||||||||||||
Gross profit | 234,638 | 229,230 | 951,304 | 909,216 | ||||||||||||
Selling, general and administrative expenses | 186,952 | 174,037 | 727,601 | 680,273 | ||||||||||||
Depreciation expense | 11,091 | 10,304 | 41,208 | 39,627 | ||||||||||||
Amortization expense | 4,808 | 3,752 | 18,045 | 15,015 | ||||||||||||
Merger and integration costs | 1,018 | 371 | 6,485 | 3,998 | ||||||||||||
Impairment of assets | 1,259 | — | 1,903 | — | ||||||||||||
205,128 | 188,464 | 795,242 | 738,913 | |||||||||||||
Income from operations | 29,510 | 40,766 | 156,062 | 170,303 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest expense | (5,771 | ) | (6,119 | ) | (23,156 | ) | (24,035 | ) | ||||||||
Other income, net | 3,419 | 2,816 | 13,578 | 10,646 | ||||||||||||
Income before income taxes | 27,158 | 37,463 | 146,484 | 156,914 | ||||||||||||
Income tax expense | 6,959 | 9,347 | 36,639 | 37,176 | ||||||||||||
Net income | $ | 20,199 | $ | 28,116 | $ | 109,845 | $ | 119,738 | ||||||||
Weighted average common shares outstanding | ||||||||||||||||
Basic | 66,759 | 67,354 | 66,701 | 67,273 | ||||||||||||
Diluted | 67,609 | 67,764 | 67,332 | 67,748 | ||||||||||||
Net income per common share | ||||||||||||||||
Basic | $ | 0.30 | $ | 0.42 | $ | 1.65 | $ | 1.78 | ||||||||
Diluted | $ | 0.30 | $ | 0.41 | $ | 1.63 | $ | 1.77 |
BMC STOCK HOLDINGS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (unaudited) | ||||||||
December 31, 2019 | December 31, 2018 | |||||||
(in thousands, except share and per share amounts) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 165,496 | $ | 150,723 | ||||
Accounts receivable, net of allowances | 325,741 | 298,440 | ||||||
Inventories | 331,969 | 309,279 | ||||||
Contract assets | 32,125 | 32,348 | ||||||
Income taxes receivable | 7,504 | — | ||||||
Prepaid expenses and other current assets | 66,818 | 56,249 | ||||||
Total current assets | 929,653 | 847,039 | ||||||
Property and equipment, net of accumulated depreciation | 345,466 | 294,327 | ||||||
Operating lease right-of-use assets | 139,907 | — | ||||||
Customer relationship intangible assets, net of accumulated amortization | 185,049 | 158,563 | ||||||
Other intangible assets, net of accumulated amortization | 580 | 325 | ||||||
Goodwill | 297,146 | 262,997 | ||||||
Other long-term assets | 8,300 | 12,860 | ||||||
Total assets | $ | 1,906,101 | $ | 1,576,111 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 189,644 | $ | 123,495 | ||||
Accrued expenses and other liabilities | 117,825 | 110,276 | ||||||
Contract liabilities | 31,094 | 34,888 | ||||||
Income taxes payable | — | 902 | ||||||
Interest payable | 4,759 | 4,759 | ||||||
Current portion: | ||||||||
Long-term debt and finance lease obligations | 5,577 | 6,661 | ||||||
Operating lease liabilities | 26,147 | — | ||||||
Insurance reserves | 16,328 | 15,198 | ||||||
Total current liabilities | 391,374 | 296,179 | ||||||
Insurance reserves | 43,536 | 41,270 | ||||||
Long-term debt | 346,032 | 345,197 | ||||||
Long-term portion of finance lease obligations | 6,959 | 8,845 | ||||||
Long-term portion of operating lease liabilities | 120,832 | — | ||||||
Deferred income taxes | 15,195 | 3,034 | ||||||
Other long-term liabilities | 661 | 6,927 | ||||||
Total liabilities | 924,589 | 701,452 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity | ||||||||
Preferred stock, $0.01 par value, 50.0 million shares authorized, no shares issued and outstanding at December 31, 2019 and December 31, 2018 | — | — | ||||||
Common stock, $0.01 par value, 300.0 million shares authorized, 68.3 million and 67.7 million shares issued, and 66.8 million and 67.2 million outstanding at December 31, 2019 and December 31, 2018, respectively | 683 | 677 | ||||||
Additional paid-in capital | 687,255 | 672,095 | ||||||
Retained earnings | 320,190 | 210,345 | ||||||
Treasury stock, at cost, 1.5 million and 0.5 million shares at December 31, 2019 and December 31, 2018, respectively | (26,616 | ) | (8,458 | ) | ||||
Total stockholders' equity | 981,512 | 874,659 | ||||||
Total liabilities and stockholders' equity | $ | 1,906,101 | $ | 1,576,111 |
BMC STOCK HOLDINGS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited) | ||||||||
Year Ended December 31, | ||||||||
(in thousands) | 2019 | 2018 | ||||||
Cash flows from operating activities | ||||||||
Net income | $ | 109,845 | $ | 119,738 | ||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
Depreciation expense | 54,108 | 50,373 | ||||||
Amortization of intangible assets | 18,045 | 15,015 | ||||||
Amortization of debt issuance costs | 1,441 | 1,684 | ||||||
Deferred income taxes | 12,161 | 1,266 | ||||||
Non-cash stock compensation expense | 12,462 | 11,315 | ||||||
Gain on sale of property, equipment and real estate | (1,973 | ) | (3,321 | ) | ||||
Gain on insurance proceeds | (107 | ) | — | |||||
Other non-cash adjustments | 3,769 | 613 | ||||||
Change in assets and liabilities, net of effects of acquisitions | ||||||||
Accounts receivable, net of allowances | 846 | 16,078 | ||||||
Inventories | 68 | 3,257 | ||||||
Accounts payable | 52,364 | (51,348 | ) | |||||
Other assets and liabilities | (17,176 | ) | 45,355 | |||||
Net cash provided by operating activities | 245,853 | 210,025 | ||||||
Cash flows from investing activities | ||||||||
Purchases of businesses, net of cash acquired | (124,412 | ) | (20,970 | ) | ||||
Purchases of property, equipment and real estate | (89,392 | ) | (55,174 | ) | ||||
Proceeds from sale of property, equipment and real estate | 4,880 | 11,432 | ||||||
Insurance proceeds | 107 | 1,991 | ||||||
Proceeds from sale of business | — | 7,773 | ||||||
Net cash used in investing activities | (208,817 | ) | (54,948 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from revolving line of credit | 110,987 | 854,946 | ||||||
Repayments of proceeds from revolving line of credit | (110,987 | ) | (859,408 | ) | ||||
Repurchases of common stock under share repurchase program | (16,446 | ) | (2,891 | ) | ||||
Payments on finance lease obligations | (6,697 | ) | (7,759 | ) | ||||
Secured borrowings | 2,445 | 431 | ||||||
Proceeds from exercise of stock options | 2,704 | 1,327 | ||||||
Repurchases of common stock related to equity award activity | (1,712 | ) | (2,044 | ) | ||||
Acquisition-related post-closing payments, net | (1,028 | ) | (370 | ) | ||||
Earnout payments | (628 | ) | — | |||||
Payments of debt issuance costs | (901 | ) | — | |||||
Principal payments on other notes | — | (336 | ) | |||||
Net cash used in financing activities | (22,263 | ) | (16,104 | ) | ||||
Net increase in cash and cash equivalents | 14,773 | 138,973 | ||||||
Cash and cash equivalents | ||||||||
Beginning of period | 150,723 | 11,750 | ||||||
End of period | $ | 165,496 | $ | 150,723 |
BMC STOCK HOLDINGS, INC. AND SUBSIDIARIES Net Sales by Product Category (unaudited) | |||||||||||||||||||
Three Months Ended December 31, 2019 | Three Months Ended December 31, 2018 | Core Organic Growth (a) | |||||||||||||||||
(in thousands) | Net Sales | % of Sales | Net Sales | % of Sales | % Change | ||||||||||||||
Structural components | $ | 152,468 | 17.1 | % | $ | 151,740 | 17.7 | % | 0.5 | % | 3.4 | % | |||||||
Lumber & lumber sheet goods | 242,148 | 27.2 | % | 272,986 | 31.8 | % | (11.3 | )% | 2.0 | % | |||||||||
Millwork, doors & windows | 284,030 | 31.9 | % | 234,366 | 27.3 | % | 21.2 | % | 10.5 | % | |||||||||
Other building products & services | 211,918 | 23.8 | % | 200,429 | 23.2 | % | 5.7 | % | (0.9 | )% | |||||||||
Total net sales | $ | 890,564 | 100.0 | % | $ | 859,521 | 100.0 | % | 3.6 | % | 3.9 | % |
Year Ended December 31, 2019 | Year Ended December 31, 2018 | Core Organic Growth (a) | |||||||||||||||||
(in thousands) | Net Sales | % of Sales | Net Sales | % of Sales | % Change | ||||||||||||||
Structural components | $ | 636,043 | 17.5 | % | $ | 622,105 | 16.9 | % | 2.2 | % | 4.6 | % | |||||||
Lumber & lumber sheet goods | 1,040,870 | 28.7 | % | 1,286,481 | 34.9 | % | (19.1 | )% | (1.6 | )% | |||||||||
Millwork, doors & windows | 1,080,837 | 29.8 | % | 964,684 | 26.2 | % | 12.0 | % | 6.0 | % | |||||||||
Other building products & services | 868,843 | 24.0 | % | 809,178 | 22.0 | % | 7.4 | % | 5.3 | % | |||||||||
Total net sales | $ | 3,626,593 | 100.0 | % | $ | 3,682,448 | 100.0 | % | (1.5 | )% | 3.1 | % | |||||||
Net Sales by Customer Type
(unaudited)
Three Months Ended December 31, 2019 | Three Months Ended December 31, 2018 | Core Organic Growth (a) | |||||||||||||||||
(in thousands) | Net Sales | % of Sales | Net Sales | % of Sales | % Change | ||||||||||||||
Single-family homebuilders | $ | 649,475 | 72.9 | % | $ | 650,316 | 75.7 | % | (0.1 | )% | 1.6 | % | |||||||
Remodeling contractors | 105,256 | 11.8 | % | 99,646 | 11.6 | % | 5.6 | % | 4.4 | % | |||||||||
Multi-family, commercial & other contractors | 135,833 | 15.3 | % | 109,559 | 12.7 | % | 24.0 | % | 17.0 | % | |||||||||
Total net sales | $ | 890,564 | 100.0 | % | $ | 859,521 | 100.0 | % | 3.6 | % | 3.9 | % |
Year Ended December 31, 2019 | Year Ended December 31, 2018 | Core Organic Growth (a) | |||||||||||||||||
(in thousands) | Net Sales | % of Sales | Net Sales | % of Sales | % Change | ||||||||||||||
Single-family homebuilders | $ | 2,713,857 | 74.8 | % | $ | 2,814,100 | 76.4 | % | (3.6 | )% | 2.0 | % | |||||||
Remodeling contractors | 419,533 | 11.6 | % | 427,346 | 11.6 | % | (1.8 | )% | 0.4 | % | |||||||||
Multi-family, commercial & other contractors | 493,203 | 13.6 | % | 441,002 | 12.0 | % | 11.8 | % | 11.6 | % | |||||||||
Total net sales | $ | 3,626,593 | 100.0 | % | $ | 3,682,448 | 100.0 | % | (1.5 | )% | 3.1 | % |
(a) | Core Organic Growth is calculated as the total change in net sales excluding the estimated impact of changes in commodity-related prices, the net sales of non-comparable acquired or disposed operations and changes in selling days, as applicable. | |
BMC STOCK HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Measures
(unaudited)
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted diluted earnings per share are intended as supplemental measures of the Company’s performance that are not required by, or presented in accordance with, GAAP. The Company believes that Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted diluted earnings per share provide useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and operating results.
Company management uses Adjusted EBITDA and Adjusted net income 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 the board of directors. The Company believes that the use of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted diluted earnings per share provides additional tools for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other distribution and retail companies, which may present similar non-GAAP financial measures to investors. However, the Company’s calculation of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted diluted earnings per share are not necessarily comparable to similarly titled measures reported by other companies. Company management does not consider Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted diluted earnings per share in isolation or as alternatives to financial measures determined in accordance with GAAP. The principal limitation of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted diluted earnings per share is that they exclude 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, Adjusted EBITDA margin, Adjusted net income and Adjusted diluted earnings per share do not reflect changes in, or cash requirements for, working capital needs; (ii) Adjusted EBITDA and Adjusted EBITDA margin do not reflect interest expense, or the requirements necessary to service interest or principal payments on debt; (iii) Adjusted EBITDA and Adjusted EBITDA margin do not reflect income tax expenses or the cash requirements to pay taxes; (iv) Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted diluted earnings per share do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; (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, Adjusted EBITDA margin, Adjusted net income and Adjusted diluted earnings per share do not reflect any cash requirements for such replacements and (vi) Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted diluted earnings per share do not consider the potentially dilutive impact of issuing non-cash stock-based compensation. In order to compensate for these limitations, management presents Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted diluted earnings per share in conjunction with GAAP results. Readers should review the reconciliations of net income to Adjusted EBITDA and Adjusted net income below, and should not rely on any single financial measure to evaluate the Company’s business.
BMC STOCK HOLDINGS, INC. AND SUBSIDIARIES Reconciliation of GAAP to Non-GAAP Measures (continued) (unaudited) | |||||||||||||||||
The following is a reconciliation of net income to Adjusted EBITDA and Adjusted net income. | |||||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||
(in thousands, except per share amounts) | 2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income | $ | 20,199 | $ | 28,116 | $ | 109,845 | $ | 119,738 | |||||||||
Interest expense | 5,771 | 6,119 | 23,156 | 24,035 | |||||||||||||
Interest income | (1,156 | ) | (641 | ) | (3,988 | ) | (758 | ) | |||||||||
Income tax expense | 6,959 | 9,347 | 36,639 | 37,176 | |||||||||||||
Depreciation and amortization | 19,194 | 16,828 | 72,153 | 65,388 | |||||||||||||
Merger and integration costs | 1,018 | 371 | 6,485 | 3,998 | |||||||||||||
Non-cash stock compensation expense | 3,285 | 3,089 | 12,462 | 11,315 | |||||||||||||
Acquisition costs | 309 | 1,562 | 1,136 | 1,829 | |||||||||||||
Business reorganization costs (a) | 1,467 | 656 | 1,767 | 656 | |||||||||||||
Other items (b) | — | 55 | (222 | ) | 2,502 | ||||||||||||
Adjusted EBITDA | $ | 57,046 | $ | 65,502 | $ | 259,433 | $ | 265,879 | |||||||||
Adjusted EBITDA margin | 6.4 | % | 7.6 | % | 7.2 | % | 7.2 | % | |||||||||
Net income | $ | 20,199 | $ | 28,116 | $ | 109,845 | $ | 119,738 | |||||||||
Merger and integration costs | 1,018 | 371 | 6,485 | 3,998 | |||||||||||||
Non-cash stock compensation expense | 3,285 | 3,089 | 12,462 | 11,315 | |||||||||||||
Acquisition costs | 309 | 1,562 | 1,136 | 1,829 | |||||||||||||
Business reorganization costs (a) | 1,467 | 656 | 1,767 | 656 | |||||||||||||
Other items (c) | — | (159 | ) | 1,413 | 1,791 | ||||||||||||
Tax effect of adjustments to net income (d) | (1,275 | ) | (1,340 | ) | (4,949 | ) | (4,783 | ) | |||||||||
Adjusted net income | $ | 25,003 | $ | 32,295 | $ | 128,159 | $ | 134,544 | |||||||||
Diluted weighted average shares | 67,609 | 67,764 | 67,332 | 67,748 | |||||||||||||
Adjusted diluted earnings per share | $ | 0.37 | $ | 0.48 | $ | 1.90 | $ | 1.99 |
(a) | Represents asset impairment charges related to the relocation of the operations of certain of the Company’s facilities (which have been separately called out in prior earnings releases) and charges related to the disposition of the Company’s Coleman Floor business and exit from the Arkansas market. | |
(b) | For the year ended December 31, 2019, represents income from a recovery made by the Company related to a fire at one of the Company’s facilities during 2015 (the “Recovery Income”) and the effect of the settlement of pending litigation for an amount below what was previously accrued (the “Litigation Settlement”). For the three months and year ended December 31, 2018, represents costs incurred in connection with the departure of the Company’s former chief executive officer and the search for and appointment of his permanent replacement (“CEO Transition Costs”). | |
(c) | For the year ended December 31, 2019, represents out of period income tax expense to correct an error related to the calculation of excess windfall tax benefits on stock option exercises in certain prior periods (“Income Tax Adjustment”), the Recovery Income and the Litigation Settlement. For the three months and year ended December 31, 2018, represents CEO Transition Costs and a tax benefit related to a measurement period adjustment to the Company’s accounting for the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act Adjustment”). Other items for the three months and year ended December 31, 2018 have been revised from previously reported amounts to exclude the excess windfall related to the Income Tax Adjustment that was reflected in historical results. | |
(d) | The tax effect of adjustments to net income was based on the respective transactions’ income tax rate, which was 23.6%, 23.4%, 23.6% and 23.6% for the three months ended December 31, 2019 and 2018 and the years ended December 31, 2019 and 2018, respectively. The tax effect of adjustments to net income excludes non-deductible impairment of assets of $0.7 million for the three months ended December 31, 2019 and non-deductible impairment of assets of $0.7 million and the Income Tax Adjustment for the year ended December 31, 2019. The tax effect of adjustment to net income excludes the Income Tax Adjustment and 2017 Tax Act Adjustment for the three months and year ended December 31, 2018. |