BMC Stock Holdings, Inc. (Nasdaq: BMCH) (“BMC” or the “Company”),
one of the nation’s leading providers of diversified building
materials and solutions to new construction builders and
professional remodelers in the U.S., today announced its financial
results for the first quarter ended March 31, 2020.
First Quarter 2020
Highlights
- Net sales increased 11.6% to $920.9 million primarily driven by
growth from acquisitions of 6.0%, core organic growth of 5.3%, and
growth of 1.7% due to an extra selling day, offset by price
deflation of 0.7% and the impact of a closed location of 0.7%
- Gross profit increased 9.7% to $237.1 million
- Net income increased 8.3% to $22.0 million
- Adjusted EBITDA1 improved by 12.1% to $61.0 million
- Adjusted EBITDA margin1 of 6.6%
- Diluted earnings per share (EPS) increased 10.0% to $0.33
- Adjusted EPS1 increased 8.1% to $0.40
- Total liquidity was approximately $501.1 million, which
included $282.8 million of cash; with no significant debt
maturities until 2024
“During this unprecedented time, our thoughts and prayers are
with all of those affected by the COVID-19 pandemic and we offer
our thanks and appreciation to our nation’s healthcare workers and
first responders who have been on the front lines of this battle
since it started. I’d also like to thank all of our
associates who have been working diligently to take care of each
other and our customers,” said Dave Flitman, President and CEO of
BMC.
“We were very pleased with our first quarter results, which
exceeded our expectations and capitalized on a strong pipeline of
construction activity and continued momentum in our value-added
products and services. However, due to the COVID-19 pandemic,
our focus quickly turned to the safety and well-being of our
associates and their families while meeting the critical product
and service needs of our customers. We have taken numerous
steps across our local operations to help protect our associates
and customers, accelerate productivity gains while reducing our
operating expenses and capital expenditures, and increase our
company’s financial flexibility. Our team is focused on
protecting the assets of the company, while not losing sight of
executing our long-term strategic objectives.”
Flitman continued, “We entered this crisis in a position of
strength, and I’m confident that our actions, combined with our
commitment to our associates, customers and suppliers have
positioned us to successfully navigate this period of
uncertainty.”
1 Non-GAAP Financial
Measures
This press release presents Adjusted EBITDA,
Adjusted EBITDA margin, Adjusted net income and Adjusted net income
per diluted share, which are non-GAAP financial measures within the
meaning of applicable SEC rules and regulations. For a
reconciliation of Adjusted EBITDA and Adjusted net income 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 the discussion and
tables included in this press release under “Reconciliation of GAAP
to Non-GAAP Measures.”
First Quarter 2020 Summary of Financial
Results
During the three months ended March 31,
2020, the Company generated solid net income, diluted earnings per
share and Adjusted EBITDA (non-GAAP).
|
Three Months Ended March 31, |
(in thousands, except per
share data) |
2020 |
|
2019 |
|
Variance |
Net
sales |
$ |
920,879 |
|
|
$ |
825,405 |
|
|
$ |
95,474 |
|
|
|
|
|
|
|
Net income and
EPS |
|
|
|
|
|
Net income (GAAP) |
$ |
22,029 |
|
|
$ |
20,350 |
|
|
$ |
1,679 |
|
Diluted earnings per share (GAAP) |
$ |
0.33 |
|
|
$ |
0.30 |
|
|
$ |
0.03 |
|
Adjusted net income (non-GAAP) |
$ |
26,725 |
|
|
$ |
25,037 |
|
|
$ |
1,688 |
|
Adjusted net income per diluted share (non-GAAP) |
$ |
0.40 |
|
|
$ |
0.37 |
|
|
$ |
0.03 |
|
|
|
|
|
|
|
Adjusted EBITDA
(non-GAAP) |
$ |
61,006 |
|
|
$ |
54,400 |
|
|
$ |
6,606 |
|
Adjusted EBITDA margin
(non-GAAP) |
6.6 |
% |
|
6.6 |
% |
|
— |
% |
|
|
|
|
|
|
Net cash provided by
operating activities |
$ |
17,066 |
|
|
$ |
77,759 |
|
|
$ |
(60,693 |
) |
First Quarter 2020 Financial Results Compared to Prior
Year Period
- Net sales increased 11.6% to $920.9 million primarily driven by
growth from acquisitions of 6.0%, core organic growth of 5.3% and
growth of 1.7% due to an extra selling day. These increases
were partially offset by a 0.7% decrease due to price deflation and
the impact of a closed location of 0.7%.
- Gross profit increased 9.7% to $237.1 million. Gross
profit as a percentage of sales (gross margin) was 25.8%, compared
to 26.2% for the first quarter of 2019. The 40 basis point
decline in gross margin was driven by a decrease in the gross
margin in the lumber and lumber sheet goods and structural
components product categories, which benefited from unusually high
commodity price-related gross margins during the prior year period,
partially offset by an increase in the percent of net sales derived
from our millwork, doors and windows product category, which often
generates higher gross margins relative to other products.
- Selling, general and administrative (“SG&A”) expenses
increased $17.0 million to $186.9 million. Approximately $11.2
million, or nearly 66%, of this increase was related to SG&A
expenses in the Company’s recently acquired businesses, $1.4
million related to an increase in bad debt expense primarily due to
the expected economic impact from the COVID-19 outbreak, and $1.3
million related to increased health care costs. The remaining
increase was primarily related to employee wage inflation and other
variable costs to serve higher sales volumes. SG&A
expenses as a percent of net sales declined 30 basis points to
20.3%, compared to 20.6% for the first quarter of 2019.
- Depreciation expense, including the portion reported within
cost of sales, increased $2.5 million to $15.0 million, compared to
$12.4 million in the first quarter of 2019.
- Merger and integration costs decreased to $1.2 million,
consisting primarily of system integration costs, compared to $2.8
million in the first quarter of 2019.
- Amortization expense was $5.0 million compared to $4.3 million
in the first quarter of 2019, primarily due to the amortization of
intangible assets at recently acquired businesses.
- Interest expense was $5.9 million compared to $6.0 million in
the first quarter of 2019.
- Other income, net, which was derived primarily from state and
local tax incentives, interest income and customer service charges,
was $2.9 million, unchanged from the prior year period.
- Net income was $22.0 million, or $0.33 per diluted share for
the quarter, compared to $20.4 million, or $0.30 per diluted share,
in the first quarter of 2019.
- Adjusted net income (non-GAAP) increased to $26.7 million, or
$0.40 per diluted share (non-GAAP), compared to Adjusted net income
of $25.0 million, or $0.37 per diluted share, in the first quarter
of 2019.
- Adjusted EBITDA (non-GAAP) was $61.0 million, up 12.1% from the
first quarter of 2019.
- Adjusted EBITDA margin (non-GAAP), defined as Adjusted EBITDA
as a percentage of net sales, was 6.6%, unchanged from the prior
year period.
- Cash provided by operating activities declined $60.7 million to
$17.1 million due to an increase in trade receivables and inventory
associated with higher sales volume and the timing of vendor
payments in the prior year period.
COVID-19 Update
Safety:
As one of our core values, we are dedicated to
ensuring that the safety of BMC’s associates and families is of the
utmost importance during these challenging times. Over the
course of the past two months, the Company took numerous steps to
protect our associates, customers and the community. In
mid-March, we created a cross-function task force that meets daily
to ensure that we are responding with the development of the
necessary processes, protocols, training and communications related
to our response. These measures incorporated the guidelines
recommended by the Center for Disease Control and Prevention (CDC)
and include detailed cleaning and disinfecting processes, social
distancing protocols, providing face coverings and other personal
protective equipment, suspending air travel, and encouraging
associates to work from home when possible.
The Company also implemented requirements for
job site safety, signage at our locations and are partnering with
our customers as necessary. Additionally, the Company
launched a dedicated COVID-19 resource intranet page to keep
associates up-to-date on Company and health authority information,
guidelines and policies. The Company also enacted several
emergency pay programs in order to maintain continuity of pay for
associates who report any symptoms or are unable to report to work
because of a COVID-19 disruption.
Operations:
While state, county, and other local
municipalities have issued various and differing shelter in place
orders, in most locations the Company’s products and services are
classified as “essential” and the Company’s facilities in those
jurisdictions continue to operate. In a select number of
states, including Washington, Pennsylvania and portions of northern
California, the Company experienced more restrictive stay-at-home
orders that halted certain construction activities. However,
these three jurisdictions are in the process of reopening building
construction.
Liquidity and Capital
Resources
Total liquidity as of March 31, 2020 was
approximately $501.1 million, which included $282.8 million of cash
and cash equivalents and $218.3 million of borrowing availability
under the Company’s asset-backed revolving credit facility.
During the quarter, the Company borrowed $144 million under its
revolving credit facility as a precautionary measure.
Importantly, the Company has no significant long-term debt
maturities until 2024.
Capital expenditures during the first quarter of
2020, net of proceeds from the sale of property, equipment and real
estate, totaled $30.2 million. These expenditures were
primarily used to fund purchases of vehicles and equipment to
replace aged assets and support increased sales volume and
facility, technology and automation investments to support our
operations. The Company has postponed future growth-related
capital projects until further notice, but will continue to invest
in safety and productivity-related capital expenditures.
Stock Repurchases
During the first quarter of 2020, the Company
repurchased 0.1 million shares at a weighted average price of
$16.20 per share under the Company’s $75.0 million share repurchase
program authorized by the Company’s board of directors. As of
March 31, 2020, the Company had approximately $54.2 million of
capacity remaining under the current share repurchase
authorization, which expires in November 2020. The
Company has temporarily suspended its share repurchase program due
to the COVID-19 pandemic.
April Net Sales & Core Strategies
Update
Considering the rapidly evolving COVID-19
pandemic, BMC withdrew its full-year 2020 outlook on April 6, 2020,
as management anticipated that COVID-19 will have a negative impact
on housing starts and the Company’s financial results over the
remainder of the year.
In the final week of March and throughout April,
most of the Company’s markets experienced negative impacts to net
sales, ranging in severity from a deceleration relative to their
first quarter growth rates to modest year-over-year declines.
The Company experienced more significant year over year sales
declines in Washington, Pennsylvania and portions of northern
California. The Company estimates the percentage decline
in core organic net sales for the month of April 2020 as compared
to April 2019 was in the mid-single digits.
The Company’s core strategies remain
unchanged. They include:
- Grow Value Added Products and Segments
- Deliver Operational Excellence with the BMC Operating
System
- Build a High Performing Culture
- Pursue Strategic Expansion
This information reflects management’s good
faith estimates based on our internal reporting and available
information as of May 5, 2020. However, these estimates are
inherently uncertain and subject to change, and we undertake no
obligation to update this information. Actual results remain
subject to the completion of our customary quarterly financial
closing procedures and the preparation of the Company’s condensed
consolidated financial statements and may differ materially from
these estimates. See “Forward-Looking Statements” below.
Conference Call Information
BMC will host a conference call on Tuesday,
May 5, 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 13702261. The telephonic replay will be
available until 11:59 p.m. (Eastern Time) on May 12, 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 one
of the nation’s leading providers of diversified building materials
and solutions to new construction builders and professional
remodelers in the U.S. Headquartered in Raleigh, North
Carolina, the Company's comprehensive portfolio of products and
services spans building materials, including millwork and
structural component manufacturing capabilities, consultative
showrooms and design centers, value-added installation management
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, and many of these risks and uncertainties are, and
may continue to be, amplified by the COVID-19 pandemic.
A number of important factors could cause actual
results to differ materially from those indicated by
forward-looking statements. These factors include without
limitation:
- the impact of the COVID-19 pandemic on our business operations
and on local, national and global economies;
- the state of the homebuilding industry and repair and
remodeling activity, the economy and the credit markets;
- fluctuation of commodity prices and prices of our products as a
result of national and international economic and other
conditions;
- the impact of potential changes in our customer or product
sales mix;
- our concentration of business in the Texas, California and
Georgia markets;
- the potential loss of significant customers or a reduction in
the quantity of products they purchase;
- seasonality and cyclicality of the building products supply and
services industry;
- competitive industry pressures and competitive pricing pressure
from our customers and competitors;
- our exposure to product liability, warranty, casualty,
construction defect, contract, tort, employment and other claims
and legal proceedings;
- our ability to maintain profitability and positive cash
flows;
- our ability to retain our key employees and to attract and
retain new qualified employees, while controlling our labor
costs;
- product shortages, loss of key suppliers or failure to develop
relationships with qualified suppliers, and our dependence on
third-party suppliers and manufacturers;
- the implementation of our supply chain and technology
initiatives;
- the impact of long-term noncancellable leases at our
facilities;
- our ability to effectively manage inventory and working
capital;
- the credit risk from our customers;
- our ability to identify or respond effectively to consumer
needs, expectations, market conditions or trends;
- our ability to successfully implement our growth strategy;
- the impact of federal, state, local and other laws and
regulations;
- the impact of changes in legislation and government
policy;
- the impact of unexpected changes in our tax provisions and
adoption of new tax legislation;
- our ability to utilize our net operating loss
carryforwards;
- natural or man-made disruptions to our distribution and
manufacturing facilities;
- our exposure to environmental liabilities and subjection to
environmental laws and regulation;
- the impact of health and safety laws and regulations;
- the impact of disruptions to our information technology
systems;
- cybersecurity risks;
- our exposure to losses if our insurance coverage is
insufficient;
- our ability to operate on multiple Enterprise Resource Planning
(“ERP”) information systems and convert multiple systems to a
single system;
- the impact of our indebtedness;
- the impact of the various financial covenants in our secured
credit agreement and senior secured notes indenture; and
- other factors discussed or referred to in the “Risk Factors”
section of BMC's most recent Annual Report on Form 10-K filed with
the SEC on February 27, 2020 as supplemented in our Quarterly
Report on Form 10-Q for the quarter ended March 31, 2020.
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 ContactBMC Stock Holdings,
Inc.Michael Neese(919) 431-1796
BMC STOCK HOLDINGS, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of
Operations(unaudited)
|
Three Months Ended March 31, |
(in thousands, except per
share amounts) |
2020 |
|
2019 |
Net sales |
$ |
920,879 |
|
|
$ |
825,405 |
|
Cost of sales |
683,751 |
|
|
609,283 |
|
Gross profit |
237,128 |
|
|
216,122 |
|
|
|
|
|
Selling, general and
administrative expenses |
186,922 |
|
|
169,934 |
|
Depreciation expense |
11,519 |
|
|
9,573 |
|
Amortization expense |
5,013 |
|
|
4,347 |
|
Merger and integration
costs |
1,168 |
|
|
2,790 |
|
|
204,622 |
|
|
186,644 |
|
Income from operations |
32,506 |
|
|
29,478 |
|
Other income (expense) |
|
|
|
Interest expense |
(5,932 |
) |
|
(6,038 |
) |
Other income, net |
2,919 |
|
|
2,910 |
|
Income before income taxes |
29,493 |
|
|
26,350 |
|
Income tax expense |
7,464 |
|
|
6,000 |
|
Net income |
$ |
22,029 |
|
|
$ |
20,350 |
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
Basic |
66,839 |
|
|
66,782 |
|
Diluted |
67,643 |
|
|
67,282 |
|
|
|
|
|
Net income per common
share |
|
|
|
Basic |
$ |
0.33 |
|
|
$ |
0.30 |
|
Diluted |
$ |
0.33 |
|
|
$ |
0.30 |
|
BMC STOCK HOLDINGS, INC. AND
SUBSIDIARIESCondensed Consolidated Balance Sheets(unaudited)
(in thousands, except share
and per share amounts) |
March 31, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
282,815 |
|
|
$ |
165,496 |
|
Accounts receivable, net of allowances of $9,984 and $8,318 at
March 31, 2020 and December 31, 2019, respectively |
351,672 |
|
|
325,741 |
|
Inventories |
361,661 |
|
|
331,969 |
|
Contract assets |
38,339 |
|
|
32,125 |
|
Income taxes receivable |
10,416 |
|
|
7,504 |
|
Prepaid expenses and other current assets |
70,499 |
|
|
66,818 |
|
Total current assets |
1,115,402 |
|
|
929,653 |
|
Property and equipment, net of
accumulated depreciation |
360,047 |
|
|
345,466 |
|
Operating lease right-of-use
assets |
133,700 |
|
|
139,907 |
|
Customer relationship
intangible assets, net of accumulated amortization |
180,101 |
|
|
185,049 |
|
Other intangible assets, net
of accumulated amortization |
515 |
|
|
580 |
|
Goodwill |
295,401 |
|
|
297,146 |
|
Other long-term assets |
8,274 |
|
|
8,300 |
|
Total assets |
$ |
2,093,440 |
|
|
$ |
1,906,101 |
|
Liabilities and
Stockholders' Equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
226,471 |
|
|
$ |
189,644 |
|
Accrued expenses and other liabilities |
86,656 |
|
|
117,825 |
|
Contract liabilities |
37,859 |
|
|
31,094 |
|
Interest payable |
9,697 |
|
|
4,759 |
|
Current portion: |
|
|
|
Long-term debt and finance lease obligations |
4,660 |
|
|
5,577 |
|
Operating lease liabilities |
26,272 |
|
|
26,147 |
|
Insurance reserves |
18,588 |
|
|
16,328 |
|
Total current liabilities |
410,203 |
|
|
391,374 |
|
Insurance reserves |
43,500 |
|
|
43,536 |
|
Long-term debt |
490,241 |
|
|
346,032 |
|
Long-term portion of finance
lease obligations |
6,228 |
|
|
6,959 |
|
Long-term portion of operating
lease liabilities |
114,436 |
|
|
120,832 |
|
Deferred income taxes |
25,492 |
|
|
15,195 |
|
Other long-term
liabilities |
280 |
|
|
661 |
|
Total liabilities |
1,090,380 |
|
|
924,589 |
|
Commitments and
contingencies |
|
|
|
Stockholders' equity |
|
|
|
Preferred stock, $0.01 par value, 50.0 million shares authorized,
no shares issued and outstanding at March 31, 2020 and December 31,
2019 |
— |
|
|
— |
|
Common stock, $0.01 par value, 300.0 million shares authorized,
68.7 million and 68.3 million shares issued, and 67.0 million and
66.8 million outstanding at March 31, 2020 and December 31, 2019,
respectively |
687 |
|
|
683 |
|
Additional paid-in capital |
690,627 |
|
|
687,255 |
|
Retained earnings |
342,219 |
|
|
320,190 |
|
Treasury stock, at cost, 1.7 million and 1.5 million shares at
March 31, 2020 and December 31, 2019, respectively |
(30,473 |
) |
|
(26,616 |
) |
Total stockholders' equity |
1,003,060 |
|
|
981,512 |
|
Total liabilities and stockholders' equity |
$ |
2,093,440 |
|
|
$ |
1,906,101 |
|
BMC STOCK HOLDINGS, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of Cash
Flows(unaudited)
|
Three Months Ended March 31, |
(in thousands) |
2020 |
|
2019 |
Cash flows from
operating activities |
|
|
|
Net income |
$ |
22,029 |
|
|
$ |
20,350 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
Depreciation expense |
14,982 |
|
|
12,445 |
|
Amortization of intangible assets |
5,013 |
|
|
4,347 |
|
Amortization of debt issuance costs |
317 |
|
|
421 |
|
Deferred income taxes |
10,297 |
|
|
6,771 |
|
Non-cash stock compensation expense |
3,170 |
|
|
2,915 |
|
Gain on sale of property, equipment and real estate |
(143 |
) |
|
(913 |
) |
Other non-cash adjustments |
— |
|
|
1,778 |
|
Change in assets and liabilities, net of effects of
acquisitions |
|
|
|
Accounts receivable, net of allowances |
(26,031 |
) |
|
(9,463 |
) |
Inventories |
(29,680 |
) |
|
1,499 |
|
Accounts payable |
43,277 |
|
|
69,741 |
|
Other assets and liabilities |
(26,165 |
) |
|
(32,132 |
) |
Net cash provided by operating activities |
17,066 |
|
|
77,759 |
|
Cash flows from
investing activities |
|
|
|
Purchases of property,
equipment and real estate |
(30,509 |
) |
|
(15,429 |
) |
Proceeds from sale of
property, equipment and real estate |
349 |
|
|
2,343 |
|
Purchases of businesses, net
of cash acquired |
— |
|
|
(52,012 |
) |
Net cash used in investing activities |
(30,160 |
) |
|
(65,098 |
) |
Cash flows from
financing activities |
|
|
|
Proceeds from revolving credit
facility |
144,000 |
|
|
110,987 |
|
Repayments of proceeds from
revolving credit facility |
— |
|
|
(110,987 |
) |
Repurchases of common stock
under share repurchase program |
(1,416 |
) |
|
(15,219 |
) |
Payments on finance lease
obligations |
(1,628 |
) |
|
(1,708 |
) |
Other financing activities,
net |
(10,543 |
) |
|
(4,875 |
) |
Net cash provided by (used in) financing activities |
130,413 |
|
|
(21,802 |
) |
Net increase (decrease) in cash and cash equivalents |
117,319 |
|
|
(9,141 |
) |
Cash and cash
equivalents |
|
|
|
Beginning of period |
165,496 |
|
|
150,723 |
|
End of period |
$ |
282,815 |
|
|
$ |
141,582 |
|
BMC STOCK HOLDINGS, INC. AND SUBSIDIARIESNet
Sales by Product Category(unaudited)
|
Three Months Ended March 31, 2020 |
|
Three Months Ended March 31, 2019 |
|
|
|
Core Organic Growth (a) |
(in thousands) |
Net Sales |
|
% of Sales |
|
Net Sales |
|
% of Sales |
|
% Change |
|
Millwork, doors &
windows |
$ |
295,669 |
|
|
32.1 |
% |
|
$ |
239,922 |
|
|
29.1 |
% |
|
23.2 |
% |
|
10.0 |
% |
Structural components |
160,344 |
|
|
17.4 |
% |
|
141,276 |
|
|
17.1 |
% |
|
13.5 |
% |
|
10.9 |
% |
Lumber & lumber sheet
goods |
259,139 |
|
|
28.1 |
% |
|
241,959 |
|
|
29.3 |
% |
|
7.1 |
% |
|
5.1 |
% |
Other building
products & services |
205,727 |
|
|
22.4 |
% |
|
202,248 |
|
|
24.5 |
% |
|
1.7 |
% |
|
(4.1 |
)% |
Total net sales |
$ |
920,879 |
|
|
100.0 |
% |
|
$ |
825,405 |
|
|
100.0 |
% |
|
11.6 |
% |
|
5.3 |
% |
Net Sales by Customer Type(unaudited)
|
Three Months Ended March 31, 2020 |
|
Three Months Ended March 31, 2019 |
|
|
|
Core Organic Growth (a) |
(in thousands) |
Net Sales |
|
% of Sales |
|
Net Sales |
|
% of Sales |
|
% Change |
|
Single-family
homebuilders |
$ |
674,771 |
|
|
73.3 |
% |
|
$ |
628,718 |
|
|
76.2 |
% |
|
7.3 |
% |
|
2.0 |
% |
Remodeling contractors |
104,669 |
|
|
11.4 |
% |
|
88,208 |
|
|
10.7 |
% |
|
18.7 |
% |
|
11.3 |
% |
Multi-family, commercial &
other contractors |
141,439 |
|
|
15.3 |
% |
|
108,479 |
|
|
13.1 |
% |
|
30.4 |
% |
|
19.1 |
% |
Total net sales |
$ |
920,879 |
|
|
100.0 |
% |
|
$ |
825,405 |
|
|
100.0 |
% |
|
11.6 |
% |
|
5.3 |
% |
(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 closed operations and changes in selling
days, as applicable.
BMC STOCK HOLDINGS, INC. AND
SUBSIDIARIESReconciliation of GAAP to Non-GAAP
Measures(unaudited)
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and
Adjusted net income per diluted 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 net income per diluted share provide useful information to
management and investors regarding certain financial and business
trends relating to the Company’s financial condition and operating
results.
- Adjusted EBITDA is defined as net income plus interest expense
(income), income tax expense, depreciation and amortization, merger
and integration costs, non-cash stock compensation expense,
acquisition costs and other items.
- Adjusted EBITDA margin is defined as Adjusted EBITDA divided by
net sales.
- Adjusted net income is defined as net income plus merger and
integration costs, non-cash stock compensation expense,
acquisition costs, other items and after tax effecting those
items.
- Adjusted net income per diluted share is defined as Adjusted
net income divided by diluted weighted average shares.
Company management uses Adjusted EBITDA and
Adjusted net income for trend analysis, 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 net income per
diluted 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
net income per diluted 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 net income per
diluted 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 net income per diluted 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 net income per diluted 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 net income
per diluted 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
net income per diluted share do not reflect any cash requirements
for such replacements and (vi) Adjusted EBITDA, Adjusted EBITDA
margin, Adjusted net income and Adjusted net income per diluted
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 net income per
diluted 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
SUBSIDIARIESReconciliation 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 March 31, |
(in thousands, except per
share amounts) |
2020 |
|
2019 |
Net income |
$ |
22,029 |
|
|
$ |
20,350 |
|
Interest expense |
5,932 |
|
|
6,038 |
|
Interest income |
(583 |
) |
|
(941 |
) |
Income tax expense |
7,464 |
|
|
6,000 |
|
Depreciation and
amortization |
19,995 |
|
|
16,792 |
|
Merger and integration
costs |
1,168 |
|
|
2,790 |
|
Non-cash stock compensation
expense |
3,170 |
|
|
2,915 |
|
Acquisition costs |
1,831 |
|
|
580 |
|
Other items (a) |
— |
|
|
(124 |
) |
Adjusted EBITDA |
$ |
61,006 |
|
|
$ |
54,400 |
|
Adjusted EBITDA margin |
6.6 |
% |
|
6.6 |
% |
|
|
|
|
Net income |
$ |
22,029 |
|
|
$ |
20,350 |
|
Merger and integration
costs |
1,168 |
|
|
2,790 |
|
Non-cash stock compensation
expense |
3,170 |
|
|
2,915 |
|
Acquisition costs |
1,831 |
|
|
580 |
|
Other items (a) |
— |
|
|
(124 |
) |
Tax effect of adjustments to
net income (b) |
(1,473 |
) |
|
(1,474 |
) |
Adjusted net income |
$ |
26,725 |
|
|
$ |
25,037 |
|
|
|
|
|
Diluted weighted average
shares |
67,643 |
|
|
67,282 |
|
Adjusted net income per
diluted share |
$ |
0.40 |
|
|
$ |
0.37 |
|
(a) Represents the effect of the
settlement of pending litigation for an amount below what was
previously accrued.
(b) The tax effect of adjustments to
net income was based on the respective transactions’ income tax
rate, which was 23.9% for the three months ended March 31, 2020 and
2019.
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