At Builders FirstSource, the word is 'progress'
With the deal of the century in the books, Builders FirstSource navigated the unfriendly waters of price deflation to a third-quarter adjusted net income of $34.7 million, up from $15.8 million in the third quarter a year ago.
The company's sales update was complicated by store closings and sinking prices, but here, too, executives described progress. Sales volume grew approximately 6.1% over the third quarter of 2014, including 7% in the home-building end market and 3% in the repair and remodel end market. However, pro forma net sales of $1.7 billion were flat compared with the third quarter of 2014, excluding the impact of closed locations.
Third-quarter 2015 pro forma lumber and lumber sheet good sales excluding closed locations were down 6% versus the third quarter of 2014. Those results came as the business experienced a 22% drop in average market prices for framing lumber since the beginning of the year.
The company completed its acquisition of ProBuild Holdings on July 31, creating a $6 billion-plus mega dealer with lumberyards, component facilities, millwork shops, gypsum yards and retail stores across 40 states.
"Since the closing of the ProBuild acquisition on July 31, I am even more confident that this acquisition will drive significant value for our customers and stockholders," said CEO Floyd Sherman. "We have created a more diversified company with enhanced scale and an improved geographic footprint, enabling a broader, more efficient platform of manufacturing and distribution capabilities going forward."
The Dallas-based pro dealer and supplier and manufacturer of structural building products reported results just days after accepting the 2015 Pro Dealer of the Year Award at the ProDealer Industry Summit in Colorado Springs, Colorado.
Executives pointed to other signs of progress:
Pro forma gross margin percentage was 25.9%, up 160 basis points from 24.3% in the third quarter of 2014;
In the third quarter, BLDR paid down approximately $160 million on the 2015 revolving credit facility subsequent to the acquisition close; and
Achieved 160 basis point expansion in its pro forma gross margin percentage and approximately 110 basis point adjusted EBITDA margin growth in the third quarter.
Executives also said they were encouraged by ongoing integration of ProBuild into the BLDR fold.
"I am very pleased with the progress we have made to date on integrating our two companies, and the pool of talent we have across our combined organization continues to impress me," said Chad Crow, president and CFO. "All aspects of the integration, including system conversions and facility consolidations, are now in full swing and are progressing as planned."