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 second quarter ended June 30, 2020.
Second Quarter 2020
Highlights
- Net sales increased 3.5% to $979.9 million
- Gross profit increased 2.9% to $252.8 million
- SG&A expenses as a percent of net sales declined 150 basis
points to 17.7%
- Net income increased 22.2% to $43.6 million
- Adjusted EBITDA1 improved by 23.2% to a record $90.3
million
- Adjusted EBITDA margin1 increased 150 basis points to a record
9.2%
- Diluted earnings per share (EPS) increased 22.6%, or $0.12, to
$0.65
- Adjusted net income per diluted share1 increased 23.7%, or
$0.14, to $0.73
- Total liquidity was approximately $615.7 million, which
included $253.4 million of cash and $362.3 million of borrowing
capacity under the revolver, with no debt maturities until
2024. The Company repaid its $144 million precautionary
revolver borrowings.
“Our record second-quarter results exceeded our
expectations and were driven by the steadfast execution of our
strategy, accelerated productivity and structural cost savings
across our business, coupled with a strong pipeline of construction
activity,” said Dave Flitman, President and CEO of BMC.
“These strong results are a testament to the determination of our
associates, who remain focused on growing our business and
providing outstanding customer service despite their personal
sacrifice in this unprecedented environment. I couldn’t be
more proud of their efforts.”
Mr. Flitman added, “Our top priority remains
keeping our associates, suppliers and customers safe as the
pandemic evolves. We continue to take any and all necessary steps
to protect our team while simultaneously growing our value-added
products, which remain in high demand from our
customers.”
Mr. Flitman continued, “We are pleased that our
team’s efforts enabled us to generate strong net sales growth in
Millwork, Doors and Windows and our Pro Remodel and Multi-Family
segments, as well as outperform the market in single-family starts
which resulted in record net income, Adjusted EBITDA and Adjusted
EBITDA margin in the quarter. We believe our solid first-half
results and momentum, coupled with strong homebuyer demand, low
housing inventories and record low interest rates will result
in continued strength in our business in the second half of
2020. I believe we have the best talent on the field, the
right business strategies, and as we remain focused on
strengthening our execution, we will continue to transform our
company into an operational powerhouse. I am confident that our
efforts will enable our ability to sustainably outperform the
market and deliver long-term shareholder value.”
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.”
Second Quarter 2020 Summary of Financial
Results
During the three months ended June 30, 2020, the
Company generated strong net income, diluted earnings per share and
Adjusted EBITDA.
|
Three Months Ended June 30, |
(in thousands, except per
share data) |
2020 |
|
2019 |
|
Variance |
Net sales |
$ |
979,896 |
|
|
$ |
946,375 |
|
|
$ |
33,521 |
|
|
|
|
|
|
|
Net income and
EPS |
|
|
|
|
|
Net income (GAAP) |
$ |
43,622 |
|
|
$ |
35,699 |
|
|
$ |
7,923 |
|
Diluted earnings per share (GAAP) |
$ |
0.65 |
|
|
$ |
0.53 |
|
|
$ |
0.12 |
|
Adjusted net income (non-GAAP) |
$ |
49,309 |
|
|
$ |
39,363 |
|
|
$ |
9,946 |
|
Adjusted net income per diluted share (non-GAAP) |
$ |
0.73 |
|
|
$ |
0.59 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|
Adjusted EBITDA
(non-GAAP) |
$ |
90,349 |
|
|
$ |
73,329 |
|
|
$ |
17,020 |
|
Adjusted EBITDA margin
(non-GAAP) |
9.2 |
% |
|
7.7 |
% |
|
1.5 |
% |
|
|
|
|
|
|
Net cash provided by
operating activities |
$ |
136,101 |
|
|
$ |
51,553 |
|
|
$ |
84,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter 2020 Financial Results Compared to Prior
Year Period
- Net sales increased 3.5% to $979.9 million, primarily driven by
growth from acquisitions of 4.3%, and 2.0% from price inflation.
These increases were partially offset by a 2.2% decrease from other
organic sales declines due to the impact of the COVID-19 pandemic
and a closed location of 0.6%.
- Gross profit increased 2.9% to $252.8 million. Gross
profit as a percentage of sales (gross margin) was 25.8%, compared
to 26.0% for the second quarter of 2019. The 20 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
decreased 4.4% or $8.0 million to $173.4 million. Excluding the
$4.3 million impact of an out of period correction during the three
months ended June 30, 2019, SG&A expenses decreased $3.7
million. Other factors impacting SG&A expenses were an
approximately $10.0 million decrease in employee wages, benefits
and other employee-related costs, which was partially offset by an
increase of $9.0 million related to SG&A expenses of recently
acquired businesses. The remaining decrease was primarily related
to lower fuel costs and a reduction in other costs. SG&A
expenses as a percent of net sales declined 150 basis points to
17.7%
- Depreciation expense, including the portion reported within
cost of sales, increased $2.0 million to $15.3 million, compared to
$13.3 million in the second quarter of 2019.
- Merger and integration costs decreased to $0.4 million,
consisting primarily of system integration costs, compared to $1.4
million in the second quarter of 2019.
- Amortization expense was $5.0 million compared to $4.3 million
in the second quarter of 2019. This increase was primarily due to
the amortization of intangible assets at recently acquired
businesses.
- Interest expense was $6.2 million compared to $5.6 million in
the second 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 compared to $3.7 million in the second quarter of
2019.
- Net income was $43.6 million, or $0.65 per diluted share for
the quarter, compared to $35.7 million, or $0.53 per diluted share,
in the second quarter of 2019.
- Adjusted net income1 increased to $49.3 million, or $0.73 per
diluted share, compared to Adjusted net income1 of $39.4 million,
or $0.59 per diluted share, in the second quarter of 2019.
- Adjusted EBITDA1 was $90.3 million, up 23.2% from the second
quarter of 2019.
- Adjusted EBITDA margin1, defined as Adjusted EBITDA1 as a
percentage of net sales, was a record 9.2%, up 150 basis points
from the prior year period.
- Cash provided by operating activities increased $84.5 million
to $136.1 million primarily due to changes in working
capital.
COVID-19 Update
As one of the Company’s core values, the safety
of BMC’s associates and families is of the utmost importance during
these challenging times. Over the course of the past several
months, the Company took numerous steps to protect our associates,
suppliers, customers and the community. In mid-March, the
Company created a cross-function task force, which continues to
meet daily to ensure that the Company is responding with the
development of the necessary processes, protocols, training and
communications related to our response.
The Company has implemented detailed cleaning
and disinfecting processes at its facilities and is adhering to
social distancing protocols. It also continues to suspend
non-essential air travel and is encouraging employees to work from
home when possible. To date, the Company and its customers’
businesses have generally been classified as “essential business”
in most of the jurisdictions in which the Company
operates.
Liquidity and Capital
Resources
Total liquidity as of June 30, 2020 was
approximately $615.7 million, which included $253.4 million of cash
and cash equivalents and $362.3 million of borrowing availability
under the Company’s asset-backed revolving credit facility.
During the first quarter, the Company borrowed $144 million under
its revolving credit facility as a precautionary measure. In
June 2020, the Company repaid this amount and had no outstanding
borrowings under its revolver as of June 30, 2020. In
addition, the Company has no long-term debt maturities until
2024.
Capital expenditures during the second quarter
of 2020, net of proceeds from the sale of property, equipment and
real estate, totaled $18.3 million which was down $10.4 million
from the prior year period. 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 is accelerating investment in safety and
productivity-related capital expenditures. Cash provided by
operating activities increased $84.5 million to $136.1 million
primarily due to changes in working capital. The Company
continues to focus on cash generation.
Stock Repurchases
During the second quarter of 2020, the Company
did not repurchase any shares of stock. As of June 30, 2020,
the Company had approximately $54.2 million of capacity remaining
under the current share repurchase authorization, which expires in
November 2020.
2020 Third-Quarter Outlook
The Company estimates its 2020 third quarter net
sales will be up 5% to 10% compared to the third quarter of
2019. BMC withdrew its full-year 2020 outlook on April 6,
2020, as management was unable to predict the potential negative
impacts that COVID-19 could have on housing starts and the
Company’s financial results over the remainder of the
year.
Conference Call Information
BMC will host a conference call on Monday,
August 3, 2020 at 5:00 p.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 1-877-407-0784
(domestic) or 1-201-689-8560 (international). A telephonic
replay will be available approximately three hours after the call
and can be accessed by dialing 1-844-512-2921, or for international
callers, 1-412-317-6671. The passcode for both the live call
and the replay is 13706969. The telephonic replay will be
available until 11:59 p.m. (Eastern Time) on August 10, 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.
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 NeeseSVP, Strategy and Investor Relations(919)
431-1796
BMC STOCK HOLDINGS, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of
Operations(unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in thousands, except per
share amounts) |
2020 |
|
2019 |
|
2020 |
|
2019 |
Net sales |
$ |
979,896 |
|
|
|
$ |
946,375 |
|
|
|
$ |
1,900,775 |
|
|
|
$ |
1,771,780 |
|
|
Cost of sales |
727,074 |
|
|
|
700,598 |
|
|
|
1,410,825 |
|
|
|
1,309,881 |
|
|
Gross profit |
252,822 |
|
|
|
245,777 |
|
|
|
489,950 |
|
|
|
461,899 |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
173,420 |
|
|
|
181,431 |
|
|
|
360,342 |
|
|
|
351,365 |
|
|
Depreciation expense |
11,704 |
|
|
|
10,043 |
|
|
|
23,223 |
|
|
|
19,616 |
|
|
Amortization expense |
5,016 |
|
|
|
4,338 |
|
|
|
10,029 |
|
|
|
8,685 |
|
|
Impairment of assets |
2,255 |
|
|
|
529 |
|
|
|
2,255 |
|
|
|
529 |
|
|
Merger and integration
costs |
357 |
|
|
|
1,382 |
|
|
|
1,525 |
|
|
|
4,172 |
|
|
|
192,752 |
|
|
|
197,723 |
|
|
|
397,374 |
|
|
|
384,367 |
|
|
Income from operations |
60,070 |
|
|
|
48,054 |
|
|
|
92,576 |
|
|
|
77,532 |
|
|
Other income (expense) |
|
|
|
|
|
|
|
Interest expense |
(6,204 |
) |
|
|
(5,574 |
) |
|
|
(12,136 |
) |
|
|
(11,612 |
) |
|
Other income, net |
2,920 |
|
|
|
3,709 |
|
|
|
5,839 |
|
|
|
6,619 |
|
|
Income before income taxes |
56,786 |
|
|
|
46,189 |
|
|
|
86,279 |
|
|
|
72,539 |
|
|
Income tax expense |
13,164 |
|
|
|
10,490 |
|
|
|
20,628 |
|
|
|
16,490 |
|
|
Net income |
$ |
43,622 |
|
|
|
$ |
35,699 |
|
|
|
$ |
65,651 |
|
|
|
$ |
56,049 |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
|
|
|
Basic |
67,022 |
|
|
|
66,578 |
|
|
|
66,931 |
|
|
|
66,679 |
|
|
Diluted |
67,564 |
|
|
|
67,077 |
|
|
|
67,604 |
|
|
|
67,179 |
|
|
|
|
|
|
|
|
|
|
Net income per common
share |
|
|
|
|
|
|
|
Basic |
$ |
0.65 |
|
|
|
$ |
0.54 |
|
|
|
$ |
0.98 |
|
|
|
$ |
0.84 |
|
|
Diluted |
$ |
0.65 |
|
|
|
$ |
0.53 |
|
|
|
$ |
0.97 |
|
|
|
$ |
0.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BMC STOCK HOLDINGS, INC. AND
SUBSIDIARIESCondensed Consolidated Balance Sheets(unaudited)
(in thousands, except share
and per share amounts) |
June 30, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
253,443 |
|
|
|
$ |
165,496 |
|
|
Accounts receivable, net of allowances of $9,895 and $8,318 at June
30, 2020 and December 31, 2019, respectively |
361,953 |
|
|
|
325,741 |
|
|
Inventories |
326,807 |
|
|
|
331,969 |
|
|
Contract assets |
33,871 |
|
|
|
32,125 |
|
|
Income taxes receivable |
— |
|
|
|
7,504 |
|
|
Prepaid expenses and other current assets |
70,926 |
|
|
|
66,818 |
|
|
Total current assets |
1,047,000 |
|
|
|
929,653 |
|
|
Property and equipment, net of
accumulated depreciation |
368,378 |
|
|
|
345,466 |
|
|
Operating lease right-of-use
assets |
136,540 |
|
|
|
139,907 |
|
|
Customer relationship
intangible assets, net of accumulated amortization |
175,150 |
|
|
|
185,049 |
|
|
Other intangible assets, net
of accumulated amortization |
450 |
|
|
|
580 |
|
|
Goodwill |
295,402 |
|
|
|
297,146 |
|
|
Other long-term assets |
7,443 |
|
|
|
8,300 |
|
|
Total assets |
$ |
2,030,363 |
|
|
|
$ |
1,906,101 |
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
237,029 |
|
|
|
$ |
189,644 |
|
|
Accrued expenses and other liabilities |
97,127 |
|
|
|
117,825 |
|
|
Contract liabilities |
42,610 |
|
|
|
31,094 |
|
|
Income taxes payable |
2,640 |
|
|
|
— |
|
|
Interest payable |
4,947 |
|
|
|
4,759 |
|
|
Current portion: |
|
|
|
Long-term debt and finance lease obligations |
4,214 |
|
|
|
5,577 |
|
|
Operating lease liabilities |
27,411 |
|
|
|
26,147 |
|
|
Insurance reserves |
18,487 |
|
|
|
16,328 |
|
|
Total current liabilities |
434,465 |
|
|
|
391,374 |
|
|
Insurance reserves |
42,473 |
|
|
|
43,536 |
|
|
Long-term debt |
346,450 |
|
|
|
346,032 |
|
|
Long-term portion of finance
lease obligations |
5,131 |
|
|
|
6,959 |
|
|
Long-term portion of operating
lease liabilities |
118,705 |
|
|
|
120,832 |
|
|
Deferred income taxes |
25,601 |
|
|
|
15,195 |
|
|
Other long-term
liabilities |
7,474 |
|
|
|
661 |
|
|
Total liabilities |
980,299 |
|
|
|
924,589 |
|
|
Commitments and
contingencies |
|
|
|
Stockholders' equity |
|
|
|
Preferred stock, $0.01 par value, 50.0 million shares authorized,
no shares issued and outstanding at June 30, 2020 and December 31,
2019 |
— |
|
|
|
— |
|
|
Common stock, $0.01 par value, 300.0 million shares authorized,
68.8 million and 68.3 million shares issued, and 67.1 million and
66.8 million outstanding at June 30, 2020 and December 31, 2019,
respectively |
688 |
|
|
|
683 |
|
|
Additional paid-in capital |
694,113 |
|
|
|
687,255 |
|
|
Retained earnings |
385,841 |
|
|
|
320,190 |
|
|
Treasury stock, at cost, 1.7 million and 1.5 million shares at June
30, 2020 and December 31, 2019, respectively |
(30,578 |
) |
|
|
(26,616 |
) |
|
Total stockholders' equity |
1,050,064 |
|
|
|
981,512 |
|
|
Total liabilities and stockholders' equity |
$ |
2,030,363 |
|
|
|
$ |
1,906,101 |
|
|
|
|
|
|
|
|
|
|
|
|
BMC STOCK HOLDINGS, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of Cash
Flows(unaudited)
|
Six Months Ended June 30, |
(in thousands) |
2020 |
|
2019 |
Cash flows from
operating activities |
|
|
|
Net income |
$ |
65,651 |
|
|
|
$ |
56,049 |
|
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
Depreciation expense |
30,265 |
|
|
|
25,739 |
|
|
Amortization of intangible assets |
10,029 |
|
|
|
8,685 |
|
|
Amortization of debt issuance costs |
634 |
|
|
|
807 |
|
|
Deferred income taxes |
10,406 |
|
|
|
6,888 |
|
|
Non-cash stock compensation expense |
6,498 |
|
|
|
6,163 |
|
|
Gain on sale of property, equipment and real estate |
(351 |
) |
|
|
(1,949 |
) |
|
Other non-cash adjustments |
2,248 |
|
|
|
2,200 |
|
|
Change in assets and liabilities, net of effects of
acquisitions |
|
|
|
Accounts receivable, net of allowances |
(36,201 |
) |
|
|
(30,725 |
) |
|
Inventories |
5,175 |
|
|
|
(8,557 |
) |
|
Accounts payable |
49,401 |
|
|
|
85,178 |
|
|
Other assets and liabilities |
9,412 |
|
|
|
(21,166 |
) |
|
Net cash provided by operating activities |
153,167 |
|
|
|
129,312 |
|
|
Cash flows from
investing activities |
|
|
|
Purchases of property,
equipment and real estate |
(49,079 |
) |
|
|
(45,905 |
) |
|
Proceeds from sale of
property, equipment and real estate |
633 |
|
|
|
4,153 |
|
|
Purchases of businesses, net
of cash acquired |
— |
|
|
|
(52,012 |
) |
|
Insurance proceeds |
— |
|
|
|
107 |
|
|
Net cash used in investing activities |
(48,446 |
) |
|
|
(93,657 |
) |
|
Cash flows from
financing activities |
|
|
|
Proceeds from revolving credit
facility |
144,000 |
|
|
|
110,987 |
|
|
Repayments of proceeds from
revolving credit facility |
(144,000 |
) |
|
|
(110,987 |
) |
|
Repurchases of common stock
under share repurchase program |
(1,416 |
) |
|
|
(16,446 |
) |
|
Payments on finance lease
obligations |
(3,166 |
) |
|
|
(3,385 |
) |
|
Other financing activities,
net |
(12,192 |
) |
|
|
(6,001 |
) |
|
Net cash used in financing activities |
(16,774 |
) |
|
|
(25,832 |
) |
|
Net increase in cash and cash equivalents |
87,947 |
|
|
|
9,823 |
|
|
Cash and cash
equivalents |
|
|
|
Beginning of period |
165,496 |
|
|
|
150,723 |
|
|
End of period |
$ |
253,443 |
|
|
|
$ |
160,546 |
|
|
|
|
|
|
|
|
|
|
|
|
BMC STOCK HOLDINGS, INC. AND SUBSIDIARIESNet
Sales by Product Category(unaudited)
|
Three Months Ended June 30,
2020 |
|
Three Months Ended June 30,
2019 |
|
|
|
Core Organic Growth (a) |
(in thousands) |
Net Sales |
|
% of Sales |
|
Net Sales |
|
% of Sales |
|
% Change |
|
Millwork, doors & windows |
$ |
287,999 |
|
|
29.4 |
% |
|
$ |
271,135 |
|
|
28.6 |
% |
|
6.2 |
|
% |
|
1.1 |
|
% |
Structural components |
164,535 |
|
|
16.8 |
% |
|
166,955 |
|
|
17.6 |
% |
|
(1.4 |
) |
% |
|
(5.6 |
) |
% |
Lumber & lumber sheet
goods |
292,817 |
|
|
29.9 |
% |
|
281,855 |
|
|
29.8 |
% |
|
3.9 |
|
% |
|
(3.5 |
) |
% |
Other building
products & services |
234,545 |
|
|
23.9 |
% |
|
226,430 |
|
|
24.0 |
% |
|
3.6 |
|
% |
|
(2.0 |
) |
% |
Total net sales |
$ |
979,896 |
|
|
100.0 |
% |
|
$ |
946,375 |
|
|
100.0 |
% |
|
3.5 |
|
% |
|
(2.2 |
) |
% |
|
Six Months Ended June 30,
2020 |
|
Six Months Ended June 30,
2019 |
|
|
|
Core Organic Growth (a) |
(in thousands) |
Net Sales |
|
% of Sales |
|
Net Sales |
|
% of Sales |
|
% Change |
|
Millwork, doors &
windows |
$ |
583,668 |
|
|
30.7 |
% |
|
$ |
511,057 |
|
|
28.8 |
% |
|
14.2 |
|
% |
|
5.3 |
|
% |
Structural components |
324,879 |
|
|
17.1 |
% |
|
308,231 |
|
|
17.4 |
% |
|
5.4 |
|
% |
|
1.9 |
|
% |
Lumber & lumber sheet
goods |
551,956 |
|
|
29.0 |
% |
|
523,814 |
|
|
29.6 |
% |
|
5.4 |
|
% |
|
0.3 |
|
% |
Other building products &
services |
440,272 |
|
|
23.2 |
% |
|
428,678 |
|
|
24.2 |
% |
|
2.7 |
|
% |
|
(3.1 |
) |
% |
Total net sales |
$ |
1,900,775 |
|
|
100.0 |
% |
|
$ |
1,771,780 |
|
|
100.0 |
% |
|
7.3 |
|
% |
|
1.2 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Customer Type(unaudited)
|
Three Months Ended June 30,
2020 |
|
Three Months Ended June 30,
2019 |
|
|
|
Core Organic Growth (a) |
(in thousands) |
Net Sales |
|
% of Sales |
|
Net Sales |
|
% of Sales |
|
% Change |
|
Single-family homebuilders |
$ |
702,388 |
|
|
71.7 |
% |
|
$ |
716,974 |
|
|
75.8 |
% |
|
(2.0 |
) |
% |
|
(6.3 |
) |
% |
Remodeling contractors |
127,699 |
|
|
13.0 |
% |
|
110,313 |
|
|
11.7 |
% |
|
15.8 |
|
% |
|
6.6 |
|
% |
Multi-family, commercial &
other contractors |
149,809 |
|
|
15.3 |
% |
|
119,088 |
|
|
12.5 |
% |
|
25.8 |
|
% |
|
14.5 |
|
% |
Total net sales |
$ |
979,896 |
|
|
100.0 |
% |
|
$ |
946,375 |
|
|
100.0 |
% |
|
3.5 |
|
% |
|
(2.2 |
) |
% |
|
Six Months Ended June 30,
2020 |
|
Six Months Ended June 30,
2019 |
|
|
|
Core Organic Growth (a) |
(in thousands) |
Net Sales |
|
% of Sales |
|
Net Sales |
|
% of Sales |
|
% Change |
|
Single-family
homebuilders |
$ |
1,377,159 |
|
|
72.5 |
% |
|
$ |
1,345,692 |
|
|
76.0 |
% |
|
2.3 |
|
% |
|
(2.4 |
) |
% |
Remodeling contractors |
232,368 |
|
|
12.2 |
% |
|
198,521 |
|
|
11.2 |
% |
|
17.0 |
|
% |
|
9.1 |
|
% |
Multi-family, commercial &
other contractors |
291,248 |
|
|
15.3 |
% |
|
227,567 |
|
|
12.8 |
% |
|
28.0 |
|
% |
|
16.1 |
|
% |
Total net sales |
$ |
1,900,775 |
|
|
100.0 |
% |
|
$ |
1,771,780 |
|
|
100.0 |
% |
|
7.3 |
|
% |
|
1.2 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 June 30, |
|
Six Months Ended June 30, |
(in thousands, except per
share amounts) |
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income |
$ |
43,622 |
|
|
|
$ |
35,699 |
|
|
|
$ |
65,651 |
|
|
|
$ |
56,049 |
|
|
Interest expense |
6,204 |
|
|
|
5,574 |
|
|
|
12,136 |
|
|
|
11,612 |
|
|
Interest income |
(339 |
) |
|
|
(844 |
) |
|
|
(922 |
) |
|
|
(1,785 |
) |
|
Income tax expense |
13,164 |
|
|
|
10,490 |
|
|
|
20,628 |
|
|
|
16,490 |
|
|
Depreciation and
amortization |
20,299 |
|
|
|
17,632 |
|
|
|
40,294 |
|
|
|
34,424 |
|
|
Merger and integration
costs |
357 |
|
|
|
1,382 |
|
|
|
1,525 |
|
|
|
4,172 |
|
|
Non-cash stock compensation
expense |
3,328 |
|
|
|
3,248 |
|
|
|
6,498 |
|
|
|
6,163 |
|
|
Acquisition costs |
495 |
|
|
|
18 |
|
|
|
2,326 |
|
|
|
598 |
|
|
Business reorganization costs
(a) |
3,219 |
|
|
|
228 |
|
|
|
3,219 |
|
|
|
228 |
|
|
Other items (b) |
— |
|
|
|
(98 |
) |
|
|
— |
|
|
|
(222 |
) |
|
Adjusted EBITDA |
$ |
90,349 |
|
|
|
$ |
73,329 |
|
|
|
$ |
151,355 |
|
|
|
$ |
127,729 |
|
|
Adjusted EBITDA margin |
9.2 |
|
% |
|
7.7 |
|
% |
|
8.0 |
|
% |
|
7.2 |
|
% |
|
|
|
|
|
|
|
|
Net income |
$ |
43,622 |
|
|
|
$ |
35,699 |
|
|
|
$ |
65,651 |
|
|
|
$ |
56,049 |
|
|
Merger and integration
costs |
357 |
|
|
|
1,382 |
|
|
|
1,525 |
|
|
|
4,172 |
|
|
Non-cash stock compensation
expense |
3,328 |
|
|
|
3,248 |
|
|
|
6,498 |
|
|
|
6,163 |
|
|
Acquisition costs |
495 |
|
|
|
18 |
|
|
|
2,326 |
|
|
|
598 |
|
|
Business reorganization costs
(a) |
3,219 |
|
|
|
228 |
|
|
|
3,219 |
|
|
|
228 |
|
|
Other items (b) |
— |
|
|
|
(98 |
) |
|
|
— |
|
|
|
(222 |
) |
|
Tax effect of adjustments to
net income (c) |
(1,712 |
) |
|
|
(1,114 |
) |
|
|
(3,185 |
) |
|
|
(2,588 |
) |
|
Adjusted net income |
$ |
49,309 |
|
|
|
$ |
39,363 |
|
|
|
$ |
76,034 |
|
|
|
$ |
64,400 |
|
|
|
|
|
|
|
|
|
|
Diluted weighted average
shares |
67,564 |
|
|
|
67,077 |
|
|
|
67,604 |
|
|
|
67,179 |
|
|
Adjusted net income per
diluted share |
$ |
0.73 |
|
|
|
$ |
0.59 |
|
|
|
$ |
1.12 |
|
|
|
$ |
0.96 |
|
|
(a) For the three and six months ended June 30,
2020, represents asset impairment charges related to the closure or
relocation of the operations of certain of the Company’s facilities
(“Impairment Charges”), which were not related to the COVID-19
pandemic, and severance expense related to permanent headcount
reductions due to the impact of the COVID-19 pandemic. For the
three and six months ended June 30, 2019, represents
Impairment Charges and the effect of certain customary post-closing
adjustments related to the November 1, 2018 disposition of the
Company’s Coleman Floor business.
(b) For the three months ended June 30,
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”). For the six months ended June 30, 2019,
represents the Recovery Income and the effect of the settlement of
pending litigation for an amount below what was previously
accrued.
(c) The tax effect of adjustments to net income
was based on the respective transactions’ income tax rate, which
was 23.1%, 23.3%, 23.5% and 23.7% for the three months ended June
30, 2020 and 2019 and the six months ended June 30, 2020 and 2019,
respectively.
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