Builders FirstSource Posts 8.2-Percent Increase in SalesApril 25th, 2014 by DWM Magazine
Builders FirstSource Inc. reported an 8.2-percent increase in sales in its results for the first quarter ended March 31, 2014.
Additional first quarter highlights include seeing first quarter 2014 sales increased 8.2 percent to $345.9 million, when compared to the first quarter of 2013, gross margin percentage improve to 21.7 percent, up from 19.5 percent in the first quarter of 2013 and adjusted EBITDA was $8.6 million, up from $5.4 million for the first quarter of 2013.
Additionally, interest expense was $8.8 million, a decrease of $3.7 million when compared to the first quarter of 2013 as a result of second quarter of 2013 refinancing. The company recorded a $0.1 million income tax benefit compared to $0.3 million of expense in the first quarter of 2013. It also recorded an increase in the after-tax, non-cash valuation allowance of $1.0 million and $4.4 million in the first quarters of 2014 and 2013, respectively. Both were related to net deferred tax assets. Absent the valuation allowance, the effective tax rate would have been 33.1 percent and 36.3 percent in the first quarters of 2014 and 2013, respectively. As of March 31, 2014, gross federal income tax net operating loss available for carry-forward was approximately $270 million.
Loss from continuing operations improved to $3.3 million, or $0.03 loss per diluted share, compared to $11.6 million, or $0.12 loss per diluted share in the first quarter of 2013. Adjusted loss from continuing operations was $1.1 million, or $0.01 loss per diluted share, compared to $6.8 million, or $0.07 loss per diluted share in the first quarter of 2013.
Operating cash flow was positive $13.8 million for the first quarter of 2014, compared to negative $25.2 million for the first quarter of 2013. Company officials attribute the difference to improved financial performance and a reduction in working capital during the first quarter of 2014. Capital expenditures were $5.3 million compared to $1.0 million for the first quarter of 2013.
“Despite the extreme winter weather that slowed construction activity across our markets and housing starts being relatively flat, we successfully grew sales and Adjusted EBITDA on a year-over-year basis. Our sales increased 8.2 percent and Adjusted EBITDA increased 59 percent when compared to the first quarter of 2013. For the same time period, the U.S. Census Bureau reported actual single-family starts for the South Region declined slightly by 0.1 percent. In addition, commodity deflation had a negative impact on our sales for the quarter. Lumber and lumber sheet goods prices were, on average, 14 percent lower compared to a year ago, which we estimate negatively impacted sales for the current quarter by 2 to 3 percent. Our employees did a great job managing through the difficult weather conditions and again delivered strong financial results in the first quarter,” says Floyd Sherman, Builders FirstSource CEO.
“We increased our gross margin percentage by 220 basis points, primarily due to improved customer pricing and less intra-quarter price volatility in the commodity lumber markets compared to a year ago. Lumber and lumber sheet goods prices rose sharply during the first quarter of 2013 while prices fell during the first quarter of 2014. Disruptions caused by the winter weather negatively impacted our operational efficiency. However, we were still able to surpass our 2013 first quarter results,” adds Chad Crow, Builders FirstSource senior vice president and chief financial officer.