The following excerpt is from the company's SEC filing.
Record First Quarter Net Sales, Gross Margin, Net Income and Adjusted EBITDA
Net sales of $5.7 billion increased 36.1%
Core Organic Sales Growth of 15.0%
Net income increased 270.6% to $639.6 million
Adjusted EBITDA increased 119.8% to $1.0 billion
Acquired Two Value-Added Companies in April
$2 Billion Share Repurchase Authorization
10, 2022 (Dallas, TX) Builders FirstSource, Inc. (NYSE: BLDR)
today reported its results for the first quarter ended
March 31, 2022.
First Quarter 2022 BFS Highlights
All Year-Over-Year Comparisons Unless Otherwise Noted:
Net sales of $5.7
billion for the quarter increased 36.1% driven by double-digit core organic growth,
commodity inflation and acquisitions.
Net income grew 270.6% to $639.6 million, or $3.56 per diluted share, and adjusted net income increased
136.5% to $700.8 million, or $3.90 per diluted share.
Adjusted EBITDA increased 119.8% to a first quarter record of $1.0 billion driven by commodity inflation,
double-digit core organic growth, acquisitions and strong demand in the residential housing market.
Strong
quarter-end
balance sheet with a net debt to LTM Adjusted EBITDA
ratio of 0.9x and liquidity of $1.2 billion.
During the quarter, the Company repurchased approximately 3.6 million shares of its common stock for
approximately $286 million.
Dave Flitman, CEO of Builders FirstSource, commented, We started the year out strong achieving
another quarter of record net sales, gross margin and Adjusted EBITDA, while also producing strong core organic sales growth of 15%. In addition, we continue to make progress investing prudently in our operations and delivering outstanding service
to our customers as we work to overcome the supply chain constraints that persist throughout our industry. Our efforts to broaden our value-added products, which saw core organic sales up 31%, alongside our strategic investments in digital, are
helping our customers get their jobs done quickly, on time and cost-effectively. The success we have achieved is directly attributable to our hard working and dedicated team members who go above and beyond each day to help us maintain our position
as an industry leader.
Mr. Flitman continued, We are excited to welcome the Panel Truss and Valley Truss team members to
the Builders FirstSource family and look forward to their contributions to grow our value-added products business. Looking ahead, we believe the housing industry remains resilient and underbuilt and we have seen strong underlying demand in new
housing construction into the second quarter. Furthermore, we are maintaining our focus on allocating resources to outpace market growth in our higher margin value-added products while investing further in our digital solutions platform to advance
our goal of transforming the homebuilding industry. For 2022, we have increased our expectations for growth and significant free cash flow generation. We remain committed to deploying capital to high return internal investments, accretive
bolt-on
M&A and share repurchases.
Peter Jackson, CFO of Builders FirstSource, added, We are pleased
with our remarkable first quarter results as well as our continued M&A momentum. We remain committed to a balanced approach to capital deployment through 2022 and beyond as we leverage our strong cash flow to pursue additional accretive
investments in our operations while executing against our share repurchase authorizations. We expect to generate free cash flow of $2.0 billion to $2.4 billion in 2022, reflecting disciplined working capital management and our ability to
capitalize on our industry-leading product portfolio. We look forward to building on a very successful quarter as we continue to focus on our value-added products, share gains, and returning additional value to our stakeholders.
Builders FirstSource Financial Performance Highlights - First Quarter 2022 Compared to First Quarter 2021
Net Sales
Net sales for the period were $5.7 billion, a 36.1% increase versus prior year quarter. Core organic sales
increased by 15.0%, commodity price inflation contributed 12.8% to net sales and acquisitions contributed net sales growth of 8.3%.
Core organic sales in value-added products grew by an estimated 30.8% compared with the prior year period.
Demand for single family housing continues to drive
top-line
growth. For
the quarter, our core organic growth for Single Family increased 16.6%, 9.5% for Repair and Remodel (R&R)/Other and 10.2% for Multi-Family.
Gross Profit
Gross profit was $1.8 billion, a 71.3% increase compared to the prior year quarter. The gross profit margin
percentage increased 670 basis points to 32.3%, primarily driven by disciplined pricing in a volatile, supply-constrained marketplace, as well as effective and timely sourcing of materials.
Selling, General and Administrative Expenses
SG&A was $968.6 million, an increase of approximately $147.0 million, or 17.9%, compared to the
prior year period, driven primarily by variable compensation due to the increase in net sales and profitability. As a percentage of net sales, total SG&A decreased by 270 basis points to 17.0%.
Interest Expense
Interest expense increased by $9.5 million to $41.3 million compared to the prior year period. The
year-over-year increase is primarily due to higher outstanding debt balances.
Income Tax Expense
Driven by higher profitability, income tax expense was $182.9 million, compared to $43.5 million in the
prior year period. The effective tax rate in the first quarter was 22.2%, up 210 basis points versus the prior year period.
Net Income
Net income was $639.6 million or $3.56 earnings per diluted share, compared to net income of
$172.6 million, or $0.83 earnings per diluted share, in the same period a year ago. Adjusted net income was $700.8 million, or $3.90 adjusted earnings per diluted share, compared to adjusted net income of $296.3 million, or $1.42
adjusted earnings per diluted share, in the prior year period. The 136.5% increase in adjusted net income was primarily driven by the increase in net sales and gross margin partially offset by higher income tax and SG&A expense. Adjusted
earnings per diluted share excludes amortization and
one-time
expenses related to merger and acquisition activity.
Adjusted EBITDA increased 119.8% to $1.0 billion, primarily driven by solid demand across our key customer
end-markets,
commodity inflation, pricing and acquisitions.
Adjusted EBITDA margin improved to 17.6%, which increased 670 basis points compared to the prior year period.
Builders FirstSource Capital Structure, Leverage, and Liquidity Information
For the three months ended March 31, 2022, cash provided by operating activities was $179.8 million;
and cash used in investing activities was $48.3 million. The Companys free cash was an inflow of $131.5 million, primarily driven by sales increases from core organic growth and from the impact of commodity inflation.
Liquidity as of March 31, 2022 was $1.2 billion, consisting of approximately $0.9 billion in net
borrowing availability under the revolving credit facility and $0.3 billion of cash on hand.
As of March 31, 2022, LTM Adjusted EBITDA was $3.6 billion and net debt was $3.1 billion,
resulting in a decreased net leverage ratio from 1.2x to 0.9x.
In the first quarter, the Company repurchased approximately 3.6 million shares of its common stock for
approximately $286.0 million at an average stock price of $79.58. In addition, the Company repurchased approximately 4.3 million shares in April 2022 for approximately $266.9 million at an average stock price of $62.21.
Year-to-date,
the Company repurchased approximately 7.9 million shares of its common stock for approximately $552.9 million at an average stock price of $70.13.
Since August 2021, the Company repurchased approximately 35.3 million shares of its common stock at an
average price of $65.10, for approximately $2.3 billion. The Company has repurchased approximately 17% of its total shares outstanding.
On May 9, 2022, the Board of Directors authorized a new share repurchase program of $2 billion, which
replaces the previous authorization.
In January 2022, the Company completed a private offering of an additional $300.0 million in aggregate
principal amount of 2032 notes at an issue price equal to 100.50% of par value. Net proceeds from the offering were used to repay borrowings on the 2026 facility and to pay related transaction fees and expenses. In February 2022, the Company amended
the 2026 facility to increase the total commitments by an aggregate amount of $400.0 million resulting in a new $1.8 billion amended credit facility.
BMC Merger Integration & Ongoing Operational Excellence Productivity
Since closing the merger with BMC on January 1, 2021, Builders FirstSource has made substantial progress in
integrating the two companies while delivering solid execution.
The Company delivered approximately $55 million in cost synergies to the P&L in the first quarter, fully
recognizing the synergy commitments of the BMC merger.
In addition, the Company believes it will deliver over $100 million in productivity savings in 2022.
M&A Update
On April 1, 2022, the Company acquired both the Texas Panel Truss and East Panel Truss businesses
(collectively, Panel Truss), for an aggregate of approximately $150 million, subject to certain closing adjustments. Panel Truss is a provider of building components to the single and multi-family markets throughout the South and
Southeast. Panel Truss will provide BFS with additional component capacity in the Companys high-growth southern markets to support new growth opportunities. The Panel Truss businesses had approximately $138 million in sales in 2021.
On April 1, 2022, the Company acquired Valley Truss Co., Inc. (Valley Truss) for approximately
$30.5 million, subject to certain closing adjustments. Valley Truss is a highly successful provider of building components to the single and multi-family markets in Boise, Idaho. Valley Truss will provide BFS with additional component capacity
and expand the Companys value-added offering to harness new growth opportunities. Valley Truss sales were approximately $26 million in 2021.
2022 Assumptions:
The Companys anticipated
2022 performance is based on several assumptions, including the following:
Growth across our geographies in single family starts in the
mid-single
digits, multi-family starts in the low to
digits; and R&R in the low to
digits.
Recently completed acquisitions projected to add net sales growth of 5% to 6%.
One fewer selling day in the fourth quarter of 2022 versus 2021 or approximately 0.3%.
Depreciation and amortization expenses in the range of $440 million to $460 million, including
approximately $180 million of amortization related to intangible assets acquired in the BMC merger. Total depreciation projected to be $190 million and total amortization projected to be $260 million for the full year 2022.
Total capital expenditures in the range of $375 million to $400 million.
Free cash flow in the range of $2.0 billion to $2.4 billion, assuming average commodity prices in the
range of $700 to $1,000.
Interest expense in the range of $175 million to $185 million.
An effective tax rate between 23.0% to 25.0%.
Conference Call
Builders FirstSource will host a
conference call Tuesday, May 10, 2022, at 8:00 a.m. Central Time (CT) and will simultaneously broadcast it live on the Internet. The earnings release presentation will be posted at
www.bldr.com
under the investors section
before the market opens on Tuesday, May 10, 2022, at 6:00am CT. To participate in the teleconference, please dial into the call a few minutes before the start time:
866-342-8591
(U.S. and Canada) and
203-518-9713
(international), Conference ID:
BLDRQ12022. A replay of the call will be available at 12:00 p.m. Central Time through Tuesday, May 17, 2022. To
access the replay, please dial
800-839-1246
402-220-0464
(international) and refer to pass code BLDRQ12022. The live webcast and archived replay can also be accessed on the Companys website at www.bldr.com under the Investors section. The archive
of the webcast will be available for approximately 90 days.
About Builders FirstSource
Headquartered in Dallas, Texas, Builders FirstSource is the largest U.S. supplier of building products, prefabricated components, and value-added services to
the professional market segment for new residential construction and repair and remodeling. We provide customers an integrated homebuilding solution, offering manufacturing, supply, delivery and installation of a full range of structural and related
building products. We operate in 42 states with approximately 565 locations and have a market presence in 47 of the top 50 and 85 of the top 100 MSAs, providing geographic diversity and balanced end market exposure. We service customers from
strategically located distribution and manufacturing facilities (certain of which are
co-located)
that produce value-added products such as roof and floor trusses, wall panels, stairs, vinyl windows, custom
millwork and
pre-hung
doors. Builders FirstSource also distributes dimensional lumber and lumber sheet goods, millwork, windows, interior and exterior doors, and other specialty building products.
Forward-Looking Statements
Statements in this news release and the schedules hereto that are not purely historical facts or that necessarily depend upon future events, including
statements about forecasted financial performance or other statements about anticipations, beliefs, expectations, hopes, synergies, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, oral statements made by our directors, officers and employees to the investor and analyst communities,
media representatives and others, depending upon their nature, may also constitute forward-looking statements. As with the forward-looking statements included in this release, these forward-looking statements are by nature inherently uncertain, and
actual results may differ materially as a result of many factors. All forward-looking statements are based upon information available to Builders FirstSource on the date this release was submitted. Builders FirstSource undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Any forward-looking statements involve risks and uncertainties that could cause actual events or results to differ
materially from the events or results described in the forward-looking statements, including risks or uncertainties related to the continuing
COVID-19
pandemic and its impact on the Companys business and
the homebuilding industry, the Companys growth strategies, including gaining market share and its digital strategies, or the Companys revenues and operating results being highly dependent on, among other things, the homebuilding
industry, lumber prices and the economy, including labor and supply shortages. Builders FirstSource may not succeed in addressing these and other risks. Further information regarding factors that could affect our financial and other results can be
found in the risk factors section of Builders FirstSources most recent annual report on Form
filed with the Securities and Exchange Commission (the SEC) and in the other reports Builders
FirstSource files with the SEC. Consequently, all forward-looking statements in this release are qualified by the factors, risks and uncertainties contained therein.
Non-GAAP
Financial Measures
The financial measures entitled Adjusted EBITDA, LTM Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, diluted Adjusted net income per share and
Free cash flow are not financial measures recognized under GAAP and are therefore
non-GAAP
financial measures. The Company believes that these
financial
measures provide useful information to management and investors regarding certain financial and business trends relating to the Companys financial condition and operating results.
Adjusted EBITDA is defined as GAAP net income before depreciation and amortization expense, interest
expense, net, income tax expense and other
non-cash
or special items including stock compensation expense, acquisition and integration expense, debt issuance and refinancing costs, gains (loss) on sale and
asset impairments and other items. LTM Adjusted EBITDA is defined as Adjusted EBITDA for the last twelve consecutive months. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by net sales. Adjusted net income is defined as GAAP net income
before
or special items including acquisition and integration expense and debt issuance and refinancing cost offset by the tax effect of those adjustments to net income. Adjusted net income per
diluted share is defined as Adjusted net income divided by weighted average diluted common shares outstanding. Free cash flow is defined as GAAP net cash from operating activities less capital expenditures, net of proceeds from the sale of property,
plant and equipment.
Company management uses Adjusted EBITDA, Adjusted EBITDA margin and Adjusted net income as supplemental measures in its evaluation
of the Companys business, including for trend analysis, purposes of determining management incentive compensation and budgeting and planning purposes. Company management believes that these measures provide a meaningful measure of the
Companys performance and a better baseline for comparing financial performance across periods because these measures eliminate the effects of period to period changes, in the case of Adjusted EBITDA and Adjusted EBITDA margin, in taxes, costs
associated with capital investments, interest expense, stock compensation expense, and other
non-recurring
items and, in the case of Adjusted net income, in
certain
items. Company management also uses free cash flow as a supplemental measure in its evaluation of the Companys business, including for purposes of its internal liquidity
assessments. Company management believes that free cash flow provides a meaningful evaluation of the Companys liquidity.
The Company believes that
these
financial measures provide additional tools for investors to use in evaluating ongoing operating results, cash flows and trends and in comparing the Companys financial measures with other
companies in the Companys industry, which may present similar
financial measures to investors. However, the Companys calculations of these financial measures are not necessarily comparable
to similarly titled measures reported by other companies. Company management does not consider these financial measures in isolation or as alternatives to financial measures determined in accordance with GAAP. Furthermore, items that are excluded
and other adjustments and assumptions that are made in calculating these
financial measures are significant components in understanding and assessing the Companys financial performance. These
financial measures should be evaluated in conjunction with, and are not a substitute for, the Companys GAAP financial measures. Further, because these
financial measures are not determined in accordance with GAAP and are thus susceptible to varying calculations, the
financial measures, as presented, may not be comparable to other similarly titled
measures of other companies. Reconciliations of these
financial measures to the most directly comparable GAAP financial measures are included in the tables below.
The Companys Adjusted EBITDA outlook, free cash flow 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
professional and legal fees associated with acquisitions. The Companys 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, operating cash flow 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, the Company does not provide a reconciliation to the most comparable GAAP financial
measure for its Adjusted EBITDA or free cash flow 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 the Companys outlook.
Contact:
Michael Neese
SVP, Investor Relations
(214)
765-3804
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Three Months Ended
(in thousands, except per share amounts)
5,681,131
4,173,775
Cost of sales
3,848,758
3,104,221
Gross margin
1,832,373
1,069,554
Selling, general and administrative expenses
968,568
821,598
Income from operations
863,805
247,956
Interest expense, net
41,314
31,844
Income before income taxes
822,491
216,112
Income tax expense
182,851
43,532
639,640
172,580
Net income per share:
Diluted
Weighted average common shares:
177,120
206,571
179,546
208,624
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
111,946
134,331
Deferred income taxes
(7,398
(8,857
Stock-based compensation expense
10,402
Changes in assets and liabilities, net of assets acquired and liabilities assumed:
Receivables
(549,712
(294,129
Inventories
(561,813
(340,940
Contract assets
(33,081
(89,994
Other current assets
(27,860
(27,664
Other assets and liabilities
Accounts payable
470,198
241,621
Accrued liabilities
93,237
Contract liabilities
33,380
(4,770
Net cash provided by (used in) operating activities
179,822
(200,508
Cash flows from investing activities:
Cash acquired in BMC Merger
167,490
Purchases of property, plant and equipment
(50,475
(39,263
Proceeds from sale of property, plant and equipment
Net cash (used in) provided by investing activities
(48,335
131,421
Cash flows from financing activities:
Borrowings under revolving credit facility
1,906,000
410,000
Repayments under revolving credit facility
(1,738,000
(260,000
Proceeds from long-term debt and other loans
301,500
Repayments of long-term debt and other loans
(468,671
Payments of debt extinguishment costs
(2,475
Payments of loan costs
(6,416
(4,272
Exercise of stock options
Repurchase of common stock
(354,965
(10,418
Net cash provided by (used in) financing activities
107,712
(335,601
Net change in cash and cash equivalents
239,199
(404,688
Cash and cash equivalents at beginning of period
42,603
423,806
Cash and cash equivalents at end of period
281,802
19,118
CONDENSED CONSOLIDATED BALANCE SHEET
December 31,
ASSETS
Current assets:
Accounts receivable, less allowances of $47,266 and $39,510 at March 31, 2022 and
December 31, 2021, respectively
2,290,513
1,708,796
Other receivables
223,070
255,075
Inventories, net
2,188,056
1,626,244
240,668
207,587
155,824
127,964
Total current assets
5,379,933
3,968,269
Property, plant and equipment, net
1,385,998
1,385,441
Operating lease
right-of-use
assets, net
446,876
457,833
Goodwill
3,270,192
Intangible assets, net
1,537,695
1,603,409
Other assets, net
30,491
29,199
Total assets
12,051,185
10,714,343
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
1,563,334
1,093,370
772,373
718,904
249,478
216,097
Current portion of operating lease liabilities
94,968
96,680
Current maturities of long-term debt
Total current liabilities
2,683,067
2,128,711
Noncurrent portion of operating lease liabilities
366,524
375,289
Long-term debt, net of current maturities, discounts and issuance costs
3,391,629
2,926,122
354,723
362,121
Other long-term liabilities
119,195
119,619
Total liabilities
6,915,138
5,911,862
Commitments and contingencies (Note 8)
Stockholders equity:
Preferred stock, $0.01 par value, 10,000 shares authorized; zero shares issued and
outstanding
Common stock, $0.01 par value, 300,000 shares authorized; 176,886 and 179,820 shares issued and
outstanding at March 31, 2022 and December 31, 2021, respectively
Additional
paid-in
4,240,540
4,260,670
Retained earnings
893,738
540,013
Total stockholders equity
5,136,047
4,802,481
Total liabilities and stockholders equity
Reconciliation of Adjusted
Financial Measures to their GAAP Equivalents
Three Months Ended
Twelve Months
(in millions)
Reconciliation to Adjusted EBITDA:
2,192.5
Acquisition and integration expense
Debt issuance and refinancing cost
Amortization expense
Tax-effect
of adjustments to net income
2,503.9
Weighted average diluted common shares
Diluted adjusted net income per share:
Reconciling items:
Depreciation expense
Stock compensation expense
Other management-identified adjustments
1,000.5
3,605.6
Costs associated with issuing and extinguishing long term debt in 2021.
Primarily relates to gain/loss on sale and asset impairments, severance and other one time costs.
Financial Data
(in millions, except per share amounts)
5,681.1
4,173.8
3,848.7
3,104.2
1,832.4
1,069.6
Gross margin %
Adjusted SG&A/Other (excluding depreciation and amortization) as a % of sales
Adjusted EBITDA margin %
Interest expense, net of debt issuance cost and refinancing
(202.2
Other adjustments
Basic adjusted net income per share:
Adjusted SG&A and other as a percentage of sales is defined as GAAP SG&A less depreciation and
amortization, stock compensation, acquisition, integration and other expenses.
Interest Reconciliation
Net Debt
Outstanding
2032 Unsecured notes @ 4.25%
1,300.0
2030 Unsecured notes @ 5.00%
2027 Secured notes @ 6.75%
Revolving credit facility @ 3.50% weighted average interest rate
Amortization of debt issuance costs, discount and premium
Finance leases and other finance obligations
(281.8
3,142.4
Free Cash Flow
Operating activities
Less: Capital expenditures, net of proceeds
Sales by Product Category
Three Months Ended March 31,
Net Sales
% Change
Manufactured products
1,354.6
Windows, doors & millwork
1,011.6
Value-added products
2,366.2
1,597.1
Specialty building products & services
Lumber & lumber sheet goods
2,325.4
1,769.3
Total net sales
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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