Higher Commodity Prices Boost Builders FirstSource Q3 Sales

On November 8, Builders FirstSource (BFS) reported its results for the third quarter ended September 30, 2017.

Image result for builders first source logoCEO Floyd Sherman said this regarding their third quarter performance, "We proved our agility to respond to unexpected challenges, including two major hurricanes and commodity inflation. I am pleased with our results, as we have once again demonstrated our ability to deliver sales and EBITDA growth in a volatile market while executing on our strategic priorities. The Company is positioned to capitalize on the growth opportunity from our national footprint, our strong customer relationships and our end market diversity. We continue our commitment to investments in strategic growth initiatives, including building our sales force and expanding our manufacturing footprint to grow shareholder value, while making further progress in paying down debt and reducing our leverage ratio on a year over year basis."

BFS net sales for the quarter were $1.9 billion, a sales-per-day increase of 9.3 percent over the same period in 2016.  While BFS attributes 6.9 percent to the dramatic rise in lumber prices, 2.6 percent is real sales volume growth.  Excluding the rise in commodity prices (and discounting locations closed by the hurricanes), sales volume grew 4.7 percent in the single family homebuilding end market.

BFS gross margin in the third quarter was $459.3 million, up $22.2 million from the same period in 2016. Their gross margin percentage decreased slightly (24.4 percent  versus 25.0 percent in 2016), which they attributed to “unexpected moves in commodity prices.” BFS estimates framing lumber and sheet good prices increased 9.8 percent and 25.7 respectively since the beginning of the year.

BFS adjusted net income for the quarter was $45.5 million, down from $69.2 million during the same period in 2016. “The year over year decrease is primarily driven by the Company's tax expense accrual versus a $13.9 million tax benefit in 2016, partially offset by lower interest expense.”

Finally, BFS estimates the hurricanes negatively impacted the company by approximately $4 million (EBITA) in the third quarter.

Click here to view the full financial report.