DALLAS, Feb. 19, 2009 (GLOBE NEWSWIRE) -- Builders FirstSource, Inc. (Nasdaq:BLDR), a leading supplier and manufacturer of structural and related building products for residential new construction in the United States, today reported its results for the fourth quarter and fiscal year ended December 31, 2008.
2008 Financial Highlights (unaudited)
---------------------------------------------------
Diluted Diluted
Fourth Per Fiscal Per
Quarter Share Year Share
--------------- ------- ---------------- -------
Sales $ 201.3 million $1,034.5 million
Loss from
continuing
operations $(53.4) million $(1.50) $(131.8) million $(3.70)
Loss from
discontinued
operations, net
of tax $ (5.4) million $(0.15) $ (7.7) million $(0.21)
Net loss $(58.9) million $(1.65) $(139.5) million $(3.91)
Included in the
calculation
thereof:
Asset
impairments $ 36.8 million $ 0.72 $ 51.1 million $ 0.97
Facility
closure
costs $ 0.5 million $ 0.01 $ 4.8 million $ 0.08
Valuation
Allowance $ 9.0 million $ 0.25 $ 35.5 million $ 1.00
------- -------
$ 0.98 $ 2.05
Adjusted EBITDA $(12.1) million $ (36.2) million
"During the fourth quarter, we saw a continued decline in housing activity as actual single-family housing starts dropped to 103,600 from 188,300 in the same period of 2007, or a 45.0 percent decline. The fourth quarter percentage decline was the largest year-over-year change since the housing correction began in March 2006," said Floyd Sherman, Builders FirstSource Chief Executive Officer. "For the year, actual single-family housing starts fell to 622,400 from 1,046,100 last year, or a 40.5 percent decline. However, the annualized rate for single-family starts at the end of 2008 was 398,000, the lowest recorded since the U.S. Census Bureau began its record keeping in 1959. This level suggests that 2009 will likely be worse than 2008, with our belief that the first six months of 2009 will be especially challenging."
Mr. Sherman continued, "We felt the impact of these difficult conditions on our 2008 results although we were able to limit it through our action plan. Our action plan principally consisted of growing market share, reducing physical capacity, adjusting staffing levels, implementing cost containment programs, managing credit tightly, and, most importantly, conserving cash. Overall we feel these efforts were very successful. We estimate that market share gains reduced our sales decline year-over-year by an estimated 10 percent. From a capacity standpoint, we closed or mothballed 14 facilities during 2008. The closures reduced our fixed operating costs and largely allowed us to redeploy sales to other locations to gain efficiencies. We lowered our average headcount by over 1,600 to 4,850 in 2008, a decrease of 25.2 percent from 2007. Our headcount at December 31, 2008, was down over 2,100 to 3,274, a 39.3 percent decrease from the beginning of 2008. The reductions in payroll costs coupled with our other cost reductions allowed us to reduce our selling, general and administrative expenses, excluding non-cash and non-recurring charges, by 19.5 percent or approximately 65 percent variable with the sales volume decline. Our bad debt expense as a percentage of sales increased only 24 basis points. The most important measure to us, cash used, was only $30.7 million for 2008. These efforts will not only benefit us in the short-term but will allow us to be a more efficient organization in the long-term."
"During these difficult economic times, we are focused not only on the fiscal side of our business, but also on maintaining and building on customer and supplier relationships. We have expanded our reach into the multi-family and light commercial segments while fostering our relations with our existing customers," Mr. Sherman said. "We know our employees are critical in maintaining and building on these relationships. We have asked a lot from them over the last two years and I am appreciative of how they have responded. Without their efforts, we would not have been able to weather this downturn as well as we have."
Charles Horn, Builders FirstSource Senior Vice President and Chief Financial Officer, added, "Since the beginning of the housing downturn, a primary focus has been on protecting liquidity. Thirty-three months into this correction, we feel we have been successful. We ended 2008 with almost $107 million in cash while we used only $30.7 million during the year. A big element in protecting liquidity is tight working capital management. For 2008, our working capital percentage of sales was 11.9 percent, excluding cash and income tax receivables, up only slightly from 11.4 percent in 2007."
Fourth Quarter 2008 Results Compared to Fourth Quarter 2007 (See accompanying financial schedules for full financial details and reconciliations of Non-GAAP financial measures to their GAAP equivalents.)
* Sales were $201.3 million compared to $290.2 million last year, a
year-over-year decline of $88.9 million or 30.6 percent. Our
sales volume dropped an estimated 27.9 percent compared to an
estimated 45.6 percent decline in housing activity in our
markets, signifying a contribution from market share gains of an
estimated 15 percent.
* Gross margin percentage was 21.3 percent, down from 23.0 percent,
a 1.7 percentage point decline year-over-year. Specifically, our
gross margin percentage declined 0.8 percentage points due to
price, 0.6 percentage points due to volume (fixed costs in costs
of goods sold), and 0.3 percentage points due to a shift in sales
mix toward installed product sales, which carry a lower gross
margin percentage than distributed sales.
* Selling, general and administrative ("SG&A") expenses decreased
$15.1 million, or 18.7 percent. As a percentage of sales,
however, SG&A expense increased from 27.9 percent in 2007 to 32.7
percent in 2008 which is reflective of fixed cost items becoming
a larger percentage of our SG&A. Average full-time equivalent
employees for the fourth quarter 2008 were 27.0 percent lower
than the fourth quarter 2007, while our salaries and benefits
expense, excluding stock compensation expense, fell $11.3
million, or 24.6 percent. Offsetting the declines in SG&A were a
$1.1 million increase in stock compensation expense and $2.8
million in transaction costs associated with cancelled
acquisitions.
* We recorded asset impairment charges of $36.8 million before tax,
or $0.72 per share net of tax. We recorded a goodwill impairment
charge of $36.4 million related to our Florida business unit. The
impairment charge is the result of the continued decline in
housing starts in this market and the effect of this decline on
this business unit's current operating performance as well as
long-term expectations. Additionally, we recorded a pre-tax asset
impairment charge of $0.4 million related to land we have held
for sale. As a result of the goodwill impairment charge taken
during the fourth quarter, the Florida business unit no longer
has any remaining goodwill on the balance sheet.
* We recorded a tax benefit of $13.4 million, or a 20.0 percent tax
benefit rate, during the quarter compared to a tax benefit of
$10.3 million, or 37.7 percent tax benefit rate, last year. Our
benefit for the quarter was reduced by an after-tax, non-cash
valuation allowance of $9.0 million, or $0.25 per share, related
to our net deferred tax assets. The valuation allowance is
reflected as a reduction to fourth quarter income tax benefit and
to the Company's net deferred tax assets as of December 31, 2008.
* Loss from continuing operations was $53.4 million, or $1.50 loss
per diluted share, compared to $16.9 million, or $0.48 loss per
diluted share.
* As announced subsequent to the third quarter of 2008, we exited
the New Jersey market, which we are treating as a discontinued
operation for accounting purposes. As such, our loss from
discontinued operations for the fourth quarter of 2008 was $5.4
million, or $0.15 loss per diluted share, compared to $3.4
million, or $0.10 loss per diluted share. Included in
discontinued operations in the fourth quarter of 2008 was $3.7
million in facility closure costs.
* Net loss was $58.9 million, or $1.65 loss per diluted share,
compared to net loss of $20.4 million, or $0.58 loss per diluted
share.
* Diluted weighted average shares outstanding were 35.7 million
compared to 35.1 million.
* Adjusted EBITDA was a loss of $12.1 million compared to a loss of
$5.2 million last year. See reconciliation attached.
* Operating cash flow was $(5.6) million compared to $11.8 million
for the fourth quarter of 2008 and 2007, respectively.
* Capital expenditures were $0.6 million compared to $2.6 million
for the fourth quarter of 2008 and 2007, respectively.
Fiscal Year 2008 Financial Results Compared to Fiscal Year 2007 (See accompanying financial schedules for full financial details and reconciliations of Non-GAAP financial measures to their GAAP equivalents.)
* Sales were $1,034.5 million compared to $1,530.5 million, a
decline of $496.0 million or 32.4 percent. Our sales volume
dropped an estimated 30.4 percent compared to an estimated 42.5
percent decline in housing activity in our markets, signifying a
contribution from market share gains of an estimated 10 percent.
* Gross margin percentage was 21.6 percent, down from 24.6 percent,
a 3.0 percentage point decline from last year. Specifically, our
gross margin percentage decreased by 1.9 percentage points due to
price, 0.9 percentage points due to volume (fixed costs in costs
of goods sold),and 0.2 percentage points due to a shift in sales
mix toward installed product sales, which carry a lower gross
margin percentage than distributed sales.
* Selling, general and administrative expenses decreased $66.0
million, or 18.4 percent. As a percentage of sales, however, SG&A
expense increased from 23.4 percent in 2007 to 28.3 percent in
2008 which is reflective of fixed cost items becoming a larger
percentage of our SG&A. Average full time equivalent employees
for 2008 were 25.0 percent lower than 2007, while our salaries
and benefits expense, excluding stock compensation expense, fell
$49.3 million, or 23.2 percent. Offsetting the declines in SG&A
were a $1.5 million increase in stock compensation expense, and
$2.8 million in transaction costs associated with cancelled
acquisitions.
* We recorded asset impairment charges charges of $51.1 million
before tax, or $0.97 per diluted share net of tax. We recorded
goodwill impairment charges of $44.0 million in 2008 related to
our Ohio and Florida business units. The impairment charge is the
result of a continued decline in housing starts in these specific
business units and the effect of this decline on these business
units' current operating performance as well as long-term
expectations.
