Builders FirstSource (BFS), now the nation's biggest full-service lumberyard since its acquisition of ProBuild, posted today a net loss of $17 million in the first quarter as compared to a $7.1 million loss in the year-earlier period.
Sales shot up 277% from the year-earlier period to $1.4 billion, a reflection of ProBuild's status as the bigger partner prior in the merger that closed last July 31. When one includes ProBuild's sales numbers from 2015's first quarter, the increase (after excluding $200,000 from closed locations) was 9.1%. Sales volume for the two firms together actually rose 15.8% from the January-to-March 2015 period, but commodity price deflation ate up 6.7 points of that gain.
The gross margin percentage for the combined BFS and ProBuild operations rose to 25.0% in this year's first quarter from the blended 24.1% they showed as separate firms in 2015.
BFS prefers to measure itself using adjusted EBITDA--earnings before interest, taxes, depreciation, and amortization as well as stock compensation expenses and items like ProBuild's long-term incentive plan. By that measure, what was a first-quarter net loss of $17 million under generally accepted accounting principles (GAAP) becomes a $61.8 million profit, and last year's $7.1 million net loss swings to a $20.8 million positive EBITDA showing.
BFS' earnings announcement also gave an update on the merger.
"Ten months after the acquisition of ProBuild, the transaction is already producing significant value," CEO Floyd Sherman said. "As of March 31, we have implemented cost savings initiatives that are projected to yield approximately $65 million to $70 million in run rate savings, including $12 million to $14 million in projected procurement initiatives, $7 million to $8 million in projected network consolidation savings, and $46 million to $48 million in projected overhead and SG&A [sales, general, and administration] savings.
"We realized $17 million in savings in the first quarter, an increase of $7 million over the fourth quarter of 2015, before one-time expenses," Sherman added. "We have a defined roadmap to achieve $100 million to $120 million of cost savings within two years of the closing date. Approximately $49 million of the projected $90 million to $100 million of one-time costs to achieve the projected synergy targets have already been incurred through March 31, and an additional $25 million is expected during the balance of 2016. "