Builders FirstSource (BFS) reported today it essentially broke even in 2015's fourth quarter, its first full period in which it and ProBuild were united. Compared with pro forma results from when the companies were separate in 4Q2014, the latest quarter's net loss of $300,000 marked a sharp improvement from the year-earlier $14.5 million loss. Net sales fell 1.1% to $1.46 billion, the gross margin rose to 26.3% from 24.8%, and adjusted EBITDA grew to $76.3 million from $67.1 million.
The quarter's sales volume rose 7.1% from the October-December 2014 period, but commodity price deflation caused the value of the goods sold to drop by 8.2%, Dallas-based BFS said. Sales volume grew 8.1% in the homebuilding market and 3.8% in the repair and remodeling business.
Had BFS and ProBuild been one company the entire year, BFS estimates it would have shown net income of $17.8 million in 2015, marking a major swing from the two firms' $69.4 million total net loss in 2014. BFS was a public company in 2014, and last Feb. 19 it reported net income totaling $18.2 million. ProBuild, at the the time a private company, didn't reveal its financials then, but subsequent documents filed in relation to its takeover by BFS showed that ProBuild recorded net losses totaling $198.1 million in the 39 months between January 2012 and March 2015. Pro forma net sales for all 2014 fell 1.0% to $6.07 billion once closed locations were factored in. BFS said commodity price deflation affected those results, too.
BFS prefers to measure itself by adjusted EBITDA--earnings before interest, taxes, depreciation and amortization, plus exclusions for such items as merger-related costs, facilitiy closure costs, depreciation and amortization expenses, interest expenses, income taxes, stock compensation, and asset impairment losses. By that measure, CEO Floyd Sherman saw encouraging news.
"We grew adjusted EBITDA by 14%, or $9 million, in the quarter, and by 22%, or $56 million, in the year versus 2014," Sherman said in a statement. "We were able to achieve these positive results despite the negative impact of commodity deflation on our sales. Average market prices for framing lumber fell approximately 13% in 2015, with the largest impact on our sales occurring in the fourth quarter. As a result, our 2015 pro forma lumber and lumber sheet good sales, excluding closed locations, were down 6% for the year. However, our pro forma value-added sales of prefabricated components, windows & doors, and millwork increased 5% versus 2014."
Sherman reaffirmed BFS' plans to produce $100 million to $120 million of annualized savings within two years of the merger, which took place last July. He said BFS expects to realize between $60 million and $70 million in 2016 alone, excluding one-time integration costs.
BFS has said it expects some savings to come from closing more than a dozen facilities in markets where it and ProBuild overlapped. BFS yards span Dixie from Texas to Maryland, while the much bigger ProBuild ranged from Florida to Alaska.
The combined BFS-ProBuild operation bills itself as the largest supplier of building products, prefabricated components, and value-added services to professional builders and remodelers. Its sales in 2015 totaled $6.1 billion, and it has 14,000 employees in 40 states.
Sales of lumber and lumber sheet goods accounted for $461.4 million of BFS business in 2015's fourth quarter, or 31.7% of its total sales. Revenue from windows, doors and millwork provided another $322.7 million (22.2% of the total); manufactured products $239 million (16.4%); gypsum, roofing and insulation $132 million (9.1%); siding, metal and concrete products $133.8 million (9.2%); and other products and services $166.8 million (11.5%).