Builders FirstSource (BFS) revealed today its expects to announce net income will shrivel by at least 60% in the second quarter from the year-earlier period even though sales will have grown at least 7%. It also reported ProBuild's second-quarter net likely more than doubled despite a decline in sales.
The revelations came in a virtually unprecedented earnings forecast that BFS apparently issued to help it secure financing as part of its planned acquisition of ProBuild. BFS announced July 16 it intends to issue $750 million worth of senior unsecured notes to help it buy ProBuild.
In today's announcement, BFS said it expects to report net income of $3 million to $4 million for the second quarter. That compares with its $10.6 million net in the April-to-June 2014 period and comes despite expectations that it will post net sales for the quarter between $455 million and $465 million, up from $426.5 million the year before.
Meanwhile, ProBuild's net income leaped to between $45 million and $50 million in the second quarter from a year-earlier $22.4 million, BFS reported. That increase came even though net sales dropped to between $1.16 billion and $1.18 billion from $1.21 billion in 2014's second quarter.
BFS plans to announce its earnings late on July 23. ProBuild is a private company, so its actual second-quarter earnings won't come out until and if BFS reports them as part of its acquisition-related announcements.
Dallas-based BFS didn't specify why its net income declined, but it did note that depreciation and amortization expenses rose 78% and interest expenses pretty much doubled. Together, those costs were about $6.6 million higher than in 2Q2014.
ProBuild, based in Denver, says facility closures cost it roughly $17.7 million in sales last quarter, BFS' SEC filing reported. "Commodity price deflation, combined with ongoing initiatives to improve gross margin, also slowed sales growth," it added.