BMC Stock Holdings Inc. released today fourth-quarter and full-year 2015 financial results that show net losses in the first days of their merger but also what company officials regard as signs of "profitable growth momentum."
In effect, the Atlanta-based company released three sets of numbers for the October-to-December 2015 period:
- Counting the former Stock Building Supply's contributions only since it and BMC merged last Dec. 1, BMC Stock Holdings posted a net loss of $7.4 million on net sales of $510.2 million.
- Combining Stock's performance with BMC's for all the fourth quarter, BMC Stock Holdings said its adjusted net income totaled $11.4 million on sales of $727.8 million.
- "Adjusted EBITDA"--earnings before interest, taxes, depreciation, and amortization, plus other factors, like merger costs--totaled $37.8 million in the fourth quarter.
"Our integration process is on target as we have taken decisive actions toward combining two best-in-class teams," Peter Alexander, BMC Stock's president and CEO, said in a statement. "We moved quickly to establish a lean organizational structure with talent from both legacy businesses. As a result of our efforts, we secured approximately $10 million of annual cost synergies in the first month after the closing of the Merger and have increased our anticipated annual run-rate of cost synergies to $40 [million] - $50 million by the fourth quarter of 2017."
Jim Major, BMC Stock's executive vice president and chief financial officer, said the fourth-quarter financial performance "continued to demonstrate our profitable growth momentum."
BMC is a much different company this year than it was 18 months ago. Along with acquiring Stock, it also acquired ProSales 100 members VNS Corp. and Robert Bowden Inc., both based in Georgia, and moved its headquarters to Atlanta. So its numbers would be changing even without the Stock deal.
BMC Stock estimated that adding Stock Building Supply's numbers to it just for December--in other words, after the merger was consummated--added about $103.6 million in net sales for the fourth quarter. That's about half of the nearly $211 million in sales growth it showed, rising to $510.2 million in 4Q2015 from $311.8 million in the year-earlier period. Gross profit rose to $113.8 million (22.3% of sales) from $72.1 million ($23.1 million). The $7.4 million in net loss was a swing from the $3.95 million net profit BMC posted in 2014's fourth quarter.
Stock's net sales pretty much held steady in the fourth quarter from a year earlier, rising to about $321 million ($217.7 million for the October and November and the $103.6 million post-merger in December) vs. $317.1 million in 4Q2105. But its income from continuing operations sank to a $3.6 million loss from a $3 million profit a year before.
Adjusted gross profit for the combined BMC Stock rose to $175.6 million (24.1% of sales) from a pre-merger $147.9 million (23.5%).
While its net loss totaled a combined $11 mllion, BMC Stock figured its adjusted EBITDA climbed to $37.8 million from 4Q2015's $28.5 million. The company also said its adjusted net income rose to $11.4 million from $8.9 million. It reached those figures mainly by excluding $7.6 million in interest expenses, $12.6 million in depreciation and amortization, $29.3 million in merger-related costs, $1 million for relocating its headquarters, and $10.3 million in "inventory step-up charges." On the other hand, it also incurred a $15.1 million income tax benefit.