BMC Stock Holdings today touted the benefits of its merger last Dec. 1, reporting a finance-assisted 41% rise in pro forma net income to $21.3 million during the third quarter compared with the combined results of their then-separate operations in 2015. That income was powered by a 6% rise in pro-forma sales to $821.2 million.
The Atlanta-based dealer--second-biggest among full-service operations on the ProSales 100--said its merger initiatives have produced $28 million worth of future run rate savings, and that it's on track to record annual run rate synergies of $40 million to $50 million by the end of 2017.
Using Generally Accepted Accounting Principles (GAAP), which ignore Stock Building Supply's activity last year before BMC acquired it, BMC's net income more than doubled to $9.2 million from $4.0 million in 2015's July-to-September period, as sales grew 97.2% to $821.2 million from $416.5 million. Those results reflect the addition not only of Stock but also of Robert Bowden Inc., a big Atlanta-area dealer, to BMC's accounts.
Significantly, BMC also reported it spent $12.5 million to extinguish a pair of debts because of refinancings (which it expects will save it $7 million annually in future interest expenses). In GAAP accounting, that's a loss. But when BMC compiled its adjusted net income so that it could include Stock's 2015 results, it excluded the impact of that $12.5 million expenditure. It also excluded $4.7 million in merger and integration costs that figure in the GAAP report. Those are big reasons why adjusted net income rose to $21.3 million from $15.1 million while on a GAAP basis rose it climbed less, to $9.2 million from $4.0 million.
Peter C. Alexander, BMC's president and CEO, noted that the company's sales of millwork, doors and windows--which generate higher margins than comodities--posted adjusted growth of 9.7%. On the adjusted basis that includes Stock's 2015 results, millwork, doors, and windows accounted for 28.4% of all sales, up from 27.4%.
"Another important component of the third quarter net sales growth was ReadyFrame, our whole-house solution, which enables builders to frame houses 20% to 30% faster with less labor and significantly less waste," Alexander added. "I am extremely pleased that ReadyFrame, which grew 43% to $28.6 million in net sales during the quarter, is now available in all of our major markets, setting the stage for substantial future growth capacity for this innovative product offering."