BMC Stock Holdings--the official name for today's BMC--reported today robust gains in sales and a return to profit in 2016's fourth quarter over a year-earlier quarter in which it took over Stock Building Supply.
Using generally accepted accounting principles that count Stock's contribution only for the one month in 2015 in which it was part of BMC, Atlanta-based BMC posted a 46.5% rise in net sales to $747.6 million and a swing in net income to $10.4 million from a $7.4 million loss a year before. That's a net profit margin of 1.4%.
If one includes Stock's activity for all of 2015's fourth quarter, then BMC's adjusted net income for October-December 2016 was 2.7% over the year-earlier period, in good part due to higher lumber and sheet goods commodity prices, which accounted for 30.6% of total sales in 4Q16. The bottom line saw a rise to $14.3 million net profit--a 1.9% margin.
During 2015, BMC not only absorbed Stock--once the No. 1 company on the ProSales 100--but also PS100 members Robert Bowden Inc. and VNS. For all of 2016, BMC estimates it realized about $31 million in cost savings as a result of its integration work, and it predicts to generate another $15 million to $21 million in run rate savings by year-end 2017.
The full-year 2016 results, which include VNS and Bowden's total numbers for 2015 but only one month's worth of Stock's, showed a 96.2% rise in net sales to $3.1 billion and net income of $30.9 million. If all of Stock's 2015 revenue were to be included, BMC's sales for 2016 work out to a 10.5% rise.
"Also, during the year, we rolled out ReadyFrame, our differentiated whole-house framing solution that assists professional builders and contractors to reduce their labor needs and shorten cash conversion cycles, to the remainder of our major markets," Peter Alexander, BMC's president and CEO, said in a statement. "This product offering grew more than 46% during 2016 to over $100 million in sales."
Sales of building products in the fourth quarter--again, including just one month of Stock's revenues in 2015--jumped 49.7% to $567.2 million, while sales of construction services climbed 37.5% to $180.4 million. Gross profit margin totaled 24.1% in 2016's fourth quarter, up from 2015's 22.3%.
The company's balance sheet shows $1.4 billion in assets, $254.8 million of it in goodwill . On the liabilities side, the company has $344.8 million in long-term debt.
BMC likes to measure itself in terms of adjusted EBITDA: in general, earnings before interest, taxes, depreciation, and amortization, plus items like impairment of assets, merger and integration costs, inventory step-up charges, non-cash stock compensation, headquarters relocation expense, loss portfolio transfer, insurance deductible reserve requirements, fire casualty losses, and any loss from extinguishing debt. By that metric, adjusted EBITDA increased 17.5% in the quarter to $44.5 million, and for the year the company posted a 49.7% gain to $193.9 million.
