US LBM swung to a $2.5 million profit in the second quarter from a $7.8 million loss in the year-earlier period, thanks in part to an 18.6% gain in revenue to $803.8 million, America's fifth-biggest ProSales 100 company indicated in an report that's part of its plans to become a publicly traded company.
The Aug 30 update to a registration statement with the Securities and Exchange Commission suggests US LBM has snapped a streak in which it racked up $270.2 million in net losses between January 2015 and March 2017. The latest statement reported only first-half 2017 financial data, so for this story we've taken first-quarter numbers provided in an earlier SEC filing and subtracted them from the latest report to come up with second-quarter statistics.
Gross profit for the second quarter jumped 16.1% from the January-to-March 2016 period to hit $220.8 million. The gross margin slipped a bit, however, to 27.5% from 28.1%. Operating income more than doubled to $27.6 million from $12.9 million.
Interest expense plays a major role in explaining why net profit (just 0.3%) of sales is so small compared with operating income (3.4% of sales). The company paid out $23 million in interest in the second quarter, up from $19.2 million a year earlier. The company has $1.2 billion in assets vs. $1.98 billion in equity. And over one-third of its equity is goodwill--$665 million worth. Analysts say it's quite common for a privately held company to have lots of debt as it goes into an initial public offering.
Buffalo Grove, Ill.-based US LBM likes to measure itself in terms of adjusted EBITDA, a metric that strips out interest expense, taxes, depreciation, amortization, early extinguishment of debt, equity-based compensation expenses, IPO-related expenses, acquisition expenses, management fees, goodwill impairment charges, changes in reserves, specified consultant fees, and other margins. For the second quarter, US LBM's adjusted EBITDA improved to $65.3 million from $53.6 million.
For the first half of 2017, US LBM reported $1.46 billion in revenue, a gross profit of $401.6 million, operating income of $26.6 million, and a net loss of $22 million. The company hasn't revealed when it will start selling shares publicly.