In response to the novel coronavirus pandemic BMC Stock Holdings reported it has borrowed $144 million from its revolving cash credit facility. The draw gives the dealer approximately $285 million cash on hand and approximately $215 million remaining borrowing capacity under its revolver as of March 31. The dealer reported it has no significant long-term debt maturities until 2024.
Numerous dealers have announced they are borrowing from revolving credit facilities to increase current cash in hand. Beacon, the third largest company on the 2019 ProSales 100, announced it was drawing down $725 from its revolving credit facility last week and Builders FirstSource, the second ranked company on the 2019 ProSales 100, announced it was borrowing $150 million.
In addition to drawing down on its revolving credit facility, the Raleigh, N.C.-based dealer has postponed future growth-related capital projects and share repurchases indefinitely. The company will continue to invest in safety and productivity-related capital expenditures, according to a news release. BMC has also taken steps to reduce operating expenses, including voluntary cash salary and retainer reductions by senior management team members and the company’s board of directors, reductions in associate staffing levels, and the elimination of certain discretionary spending.
BMC is withdrawing its full-year 2020 outlook issued with its 2019 fiscal year results in February, as management anticipates the coronavirus will have a negative affect on single-family housing starts and company financial results over the remaining months of the year. Despite the revision of expectations, BMC does not expect a significant impact on its first quarter 2020 results compared to expectations.
The coronavirus has also forced BMC to significantly reduce operations in Washington state. BMC branches in the state represented 5% of the company’s $3.6 billion in 2019 net sales. A majority of BMC’s products and services have been classified as “essential business” and the company’s facilities are continuing to operate in most of the country.
“At BMC, we are focused on supporting our associates, customers, partners, and communities during this unprecedented time,” president and CEO Dave Flitman said in a news release. “Due to the rapidly evolving nature and continued uncertainty surrounding COVID-19, we are taking actions to maintain the safety of our associates and increase our company’s financial flexibility, including borrowing on our revolving credit facility and temporarily suspending our share repurchase program, while actively reducing our operating expenses and capital expenditures.”
Flitman said he is confident BMC’s responses, combined with a commitment to safety, the company’s business model, and the company’s “financial strength” will position the dealer to navigate successfully through the challenging period presented by the coronavirus.
BMC said it has taken several steps to protect associates, including detailed cleaning and disinfecting processes, implementing social distancing protocols, suspending all air travel, and encouraging associates to work from home when possible. The dealer has launched a dedicated coronavirus resource intranet page for associates and BMC has also enacted an Emergency Sick Pay Leave policy for associates unable to report to work because of a coronavirus disruption.