Builders FirstSource (BLDR) Tops Q4 EPS by 36c, Revenues Miss; Offers FY21 Revenue Mid-Point Outlook Above Consensus

February 26, 2021 7:08 AM EST

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Builders FirstSource (NASDAQ: BLDR) reported Q4 EPS of $1.26, $0.36 better than the analyst estimate of $0.90. Revenue for the quarter came in at $2.5 billion versus the consensus estimate of $2.57 billion.

Fourth Quarter 2020 Highlights:

  • Net sales of $2.5 billion for the quarter increased 43.5% compared to the prior year period
    • Core organic sales increased 15.0%, excluding acquisitions and commodity impacts
    • Commodity inflation increased net sales 26.5%
    • Acquisitions contributed to net sales growth of 2.0%
  • Gross profit of $669.2 million increased 40.4% compared to the prior year period
  • Net income of $139.9 million, or $1.18 per diluted share, and adjusted net income of $149.0 million, or $1.26 per diluted share
  • Adjusted EBITDA more than doubled to $257.1 million, driven by solid demand across all three customer end markets and commodity inflation
  • Strong quarter-end balance sheet with a net debt to LTM Adjusted EBITDA ratio of 1.7x and liquidity of $1.2 billion

On January 1, 2021, Builders FirstSource completed its transformational merger with BMC Stock Holdings (“BMC”) in an all-stock transaction, creating the nation’s premier supplier of building materials and services. As a result, the fourth quarter and full-year results do not include the financial results of BMC.

Chad Crow, CEO of Builders FirstSource, commented, “Record fourth quarter results reflect an exceptional finish to a year of remarkable performance, despite the challenges in 2020. Solid momentum from the continued execution of our strategic plan combined with strong residential market tailwinds positions Builders FirstSource to accelerate its success through the recently completed combination with BMC. The combined company provides a broader platform for growth including a deepened presence in the top housing markets across the nation. It has been my absolute pleasure to help build this great company over the past 21 years, and I believe that Dave Flitman’s proven ability to drive sustainable growth with a defined vision will lead to further value creation for our shareholders in the quarters and years to come.”

Dave Flitman, President of Builders FirstSource who will succeed Mr. Crow as CEO on April 1, added, “We are very excited about our merger, which was overwhelmingly approved by the shareholders of both companies and positions us with a long runway of growth well into the future. I want to thank Chad for his partnership in creating the premier specialty building materials distributor in the U.S. On a pro forma basis, our combined companies achieved outstanding top and bottom-line performance in 2020, including $12.8 billion in net sales and over $1 billion of Adjusted EBITDA. Our integration efforts are progressing very well against our plan and we remain confident in delivering our expected run rate cost savings of $130 million to $150 million by the end of 2023. I look forward to working with our more than 26,000 team members to execute our strategy and foster a culture where we live our values of safety, people, integrity, customers and excellence.”

Peter Jackson, CFO of Builders FirstSource, said, “We entered 2021 with a strong foundation for our best-in-class solutions to thrive, underpinned by a pro forma leverage ratio for our combined companies of 1.3 times and free cash flow in excess of $286 million. We continue to evaluate opportunities to leverage the strength of our balance sheet as our debt falls. Looking ahead, we expect favorable market tailwinds from continued robust new single-family home demand to drive additional growth, and cash generation.”

GUIDANCE:

Builders FirstSource sees FY2021 revenue of $13.9-14.6 billion, versus the consensus of $13.99 billion.

For 2021, the Company expects significant improvement in its financial performance, including the following:

  • Net sales to grow to a range of $13.9 billion to $14.6 billion or approximately 9% to 14% over its 2020 pro forma net sales of $12.8 billion.
  • Adjusted EBITDA to be in a range of $1.29 billion to $1.34 billion or approximately 20% to 25% over its 2020 pro forma Adjusted EBITDA of $1.07 billion.
  • Expected realized cost savings of $60 million to $70 million
  • Free cash flow in the range of $800 million to $900 million

The 2021 outlook is based on several assumptions, including the following:

  • Single family starts growth across our geographies in the high single digits; multi-family starts decline in the low single digits; and R&R growth in the low single digits.
  • Commodity tailwind of 0% to 10% compared to the prior year
  • Recently completed acquisitions net sales accretion of 2%
  • Less selling days of approximately 1% or 2 fewer days
  • Depreciation and amortization expenses in the range of $540 million to $550 million.
  • Capital Expenditures in the 1.4% to 1.6% range of net sales
  • Interest expense in the range of $110 million to $115 million
  • An effective tax rate of approximately 23.0% to 25.0%

For earnings history and earnings-related data on Builders FirstSource (BLDR) click here.



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