Sales jump 7.3% at BMC Stock
BMC Stock Holdings, Inc., one of the nation’s largest pro dealers, reported third quarter 2017 net sales of $881 million, a 7.3% increase over sales of $821.2 million for the third quarter 2016.
The Atlanta-based pro dealer also reported a net income of $18.4 million for the quarter, doubling a net income of $9.2 million in the prior year period, which included a pre-tax loss on debt extinguishment of $12.5 million.
“We are pleased with our team’s ongoing execution and ability to deliver this solid performance despite the short-term impacts of Hurricanes Harvey and Irma on our Houston and Georgia operations,” Peter Alexander, president and CEO, noted in a press release issued by the company Monday morning. “We grew sales in our higher-margin structural components product category by 17.5%, driven, in part, by continued success of Ready-Frame. This whole-house framing solution remains an important contributor to our business, allowing us to differentiate BMC with our builder customers with a cost-effective and time-saving alternative as they face a very tight labor market.”
Breaking down net sales for the quarter, BMC Stock estimated that net sales increased 4.5% from lumber and sheet goods commodity price inflation, 2.3% from recent acquisitions and 0.5% from increased volumes. The increase in sales volume was negatively impacted by one less selling day during the quarter as compared to the third quarter of 2016, resulting in a 1.6% impact to net sales. Hurricanes Harvey and Irma are estimated to have decreased net sales by $12 million to $15 million during the quarter, the company said.
BMC operates in 43 metropolitan areas across 18 states, principally in the South and West.
Mixed reviews for a tax bill
Taxation has always been a contentious issue, and the contention seems to be rising with the release of the Tax Cuts and Jobs Act (H.R.1) on Thursday.
The National Association of Home Builders was an early opponent of the Republican tax plan, with an opposition based on the absence of meaningful home ownership incentive. More recently the Window and Door Manufacturers Association expressed “serious concerns.”
And while the editorial board of the USA Today denounced the plan and its impact on the deficit, the Wall Street Journal called it “Half a Tax Reform,” with drawbacks as well as a “much-needed and pro-growth reform of business taxes.”
The National Lumber and Building Material Dealers Association issued a statement yesterday in which it restated its commitment to preserving the mortgage interest deduction and eliminating the estate tax.
While the NLBMDA has not taken a position on the tax bill, the association broke down some of its salient points. NLBMDA Vice President of Legislative and Political Affairs Ben Gann also shared some “inside baseball” analysis of how the reform might come into being:
“Congressional Republicans are using the budget reconciliation process as the legislative vehicle for tax reform. That permits the Senate to bypass certain procedural hurdles and allow a simple majority to approve a tax overhaul package in the upper chamber,” he wrote.
“A rule in the budget resolution bill (the legislative vehicle for tax reform) also allows for $1.5 trillion in tax cuts over 10 years without corresponding offsets. Using reconciliation requires that at least some of the tax cuts phase-in to comply with the Byrd Rule, a Senate rule that prohibits budget reconciliation provisions from increasing the deficit beyond 10 years.”
From the NLBMDA’s recent legislative alert, here are some of the early version key components of the bill:
- Permanently Repeals the Estate Tax – Phases-in permanent repeal of the estate tax. Immediately doubles the estate tax exemption levels ($11.2 million for individuals, $22.4 million for couples) and indexes for inflation. Repeals the estate tax and generation-skipping transfer tax starting in 2024. Maintains full step-up in basis. Cuts the gift tax to 35% on gifts over $10 million and indexes that amount for inflation. NLBMDA supports full repeal of the estate tax
- Increases the Standard Deduction – Approximately doubles the standard deduction. $12,000 for single filers. $24,000 for married couples filing jointly
- Lowers the Cap on the Mortgage Interest Deduction – Lowers the mortgage debt cap from $1 million to $500,000 on interest payment deductions. The deduction for second homes is eliminated. In addition, the deduction on interest payments associated with home equity loan debt is eliminated. NLBMDA supports the preservation of the mortgage interest deduction.
- Lowers Tax Rate for Small Businesses – Caps the income tax rate for pass-through entities at 25%, which is significantly lower than the top rate that these businesses pay today.
- Full "Expensing" of Capital Investments – Allows businesses to immediately write-off (or "expense") the cost of new qualified property through 2022.
- Lowers Corporate Income Tax Rate – Reduces the corporate income tax rate to 20%. The average corporate tax rate for the industrialized world is 22.5%.
An award for 84 Lumber leader
In a high-visibility year for 84 Lumber that included Super Bowl commercials and geographic expansion, a behind-the-scenes executive recently earned recognition for his financial leadership.
The Eighty Four, Pa.-based lumberyard company’s CFO Paul Lentz was recently selected by an independent panel of judges as a 2017 recipient of the Pittsburgh Business Times “CFO of the Year” award.
Lentz’s impressive tenure with the company spans 30 years, having begun his career in 84 Lumber’s accounting department and working his way up the company’s career ladder.
“Paul has been a critical part of our success,” said Maggie Hardy Magerko, owner and president. “He is a key member of our executive leadership team and continues to find new ways to improve our business. This award is great recognition for Paul and we’re proud to have him as part of the 84 Lumber family.”
In announcing the award, the company added: “In 2010, among one of the worst housing market crashes since the Great Depression, he accepted a well-deserved, yet challenging, promotion from the company’s financial controller to 84 Lumber’s new chief financial officer. During the tumultuous market downturn in the second half of that year, he also brought an unfaltering commitment to 84 Lumber. His selection for the task, by 84 Lumber’s owner and president Maggie Hardy Magerko, was key to the company’s reemergence.”
Since Lentz’s appointment as chief financial officer, 84 Lumber has experienced increasing revenue figures year over year and a strong financial stability that has allowed the company to invest in added capabilities.