BMC’s Q3: deflation and acquisitions

CEO Dave Flitman encouraged by 'core organic growth,' and momentum.

BY HBSDealer Staff

Acquisitions were a big part of BMC Holdings’ third quarter earnings story, and so was commodity price deflation.

In the three months ended Sept. 30, the Raleigh, N.C.-based company completed three acquisitions representing some $95 million in pre-acquisition annual sales. These three are Kingston Lumber, Heritage One Door & Carpentry and Colorado Fasteners.

Net sales of $964.2 million were down 2.6%. Sales were weighed down by deflation, and partially offset by acquisition growth of 3.9% and “core organic growth” of 3.6%. The company defined the latter as “the total change in net sales excluding the estimated impact of changes in commodity-related prices, the net sales of non-comparable acquired or disposed operations and changes in selling days.”

Net income decreased 6.3% to $33.6 million.

Despite the single-digit declines in sales and earnings, CEO David Flitman described a strong third-quarter performance, pointing to core organic growth, improved margins and strong operating cash flow. In high-margin categories, the company produced gains: 7.4% gain in structural components, and 5.9% in millwork, doors and windows.

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Bottom line: Net income of $33,597,000 marked a decline from the prior year’s net income of $35,858,000.

What the CEO said: “During the third quarter, we continued our focus on ramping up our productivity initiatives, accelerating our innovation efforts and identifying and completing strategic tuck-in acquisitions,” said CEO David Flitman.

More on BMC: Read the company’s full earnings release here.


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