Commodity prices pinch Builders FirstSource Q4 sales
Pro dealer giant grows sales volume by 7.7% in final quarter of 2019.
Builders FirstSource reported fourth quarter net sales of $1.76 billion, a 2.9% decrease compared to the sales of $1.82 billion for the same period last year.
The Dallas, Texas-based pro dealer giant said the falloff was driven by the impact of deflation in commodity prices of approximately 10.6%.
Lumber and lumber sheet goods sales declined by 16.1%, attributable to the deflation in commodity prices as compared to the same period a year ago. The remaining product categories, excluding gypsum, roofing and insulation, achieved increased sales on higher volumes, Builders FirstSource said.
Excluding commodity deflation, sales volume grew by an overall 7.7% with the single-family end market rising 7.5%, repair and remodel growing by 6.8% and multi-family up 13.3%. Sales volume in value-added product categories grew by 8.7%, including 10.7% in manufactured products and 6.9% growth in the windows, doors and millwork categories.
For its full fiscal year, Builders FirstSource posted net sales of $7.3 billion, down 5% from sales of $7.7 billion in 2018.
Builders FirstSource posted a net income of $41.4 million for the fourth quarter, falling 20% from a net income of $52 million for the same period a year ago.
But the company’s full-year net income increased 8.1% to $221.8 million from a net income of $205.2 million a year ago.
During the fourth quarter Builders FirstSource acquired Raney Components, a vertically-integrated distributor and installer of value-added products in Florida with annual revenue of approximately $140 million.
Builders FirstSource operates about 400 locations in 40 states.
The Bottom Line: Commodity price deflation drops sales 2.9% in the fourth quarter and 8.1% for the year despite the dealer moving more volume.
What the CEO said: “We delivered another quarter of strong results to end 2019 with a solid foundation to further build on our record of success. Continued focus on our operational excellence initiatives contributed to a robust fourth quarter gross margin, while our full year gross margin improved 230 basis points, allowing us to achieve record annual adjusted EBITDA of $516 million. Furthermore, we continue to make strategic investments in our operations and acquisitions to drive enhanced growth in margin-accretive products and markets, while preserving our balance sheet strength to support value-enhancing initiatives. We believe we are the strongest company in our industry, which is a real tribute to our team’s hard work and dedication. As we look forward, we are confident that our efforts to further partner with our customers to streamline the construction process will allow us to drive profitable growth in the years to come,” said CEO Chad Crow.
(Last month, in a surprise move, Crow announced that he will retire in 2020.)
What the CFO said: “I am extremely positive on the outlook for Builders FirstSource in the new decade ahead. Our company is well-positioned to be the building supply company of choice for builders thanks to our enhanced geographic reach, diversified product offerings, national manufacturing capabilities, and strong partnerships with our customers,” said CFO Peter Jackson. “We are excited about our plans to drive greater value through our operational excellence initiatives as well as capitalizing on a strong economy and steady growth in the single-family housing market. The continued execution of our strategic plan, in combination with an overall positive macroeconomic environment, puts us on firm footing to achieve our full-year 2020 objectives. Thank you to all of our associates for their hard work and dedication to help us further advance our premier industry position.”
Company info: The full fourth quarter 2019 and year-end report from Builders FirstSource can be read here.
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