ATLANTA, July 30, 2018 (GLOBE NEWSWIRE) -- BMC Stock Holdings, Inc. (Nasdaq:BMCH), one of the leading providers of diversified building products, services and innovative solutions in the U.S. residential construction market, today announced its financial results for the second quarter ended June 30, 2018. A reconciliation of non-GAAP financial measures to comparable GAAP financial measures is provided in the “Reconciliation of GAAP to Non-GAAP Measures” section of this press release.

Second Quarter 2018 Highlights (Comparisons are to Prior Year Period)

• Net sales of $998.5 million, an increase of 12.6%, including significant growth in Structural Components and Ready-Frame® sales
• Net income of $40.4 million, an increase of $22.8 million
• Adjusted EBITDA (non-GAAP) of $78.8 million, an increase of $19.3 million or 32.3%
• Adjusted EBITDA margin (non-GAAP) of 7.9%, an increase of 120 basis points
• Diluted earnings per share of $0.60, an increase of $0.34
• Adjusted net income per diluted share (non-GAAP) of $0.64, an increase of $0.30
• Cash provided by operating activities of $27.7 million, an increase of $12.6 million

Commenting on BMC’s second quarter performance, Dave Keltner, Interim President and Chief Executive Officer of BMC, stated, “Based on the strength of our innovative product offerings combined with the team’s solid execution and commitment to the BMC Operating System, we delivered strong results for the second quarter, including significant year-over-year growth in net income, diluted earnings per share, Adjusted EBITDA and cash provided by operating activities. In addition, Adjusted EBITDA margin improved 120 basis points to 7.9% for the quarter.”

Keltner continued, “Within the organization, the team is energized and we are driving an expectation of continuous improvement. We are making key investments in automation and are continuing to implement the BMC Operating System to improve our processes and increase our efficiency, capacity and customer service levels. We are pleased with the success recorded to date, and through these efforts, we expect to drive sustainable growth and value for all of our stakeholders.”

Second Quarter 2018 Summary of Financial Results

During the three months ended June 30, 2018, the Company generated strong improvements in net sales, net income, diluted earnings per share, Adjusted EBITDA and operating cash flow.

Second Quarter 2018 Financial Results Compared to Prior Year Period

• Net sales increased 12.6% to $998.5 million, driven in part by strong 21.2% growth in the Company’s Structural Components product category. The Company estimates that net sales increased 7.9% from higher selling prices of lumber & lumber sheet goods, 2.4% from other organic growth and 2.3% from the acquisition of W.E. Shone Co. (“Shone Lumber”). The Company also estimates that net sales to single-family homebuilders and remodeling contractors increased 15.7% while net sales to multi-family, commercial and other contractors declined 4.8%. Net sales of Ready-Frame® were $60.1 million, an increase of 32.7%.
• Gross profit increased 13.2% to $239.6 million. Gross profit as a percentage of sales (“gross margin”) was 24.0%, as compared to 23.9% for the second quarter of 2017.
• Selling, general and administrative (“SG&A”) expenses increased 7.6% to $169.8 million. Approximately $3.4 million of this increase related to SG&A expenses at Shone Lumber, which was acquired earlier this year. Approximately $7.4 million of the increase related to higher employee compensation, benefits and other employee-related costs, and the remaining increase related primarily to a $0.7 million increase in diesel fuel costs. SG&A expenses as a percent of net sales improved 80 basis points to 17.0%, compared with 17.8% for the second quarter of 2017.
• Depreciation expense, including the portion reported within cost of sales, decreased to $12.4 million, compared to $13.5 million in the second quarter of 2017.
• Merger and integration costs decreased to $0.5 million, consisting primarily of system integration costs, partially offset by a gain from disposition of property due to the integration. This compared to $6.3 million in the second quarter of 2017. During the three months ended June 30, 2017, the Company recognized $2.8 million of expense related to the discontinuance of the ERP system previously utilized by Building Materials Holding Corporation prior to the December 2015 merger.
• Amortization expense was $3.8 million, compared to $4.1 million in the second quarter of 2017.
• Interest expense decreased to $6.0 million, compared to $6.5 million in the second quarter of 2017.
• Other income, net, increased to $2.9 million, which was derived primarily from state and local tax incentives and customer service charges, compared to $1.0 million in the second quarter of 2017. This increase was primarily due to an increase in income from state and local tax incentive programs.
• Net income increased to $40.4 million, or $0.60 per diluted share, compared to $17.6 million, or $0.26 per diluted share, in the second quarter of 2017.
• Adjusted net income (non-GAAP) increased to $43.4 million, or $0.64 per diluted share (non-GAAP), compared to Adjusted net income of $23.0 million, or $0.34 per diluted share, in the second quarter of 2017.
• Adjusted EBITDA (non-GAAP) increased 32.3% to $78.8 million, compared to $59.6 million in the second quarter of 2017.
• Adjusted EBITDA margin (non-GAAP), defined as Adjusted EBITDA as a percentage of net sales, expanded 120 basis points to 7.9%.
• Cash provided by operating activities increased $12.6 million to $27.7 million.

Liquidity and Capital Resources

Total liquidity as of June 30, 2018 was approximately $328.2 million, which included cash and cash equivalents of $14.3 million and $313.9 million of borrowing availability under the Company’s asset-backed revolver. Capital expenditures during the second quarter of 2018 totaled $16.0 million. These expenditures were primarily used to fund purchases of vehicles and equipment to replace aged assets and support increased sales volume, and facility, technology and automation investments to support our operations.

CEO Search
On January 10, 2018, the Company announced that President and CEO, Peter C. Alexander left the Company under mutual agreement with the Board of Directors. David L. Keltner assumed the role of Interim President and CEO while the Board conducts a formal search for a permanent replacement. Since that time, the Board of Directors engaged a leading executive search firm and launched a broad search effort to find the best candidate who will continue to cultivate the Company’s strong culture and drive the growth strategy forward. The Board of Directors is confident in its ability to attract a proven, experienced executive and is entering its final round of interviews with a strong slate of candidates. During the search, BMC is aggressively moving forward with the execution of its growth strategies.

Non-GAAP Financial Measures

This press release presents Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted net income per diluted share, which are non-GAAP financial measures within the meaning of applicable SEC rules and regulations. For a reconciliation of Adjusted EBITDA and Adjusted net income to the most comparable GAAP measures and a discussion of the reasons why the Company believes that these non-GAAP financial measures provide information that is useful to investors, see the tables included in this press release under "Reconciliation of GAAP to Non-GAAP Measures."

About BMC Stock Holdings, Inc.

With $3.4 billion in 2017 net sales, BMC is a leading provider of diversified building products, services and innovative solutions to builders, contractors and professional remodelers in the U.S. residential housing market. Headquartered in Atlanta, Georgia, the Company's comprehensive portfolio of products and solutions spans building materials, including millwork and structural component manufacturing capabilities, consultative showrooms and design centers, value-added installation management services and an innovative eBusiness platform. BMC serves 45 metropolitan areas across 19 states, principally in the South and West regions.