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On Strong Q2 2020 Earnings, BFS Looking to Invest

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Builders First Source (BFS) reported 2020 Q2 sales of $1.9 billion, a 2.25% increase compared to a year ago. This represents a core organic sales decline of 2.1%, offset by a 2.5% increase due to acquisitions and a commodity inflation increase of 1.8%. As a result of COVID-19 executive order shutdowns in certain states, BFS’ manufacturing products reports a decrease of 2.6%. Overall net sales year to date were $3.7 billion, an increase of 5.6% compared to the first two quarters of 2019, again driven by the impact of acquisitions, commodity inflation, and core organic growth. 

Gross margin for Q2 was $517.3 million, up slightly over the same period in 2019. SG&A expenses were down $13.4 million resulting in a Q2 net income of $78.9 million or diluted EPS of $0.67, up from $0.57 from the same period last year. BFS remains cash flush with total liquidity of $1.2 billion, up $200 million since May, providing ample reserves for future M&A activity. 

Housing Industry Positive, BFS Pursues Further Investment

Chad Crow, BFS CEO said, “Our first half results demonstrate a positive overall homebuilding environment, supported by tailwinds and rising demand across our diverse, national footprint. We are focusing our efforts on disciplined cost management while we work to efficiently meet customer demand, manage the impact of accelerating commodity inflation and generate additional cash flow in the third quarter. We are exceptionally well-positioned to execute on organic and inorganic value-enhancing growth opportunities that advance our long-range plan, and help us win in our markets.”

BFS’ manufacturing sales during the second quarter of 2020 were $365.8 million, representing 18.8% of sales. “Our expanding network of high margin, value-added offsite component manufacturing facilities remain core to our strategy. We intend to use a portion of our cash flow to continue investing in value-added growth capacity through both organic and acquisition opportunities,” commented Crow. “This includes our investment plans related to greenfield facilities, new truss lines in existing plants, store facility expansions, and machinery and systems and dozens of our value-added operations, such as our newly commissioned state-of-the-art truss plant in Spartanburg, South Carolina.”

 

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