Builders FirstSource (BFS) reported strong financial results in the fourth quarter, with net sales increasing 43.5% on a year-over-year (YOY) basis to $2.5 billion. The dealer’s adjusted EBITDA more than doubled YOY in the fourth quarter to $257.1 million, driven by solid demand across the company’s three customer markets and by commodity inflation, according to the BFS fourth quarter earnings report.
“Record fourth quarter results reflect an exceptional finish to a year of remarkable performance, despite the challenges in 2020,” BFS CEO Chad Crow said in a prepared statement. “Solid momentum from the continued execution of our strategic plan combined with strong residential market tailwinds position Builders FirstSource to accelerate its success through the recently completed combination with BMC.”
Core organic sales for BFS in the fourth quarter, which excludes acquisitions, commodity price fluctuations, and differences in selling days between periods, increased 15.0% YOY. Commodity price inflation added 26.5% to net sales in the fourth quarter on a YOY basis. BFS reported strong core organic growth in all value-added product categories and strong demand across its single-family, repair and remodel, and multi-family customer end markets.
For the full fiscal year, BFS reported net sales increased 17.6% from 2019 to $8.6 billion. Commodity inflation increased net sales by 9.0% compared to 2019.
The dealer reported a gross margin of $669.2 million in the fourth quarter, an increase of $192.6 million compared to the prior year period. Gross margin percentage decreased 60 basis points YOY to 26.4% in the fourth quarter, primarily attributable to a shift in sales mix due to commodity inflation relative to the fourth quarter in 2019. For the full fiscal year, BFS reported gross margin increased $245.8 million to a record $2.2 billion. Gross margin percentage for the full fiscal year decreased 120 basis points, driven by the impact of commodity price inflation.
Net income for the dealer increased nearly $100 million in the fourth quarter to $139.9 million. For the full fiscal year, net income increased from $221.8 million in 2019 to $313.5 million in 2020. Adjusted EBITDA for the full year increased 35.7% to a record $700.2 million, or 8.2% of net sales. The YOY improvement was attributable to core organic growth in the dealer’s three customer markets, commodity inflation, and cost leverage, according to BFS.
BFS completed its mega-merger with BMC Stock Holdings in January 2021 and, as a result, the company’s fourth quarter and full-year results do not include the financial results of BMC. The company did include supplemental unaudited pro forma financial data of the combined company in its earning report. The Pro forma financial data combines BFS and BMC historical operating results as if the businesses had been operated together on a combined basis during prior periods, along with adjustment to reclassify certain BMC historical financial information conform to BFS historical financial information.
“We are very excited about our merger, which was overwhelmingly approved by the shareholders of both companies and positions us with a long runway of growth well into the future,” Dave Flitman, president of BFS, said. Flitman will succeed Crow as CEO of the company on April 1. “On a pro forma basis, our combined companies achieved outstanding top and bottom-line performance in 2020, including $12.8 billion in net sales and over $1 billion of adjusted EBITDA. Our integration efforts are progressing very well against our plan and we remain confident in delivering our expected run rate cost savings of $130 million to $150 million by the end of 2023.”
Dallas-based BFS operates in 40 states with approximately 550 locations and has a market presence in 44 of the top 50 metropolitan statistical areas.
