Amid negative effects from commodity price deflation, BMC Stock Holdings posted positive growth in net sales during the fourth quarter of 2019. Net sales increased 3.6% year over year (YOY) in the fourth quarter, driven by acquisition growth and core organic growth, according to the dealer’s fourth quarter earnings report.
Despite a recovery in net sales during the fourth quarter, net sales for the full fiscal year decreased 1.5% YOY to $3.6 billion. The decrease in net sales for the full fiscal year was driven by commodity price deflation. The dealer estimates fiscal year sales decreased 7.5% YOY from commodity price deflation, effects that were offset by an increase of 3.9% from acquisition growth and 3.1% from core organic growth.
In the fourth quarter of 2019, BMC completed the acquisition of DeFord Lumber, enhancing BMC’s value-added offerings and custom mix. DeFord generated approximately $75 million in total net sales for the 12-month period of September 2018 to September 2019. For the full fiscal year, the dealer completed six acquisitions with annualized sales of approximately $275 million.
Net income for BMC decreased 28.2% YOY to $20.2 million. For the full fiscal year, net income fell 8.3% to $109.8 million compared to a net income of $119.7 million in 2018.
“2019 was a year of significant accomplishment, leveraging our strong culture, innovation and continuous improvement efforts to drive enhancements in safety, customer service, pricing and productivity,” Dave Flitman, president and CEO of BMC, said in a news release. “I’m proud of our team’s execution of our strategic initiatives during the year in the face of significant commodity deflation.”
Gross profit for BMC increased 2.4% YOY to $234.6 million in the fourth quarter and fourth quarter gross margin was 26.3%, down 40 basis points from the fourth quarter of 2018. BMC attributed the decrease in gross margin to a decrease in the gross margin of lumber and lumber sheet goods and structural components product categories. For the full fiscal year, gross profit increased 4.6% to $951.3 million. Gross margin for the full year was 26.2%, compared to 24.7% for 2018. The dealer said gross margin increased for the full year primarily because of an increase in gross margin within the lumber and lumber sheet goods and structural components product categories. It added that gross margin increased for the full year due to an increase in the percent of total net sales derived from structural components and millwork, doors, and windows product categories.
Adjusted EBITDA for the fourth quarter at BMC was $57.0 million, an $8.5 million decrease YOY. Adjusted EBITDA margin in the fourth quarter declined 120 basis points YOY to 6.4%. For the full year, adjusted EBITDA decreased $6.4 million to $259.4 million, while BMC’s full-year adjusted EBITDA margin was unchanged at 7.2%.
Raleigh, N.C.-based BMC ranked as the 5th largest company on the 2019 ProSales 100. The dealer serves 45 metropolitan areas across 18 states, principally in the southern and western regions of the U.S.
