BMC Stock Holdings delivered record third quarter results, including double-digit net sales and net income growth and record gross profit. BMC reported net sales increased 13.1% on a year-over-year (YOY) basis to a record $1.09 billion and net income rose 33.6% YOY to $44.9 million, according to the dealer’s quarterly earnings report.
BMC said net sales growth was driven by growth from price inflation of 10%, acquisitions of 3.5%, and core organic growth of 0.6%. The growth in net sales were partially offset by a decrease of 1.0% from closed facilities.
The Raleigh, N.C.-based dealer reported gross profit increased 7.2% on a YOY basis to $273.1 million. The dealer reported a gross margin of 25.0%, compared to 26.4% for the third quarter of 2019. BMC said the 140 basis point decline in gross margin was driven by a decrease in the gross margin in the lumber and lumber sheet goods and structural components product categories, and a higher percentage of net sales being derived from lumber and lumber sheet goods. Gross margins in lumber and lumber sheet goods and structural components product categories were lower due to a significant increase in commodity costs, which increased at a faster rate than average selling prices.
“BMC delivered record third quarter results, including double-digit net sales and net income growth, and record gross profit, adjusted EBITDA, and adjusted net income,” Dave Flitman, president and CEO of BMC, said in a prepared statement. “These strong results were driven by strong demand in our single-family homes and pro remodel segments and higher lumber pricing, combined with solid execution against our four-pillar strategy, including our BMC Operating System-led productivity and cost savings initiatives. The double-digit sales growth led to sales in the third quarter exceeding $1 billion for the first time in our company’s history.”
BMC’s adjusted EBITDA in the third quarter was $99.2 million, an increase of 32.9% from the third quarter of 2019. The dealer’s adjusted EBITDA margin was a record 9.1% in the third quarter, up 140 basis points from the prior-year period.
In addition to the strong financial results, BMC and Builders FirstSource announced that they entered a definitive merger agreement during the third quarter. The transaction is expected to close in late 2020 or early 2021. Combined, the companies will create a building materials supplier with over $11 billion in annual sales and a network of 550 distribution and manufacturing locations across 42 states.
