Builders FirstSource (BFS) recorded a net profit of $52.0 million in the fourth quarter of 2018, which compares to a net loss of $42.7 million in the fourth quarter of 2017. The Dallas-based dealer also posted gains in net income for the full year compared to 2017, the company announced in its fourth quarter earnings report. BFS recorded a net income of $205.2 million in 2018, an increase of $166.4 million compared to 2017.
The dealer also posted $1.8 billion in net sales for the fourth quarter, a 2.1% increase year over year. BFS estimated sales unit volume per day grew 3.3% in the quarter, partially offset by 2.8% from commodity deflation. Sales unit volume per day, excluding commodity inflation, grew 4.5% in the single-family building market and 1.1% in the remodeling and repair market in the fourth quarter. Sales per day for the builder grew 4.7% in the windows, doors, and millwork category and 9.1% in manufactured products for the quarter.
For the full year period, net sales grew 9.8% year over year to $7.7 billion. Over 6% of the growth was attributed to commodity price inflation while 3.2% of the net sales growth was because of sales unit volume growth. Net sales of value-added products grew 10.5% during the full year.
“As overall market growth moderated, we managed to produce solid growth driven by our differentiated platform in the single-family end market, delivered on our long-term strategic priority of deleveraging, and demonstrated the strength of our close customer relationships across our national footprint,” BFS CEO Chad Crow said in a public statement. “I am confident that we will continue to deliver strong results from our strategic initiatives in high margin value-added products and operational excellence programs.”
The dealer’s gross margin in the fourth quarter increased 14.3% year over year to $492.8 million and the gross margin percentage increased 2.9% year over year to 27.1%. The increase in margin percentage in the fourth quarter was attributable to the sharp decline in the cost of commodities during the quarter combined with continued pricing discipline and growth in value-added products, according to the dealer.
For the full-year period, gross margin increased $195.5 million to $1.9 billion while gross margin increased 0.3% year over year to 24.9%.
Selling, general, and administrative (SG&A) expenses in the fourth quarter rose to $402.3 million, or 22.2% of sales. BFS attributed year-over-year increase in SG&A expenses to higher variable costs, including compensation related to improved performance.
BFS, which ranked second on the most recent ProSales 100, measures itself in EBITDA—earnings before interest, taxes, depreciation, amortization, integration-related expenses, and other unusual costs. Adjusted EBITDA in the fourth quarter grew $28.1 million year over year to $125.0 million. The dealer attributed the improvement to an increase in sales, particularly in the value-added product categories. Adjusted EBITDA improved to 6.9% of sales in the fourth quarter, up 1.5%from the same period a year ago. For the full year, Adjusted EBITDA grew 6.5% year over year to $501.6 million, or 6.5% of sales.
According to the company’s balance sheet as of December 31, 2018, goodwill accounts for $740.4 million of its $2.9 billion in total assets while the liabilities side shows long-term debt stands at $1.5 billion.
