US LBM more than quadrupled its second-quarter net profit from a year earlier, reaching $13.1 million, on a 10.1% jump in revenue to $885 million, the sixth-biggest company on the ProSales 100 reported.
In an updated SEC filing Aug. 10 for an initial public offering that now has been hanging fire for 15 months, US LBM’s latest financials indicate the company’s gross margin slipped to 26.5% from 29.8% in the April-to-June 2017 quarter. This might reflect wood’s increased share of total sales dollars: 29.6% in the second quarter vs. 25.4% a year before.
Selling, general and administrative costs also declined, to 20.0% of sales from 20.8%. Operating income climbed 33.7% to $36.9 million.
The Buffalo Grove, Ill.-based dealer didn’t actually report second-quarter figures; rather, its financial report covered the first six months of 2018. The second-quarter numbers and percentages above are based on ProSales’ subtracting previously reported first-quarter numbers from the just-reported first-half figures. And there’s value in considering the entire first half as one entity, because the company reported a $22.7 million net loss in the first quarter, a slight improvement from 1Q17’s $24.5 million net loss, on a 4.4% gain in sales to $689.3 million. Thus, even with the second-quarter’s profit, US LBM still posted a net loss of $9.6 million for the first half of the year.
US LBM likes to measure itself in terms of adjusted EBITDA, which it defines as earnings before interest expense, taxes, depreciation, and amortization as well as loss on the early extinguishment of debt, equity-based compensation expense, IPO-related expenses, acquisition expenses, management fees, goodwill impairment charge, change in LIFO reserve, specified consultant fees, and other items. By that metric, adjusted EBITDA improved to $70.9 million (8.0% of revenues) from $65.3 million (8.1% or revenues).
The company’s balance sheet as of June 30 shows that goodwill represents $672.6 million of the company’s $1.96 billion in assets, while there’s $1.03 billion in long-term debt on the books. Same-store sales rose 5.8% in the first half of the year.
US LBM reported $3.09 billion in sales in 2017, 97% of it to pros. The company once was among the acquisition-hungry dealers in all LBM, but its purchasing slowed as it headed toward going public. It has made two purchases in 2018: Myrtle Beach Building Supply of South Carolina and R&K Building Supplies of Arizona.
