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© 2018 BMC. All Rights Reserved.
BMC STOCK HOLDINGS, INC.May 2018 Investor Presentation
CLICK TO EDIT TITLEDISCLAIMER
This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this document may include, without limitation, statements regarding sales growth, price changes, earnings performance, strategic direction and the demand for our products. Forward-looking statements are typically identified by words or phrases such as "may," "might," "predict," "future," "seek to," "assume," "goal," "objective," "continue," "will," "could," "should," "would," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "prospects," "guidance," "possible," "predict," "propose," "potential" and "forecast," or the negative of such terms and other words, terms and phrases of similar meaning. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties, many of which are outside BMC's control. BMC cautions readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement; therefore, investors and shareholders should not place undue reliance on such statement. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this communication.
A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. These factors include without limitation: the state of the homebuilding industry and repair and remodeling activity, the economy and the credit markets; the impact of potential changes in our customer or product sales mix; our concentration of business in the Texas, California and Georgia markets; the potential loss of significant customers or a reduction in the quantity of products they purchase; seasonality and cyclicality of the building products supply and services industry; competitive industry pressures and competitive pricing pressure from our customers and competitors; fluctuation of commodity prices and prices of our products; our exposure to product liability, warranty, casualty, construction defect, contract, tort, employment and other claims and legal proceedings; our ability to maintain profitability; our ability to retain our key employees and to attract and retain new qualified employees, while controlling our labor costs; product shortages, loss of key suppliers or failure to develop relationships with qualified suppliers, and our dependence on third-party suppliers and manufacturers; the implementation of our supply chain and technology initiatives; the impact of long-term non-cancelable leases at our facilities; our ability to effectively manage inventory and working capital; the credit risk from our customers; the impact of pricing pressure from our customers; our ability to identify or respond effectively to consumer needs, expectations, market conditions or trends; our ability to successfully implement our growth strategy; the impact of federal, state, local and other laws and regulations; the impact of changes in legislation and government policy; the impact of unexpected changes in our tax provisions and adoption of new tax legislation; our ability to utilize our net operating loss carryforwards; natural or man-made disruptions to our distribution and manufacturing facilities; our exposure to environmental liabilities and subjection to environmental laws and regulation; the impact of health and safety laws and regulations; the impact of disruptions to our information technology systems; cybersecurity risks; our exposure to losses if our insurance coverage is insufficient; our ability to operate on multiple Enterprise Resource Planning ("ERP") information systems and convert multiple systems to a single system; the impact of our indebtedness; the various financial covenants in our secured credit agreement and senior secured notes indenture; and other factors discussed or referred to in the "Risk Factors" section of BMC's most recent Annual Report on Form 10-K filed with the SEC on March 1, 2018.
All such factors are difficult to predict and are beyond BMC's control. All forward-looking statements attributable to BMC or persons acting on BMC's behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and BMC undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Basis of Presentation
On December 1, 2015, the merger (the “Merger”) of Stock Building Supply Holdings, Inc. (“SBS” or “Legacy SBS”) with Building Materials Holding Corporation (“LegacyBMC”) was completed. Some of this presentation includes financial and operating results, plans, objectives, expectations and intentions, and other statements that arenot historical facts related to the Merger. The Merger was accounted for as a “reverse acquisition” under the acquisition method of accounting, with Legacy SBS treatedas the legal acquirer and Legacy BMC treated as the acquirer for accounting purposes. As such, the Company has accounted for the Merger by using Legacy BMChistorical information and accounting policies and adding the assets and liabilities of Legacy SBS as of the completion date of the Merger at their estimated fair values.As a result, current year results reported pursuant to U.S. generally accepted accounting principles (“GAAP”) are not comparable to periods prior to the completion ofthe Merger.
2
CLICK TO EDIT TITLENON-GAAP (ADJUSTED) FINANCIAL MEASURES
3
Adjusted net sales, Adjusted gross profit, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted net income per diluted share are intended as
supplemental measures of the Company’s performance that are not required by, or presented in accordance with, GAAP. The Company believes that Adjusted net sales,
Adjusted gross profit, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted net income per diluted share provide useful information to
management and investors regarding certain financial and business trends relating to the Company’s financial condition and operating results.
• Adjusted net sales is defined as BMC net sales plus pre-Merger SBS net sales.
• Adjusted gross profit is defined as BMC gross profit plus pre-Merger SBS gross profit and inventory step-up charges.
• Adjusted EBITDA is defined as net income (loss) adjusted for pre-Merger SBS (loss) income from continuing operations, interest expense, income tax expense (benefit),
depreciation and amortization, Merger and integration costs, restructuring expense, inventory step-up charges, non-cash stock compensation expense, loss on debt
extinguishment, headquarters relocation expense, insurance deductible reserve adjustment and fire casualty loss, loss on portfolio transfer, acquisition costs and other
items and impairment of assets.
• Adjusted EBITDA margin is defined as Adjusted EBITDA divided by net sales or, for 2015 and prior periods, Adjusted net sales.
• Adjusted net income is defined as BMC net income adjusted for merger and integration costs, non-cash stock compensation expense, acquisition costs, other items and
after-tax effecting those items.
• Adjusted net income per diluted share is defined as Adjusted net income divided by diluted weighted average shares.
Company management uses Adjusted net sales, Adjusted gross profit, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted net income per
diluted share for trend analyses, for purposes of determining management incentive compensation and for budgeting and planning purposes. Adjusted net sales and
Adjusted EBITDA are used in monthly financial reports prepared for management and the board of directors. The Company believes that the use of Adjusted net sales,
Adjusted gross profit, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted net income per diluted share provide additional tools for investors to
use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other distribution and retail companies, which may present
similar non-GAAP financial measures to investors. However, the Company’s calculation of Adjusted net sales, Adjusted gross profit, Adjusted EBITDA, Adjusted EBITDA
margin, Adjusted net income and Adjusted net income per diluted share are not necessarily comparable to similarly titled measures reported by other companies. Company
management does not consider Adjusted net sales, Adjusted gross profit, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted net income per
diluted share in isolation or as alternatives to financial measures determined in accordance with GAAP. The principal limitation of Adjusted EBITDA and Adjusted net
income is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. Some of these limitations
are: (i) Adjusted EBITDA and Adjusted net income do not reflect changes in, or cash requirements for, working capital needs; (ii) Adjusted EBITDA does not reflect interest
expense, or the requirements necessary to service interest or principal payments on debt; (iii) Adjusted EBITDA does not reflect income tax expenses or the cash
requirements to pay taxes; (iv) Adjusted net income and Adjusted EBITDA do not reflect historical cash expenditures or future requirements for capital expenditures or
contractual commitments; (v) although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be
replaced in the future and Adjusted EBITDA and Adjusted net income do not reflect any cash requirements for such replacements and (vi) Adjusted net income and
Adjusted EBITDA do not consider the potentially dilutive impact of issuing non-cash stock-based compensation. In order to compensate for these limitations, management
considers Adjusted net sales, Adjusted EBITDA and Adjusted net income in conjunction with GAAP results. Readers should review the reconciliations of net sales to
Adjusted net sales, gross profit to Adjusted gross profit, net income (loss) to Adjusted EBITDA and Adjusted net income, included in the Appendix, and should not rely on
any single financial measure to evaluate the Company’s business.
© 2018 BMC. All Rights Reserved.
COMPANY OVERVIEW1
CLICK TO EDIT TITLEBMC COMPANY SNAPSHOT – PROVIDING INNOVATIVE SOLUTIONS NASDAQ LISTED: BMCH
5
2017 Product & Service Mix▪ A leading national building products solutions provider with
$3.4 billion of net sales and $200 million of Adjusted
EBITDA(1) for 2017
▪ Locations in 19 states representing 66% of 2017 single-
family building permits
▪ Significant market presence in 45 attractive metropolitan
areas
▪ Focus on differentiated, value-added products and services
that meet critical industry needs
▪ Proven growth track record (~24% Adjusted EBITDA1 CAGR
since 2015) with significant future opportunities as housing
market expands
Design
Services
Component
Manufacturing
Millwork
ManufacturingTurnkey
Solutions
103 Distribution Yards 51 Ready-Frame,
EWP, Truss & Panel
Manufacturing
49 Millwork
Operations
Installation
Services
Design Centers &
Showrooms
eBusiness
Platform
Logistics, Services
& eCommerce
Distribution
Services
Structural Components,
16%
Lumber & Sheet Goods,
33%
Millwork, Windows & Doors,
27%
Other Bldg. Products & Services,
24%
1. See Non-GAAP (Adjusted) Financial Measures page of this presentation for definition of Adjusted EBITDA and a reconciliation thereof to net income, the most directly comparable GAAP measure..
Product categories are shown a % of 2017 net sales
CLICK TO EDIT TITLESTRATEGIC FOOTPRINT IN HIGHLY ATTRACTIVE, LONG-TERM
GROWTH MARKETS
6
Mid & South Atlantic
26%
West South Central
33%
Mountain23%
Pacific18%
2017 Sales by U.S. Census DivisionCompany Footprint
FL
NM
TX
MT
COUT
ID
NV
WA
CA
PA
VA
AR
GA
103 Distribution locations
in 19 states
51Ready-Frame, EWP,
Truss & Panel
Manufacturing Facilities
49Millwork
operations
66% of 2017 single-family
building permits
Regional categories are shown a % of 2017 net sales
WV
CLICK TO EDIT TITLE
▪ Diverse base of customers ranging from well-
known national builders to small regional and
local players
▪ No single customer greater than 6% of total
net sales
▪ Enhanced capabilities to serve attractive
professional repair and remodeling contractor
segment
Select Customers
Multi-Family &
Commercial Contractors
14%
Repair & Remodel
Contractors
11%
Single-Family
Homebuilders
75%
National Homebuilders Regional Homebuilders Multi-family (millwork)
2017 Customer Mix
HIGHLY DIVERSIFIED AND GROWING CUSTOMER BASE
7
Customer categories are shown as a % of 2017 net sales
CLICK TO EDIT TITLEVALUE-ADDED SERVICES SUPPORT JOB SITE EXCELLENCEONE-STEP VALUE CHAIN – SHOWROOM TO JOB-SITE…CONTRACTOR TO CLIENT
8
▪ Providing differentiated solutions and
proprietary services that support our
unique value proposition
▪ Driving enhanced productivity and
customer satisfaction
▪ One-step distributor for premier
building products manufacturers;
critical link in building supply chain
for customers
▪ Keen understanding of unique
construction codes, regional product
preferences and local distribution
infrastructure
CLICK TO EDIT TITLE
BMC Provides Strategic Go-to-Market Options for Suppliers
▪ Diverse base of leading building products manufacturers
▪ One-step value-added distributor providing direct access to thousands of customers
DIVERSITY OF SUPPLIER BASESTRATEGIC AGREEMENTS IN PLACE WITH LEADING BUILDING PRODUCT SUPPLIERS
9
© 2018 BMC. All Rights Reserved.
FOCUSED GROWTH STRATEGY2
SHARPENING THE FOCUS ON OUR GROWTH STRATEGIES
STRATEGIC PRIORITIES
Achieve Industry-Leading Financial Performance through Customer Service Leadership and
Operational Excellence
Organic Growth of
Value Added Products
and Segments
Deliver Operational
Excellence with the BMC
Operating System
Build High Performing
Culture
Pursue
Strategic Expansion
Balance Customer Portfolio:
• Maximize Single Family Potential
• Grow Multi-Family in select markets
• Grow Pro Remodeling Segment
Increase Mix of Value Added
Products:
• Millwork
• Windows
• Doors
• Components
PIL
LA
RS
1 2 3 4
GO
AL
Ser
vice
Imp
rove
men
t
Op
tim
ize
Pro
fita
bili
ty
Val
ue-
Ad
ded
Cap
abili
ties
Co
mm
un
icat
ion
Best in Class Customer Service
Optimize Profitability:
• Profitable Pricing
• Purchasing Rigor
• SG&A Optimization
Drive Continuous Improvement
Performance Management
BMC Leadership Academy:
• Talent Development
• Recruiting
College Graduate Management
Training Program
Areas of Focus for Tuck-In
Acquisitions:
• Value Added Products
• Pro Remodel
• Improved Local Scale
• Expand GeographicallyKE
Y A
CT
IVIT
IES
Solid Balance Sheet Provides Foundation for Growth
11
CLICK TO EDIT TITLEREADY-FRAME® - SIGNIFICANT GROWTH POTENTIALOPPORTUNITY TO TRANSITION COMMODITY LUMBER SALES TO VALUE-ADDED
12
Less Risk. Less Labor. Less Cost
Rea
dy-F
ram
e S
ales
(dol
lars
in m
illio
ns)
READY-FRAME video:
https://www.youtube.com/watch?v=REv665u2QRI
$29.2
$171.2
FY 2013 FY 2014 FY 2015 FY 2016 FY 2017
CLICK TO EDIT TITLEWHY READY-FRAME?A WIN-WIN OFFERING FOR BMC AND FOR CUSTOMERS
13
For Builders For Framers For BMC
Shortens cash conversion cycle
time; Less framing time needed
Can frame 20 – 30% more
homes in same amount of time (Note: framers are typically paid by the square foot.)
Higher margin offering than
traditional dimensional lumber
packages
Less labor needed (particularly helpful
given the current labor shortages)
Safer, cleaner jobsite – Potential
reduction in jobsite injuries
Helps to solidify the Company’s
position as a solutions provider
Safer – less cutting on the
jobsite; likely means fewer
worker’s compensation claims
Framing becomes easier with
each subsequent Ready-Frame
package
Fewer trips to jobsite (No last
minute orders or extra lumber
returns)
Greener and Cleaner – less
waste and additional savings on
disposal costs
Promotes accuracy;
Architectural errors are
generally caught prior to framing
Opportunity to cross-sell /
up-sell products
Entire house package
guaranteed to 1/16th of an inch,
which should result in fewer
warranty claims
Benefits of READY-FRAME:
COUTNV
WA
CA
Washington, DC
MTID
NM
TXGA
NC
PA
Ready-Frame® location
CLICK TO EDIT TITLEBMC’S LEAN EBUSINESS EVOLUTIONBUILDING A TECHNOLOGY PLATFORM TO ENABLE AND LEVERAGE PROFITABLE
GROWTH
14
>92%
1. Reduced product costs from Photo Proof of Delivery, which has reduced Claims, including Returns, Damages and Missing Product
2. As of 3/31/18, transactional capabilities are available in 16 markets; rollout expected to continue following ERP conversions.
3. Conversions are expected to continue through early 2019
Single
ERP
Logistics Solutions
↑ Driver Productivity
↑ Customer Satisfaction
↑ Asset Utilization
↓ Product Costs1
E-Commerce2
↑ Ease of Accessibility
↑ Customer Productivity
↑ Associate Productivity
↑ New Customer Leads
Installation Services
↑ Resource Management
↑ Communication & Document
Management
↑ Completion Performance
Integrating Value-Added Solutions Around a Single ERP
3
CLICK TO EDIT TITLE24X7 TRANSACTIONAL FRONT-END TO ERP ENHANCES CUSTOMER EXPERIENCE / PRODUCTIVITY
15
Easy, Fast, Convenient
▪ Intuitive interface
▪ Accessible 24x7
▪ Mobile based platform
▪ Full breadth of products
▪ Customer specific pricing
▪ Product availability and lead
times
Professional Resources
▪ Robust building science content:
articles, videos, project
management tools
▪ “How-to” articles
▪ Product search with photos,
specs, comparison tools
▪ Idea gallery with room scenes
▪ Interactive design tools
Work More Efficiently
▪ Order Management Tools: place
orders, check order status, create
reorder lists
▪ Account management Tools: Pay
invoices, assign users and admin
permissions, view history
▪ Configure custom millwork
▪ Manage business digitally
Introducing a Brand New Tool for our Customer’s Belt
Note: Transactional capabilities are not yet available in all markets. As of 3/31/18, transactional capabilities are available in 16 markets; rollout expected to continue following ERP conversions.
CLICK TO EDIT TITLE
Reduce Cost Structure
Gain Efficiencies Using Lean Principles
Best-in-Class Customer Service
OPERATIONAL EXCELLENCE TO DRIVE
CONTINUOUS IMPROVEMENT
16
Using Lean principles to identify opportunities and create best practices to improve
service, increase efficiencies and remove costs from the business.
Increase Productivity
Drive Continuous Improvement
CLICK TO EDIT TITLECONTINUING TO BUILD A HIGH PERFORMANCE CULTURE
17
❑Action-oriented operating
reviews
❑Regular employee feedback
❑Improvement based incentives
❑Bi-Annual calibration of talent
and succession planning
❑Multi-phased approach to
developing BMC leaders
❑Focused on developing strong
location, sales, and market
leaders
❑Heavy emphasis on
developing High Potentials and
future Leaders
❑Recruiting and developing for
succession
❑Focus on Sales, Leadership,
and Design
❑Programs timing, 6-9 months
❑Targeted recruiting in key
geographic areas and schools
that fit BMC culture
Leadership Development Trainee ProgramPerformance Management
CLICK TO EDIT TITLEPOSITIONED TO UTILIZE M&A TO DRIVE FUTURE GROWTHFRAGMENTED MARKET COMBINED WITH PROVEN AND DISCIPLINED M&A PROCESS
Fragmentation Presents Significant Consolidation Opportunities
▪ Leverage profile provides financial flexibility to pursue
accretive tuck-in acquisitions to enhance our value
added offerings, customer base and/or geographic
presence
▪ Recent acquisitions:▪ Shone Lumber (Mar ‘18) – solid customer base in DE &
Southeast PA, including strong Custom Builder and
Professional Remodeling relationships
▪ TexPly (Apr ‘17) – leading supplier of millwork and doors
for single-family production builders in the DFW area
▪ Code Plus (Mar ‘17) – DC area truss manufacturer
Builders FirstSource 7%
BMC 3%
84 Lumber 3%
US LBM 3%
Carter Lumber 1%
Others 83%
$7,034
$3,366 $3,302 $3,092
$1,365 $559
($m)
M&A OpportunityLBM Dealer Market Fragmentation (1)
LBM Dealers 2017 Total Net Sales (1)
Average of Top
100 LBM Dealers
Public LBM Dealers Leverage Profile
1. Source: 2018 ProSales 100 rankings of pro dealers with manufacturing capabilities; Market Size based on Census Bureau data
2. US LBM is not public but filed an S-1 indicating their intention to go public; Leverage for US LBM was calculated using data provided for the “Successor Company” in their S-1/A filing filed on 3/22/18; The leverage calculation used was Total Debt of the
Successor Company at 12/31/17 divided by TTM Adjusted EBITDA at 12/31/17 of the Successor Company as defined in their S-1 filing
3. Leverage for BLDR is the ratio of net debt at Mar. 31, 2018 to Adjusted EBITDA for the twelve months ended Mar. 31, 2018 as reported in BLDR’s Investor Presentation on May 10, 2018.
4. BMC’s calculation of leverage is the ratio of Long Term Debt to LTM Adjusted EBITDA as of Mar 31, 2018.
18
As of 3/31/18As of 3/31/18As of 12/31/17
1.7x(4)
4.6x(3)
4.9x(2)
© 2018 BMC. All Rights Reserved.
FINANCIAL OVERVIEW &
Q1 18 RESULTS3
CLICK TO EDIT TITLE
$93
$114 $130
$194 $200
3.8%
4.4%4.6%
6.3% 5.9%
$0
$50
$100
$150
$200
$250
2013 2014 2015 2016 2017
$531
$603
$670
$745 $796
22.1%
23.1%
23.9% 24.1%23.6%
$0
$160
$320
$480
$640
$800
2013 2014 2015 2016 2017
$34
$62 $59
$53
$66
$0
$20
$40
$60
$80
2013 2014 2015 2016 2017
$2,407 $2,607
$2,801
$3,094 $3,366
$0
$700
$1,400
$2,100
$2,800
$3,500
2013 2014 2015 2016 2017
Adjusted Net Sales (1) ($mm) Adjusted Gross Profit (1) ($mm)
Adjusted EBITDA (1) ($mm)
1. See Non-GAAP (Adjusted) Financial Measures page of this presentation for definition of Adjusted net sales, Adjusted gross profit and Adjusted EBITDA.
2. Pro Forma Capital Expenditures including both legacy BMC and legacy Stock Building Supply; Also includes capital leases.
3. Excludes $15mm of capital expenditures related to the purchase of a facility which was sold shortly thereafter as part of a sale-lease back.
Capital Expenditures(2) ($mm)
(3)
HISTORICAL FINANCIAL PERFORMANCE
20
CLICK TO EDIT TITLEFIRST QUARTER 2018 HIGHLIGHTS
21
Strong Growth
in Value-Added
Components
Gross Profit
Improvement
Improved
Profitability• Net income grew $11.6 million to $15.4 million
• Adjusted earnings per share1 of $0.29, up $0.18
Adjusted
EBITDA1
Growth
• Adjusted EBITDA1 up $13.6 million to $47.2 million
• Adjusted EBITDA margin1 up 130 bps over Q1 17
• Gross profit dollars up 11.7%, gross margin up 40 bps
• Reflects 100 bps year-over-year improvement in gross margin within the
Lumber & Lumber Sheet Goods product category
• Structural Components growth of 23.6%
• $50 million in Q1 Ready-Frame® sales, up 47%
• Total net sales up 10.1%
1. Adjusted earnings per share, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. See Non-GAAP (Adjusted) Financial Measures pages of this presentation for definition of Adjusted EBITDA and a reconciliation to
net income, the most directly comparable GAAP measure.
Operating
Cash Flow• Delivered $23.2 million of operating cash flow
Operational
Excellence
• Unlocking productivity opportunities through LEAN training
• Improving efficiency in our manufacturing and distribution operations
• Investing to increase automation in our processes
CLICK TO EDIT TITLEQ1 2018 FINANCIAL RESULTS
22
• Net sales growth of 10.1%
• Commodity inflation adds $51 million to net
sales as average selling prices on lumber
and sheet goods up ~21% vs. prior year
• Sales from TexPly, Code Plus and first
month of Shone Lumber total $21.4 million
• Strong 23.6% growth in structural
components
• Growth in single-family and professional
remodeling partially offset by declines in
multi-family and commercial customer type
• 41% improvement in Adjusted EBITDA1
• Inflationary benefits accelerate as higher
prices more fully absorbed
• Lumber and lumber sheet goods gross
margin up 100 bps primarily due to
temporary drop in structural panel market
• Lower than average contribution from
acquisitions primarily due to Q1 seasonality
Q1 2018 Net Sales Bridge Q1 2018 Commentary
Q1 2018 Adjusted EBITDA1 Bridge
$757.7
$51.4
$21.4
$18.3
$700
$725
$750
$775
$800
$825
$850
Q1 '17 Sales Lumber &Sheet Goods
Inflation
Acquisitions Organic &Other Growth
Multi-family &Commercial
Q1 '18 Sales
($14.6)
$834.2
$33.6
$7.3
$2.9$2.4 $1.0
$30
$35
$40
$45
$50
Q1 '17AdjustedEBITDA
CommodityInflation
Change inLumber and
Lumber SheetGoods Gross
Margin
VolumeGrowth &
OtherOperating
Improvements
Acquisitions Q1 '18AdjustedEBITDA
$47.2
1. Adjusted EBITDA is a non-GAAP financial measure. See Non-GAAP (Adjusted) Financial Measures pages of this presentation for definition of Adjusted EBITDA and a reconciliation to net income, the most directly comparable GAAP measure.
$ in millions
$ in millions
CLICK TO EDIT TITLE
2018 organic volume growth
2018 commodity inflation
2018 sales growth from completed acquisitions1
2018 total net sales growth
2018 Incremental Operating Margins2, 3
Longer-term Incremental Operating Margins2
SOLID START IN Q1 RAISES CONFIDENCE FOR FULL YEAR 2018
231. Includes Code Plus, TexPly and Shone Lumber acquisitions
2. Incremental operating margin is defined as the change in operating income divided by the change in net sales.
3. Revised from previous expectation provided on Feb 27, 2018
2018 Year Over Year End Market Growth Assumptions Q1 2018 BMC Customer Mix
76.4%
11.4%
12.2%
Multi-Family,
Commercial & Other
Contractors
Remodeling
Contractors
Single-Family
Homebuilders
BMC Full Year 2018 Expectations
Fundamentals Support Continued Improvement
Single-Family Starts
Median Size of New Home
Professional Remodeling
Multi-Family Starts
5% - 8%
1% - 2%
3% - 5%
8% - 12%
2% - 5%
Deceleration in YoY benefits vs. Q1
Up 2%
Up 6% – 11%
9% – 12%
10% – 15%
CLICK TO EDIT TITLESTRONG BALANCE SHEET TO SUPPORT GROWTHFLEXIBILITY FOR CONTINUED INVESTMENTS AND DISCIPLINED, ACCRETIVE M&A
24
▪ Improving Adjusted EBITDA1 trends
▪ Working capital usage ~12-13% of sales
▪ 2018 Expectations:
▪ Capital expenditures: $55 to $65 million
▪ Depreciation expense: $50 to $55 million2
▪ Amortization expense: $15 to $16 million
▪ Interest expense: $24 to $26 million
▪ Effective tax rate: 25%
Attractive Cash Flow Dynamics
3/31/2018 Long-Term Debt
$357 million
Long-Term Debt/ LTM 3/31/2018
Adjusted EBITDA (1)
1.7x
▪ $375 million revolving ABL facility with
extended maturity; $12.2 million
outstanding borrowings at 3/31/2018
▪ $301.5 million of availability for strategic
investments and seasonal working capital
needs
▪ $350 million 5.5% Senior Secured Notes
maturing 2024
▪ Leverage target of 2.0x to 2.5x allows
flexibility to make strategic investments
but remains prudent
Balance Sheet Positioned to Invest
1. Adjusted EBITDA is a non-GAAP financial measure. See Non-GAAP (Adjusted) Financial Measures pages of this presentation for definition of Adjusted EBITDA.
2. Revised from previous expectation provided on Feb 27, 2018
CLICK TO EDIT TITLE
0
400
800
1,200
1,600
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
U.S. Single Family Housing Starts
DRIVING LONG-TERM SHAREHOLDER VALUE --LEVERAGING STRONG FOUNDATION AND CORE CAPABILITIES TO
ACCELERATE PROFITABLE GROWTH
PROFITABLE GROWTH
25
Favorable
Macro Trends
Differentiated Value-
Added Solutions
Growth Strategies to
Drive Profitable
Growth
✓ Job & Wage Growth
✓ Consumer Confidence
✓ Low Levels of Inventory
✓ Favorable demographics
✓ Ready-Frame® -Revolutionary framing solution,
helping builders navigate labor
shortage
✓ E-Business Suite –Providing customers what they
want when and how they want it
✓ Wide Breadth of Value-
Added Offerings:
➢ Structural Components,
including EWP, trusses,
wall panels, etc.
➢ Millwork, Doors &
Windows
✓ Expand Value-Added
Categories:
➢ Structural Components
➢ Millwork, Doors & Windows
✓ Execute with Culture of
Operational Excellence,
Customer Service and
Innovation
✓ Strategic Tuck-In
Acquisitions
✓ Gain Market Share in
Professional Remodeling
Solid Balance Sheet Provides Foundation for Growth
(1) Source: United States Census Bureau.
(1)
50 year
average
© 2018 BMC. All Rights Reserved.
APPENDIX
BMC STOCK HOLDINGS REPORTED (GAAP) INCOME STATEMENT
($ths) FY 2015 Q1 16 Q2 16 Q3 16 Q4 16 FY 2016 Q1 17 Q2 17 Q3 17 Q4 17 FY 2017 Q1 18
Net sales 1,576,746 727,418 797,547 821,204 747,574 3,093,743 757,700 886,375 881,012 840,881 3,365,968 834,202
Cost of sales 1,215,336 560,801 605,892 618,238 566,847 2,351,778 579,503 674,688 671,467 644,795 2,570,453 635,118
Gross profit 361,410 166,617 191,655 202,966 180,727 741,965 178,197 211,687 209,545 196,086 795,515 199,084
SG&A 306,843 141,781 139,897 149,498 140,623 571,799 148,888 157,789 158,193 154,676 619,546 160,204
Depreciation expense 15,700 8,792 9,290 9,784 10,575 38,441 10,561 10,941 11,053 10,467 43,022 9,506
Amortization expense 3,626 5,245 5,288 5,349 4,839 20,721 3,821 4,100 4,026 4,056 16,003 3,657
Impairment of assets - 11,883 - - 45 11,928 - 26 409 - 435 -
Merger and integration
costs22,993 2,836 3,597 4,655 4,252 15,340 4,441 6,324 2,574 1,997 15,336 1,687
Income (loss) from
operations12,248 (3,920) 33,583 33,680 20,393 83,736 10,486 32,507 33,290 24,890 101,173 24,030
Interest expense (27,552) (8,231) (8,121) (7,668) (6,111) (30,131) (6,088) (6,495) (6,377) (6,076) (25,036) (5,982)
Loss on debt
extinguishment- - - (12,529) - (12,529) - - - - - -
Other income (expense),
net784 1,455 1,411 735 469 4,070 319 964 1,083 3,324 5,690 1,950
(Loss) income before
income taxes(14,520) (10,696) 26,873 14,218 14,751 45,146 4,717 26,976 27,996 22,138 81,827 19,998
Income tax (benefit)
expense(9,689) (3,940) 8,891 4,982 4,333 14,266 973 9,380 9,553 4,496 24,402 4,639
Net (loss) income (4,831) (6,756) 17,982 9,236 10,418 30,880 3,744 17,596 18,443 17,642 57,425 15,35927
BMC STOCK HOLDINGS RECONCILIATION OF NON-GAAP ITEMSADJUSTED NET SALES
($ths) FY 2013 FY 2014 FY 2015 Q1 16 Q2 16 Q3 16 Q4 16 FY 2016 Q1 17 Q2 17 Q3 17 Q4 17 FY 2017 Q1 18
Net sales 1,210,156 1,311,498 1,576,746 727,418 797,547 821,204 747,574 3,093,743 757,700 886,375 881,012 840,881 3,365,968 834,202
Pre-merger SBS net
sales1,197,037 1,295,716 1,223,875 - - - - - - - - - - -
Adjusted net sales 2,407,193 2,607,214 2,800,621 727,418 797,547 821,204 747,574 3,093,743 757,700 886,375 881,012 840,881 3,365,968 834,202
Structural components 420,337 108,890 121,187 123,539 108,145 461,761 109,891 138,306 145,185 129,237 522,619 135,829
Lumber & sheet goods 864,868 213,532 244,830 248,751 231,450 938,563 244,436 290,499 294,699 284,585 1,114,219 288,086
Millwork, doors &
windows794,643 217,987 228,423 232,292 216,187 894,889 210,751 240,999 225,804 229,823 907,377 229,518
Other building prods &
svcs720,773 187,009 203,107 216,622 191,792 798,530 192,622 216,571 215,324 197,236 821,753 180,769
Adjusted net sales by
product category2,800,621 727,418 797,547 821,204 747,574 3,093,743 757,700 886,375 881,012 840,881 3,365,968 834,202
Gross profit 256,547 295,074 361,410 741,965 795,515
Pre-merger SBS gross
profit274,403 307,654 298,393 - -
Inventory step-up charges - - 10,285 2,884 -
Adjusted gross profit 530,950 602,728 670,088 744,849 795,515
Adjusted gross margin
%22.1% 23.1% 23.9% 24.1% 23.6%
28
BMC STOCK HOLDINGS RECONCILIATION OF NON-GAAP ITEMSADJUSTED EBITDA
($ths) FY 2013 FY 2014 FY 2015 Q1 16 Q2 16 Q3 16 Q4 16 FY 2016 Q1 17 Q2 17 Q3 17 Q4 17 FY 2017 Q1 18
Net income (loss) 21,655 94,032 (4,831) (6,756) 17,982 9,236 10,418 30,880 3,744 17,596 18,443 17,642 57,425 15,359
Pre-merger SBS (loss)
income from continuing
operations
(5,036) 10,087 6,842 - - - - - - - - - - -
Interest expense 22,579 29,774 30,189 8,231 8,121 7,668 6,111 30,131 6,088 6,495 6,377 6,076 25,036 5,982
Income tax expense
(benefit)9,147 (59,237) (9,974) (3,940) 8,891 4,982 4,333 14,266 973 9,380 9,553 4,496 24,402 4,639
Depreciation and
amortization25,827 28,799 39,251 16,682 17,139 17,276 17,583 68,680 16,813 17,558 17,625 17,221 69,217 15,681
Merger and integration
costs- - 37,998 2,836 3,597 4,655 4,252 15,340 4,441 6,324 2,574 1,997 15,336 1,687
Restructuring expense 141 73 383 - - - - - - - - - - -
Inventory step-up
charges- - 10,285 2,884 - - - 2,884 - - - - - -
Non-cash stock
compensation expense3,474 6,079 5,452 1,889 1,804 1,851 1,708 7,252 1,231 2,154 1,366 2,018 6,769 1,775
Loss on debt
extinguishment- - - - - 12,529 - 12,529 - - - - - -
Headquarters
relocation- 2,054 3,865 - - - - - - - - - - -
Insurance deductible
reserve adj. and fire
casualty loss
1,772 669 3,026 - - - - - - - - - - -
Loss on portfolio
transfer- - 2,826 - - - - - - - - - - -
Acquisition costs and
other items12,995 1,828 4,216 - - - - - 273 44 2,950 (1,884) 1,383 2,057
Impairment of assets - - - 11,883 - - 45 11,928 - 26 409 - 435 -
Adjusted EBITDA 92,554 114,158 129,528 33,709 57,534 58,197 44,450 193,890 33,563 59,577 59,297 47,566 200,003 47,180
Adjusted EBITDA
margin3.8% 4.4% 4.6% 4.6% 7.2% 7.1% 5.9% 6.3% 4.4% 6.7% 6.7% 5.7% 5.9% 5.7%
29
BMC STOCK HOLDINGS RECONCILIATION OF NON-GAAP ITEMS ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
(in $ths, except per share amounts) Q1 2018 Q1 2017
Net income 15,359 3,744
Merger and integration costs 1,687 4,441
Non-cash stock compensation expense 1,775 1,231
Acquisition Costs (a) 234 273
Other Items (b) 1,823 -
Tax effect of adjustments to net income (c) (1,304) (2,039)
Adjusted net income 19,574 7,650
Diluted weighted avg. shares used to calculate Adjusted net income per diluted share 67,664 67,186
Adjusted net income per diluted share $0.29 $0.11
30
(a) For the three months ended March 31, 2018, represents costs incurred related to the acquisition of W.E. Shone Co. For the three months ended March
31, 2017, represents costs incurred related to the acquisitions of Code Plus Components, LLC and Texas Plywood and Lumber Company, Inc.
(b) Represents severance and executive search costs incurred in connection with the departure of the Company’s former chief executive officer and the
search for his permanent replacement.
(c) The tax effect of adjustments to net income was based on the respective transactions’ income tax rate, which was 23.6% and 37.3% for the three months
ended March 31, 2018 and 2017, respectively. The tax effect of adjustments to net income exclude non-deductible Merger and integration costs of $0.5
million for the three months ended March 31, 2017.