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Builders FirstSource Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: July 29, 2011 02:46PM

Builders FirstSource Inc. (BLDR) filed Quarterly Report for the period ended 2011-06-30. Builders Firstsource Inc. has a market cap of $241 million; its shares were traded at around $2.49 with and P/S ratio of 0.3.



Highlight of Business Operations:

Sales. Sales for the three months ended June 30, 2011 were $206.4 million, a 2.4% decrease from sales of $211.5 million for the three months ended June 30, 2010. For the three months ended June 30, 2011, actual U.S. single-family housing starts and units under construction declined 13.1% and 16.7%, respectively, over this same time period. Average market prices for lumber and lumber sheet goods were 20.8% lower than the same period a year ago. Despite this price deflation and the decline in housing activity, our sales of lumber and lumber sheet goods decreased only 8.2% during the quarter, as we experienced slightly higher sales volume. This decrease was partially offset by an increase of $1.4 million in other building products and services, due to a sales increase of roofing and composite decking.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $2.5 million, or 4.8%. Our salaries and benefits expense, excluding stock compensation expense, was $28.0 million, a decline of $1.8 million from the second quarter of 2010 primarily due to a 5.2% reduction of our average full-time equivalent headcount. Delivery expenses decreased $0.2 million as compared to the second quarter of 2010 due to reduced vehicle and equipment lease expense which was mostly offset by higher fuel costs.

Income Tax Expense (Benefit). We recorded income tax expense of $1.7 million during the quarter compared to an income tax benefit of $0.3 million in the second quarter of 2010. We recorded an after-tax, non-cash valuation allowance of $6.8 million and $7.1 million, in 2011 and 2010, respectively, related to our net deferred tax assets. Absent this valuation allowance, our tax benefit rate would have been 37.5% and 38.5% in 2011 and 2010, respectively.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $5.2 million, or 5.2%. Our salaries and benefits expense, excluding stock compensation expense, was $54.6 million, a decline of $3.4 million from the first six months of 2010 primarily due to a 6.0% reduction of our average full-time equivalent headcount. Delivery expenses decreased $1.1 million year over year due to reduced vehicle and equipment lease expense which was slightly offset by higher fuel costs.

Interest Expense, Net. Interest expense was $11.5 million in 2011, a decrease of $6.3 million. The decrease was primarily due to the write-off of $1.6 million of unamortized debt issuance costs related to long-term debt repaid and $2.5 million of costs incurred related to our recapitalization transaction in the first half of 2010. The remaining decrease in interest expense is primarily due to the expiration of our interest rate swaps during the current quarter.

Income Tax Expense (Benefit). We recorded income tax expense of $1.6 million for the first six months of 2011 compared to an income tax benefit of $0.5 million for 2010. We recorded an after-tax, non-cash valuation allowance of $14.9 million and $18.7 million, in 2011 and 2010, respectively, related to our net deferred tax assets. Absent this valuation allowance, our tax benefit rate would have been 38.1% and 37.9% in 2011 and 2010, respectively.

Read the The complete Report



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