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Builders FirstSource Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 28, 2011 03:01PM
Builders FirstSource Inc. (BLDR) filed Quarterly Report for the period ended 2011-09-30.
Highlight of Business Operations:Sales. Sales for the three months ended September 30, 2011 were $217.2 million, a 20.4% increase from sales of $180.4 million for the three months ended September 30, 2010. We achieved this increase in sales despite a continuing weak housing environment. For the three months ended September 30, 2011, actual U.S. single-family housing starts declined 1.4% compared to the third quarter of 2010. In the South Region we saw a slightly more positive trend, as actual single-family housing starts increased 5.1% during the third quarter of 2011 compared to the same quarter a year ago. We estimate that our sales volume increased approximately 22% during the quarter, and was partially offset by commodity price deflation. The increased sales volume was achieved across all product categories, as we expanded our customer base and increased sales to existing customers.
Sales. Sales for the nine months ended September 30, 2011 were $586.4 million, a 6.0% increase from sales of $553.3 million for the nine months ended September 30, 2010. We achieved this sales increase despite a decline in housing starts during the period. Actual U.S. single-family housing starts for the nine months ended September 30, 2011 declined 12.1% compared to the first nine months of 2010. In the South Region, actual single-family housing starts were down 9.9% compared to a year ago. We estimate that our sales volume increased approximately 7.5%, and was partially offset by commodity price deflation. The increased sales volume was achieved across all product categories, as we expanded our customer base and increased sales to existing customers.
Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $2.6 million, or 1.7%. Our salaries and benefits expense, excluding stock compensation expense, was $83.3 million, a decline of $3.1 million from the first nine months of 2010, which was partially due to a 2.1% reduction of our average full-time equivalent headcount. Delivery expense decreased $0.6 million year over year due to reduced vehicle and equipment lease expense which was slightly offset by higher fuel costs.
Income Tax Expense (Benefit). We recorded income tax expense of $1.9 million for the first nine months of 2011 compared to an income tax benefit of $1.0 million for 2010. We recorded an after-tax, non-cash valuation allowance of $19.6 million and $25.9 million in 2011 and 2010, respectively, related to our net deferred tax assets. Absent this valuation allowance, our tax benefit rate would have been 38.3% and 38.1% in 2011 and 2010, respectively.
At September 30, 2011, we had total liquidity of $100.0 million, which consisted of $52.9 million of cash on hand and $47.1 million of net borrowing base availability. We expect our fourth quarter to essentially be cash neutral as cash used to fund operations, pay interest, and repay our remaining 2012 notes should largely be offset by seasonal reductions in working capital. As a result, we expect our cash used in fiscal year 2011 to approximate $50 $55 million. However, due to the seasonal reductions in working capital in the fourth quarter of 2011 and the corresponding decrease in our borrowing base, we expect to end the year with total liquidity of approximately $80 million. We believe our current liquidity is sufficient to meet our needs over the next twelve months and do not