The accompanying notes are an integral part of these condensed consolidated financial statements.
For the three months ended March 31, 2016 the Company retired assets subject to lease finance obligations of $10.6 million and extinguished the related lease finance obligation of $10.6 million. There were no assets subject to lease finance obligations retired during the three months ended March 31, 2017.
The company purchased equipment which was financed through capital lease obligations of $1.2 million and $1.0 million in the three months ended March 31, 2017 and 2016, respectively.
The accompanying notes are an integral part of these condensed consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1.
Basis of Presentation
Builders FirstSource, Inc., a Delaware corporation formed in 1998, is a leading supplier of building materials, manufactured components and construction services to professional contractors, sub-contractors, and consumers. The company operates 400 locations in 40 states across the United States. In this quarterly report, references to the “Company,” “we,” “our,” “ours” or “us” refer to Builders FirstSource, Inc. and its consolidated subsidiaries unless otherwise stated or the context otherwise requires.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all recurring adjustments and normal accruals necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the dates and periods presented. Results for interim periods are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period. Intercompany transactions are eliminated in consolidation.
The condensed consolidated balance sheet as of December 31, 2016 is derived from the audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. This condensed consolidated balance sheet as of December 31, 2016 and the unaudited condensed consolidated financial statements included herein should be read in conjunction with the more detailed audited consolidated financial statements for the year ended December 31, 2016 included in our most recent annual report on Form 10-K. Accounting policies used in the preparation of these unaudited condensed consolidated financial statements are consistent with the accounting policies described in the Notes to Consolidated Financial Statements included in our Form 10-K.
Recent Accounting Pronouncements
In January 2017, the Financial Accounting Standards Board (“FASB”) issued an update to the existing guidance under the
Intangibles-Goodwill and Other
topic of the Accounting Standards Codification (“Codification”) to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All of the other goodwill impairment guidance will remain largely unchanged, including the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. This update is effective for annual and any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption of this guidance is permitted for annual or interim goodwill tests performed after January 1, 2017. As such, the Company intends to adopt this guidance in the fourth quarter of 2017 in connection with its annual goodwill impairment test. This guidance will be applied on a prospective basis following adoption.
In January 2017, the FASB issued an update to the existing guidance under the
Business Combinations
topic of the Codification. This update revises the definition of a business. Under this guidance when substantially all of the assets acquired are concentrated in a single asset (or group of similar assets) the assets acquired would not be considered a business. If this initial screen is met the need for further assessment is eliminated. If this screen is not met in order to be considered a business an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create outputs. This update is effective for public companies for annual and interim reporting periods beginning after December 15, 2017. Early adoption of this guidance is permitted. This guidance requires prospective application following adoption. While the Company is still evaluating this updated guidance, the impact on our financial statements will depend upon the occurrence of any future acquisition activity.
In March 2016, the FASB issued an update to the existing guidance under the
Compensation-Stock Compensation
topic of the Codification. This update simplifies several aspects of accounting for stock compensation including accounting for income taxes, classification of awards as liabilities or equity, forfeitures and classification on the statement of cash flows. This update was effective for public companies for annual and interim reporting periods beginning after December 15, 2016. As such, we adopted this guidance effective January 1, 2017. The various aspects of this guidance require prospective, retrospective, or modified retrospective application. Upon adoption the Company recognized $8.9 million in previously unrecorded windfall benefits on a modified retrospective basis through a cumulative-effect adjustment to the beginning balance of our accumulated deficit. All windfalls or shortfalls are now recognized as a component of income tax expense in the period they occur. The Company elected to recognize the effect of pre-vesting forfeitures as they actually occur rather than estimating forfeitures each period.
In February 2016, the FASB issued an update to the existing guidance under
Leases
topic of the Codification. Under the new guidance, lessees will be required to recognize the following for all leases, with the exception of short-term leases, at the commencement date: (1) a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a
7
discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s righ
t to use, or control the use of, a specified asset for the lease term. This update requires a modified retrospective transition as of the beginning of the earliest comparative period presented in the financial statements. This update is effective for publi
c companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company has a significant number of leases, primarily related to real estate and rolling stock, which ar
e accounted for as operating leases under existing guidance. We are currently evaluating the impact of this new guidance on our financial statements.
In July 2015, the FASB issued an update to the existing guidance under the
Inventory
topic of the Codification. This update changes the subsequent measurement of inventory from lower of cost or market to lower of cost and net realizable value. We adopted this guidance effective January 1, 2017 on a prospective basis. The adoption of this guidance did not have an impact on our financial statements.
In May 2014, the FASB issued an update to the existing guidance under the
Revenue Recognition
topic of the Codification which is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Subsequent to issuance of the original update the FASB issued several further updates amending this new guidance. In April 2016, the FASB issued an update clarifying issues related to identifying performance obligations and licensing. In May 2016, the FASB issued an update regarding the assessment of collectability criteria, presentation of sales taxes, measurement of noncash consideration and transition guidance for completed contracts and contract modifications. The Company intends to adopt this guidance beginning on January 1, 2018 on a modified retrospective basis. While we are still evaluating the impact of these updates on our financial statements, we anticipate this guidance will primarily impact our contracts with service elements and certain classifications within the statement of operations. Under current guidance, we generally recognize sales from contracts with service elements on the completed contract method as these contracts are usually completed within 30 days with the percentage of completion method applied on a limited basis to certain contracts. Percentage of completion revenue represents less than 2% of our consolidated sales for each period presented.
2.
Net Income (Loss) per Common Share
Net income (loss) per common share (“EPS”) is calculated in accordance with the
Earnings per Share
topic of the FASB Accounting Standards Codification (“Codification”), which requires the presentation of basic and diluted EPS. Basic EPS is computed using the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential common shares.
Our previously outstanding restricted stock shares included rights to receive dividends that were not subject to the risk of forfeiture even if the underlying restricted stock shares on which the dividends were paid did not vest. In accordance with the
Earnings per Share
topic of the Codification, unvested share-based payment awards that contain non-forfeitable rights to dividends are deemed participating securities and should be considered in the calculation of basic EPS. Since the restricted stock shares did not include an obligation to share in losses, they were included in our basic EPS calculation in periods of net income and excluded from our basic EPS calculation in periods of net loss. Accordingly, there were 13,000 restricted stock shares excluded from our calculation of basic EPS for the three months ended March 31, 2016 as we generated a net loss. There were no outstanding restricted stock shares as of March 31, 2017.
For the purpose of computing diluted EPS, weighted average shares outstanding have been adjusted for common shares underlying 3.2 million options and 2.2 million restricted stock units (“RSUs”) for the three months ended March 31, 2017.
For the purpose of computing diluted EPS, options to purchase 5.0 million shares of common stock and 2.2 million RSUs were not included in the computations of diluted EPS for the three months ended March 31, 2016 because their effect was anti-dilutive.
The table below presents a reconciliation of weighted average common shares used in the calculation of basic and diluted EPS (in thousands):
|
Three Months Ended
March 31,
|
|
|
2017
|
|
|
2016
|
|
Weighted average shares for basic EPS
|
|
111,964
|
|
|
|
109,913
|
|
Dilutive effect of options and RSUs
|
|
2,616
|
|
|
|
─
|
|
Weighted average shares for diluted EPS
|
|
114,580
|
|
|
|
109,913
|
|
8
3.
Debt
Long-term debt and lease obligations consisted of the following (in thousands):
|
March 31,
2017
|
|
|
December 31,
2016
|
|
2022 facility
|
$
|
142,000
|
|
|
$
|
—
|
|
2023 notes
|
|
367,608
|
|
|
|
367,608
|
|
2024 notes
|
|
750,000
|
|
|
|
750,000
|
|
2024 term loan
|
|
466,481
|
|
|
|
467,650
|
|
Lease finance obligations
|
|
238,276
|
|
|
|
238,539
|
|
Capital lease obligations
|
|
7,542
|
|
|
|
7,427
|
|
|
|
1,971,907
|
|
|
|
1,831,224
|
|
Unamortized debt discount and debt issuance costs
|
|
(29,122
|
)
|
|
|
(29,172
|
)
|
|
|
1,942,785
|
|
|
|
1,802,052
|
|
Less: current maturities of long-term debt and lease obligations
|
|
16,144
|
|
|
|
16,217
|
|
Long-term debt and lease obligations, net of current maturities
|
$
|
1,926,641
|
|
|
$
|
1,785,835
|
|
2017 Debt Transactions
In the first quarter of 2017 the Company executed two debt transactions which are described in more detail below. These transactions included a repricing and extension of our
$470.0 million term loan facility originally due 2022 (“2015 term loan”) as well as increasing the borrowing capacity and extending the maturity of our $800.0 million revolving credit facility (“2015 facility”). These transactions have further extended our debt maturity profile and reduced our annual cash interest on a go forward basis.
Term Loan Amendment
On February 23, 2017, we repriced our 2015 term loan through an amendment and extension of the term loan credit agreement providing for a $467.7 million senior secured term loan facility due 2024 (“2024 term loan”). This repricing reduces the interest rate by 0.75% and extends the maturity by 19 months to February 29, 2024.
The 2024 term loan bears interest based on either a eurodollar or base rate (a rate equal to the highest of an agreed commercially available benchmark rate, the federal funds effective rate plus 0.50% or the eurodollar rate plus 1.0%, as selected by the Company) plus, in each case, an applicable margin. The applicable margin in the 2024 term loan is (x) 3% in the case of Eurodollar rate loans and (y) 2% in the case of base rate loans. These rates represents a 0.75% reduction from the 2015 term loan. Deutsche Bank AG New York Branch continues to serve as administrative agent and collateral agent under the 2024 term loan agreement.
In connection with the 2024 term loan amendment we recognized $0.4 million in interest expense in the first quarter of 2017 related to the write-off of unamortized debt discount and debt issuance costs. We incurred $1.2 million in lender fees which, together with $10.0 million in remaining unamortized debt discount and debt issuance costs, have been recorded as a reduction of long-term debt and are being amortized over the remaining contractual life of the 2024 term loan using the effective interest method. In addition, we also incurred $1.4 million in various third-party fees and expenses related to the 2024 term loan amendment which were recorded to interest expense in the first quarter of 2017.
Revolving Credit Facility Amendment
On March 22, 2017, the Company extended the maturity date and increased the revolving commitments under its 2015 facility. This transaction resulted in an amended and restated $900.0 million revolving credit facility (“2022 facility”) and extended the maturity by 20 months to March 22, 2022. SunTrust Bank continues to serve as administrative agent and collateral agent under the 2022 facility agreement. All other material terms of the 2022 facility remain unchanged from those of the 2015 facility.
In connection with the 2022 facility amendment, we recognized $0.6 million in interest expense in the first quarter of 2017 related to the write-off of unamortized debt issuance costs. We incurred $1.6 million in lender and third-party fees which, together with $8.5 million in remaining unamortized debt issuance costs, have been recorded as other assets and are being amortized over the remaining contractual life of the 2022 facility on a straight-line basis.
2022 Facility Borrowings
As of March 31, 2017, we have $142.0 million in borrowings outstanding under our 2022 facility. During the first three months of 2017, we borrowed $457.0 million and repaid $315.0 million at a weighted average interest rate of 3.3%.
9
2024 Term Loan
As of March 31, 2017, we have $466.5 million in borrowings outstanding under our 2024 term loan at a weighted average interest rate of 4.4%. During the first three months of 2017 we repaid $1.2 million of the 2024 term loan.
We were not in violation of any covenants or restrictions imposed by any of our debt agreements at March 31, 2017.
Fair Value
As of March 31, 2017 and December 31, 2016, the Company does not have any financial instruments which are measured at fair value on a recurring basis. We have elected to report the value of our 2023 notes, 2024 notes, and 2024 term loan at amortized cost. The fair values of the 2023 notes, the 2024 notes and the 2024 term loan at March 31, 2017 were approximately $426.7 million, $763.1 million and $466.5 million, respectively, and were determined using Level 2 inputs based on market prices.
4.
Employee Stock-Based Compensation
Time Based Restricted Stock Unit Grants
In the first quarter of 2017, our board of directors granted 405,000 RSUs to employees under our 2007 and 2014 Incentive Plans for which vesting is based solely on continuous employment over the requisite service period. 348,000 of the RSUs vest at 33% per year at each anniversary of the grant date over the next three years and 57,000 RSUs vest at 25% per year at each anniversary of the grant date over the next four years. The weighted average grant date fair value for these RSUs was $14.31 per share, which was based on the closing stock price on the grant dates.
Performance and Service Condition Based Restricted Stock Unit Grants
In the first quarter of 2017, our board of directors granted 174,000 RSUs to employees under our 2007 and 2014 Incentive Plans, that vest if the compound annual growth rate of the Company’s total sales in 2019 over 2016 exceeds a composite annual growth rate based on single-family housing starts, multi-family housing starts, and growth in repair and remodeling sales over the same period. Assuming continued employment and if the performance vesting condition is achieved, these awards will cliff vest on the third anniversary of the grant date. The weighted average grant date fair value for these RSUs was $14.54 per share, which was based on the closing stock price on the grant dates.
Market and Service Condition Based Restricted Stock Unit Grants
In the first quarter of 2017, our board of directors granted 174,000 RSUs to employees under our 2007 and 2014 Incentive Plans for which vesting is contingent upon the Company’s total shareholder return exceeding the median total shareholder return of the Company’s peer group over a three year measurement period. Assuming continued employment and if the market vesting condition is met, these awards will cliff vest on the third anniversary of the grant date. The weighted average grant date fair value for these RSUs was $11.49 per share, which was determined using the Monte Carlo simulation model using the following weighted average assumptions:
Expected volatility (company)
|
73.7%
|
|
Expected volatility (peer group median)
|
33.8%
|
|
Correlation between the company and peer group median
|
0.33
|
|
Expected dividend yield
|
0.00%
|
|
Risk-free rate
|
1.5%
|
|
The expected volatilities and correlation are based on the historical daily returns of our common stock and the common stocks of the constituents of the Company’s peer group over the most recent period equal to the measurement period. The expected dividend yield is based on our history of not paying regular dividends in the past and our current intention to not pay regular dividends in the foreseeable future. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant and has a term equal to the measurement period.
Stock Option Grant
In the first quarter of 2017, our board of directors granted 57,000 stock options to employees under our 2014 Incentive Plan. All the awards vest at 25% per year at each anniversary of the grant date over four years. The exercise price for the options was $12.94
10
per share, which was the closing stock price on the
grant date. The weighted average grant date fair value of the options was $
7.26
and was determined using the Black-Scholes option-pricing model with the following weighted average assumptions:
Expected life
|
6.0 years
|
|
Expected volatility
|
59.2%
|
|
Expected dividend yield
|
0.00%
|
|
Risk-free rate
|
2.2%
|
|
The expected life represents the period of time the options are expected to be outstanding. We used the simplified method for determining the expected life assumption due to limited historical exercise experience on our stock options. The expected volatility is based on the historical volatility of our common stock over the most recent period equal to the expected life of the option. The expected dividend yield is based on our history of not paying regular dividends in the past and our current intention to not pay regular dividends in the foreseeable future. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant and has a term equal to the expected life of the options.
5.
Income Taxes
A reconciliation of the statutory federal income tax rate to our effective rate for continuing operations is provided below:
|
Three Months Ended
March 31,
|
|
|
2017
|
|
|
2016
|
|
Statutory federal income tax rate
|
|
35.0
|
%
|
|
|
35.0
|
%
|
State income taxes, net of federal income tax
|
|
5.7
|
|
|
|
4.9
|
|
Valuation allowance
|
|
—
|
|
|
|
(77.4
|
)
|
Stock compensation windfall benefit
|
|
(41.5
|
)
|
|
|
—
|
|
Permanent differences
|
|
0.4
|
|
|
|
1.1
|
|
Other
|
|
7.6
|
|
|
|
—
|
|
|
|
7.2
|
%
|
|
|
(36.4
|
)%
|
As discussed in Note 1 the Company adopted updated guidance related to the accounting for stock compensation in the first quarter of 2017. As a result of this updated guidance all windfalls or shortfalls are now recognized as a component of income tax expense in the period they occur.
We evaluate our deferred tax assets on a quarterly basis to determine whether a valuation allowance is required. In accordance with the
Income Taxes
topic of the Codification we assess whether it is more likely than not that some or all of our deferred tax assets will not be realized. Significant judgment is required in estimating valuation allowances for deferred tax assets and in making this determination, we consider all available positive and negative evidence and make certain assumptions. The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in the applicable carryback or carryforward periods. We consider nature, frequency, and severity of current and cumulative losses, as well as historical and forecasted financial results, the overall business environment, our industry's historic cyclicality, the reversal of existing deferred tax liabilities, and tax planning strategies in our assessment. Changes in our estimates of future taxable income and tax planning strategies will affect our estimate of the realization of the tax benefits of these tax carryforwards. As of March 31, 2017, the Company needed to generate approximately $311.5 million of pre-tax income in future periods to fully realize its net federal deferred tax assets.
We recorded a full valuation allowance in 2008 due to our cumulative three year loss position at that time, compounded by the negative industry-wide business trends and outlook. We remained in a cumulative three year loss position until the second quarter of 2016. In the third quarter of 2016 management determined that there was sufficient positive evidence to conclude that it is more likely than not that the valuation allowance should be released against our net federal and some state deferred tax assets.
As of March 31, 2017, we have certain states where we are not currently projecting future taxable income levels that would be sufficient to utilize the carryover net operating losses and as such continue to maintain a partial valuation allowance against certain of these state deferred tax assets. We will continue to evaluate our projections of future taxable income related to these states to assess whether it is more likely than not that some or all of these state deferred tax assets will be realizable in the future. There was no change to the valuation allowance against these state deferred tax assets during the three months ended March 31, 2017. We recorded an increase to the valuation allowance of $5.1 million for the three months ended March 31, 2016 against our net deferred tax assets as we generated a net operating loss during that period.
Section 382 of the Internal Revenue Code imposes annual limitations on the utilization of net operating loss (“NOL”) carryforwards, other tax carryforwards, and certain built-in losses upon an ownership change as defined under that section. In general terms, an ownership change may result from transactions that increase the aggregate ownership of certain stockholders in the
11
Company’s stock by more than 50 percentage points over a three year testing period (“Section 382 Ownership Change”). In the first quart
er of 2017 affiliates of a significant shareholder sold approximately 41.1% of their investment in the Company, which did not trigger a Section 382 Ownership change. Future significant sales of our common stock could cause the Company to experience a Sect
ion 382 Ownership Change. If the Company were to experience, a Section 382 Ownership Change, an annual limitation would be imposed on certain of the Company’s tax attributes, including NOL and capital loss carryforwards, and certain other losses, credits,
deductions or tax basis.
We base our estimate of deferred tax assets and liabilities on current tax laws and rates. In certain cases, we also base our estimate on business plan forecasts and other expectations about future outcomes. Changes in existing tax laws or rates could affect our actual tax results, and future business results may affect the amount of our deferred tax liabilities or the valuation of our deferred tax assets over time. Due to uncertainties in the estimation process, particularly with respect to changes in facts and circumstances in future reporting periods, as well as the residential homebuilding industry’s cyclicality and sensitivity to changes in economic conditions, it is possible that actual results could differ from the estimates used in previous analyses.
Accounting for deferred taxes is based upon estimates of future results. Differences between the anticipated and actual outcomes of these future results could have a material impact on our consolidated results of operations or financial position.
6.
Commitments and Contingencies
Since the fourth quarter of 2016, the Company has seen an increased occurrence of known and threatened construction defect legal claims primarily in two states. While these claims are generally covered under the Company’s existing insurance programs to the extent any loss exceeds the deductible, there is a reasonable possibility of loss that is not able to be estimated at this time because (i) many of the proceedings are in the discovery stage, (ii) the outcome of future litigation is uncertain, and/or (iii) the complex nature of the claims. Although the Company cannot estimate a reasonable range of loss based on currently available information, the resolution of these matters could have an adverse effect on the Company's financial position, results of operations or cash flows which could be material.
We are a party to various legal proceedings in the ordinary course of business. Although the ultimate disposition of these proceedings cannot be predicted with certainty, management believes the outcome of any claim that is pending or threatened, either individually or on a combined basis, will not have a material adverse effect on our consolidated financial position, cash flows or results of operations. However, there can be no assurances that future adverse judgments and costs would not be material to our results of operations or liquidity for a particular period.
7.
Segment and Product Information
We offer an integrated solution to our customers providing manufacturing, supply, and installation of a full range of structural and related building products. We provide a wide variety of building products and services directly to homebuilder customers. We manufacture floor trusses, roof trusses, wall panels, stairs, millwork, windows, and doors. We also provide a full range of construction services. These product and service offerings are distributed across approximately 400 locations operating in 40 states across the United States, which are organized into nine geographical regions. Centralized financial and operational oversight, including resource allocation and assessment of performance on an income (loss) before income taxes basis, is performed by our CEO, whom we have determined to be our chief operating decision maker (“CODM”).
The Company has nine operating segments aligned with its nine geographical regions (Regions 1 through 9). While all of our operating segments have products, distribution methods and customers of a similar nature, certain of our operating segments have been aggregated due to also containing similar economic characteristics, resulting in the following composition of reportable segments:
|
•
|
Regions 1 and 2 have been aggregated to form the “Northeast” reportable segment
|
|
•
|
Regions 3 and 5 have been aggregated to form the “Southeast” reportable segment
|
|
•
|
Regions 4 and 6 have been aggregated to form the “South” reportable segment
|
|
•
|
Region 7, 8 and 9 have been aggregated to form the “West” reportable segment
|
In addition to our reportable segments, our consolidated results include corporate overhead, other various operating activities that are not internally allocated to a geographical region nor separately reported to the CODM, and certain reconciling items primarily related to allocations of corporate overhead and rent expense, which have collectively been presented as “All Other”. The accounting policies of the segments are consistent with those referenced in Note 1, except for noted reconciling items.
12
The following tables pre
sent Net sales, income (loss) before income taxes and certain other measures for the reportable segments, reconciled to consolidated total continuing operations, for the periods indicated (in thousands):
|
|
Three months ended March 31, 2017
|
|
Reportable segments
|
|
Net Sales
|
|
|
Depreciation & Amortization
|
|
|
Interest
|
|
|
Income (loss)
before income
taxes
|
|
Northeast
|
|
$
|
282,770
|
|
|
$
|
3,477
|
|
|
$
|
4,899
|
|
|
$
|
2,937
|
|
Southeast
|
|
|
353,974
|
|
|
|
2,506
|
|
|
|
5,325
|
|
|
|
10,062
|
|
South
|
|
|
449,852
|
|
|
|
4,793
|
|
|
|
5,584
|
|
|
|
21,342
|
|
West
|
|
|
409,037
|
|
|
|
6,939
|
|
|
|
7,099
|
|
|
|
(3,152
|
)
|
Total reportable segments
|
|
|
1,495,633
|
|
|
|
17,715
|
|
|
|
22,907
|
|
|
|
31,189
|
|
All other
|
|
|
37,431
|
|
|
|
5,877
|
|
|
|
13,250
|
|
|
|
(27,069
|
)
|
Total consolidated
|
|
$
|
1,533,064
|
|
|
$
|
23,592
|
|
|
$
|
36,157
|
|
|
$
|
4,120
|
|
|
|
Three months ended March 31, 2016
|
|
Reportable segments
|
|
Net Sales
|
|
|
Depreciation & Amortization
|
|
|
Interest
|
|
|
Income (loss)
before income
taxes
|
|
Northeast
|
|
$
|
258,020
|
|
|
$
|
5,483
|
|
|
$
|
4,150
|
|
|
$
|
2,623
|
|
Southeast
|
|
|
306,607
|
|
|
|
3,170
|
|
|
|
4,316
|
|
|
|
6,948
|
|
South
|
|
|
405,397
|
|
|
|
6,070
|
|
|
|
5,179
|
|
|
|
15,860
|
|
West
|
|
|
385,979
|
|
|
|
9,654
|
|
|
|
6,118
|
|
|
|
(1,229
|
)
|
Total reportable segments
|
|
|
1,356,003
|
|
|
|
24,377
|
|
|
|
19,763
|
|
|
|
24,202
|
|
All other
|
|
|
41,111
|
|
|
|
6,414
|
|
|
|
15,461
|
|
|
|
(36,647
|
)
|
Total consolidated
|
|
$
|
1,397,114
|
|
|
$
|
30,791
|
|
|
$
|
35,224
|
|
|
$
|
(12,445
|
)
|
Asset information by segment is not reported internally or otherwise reviewed by the CODM nor does the Company earn revenues or have long-lived assets located in foreign countries. The Company’s net sales by product category for the periods indicated were as follows (in thousands):
|
Three Months Ended
March 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
Lumber & lumber sheet goods
|
$
|
530,695
|
|
|
$
|
461,415
|
|
|
|
Manufactured products
|
|
269,819
|
|
|
|
236,233
|
|
|
|
Windows, doors & millwork
|
|
309,698
|
|
|
|
296,668
|
|
|
|
Gypsum, roofing & insulation
|
|
117,207
|
|
|
|
112,302
|
|
|
|
Siding, metal & concrete products
|
|
137,210
|
|
|
|
131,966
|
|
|
|
Other building products & services
|
|
168,435
|
|
|
|
158,530
|
|
|
|
Net sales
|
$
|
1,533,064
|
|
|
$
|
1,397,114
|
|
|
|
8.
Related Party Transactions
Floyd F. Sherman, our chief executive officer, and Brett Milgrim, a member of the Company’s board of directors, serve on the board of directors for PGT, Inc. We purchased windows from PGT, Inc. totaling $2.4 million and $2.1 million for the three months ended March 31, 2017 and 2016 respectively. We had accounts payable to PGT, Inc. in the amounts of $1.0 million and $1.4 million as of March 31, 2017 and December 31, 2016, respectively.
Transactions between the Company and other related parties occur in the ordinary course of business. However, the Company carefully monitors and assesses related party relationships. Management does not believe that any of these transactions with related parties had a material impact on the Company’s results for the three months ended March 31, 2017 and 2016.
13