bldr nov pres
TRANSCRIPT
1
Cautionary Notice
Statements in this presentation which are not purely historical facts or which necessarily depend upon future events,
including statements about forecasted financial performance or other statements about anticipations, beliefs, expectations,
hopes, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Readers are
cautioned not to place undue reliance on forward-looking statements. All forward-looking statements in this presentation
are based upon information available to Builders FirstSource, Inc. on the date of this presentation. Except as required by
law, Builders FirstSource, Inc. undertakes no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. Any forward-looking statements involve risks and
uncertainties that could cause actual events or results to differ materially from the events or results described in the
forward-looking statements, including risks or uncertainties related to the Company’s revenues and operating results
being highly dependent on, among other things, the homebuilding industry, lumber prices and the economy. Builders
FirstSource, Inc. may not succeed in addressing these and other risks. Further information regarding factors that could
affect our financial and other results can be found in the risk factors section of Builders FirstSource, Inc.’s most recent
Form 10-K filed with the Securities and Exchange Commission. Consequently, all forward-looking statements in this
presentation are qualified by the factors, risks and uncertainties contained therein
Use of Non-GAAP Financial Measures
This presentation includes financial measures and terms not calculated in accordance with accounting principles generally
accepted in the United States (“GAAP”) in order to provide investors with an alternative method for assessing our
operating results in a manner that enables investors to more thoroughly evaluate our current performance as compared to
past performance. We believe these non-GAAP measures provide investors with a better baseline for modeling our future
earnings expectations. Our management uses these non-GAAP measures for the same purpose. We believe that our
investors should have access to the same set of tools that we use in analyzing our results. These non-GAAP measures
should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute
for or superior to GAAP results. Our calculations of non-GAAP measures are not necessarily comparable to similarly
titled measures reported by other companies. Schedules that reconcile non-GAAP financial
measures to their GAAP equivalents are included later in this presentation.
Safe Harbor & Non-GAAP Financial Measures
2
Contents
Section 1 Company Overview 3
Section 2 Industry Update 9
Section 3 Investment Highlights 13
Section 4 Financial Overview 19
Section 5 Reconciliation of Non-GAAP Financial Measures 27
4
Prefabricated Components Lumber & Lumber Sheet Other Products & Services
Products include
dimensional lumber,
plywood and oriented
strand board (“OSB”)
Factory-built substitutes
for job side-framing
including floor trusses,
roof trusses, wall
panels, stairs, and
engineered wood
Cabinets, gypsum,
roofing and insulation.
Services include turn-
key framing, shell
construction, design
assistance, and
installation
Windows & Doors Millwork
Manufacturing,
assembly and
distribution of
aluminum and vinyl
windows
Assembly and
distribution of interior
and exterior door units
Distribution of interior
trim, exterior trim,
columns and posts.
Manufacturing of custom
exterior features under
the Synboard™
brand name
Third largest building products provider1 operating in the estimated $106.8 billion single family residential
home construction market2
The Company is a fully-integrated supplier, manufacturer and installer of structural and related building
products
Company Overview
Notes:
1 According to ProSales Magazine among those with manufacturing capabilities, based on 2011 revenues
2 2011 National Association of Home Builder (“NAHB”)
5
Revenue Distribution
Over 50% of BFS sales are from value added product categories — Prefabricated Components,
Millwork and Windows & Doors
Over 20% of sales are related to our installation services
FY 2011 Q3 YTD 2012
6
Top 10 customers represented approximately 23% of total sales, with no one customer
exceeding 5% for FY 2011
Customer mix consists of large national homebuilders, regional homebuilders and local
builders
Approximately 15% of sales are related to light commercial and multi-family construction
Large builders, making up a significant portion of the Company’s customers, are winning
market share due to cost advantages, land positions and easier access to financing
Our Customers
7
BFS has operations in 32 markets in 9 states primarily in the southern and eastern regions of the United States
BFS is in 17 of the nation’s
top 50 Metropolitan Statistical
Areas (as ranked by single
family housing permits)
Approximately 46% of 2011
U.S. housing permits were
issued in states in which BFS
operates
53 distribution centers and 44
manufacturing facilities, some
of which are co-located
Geographic Footprint
North East
Emmitsburg Frederick
Port of Rocks
Hagerstown
Manassas
Culpeper
Washington
Hillsborough
High Point
Bristol
Piney Flats Kingsport
Johnson City
Knoxville Asheville
Hendersonville
Brevard Cashiers
Blairsville
Gainsville
Atlanta
LaGrange
Columbus
CherryPoint
Edisto Island
Johns Island
Charleston
Pawleys Island
Columbia
Sumter Goose Creek
Conway Loris
Florence
Anderson
Seneca Greenville
Spartanburg
Cowpens
Charlotte
Aberdeen
Fayetteville
Southport
Wilmington Wilmington
Nashville
Chelsea
Shelby
Auburn
Jacksonville Freeport
Tampa
Bunnell
Orlando
West Palm Beach
Dallas Headquarters
Lewisville
Arlington
Grand Prairie
Houston
San Antonio
Austin
Apex
Clarksville
8
Strong Market Position
BFS is the third largest building products provider in an estimated
$106.8 billion single family residential construction market1
Building Products Suppliers with Manufacturing Capabilities
Note:
1 2011 NAHB
Pro Distributor % Change
ProBuild Holdings $2,838 $3,045 -6.8%
84 Lumber 1,278 1,378 -7.2%
Builders FirstSource 779 700 11.3%
Stock Building Supply 735 818 -10.1%
BMC 631 570 10.7%
Carter Lumber 557 535 4.2%
US LBM 429 270 59.3%
Harvey Building Products 400 n/m n/m
McCoy’s Building Supply 380 377 0.6%
Golden State Lumber 213 212 0.4%
Source: ProSales Magazine, 2011 & 2010
2011 Pro Segment
Sales ($mm)
2010 Pro Segment
Sales ($mm)
10
Recent downturn in residential new construction market is without precedent since World War II
Since 2008, housing starts have been well below the long term trend of 1.5 million total starts and
1.1 million single family starts.
Overbuild/Underbuild
New Construction Market Trends
Sources: US Census
1.6 1.7
1.8 2.0
2.1
1.8
1.4
0.9
0.6 0.6 0.6
-
0.5
1.0
1.5
2.0
2.5
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
To
tal S
tart
s (m
m u
nit
s)
Long Term Average: 1.5mm
Underbuild
Overbuild
11
The residential new construction market has experienced a substantial downturn in recent
years as a result of the recession
The downturn resulted in the largest decline in housing starts since the Great Depression
falling by 74% from the 2005 peak to the current trough
Building products sales have had a corresponding decline
Trends that will drive a recovery in U.S. housing demand include:
Low interest rates, the aging of housing stock, and population growth due to
immigration and birthrates exceeding death rates
The National Association of Home Builders (“NAHB”) is predicting that 2012 U.S.
single family housing starts will grow approximately 21% from 2011, with
approximately 528,000 single family housing starts predicted
NAHB predicts single family housing starts will increase to 665,000 in 2013,
representing a 26% increase over the 2012 forecast
The Macro Environment
BFS is well positioned to take advantage of anticipated renewed demand
12
Commodity Price Trends
Commodity prices have steadily increased from the beginning of the year. Higher commodity prices
will typically result in increased gross profit dollars and improved EBITDA flow through.
14
Strategic Growth Plan
Management continues to focus on profitable, disciplined growth and free cash
flow generation
Expand Current
Customer Base
Expand into
Multi-Family and Light
Commercial Business
Focus on Cost, Working
Capital and Operating
Improvements
Selective
Acquisitions Subject to
Liquidity
Grow sales
to production
homebuilders as they
continue to gain
market share
Continue with plan
to prudently expand
presence in the custom
homebuilder base
Diversify revenue base
into more stable end
markets
Utilize existing
capabilities of large
design centers and
personnel with
necessary expertise to
effectively compete in
these markets
Focus on remaining a
low cost supplier
through operational
efficiencies such as
implementation of
computer systems
linking customers to
BFS network
Continued focus on
all aspects of
working capital
The Company regularly
evaluates its facilities
in an effort to reduce
fixed costs without
compromising service
Focus on growing high
margin prefabricated
component business
and geographic
expansion
Acquire market-leading
distributors and
expand by adding
product offerings
and/or integrated
manufacturing facilities
15
Fully Integrated Distribution Platform
BFS has an integrated business model that differentiates it from
competitors that operate with a decentralized collection of facilities
Network of 53 distribution centers and 44 manufacturing facilities, some which are co-
located
Size of facilities tailored to each market to meet customer needs
Offering large-scale, full-service branches in larger markets and smaller, more tailored
facilities in secondary markets
Highly customized, proprietary information technology system drives internal efficiencies
allowing the Company to respond rapidly to customers and reduce their costs
BFS operates and owns the source code to its Enterprise Resource Planning (“ERP”)
computer system that is tailored to the building supply industry in addition to laser
technology that facilitates precision, speed and efficiency in the manufacturing process
16
Due to the breadth of its product offering (63,000 SKUs), BFS functions as a “one-stop shop”
Homebuilders value the convenience and efficiency of using one supplier throughout building process
BFS provides customers with a full range of services including professional installation, turn-key
framing and shell construction and design
BFS’s salespeople are typically trained homebuilders who understand the challenges that might be
encountered at the job site
Just-in-time delivery of just the right amount of product
Value-added advice and consultation on engineering, building codes and other building matters
BFS acts as both a supplier and advisor to the homebuilding customer
Supplier to
Homebuilders
Trusted Consultant
Full Offering of Manufactured Products and
Construction Services
17 17
Experienced Management Team
Frederick B. Schenkel Vice President – Manufacturing
Morris E. Tolly Senior Vice President – Operations
Floyd F. Sherman President and CEO
Chad Crow Senior Vice President and CFO
13 years of industry experience
Prior experience: Director of Accounting at Pier One Imports and five
years experience with PriceWaterhouse
48 years of industry experience
Prior experience: Area Manager at Pelican Companies, Inc.
Over 40 years of industry experience
Prior experience: Chairman & CEO of Triangle Pacific / Armstrong
Flooring
Area VPs
Over 30 years of industry experience
Prior experience: Manufacturing management positions with Builders
Supply and Lumber and The Ryland Group
Average BFS tenure of 20 years
Donald F. McAleenan Senior VP and General Counsel
20 years of industry experience
Prior experience: VP & Deputy General Counsel of Fibreboard, Asst
General Counsel of AT&E, nine years as a securities lawyer
18
Summary
Experienced
Management
Team
Full Offering of
Manufactured
Products and
Construction
Services
Diversification
into Multi-family
and Light
Commercial End
Markets
Superior
Customer
Service
Streamlined
Operations and
Attractive Cost
Position
Fully Integrated
Distribution
Platform
Leading Local
Market Positions
in Attractive
Geographies
Differentiating factors that will enhance BFS’s ability to take advantage of
anticipated housing recovery
20
Sales for 2011 were 11.2% higher than 2010 primarily due to increased sales volume
Comparing our sales growth to an 8.6% decline in U.S. single family housing starts indicates
significant market share gains
For the year, gross margins increased 150 bps, from 18.8% in 2010 to 20.3% in 2011
Margins improved 90 bps due to increased sales volume and our ability to leverage fixed costs
in cost of goods sold
Improving customer pricing, coupled with less volatility in the commodity market also
contributed to margin improvement
Margins are positioned to expand further due to operating leverage upon increased builder
demand as well as an improved commodity inventory position
Selling, general, and administrative expenses have been monitored closely by management and as a
percentage of sales decreased from 27.3% in 2010 to 24.2% in 2011 (excluding stock compensation
expense and 2010 litigation settlement)
Review of 2011 Operating Results
21
After declines in 2007-2009, revenues stabilized in 2010 and grew 11% in 2011
Historical margins demonstrate the potential for expansion from current margins as the business
builds toward historical scale and leverages a leaner cost structure
Proven ability to conserve capital through tight working capital management and reduced capital
spending
Summary Financial Performance
$mm except Sales per SF Start 2005 2006 2007 2008 2009 2010 2011
South Region Single Family Housing Starts1
831,300 756,500 539,500 323,600 232,100 247,200 229,200
South region sales per SF start $2,572 $2,728 $2,722 $3,066 $2,921 $2,833 $3,399
U.S. Single Family Housing Starts1
1,715,800 1,465,300 1,046,100 622,000 445,000 471,100 430,500
U.S. sales per SF start $1,246 $1,408 $1,404 $1,595 $1,523 $1,487 $1,810
Total Revenue $2,138.1 $2,063.5 $1,468.4 $992.0 $677.9 $700.3 $779.1
% growth -3.5% -28.8% -32.4% -31.7% 3.3% 11.2%
Gross Profit $543.4 $544.8 $363.2 $215.5 $142.4 $131.8 $157.9
% margin 25.4% 26.4% 24.7% 21.7% 21.0% 18.8% 20.3%
Operating Expenses2
$388.6 $401.5 $341.9 $280.0 $201.4 $194.1 $193.0
% revenue 18.2% 19.5% 23.3% 28.2% 29.7% 27.7% 24.8%
Adjusted EBITDA3
$172.7 $169.9 $53.2 ($32.4) ($35.1) ($43.6) ($15.0)
% margin 8.1% 8.2% 3.6% -3.3% -5.2% -6.2% -1.9%
Capex4
$29.7 $27.2 $10.1 $8.2 $2.1 $9.0 $4.8
% revenue 1.4% 1.3% 0.7% 0.8% 0.3% 1.3% 0.6%
Net Working Capital5
$182.6 $184.6 $140.4 $95.3 $53.9 $61.0 $85.8
% revenue 8.5% 8.9% 9.6% 9.6% 7.9% 8.7% 11.0%
Notes:
1 Source: U.S. Census
2 2005 operating expenses adjusted to exclude $35.5mm anti-dilution payment to stock option holders
3 See Adjusted EBITDA reconciliation on page 28
4 2005 and 2006 capex includes expansion expenditures.
5 Net working capital calculated as accounts receivable plus inventories plus other current assets minus accounts payable minus
accrued liabilities. 2008 and 2009 net working capital excludes taxes receivable of $35mm and $34mm, respectively.
Fiscal Year
22
Recent Quarterly Performance
Recent quarterly performance demonstrates strong revenue trends with five
consecutive quarters of revenue growth greater than 20%
Increasing sales per start indicates market share gains
$mm except Sales per SF Start Q1 Q2 Q3 Q4 Q1 Q2 Q3
South Region Single Family Housing Starts1
52,100 63,800 61,700 51,600 62,000 77,200 78,800
South region sales per SF start $3,125 $3,235 $3,520 $3,734 $3,539 $3,522 $3,703
U.S. Single Family Housing Starts1
89,500 123,400 117,700 99,900 105,500 151,100 151,800
U.S. sales per SF start $1,819 $1,673 $1,845 $1,929 $2,080 $1,799 $1,922
Total Revenue $162.8 $206.4 $217.2 $192.7 $219.4 $271.9 $291.8
% growth y-o-y 0.9% -2.4% 20.4% 31.0% 34.7% 31.7% 34.3%
Gross Profit $31.4 $42.8 $44.4 $39.3 $45.1 $53.7 $57.7
% margin 19.3% 20.7% 20.4% 20.4% 20.6% 19.7% 19.8%
Operating Expenses $46.7 $49.0 $50.2 $47.1 $50.8 $55.0 $58.7
% revenue 28.7% 23.7% 23.1% 24.4% 23.2% 20.2% 20.1%
Adjusted EBITDA2
($9.7) ($1.3) ($0.7) ($3.3) ($2.1) $2.1 $3.0
% margin -6.0% -0.6% -0.3% -1.7% -1.0% 0.8% 1.0%
Capex $0.5 $1.1 $1.1 $2.1 $1.7 $2.3 $5.2
% revenue 0.3% 0.5% 0.5% 1.1% 0.8% 0.8% 1.8%
Notes:
1 Source: U.S. Census
2 See Quarterly Adjusted EBITDA reconciliation on page 29
2011 2012
23
Market Share Gains
BFS sales per South Region single-family housing start for FY 2011 grew 20%
year-over-year.
Gains continued in 2012 as Q3 YTD sales per single-family start grew 9%
compared to Q3 YTD 2011.
24
Sales & Adjusted EBITDA Trends
Consistent sales and adjusted EBITDA growth
Five straight quarters of y/o/y sales growth greater than 20%
Seven straight quarters of y/o/y adjusted EBITDA improvement
In Q2 2012, achieved positive adjusted EBITDA for the first time in 19 quarters
and breakeven LTM adjusted EBITDA at the end of Q3 2012
25
September YTD 2012 Update
Sales for Q3 YTD 2012 were $783.1 million, a 33.5% increase over sales of $586.4 million for Q3
YTD 2011
Sales growth was primarily driven by volume
U.S. single family housing starts (South region) were up only 22.7% over the same period
U.S. single family units under construction (South region) were up only 3.7% over the same
period
Combination of these data points, indicate market share gains
Gross margins was 20.0% for Q3 YTD 2012 compared to 20.2% for Q3 YTD 2011. Increased sales
volume was offset by intra-quarter commodity lumber price inflation relative to quarterly customer
pricing commitments, particularly in Q2 and Q3 2012. Higher than expected sales volume resulted
in us replacing inventory during the latter half of the quarters at higher costs.
At September 30, 2012, our LTM Adjusted EBITDA had improved $23.9 million – ($0.3) million
compared to ($24.2) million for the same period in 2011
26
Capital Structure Summary
$mm 9/30/2012 Coupon Maturity Call Provisions
Cash & Cash Equivalents $90.7
Term Loan *
160.0 L+950 bps (2% Libor floor) Sep-15 Interest make-whole through Dec 2014
Second-lien Floating Rate Notes 139.7 L+1000 bps (3% Libor floor) Feb-16 Currently callable at 101
Other debt 4.1
Total Debt $303.8
Stockholders' Equity 58.9
Total Capitalization $362.7
* Financing also includes an LC facility that provides for the issuance of up to $20mm letters of credit
28
Adjusted EBITDA Reconciliation
$mm 2005 2006 2007 2008 2009 2010 2011
Net Income (Loss) $48.6 $68.9 ($23.8) ($139.5) ($61.9) ($95.5) ($65.0)
Reconciling Items:
Depreciation & amortization 16.9 20.4 22.4 20.8 17.9 15.4 14.0
Interest expense 47.2 28.7 27.7 25.6 27.0 31.7 24.9
Income tax expense (benefit) 27.0 43.3 (4.3) (17.7) (30.8) (1.1) 2.2
(Income) loss from discontinued operations, net of tax (3.6) 2.3 21.1 18.9 5.0 1.2 0.4
Asset impairments - - 0.4 46.9 0.5 0.8 -
Stock compensation expense 0.0 4.1 7.0 8.5 2.9 4.3 4.6
Litigation settlement - - - - - (1.2) -
Transaction costs - - 1.1 2.8 3.2 (0.0) 1.2
Facility closure costs 0.8 0.6 0.1 1.2 1.2 0.6 2.5
Anti-dilution payment to stock option holders 35.5 - - - - - -
Other 0.2 1.6 1.5 (0.1) (0.0) 0.2 0.2
Adjusted EBITDA $172.7 $169.9 $53.2 ($32.4) ($35.1) ($43.6) ($15.0)
Fiscal Year
29
Quarterly Adjusted EBITDA Reconciliation
$mm Q1 Q2 Q3 Q4 Q1 Q2 Q3
Net Loss ($21.2) ($15.5) ($11.6) ($16.7) ($19.2) ($12.1) ($13.6)
Reconciling Items:
Depreciation & amortization 3.7 3.5 3.4 3.5 2.9 2.5 2.9
Interest expense 5.9 5.7 5.3 8.1 13.1 10.5 10.6
Income tax expense (benefit) (0.0) 1.7 0.3 0.3 0.2 0.1 0.0
Loss from discontinued operations, net of tax 0.1 0.1 0.1 0.1 0.1 0.1 1.3
Stock compensation expense 1.1 0.9 1.7 0.9 0.8 0.9 0.9
Transaction costs 0.9 0.3 - - - 0 0
Facility closure costs 0.0 1.9 0.1 0.4 0.1 0.1 0.7
Other (0.1) 0.1 (0.0) 0.1 0.0 (0.0) 0.0
Adjusted EBITDA ($9.7) ($1.3) ($0.7) ($3.3) ($2.1) $2.1 $3.0
2011 2012