Builders FirstSource Reports Financial Results

DALLAS, Feb. 22, 2007 (PRIME NEWSWIRE) -- Builders FirstSource, Inc. (Nasdaq:BLDR), a leading supplier and manufacturer of structural and related building products for residential new construction in the United States, today reported financial results for its fourth quarter and fiscal year ended December 31, 2006.

  2006 Financial Highlights  * Sales - Q4 $438.6 million, FY $2,239.5 million  * Gross margin - Q4 26.0 percent of sales, FY 26.2 percent of sales  * Net income - Q4 $3.9 million, FY $68.9 million  * Net income per diluted share - Q4 $0.11, FY $1.91  * Diluted weighted average shares outstanding - Q4 36.1 million,    FY 36.0 million

"Even though we are facing the reality of a housing downturn, I want to highlight some of our achievements in 2006," said Floyd Sherman, Builders FirstSource Chief Executive Officer. "First, we continued to grow market share. Our fiscal 2006 sales decreased only 4.2 percent while housing activity in our markets decreased 14.2 percent, and commodity deflation reduced our sales by 3.4 percent. Second, we effectively managed pricing and controlled costs as our gross margin percentage improved 90 basis points. And finally, we adjusted our operating cost structure as housing demand fell rapidly during the second half of the year. As a result of these actions and strong housing activity in the first half of the year, our EBITDA as a percentage of sales was an impressive 7.5 percent for fiscal 2006."

Sherman continued, "Our business is based on relationships. Our people in the field are critical in building and maintaining customer relationships in order to increase our market share. I want to thank all of our employees for their hard work and sacrifice given the current operating conditions."

  Fourth Quarter 2006 Financial Results Compared   to Fourth Quarter 2005  ----------------------------------------------  (See accompanying financial schedules for full financial   details and reconciliations of Non-GAAP financial measures   to their GAAP equivalents.)    * Sales were $438.6 million compared to $565.9 million. This 22.5      percent sales decline was primarily driven by an estimated 32.2      percent decrease in housing activity within the company's      markets. Also, commodity lumber and lumber sheet goods prices had      a 6.2 percent negative effect on sales. These non-controllable      sales drivers were partially offset by sales growth attributable      to market share gains of approximately 13.6 percent and sales      growth from new operations of 2.3 percent.    * Net income was $3.9 million compared to $19.5 million. Net      income for the fourth quarter 2006 included stock-based      compensation expense of $0.6 million (net of tax) as the company      adopted Statement of Financial Accounting Standards No. 123      (Revised 2004), Share-Based Payment, ("SFAS No. 123R") on January      1, 2006. The company's effective tax rate was 50.4 percent as the      company established approximately $0.9 million of additional      reserves in connection with various tax audits which are      underway.    * Net income per diluted share was $0.11 in 2006, including $0.02      related to the aforementioned stock-based compensation expense,      compared to $0.56 in 2005.    * Diluted weighted average shares outstanding were 36.1 million      compared to 35.1 million.    * Gross margin percentage was up slightly at 26.0 percent,      compared to 25.8 percent. The margin expansion was primarily      driven by declining procurement prices and effective pricing      management, resulting in higher margins for the prefabricated      components and lumber & lumber sheet goods categories.    * Selling, general and administrative ("SG&A") expenses decreased      $9.2 million. As a percentage of sales, however, SG&A increased      from 19.2 percent in 2005 to 22.7 percent in 2006. Lower market      prices for lumber products increased the 2006 percentage by 170      basis points as many variable costs do not adjust with changes in      price. Stock compensation expense, which was not present in 2005,      added 27 basis points.    * In order to align its workforce with customer demand, the      company reduced the number of full-time equivalent employees by      18.2 percent during the fourth quarter 2006. However, fourth      quarter expenses did not reflect the full benefit of these      actions as most of the headcount reductions occurred late in the      quarter.    * EBITDA was $20.8 million, or 4.7 percent of sales, compared to      $42.4 million, or 7.5 percent of sales.