Slide 1: First Quarter 2019
First Quarter 2019 _____________ Jerry Volas, CEO May 7, 2019 Robert Buck, President & COO John Peterson, CFO
Slide 2: Safe Harbor
Safe Harbor 2 Statements contained in this presentation that are not historical and reflect our views about future periods and events, including our future performance, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
Slide 3: U.S. Housing Overview
U.S. Housing Overview 3 First Quarter 2019 ▪ Affordability issues improving • Mortgage rates have declined from 2018 high • Input costs, including lumber, moderating ▪ Builders focusing on entry level homes ▪ Inventory tight ▪ Job and wage growth strong ▪ Starts remain well below historical level of
Slide 4: Financial Highlights
Financial Highlights 4 First Quarter 2019 ▪ 26.0% revenue growth, 7.1% same branch ▪ 250 bps gross margin expansion ▪ 12.0% adjusted EBITDA margin, up 260 bps ▪ 22.3% incremental EBITDA margin • 32.2% same branch • 18.6% acquisitions ▪ 45.2% increase in adjusted EPS to $1.06 Leveraging Our Unique Di
Slide 5: Capital Allocation
Capital Allocation 5 First Quarter 2019 ▪ Acquisitions number one priority • Acquired 10 companies since 2016 • Generating over $500M of annual revenue ▪ Robust pipeline of acquisition targets • Core products and services primary focus ▪ Disciplined and strategic approach to adjacent product categor
Slide 6: Financial Overview
Financial Overview 6 First Quarter 2019 ($ in 000s) Three Months Ended March 31, 2019 Sales $619,330 Y-O-Y Change 26.0% Adjusted Operating Profit* $59,097 Y-O-Y Change 54.8% Adjusted Operating Margin* 9.5% Y-O-Y Change 170 bps Adjusted EBITDA* $74,544 Y-O-Y Change 62.0% Adjusted EBITDA Margin* 12.0%
Slide 7: Adjusted EPS
Adjusted EPS 7 First Quarter 2019 ($ in 000s) Three Months Ended March 31, 2019 2018 Income before income taxes, as reported $ 47,349 $ 31,603 Rationalization charges 1,827 797 Acquisition related costs 652 3,482 Income before income taxes, as adjusted 49,828 35,882 Tax rate at 26.5% and 27.0% for 2
Slide 8: CapEx, Working Capital & Cash Flow
CapEx, Working Capital & Cash Flow 8 First Quarter 2019 ($ in 000s) Three Months Ended March 31, 2019 CAPEX $10,213 Working Capital % to Sales (using Pro Forma LTM sales) 12.1% Operating Cash Flow $23,522 Cash Balance $98,278 Strong Cash Flow Generation
Slide 9: Leverage
Leverage 9 First Quarter 2019 2.8x Total Debt $746.4 2.5x Less Cash 98.3 TARGET 2.19x LEVERAGE Net Debt $648.1 RANGE 2.05x 2.0x Adj. EBITDA1 $315.5 Leverage 2.05x 3/31/2018 12/31/2018 3/31/2019 1. Proforma LTM EBITDA Rapidly De-Leveraging and Well Within Our Targeted Range
Slide 10: 2019 Outlook
2019 Outlook 10 First Quarter 2019 REVENUE ADJUSTED EBITDA* $2,610M to $2,670M $330M to $350M ✓ Low end raised by $40M ✓ Low end raised by $20M ✓ High end raised by $35M ✓ High end raised by $20M Assumes Housing Starts Between 1.26M and 1.3M * See slides 17 & 19 for adjusted EBITDA reconciliation an
Slide 11: Same Branch Sales up 10.5% Strong Residential & Commercial Capturing Share
11 First Quarter 2019 ($ in 000s) Three Months Ended March 31, 2019 Sales $449,383 Y-O-Y Change 36.4% Adjusted Operating Profit* $51,542 Y-O-Y Change 74.4% Adjusted Operating Margin* 11.5% Y-O-Y Change 250 bps Same Branch Sales up 10.5% Capturing Share Strong Residential & Commercial Great Operation
Slide 12: Continued Solid Performance as We Drive Profitable Growth
12 First Quarter 2019 ($ in 000s) Three Months Ended March 31, 2019 Sales $204,464 Y-O-Y Change 8.9% Adjusted Operating Profit* $20,706 Y-O-Y Change 15.5% Adjusted Operating Margin* 10.1% Y-O-Y Change 60 bps Continued Solid Performance as We Drive Profitable Growth * See slides 18 for GAAP to non-GA
Slide 13: Strong Commercial Growth
Strong Commercial Growth 13 First Quarter 2019 ▪ $5B industry • Estimate BLD is largest industry player with high single-digit share • Very fragmented, specialized players ▪ Compared to residential new construction commercial: • Higher barriers to entry • Operates on a different cycle • Offers highe
Slide 14: Fiberglass
Fiberglass 14 First Quarter 2019 ▪ Price increase in January had some traction ▪ Expect second price increase in 2019 • Traction highly dependent on industry demand and housing starts ▪ More supply available vs. a year ago ▪ Spray foam continues to grow in acceptance High Confidence in Strength, Sta
Slide 15: Competitive Operational Advantages
Competitive Operational Advantages 15 First Quarter 2019 ▪ Integrated systems helps drive results • Share labor and material • Compare and rank branches and product performance • On-going focus on bottom quartile ▪ Local empowerment culture • Drives operational excellence and profitable growth ▪ Bes
Slide 16: Appendix
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Slide 17: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 17 First Quarter 2019 ($ in 000s) Three Months Ended March 31, 2019 2018 Net income, as reported $ 37,983 $ 26,388 Adjustments to arrive at EBITDA, as adjusted: Interest expense and other, net 9,269 2,290 Income tax expense 9,366 5,215 Depreciation and amortization 12,
Slide 18: Segment GAAP to Non-GAAP Reconciliation
Segment GAAP to Non-GAAP Reconciliation 18 First Quarter 2019 ($ in 000s) Three Months Ended March 31, 2019 2018 Change Installation Sales $ 449,383 $ 329,394 36.4 % Operating profit, as reported $ 51,299 $ 29,330 Operating margin, as reported 11.4 % 8.9 % Rationalization charges 118 217 Acquisition
Slide 19: Reconciliation Table
Reconciliation Table 19 First Quarter 2019 ($ in 000,000s) Twelve Months Ending December 31, 2019 Low High Estimated net income $ 160.1 $ 183.0 Adjustments to arrive at estimated EBITDA, as adjusted: Interest expense and other, net 38.9 35.9 Income tax expense 57.7 66.0 Depreciation and amortization