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LBM's Generally Good 4Q Results Will Be Hard to Repeat at Lumber-Heavy Firms This Quarter



With BlueLinx finally reporting on March 13 and an unexpected filing last week from US LBM, you now can see above how eight of the biggest dealers and distributors fared during the final three months of 2018. Just about every dealer saw gross margins rise in the October-to-December period from the previous quarter and from their year-earlier status, while adjusted EBITDA margins generally held steady.


But the numbers might not look different for the lumberyards in the first quarter. Both BFS and BMC predicted declines in sales revenue this year from last because lumber prices are so much lower today compared with 2018. On the other hand, margins could rise.


Officials at Builders FirstSource forecast that sales for January through March will show, percentage-wise, a decline in the low single digits, while BMC's leaders estimated sales could be 1.7% to 7.6% lower.


That's what happens when the spot prices for framing lumber and panels are 30% lower this year than they were in the same period a year earlier, as the latest Random Lengths report indicates. At the same time, BFS predicts its gross margins for all product sales will go up as much as 200 basis points this quarter.


Higher lumber prices also likely contributed to the 8.3% rise in sales to $3.35 billion that US LBM reported for all 2018. The company swung to a $38.3 million profit in 2018 from a $10.9 million loss the year before. Adjusted EBITDA climbed 6.9% to $236.2 million. That equals 7.1% of sales, the same adjusted EBITDA margin that US LBM had in 2017 as well as 2016. (See related story.)


US LBM hadn't reported any of its numbers since it made a mid-year report last August. It ended its silence on March 8 when it updated the S-1 filing it first made in May 2017 to set itself up for an initial public offering. But since then, it hasn't gone further than providing new numbers. President and CEO L.T. Gibson told attendees at a lumber distributor and producers' conference on March 12 that US LBM reviews the IPO option periodically.


Meanwhile, distributors continued to face challenges. Huttig's results reflected the investments it is making to build its new Grip-Rite business, while BlueLinx is still absorbing the Cedar Creek acquisition it made last April and is still confident it will generate synergies from that deal.

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