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US LBM Reports $38.3M Net in 2018; No Current Plans to Go Public

US LBM swung to a $38.3 million profit in 2018 from a $10.9 million loss the year before on an 8.3% rise in sales to $3.35 billion, the dealer has reported.

Its little-noticed SEC filing on March 8 also revealed its gross margin inched up to 27.6% last year from 27.4% in 2017. Operating income shot up 49.6% to $131.5 million.

EBITDA (earnings before interest, taxes, depreciation and amortization) jumped 19.1% to $215.9 million. Adjusted EBITDA--the benchmark that US LBM prefers to use--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.

Sales at stores in business during all of 2018 grew 5.4% from 2017. That’s a slowdown from the 6.6% and 8.0% gains that the same-store category showed in 2017 and 2016, respectively.

The balance sheet as of Dec. 31 shows that goodwill accounts for $678.2 million of the company’s $1.85 billion in total assets. On the liabilities side, US LBM has $1.03 billion in long-term debt that’s not currently due.

US LBM revealed its numbers in an update to an S-1 registration statement that it first filed in May 2017. This Securities and Exchange Commission document typically is filed as a precursor to making an initial public offering (IPO). But President and CEO L.T. Gibson said March 12 of IPO prospects that, “in this environment, that’s probably unlikely.”

Doing an IPO “is an option. I wouldn’t say it’s a strategy,” Gibson told attendees in Tucson, Ariz. at an annual joint meeting of the North American Wholesale Lumber Association and the Western Wood Products Association. “Every quarter we assess what’s the best way to go forward.”

Created in 2009, US LBM now has 251 locations in 30 states. Its S-1 filing says that during the last seven years, comparable location sales have grown on average 3.5% faster than the markets they're in.

Roughly 28% of the sales are for wood products, Gibson said. That’s followed by windows, doors, and millwork, at 18%; wallboard and metal studs, 17%, roofing and siding, 11%; engineered components, 10%; cabinets, 5%; and hardlines and other products and services, 11%.

As for customers, custom builders figure in 35% of the sales, production builders 20%, multifamily 13%, repair and remodel 17%, commercial 10%, and all others, 6%.

All told, the company has more than 30,000 customers, and relationships with more than 2,000 suppliers. “We want geographic diversity, product diversity, and customer diversity,” Gibson said.

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