Builders FirstSource leverage ratio drops from record adjusted EBITDA

By Devika Patel

Knoxville, Tenn., May 10 – Builders FirstSource, Inc. saw its net leverage ratio fall to 0.9x as of the end of the last quarter after the company generated a record $1 billion of adjusted EBITDA during the quarter.

As of March 31, Builders FirstSource’s last 12 months’ adjusted EBITDA was $3.6 billion and net debt was $3.1 billion, bringing the company’s net leverage ratio down to 0.9x from 1.2x a year ago.

“Our pro forma net debt-to-EBITDA ratio was approximately 0.9x,” chief financial officer Peter Jackson said on the company’s first quarter ended March 31 earnings conference call on Tuesday.

“Excluding our ABL, we have no long-term debt maturities until 2027,” he said.

The company generated $1 billion of adjusted EBITDA in the first quarter, a record high.

“We entered the first quarter of 2022 building on that strong momentum and delivered another quarter of record net sales, gross margin and adjusted EBITDA,” Jackson said.

As of March 31, liquidity was $1.2 billion, consisting of approximately $900 million in net borrowing availability under the company’s revolving credit facility and $281,802,000 of cash on hand.

Long-term debt, net of current maturities, was $3,391,629,000 as of March 31, 2022, compared to $2,926,122,000 as of Dec. 31, 2021.

Current maturities of long-term debt were $2,914,000 as of March 31, 2022, compared to $3.66 million as of Dec. 31, 2021.

On Jan. 19, Builders FirstSource priced a $300 million add-on to its 4¼% senior notes due Feb. 1, 2032 (Ba2/BB-) at 100.5 to yield 4.188% in a drive-by. The deal settled on Jan. 21.

The issue price came at the rich end of the 100 to 100.5 price talk. Initial talk was in the 100 area.

BofA Securities Inc. was at the left of a syndicate of deal managers that also included Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Truist Securities Inc. and Wells Fargo Securities LLC.

Proceeds were earmarked to repay debt under the company’s ABL facility.

On Feb. 8, the company increased the commitments under its $1.4 billion asset-based revolving credit facility by up to $400 million.

Truist Bank is the administrative agent of the amended and restated $1.8 billion ABL facility, which matures Dec. 17, 2026.

Borrowings will bear interest at the SOFR plus a margin of either 135 basis points or 160 bps, based on utilization. The margins are 10 bps higher than under the previous version of the agreement. No other material changes were made to the agreement.

The company will also pay customary commitment fees and letter-of-credit fees.

Truist, Bank of America, NA and Wells Fargo Bank, NA were the joint lead arrangers and bookrunners for the amendment.

Builders FirstSource is a Dallas-based building products manufacturer and distributor.

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