2. CLICK TO EDIT TITLEDISCLAIMER
2
Forward-Looking Statements
This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this
document may include, without limitation, statements regarding sales growth, price changes, earnings performance, strategic direction and the demand for our products.
Forward-looking statements are typically identified by words or phrases such as "may," "might," "predict," "future," "seek to," "assume," "goal," "objective," "continue," "will,"
"could," "should," "would," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "prospects," "guidance," "possible," "predict," "propose," "potential"
and "forecast," or the negative of such terms and other words, terms and phrases of similar meaning. Forward-looking statements involve estimates, expectations,
projections, goals, forecasts, assumptions, risks and uncertainties, many of which are outside BMC's control. BMC cautions readers that any forward-looking statement is
not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement; therefore, investors and
shareholders should not place undue reliance on such statement. There are a number of risks and uncertainties that could cause actual results to differ materially from the
forward-looking statements included in this communication. A number of important factors could cause actual results to differ materially from those indicated by the forward-
looking statements. These factors include without limitation: the state of the homebuilding industry and repair and remodeling activity, the economy and the credit markets;
seasonality and cyclicality of the building products supply and services industry; competitive industry pressures and competitive pricing pressure from our customers and
competitors; inflation or deflation of prices of our products; our exposure to product liability, warranty, casualty, construction defect, contract, tort, employment and other
claims and legal proceedings; our ability to maintain profitability; the impact of our indebtedness; the various financial covenants in our secured credit agreement and senior
secured notes indenture; our concentration of business in the Texas, California and Georgia markets; the potential negative impacts from the significant decline in oil prices
on employment, home construction and remodeling activity in Texas (particularly the Houston metropolitan area) and other markets dependent on the energy industry; our
ability to retain our key employees and to attract and retain new qualified employees, while controlling our labor costs; product shortages, loss of key suppliers or failure to
develop relationships with qualified suppliers, and our dependence on third-party suppliers and manufacturers; the implementation of our supply chain and technology
initiatives; the impact a housing market decline may have on our business, including the potential for impairment losses or the closing or idling of under-performing
locations; the impact of long-term non-cancelable leases at our facilities; our ability to effectively manage inventory and working capital; the credit risk from our customers;
the impact of pricing pressure from our customers; our ability to identify or respond effectively to consumer needs, expectations or trends; our ability to successfully
implement our growth strategy; the impact of federal, state, local and other laws and regulations; the impact of changes in legislation and government policy; the impact of
unexpected changes in our tax provisions and adoption of new tax legislation; our ability to utilize our net operating loss carryforwards; the potential loss of significant
customers or a reduction in the quantity of products they purchase; natural or man-made disruptions to our distribution and manufacturing facilities; our exposure to
environmental liabilities and subjection to environmental laws and regulation; the impact of disruptions to our information technology systems; cybersecurity risks; risks
related to the continued integration of Building Materials Holding Corporation and Stock Building Supply Holdings, Inc. and successful operation of the post-merger
company; our ability to operate on multiple Enterprise Resource Planning information systems and convert multiple systems to a single system; and other factors discussed
or referred to in the "Risk Factors" section of BMC's most recent Annual Report on Form 10-K filed with the SEC on March 1, 2017.All such factors are difficult to predict
and are beyond BMC's control. All forward-looking statements attributable to BMC or persons acting on BMC's behalf are expressly qualified in their entirety by the
foregoing cautionary statements. All such statements speak only as of the date made, and BMC undertakes no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise, unless otherwise required by law.
Basis of Presentation
On December 1, 2015, the merger (the “Merger”) of Stock Building Supply Holdings, Inc. (“SBS” or “Legacy SBS”) with Building Materials Holding Corporation (“Legacy
BMC”) was completed. Some of this presentation includes financial and operating results, plans, objectives, expectations and intentions, and other statements that are not
historical facts related to the Merger. The Merger was accounted for as a “reverse acquisition” under the acquisition method of accounting, with Legacy SBS treated as the
legal acquirer and Legacy BMC treated as the acquirer for accounting purposes. As such, the Company has accounted for the Merger by using Legacy BMC historical
information and accounting policies and adding the assets and liabilities of Legacy SBS as of the completion date of the Merger at their estimated fair values. As a result,
current year results reported pursuant to U.S. generally accepted accounting principles (“GAAP”) are not comparable to periods prior to the completion of the Merger.
3. CLICK TO EDIT TITLENON-GAAP (ADJUSTED) FINANCIAL MEASURES
3
Adjusted net sales, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted net income per diluted share are intended as supplemental measures of
the Company’s performance that are not required by, or presented in accordance with, GAAP. The Company believes that Adjusted net sales, Adjusted EBITDA, Adjusted
EBITDA margin, Adjusted net income and Adjusted net income per diluted share provide useful information to management and investors regarding certain financial and
business trends relating to the Company’s financial condition and operating results.
• Adjusted net sales is defined as BMC net sales plus pre-Merger SBS net sales.
• Adjusted EBITDA is defined as BMC net income (loss) plus pre-Merger SBS (loss) income from continuing operations, interest expense, income tax expense (benefit),
depreciation and amortization, Merger and integration costs, restructuring expense, inventory step-up charges, non-cash stock compensation expense, loss on debt
extinguishment, headquarters relocation expense, insurance deductible reserve adjustment and fire casualty loss, loss on portfolio transfer, acquisition costs and other
items and impairment of assets.
• Adjusted EBITDA margin is defined as Adjusted EBITDA divided by net sales or, for 2015 and prior periods, Adjusted net sales.
• Adjusted net income is defined as BMC net income plus merger and integration costs, non-cash stock compensation expense, impairment of assets, loss on debt
extinguishment, other items and after-tax effecting those items.
• Adjusted net income per diluted share is defined as Adjusted net income divided by diluted weighted average shares.
Company management uses Adjusted net sales, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted net income per diluted share for trend
analyses, for purposes of determining management incentive compensation and for budgeting and planning purposes. Adjusted net sales and Adjusted EBITDA are used
in monthly financial reports prepared for management and the board of directors. The Company believes that the use of Adjusted net sales, Adjusted EBITDA, Adjusted
EBITDA margin, Adjusted net income and Adjusted net income per diluted share provide additional tools for investors to use in evaluating ongoing operating results and
trends and in comparing the Company’s financial measures with other distribution and retail companies, which may present similar non-GAAP financial measures to
investors. However, the Company’s calculation of Adjusted net sales, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted net income per
diluted share are not necessarily comparable to similarly titled measures reported by other companies. Company management does not consider Adjusted net sales,
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted net income per diluted share in isolation or as alternatives to financial measures determined
in accordance with GAAP. The principal limitation of Adjusted EBITDA and Adjusted net income is that they exclude significant expenses and income that are required by
GAAP to be recorded in the Company’s financial statements. Some of these limitations are: (i) Adjusted EBITDA and Adjusted net income do not reflect changes in, or
cash requirements for, working capital needs; (ii) Adjusted EBITDA does not reflect interest expense, or the requirements necessary to service interest or principal
payments on debt; (iii) Adjusted EBITDA does not reflect income tax expenses or the cash requirements to pay taxes; (iv) Adjusted net income and Adjusted EBITDA do not
reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; (v) although depreciation and amortization charges are non-
cash charges, the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA and Adjusted net income do not reflect any
cash requirements for such replacements and (vi) Adjusted net income and Adjusted EBITDA do not consider the potentially dilutive impact of issuing non-cash stock-based
compensation. In order to compensate for these limitations, management considers Adjusted net sales, Adjusted EBITDA and Adjusted net income in conjunction with
GAAP results. Readers should review the reconciliations of net sales to Adjusted net sales, net income (loss) to Adjusted EBITDA and Adjusted net income, included in the
Appendix, and should not rely on any single financial measure to evaluate the Company’s business.
4. CLICK TO EDIT TITLEHURRICANE UPDATE
• No significant damage to any of our facilities
• Houston locations closed for approximately 6 business days; N. FL and
Georgia locations closed for 1-2 days, primarily due to power outages
• Estimated Impact on Q3 Numbers from Harvey and Irma:
– $12 million - $15 million in revenue, or 1.6% negative impact to the top-line
– $2 million of Adjusted EBITDA1
4
• Our people are priority #1
• We will be there for them and for the community when the rebuilding begins
1. Adjusted EBITDA is a non-GAAP financial measure. See Non-GAAP (Adjusted) Financial Measures pages of this presentation for definition of Adjusted EBITDA.
5. CLICK TO EDIT TITLETHIRD QUARTER 2017 HIGHLIGHTS
5
Achieved
Growth
Ready-Frame®
Success
Improved
Leverage and
Cost Savings
• Improved SG&A leverage by 50 basis points, excluding litigation expense
• $1.7 million in cost savings from synergies, primarily within SG&A
Increased Cash
Flow
• Cash provided by operating activities increased by $12.5 million to $37.0
million
• Delivered $47 million in Q317 Ready-Frame® net sales
• Expect $150 million to $170 million in net sales for full year 2017
• Continue to expect in Ready-Frame® sales in excess of $300 million by 2020
• Q317 top line sales growth of 8.9% per day despite hurricane impacts
• Structural Components growth of 17.5%
• Improved Net Income, EPS, Adjusted EBITDA1 and Cash Flow from
Operations
1. Adjusted EBITDA is a non-GAAP financial measure. See Non-GAAP (Adjusted) Financial Measures pages of this presentation for definition of Adjusted EBITDA.
6. CLICK TO EDIT TITLE
Reduce Cost Structure
Gain Efficiencies Using Lean Principles
Best-in-Class Customer Service
EXPECT TO DELIVER BEST-IN-CLASS FINANCIAL PERFORMANCE
THROUGH OPERATIONAL EXCELLENCE, CUSTOMER SERVICE
LEADERSHIP, AND INNOVATION
6
Using Lean principles to identify opportunities and create best practices to improve
service, increase efficiencies and remove costs from the business.
Increase Productivity
Drive Continuous Improvement
7. CLICK TO EDIT TITLEREADY-FRAME® - POISED TO DRIVE FUTURE GROWTH
OPPORTUNITY TO TRANSITION COMMODITY LUMBER SALES TO VALUE-ADDED
7
Less Risk. Less Labor. Less Cost
$29
$150 - $170
FY 2013 FY 2014 FY 2015 FY 2016 FY 2017
projected
Ready-FrameSales(dollarsinmillions)
READY-FRAME video:
https://www.youtube.com/watch?v=REv665u2QRI
8. CLICK TO EDIT TITLE
$821.2
$881.0
$18.5
$36.9
$30.8
$12.8
$13.5
$700
$725
$750
$775
$800
$825
$850
$875
$900
$925
Q3 '16 Sales Acquisitions Commodity
Inflation
Adjusted
Volume Growth
Chg in Sales
Days
Hurricane
Impact
Q3 '17 Sales
Q3 2017 FINANCIAL RESULTS
8
Q3 2017 Net Sales Bridge Q3 2017 Commentary1
1. Adjusted EBITDA is a non-GAAP financial measure. See Non-GAAP (Adjusted) Financial Measures pages of this presentation for definition of Adjusted EBITDA.
2. Adjusted volume growth excludes the impacts of one less selling day during Q3 17 as compared to Q3 16 and the estimated hurricane impacts on sales; total (unadjusted) sales volume growth for Q317 is estimated to be 0.5%, or approximately $4.4 million.
3. Q316 Adjusted EBITDA included approximately $3.1 million of additional supplier consideration that related to inventory purchases made in the first half of 2016. This benefit resulted from certain supplier agreements with enhanced terms retroactive to
January 1, 2016.
2
Q3 2017 Adjusted EBITDA1 Bridge
$58.2
$59.3
$1.7
$1.7
$5.0
$3.1
$1.7
$2.4
$50
$52
$54
$56
$58
$60
$62
$64
$66
$68
Q3 '16
EBITDA
PY Rebate
Benefit
Acquisitions Synergies Other
Improvements
Change in
Sales Days
Hurricane
Impact
Q3 '17
EBITDA3
Total Q317 net sales growth of 7.3% (8.9% growth
per sales day):
4.5% from commodity price inflation
2.3% from acquisitions
0.5% from volume growth
$12.0 million - $15.0 million negative sales impact
from hurricanes
$12.8 million negative sales impact from one less
selling day
Gross profit up 3.2% but gross margin percentage
declines due to:
$3.1 million prior year benefit from supplier
consideration related to H1 ‘16 purchases
Increased sales mix from lower margin lumber and
lumber sheet goods category
50 bps gross margin decline in lumber
Millwork, windows and doors sales decline 2.8% on
hurricane impacts, one less selling day and multi-
family weakness
Adjusted EBITDA1 improves to $59.3 million
Approximately $8.4 million in benefits from
acquisitions, synergies and ops improvements
Partially offset by change in sales days, hurricane
impact and absence of prior year rebate benefit
Operational
Improvements
9. CLICK TO EDIT TITLE
• Focused on adding to our extensive value-added (and higher-margin)
product and service capabilities
– Aggressive approach to operational excellence and customer service leadership
– Over 40% of net sales derived from millwork, windows, doors and structural components
• Favorable Industry Trends
• Strong balance sheet with low levels of debt
• Poised to act on robust pipeline of M&A bolt-on opportunities in a very
fragmented industry
– Targeted investments to drive higher-margin product and/or customer categories
• Innovative solutions, such as Ready-Frame, drive additional growth
– Providing solutions to labor shortage & shortening the cash conversion cycles for builders
• Strong financial record of growth:
DRIVING LONG-TERM SHAREHOLDER VALUE
9
$2.4 $2.6
$2.8
$3.1
$3.3
$2.0
$3.0
2013 2014 2015 2016 LTM
Sep
2017
Adjusted Net Sales1
$93 $114
$130
$194 $197
$50
$100
$150
$200
$250
2013 2014 2015 2016 LTM
Sep
2017
Adjusted EBITDA1
$ in billions
$ in millions
1. Adjusted net sales and Adjusted EBITDA are non-GAAP financial measures. See Non-GAAP (Adjusted) Financial Measures pages of this presentation for definition of Adjusted net sales and Adjusted EBITDA.
11. CLICK TO EDIT TITLESTRONG BALANCE SHEET TO SUPPORT GROWTH
FLEXIBILITY FOR CONTINUED INVESTMENTS AND DISCIPLINED, ACCRETIVE M&A
11
Improving Adjusted EBITDA1 trends
Working capital usage ~12-13% of sales
Full Year 2017 CAPEX expected to be $65 to $75
million
2017 depreciation expense expected to be $53 to $55
million
2017 amortization expense expected to be $16 to $17
million(2)
2017 interest expense expected to be $25 to $26
million
Targeting $48 to $52 million of annual run rate cost
synergies by the end of 2017
Attractive Cash Flow Dynamics
9/30/2017 Long-Term Debt
$396.2 million
Long-Term Debt/ LTM 9/30/2017
Adjusted EBITDA (1)
2.0x
$375 million revolving ABL facility with extended
maturity; $51.8 million outstanding borrowings at
9/30/2017
$256 million of availability for strategic investments
and seasonal working capital needs
$350 million 5.5% Senior Secured Notes
maturing 2024
Longer-term leverage target of 2.0x to 3.0x
allows flexibility to make strategic investments
Balance Sheet Positioned to Invest
1. Adjusted EBITDA is a non-GAAP financial measure. See Non-GAAP (Adjusted) Financial Measures pages of this presentation for definition of Adjusted EBITDA.
12. CLICK TO EDIT TITLE
Incremental opportunities from best practices:
Millwork and components manufacturing
Ready-Frame
Logistics, design and eCommerce capabilities
Working capital optimization
$15 million of integration costs in 2016; $15 to $18 million expected in 2017, primarily related to associate severance and system
integration costs
Synergy
Category Description of Benefit
Cumulative Cost
Savings Recorded
through Sep 30, 2017
YE 2017 Annual
Run Rate Synergy
Expectations(1)
Sales, General &
Administrative
and Other Costs
Rationalization of corporate and branch support costs
Common casualty insurance and employee benefit
programs
Fleet and indirect spend programs
Select consolidation of branches in overlapping
markets
$16.7m $21m to $22m
Sourcing and
Supply Chain
(Cost of Goods
Sold)
Alignment of suppliers to optimize purchase quantities
Extend ‘one-step’ supplier sourcing relationships
across combined company
Improve supplier rebates and discounts by leveraging
combined larger purchase volume
$24.1m $27m to $30m
Total $40.8m $48m to $52m
Moving Quickly to Capture Value
1. Estimated run-rate cost savings represents annualized savings at the end of 2017.
TIGHTLY MANAGED INTEGRATION PLAN
TO EXTRACT SYNERGIES AND LEVERAGE UNIQUE CAPABILITIES
12
16. BMC STOCK HOLDINGS RECONCILIATION OF NON-GAAP ITEMS
ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
(in $ths, except per share amounts) Q3 2017 Q3 2016
Net income 18,443 9,236
Merger and integration costs 2,574 4,655
Non-cash stock compensation expense 1,366 1,851
Loss on debt extinguishment - 12,529
Impairment of assets 409 -
Other Items (a) 2,950 -
Tax effect of adjustments to net income (b) (2,693) (6,927)
Adjusted net income 23,049 21,344
Diluted weighted avg. shares used to calculate Adjusted net income per diluted share 67,442 67,085
Adjusted net income per diluted share $0.34 $0.32
16
(a) Represents expense incurred during the three months ended September 30, 2017 related to pending litigation.
(b) The tax effect of adjustments to net income was based on the respective transactions’ income tax rate, which was 36.9% and 37.6% for the three months
ended September 30, 2017 and 2016, respectively. The tax effect of adjustments to net income for the three months ended September 30, 2017 and
2016 exclude approximately $0.0 million and $0.6 million, respectively, of non-deductible Merger, integration and acquisition costs.