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BMC Stock Holdings, Inc. Investor Presentation March 2016
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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 the control of BMC Stock Holdings, Inc. (“BMC Stock” or the “Company”). BMC Stock 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. Such forward-looking statements include, but are not limited to, statements about the benefits of the recently completed merger (the “Merger”) of Stock Building Supply Holdings, Inc. (“SBS”) with Building Material Holdings Corporation (“BMC”), including future financial and operating results, plans, objectives, expectations and intentions, and other statements that are not historical facts. 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. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include risks and uncertainties relating to: the risk that the BMC business will not be integrated successfully or that such integration will take longer, be more difficult, time-consuming or costly to accomplish than expected; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; disruption from the transaction may make it more difficult to maintain relationships with customers, employees or suppliers; the diversion of management time on Merger-related issues; general worldwide economic conditions and related uncertainties; changes in the markets for BMC Stock's business segments; unanticipated downturns in business relationships with customers; competitive pressures on the Company's sales and pricing; increases in the cost of material, energy and other production costs, or unexpected costs that cannot be recouped in product pricing; the introduction of competing technologies; unexpected technical or marketing difficulties; unexpected claims, charges, litigation or dispute resolutions; the effect of changes in governmental regulations; and other factors discussed or referred to in the "Risk Factors" section of BMC Stock's most recent Annual Report on Form 10-K filed with the SEC on March 15, 2016, and our subsequent filings with the SEC. All such factors are difficult to predict and are beyond BMC Stock's control. All forward-looking statements attributable to BMC Stock or persons acting on BMC Stock'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 Stock undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Basis of Presentation The Merger was accounted for as a “reverse acquisition” under the acquisition method of accounting, with SBS treated as the legal acquirer and BMC treated as the acquirer for accounting purposes. As such, the Company has accounted for the Merger by using BMC historical information and accounting policies and adding the assets and liabilities of SBS as of the completion date of the Merger at their estimated fair values. The Company’s fourth quarter and full year 2015 results include SBS’s operations from the date of the Merger through December 31, 2015 (the “stub” period), which contributed $103.6 million of net sales. As a result, current year results reported pursuant to U.S. generally accepted accounting principles (“GAAP”) are not comparable to prior periods. For informational purposes only, the Company has furnished Adjusted financial information. The Adjusted financial information combines the historical results of BMC Stock with the pre-Merger results of SBS. The Adjusted financial information has not been prepared in accordance with GAAP, and is based upon currently available information and assumptions deemed appropriate by the Company’s management. This Adjusted financial information is not necessarily indicative of what the Company’s results actually would have been had the Merger been completed as of any date prior to December 1, 2015. In addition, this Adjusted financial information is not indicative of future results or current financial conditions and does not reflect any anticipated synergies, operating efficiencies, cost savings or integration costs that may result from the Merger. All Adjusted financial information should be read in conjunction with separate historical financial statements and accompanying notes filed with the Securities and Exchange Commission (“SEC”). A reconciliation of Adjusted financial measures to GAAP financial measures is provided in the Appendix of this presentation. Disclaimer
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3 Non-GAAP Financial Measures For informational purposes only, the Company has furnished Adjusted financial information. The Adjusted financial information combines the historical results of BMC Stock with the pre-Merger results of SBS. The Adjusted financial information has not been prepared in accordance with GAAP, and is based upon currently available information and assumptions deemed appropriate by the Company’s management. This Adjusted financial information is not necessarily indicative of what the Company’s results actually would have been had the Merger been completed as of any date prior to December 1, 2015. In addition, this Adjusted financial information is not indicative of future results or current financial conditions and does not reflect any anticipated synergies, operating efficiencies, cost savings or integration costs that may result from the Merger. All Adjusted financial information should be read in conjunction with separate historical financial statements and accompanying notes filed with the Securities and Exchange Commission (“SEC”). A reconciliation of Adjusted financial measures to GAAP financial measures is provided in the Appendix of this presentation. • Adjusted net sales is defined as (i) BMC Stock net sales plus (ii) pre-Merger SBS net sales. • Adjusted gross profit is defined as (i) BMC Stock gross profit plus (ii) pre-Merger SBS gross profit plus (iii) inventory step-up charges. • Adjusted EBITDA is defined as (i) BMC Stock net income (loss) plus (ii) pre-Merger SBS income (loss) from continuing operations plus (iii) interest expense, income tax expense, depreciation and amortization, Merger-related costs, inventory step-up charges, non-cash stock compensation expense, headquarters relocation expense, insurance deductible reserve adjustments and other items, each of which are inclusive of pre-Merger SBS results. Adjusted net sales, Adjusted gross profit and Adjusted EBITDA are intended as supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. We believe that Adjusted net sales, Adjusted gross profit and Adjusted EBITDA provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results. Our management uses Adjusted net sales, Adjusted gross profit and Adjusted EBITDA to compare our performance to that of prior periods for trend analyses, for purposes of determining management incentive compensation and for budgeting and planning purposes. Adjusted net sales, Adjusted gross profit, and Adjusted EBITDA is used in monthly financial reports prepared for management and our board of directors. We believe that the use of Adjusted net sales, Adjusted gross profit and Adjusted EBITDA provide additional tools for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with other distribution and retail companies, which may present similar non-GAAP financial measures to investors. However, our calculation of Adjusted net sales, Adjusted gross profit and Adjusted EBITDA are not necessarily comparable to similarly titled measures reported by other companies. Our management does not consider Adjusted net sales, Adjusted gross profit and Adjusted EBITDA in isolation or as alternatives to financial measures determined in accordance with GAAP. The principal limitation of Adjusted gross profit and Adjusted EBITDA 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 does not reflect changes in, or cash requirements for, our working capital needs; (ii) Adjusted EBITDA does not reflect our interest expense, or the requirements necessary to service interest or principal payments on our debt; (iii) Adjusted EBITDA does not reflect our income tax expenses or the cash requirements to pay our taxes; (iv) Adjusted EBITDA does 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 does not reflect any cash requirements for such replacements and (vi) Adjusted EBITDA does not consider the potentially dilutive impact of issuing non-cash stock-based compensation. In order to compensate for these limitations, management presents Adjusted net sales, Adjusted gross profit and Adjusted EBITDA in conjunction with GAAP results. You should review the reconciliations of net sales to Adjusted net sales, gross profit to Adjusted gross profit and net income (loss) to Adjusted EBITDA and should not rely on any single financial measure to evaluate our business. Non-GAAP (Adjusted) Financial Measures
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4 BMC STOCK Investment Highlights A Market Leader for Growth Market leader with national scale and local expertise Strategic footprint in highly attractive long-term growth markets Extensive value-added product and service capabilities support share gains Low cost, high service integrated supply chain and diverse customer base Strong balance sheet that supports growth Highly fragmented industry poised for continued recovery Significant synergies to be realized from BMC Stock combination
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Company Overview 1
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6 2015 Product & Service Mix2 Company Snapshot STCK (NASDAQ) A leading national building solutions provider with $2.8 billion of Adjusted net sales1 and $130 million of Adjusted EBITDA1 for full year 2015 Locations in 17 states representing 63% of 2015 single- family building permits Significant market presence in 42 attractive metropolitan areas Focus on differentiated, value-added products and services that meet critical industry needs Proven growth track record (~18% Adjusted EBITDA CAGR since 2013) with significant future opportunities Design Services Truss Manufacturing Millwork Manufacturing Turnkey Solutions 91 Distribution Yards 35 Truss & Structures Operations 47 Millwork Operations Installation Management Design Centers & Showrooms eBusiness Platform Logistics, Services & eCommerce Distribution Services Other Bldg. Products & Services 26% Lumber & Sheet Goods 31% Millwork, Doors & Windows 28% Structural Components 15% 1. See Non-GAAP (Adjusted) Financial Measures page of this presentation for definition of Adjusted net sales and Adjusted EBITDA 2. 2015 Product and Service Mix based on Adjusted net sales
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Lumber Yards & Building Materials Dealers 33% Home Centers 58% Hardware Stores 9% Market Leader in Highly Fragmented Industry 7 0 1,000 2,000 3,000 4,000 ($ millions) BMC Stock Top 10 Pro Sales 20152 Building Materials Sales by Distribution Channel1 1. Source: U.S. Census Bureau 2012 NAICS Survey and 2015 NAICS Annual Retail Trade Report 2. Source: 2015 ProSales 100 rankings of pro dealers with manufacturing capabilities; chart not to scale Approximately $290 billion of U.S. retail building materials sales in 2015 Lumber and building materials dealers primarily serve professional contractors, homebuilders and tradespersons Median revenue for top 100 pro dealers is $117 million BMC Stock is a leading ‘Direct-to-Jobsite’ distributor in the highly fragmented U.S. Lumber and Building Material industry 6,0 2
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8 Strategic Footprint in Attractive Growth Markets Mid & South Atlantic 27% West South Central 35% Mountain 21% Pacific 17% Presence in 42 metropolitan areas Strong capabilities with significant expansion opportunities Complementary design centers and showrooms Unique eBusiness platform to support physical assets Industry leading professional talent Additional Highlights Sales by U.S. Census Division1 Company Footprint 1. Sales by U.S. Census Division based on 2015 Adjusted net sales and pre-acquisition net sales of VNS Corporation (“VNS”) and Robert Bowden, Inc. (“RBI”) FL NM TX MT CO UT ID NV WA CA PA VA AR GA 91 Distribution locations in 17 states 35 Truss and structures operations 47 Millwork operations 63% of 2015 single-family building permits
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9 Extensive Product and Service Offering Portfolio Represents Over 50% of the Cost for a Typical New Home Average Cost Share of Cost Building Permit Fees $3,601 1.2% Impact Fee $1,742 0.6% Water & Sewer Fees Inspections $4,191 1.4% Architecture, Engineering $4,583 1.6% Excavation, Foundation & Backfill $32,576 11.3% Framing & Trusses $48,524 16.8% Sheathings $1,238 0.5% Siding $20,717 7.2% Roofing $10,069 3.5% Windows & Doors $12,127 4.2% Plumbing $12,302 4.3% Electrical $12,181 4.2% HVAC $12,623 4.4% Insulation $6,467 2.2% Drywall $11,744 4.1% Interior Trim, Doors & Hardware $12,409 4.3% Painting $9,002 3.1% Lighting $3,517 1.2% Cabinets & Countertops $16,056 5.5% Appliances $4,463 1.5% Flooring $13,367 4.6% Plumbing Fixtures $4,465 1.5% Outdoor Structures (deck, patio) $4,439 1.5% Landscaping $6,156 2.1% Driveway $6,240 2.1% Other $14,706 5.1% Total $289,415 100.0% Source: 2015 NAHB Cost of Construction Survey
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10 Value-Added Services Support Job Site Excellence One-Step Value Chain – Showroom to Job-site…Contractor to Client Providing differentiated solutions and proprietary services that support our unique value proposition Driving enhanced productivity and customer satisfaction One-step distributor for premier building products manufacturers; critical link in building supply chain for customers Keen understanding of unique construction codes, regional product preferences and local distribution infrastructure Design and showroom services Project planning eBusiness platform Custom millwork, doors, windows Ready-Frame and trusses Job-site distribution services Installation management Unique Service Platform
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11 Diverse base of customers ranging from well-known national builders to small regional and local players No single customer exceeds 5% of total Adjusted net sales1 Enhanced capabilities to serve attractive professional repair and remodeling contractor segment Highly Diversified and Growing Customer Base Select Customers Multi-Family & Commercial Contractors 11% Repair & Remodel Contractors 12% Single-Family Homebuilders 77% National Homebuilders Regional Homebuilders Multi-family (millwork) 2015 Customer Mix2 1. See Non-GAAP (Adjusted) Financial Measures page of this presentation for definition of Adjusted net sales 2. 2015 Customer Mix based on Adjusted net sales
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Tightly Managed Integration Plan to Extract Synergies and Leverage Unique Capabilities 12 1. Estimated run-rate cost savings represents annualized savings at the end of each period presented Combined executive leadership team and operating structure in place $10 million annual savings from executive and other redundant positions; implementation of casualty insurance and employee benefit programs Limited branch overlap reduces risk of customer disruption / revenue loss Incremental opportunities from best practices: Millwork and components manufacturing Ready-Frame Logistics, design and eCommerce capabilities Working capital optimization $20 to $25 million of integration costs expected over 2016 / 2017, primarily related to associate severance, retention and system integration costs Synergy Category Description of Benefit Q4 2017 Annual Run-Rate Estimates1 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 $18 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 $22 to $28m Total $40 to $50m Estimated Run-Rate Cost Savings1 Moving Quickly to Capture Value Q4 15 Q4 16 Q4 17 $10m $27 to $33m $40 to $50m
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Focused Growth Strategy 2
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Leveraging Strong Foundation and Core Capabilities to Accelerate Profitable Growth 14 Favorable Industry Trends Expand Value-Added Products & Services Expand Share in Core Markets Pursue Strategic Expansions Merger Benefits National scale Service capabilities meeting industry demands Attractive geographies Proven leadership and deep talent pool Solid financial position Significant synergies Creating a Best-in-Class Building Solutions Platform
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0 400 800 1,200 1,600 2,000 1959 1966 1973 1980 1987 1994 2001 2008 2015 U.S. Single-Family Starts Poised to Benefit from the Housing Recovery Adjusted net sales per U.S. S-F Housing Start2 Macro conditions support housing market growth population & employment growth consumer & builder confidence credit availability affordability government policy Significant Room to Recover from Today’s Levels (ths) Benefitting from Favorable Industry Trends 15 U.S. S-F Starts Remain Well Below 50 Year Average1 50 yr avg. 1. Source: United States Census Bureau 2. See Non-GAAP (Adjusted) Financial Measures page of this presentation for definition of Adjusted net sales; 2011 to 2014 Adjusted net sales per U.S. S-F Housing Starts calculated on a constant-dollar basis using 2015 annual average commodity prices $3,447 $3,419 $3,700 $3,864 $3,919 2011 2012 2013 2014 2015
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16 Other Bldg. Products & Services 26% Lumber & Sheet Goods 31% Millwork, Doors & Windows 28% Structural Components 15% Expansion of Product & Service Offering Driving Share Gains Includes engineered wood products, trusses and wall panels Custom designed and built to reduce job- site labor, waste and cycle times Investing in equipment and automation to improve manufacturing productivity Capacity expansion in Atlanta, Austin, Raleigh and Salt Lake City to capture greater share of growing demand Proprietary job-site framing solution for constructing roof and floor trusses Designed to reduce builder cycle time, labor requirement and material waste 2015 sales growth of nearly 18% to over $70 million BMC market rollout complete; planned rollout to SBS markets during 2016 & 2017 Includes millwork, interior doors, cabinets and flooring Developing web-based catalogs and configuration tools to showcase offerings Acquired custom millwork manufacturer in Atlanta with potential to leverage unique capabilities across multiple markets Investing in capacity, showrooms and sales Ready-Frame® 1 Structural Components Windows, Doors & Millwork 2015 Product & Service Mix 2015 Growth by Product Category 1. Ready-Frame® sales are included in the Lumber & Sheet Goods product category Relative GM % Gro w th Rat e Low Mid High -4% 0% 4% 8% 12% 16% Structural Components Millwork, Doors & Windows Lumber & Sheet Goods Other Bldg. Products & Services
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READY-FRAME® Meeting Industry Needs; First-Mover Position for Future of Framing 17 Proprietary job-site framing solution for constructing roof and floor trusses Designed to reduce builder cycle time, labor requirement and material waste Applicable to single-family, custom, multi-family, and commercial construction Enables customers to frame 20-30% more houses in same time period as stick framing Whole house, precision pre-cut package One price per package Smart bundled (top piece off delivery is first used for framing) No cutting lumber, no last minute orders, no errors and no punch lists Take off guaranteed to the 1/16” Green solution with minimal to no on-site waste and disposal costs 2015 sales grew nearly 18% to over $70 million Over 55% of Seattle market LBM business after 3 years Opportunity to transition commodity lumber sales to value-added solutions and grow share Less Risk. Less Labor. Less Cost. READY-FRAME video: https://www.youtube.com/watch?v=REv665u2QRI
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18 Differentiated eBusiness Offering Drives Productivity and Enhanced Customer Experience Logistics Solutions Installed Solutions Design Solutions Benefit to Customer: real-time order status with pick-up and delivery notifications Benefit to Company: Drives higher on time deliveries and lower distribution costs Benefit to Customer: project management system for cost transparency and reliability Benefit to Company: Improves quality and profitability profile of installed sales Benefit to Customer: Faster quote turnaround improves customer satisfaction Benefit to Company: Operational efficiencies improve closure rates and drive revenue through whole house selling 24x7 eCommerce Benefit to Customer: Ability to manage business digitally for increased efficiency and convenience Benefit to Company: Improves productivity and drives revenue through enhanced customer experience Introducing Digital Tools for Our Customer’s Belt Transactional capabilities available in seven markets; rollout expected to continue through 2016 & 2017. eBusiness video: https://youtu.be/6J6tb1L3ImU
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19 Entering New Markets Efficiently Proven Acquisition Capability Serves central and coastal Georgia and the north coast of Florida 7 lumberyards, 1 truss plant, and 1 millwork manufacturing plant Customer mix primarily single-family custom homebuilders and professional remodeling contractor 2015 net sales1 of $141.5 million and Adjusted EBITDA1 of $7.5 million Serves the greater Atlanta metropolitan area Manufacturer and distributor of custom millwork products Serves various size customers including production and custom builders and professional remodeling contractors 2015 net sales1 of $80.1 million and Adjusted EBITDA1 of $9.2 million Adjacency of existing and acquired locations adds to local scale and creates opportunity to leverage capabilities and fixed costs Rigorous integration process to capture value, with over 70 bolt-on acquisitions completed Industry remains extremely fragmented, allowing for robust pipeline of opportunities Acquired location Existing location VNS Corporation (VNS), May 2015 Robert Bowden, Inc. (RBI), September 2015 1. 2015 Net sales and Adjusted EBITDA data includes pre-acquisition results
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Financial Overview 3
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21 Proven Track Record of Growth Adjusted net sales1 CAGR2 of 10.7% since 2013 compared to single-family starts CAGR of 7.6% Adjusted gross margin1 improvement of 180 basis points since 2013 Adjusted EBITDA 1 CAGR of 18.3% since 2013 driven by operating leverage and strategic growth investments Incremental Adjusted EBITDA1 as percent of Adjusted net sales1 growth (“pull- through”) of 9.4% since 2013 while continuing to invest in growth strategy Full Year 2015 excludes pre-acquisition net sales of $90.1 million and Adjusted EBITDA1 of $5.5 million from VNS and RBI $531 $603 $670 2013 2014 2015 $2,407 $2,607 $2,801 2013 2014 2015 $93 $114 $130 2013 2014 2015 Adjusted net sales1 ($m) Adjusted gross profit 1 ($m) Adjusted EBITDA1 ($m) 1. See Non-GAAP (Adjusted) Financial Measures page of this presentation for definition of Adjusted net sales , Adjusted gross profit and Adjusted EBITDA 2. Adjusted net sales CAGR calculated on a constant-dollar basis using 2015 annual average commodity prices
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22 Q4 / Full Year 2015 Adjusted Net Sales Bridge Adjusted net sales1 ($m) Q4 2014 Volume Acquisition Deflation Q4 2015 $628.9 $61.6 $63.4 ($26.1) $727.8 $2,607.2 $189.7 $130.8 ($127.2) $2,800.6 FY 2014 Volume Acquisition Deflation FY 2015 Q4 Adjusted net sales1 up 15.7% Organic volume growth of 9.8% highest growth rate since Q2 2014 driven by value- added products VNS and RBI acquisitions contributed growth of 10.1% Commodity deflation reduced growth rate by 4.2% 1. See Non-GAAP (Adjusted) Financial Measures page of this presentation for definition of Adjusted net sales Full year 2015 Adjusted net sales1 up 7.4% Organic volume growth of 7.3% despite labor-constrained construction markets VNS and RBI acquisitions contributed growth of 5.0% Commodity deflation reduced growth rate by 4.9%
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23 Quarterly Financial Results Operating Improvements Continue Momentum Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Adjusted net sales1 YoY change $569.7 12.2% $696.2 8.3% $712.4 7.9% $628.9 5.4% $590.4 3.6% $707.4 1.6% $775.0 8.8% $727.8 15.7% Adjusted gross profit1 YoY change $127.1 22.9% $161.7 16.7% $166.0 10.8% $147.9 6.3% $138.0 8.6% $170.2 5.3% $186.3 12.2% $175.6 18.7% Adjusted GM%1 22.3% 23.2% 23.3% 23.5% 23.4% 24.1% 24.0% 24.1% Adjusted EBITDA1 $10.4 $37.1 $38.2 $28.5 $15.6 $35.1 $41.0 $37.8 Adj. EBITDA Margin1 1.8% 5.3% 5.4% 4.5% 2.6% 5.0% 5.3% 5.2% ($ millions) Recent acquisitions, strategic initiatives and high-confidence Merger benefits yield numerous opportunities to drive operating results forward 1. See Non-GAAP (Adjusted) Financial Measures page of this presentation for definition of Adjusted net sales, Adjusted gross profit and Adjusted EBITDA
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24 Strong Balance Sheet to Support Growth Flexibility for Continued Investments and Disciplined, Accretive M&A 1. Adjusted net debt is defined as long-term debt and capital lease obligations (current and long-term portions), plus interest payable less cash and cash equivalents 2. See Non-GAAP (Adjusted) Financial Measures page of this presentation for definition of Adjusted EBITDA; includes pre-acquisition results for VNS and RBI Improving Adjusted EBITDA trends Working capital usage ~12% of sales with improvement opportunity through Merger Full Year 2016 CAPEX expected to be $60 to $70 million 2016 depreciation expense expected to be $45 - $50 million 2016 amortization expense expected to be $20 - $22 million Annual run-rate interest expense currently $30 to $32 million Normalized effective tax rate of 36% to 37% Attractive Cash Flow Dynamics 12/31/2015 Adjusted Net debt1 $437 million Adjusted net debt1 / 2015 Adjusted EBITDA2 3.2x $450 million revolving ABL facility with extended maturity; $152 million drawn at 12/31/15 Existing $250 million 9.0% Senior Secured Notes maturing 2018 Medium-term leverage target of 3.0x - 4.0x allows flexibility to make opportunistic investments Longer-term leverage target of 2.0x – 3.0x as housing cycle matures Balance Sheet Positioned to Invest
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25 Committed to Shareholder Value Creation Market leader with national scale and local expertise Strategic footprint in highly attractive long-term growth markets Extensive value-added product and service capabilities support share gains Low cost, high service integrated supply chain and diverse customer base Strong balance sheet that supports growth Highly fragmented industry poised for continued recovery Significant synergies to be realized from BMC Stock combination
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APPENDIX
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27 BMC Stock Reported (GAAP) Income Statement ($ths) FY 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 FY 2015 Net sales 1,210,156 289,716 351,620 358,314 311,848 1,311,498 292,826 357,287 416,471 510,162 1,576,746 Cost of sales 953,609 227,897 272,129 276,672 239,726 1,016,424 226,129 273,469 319,370 396,368 1,215,336 Gross profit 256,547 61,819 79,491 81,642 72,122 295,074 66,697 83,818 97,101 113,794 361,410 SG&A 200,588 54,110 58,375 59,519 57,313 229,317 62,861 67,503 76,436 100,043 306,843 Depreciation expense 9,168 2,682 2,757 2,948 3,105 11,492 3,444 3,262 3,549 5,445 15,700 Amortization expense 1,310 - - - - - - 264 735 2,627 3,626 Impairment of assets held for sale 73 - 134 - - 134 - - 82 (82) - Merger-related costs - - - - - - - 3,042 998 18,953 22,993 (Loss) income from operations 45,408 5,027 18,225 19,175 11,704 54,131 392 9,747 15,301 (13,192) 12,248 Interest expense (18,786) (6,599) (6,757) (6,839) (6,895) (27,090) (6,730) (6,730) (7,038) (7,054) (27,552) Other income (expense), net 1,306 486 424 131 373 1,414 669 347 (48) (184) 784 (Loss) income before income taxes 27,928 (1,086) 11,892 12,467 5,182 28,455 (5,669) 3,364 8,215 (20,430) (14,520) Income tax (benefit) expense 6,273 588 (72,332) 4,935 1,232 (65,577) (2,108) 1,239 4,168 (12,988) (9,689) Net (loss) income 21,655 (1,674) 84,224 7,532 3,950 94,032 (3,561) 2,125 4,047 (7,442) (4,831)
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28 Pre-Merger SBS Reported (GAAP) Income Statement ($ths) FY 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Q1 2015 Q2 2015 Q3 2015 Oct / Nov YTD Nov15 Net sales 1,197,037 279,983 344,586 354,060 317,087 1,295,716 297,620 350,065 358,540 217,650 1,223,875 Cost of sales 922,634 214,741 262,372 269,668 241,281 988,062 226,299 263,654 269,401 166,129 925,483 Gross profit 274,403 65,242 82,214 84,392 75,806 307,654 69,925 86,411 89,139 51,521 296,996 SG&A 254,935 67,127 71,086 73,665 67,839 279,717 70,132 74,655 75,286 44,455 264,528 Depreciation expense 5,890 1,468 1,641 1,681 1,941 6,731 2,075 2,243 2,493 1,684 8,495 Amortization expense 2,236 563 564 563 563 2,253 563 597 596 398 2,154 Impairment of assets held for sale 432 48 - - - 48 - - - - - Merger-related cost - - - - - - 207 3,262 1,183 10,353 15,005 Public offering transaction- related costs 10,008 448 - 60 - 508 - - - - - Restructuring expense 141 7 2 2 62 73 192 205 (14) (1) 382 (Loss) income from continuing operations 761 (4,419) 8,921 8,421 5,401 18,324 (1,641) 5,449 9,595 (5,368) 8,035 Interest expense (3,793) (631) (668) (712) (673) (2,684) (711) (677) (745) (504) (2,637) Other income, net 870 243 170 197 177 787 612 196 194 158 1,160 (Loss) income before income taxes (2,162) (4,807) 8,423 7,906 4,905 16,427 (1,740) 4,968 9,044 (5,714) 6,558 Income tax (benefit) expense 2,874 (1,498) 2,943 2,972 1,923 6,340 (3,591) 2,437 3,020 (2,151) (285) (Loss) income from discontinued operations 401 21 147 40 124 332 8 39 7 (1) 53 Net (loss) income (4,635) (3,288) 5,627 4,974 3,106 10,419 1,859 2,570 6,031 (3,564) 6,896
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29 Reconciliation of Non-GAAP Items – Adjusted Net Sales, Adjusted Gross Profit ($ths) FY 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 FY 2015 BMC Stock net sales 1,210,156 289,716 351,620 358,314 311,848 1,311,498 292,826 357,287 416,471 510,162 1,576,746 Pre-merger SBS net sales 1,197,037 279,983 344,586 354,060 317,087 1,295,716 297,620 350,065 358,540 217,650 1,223,875 Adjusted net sales 2,407,193 569,699 696,206 712,374 628,935 2,607,214 590,446 707,352 775,011 727,812 2,800,621 Structural components 347,689 82,392 102,661 105,793 89,219 380,065 86,010 106,859 119,917 107,514 420,300 Lumber & sheet goods 848,202 197,566 239,817 238,166 200,176 875,725 192,297 224,702 238,581 208,899 864,479 Millwork, doors & windows 597,805 146,943 178,147 183,743 180,699 689,532 168,299 195,797 212,685 216,959 793,740 Other bldg. prods & svcs 613,497 142,798 175,581 184,672 158,841 661,892 143,840 179,994 203,828 194,440 722,102 Adjusted net sales by product category 2,407,193 569,699 696,206 712,374 628,935 2,607,214 590,446 707,352 775,011 727,812 2,800,621 BMC Stock gross profit 256,547 61,819 79,491 81,642 72,122 295,074 66,697 83,818 97,101 113,794 361,410 Pre-merger SBS gross profit 274,403 65,242 82,214 84,392 75,806 307,654 71,321 86,411 89,139 51,521 298,392 Inventory step-up charges - - - - - - - - - 10,285 10,285 Adjusted gross profit 530,950 127,061 161,705 166,034 147,928 602,728 138,018 170,229 186,240 175,600 670,087 Adjusted gross margin % 22.1% 22.3% 23.2% 23.3% 23.5% 23.1% 23.4% 24.1% 24.0% 24.1% 23.9% See Non-GAAP (Adjusted) Financial Measures page of this presentation for definition of Adjusted net sales, Adjusted gross profit and Adjusted EBITDA
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30 Reconciliation of Non-GAAP Items – Adjusted EBITDA ($ths) FY 2013 Q1 14 Q2 14 Q3 14 Q4 14 FY 2014 Q1 15 Q2 15 Q3 15 Q4 15 FY 2015 BMC Stock net income (loss) 21,655 (1,674) 84,224 7,532 3,950 94,032 (3,561) 2,125 4,047 (7,442) (4,831) Pre-merger SBS income (loss) from continuing operations (5,036) (3,309) 5,480 4,934 2,982 10,087 1,851 2,531 6,024 (3,564) 6,842 Interest expense 22,579 7,230 7,425 7,551 7,568 29,774 7,441 7,407 7,783 7,558 30,189 Income tax expense (benefit) 9,147 (910) (69,389) 7,907 3,155 (59,237) (5,699) 3,676 7,188 (15,139) (9,974) Depreciation and amortization 25,827 6,655 7,142 7,244 7,758 28,799 8,344 8,678 9,643 12,586 39,251 Merger-related costs - - - - - - 207 6,304 2,181 29,306 37,998 Restructuring expense 141 7 2 2 62 73 192 205 (14) - 383 Inventory step-up charges - - - - - - - - - 10,285 10,285 Non-cash stock compensation expense 3,474 1,497 1,287 1,664 1,631 6,079 1,518 1,529 1,524 881 5,452 Headquarters relocation - - 256 827 971 2,054 1,377 1,075 359 1,054 3,865 Insurance deductible reserve adjustment and fire casualty loss 1,772 150 552 110 (143) 669 378 (13) 694 1,967 3,026 Loss on portfolio transfer - - - - - - 2,826 - - - 2,826 Acquisition costs and other items 12,995 758 76 422 572 1,828 711 1,601 1,578 326 4,216 Adjusted EBITDA $92,554 $10,404 $37,055 $38,193 $28,506 $114,158 $15,585 $35,118 $41,007 $37,818 $129,528 See Non-GAAP (Adjusted) Financial Measures page of this presentation for definition of Adjusted EBITDA