News Column

Stock Building Supply Announces 2013 Fourth Quarter and Full Year Results

February 25, 2014

RALEIGH, N.C., Feb. 25, 2014 (GLOBE NEWSWIRE) -- Stock Building Supply Holdings, Inc. (Nasdaq:STCK), a large, diversified lumber and building materials distributor and solutions provider that sells primarily to new construction and remodeling contractors, today reported its financial results for the fourth quarter and year ended December 31, 2013.

Fourth Quarter 2013 Financial Highlights

• Net sales of $305.2 million, up 21.0%, compared to $252.1 million for the fourth quarter of 2012• Operating income of $5.1 million, compared to operating loss of $5.2 million for the fourth quarter of 2012• Net income of $3.0 million, compared to a net loss of $3.8 million for the fourth quarter of 2012• Adjusted EBITDA of $9.6 million, compared to $3.1 million for the fourth quarter of 2012

Full Year 2013 Financial Highlights

• Net sales of $1,197.0 million, up 27.0%, compared to $942.4 million for full year 2012• Net loss of $4.6 million, including $10.0 million of initial public offering ("IPO") transaction-related costs, compared to net loss of $14.5 million for full year 2012• Adjusted EBITDA of $27.8 million, compared to $2.0 million for full year 2012

Commenting on the Company's results, Jeff Rea, Chief Executive Officer of Stock Building Supply, stated, "During the fourth quarter of 2013, the U.S. housing industry continued its recovery and our business delivered strong revenue growth and profit improvement. Over the course of 2013, our net sales to single-family homebuilders grew nearly 31% and our net sales to remodeling contractors increased over 18%. This revenue growth, which outpaced the underlying increase in US single-family housing starts of 15.5%, as reported by the US Census Bureau, enabled us to expand our operating profit margins and accelerate investments in our business."

Commenting on the fourth quarter and full year results, Jim Major, Executive Vice President and Chief Financial Officer, stated, "During the past year, we continued to implement our productivity initiatives in order to achieve margin improvements from our net sales growth and operating cost structure. These initiatives contributed to a reduction in our selling, general and administrative expenses as a percentage of net sales to 21.3% for full year 2013, compared to 23.5% in 2012. We also increased our gross profit as a percentage of net sales to 22.9% for full year 2013 as compared to 22.8% in 2012 and achieved sequential improvements in our gross margin percentage during each of the last three quarters of 2013."

Mr. Major added, "In February 2014, we increased the size of our secured revolving credit facility from $150.0 million to $200.0 million and extended the maturity to December 31, 2017. We believe this amendment will further enhance our ability to capitalize on future growth and productivity opportunities and maintain an attractive overall cost of capital."

Fourth Quarter 2013 Financial Results Compared to Prior Year Period

Net sales for the fourth quarter of 2013 totaled $305.2 million, up $53.1 million, or 21.0%, compared to $252.1 million in the fourth quarter of 2012. The Company estimates net sales increased 18.7% related to increased volume and 2.3% due to increased selling prices. The increase in sales volume was primarily driven by increased single-family housing starts and increased demand arising from higher remodeling activity.

Gross profit in the fourth quarter of 2013 was $73.7 million, up $16.0 million, or 27.7%, compared to $57.7 million in the fourth quarter of 2012, primarily as a result of increased sales volume. The gross margin percentage for the fourth quarter of 2013 increased 130 basis points to 24.2% from 22.9% in the fourth quarter of 2012, primarily as a result of structural components and windows and other exterior products representing a higher percentage of total net sales, improved gross margins on sales of lumber and lumber sheet goods and increased consideration from suppliers due to higher purchase volume.

Selling, general and administrative expenses during the fourth quarter of 2013 were $66.5 million, up $8.9 million, or 15.4%, from $57.6 million in the fourth quarter of 2012. This increase was primarily driven by variable costs to serve higher sales volume, such as sales commissions, shipping and handling costs and other variable compensation, which increased by $4.6 million. Other salary, wage, benefit and taxation costs increased $3.8 million, primarily as a result of headcount additions to serve increased sales volume and sales opportunities arising from the improved residential construction market.

Operating income in the fourth quarter of 2013 was $5.1 million, compared to an operating loss of $5.2 million in the fourth quarter of 2012. Net income during the quarter totaled $3.0 million, or $0.11 per diluted share, compared to a net loss of $3.8 million, or ($0.36) per diluted share, in the fourth quarter of 2012.

Adjusted EBITDA in the fourth quarter of 2013 totaled $9.6 million, up $6.5 million, compared to $3.1 million in the fourth quarter of 2012. Adjusted income from continuing operations for the fourth quarter of 2013 increased $4.1 million to $3.6 million, compared to an adjusted net loss from continuing operations of $0.5 million in the fourth quarter of 2012. A reconciliation of non-GAAP (adjusted) financial measures to comparable GAAP financial measures is provided as an appendix to this release.

Full Year 2013 Financial Results Compared to Full Year 2012

Net sales for 2013 totaled $1,197.0 million, up $254.6 million, or 27.0%, compared to $942.4 million in 2012. The Company estimates net sales increased 19.6% related to increased volume and 7.4% due to increased selling prices. The increase in sales volume was primarily driven by increased single-family housing starts and increased demand arising from higher remodeling activity.

Gross profit in 2013 was $274.4 million, up $59.7 million, or 27.8%, compared to $214.7 million in 2012, primarily as a result of increased sales volume. The gross margin percentage increased 10 basis points to 22.9% from 22.8%.

Selling, general and administrative expenses for 2013 were $254.9 million, up $33.7 million, or 15.3%, from $221.2 in 2012. This increase was primarily driven by variable costs to serve higher sales volume, such as sales commissions, shipping and handling costs and other variable compensation, which increased by $18.9 million. Other salary, wage, benefit and taxation costs increased $10.3 million, primarily as a result of headcount additions to serve increased sales volume and sales opportunities arising from the improved residential construction market.

Operating income for 2013 was $0.8 million compared to an operating loss of $18.9 million in 2012. Net loss for 2013 was $4.6 million, or ($0.36) per diluted share, compared to a net loss of $14.5 million, or ($1.83) per diluted share, in 2012. During 2013, the Company's operating income and net loss were impacted by $10.0 million of IPO transaction-related costs, which included a $9.0 million fee for terminating our management services agreement with The Gores Group, LLC.

Adjusted EBITDA in 2013 totaled $27.8 million, up $25.8 million, compared to $2.0 million in 2012. Adjusted income from continuing operations in 2013 increased $16.3 million to $7.4 million, compared to an adjusted loss from continuing operations of $8.9 million in 2012. A reconciliation of non-GAAP (adjusted) financial measures to comparable GAAP financial measures is provided as an appendix to this release.

Liquidity and Capital Resources

Total liquidity as of December 31, 2013 was approximately $72.1 million, which includes cash and cash equivalents of $1.1 million and $71.0 million of borrowing availability under our existing revolver.

Capital expenditures during the fourth quarter and full year 2013 totaled $4.9 million and $7.4 million, respectively, primarily to fund purchases of delivery fleet and material handling equipment.

Outlook

"While we are pleased with the progress our business made over the past year, we see many opportunities to expand and enhance our capabilities to serve our customers," added Mr. Rea. "As we look ahead to 2014, we are encouraged by macro-economic trends that generally support growth in residential new construction and remodeling activity. While many of our customers and local operations have been impacted by adverse weather events quarter-to-date, as we look ahead to the balance of 2014, we remain optimistic. Additionally, we intend to accelerate investment in our core product and service capabilities in order to capture the growth opportunities that will be available to us as the housing recovery continues."

Conference Call

Stock Building Supply will host a conference call on Tuesday, February 25, 2014 at 8:30 a.m. Eastern Time and will simultaneously broadcast it live over the Internet. The conference call can be accessed by dialing 877-407-0784 (domestic) or 201-689-8560 (international). A telephonic replay will be available approximately three hours after the call and can be accessed by dialing 877-870-5176, or for international callers, 1-858-384-5517. The passcode for the live call and the replay is 13575802. The telephonic replay will be available until 11:59 pm (Eastern Time) on March 4, 2014. The live webcast and archived replay can also be accessed on the Company's investor relations website at ir.stocksupply.com. The online archive of the webcast will be available for approximately 90 days.

About Stock Building Supply

Stock Building Supply operates in 21 metropolitan areas in 14 states primarily in the South and West regions of the United States (as defined by the U.S. Census Bureau). Today, we serve our customers from 69 strategically located facilities. We offer approximately 39,000 stock keeping units, as well as a broad range of customized products, including lumber and lumber sheet goods, millwork, doors, flooring, windows, structural components, engineered wood products, trusses, wall panels and other exterior products. Our customer base includes production homebuilders, custom homebuilders and remodeling contractors.

Non-GAAP Financial Measures

This press release presents Adjusted EBITDA and Adjusted income (loss) from continuing operations, which are non-GAAP financial measures within the meaning of applicable Securities and Exchange Commission rules and regulations. For a reconciliation of Adjusted EBITDA and Adjusted income (loss) from continuing operations under generally accepted accounting principles and for a discussion of the reasons why the Company believes that these non-GAAP financial measures provide information that is useful to investors, see the tables below under "Reconciliation of GAAP to Non-GAAP Measures."

Forward-Looking Statements

This press release contains forward-looking statements, which are subject to substantial risks, uncertainties and assumptions. You should not place reliance on these statements. These statements often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "seek," "will," "may" or similar expressions. These risks include, but are not limited to, the following: (i) the state of the homebuilding industry and repair and remodeling activity; (ii) seasonality and cyclicality of the building products supply and services industry; (iii) competitive industry pressures and competitive pricing pressure from our customers; (iv) inflation or deflation of commodity prices; (v) litigation or claims relating to our products and services; (vi) our ability to maintain profitability; (vii) our ability to attract and retain key employees and (viii) product shortages and relationships with key suppliers. Further information regarding factors that could impact our financial and other results can be found in the Risk Factors section of our Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (the "SEC") on October 31, 2013, and subsequent filings with the SEC. These statements are based on certain assumptions that we have made in light of our experience in the industry as well as our perceptions of expected future developments and other factors we believe are appropriate in these circumstances. As you read and consider this press release, you should understand that these statements are not guarantees of performance or results. Many factors could affect our actual performance and results and could cause actual results to differ materially from those expressed in the forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES  
Condensed Consolidated Statements of Operations  
(unaudited)
       
 Three Months ended December 31,Year ended December 31,
 2013201220132012
(in thousands of dollars, except share and per share amounts)        
Net sales$ 305,190$ 252,134$ 1,197,037$ 942,398
Cost of goods sold 231,468 194,407 922,634 727,670
Gross profit 73,722 57,727 274,403 214,728
Selling, general and administrative expenses 66,477 57,625 254,935 221,192
Depreciation expense 1,174 1,857 5,890 7,759
Amortization expense 564 377 2,236 1,470
Impairment of assets held for sale 432 361 432 361
IPO transaction-related costs 10,008
Restructuring expense 11 2,687 141 2,853
  68,658 62,907 273,642 233,635
Income (loss) from operations 5,064 (5,180) 761 (18,907)
Other income (expense), net        
Interest expense (643) (967) (3,793) (4,037)
Other income, net 274 242 870 278
Income (loss) from continuing operations before income taxes 4,695 (5,905) (2,162) (22,666)
Income tax benefit (expense) (1,798) 2,134 (2,874) 8,084
Income (loss) from continuing operations 2,897 (3,771) (5,036) (14,582)
Income from discontinued operations, net of tax expense of $6, $27, $243 and $52, respectively 60 1 401 49
Net income (loss) 2,957 (3,770) (4,635) (14,533)
Redeemable Class B Senior Preferred stock deemed dividend (1,114) (1,836) (4,480)
Accretion of beneficial conversion feature on Convertible Class C Preferred stock (5,000)
Income (loss) attributable to common stockholders$ 2,957$ (4,884)$ (6,471)$ (24,013)
Weighted average common shares outstanding        
Basic 25,586,462 13,440,380 18,205,892 13,153,446
Diluted 26,194,684 13,440,380 18,205,892 13,153,446
         
Basic income (loss) per share        
Income (loss) from continuing operations$ 0.12$ (0.36)$ (0.38)$ (1.83)
Income from discontinued operations 0.02
Basic net income (loss) per share$ 0.12$ (0.36)$ (0.36)$ (1.83)
         
Diluted income (loss) per share        
Income (loss) from continuing operations$ 0.11$ (0.36)$ (0.38)$ (1.83)
Income from discontinued operations 0.02
Diluted net income (loss) per share$ 0.11$ (0.36)$ (0.36)$ (1.83)
 
STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES     
Condensed Consolidated Balance Sheets     
(unaudited)  
   
 December 31,

 2013
December 31,

 2012
(in thousands of dollars, except share and per share amounts)    
Assets    
Current assets    
Cash and cash equivalents$ 1,138$ 2,691
Restricted assets 460 3,821
Accounts receivable, net 111,285 90,297
Inventories, net 91,303 73,918
Costs in excess of billings on uncompleted contracts 7,921 5,176
Assets held for sale 2,363 6,198
Prepaid expenses and other current assets 9,332 8,682
Deferred income taxes 3,332 3,562
Total current assets 227,134 194,345
Property and equipment, net of accumulated depreciation 56,039 55,076
Intangible assets, net of accumulated amortization 24,789 25,865
Goodwill 7,186 6,511
Restricted assets 1,359 2,202
Other assets 2,033 2,013
Total assets$ 318,540$ 286,012
Liabilities and Stockholders' Equity    
Current liabilities    
Accounts payable$ 64,984$ 74,231
Accrued expenses and other liabilities 30,528 25,277
Revolving line of credit 72,218
Income taxes payable 2,989 2,939
Current portion of restructuring reserve 1,594 1,513
Current portion of capital lease obligation 1,240 1,329
Billings in excess of costs on uncompleted contracts 1,599 1,239
Total current liabilities 102,934 178,746
Revolving line of credit 59,072
Long-term portion of capital lease obligation 6,011 5,635
Deferred income taxes 15,496 16,983
Other long-term liabilities 7,346 9,007
Total liabilities 190,859 210,371
Commitments and contingencies    
Redeemable Class A Junior Preferred stock, $0.01 par value, no shares authorized, issued and outstanding at December 31, 2013, 10,000 shares authorized and issued, 5,100 shares outstanding at December 31, 2012
Redeemable Class B Senior Preferred stock, $0.01 par value, no shares authorized, issued and outstanding at December 31, 2013, 500,000 shares authorized, 75,000 shares issued, 36,388 shares outstanding at December 31, 2012 36,477
Convertible Class C Preferred stock, $0.01 par value, no shares authorized, issued and outstanding at December 31, 2013, 5,000 shares authorized, issued and outstanding at December 31, 2012 5,000
Stockholders' equity    
Class A common stock, $0.01 par value, no shares authorized, issued and outstanding at December 31, 2013, 22,725,500 shares authorized and issued, 11,590,005 shares outstanding at December 31, 2012 116
Class B common stock, $0.01 par value, no shares authorized, issued and outstanding at December 31, 2013, 3,246,500 shares authorized, 2,870,712 shares issued and outstanding at December 31, 2012 29
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding at December 31, 2013, no shares authorized, issued and outstanding at December 31, 2012
Common stock, $0.01 par value, 300,000,000 shares authorized, 26,112,007 shares issued and outstanding at December 31, 2013, no shares authorized, issued and outstanding at December 31, 2012 261
Additional paid-in capital 144,570 46,534
Retained deficit (17,150) (12,515)
Total stockholders' equity 127,681 34,164
Total liabilities and stockholders' equity$ 318,540$ 286,012
 
STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES  
Condensed Consolidated Statements of Cash Flows  
(unaudited)  
    
 Year ended December 31,
 20132012
(in thousands of dollars)    
Cash flows from operating activities    
Net loss$ (4,635)$ (14,533)
Adjustments to reconcile net loss to net cash used in operating activities    
Depreciation expense 9,827 10,299
Amortization of intangible assets 2,236 1,470
Amortization of debt issuance costs 596 902
Deferred income taxes (1,257) (3,633)
Noncash stock compensation expense 1,049 1,305
Impairment of assets held for sale 432 481
(Loss) gain on sale of property, equipment and real estate (60) 169
Gain on reduction of earnout liability (195)
Bad debt expense 1,051 2,333
Change in assets and liabilities    
Accounts receivable (21,008) (27,026)
Inventories, net (16,858) (22,712)
Costs in excess of billings on uncompleted contracts (2,745) (1,288)
Prepaid expenses and other current assets (650) (784)
Current income taxes receivable/payable 50 12,110
Other assets (13) 2,314
Accounts payable (10,795) 24,821
Accrued expenses and other liabilities 3,736 1,798
Restructuring reserve (1,522) 1,125
Billings in excess of costs on uncompleted contracts 360 131
Other long-term liabilities 137 (1,525)
Net cash used in operating activities (40,264) (12,243)
Cash flows from investing activities    
Change in restricted assets 4,204 3,069
Purchase of business (2,373) (5,732)
Loan to seller of Total Building Services Group, LLC (850)
Proceeds from sale of property, equipment and real estate 3,754 1,393
Purchases of property and equipment (7,448) (2,741)
Net cash used in investing activities (1,863) (4,861)
Cash flows from financing activities    
Proceeds from revolving line of credit 1,301,290 1,042,850
Repayments of proceeds from revolving line of credit (1,314,436) (1,004,482)
Redemption of Class B Preferred stock (12,372)
Proceeds from issuance of common stock, net of offering costs 55,225
Loans from related parties 401 11
Sale of Class B Preferred stock 328
Dividends paid on Class B Preferred stock (10,628)
Payments of debt issuance costs (298) (555)
Payments on capital leases (1,610) (1,311)
Secured borrowings 2 997
Net cash provided by financing activities 40,574 14,838
Net (decrease) increase in cash and cash equivalents (1,553) (2,266)
Cash and cash equivalents    
Beginning of period 2,691 4,957
End of period$ 1,138$ 2,691
 
STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES
Sales by Product Category
(unaudited)
           
 Three months ended December 31, 2013Three months ended December 31, 2012  
(in thousands of dollars)Net Sales% of SalesNet Sales% of Sales% Change
Structural components  $ 40,608 13.3%  $ 28,935 11.5% 40.3%
Millwork & other interior products 57,979 19.0% 47,634 18.9% 21.7%
Lumber & lumber sheet goods 98,641 32.3% 93,231 37.0% 5.8%
Windows & other exterior products 67,649 22.2% 52,114 20.7% 29.8%
Other building products & services 40,313 13.2% 30,220 11.9% 33.4%
Total net sales  $ 305,190 100.0%  $ 252,134 100.0% 21.0%
           
 Year endedYear ended  
 December 31, 2013December 31, 2013  
(in thousands of dollars)Net Sales% of SalesNet Sales% of Sales% Change
Structural components  $ 157,975 13.2%  $ 106,745 11.3% 48.0%
Millwork & other interior products 219,191 18.3% 178,449 18.9% 22.8%
Lumber & lumber sheet goods 428,384 35.8% 333,952 35.5% 28.3%
Windows & other exterior products 249,711 20.9% 202,532 21.5% 23.3%
Other building products & services 141,776 11.8% 120,720 12.8% 17.4%
Total net sales  $ 1,197,037 100.0%  $ 942,398 100.0% 27.0%

STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Measures

(unaudited)

EBITDA is defined as net income (loss) before interest expense, income tax expense (benefit) and depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus impairment of assets held for sale, IPO transaction-related costs, restructuring expense, discontinued operations, net of taxes, management fees, non-cash compensation expense, acquisition costs, severance and other expense related to store closures and business optimization, other expense related to reduction of a tax indemnification asset and other items. Adjusted income (loss) from continuing operations is defined as net income as adjusted for the same items deducted from EBITDA in calculating Adjusted EBITDA, and after tax effecting those items. EBITDA, Adjusted EBITDA and Adjusted income (loss) from continuing operations are intended as supplemental measures of our performance that are not required by, or presented in accordance with, generally accepted accounting principles in the United States ("GAAP"). We believe that EBITDA, Adjusted EBITDA and Adjusted income (loss) from continuing operations provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results. Our management uses EBITDA 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. EBITDA and Adjusted EBITDA are used in monthly financial reports prepared for management and our board of directors. We believe that the use of EBITDA, Adjusted EBITDA and Adjusted income (loss) from continuing operations 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 EBITDA, Adjusted EBITDA and Adjusted income (loss) from continuing operations are not necessarily comparable to similarly titled measures reported by other companies. Our management does not consider EBITDA, Adjusted EBITDA or Adjusted income (loss) from continuing operations in isolation or as alternatives to financial measures determined in accordance with GAAP. The principal limitation of EBITDA, Adjusted EBITDA and Adjusted income (loss) from operations 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) EBITDA, Adjusted EBITDA and Adjusted income (loss) from continuing operations do not reflect changes in, or cash requirements for, our working capital needs; (ii) EBITDA and Adjusted EBITDA do not reflect our interest expense, or the requirements necessary to service interest or principal payments on our debt; (iii) EBITDA and Adjusted EBITDA do not reflect our income tax expenses or the cash requirements to pay our taxes; (iv) EBITDA, Adjusted EBITDA and Adjusted income (loss) from continuing operations do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments and (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 EBITDA, Adjusted EBITDA and Adjusted income (loss) from continuing operations do not reflect any cash requirements for such replacements. In order to compensate for these limitations, management presents EBITDA, Adjusted EBITDA and Adjusted income (loss) from continuing operations in conjunction with GAAP results. You should review the reconciliations of net income (loss) to EBITDA, Adjusted EBITDA and Adjusted income (loss) from continuing operations below, and should not rely on any single financial measure to evaluate our business.

STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES  
Reconciliation of GAAP to Non-GAAP Measures (continued)
(unaudited)  
       
The following is a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA.

 
       
 Three months ended

December 31,
Year ended

December 31,
(in thousands of dollars)2013201220132012
Net income (loss)$ 2,957$ (3,770)$ (4,635)$ (14,533)
Interest expense 643 967 3,793 4,037
Income tax expense (benefit) 1,798 (2,134) 2,874 (8,084)
Depreciation and amortization 3,002 2,879 12,060 11,718
EBITDA$ 8,400$ (2,058)$ 14,092$ (6,862)
Impairment of assets held for sale (a) 432 361 432 361
IPO transaction-related costs (b) 10,008
Restructuring expense 11 2,687 141 2,853
Discontinued operations, net of taxes (60) (1) (401) (49)
Management fees (c) 102 282 1,307 1,379
Non-cash compensation expense 476 236 1,049 1,305
Acquisition costs (d) 238 257 284
Severance and other expense related to store closures and business optimization (e) 392 1,340 1,113 2,375
Reduction of tax indemnification asset (f) 347
Other items (g) (195) (195)
Adjusted EBITDA$ 9,558$ 3,085$ 27,803$ 1,993
 
STOCK BUILDING SUPPLY HOLDINGS, INC. AND SUBSIDIARIES     
Reconciliation of GAAP to Non-GAAP Measures (continued)
(unaudited)  
       
The following is a reconciliation of net income (loss) to Adjusted income (loss) from continuing operations.
       
 Three months ended

December 31,
Year ended

December 31,
(in thousands of dollars)2013201220132012
Net income (loss)$ 2,957$ (3,770)$ (4,635)$ (14,533)
Impairment of assets held for sale (a) 432 361 432 361
IPO transaction-related costs (b) 10,008
Restructuring expense 11 2,687 141 2,853
Discontinued operations, net of taxes (60) (1) (401) (49)
Management fees (c) 102 282 1,307 1,379
Non-cash compensation expense 476 236 1,049 1,305
Acquisition costs (d) 238 257 284
Severance and other expense related to store closures and business optimization (e) 392 1,340 1,113 2,375
Reduction of tax indemnification asset (f) 347
Other items (g) (195) (195)
Tax effect of adjustments to continuing operations (h) (472) (1,860) (1,690) (3,183)
Adjusted income (loss) from continuing operations$ 3,643$ (487)$ 7,386$ (8,861)
         
(a) Impairment of assets held for sale represents the write down of such assets to the lower of depreciated cost or estimated fair value less expected disposition costs.
(b) Represents a $9.0 million fee for terminating our management services agreement with Gores and $1.0 million of other IPO transaction-related costs for the year ended December 31, 2013.
(c) Represents the expense for management services provided by Gores through August 2013 and professional services provided by an affiliate of Gores.
(d) Represents acquisition costs related to the acquisitions of Total Building Services Group, LLC ("TBSG") and Chesapeake Structural Systems, Inc., Creative Wood Products, LLC and Chestruc, LLC (collectively "Chesapeake").
(e) Represents (i) $0.0 million, $0.2 million, $0.2 million and $0.5 million of severance expense for the three months ended December 31, 2013 and 2012 and the years ended December 31, 2013 and 2012, respectively and (ii) $0.4 million, $1.1 million, $0.9 million and $1.8 million related to closed locations, consisting of pre-tax losses incurred during closure and post-closure activities, for the three months ended December 31, 2013 and 2012 and the years ended December 31, 2013 and 2012, respectively.
(f) Represents expense related to the reduction of a tax indemnification asset, with a corresponding increase in income tax benefit, for the year ended December 31, 2012. This indemnification asset corresponds to the long-term liability related to uncertain tax positions for which Wolseley plc had indemnified the Company, which was reduced upon the expiration of the statute of limitations for certain tax periods.
(g) Represents a gain of $0.2 million for the three months and year ended December 31, 2013 related to the reduction of an earnout liability associated with the TBSG acquisition.
(h) The tax effect of adjustments to continuing operations, excluding approximately $9.2 million of non-deductible IPO transaction-related costs for the year ended December 31, 2013 and $0.3 million of a non-deductible reduction of a tax indemnification asset for the year ended December 31, 2012, was based on the respective transactions' income tax rate, which was 38.7%, 36.2%, 34.6% and 37.2% for the three months ended December 31, 2013 and 2012 and the years ended December 31, 2013 and 2012, respectively.

CONTACT: Investor Relations Contact Stock Building Supply Holdings, Inc.Mark Necaise (919) 431-1021 or Solebury Communications Group LLCRichard Zubek (919) 431-1133



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