SAN FRANCISCO, May 12 /PRNewswire-FirstCall/ -- Building Materials HoldingCorporation (NYSE: BLG), a leading provider of construction services andbuilding materials to professional residential builders and contractors, todayreported sales for the first quarter of 2008 decreased 37% to $355 millionfrom $559 million in the same quarter a year ago.
Net loss for the first quarter of 2008 increased to $33.9 million or $1.17per share from a net loss of $5.0 million or $0.17 per share in the samequarter a year ago.
Commenting on first quarter results, Robert E. Mellor, Chairman and ChiefExecutive Officer, stated, 'Challenging industry conditions continued acrossU.S. homebuilding markets during the first quarter. While the very difficultmarket conditions continued to impact our operating results, once again thedistribution side of our business gained market share with sales decliningless than single-family permits in its regions while sustaining gross margins.Our focus remains intently on managing costs, strengthening our balance sheetand structuring for profitability.
'As explained in more detail in our separate announcement issued today, weare making significant progress on our initiatives to realign our business tothe current operating environment. We are aggressively moving forward withplans to streamline our operations. Our employee count was reduced a further20% during the quarter. We are flattening our management structure,simplifying our operational organization and moving ahead with thecentralization of key administrative support functions. We will continue totake the necessary actions to realign our business to withstand the prolongedchallenging industry dynamics and position the Company for the future.'
Segment Financial Performance
(thousands) Three Months Ended March 31 2008
BMC SelectBuild Corporate Total West
Sales $210,582 $ 144,164 - 354,746
(Loss) income from continuing operations $1,783 $(17,322) $(5,205) $(20,744)
Three Months Ended March 31 2007 BMC SelectBuild Corporate Total West
Sales $278,871 $ 280,512 - $559,383
(Loss) income from continuing operations $10,697 $2,772 $(13,057) $412
BMC West Operating Results
(thousands) Three Months Ended Year Ended March 31 % December 31 2008 2007 Change 2007
Sales $210,582 $278,871 (24)% $ 1,177,711
Income from operations $1,783 $10,697 (83)% $64,653
For the quarter, BMC West sales decreased 24% to $211 million from $279million in the same quarter of 2007. Consistent with national trends in newhome construction, sales were down in all of our regions. Although sales were24% lower, the reduction was less than a 41% decline in single-family permitsin our markets and were particularly strong in Texas.
For the quarter, income from operations decreased 83% to $1.8 million from$10.7 million in the same quarter of 2007. Income from operations declineddue to lower sales volume despite consistent gross margins as a percent ofsales and lower selling, general and administrative expenses.
SelectBuild Operating Results
(thousands) Three Months Ended Year Ended March 31 % December 31 2008 2007 Change 2007
Sales $144,164 $280,512 (49)% $ 1,095,863
(Loss) income from continuing operations $(17,322) $2,772 n/m $(334,272)
For the quarter, SelectBuild sales decreased 49% to $144 million from $281million in the same quarter of 2007. A sharp curtailment in demand for newhome construction was pervasive across all of our markets as single-familypermits declined 55%. In particular, production builders substantiallyreduced new home construction in larger metropolitan markets such as those inour Southwest and Pacific regions.
For the quarter, loss from continuing operations was $17.3 million comparedto income from operations of $2.8 million in the same quarter of 2007. Lowersales volume and competitive pressure on gross margins led to a loss fromcontinuing operations. Reductions in selling, general and administrativeexpenses partially offset the loss from continuing operations.
Corporate
(thousands) Three Months Ended Year Ended March 31 % December 31 2008 2007 Change 2007 Corporate general and administrative $5,205 $13,057 (60)% $51,697
Corporate represents expenses to support the operations of our businesssegments, BMC West and SelectBuild. These expenses were $7.9 million lessthan the same quarter a year ago due to reductions in employees and relatedexpenses as well as incentive compensation.
Interest Expense
For the three months, interest expense was 42% or $3.4 million more thanthe same period a year ago. The increase was principally due to therecognition of unamortized deferred loan costs in connection with theamendment of our credit facility in February 2008. Under the terms of theamended credit facility, interest rates for the revolver and term noteincreased to LIBOR plus 4.50% or Prime plus 2.50%. Rates also increased forthe unused portion of the revolver and letters of credit. We also incurredapproximately $5 million of fees in connection with the amendment and thesecosts will be amortized over the remaining term of our credit facility.
Income Taxes
Income tax expense for continuing operations was $1.7 million compared toan income tax benefit of $2.9 million in the same period a year ago. Thesignificant change in our effective tax rate for continuing operations was theresult of uncertainty as to the realizability of deferred tax assets.
Conference Call and Webcast
Management will host a conference call and audio webcast May 12, 2008 at9:00 a.m. Pacific Time (12:00 p.m. Eastern Time). The conference call may beaccessed by dialing 866-713-8395 (Domestic), or 617-597-5309 (International),pass code 61613071. A replay will be available through Monday, May 19, 2008by dialing 888-286-8010 (Domestic) or 617-801-6888 (International). Therequired pass code for the replay is 29692637.
