- Company reports substantial progress on restructuring initiatives

- Consolidated Sales of $385 million, a 12% increase from first quarter

- Net loss of $31.9 million, a 6% improvement from first quarter

- Consolidated gross margin of 18.8%, up from 17.9% in the first quarter

SAN FRANCISCO, Aug. 14 /PRNewswire-FirstCall/ -- Building Materials Holding Corporation (NYSE: BLG), a leading provider of building materials and construction services to professional residential builders and contractors, today reported sales for the second quarter of 2008 decreased 41% to $385 million from $656 million in the same quarter a year ago. For the six months ended June 30, 2008, sales decreased 38% to $728 million from $1.2 billion in the same period of 2007.

Net loss for the second quarter of 2008 was $31.9 million or $1.10 per share compared to net income of $19.4 million or $0.66 per share in the same quarter a year ago. For the six months ended June 30, 2008, net loss was $65.8 million or $2.27 per share compared to net income of $14.5 million or $0.49 per share in the same period of 2007.

    Our operating results in the second quarter included:
    -- Costs associated with closing and consolidating underperforming
       business units as follows:
        o $8.5 million or $0.25 per share for impairments of customer
          relationships and leasehold improvements and
        o $5.8 million or $0.20 per share to exit certain facility operating
          leases and other costs.
    -- $9.4 million or $0.32 per share for income from discontinued operations
       and the related income tax benefit from our concrete services
       operations in Florida.

Commenting on second quarter results, Robert E. Mellor, Chairman and Chief Executive Officer, stated, 'While our operating results reflect the continued difficult conditions confronting the homebuilding industry, we made substantial progress in our restructuring program during the second quarter, and also experienced sequential improvements in consolidated sales and gross margin.

'As we recently announced, we obtained a temporary waiver from our lending group, which enables us to borrow up to $60 million on our revolver as we work toward reaching agreement on a permanent amendment to our credit facility. We expect this new amendment to be more in line with the Company's projected performance under current industry conditions. Additionally, we have taken a number of actions aimed at preserving value and enhancing our liquidity going forward. These measures include the wind-down of certain operations, sale of underperforming business units and excess assets and other restructuring initiatives that will generate tax refunds based upon our existing net operating loss carry-back. We anticipate that these initiatives will reduce annualized SG&A expenses by $20 to $25 million and result in one-time cash proceeds of approximately $50 million to the company over the next three to four quarters.'

Mr. Mellor concluded, 'We believe that, over the long term, favorable underlying demographics and increasing core housing demand will continue to support the growth trajectory of the homebuilding industry. We have taken major steps to realign our business to withstand the continuing challenges of this cyclical downturn and to better position the Company for future growth.'

    BMHC Operating Results
                                         (thousands)
                       Three Months Ended           Six Months Ended
                             June 30        %           June 30        %
                         2008      2007   Change    2008       2007  Change
    Sales
      Building
       Products        $198,309  $278,978  (29)%  $377,873   $519,726 (27)%
      Construction
       Services         186,311   377,022  (51)%   349,695    662,448 (47)%
                       $384,620  $656,000  (41)%  $727,568 $1,182,174 (38)%
    (Loss) income
     from operations   $(32,561)  $35,866   n/m   $(50,917)   $34,629  n/m

For the quarter, sales declined 41% to $385 million from $656 million in the same quarter a year ago. For the six months, sales declined 38% to $728 million from $1.2 billion in the same period a year ago. Consistent with the national weakness in new home construction, sales were lower in all our regions. Single-family building permits in the U.S. were down 43% for the quarter.

For the quarter and six months, loss from continuing operations was a result of:

    -- substantially lower sales,
    -- a decline in gross margins due to competitive market conditions,
       particularly for construction services,
    -- impairments of $8.5 million for certain customer relationships and
       leasehold improvements as a result of closing and consolidating
       underperforming business units and
    -- additional expenses of $5.8 million to exit certain operating leases as
       well as other charges.

Loss from continuing operations was offset by lower selling, general and administrative expenses. Despite the additional expense of $5.8 million to exit certain operating leases and other charges, selling, general and administrative expenses were $8.5 million lower for the quarter and $31.8 million lower for the six months compared to the same periods a year ago.

Interest Expense

For the six months, interest expense was 18% or $3.2 million more than the same period a year ago. The increase was principally due to the recognition of unamortized deferred loan costs in connection with the amendment of our credit facility in February 2008.

Income Taxes

Income tax benefit for continuing operations was $0.5 million compared to income tax expense of $8.4 million in the same quarter a year ago. The significant change in our effective tax rate for continuing operations was the result of additional valuation allowance due to uncertainty as to our ability to realize deferred tax assets.

Income from discontinued operations included $17.8 million in the second quarter for the realization of tax benefits resulting from the closure of operations in Florida.

Conference Call and Webcast

Management will host a conference call and audio webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call may be accessed by dialing 800-291-9234 (Domestic), or 617-614-3923 (International), pass code 22261904. A replay will be available through Thursday, August 21, 2008 by dialing 888-286-8010 (Domestic) or 617-801-6888 (International). The required pass code for the replay is 71656932. The live conference call and replay can also be accessed via audio webcast at BMHC's website at http://www.bmhc.com. An archive of the webcast will be available for 90 days following the conclusion of the teleconference.

About BMHC

BMHC is one of the largest providers of building materials and residential construction services in the United States.