BMHC Announces Third Quarter 2008 Financial Results
11/6/2008 4:01:00 PM
Restructuring initiatives progressing as planned, liquidity has improved - Completed amendment to $540 million credit facility
Building Materials Holding Corporation (BLGM), a leading provider of building materials and construction services to professional residential builders and contractors, today reported sales for the third quarter of 2008 decreased 39% to $364 million from $594 million in the same quarter a year ago. For the nine months ended September 30, 2008, sales decreased 39% to $1.1 billion from $1.8 billion in the same period of 2007.
Net loss for the third quarter of 2008 was $45.2 million or $1.55 per share compared to net income of $4.2 million or $0.14 per share in the same quarter a year ago. For the nine months ended September 30, 2008, net loss was $111.0 million or $3.82 per share compared to net income of $18.6 million or $0.63 per share in the same period of 2007.
Our operating results in the third quarter included: -- $3.9 million of impairments for assets held for sale and customer relationships and -- $2.1 million for expenses to close and consolidate underperforming business units.Commenting on third quarter results, Robert E. Mellor, Chairman and Chief Executive Officer, stated, "As the unprecedented volatility in the capital markets and the downturn in the homebuilding industry persisted, we remained focused on our goal of realigning our business to the current environment. We made significant progress on our restructuring program during the third quarter, executing on a wide range of operational and financial actions designed to address the impact of the homebuilding industry downturn. Importantly, we successfully negotiated an amendment to our $540 million secured credit facility. Year-to-date, we have reduced selling, general and administrative expenses by $51.2 million, or 16 percent. We continued to enhance our liquidity during the quarter through the wind-down of certain operations and the sale of underperforming business units and excess assets. We remain on track for these and other restructuring initiatives."
Mr. Mellor concluded, "While our third quarter financial results continued to be significantly impacted by the difficult operating environment, we are seeing an improvement in our ongoing operations and we comfortably met the bank covenants at the end of the quarter."
Operating Results (thousands) Three Months Ended Nine Months Ended September 30 % September 30 % 2008 2007 Change 2008 2007 Change Sales Building Products $184,568 $265,652 (31)% $563,116 $785,378 (28)% Construction Services 179,862 328,387 (45)% 528,882 990,835 (47)% $364,430 $594,039 (39)% $1,091,998 $1,776,213 (39)% (Loss) income from operations $(29,047) $10,991 n/m $(79,964) $45,620 n/mFor the quarter, sales declined 39% to $364 million from $594 million in the same quarter a year ago. For the nine months, sales declined 39% to $1.1 billion from $1.8 billion in the same period a year ago. The challenging circumstances in the homebuilding industry continue to adversely affect our markets. Sales were lower in all our regions, particularly California/Northern Nevada and the Southwest. However, our 39% decline in sales is less than the decline in building permits in our markets of 42% for the quarter and 46% for the nine month period.
For the quarter and nine months, loss from continuing operations was a result of:
-- lower sales volume, particularly construction services, -- gross margin compression from competitive market conditions, -- impairments of $3.9 million for the quarter and $12.3 million for the nine months principally for customer relationships and assets held for sale and -- expenses of $2.1 million for the quarter and $7.9 million for the nine months to close and consolidate underperforming business units.Although selling, general and administrative expenses were higher as a percent of sales, these expenses included costs associated with the closure and consolidation of underperforming business units and were $19.4 million lower for the quarter and $51.2 million lower for the nine month period compared to the same periods a year ago. We are continuing to further reduce selling, general and administrative expenses consistent with sales trends.
Interest Expense For the quarter, interest expense was 84% or $7.3 million more than the same quarter a year ago. The increase was due to:
-- costs to obtain a waiver for our credit facility, -- expensing of unamortized deferred loan costs from the February 2008 amendment to our credit facility and -- costs associated with the September 2008 amendment to our credit facility.
Income Taxes For the quarter and nine month period, the significant change in our effective tax rate for continuing operations was the result of additional valuation allowance due to the uncertainty as to our ability to realize deferred tax assets.
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