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Net loss for the first quarter of 2009 increased to $45.2 million or $1.53 per share from a net loss of $33.9 million or $1.17 per share in the same quarter a year ago.
Commenting on first quarter results, Robert E. Mellor, Chairman and Chief Executive Officer, stated, "The operating environment for the homebuilding industry remained very challenging during the first quarter of 2009. We continued to focus on our restructuring initiatives to improve cost efficiencies and preserve liquidity.
"We are working with our lenders toward a restructuring of our credit facility and balance sheet and we appreciate their continuing support. We are pleased to have obtained an extension of the waiver from our lenders that allows the Company to continue to borrow up to $20 million under our revolver.
"We also appreciate the continued hard work of our employees and ongoing support from our vendors during these unprecedented times. We greatly value the loyalty of our customers and look forward to continuing to provide them with high quality materials and services," concluded Mr. Mellor.
Extension of Waiver to Credit Facility
The Company obtained an extension of the waiver from its lenders that continues to waive the monthly Adjusted EBITDA, forecast and projection requirements of our credit agreement and continues to allow the Company to borrow up to $20 million through June 29, 2009.
Operating Results
(thousands)
Three Months
Ended March 31 %
2009 2008 Change
Sales
Building Products $99,174 $179,886 (45)%
Construction Services 68,325 163,062 (58)%
$167,499 $342,948 (51)%
Loss from operations $(32,925) $(18,356) (79)%
For the quarter, sales declined 51% to $167 million from $343 million in the same quarter a year ago. The depressed conditions in the general homebuilding industry continue to be reflected in our markets. Sales were lower in all our regions. As of March 2009, single-family housing starts for the U.S. were at an annualized rate below 0.4 million and single-family permits in our markets were at an annualized rate of 0.1 million.
For the quarter, loss from continuing operations increased over the prior year's first quarter as a result of:
-- lower sales volume, particularly construction services,
-- gross margin compression from competitive market conditions and
-- deleveraging of selling, general and administrative (SG&A) expenses
as fixed capacity costs combined with facility consolidation and closure
costs of $4.9 million in the first quarter of 2009 resulted in SG&A
increasing to 37.0% from 24.6% of sales in the prior year's first
quarter. Excluding the $4.9 million of consolidation and closure costs,
first quarter 2009 SG&A expenses were 34.1% of sales.
Interest Expense
For the quarter, interest expense was 4% or $0.5 million more than the same quarter a year ago. The increase was due to:
-- higher interest rates,
-- costs associated with interest rate swap contracts no longer accounted
for as cash flow hedges and
-- costs to obtain a limited waiver for our credit agreement.
Income Taxes
For the quarter, 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.
About BMHC
BMHC is one of the largest providers of building materials and residential construction services in the United States. We serve the homebuilding industry through two recognized brands: as BMC West, we distribute building materials and manufacture building components for professional builders and contractors in the western and southern states; as SelectBuild, we provide construction services to high-volume production homebuilders in key markets across the country. To learn more about BMHC, visit our website at www.bmhc.com.
BUSINESS RISKS AND FORWARD-LOOKING STATEMENTS
There are a number of business risks and uncertainties that affect our operations and therefore could cause future results to differ from past performance or expected results. Additional information regarding business risks and uncertainties is contained in Part II Item 1A of our most recent Form 10-Q. These risks and uncertainties may include, however are not limited to:
-- substantial doubt about our ability to continue as a going concern;
-- our existing common equity may have no value;
-- demand for and supply of single-family homes which are influenced by
changes in the overall condition of the U.S. economy, including interest
rates, consumer confidence, job formation, availability of credit and
other important factors;
-- our ability to maintain adequate liquidity, reduce operating costs and
increase market share in an industry that has experienced and continues
to experience a significant reduction in average annual housing starts;
-- our liquidity is dependent on operating performance, an efficient
cash conversion cycle and compliance with financial covenants;
-- our ability to implement and maintain cost structures that align
with sales trends and
-- losses of customers as well as changes in the business models of our
customers may limit our ability to provide building products and
construction services;
-- intense competition;
-- availability of and our ability to attract, train and retain qualified
individuals;
-- fluctuations in our costs and availability of sourcing channels for
commodity wood products, concrete, steel and other building materials;
-- weather conditions including natural catastrophic events;
-- exposure to product liability and construction defect claims as well as
other legal proceedings;
-- disruptions in our information systems;
-- actual and perceived vulnerabilities as a result of widespread credit
and liquidity concerns, terrorist activities and armed conflict;
-- costs and/or restrictions associated with federal, state and other
regulations and
-- numerous other matters of a local and regional scale, including those of
a political, economic, business, competitive or regulatory nature.
Risks related to our shares may include, however are not limited to:
-- price for our shares may fluctuate significantly;
-- our shares may be less attractive as they are not traded on a large,
more well-known exchange and
-- anti-takeover defenses and certain provisions could prevent an
acquisition of our company or limit share price.
Certain statements in this news release including those related to our restructuring initiatives and cost cutting efforts, our liquidity and negotiations with our lenders are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements about our expectations, anticipated financial results and future business prospects are forward-looking statements. While these statements represent our current judgment on what the future may hold and we believe these judgments are reasonable, these statements involve risks and uncertainties that are important factors that could cause our actual results to differ materially from those in forward-looking statements. These factors include, however are not limited to the risks and uncertainties cited in the above paragraph, as well as our ability to timely and successfully implement our restructuring program and achieve the benefits that the program is designed to provide, including preserving value, enhancing our liquidity, generating tax refunds, reducing expenses and generating cash proceeds. Undue reliance should not be placed on such forward-looking statements, as such statements speak only as of the date of this news release. We undertake no obligation to update forward-looking statements.
(Tables Follow)
Building Materials Holding Corporation
Consolidated Statements of Operations
(thousands, except per share data)
(unaudited)
Three Months Ended Year Ended
March 31 December 31
2009 2008 2008
Sales
Building products $99,174 $179,886 $693,664
Construction services 68,325 163,062 631,015
Total sales 167,499 342,948 1,324,679
Costs and operating expenses
Cost of goods sold
Building products 77,267 130,683 514,222
Construction services 66,839 150,795 576,087
Impairment of assets 365 - 53,015
Selling, general and
administrative expenses 61,952 84,256 349,417
Other income, net (5,999) (4,430) (5,059)
Total costs and operating
expenses 200,424 361,304 1,487,682
Loss from operations (32,925) (18,356) (163,003)
Interest expense 12,155 11,638 52,925
(45,080) (29,994) (215,928)
Loss from continuing
operations before income taxes
Income tax benefit (expense) 12 (3,849) 23,409
Loss from continuing operations (45,068) (33,843) (192,519)
Loss from discontinued
operations (152) (3,513) (12,680)
Impairment of assets - - (7,813)
Income tax benefit (expense) - 3,456 (1,860)
Loss from discontinued operations (152) (57) (22,353)
Net loss (45,220) (33,900) (214,872)
Noncontrolling interests loss - 39 63
Net loss attributable to
common shareholders $(45,220) $(33,861) $(214,809)
Net loss per share:
Continuing operations $(1.53) $(1.17) $(6.62)
Discontinued operations - - (0.77)
Basic $(1.53) $(1.17) $(7.39)
Continuing operations $(1.53) $(1.17) $(6.62)
Discontinued operations - - (0.77)
Diluted $(1.53) $(1.17) $(7.39)
Building Materials Holding Corporation
Consolidated Balance Sheets
(thousands)
(unaudited)
March 31 December 31
2009 2008
Assets
Cash and cash equivalents $6,323 $11,484
Receivables, net of
allowances
of $14,487 and $12,091 89,703 118,245
Inventory 70,605 78,676
Unbilled receivables 10,571 13,112
Income tax receivable 49,977 50,304
Deferred income taxes - -
Prepaid expenses and
other 4,940 4,864
Assets of discontinued
operations 5,073 5,659
Current assets 237,192 282,344
Property and equipment
Land 34,188 33,996
Buildings and
improvements 120,727 120,814
Equipment 144,385 153,843
Construction in progress 3,444 3,440
Accumulated depreciation (144,460) (148,032)
Assets held for sale 41,451 46,300
Deferred income taxes - -
Deferred loan costs 4,100 4,485
Other long-term assets 20,696 23,303
Other intangibles, net 18,425 19,222
Goodwill - -
$480,148 $539,715
March 31 December 31
2009 2008
Liabilities and (Deficit)
Equity
Accounts payable $26,189 $19,021
Accrued compensation 19,452 17,274
Insurance deductible
reserves 16,788 17,527
Other accrued liabilities 24,524 26,981
Billings in excess of
costs and estimated
earnings 19,696 24,054
Current portion of
long-term debt 316,309 39,443
Liabilities of
discontinued operations 502 773
Current liabilities 423,460 145,073
Insurance deductible
reserves 25,466 26,208
Long-term debt 381 287,009
Other long-term
liabilities 32,007 37,163
Total liabilities 481,314 495,453
Commitments and
contingent liabilities - -
(Deficit) equity
Common shares, $0.001 par
value:
authorized 50 million
shares; issued and
outstanding 29.7 and 29.7
million shares 29 29
Additional paid-in
capital 168,545 169,146
Deferred compensation
common shares obligation 80 878
Deferred compensation
common shares held (80) (878)
Accumulated deficit (165,547) (120,327)
Accumulated other
comprehensive loss, net (4,193) (4,586)
Shareholders' (deficit)
equity (1,166) 44,262
Noncontrolling interests - -
Total (deficit) equity (1,166) 44,262
$480,148 $539,715
Building Materials Holding Corporation
Consolidated Statements of Cash Flows
(thousands)
(unaudited)
Three Months Ended Year Ended
March 31 December 31
2009 2008 2008
Operating Activities
Net loss attributable to
common shareholders $(45,220) $(33,861) $(214,809)
Noncontrolling interests
loss, net - (39) (63)
Net loss $(45,220) $(33,900) $(214,872)
Items in net loss not
using (providing) cash:
Depreciation and
amortization 6,141 10,522 37,611
Deferred loan cost
amortization 385 2,739 1,621
Deferred loan cost write
off - - 7,099
Amortization of unrealized
loss related to interest
rate swap contracts 384 - -
previously accounted for
as cash flow hedge
Amortization of terminated
interest rate swap
contracts notional
reduction 250 - 926
settlement payments
Unrealized ineffective
portion of interest rate
swap contracts - - 3,022
Amortization of warrant
discount 62 - 62
Impairment of assets 365 - 60,828
Share-based compensation 249 1,846 4,276
Gain on sale of assets,
net (5,338) (3,435) (2,225)
Realized gain on
marketable securities - (186) (542)
Deferred income tax
(benefit) expense (241) 13,896 22,534
Changes in assets and
liabilities, net of
effects of acquisitions
and
divestitures of business
units:
Receivables, net 29,155 15,435 85,424
Inventory 8,042 7,670 38,190
Unbilled receivables 2,541 8,271 26,804
Income tax receivable 327 - (40,492)
Prepaid expenses and
other current assets (73) (7,276) 4,298
Accounts payable 6,951 4,909 (32,836)
Accrued compensation (258) (3,306) (14,724)
Insurance deductible
reserves (739) (1,756) (10,961)
Other accrued
liabilities (1,852) (2,540) (8,028)
Billings in excess of
costs and estimated
earnings (4,358) 1,434 275
Other long-term assets
and liabilities (3,343) (2,610) 8,789
Other, net (241) (3,504) (205)
Cash flows (used) provided
by operating activities (6,811) 8,209 (23,126)
Investing Activities
Purchases of property and
equipment (570) (7,176) (16,509)
Acquisitions and
investments in
businesses, net of cash
acquired - (2,450) (8,575)
Proceeds from dispositions
of property and equipment 10,828 5,187 14,871
Purchase of marketable
securities - (13,854) (28,589)
Proceeds from sales of
marketable securities - 10,339 70,221
Other, net (26) (2,797) (2,123)
Cash flows provided (used)
by investing activities 10,232 (10,751) 29,296
Financing Activities
Net borrowings under
revolver 2,300 - -
Principal payments on term
notes (11,986) (3,522) (19,866)
Interest rate swap
contracts notional
reduction settlement
payments (1,220) - (3,835)
Net payments on other
notes (138) (418) (2,261)
Increase (decrease) in
book overdrafts 2,418 (4,413) (17,616)
Proceeds from share
options exercised - 9 8
Income tax benefit for
share-based compensation - (731) -
Dividends paid - (2,938) (2,938)
Deferred financing costs - (4,927) (8,847)
Other, net 44 - 82
Cash flows used by
financing activities (8,582) (16,940) (55,273)
Decrease in Cash and Cash
Equivalents (5,161) (19,482) (49,103)
Cash and cash equivalents,
beginning of period 11,484 60,587 60,587
Cash and cash equivalents,
end of period $6,323 $41,105 $11,484
Supplemental Disclosure of
Cash Flow Information
Cash paid for interest $8,407 $8,876 $41,863
Cash paid for income taxes $9 $78 $3,141
Supplemental Schedule of
Investing Activities
Liabilities of
acquisitions
(extinguished) $- $(2,450) $(8,525)
Cash paid for acquisitions
made this period $- $2,450 $8,525
Cash paid for acquisitions
made in prior period $- $- $50
Supplemental Schedule of
Financing Activities
Fair value of warrants
issued $- $- $782
Discount on term note for
warrants issued $- $- $(782)
SOURCE Building Materials Holding Corp.
http://www.bmhc.com
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