BMHC ACHIEVES RECORD RESULTS FOR
FOURTH QUARTER AND FULL YEAR 2004
Annual Sales Exceed $2 Billion
Net Income for the Year More than Doubles to $53.9 Million
SAN FRANCISCO (February 8, 2005) - Building Materials Holding Corporation (Nasdaq: BMHC), a leading provider of building products and construction services to professional residential builders and contractors, today reported that sales for the fourth quarter of 2004 increased 28% to a record $539.3 million, compared to $420.1 million in the fourth quarter of 2003. For the year, sales increased 50% to $2.1 billion compared to $1.4 billion in 2003.
Net income for the fourth quarter of 2004 more than tripled to a record $19.0 million or $1.34 per diluted share, compared to $5.8 million or $0.43 per diluted share for the fourth quarter of 2003. For the year, net income increased to $53.9 million or $3.87 per diluted share, compared to $19.9 million or $1.48 per diluted share in 2003. Net income for the quarter benefited by $3.8 million net of tax, or $0.27 per share, from lower than expected insurance costs.
Mr. Robert E. Mellor, Chairman, President and Chief Executive Officer, stated, “This has been a landmark year in which we achieved our best-ever sales and net income. Both of our business segments, BMC West and BMC Construction, performed solidly throughout 2004, generating strong sales and operating results. Our record setting financial performance is a testament to the commitment of all of our employees to executing BMHC’s business strategy. We are extremely pleased with the demonstrated success that has resulted from our focus on delivering building products and construction services in key growth areas across the U.S.
“BMHC has consistently been an industry leader in providing building products and superior services to professional residential builders. We are committed to building upon this core component of our business philosophy to grow our market share and continue building our reputation in an evolving industry. We believe our strong foundation should enable us to move quickly and benefit from the strength in housing demand and construction activity in targeted markets. Looking ahead, we remain steadfast in our plan to increase our market share through acquisitions and the expansion of our construction services business. We are confident that our strategy will deliver long-term growth and enhance shareholder return,” Mr. Mellor concluded.
BMC West
Sales for the quarter increased 19% to $323.1 million compared to $271.5 million in the same period a year ago. For the year, sales were over $1.3 billion compared to $1.0 billion in 2003. The increase in sales was the result of growth in comparable business unit sales and higher commodity wood product prices.
Operating income increased 60% to $24.0 million for the fourth quarter from $15.0 million in the same quarter a year ago. Operating income for the year increased 75% to $96.1 million compared to $54.8 million in 2003. The improvement was the result of effective inventory management and leveraging of operating expenses as a percentage of sales.
BMC Construction
Sales for the quarter increased 45% to $216.2 million compared to $148.6 million in the same quarter a year ago. For the year, sales were $753.7 million compared to sales of $408.2 million in 2003. Higher sales were a function of strong construction activity in our markets, rising labor and material costs as well as the benefit of acquisitions ($10.9 million for the quarter and $184.6 million for the year).
Operating income for the quarter more than quadrupled to $21.7 million from $4.6 million in 2003. For the year, operating income more than tripled to $59.7 million compared to $19.0 million in 2003. The increase was attributable to improved operating performance in most of our markets, particularly the Southwest region.
Teleconference and Webcast
BMHC will host a conference call and audio webcast today at 9 a.m. Pacific Time to discuss financial results for the fourth quarter and year ended December 31, 2004. The conference call can be accessed by dialing 877-223-0437 (Domestic) or 706-643-0552 (International). A replay will be available through February 15, 2005 by dialing 800-642-1687 (Domestic) or 706-645-9291 (International). The required passcode for the replay is 3348776. The conference call and replay can be accessed via audio webcast at BMHC’s website atwww.bmhc.com. An archive of the webcast will be available for 90 days following the conclusion of the teleconference.
About Building Materials Holding Corporation
BMHC is one of the largest building products distribution and residential construction services companies in the United States. Our two subsidiaries, BMC West and BMC Construction, specialize in providing building products, construction services and component manufacturing to national, regional and local builders and contractors. To learn more about BMHC, visit our website atwww.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 financial performance or expected results. Information regarding business risks and uncertainties is contained in our Annual Report on Form 10-K for the period ended December 31, 2003 and periodic filings with the Securities and Exchange Commission. These risks or uncertainties may include, but are not limited to changes in the overall condition of the U.S. economy, including job formation, interest rates and consumer confidence; fluctuations in our costs and availability of sourcing channels for commodity wood products and building materials; changes in the business models of our customers; changes in our competition; future integration of acquired businesses which may not result in anticipated cost savings and revenue synergies being fully realized or it may take longer to realize than expected; availability of and ability to attract, train and retain highly-qualified individuals; unanticipated weather conditions, including natural catastrophic events such as earthquakes, fire, flood, hurricanes, tornadoes, etc.; implementation of cost structures that align with revenue growth; actual and perceived vulnerabilities as a result of terrorist activities and armed conflict; international supply and demand for key building materials and numerous other matters of a local and regional scale, including those of a political, economic, business, competitive or regulatory nature.
Certain statements made in this news release constitute 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 inherent risks and uncertainties, including those described in the preceding paragraph, that may cause actual results to differ materially from our historical experience and present expectations. 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.
| CONTACTS: | Bill Smartt
Senior Vice President and
Chief Financial Officer
(415) 627-9100 | Ellis Goebel
Senior Vice President,
Business Development and Investor Relations
(415) 627-9100 |
(Tables Follow)
BUILDING MATERIALS HOLDING CORPORATION
Consolidated Statements of Income
(thousands, except per share data)
(unaudited)
| | | Three Months Ended | Twelve Months Ended |
| | December 31, | December 31, |
| | | | 2004 | | | 2003 | | | 2004 | | | 2003 | |
Sales | | | | | | | | | | | | | |
| Building products | | $ | 284,213 | | $ | 245,622 | | $ | 1,186,663 | | $ | 917,019 | |
| Construction services | | | 255,096 | | | 174,466 | | | 904,362 | | | 498,052 | |
Total sales | | | 539,309 | | | 420,088 | | | 2,091,025 | | | 1,415,071 | |
| | | | | | | | | | | | | | |
Costs and operating expenses | | | | | | | | | | | | | |
| Cost of goods sold | | | | | | | | | | | | | |
| Building products | | | 211,825 | | | 186,131 | | | 897,725 | | | 688,354 | |
| Construction services | | | 209,635 | | | 157,575 | | | 768,407 | | | 436,908 | |
| Impairment of assets | | | 1,001 | | | 829 | | | 2,274 | | | 829 | |
Selling, general and administrative expenses | | | 81,459 | | | 64,562 | | | 317,002 | | | 250,319 | |
| Other (income), net | | | (515 | ) | | (1,394 | ) | | (2,491 | ) | | (1,768 | ) |
| Total costs and operating expenses | | | 503,405 | | | 407,703 | | | 1,982,917 | | | 1,374,642 | |
| | | | | | | | | | | | | | |
Income from operations | | | 35,904 | | | 12,385 | | | 108,108 | | | 40,429 | |
| | | | | | | | | | | | | | |
| Interest expense | | | 3,376 | | | 2,452 | | | 13,560 | | | 9,279 | |
| | | | | | | | | | | | | | |
Income before income taxes, minority
interests and equity earnings | | | 32,528 | | | 9,933 | | | 94,548 | | | 31,150 | |
| | | | | | | | | | | | | | |
| Income taxes | | | 12,435 | | | 3,298 | | | 35,198 | | | 11,402 | |
| | | | | | | | | | | | | | |
| Minority interests, net | | | (1,047 | ) | | (857 | ) | | (5,440 | ) | | (1,250 | ) |
| | | | | | | | | | | | | | |
| Equity earnings, net of tax of $918 | | | | | | — | | | — | | | 1,431 | |
| | | | | | | | | | | | | | |
Net income | | $ | 19,046 | | $ | 5,778 | | $ | 53,910 | | $ | 19,929 | |
| | | | | | | | | | | | | | |
Net income per share: | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Basic | | $ | 1.39 | | $ | 0.43 | | $ | 4.00 | | $ | 1.50 | |
| | | | | | | | | | | | | | |
| Diluted | | $ | 1.34 | | $ | 0.43 | | $ | 3.87 | | $ | 1.48 | |
| | | | | | | | | | | | | | |
| Weighted average number of shares: | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Basic | | | 13,689 | | | 13,327 | | | 13,494 | | | 13,279 | |
| | | | | | | | | | | | | | |
| Diluted | | | 14,258 | | | 13,496 | | | 13,923 | | | 13,441 | |
BUILDING MATERIALS HOLDING CORPORATION
Consolidated Balance Sheets
(thousands, except share data)
(unaudited)
| | | December 31, | |
| | | 2004 | | 2003 | |
ASSETS | | | | | |
| Cash and cash equivalents | | $19,496 | | $19,506 | |
| Receivables, net of allowances of $4,367 and $2,425 | | 238,071 | | 187,790 | |
| Inventory | | 153,391 | | 111,146 | |
| Unbilled receivables | | 17,196 | | 8,625 | |
| Marketable securities | | 2,216 | | — | |
| Deferred income taxes | | 11,913 | | 8,629 | |
| Prepaid expenses and other current assets | | 7,317 | | 5,243 | |
| | | | | | | |
| Total current assets | | | 449,600 | | | 340,939 | |
| | | | | | | |
| Property and equipment, net | | | 164,311 | | | 165,400 | |
| Marketable securities | | | 16,760 | | | — | |
| Other long-term assets | | | 16,281 | | | 10,692 | |
| Other intangibles, net | | | 15,776 | | | 14,423 | |
| Goodwill | | | 80,316 | | | 72,745 | |
| | | | | | | |
| Total assets | | $ | 743,044 | | $ | 604,199 | |
| | | | | | | |
LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS’ EQUITY | | | | | | | |
| Accounts payable and accrued expenses | | $ | 164,485 | | $ | 109,067 | |
| Billings in excess of costs and estimated earnings | | | 11,274 | | | 12,069 | |
| Current portion of long-term debt | | | 3,404 | | | 2,905 | |
| | | | | | | |
| Total current liabilities | | | 179,163 | | | 124,041 | |
| | | | | | | |
| Deferred income taxes | | | 297 | | | 5,354 | |
| Long-term debt | | | 206,418 | | | 186,773 | |
| Other long-term liabilities | | | 23,163 | | | 13,276 | |
| | | | | | | |
| Total liabilities | | | 409,041 | | | 329,444 | |
| | | | | | | |
| Minority interests | | | 6,325 | | | 3,745 | |
| | | | | | | |
| Shareholders’ equity | | | | | | | |
Common stock, $0.001 par value, 20,000,000 shares authorized;
13,852,683 and 13,333,711 shares issued and outstanding respectively | | | 14 | | | 13 | |
| Additional paid-in capital | | | 123,211 | | | 115,282 | |
| Retained earnings | | | 205,812 | | | 155,715 | |
| Accumulated other comprehensive loss, net | | | (1,359 | ) | | — | |
| | | | | | | |
| Total shareholders’ equity | | | 327,678 | | | 271,010 | |
| | | | | | | |
| Total liabilities, minority interests and shareholders’ equity | | $ | 743,044 | | $ | 604,199 | |
BUILDING MATERIALS HOLDING CORPORATION
Segment Information
(thousands)
(unaudited)
| | Three Months Ended December 31, | Twelve Months Ended December 31, |
| | | 2004 | | | 2003 | | | 2004 | | | 2003 | |
Sales | | | | | | | | | | | | | |
| BMC West | | $ | 323,124 | | $ | 271,456 | | $ | 1,337,324 | | $ | 1,006,904 | |
| | | | | | | | | | | | | | |
| BMC Construction | | | 216,185 | | | 148,632 | | | 753,701 | | | 408,167 | |
| | | $ | 539,309 | | $ | 420,088 | | $ | 2,091,025 | | $ | 1,415,071 | |
Income from Operations | | | | | | | | | | | | | |
| BMC West | | $ | 23,954 | | $ | 14,988 | | $ | 96,083 | | $ | 54,826 | |
| | | | | | | | | | | | | | |
| BMC Construction | | | 21,681 | | | 4,647 | | | 59,689 | | | 18,954 | |
| | | | | | | | | | | | | | |
| Corporate and other | | | (9,731 | ) | | (7,250 | ) | | (47,664 | ) | | (33,351 | ) |
| | | $ | 35,904 | | $ | 12,385 | | $ | 108,108 | | $ | 40,429 | |
We evaluate our results of operations including and excluding recent acquisitions. We believe a presentation of sales and income from operations excluding acquisitions not operating in the comparable periods enhances an understanding of our operating results for the respective reporting periods.
A reconciliation of sales and income from operations before recent acquisitions for the three and twelve months ended December 31, 2004 and 2003 is provided in the following table:
| | Three Months Ended December 31, | Twelve Months Ended December 31, |
| | | 2004 | | | 2003 | | | 2004 | | | 2003 | |
Sales | | | | | | | | | | | | | |
| BMC West | | $ | 323,124 | | $ | 271,456 | | $ | 1,337,324 | | $ | 1,006,904 | |
| Less: Acquisitions | | | (3,994 | ) | | | | | (36,854 | ) | | | |
| | | | 319,130 | | | 271,456 | | | 1,300,470 | | | 1,006,904 | |
| | | | | | | | | | | | | | |
| BMC Construction | | | 216,185 | | | 148,632 | | | 753,701 | | | 408,167 | |
| Less: Acquisitions | | | (10,884 | ) | | | | | (184,553 | ) | | | |
| | | | 205,301 | | | 148,632 | | | 569,148 | | | 408,167 | |
| | | $ | 524,431 | | $ | 420,088 | | $ | 1,869,618 | | $ | 1,415,071 | |
Income from Operations | | | | | | | | | | | | | |
| BMC West | | $ | 23,954 | | $ | 14,988 | | $ | 96,083 | | $ | 54,826 | |
| Less: Acquisitions (income) loss | | | 22 | | | | | | 2,815 | | | | |
| | | | 23,976 | | | 14,988 | | | 98,898 | | | 54,826 | |
| | | | | | | | | | | | | | |
| BMC Construction | | | 21,681 | | | 4,647 | | | 59,689 | | | 18,954 | |
| Less: Acquisitions (income) loss | | | (245 | ) | | | | | (5,579 | ) | | | |
| | | | 21,436 | | | 4,647 | | | 54,110 | | | 18,954 | |
| | | | | | | | | | | | | | |
| Corporate and other | | | (9,731 | ) | | (7,250 | ) | | (47,664 | ) | | (33,351 | ) |
| | | $ | 35,681 | | $ | 12,385 | | $ | 105,344 | | $ | 40,429 | |
