BMHC ANNOUNCES THIRD QUARTER 2005 FINANCIAL RESULTS
Company Reports Record Sales and Net Income
SAN FRANCISCO (October 25, 2005) - Building Materials Holding Corporation (Nasdaq: BMHC), a leading provider of construction services and building materials to professional residential builders and contractors, today reported sales increased 39% to $820 million, compared to $591 million in the same quarter a year ago. For the nine months ended September 30, 2005, sales increased 35% to $2.1 billion compared to $1.6 billion in the same period of 2004.
Net income was $41.6 million or $2.81 per share compared to $18.1 million or $1.29 per share in the same quarter a year ago. For the nine months ended September 30, 2005, net income was $96.0 million or $6.57 per share compared to $34.9 million or $2.53 per share in the same period of 2004.
“We are pleased to report that our excellent financial performance continued in the third quarter with record sales and net income,” said Robert E. Mellor, Chairman, President and Chief Executive Officer. “Our financial results for the quarter were driven by solid performances at BMC West and BMC Construction. Strong demand in our markets, as well as a continued focus on expanding our construction services, enabled us to increase our top line by almost 40% and more than double our net income compared to the same quarter a year ago. We continue to expand and capitalize on our market position in the construction services industry, reflective of our long-term strategy to meet the service and supply needs of our nation’s homebuilders.”
Segment Financial Performance
(thousands)
BMC West
| | Three Months Ended September 30 | Nine Months Ended September 30 |
| | | 2005 | | | 2004 | | | 2005 | | | 2004 |
| Sales | $ | 417,428 | | $ | 379,000 | | $ | 1,146,000 | | $ | 1,014,200 |
| | | | | | | | | | | | |
| Income from operations | $ | 43,644 | | $ | 31,564 | | $ | 113,549 | | $ | 72,129 |
Sales at BMC West increased 10% to $417.4 million compared to $379.0 million in the same quarter a year ago. For the nine months ended September 30, 2005, sales increased 13% to $1.1 billion compared to $1.0 billion in the same period of 2004. Sales increased in all of our operations as construction activity remained strong, especially in our Northwest, Intermountain and Texas regions.
Income from operations increased to $43.6 million from $31.6 million in the same quarter a year ago. Income from operations was $113.5 million for the nine months ended September 30, 2005 compared to $72.1 million in the same period of 2004. Record operating income was the result of improved gross margins despite lower commodity wood product prices.
BMC Construction
| | Three Months Ended September 30 | Nine Months Ended September 30 |
| | | 2005 | | | 2004 | | | 2005 | | | 2004 |
| Sales | $ | 402,400 | | $ | 212,480 | | $ | 948,277 | | $ | 537,516 |
| | | | | | | | | | | | |
| Income from operations | $ | 47,118 | | $ | 17,941 | | $ | 112,406 | | $ | 38,008 |
Sales at BMC Construction nearly doubled to $402.4 million compared to $212.5 million in the third quarter of last year. For the nine months ended September 30, 2005 sales were $948.3 million compared to $537.5 million in the same period a year ago. Sales reflect continuing growth through acquisitions and strong homebuilding activity, particularly in our Las Vegas and Phoenix markets as well as Florida and California.
Income from operations increased to $47.1 million from $17.9 million in the same quarter a year ago. Income from operations was $112.4 million for the nine months ended September 30, 2005 compared to $38.0 million in the same period of 2004. The value of our services and effective management of construction contracts as well as recent acquisitions were key factors in the segment’s record operating income.
Conference Call and Webcast
BMHC will host a conference call and audio webcast today at 9 a.m. (Pacific) to discuss financial results for the third quarter ended September 30, 2005. The conference call can be accessed by dialing 877-223-0437 or via audio webcast at www.bmhc.com. A replay will be available through November 1, 2005 by dialing 800-642-1687 (passcode 1297125) and an archive of the webcast will be available on our website for 90 days following the conclusion of the conference call.
About BMHC
BMHC, a Fortune 1000 company, is one of the largest providers of residential construction services and building materials in the United States. We serve the homebuilding industry through two subsidiaries: BMC West distributes building materials and manufactures building components for professional builders and contractors in the western and southern states; BMC Construction provides construction services to high-volume production homebuilders in key growth 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 Item 1 of our most recent Form 10-K. These risks and uncertainties may include, but are not limited to:
| · | demand for homebuilding which is influenced by changes in the overall condition of the U.S. economy, including job formation, interest rates, consumer confidence and other important factors; |
| · | fluctuations in our costs and availability of sourcing channels for commodity wood products and building materials; |
| · | changes in the business models of our customers; |
| · | integration of acquired businesses may not result in anticipated cost savings and revenue synergies being fully realized or it may take longer to realize than expected; |
| · | our ability to identify suitable acquisition candidates; |
| · | availability of and our ability to attract, train and retain qualified individuals; |
| · | unanticipated weather conditions including natural catastrophic events; |
| · | implementation of cost structures that align with revenue growth; |
| · | actual and perceived vulnerabilities as a result of terrorist activities and armed conflict; 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 risks and uncertainties that could cause our actual results to differ materially from those in forward-looking statements. These factors include, but are not limited to the risks and uncertainties cited in the above paragraph. 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 | | Ellis Goebel |
| Senior Vice President and | | Senior Vice President, |
| Chief Financial Officer | | Business Development and |
| (415) 627-9100 | | Investor Relations |
| | | (415) 627-9100 |
| Mark Kailer | | |
| Vice President, Treasurer 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 September 30 | | Nine Months Ended September 30 |
| | | 2005 | | | 2004 | | | 2005 | | | 2004 |
Sales | | | | | | | | | | | |
| Building products | $ | 360,202 | | $ | 335,837 | | $ | 997,717 | | $ | 902,450 |
| Construction services | | 459,626 | | | 255,643 | | | 1,096,560 | | | 649,266 |
Total sales | | 819,828 | | | 591,480 | | | 2,094,277 | | | 1,551,716 |
| | | | | | | | | | | | |
Costs and operating expenses | | | | | | | | | |
| Cost of goods sold | | | | | | | | | | | |
| Building products | | 261,384 | | | 255,509 | | | 730,811 | | | 685,900 |
| Construction services | | 371,963 | | | 217,166 | | | 889,336 | | | 558,772 |
| Impairment of assets | | ― | | | ― | | | 463 | | | 1,273 |
Selling, general and
administrative expenses | | 112,084 | | | 85,284 | | | 299,426 | | | 235,543 |
| Other income, net | | (1,423) | | | (1,559) | | | (2,779) | | | (1,976) |
Total costs and operating
expenses | | 744,008 | | | 556,400 | | | 1,917,257 | | | 1,479,512 |
| | | | | | | | | | | | |
Income from operations | | 75,820 | | | 35,080 | | | 177,020 | | | 72,204 |
| | | | | | | | | | | | |
| Interest expense | | 3,629 | | | 4,273 | | | 10,177 | | | 10,184 |
| | | | | | | | | | | | |
Income before income taxes
and minority interests | | 72,191 | | | 30,807 | | | 166,843 | | | 62,020 |
| | | | | | | | | | | | |
| Income taxes | | 25,474 | | | 11,815 | | | 58,855 | | | 22,763 |
| | | | | | | | | | | | |
| Minority interests income | | (5,153) | | | (896) | | | (11,962) | | | (4,393) |
| | | | | | | | | | | | |
Net income | $ | 41,564 | | $ | 18,096 | | $ | 96,026 | | $ | 34,864 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Net income per share: | | | | | | | | | | | |
| Basic | | $2.94 | | | $1.34 | | | $6.87 | | | $2.60 |
| Diluted | | $2.81 | | | $1.29 | | | $6.57 | | | $2.53 |
Building Materials Holding Corporation
Consolidated Balance Sheets
(thousands, except share data)
(unaudited)
| | | September 30 | December 31 | | | | September 30 | December 31 |
| | | 2005 | 2004 | | | | 2005 | 2004 |
ASSETS | | | | | | | LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS’ EQUITY | | | | | |
| Cash and cash equivalents | $ | 45,451 | | $ | 19,496 | | | | | | | |
| Marketable securities | | 4,707 | | | 2,216 | | Accounts payable | $ | 153,978 | | $ | 77,591 |
| Receivables, net of $4,721 and | | | | | | | Accrued compensation | | 63,493 | | | 34,078 |
$4,367 | | 365,588 | | | 238,071 | | Insurance deductible reserves | | 39,401 | | | 26,639 |
| Inventory | | 163,255 | | | 153,391 | | Other accrued liabilities | | 43,264 | | | 26,177 |
| Unbilled receivables | | 55,448 | | | 17,196 | | Billings in excess of costs and estimated | | | | | |
| Deferred income taxes | | 13,534 | | | 11,913 | | earnings | | 31,154 | | | 11,274 |
| Prepaid expenses and other | | 4,553 | | | 7,317 | | Current portion of long-term debt | | 8,973 | | | 3,404 |
Total current assets | | 652,536 | | | 449,600 | | Total current liabilities | | 340,263 | | | 179,163 |
| | | | | | | | | | | | | |
| Property and equipment | | | | | | | Deferred income taxes | | 3,300 | | | 297 |
Land | | 44,821 | | | 37,036 | | Long-term debt | | 264,573 | | | 206,419 |
Buildings and improvements | | 117,849 | | | 104,667 | | Other long-term liabilities | | 28,193 | | | 23,162 |
Equipment | | 150,044 | | | 122,105 | | Total liabilities | | 636,329 | | | 409,041 |
Construction in progress | | 8,441 | | | 4,956 | | | | | | | |
Accumulated depreciation | | (116,385) | | | (104,453) | | Minority interests | | 11,443 | | | 6,325 |
| Marketable securities | | 22,330 | | | 16,760 | | | | | | | |
| Deferred loan costs | | 3,679 | | | 2,084 | | Commitments and contingent liabilities | | ― | | | ― |
| Other long-term assets | | 18,925 | | | 16,281 | | | | | | | |
| Other intangibles, net | | 21,837 | | | 13,692 | | Shareholders’ equity | | | | | |
| Goodwill | | 160,726 | | | 80,316 | | Common stock, $0.001 par value: | | | | | |
Total assets | $ | 1,084,803 | | $ | 743,044 | | authorized 50,000,000 shares; | | | | | |
| | | | | | | | issued and outstanding 14,365,233 and | | | | | |
| | | | | | | | 13,852,683 shares | | 14 | | | 14 |
| | | | | | | | Additional paid-in capital | | 142,799 | | | 124,594 |
| | | | | | | | Unearned compensation | | (3,050) | | | (1,383) |
| | | | | | | | Retained earnings | | 297,140 | | | 205,812 |
| | | | | | | | Accumulated other comprehensive income (loss), net | | 128 | | | (1,359) |
| | | | | | | | Total shareholders’ equity | | 437,031 | | | 327,678 |
| | | | | | | | Total liabilities, minority interests and
shareholders’ equity | $ | 1,084,803 | | $ | 743,044 |
Building Materials Holding Corporation
Segment Information
(thousands)
(unaudited)
| | Three Months Ended September 30 | Nine Months Ended September 30 |
| | | 2005 | | | 2004 | | | 2005 | | | 2004 |
Sales | | | | | | | | | | | |
| BMC West | $ | 417,428 | | $ | 379,000 | | $ | 1,146,000 | | $ | 1,014,200 |
| | | | | | | | | | | | |
| BMC Construction | | 402,400 | | | 212,480 | | | 948,277 | | | 537,516 |
| | $ | 819,828 | | $ | 591,480 | | $ | 2,094,277 | | $ | 1,551,716 |
| | | | | | | | | | | | |
Income from operations | | | | | | | | | | | |
| BMC West | $ | 43,644 | | $ | 31,564 | | $ | 113,549 | | $ | 72,129 |
| | | | | | | | | | | | |
| BMC Construction | | 47,118 | | | 17,941 | | | 112,406 | | | 38,008 |
| | | | | | | | | | | | |
| Corporate and other | | (14,942) | | | (14,425) | | | (48,935) | | | (37,933) |
| | $ | 75,820 | | $ | 35,080 | | $ | 177,020 | | $ | 72,204 |
We evaluate our results of operations including and excluding acquisitions. We believe a presentation of sales and income from operations excluding recent acquisitions enhances an understanding of the acquisitions as well as comparable operations for the respective periods.
A reconciliation of sales and income from operations before recent acquisitions for the three and nine months ended September 30, 2005 and 2004 is provided in the following table:
| | Three Months Ended September 30 | | Nine Months Ended September 30 |
| | | 2005 | | | 2004 | | | 2005 | | | 2004 |
Sales | | | | | | | | | | | |
| BMC West | $ | 417,428 | | $ | 379,000 | | $ | 1,146,000 | | $ | 1,014,200 |
| Less: Acquisitions | | (93) | | | ― | | | (19,055) | | | ― |
| | | 417,335 | | | 379,000 | | | 1,126,945 | | | 1,014,200 |
| | | | | | | | | | | | |
| BMC Construction | | 402,400 | | | 212,480 | | | 948,277 | | | 537,516 |
| Less: Acquisitions | | (116,805) | | | ― | | | (193,803) | | | ― |
| | | 285,595 | | | 212,480 | | | 754,474 | | | 537,516 |
| | $ | 702,930 | | $ | 591,480 | | $ | 1,881,419 | | $ | 1,551,716 |
| | | | | | | | | | | | |
Income from operations | | | | | | | | | | | |
| BMC West | $ | 43,644 | | $ | 31,564 | | $ | 113,549 | | $ | 72,129 |
| Less: Acquisitions income | | 2 | | | ― | | | (236) | | | ― |
| | | 43,646 | | | 31,564 | | | 113,313 | | | 72,129 |
| | | | | | | | | | | | |
| BMC Construction | | 47,118 | | | 17,941 | | | 112,406 | | | 38,008 |
| Less: Acquisitions income | | (11,688) | | | ― | | | (16,227) | | | ― |
| | | 35,430 | | | 17,941 | | | 96,179 | | | 38,008 |
| | | | | | | | | | | | |
| Corporate and other | | (14,942) | | | (14,425) | | | (48,935) | | | (37,933) |
| | $ | 64,134 | | $ | 35,080 | | $ | 160,557 | | $ | 72,204 |
