Building Materials Holding (BLGM) 8-K BMHC Announces Second Quarter 2006 Financial Results

Exhibit 99.1

BMHC ANNOUNCES SECOND QUARTER 2006 FINANCIAL RESULTS

Company Reports Second Quarter Record Sales and Net Income

SAN FRANCISCO (July 25, 2006) - Building Materials Holding Corporation (Nasdaq: BMHC), a leading provider of construction services and building materials to professional residential builders and contractors, today reported sales for the second quarter of 2006 increased 31% to $922 million from $702 million in the same quarter a year ago. For the six months ended June 30, 2006, sales increased 42% to $1.8 billion from $1.3 billion in the same period of 2005.

Net income for the second quarter of 2006 was $34.2 million or $1.16 per share compared to $33.3 million or $1.14 per share in the same quarter a year ago. The second quarter included a $2.2 million, or $0.05 per share, impairment charge for goodwill and certain intangibles at our SelectBuild operations. For the six months ended June 30, 2006, net income was $62.2 million or $2.10 per share compared to $54.5 million or $1.87 per share in the same period of 2005.

Robert E. Mellor, Chairman, President and Chief Executive Officer, stated, “Sales and net income for the quarter topped our record results for the same period last year. We were pleased to have achieved an increase in net income despite a slowdown in the overall housing industry. Our growth in the second quarter reflects market share gains from recent acquisitions, as mixed regional results from continuing operations largely offset one another. During the quarter, we focused on the integration of our recent acquisitions, which have served to further extend our operations. We are pleased that our growing range of construction services and our geographic diversity are helping to insulate BMHC from some of the impact of regional market variations in homebuilding activity.”

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Segment Financial Performance

(thousands)

SelectBuild 

	Three Months Ended June 30				$		%			Six Months Ended June 30				$		%
	2006		2005		Change		Change			2006		2005		Change		Change
Sales	$	501,931	$	303,635	$	198,296		65	%	$	1,000,229	$	545,877	$	454,352		83	%
Income from operations	$	47,098	$	36,756	$	10,342		28	%	$	93,173	$	65,288	$	27,885		43	%

For the second quarter, SelectBuild sales increased 65% to $502 million from $304 million in the same period of 2005. Acquisitions not present in the same period of 2005 represented sales of $215 million for the quarter. Sales from comparable operations were down 6%, with particular weakness in our Southeast region.

For the six months ended June 30, sales increased 83% to $1.0 billion from $546 million in the same period of 2005. Acquisitions not present in the same period of 2005 represented sales of $439 million for the six month period. Sales from comparable operations were up 3%.

For the second quarter, SelectBuild income from operations increased 28% to $47.1 million from $36.8 million in the same period of 2005. This increase was due to acquisitions not present in the same period.

For the six months ended June 30, income from operations increased 43% to $93.2 million from $65.3 million in the same period of 2005. Income from comparable operations was down for both the quarter and the six month period as selling, general and administrative expenses were higher due to compensation expenses for additional personnel to support the segment’s expanding operations.

BMC West

	Three Months Ended June 30				$			%			Six Months Ended June 30				$			%
	2006		2005		Change			Change			2006		2005		Change			Change
Sales	$	420,061	$	397,886	$	22,175			6	%	$	806,320	$	728,572	$	77,748			11	%
Income from operations	$	39,178	$	41,030	$	(1,852	)		(5	)%	$	69,724	$	69,905	$	(181	)		─

For the second quarter, BMC West sales increased 6% to $421 million from $398 million in the same period of 2005. The increase was due to acquisitions not present in the same period.

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For the six months ended June 30, sales increased 11% to $806 million from $729 million in the same period of 2005. Sales from comparable operations increased 7% or $53 million. Sales were higher in our Texas, Intermountain and Northwest regions, while the California and Colorado regions were lower compared to the same period a year ago.

For the second quarter, BMC West income from operations decreased 5% to $39.2 million from $41.0 million in the same period of 2005.

For the six months ended June 30, income from operations was down slightly to $69.7 million from $69.9 million in the same period of 2005. Selling, general and administrative expenses were higher for both the quarter and the six month period due to compensation expenses for additional personnel to support higher volume.

Corporate

	Three Months Ended June 30				$		%			Six Months Ended June 30				$		%
	2006		2005		Change		Change			2006		2005		Change		Change
Corporate general and administrative	$	21,959	$	16,894	$	5,065		30	%	$	44,194	$	33,993	$	10,201		30	%

Corporate general and administrative expenses support the operations of our business segments, SelectBuild and BMC West. These expenses as a percent of sales held steady at 2.4% in the second quarter. For the six months ended June 30, these expenses as a percent of sales improved to 2.4% from 2.7% for the same period of 2005.

Conference Call and Webcast

BMHC will host a conference call and audio webcast today at 9 a.m. Pacific Time (12:00 noon Eastern Time) to discuss financial results for the second quarter ended June 30, 2006. The conference call may be accessed by dialing 800-329-9097 (Domestic), or 617-614-4929 (International). The required pass code for the live conference call is “31785112”. A replay will be available through Tuesday, August 1, 2006 by dialing 888-286-8010 (Domestic), or 617-801-6888 (International). The required pass code for the replay is "53971377." The live conference call and replay can also be accessed via audio webcast at BMHC’s website at www.bmhc.com. The archive of the webcast will be available for 90 days following the conclusion of the teleconference.

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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: SelectBuild provides construction services to high-volume production homebuilders in key growth markets across the country; BMC West distributes building materials and manufactures building components for professional builders and contractors in the western and southern states. BMHC was recently named to the Forbes Platinum 400, also known as America’s Best Big Companies, and was selected Pro Dealer of the Year by Home Channel News. 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 1A of our most recent Form 10-K. These risks and uncertainties may include, but are not limited to:

· demand for single-family homes which is influenced by changes in the overall condition of the U.S. economy, including interest rates, job formation, consumer confidence and other important factors;

· our business model;

· integration of acquired businesses may not result in anticipated cost savings and revenue synergies being fully realized or may take longer to realize than expected;

· our ability to identify and acquire suitable acquisition candidates;

· availability of and our ability to attract, train and retain qualified individuals;

· implementation of cost structures that align with revenue growth;

· changes in the business models of our customers;

· fluctuations in our costs and availability of sourcing channels for commodity wood products, concrete, steel and other building materials;

· intense competition;

· weather conditions, including natural catastrophic events;

· construction defect and product liability claims as well as other legal proceedings;

· disruptions in our information systems;

· actual and perceived vulnerabilities as a result of terrorist activities and armed conflict;

· changes to various 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 include, but are not limited to:

· share price fluctuations and

· potential share price limitations due to anti-takeover defenses in our governing documents and certain provisions under Delaware law.

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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	Mark Kailer
Senior Vice President and	Vice President, Treasurer and
Chief Financial Officer	Investor Relations
(415) 627-9100	(415) 627-9100

(Tables Follow)

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Building Materials Holding Corporation

Consolidated Statements of Income

(thousands, except per share data)

(unaudited)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2006			2005			2006			2005
Sales
Construction services	$	560,323		$	356,889		$	1,109,078		$	636,934
Building products		361,669			344,632			697,471			637,515
Total sales		921,992			701,521			1,806,549			1,274,449
Costs and operating expenses
Cost of goods sold
Construction services		452,467			289,889			900,681			517,373
Building products		264,365			253,779			511,243			469,427
Impairment of assets		2,237			463			2,237			463
Selling, general and administrative expenses		139,105			97,349			275,971			187,342
Other income, net		(499	)		(851	)		(2,286	)		(1,356	)
Total costs and operating expenses		857,675			640,629			1,687,846			1,173,249
Income from operations		64,317			60,892			118,703			101,200
Interest expense		6,465			3,350			12,055			6,548
Income before income taxes and minority interests		57,852			57,542			106,648			94,652
Income taxes		20,520			20,420			38,330			33,381
Minority interests income, net of income taxes		(3,157	)		(3,808	)		(6,074	)		(6,809	)
Net income	$	34,175		$	33,314		$	62,244		$	54,462
Net income per share:
Basic	$	1.20		$	1.19		$	2.18		$	1.96
Diluted	$	1.16		$	1.14		$	2.10		$	1.87

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Building Materials Holding Corporation

Consolidated Balance Sheets

(thousands, except share data)

(unaudited)

	June 30 2006			December 31 2005				June 30 2006		December 31 2005
Assets							Liabilities, Minority Interests and Shareholders’ Equity
Cash and cash equivalents	$	37,885		$	30,078		Accounts payable	$	176,447	$	146,627
Marketable securities		1,917			3,645		Accrued compensation		59,086		65,928
Receivables, net of allowances of $5,010 and $3,756		404,691			363,527		Insurance deductible reserves		33,075		21,872
Inventory		198,846			168,282		Other accrued liabilities		89,396		51,579
Unbilled receivables		82,695			56,128		Billings in excess of costs and estimated earnings		53,721		33,799
Deferred income taxes		6,747			5,768		Current portion of long-term debt		13,804		10,131
Prepaid expenses and other		9,731			6,967
Total current assets		742,512			634,395		Total current liabilities		425,529		329,936
							Deferred income taxes		6,177		6,911
Property and equipment							Insurance deductible reserves		22,330		20,753
Land		49,138			47,328		Long-term debt		339,223		278,169
Buildings and improvements		127,882			118,556		Other long-term liabilities		39,156		30,689
Equipment		183,865			166,633		Total liabilities		832,415		666,458
Construction in progress		18,530			9,485
Accumulated depreciation		(131,280	)		(121,525	)	Minority interests		11,746		14,006
Marketable securities		34,724			28,875
Deferred loan costs		4,674			3,616		Commitments and contingent liabilities		─		―
Other long-term assets		29,362			20,465
Other intangibles, net		75,162			55,227		Shareholders’ equity
Goodwill		244,425			187,470		Common shares, $0.001 par
Total assets	$	1,378,994		$	1,150,525		value: authorized 50 million
							shares; issued and outstanding 28,995,803 and 28,758,580 shares		29		29
							Additional paid-in capital		148,398		143,780
							Unearned compensation		─		(2,698	)
							Retained earnings		384,914		328,463
							Accumulated other comprehensive income, net		1,492		487
							Total shareholders’ equity		534,833		470,061
							Total liabilities, minority interests and shareholders' equity	$	1,378,994	$	1,150,525

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Building Materials Holding Corporation

Segment Information

(thousands)

(unaudited)

	Three Months Ended June 30						Six Months Ended June 30
	2006			2005			2006			2005
Sales
SelectBuild	$	501,931		$	303,635		$	1,000,229		$	545,877
BMC West		420,061			397,886			806,320			728,572
	$	921,992		$	701,521		$	1,806,549		$	1,274,449
Income from operations
SelectBuild	$	47,098		$	36,756		$	93,173		$	65,288
BMC West		39,178			41,030			69,724			69,905
Corporate and other		(21,959	)		(16,894	)		(44,194	)		(33,993	)
	$	64,317		$	60,892		$	118,703		$	101,200

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 six months ended June 30, 2006 and 2005 is provided in the following table: 

	Three Months Ended June 30						Six Months Ended June 30
	2006			2005			2006			2005
Sales
SelectBuild	$	501,931		$	303,635		$	1,000,229		$	545,877
Less: Acquisitions		(215,400	)		―			(439,164	)		―
		286,531			303,635			561,065			545,877
BMC West		420,061			397,886			806,320			728,572
Less: Acquisitions		(16,768	)		―			(24,319	)		―
		403,293			397,886			782,001			728,572
	$	689,824		$	701,521		$	1,343,066		$	1,274,449
Income from operations
SelectBuild	$	47,098		$	36,756		$	93,173		$	65,288
Less: Acquisitions income		(17,800	)		―			(35,623	)		―
		29,298			36,756			57,550			65,288
BMC West		39,178			41,030			69,724			69,905
Less: Acquisitions income		(143	)		―			(425	)		―
		39,035			41,030			69,299			69,905
Corporate and other		(21,959	)		(16,894	)		(44,194	)		(33,993	)
	$	46,374		$	60,892		$	82,655		$	101,200

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