Building Materials Holding (BLGM) 8-K BMHC Announces First Quarter 2007 Financial Results

Exhibit 99.1

  

BMHC ANNOUNCES FIRST QUARTER 2007 FINANCIAL RESULTS

SAN FRANCISCO (April 26, 2007) - Building Materials Holding Corporation (NYSE: BLG), a leading provider of construction services and building materials to professional residential builders and contractors, today reported sales for the first quarter of 2007 decreased 36% to $569 million from $885 million in the same quarter a year ago. Net loss for the first quarter of 2007 was $5.0 million or $0.17 per share compared to net income of $28.1 million or $0.95 per share in the same quarter a year ago.

Robert E. Mellor, Chairman, President and Chief Executive Officer, stated, “Weakness in the homebuilding market continued to be pervasive during the first quarter. Like many of our peers and customers, our quarterly results reflect the sustained industry downturn. On the building materials distribution side of our business, we continued to increase market share. Sales at our construction services operations closely correlated with lower regional building permit activity.

“We have made progress in lowering expenses across our organization during the quarter. However, the market correction continues to be challenging for homebuilders and their suppliers, and we are all focused intently on recalibrating our expense run rates to match significantly lower revenues.”

Segment Financial Performance (thousands)

BMC West

	Three Months Ended March 31
	2007		2006		$ Change			% Change
Sales	$	286,633	$	386,259	$	(99,626	)		(26	%)
Income from operations	$	11,431	$	30,546	$	(19,115	)		(63	%)

1

For the first quarter, BMC West sales decreased 26% to $287 million from $386 million in the same quarter of 2006. Sales volume was down due to a 29% decrease in single-family building permits. Our sales decreased approximately 10% due to declining commodity wood product prices. 

Income from operations for the quarter decreased 63% to $11.4 million from $30.5 million in the same quarter of 2006. While gross margins improved, operating income was impacted by lower volume.

SelectBuild

	Three Months Ended March 31
	2007		2006		$ Change			% Change
Sales	$	282,471	$	498,298	$	(215,827	)		(43	%)
Income from operations	$	2,586	$	46,075	$	(43,489	)		(94	%)

For the first quarter, SelectBuild sales decreased 43% to $282 million from $498 million in the same quarter of 2006. Sales from comparable operations were 49% or $243 million lower due to a decline in job starts relative to the same quarter a year ago. Sales from acquisitions not present in the same quarter of 2006 were 10% of sales or $27 million.

Income from operations for the quarter decreased 94% to $2.6 million from $46.1 million in the same quarter of 2006. Income from comparable operations for the segment was a loss of $0.3 million. Income from operations was adversely impacted by reduced volume and a decrease in gross margins partially offset by a reduction in selling, general and administrative expenses.

Corporate

	Three Months Ended March 31
	2007		2006		$ Change			% Change
Corporate general and administrative	$	13,057	$	22,235	$	(9,178	)		(41	%)

Corporate represents expenses to support the operations of our business segments, SelectBuild and BMC West. For the first quarter, corporate overhead decreased $9.2 million, or 41%, to $13.1 million from $22.2 million in the same period of 2006, primarily due to lower compensation expenses.

2

Interest expense was $2.6 million more than the same quarter a year ago. The increase was due to rising interest rates as well as a larger average balance of debt outstanding due to additional capital investments.

Conference Call and Webcast

Management will host a conference call and audio webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call may be accessed by dialing 866-578-5771 (Domestic), or 617-213-8055 (International), pass code 60799607. A replay will be available through Thursday, May 3, 2007 by dialing 888-286-8010 (Domestic) or 617-801-6888 (International). The required pass code for the replay is 50489074. The live conference call and replay can also be accessed via audio webcast at BMHC’s website at www.bmhc.com. An archive of the webcast will be available 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: 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. Recently, BMHC was named to Fortune Magazine’s 100 Fastest Growing Companies and for a second consecutive year named to the Forbes 400 Best Big Companies. 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 and supply of 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;

· the 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 suitable acquisition candidates;

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

· our ability to implement and maintain cost structures that align with revenue growth;

· changes in the business models of our customers may limit our ability to provide construction services and building products required by 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;

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

3

· disruptions in our information systems;

· actual and perceived vulnerabilities as a result of 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; and

· anti-takeover defenses and certain provisions could prevent an acquisition of our company or limit share price.

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 paragraphs. 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.

For More Information Investor Contacts:

· Bill Smartt, Senior Vice President and Chief Financial Officer, BMHC

· Mark Kailer, Vice President, Treasurer and Investor Relations Officer, BMHC

+1.415.627.9100

· Lisa Laukkanen, The Blueshirt Group for BMHC

+1.415.217.4967

lisa@blueshirtgroup.com

(Tables Follow)

4

Building Materials Holding Corporation

Consolidated Statements of Operations

(thousands, except per share data)

(unaudited)

	Three Months Ended March 31
	2007			2006
Sales
Construction services	$	319,008		$	549,058
Building products		250,096			335,499
Total sales		569,104			884,557
Costs and operating expenses
Cost of goods sold
Construction services		275,402			454,131
Building products		181,078			247,226
Selling, general and administrative expenses		113,822			130,601
Other income, net		(2,158	)		(1,787	)
Total costs and operating expenses		568,144			830,171
Income from operations		960			54,386
Interest expense		8,218			5,590
(Loss) income before income taxes and minority interests		(7,258	)		48,796
Income tax benefit (expense)		2,668			(17,810	)
Minority interests income, net of income taxes		(376	)		(2,917	)
Net (loss) income	$	(4,966	)	$	28,069
Net (loss) income per share:
Basic		$    (0.17	)		$    0.98
Diluted		$    (0.17	)		$    0.95

 

5

Building Materials Holding Corporation

Consolidated Balance Sheets

(thousands)

(unaudited)

		March 31	December 31				March 31	December 31
		2007	2006				2007	2006
Assets					Liabilities, Minority Interests and Shareholders' Equity
Cash and cash equivalents	$	27,901	$	74,272
Marketable securities		5,806		4,337	Accounts payable	$	113,922	$	110,961
Receivables, net of allowances					Accrued compensation		35,080		48,552
of $4,948 and $4,487		288,578		279,829	Insurance deductible reserves		26,731		24,931
Inventory		144,361		144,366	Other accrued liabilities		28,140		103,402
Unbilled receivables		57,331		43,527	Billings in excess of costs and
Deferred income taxes		7,097		8,914	estimated earnings		27,221		27,622
Prepaid expenses and other		18,541		11,166	Current portion of long-term debt		5,072		8,143
Current assets		549,615		566,411	Current liabilities		236,166		323,611
Property and equipment					Deferred income taxes		8,591		9,138
Land		67,539		62,367	Insurance deductible reserves		27,139		25,841
Buildings and improvements		143,410		139,602	Long-term debt		427,009		349,161
Equipment		189,538		188,285	Other long-term liabilities		36,015		41,390
Construction in progress		4,420		8,579
Accumulated depreciation		(145,394)		(139,342)	Minority interests		7,004		7,141
Marketable securities		51,863		53,513
Deferred loan costs		5,200		5,481	Commitments and contingent liabilities		—		—
Other long-term assets		30,539		27,223
Other intangibles, net		105,447		108,792	Shareholders’ equity
Goodwill		306,479		308,000	Common shares, $0.001 par value: authorized 50
	$	1,308,656	$	1,328,911	million; issued and
					outstanding 29.3 and 29.2 million shares		29		29
					Additional paid-in capital		156,794		154,405
					Retained earnings		411,043		418,927
					Accumulated other comprehensive
					(loss), net		(1,134)		(732)
					Shareholders' equity		566,732		572,629
						$	1,308,656	$	1,328,911

6

Building Materials Holding Corporation

Consolidated Statements of Cash Flows

(thousands)

(unaudited)

		Three Months Ended March 31
Operating Activities		2007			2006
Net (loss) income	$	(4,966	)	$	28,069
Items in net (loss) income not using (providing) cash:
Minority interests, net		376			2,917
Depreciation and amortization		12,747			10,182
Deferred loan cost amortization		281			208
Share-based compensation		2,113			2,980
(Gain) loss on sale of assets, net		(363	)		27
Realized gain on marketable securities		(11	)		—
Deferred income taxes		2,443			(208	)
Changes in assets and liabilities, net of effects of acquisitions       of business units:
Receivables, net		(8,749	)		(19,399	)
Inventory		5			(15,096	)
Unbilled receivables		(13,804	)		(22,510	)
Prepaid expenses and other current assets		(7,386	)		(2,257	)
Accounts payable		15,831			35,094
Accrued compensation		(13,494	)		(15,745	)
Insurance deductible reserves		1,800			2,944
Other accrued liabilities		(14,675	)		16,019
Billings in excess of costs and estimated earnings		(401	)		(4,425	)
Other long-term assets and liabilities		(10,057	)		(4,068	)
Other, net		256			(370	)
Cash flows (used) provided by operating activities		(38,054	)		14,362
Investing Activities
Purchases of property and equipment		(8,651	)		(10,409	)
Acquisitions and investments in businesses, net of cash acquired		(61,596	)		(80,005	)
Proceeds from dispositions of property and equipment		1,187			425
Purchase of marketable securities		(8,739	)		(834	)
Proceeds from sales of marketable securities		9,150			581
Other, net		(463	)		(1,777	)
Cash flows used by investing activities		(69,112	)		(92,019	)
Financing Activities
Net borrowings under revolver		79,200			80,700
Principal payments on term notes		(875	)		(313	)
Net payments on other notes		(3,548	)		(688	)
(Decrease) increase in book overdrafts		(10,359	)		329
Proceeds from share options exercised		35			291
Tax benefit for share options		28			328
Dividends paid		(2,915	)		(2,158	)
Distributions to minority interests		(1,003	)		(245	)
Other, net		232			(395	)
Cash flows provided by financing activities		60,795			77,849
(Decrease) Increase in Cash and Cash Equivalents		(46,371	)		192
Cash and cash equivalents, beginning of year		74,272			30,078
Cash and cash equivalents, end of year	$	27,901		$	30,270

7

Building Materials Holding Corporation

Segment Information

(thousands)

(unaudited)

	Three Months Ended March 31
	2007			2006
Sales
BMC West	$	286,633		$	386,259
SelectBuild		282,471			498,298
	$	569,104		$	884,557
Income from operations
BMC West	$	11,431		$	30,546
SelectBuild		2,586			46,075
Corporate and other		(13,057	)		(22,235	)
	$	960		$	54,386

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 months ended March 31, 2007 and 2006 is provided in the following table:

	Three Months Ended March 31
	2007			2006
Sales from comparable operations
BMC West	$	286,633		$	386,259
Less: Acquisitions		(8,529	)		—
		278,104			386,259
Sales from comparable operations
SelectBuild		282,471			498,298
Less: Acquisitions		(27,476	)		—
		254,995			498,298
	$	533,099		$	884,557
Income from comparable operations
BMC West	$	11,431		$	30,546
Less: Acquisitions		210			—
		11,641			30,546
(Loss) income from comparable operations
SelectBuild		2,586			46,075
Less: Acquisitions		(2,907	)		—
		(321	)		46,075
Corporate and other		(13,057	)		(22,235	)
	$	(1,737	)	$	54,386

8