Building Materials Holding (BLGM) 8-K BMHC Announces Second Quarter 2008 Financial Results

Exhibit 99.1

BMHC ANNOUNCES SECOND QUARTER 2008 FINANCIAL RESULTS

· Company reports substantial progress on restructuring initiatives

· Consolidated Sales of $385 million, a 12% increase from first quarter

· Net loss of $31.9 million, a 6% improvement from first quarter

· Consolidated gross margin of 18.8%, up from 17.9% in the first quarter

SAN FRANCISCO (August 14, 2008) - Building Materials Holding Corporation (NYSE: BLG), a leading provider of building materials and construction services to professional residential builders and contractors, today reported sales for the second quarter of 2008 decreased 41% to $385 million from $656 million in the same quarter a year ago. For the six months ended June 30, 2008, sales decreased 38% to $728 million from $1.2 billion in the same period of 2007.

Net loss for the second quarter of 2008 was $31.9 million or $1.10 per share compared to net income of $19.4 million or $0.66 per share in the same quarter a year ago. For the six months ended June 30, 2008, net loss was $65.8 million or $2.27 per share compared to net income of $14.5 million or $0.49 per share in the same period of 2007.

Our operating results in the second quarter included:

· Costs associated with closing and consolidating underperforming business units as follows:

o $8.5 million or $0.25 per share for impairments of customer relationships and leasehold improvements and

o $5.8 million or $0.20 per share to exit certain facility operating leases and other costs.

· $9.4 million or $0.32 per share for income from discontinued operations and the related income tax benefit from our concrete services operations in Florida.

Commenting on second quarter results, Robert E. Mellor, Chairman and Chief Executive Officer, stated, “While our operating results reflect the continued difficult conditions confronting the homebuilding industry, we made substantial progress in our restructuring program during the second quarter, and also experienced sequential improvements in consolidated sales and gross margin.

“As we recently announced, we obtained a temporary waiver from our lending group, which enables us to borrow up to $60 million on our revolver as we work toward reaching agreement on a permanent amendment to our credit facility. We expect this new amendment to be more in line with the Company’s projected performance under current industry conditions. Additionally, we have taken a number of actions aimed at preserving value and enhancing our liquidity going forward. These measures include the wind-down of certain operations, sale of underperforming business units and excess assetsand other restructuring initiatives that will generate tax refunds based upon our existing net operating loss carry-back. We anticipate that these initiatives will reduce annualized SG&A expenses by $20 to $25 million and result in one-time cash proceeds of approximately $50 million to the company over the next three to four quarters.”

Mr. Mellor concluded, “We believe that, over the long term, favorable underlying demographics and increasing core housing demand will continue to support the growth trajectory of the homebuilding industry. We have taken major steps to realign our business to withstand the continuing challenges of this cyclical downturn and to better position the Company for future growth.”

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BMHC Operating Results

(thousands)

	Three Months Ended June 30		%	Six Months Ended June 30		%
	2008	2007	Change	2008	2007	Change
Sales
Building Products	$198,309	$278,978	(29)%	$377,873	$   519,726	(27)%
Construction Services	186,311	377,022	(51)%	349,695	662,448	(47)%
	$384,620	$656,000	(41)%	$727,568	$1,182,174	(38)%
(Loss) income from operations	$(32,561)	$  35,866	n/m	$(50,917)	$     34,629	n/m

For the quarter, sales declined 41% to $385 million from $656 million in the same quarter a year ago. For the six months, sales declined 38% to $728 million from $1.2 billion in the same period a year ago. Consistent with the national weakness in new home construction, sales were lower in all our regions. Single-family building permits in the U.S. were down 43% for the quarter.

For the quarter and six months, loss from continuing operations was a result of:

· substantially lower sales,

· a decline in gross margins due to competitive market conditions, particularly for construction services,

· impairments of $8.5 million for certain customer relationships and leasehold improvements as a result of closing and consolidating underperforming business units and

· additional expenses of $5.8 million to exit certain operating leases as well as other charges.

Loss from continuing operations was offset by lower selling, general and administrative expenses. Despite the additional expense of $5.8 million to exit certain operating leases and other charges, selling, general and administrative expenses were $8.5 million lower for the quarter and $31.8 million lower for the six months compared to the same periods a year ago.

Interest Expense

For the six months, interest expense was 18% or $3.2 million more than the same period a year ago. The increase was principally due to the recognition of unamortized deferred loan costs in connection with the amendment of our credit facility in February 2008.

Income Taxes

Income tax benefit for continuing operations was $0.5 million compared to income tax expense of $8.4 million in the same quarter a year ago. The significant change in our effective tax rate for continuing operations was the result of additional valuation allowance due to uncertainty as to our ability to realize deferred tax assets.

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Income from discontinued operations included $17.8 million in the second quarter for the realization of tax benefits resulting from the closure of operations in Florida.

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 800-291-9234 (Domestic), or 617-614-3923 (International), pass code 22261904. A replay will be available through Thursday, August 21, 2008 by dialing 888-286-8010 (Domestic) or 617-801-6888 (International). The required pass code for the replay is 71656932. 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 teleconference.

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:

· 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, consumer confidence, job formation and other important factors;

· our business model;

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

· our liquidity is dependent on operating performance, compliance with financial covenants and cash resources;

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

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· 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;

· losses of and changes in customers;

· 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;

· intense competition;

· weather conditions including natural catastrophic events;

· exposure to 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;

· 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 in the Annual Report to Shareholders including those related to expectations about homebuilding activity in our markets, demographic trends supporting homebuilding and anticipated sales and operating income 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 reach agreement with our lenders with respect to an amendment to our credit facility, 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 the filing 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)

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Building Materials Holding Corporation

Consolidated Statements of Operations

(thousands, except per share data)

(unaudited)

	Three Months Ended June 30				Six Months Ended June 30				Year Ended December 31
		2008		2007		2008		2007	2007
Sales
Building products	$	198,309	$	278,978	$	377,873	$	519,726	$	997,035
Construction services		186,311		377,022		349,695		662,448		1,182,038
Total sales		384,620		656,000		727,568		1,182,174		2,179,073
Costs and operating expenses
Cost of goods sold
Building products		145,814		202,588		276,497		376,802		722,786
Construction services		166,491		320,548		317,286		567,991		1,027,796
Impairment of assets		8,469		—		8,469		—		272,152
Selling, general and administrative       expenses		98,693		107,199		182,949		214,794		422,694
Other income, net		(2,286)		(10,201)		(6,716)		(12,042)		(9,971)
Total costs and operating expenses		417,181		620,134		778,485		1,147,545		2,435,457
(Loss) income from operations		(32,561)		35,866		(50,917)		34,629		(256,384)
Interest expense		9,246		9,501		20,884		17,719		33,800
Loss (income) from continuing operations    before income taxes and minority    interests		(41,807)		26,365		(71,801)		16,910		(290,184)
Income tax benefit (expense)		457		(8,325)		(3,392)		(4,783)		25,670
Minority interests loss (income)		24		(156)		63		(641)		(1,253)
(Loss) income from continuing operations		(41,326)		17,884		(75,130)		11,486		(265,767)
(Loss) income from discontinued       operations prior to sale		(2,195)		2,471		(5,708)		4,778		2,937
Impairment of assets		6,212		—		6,212		—		64,922
Gain on sale of discontinued operations		—		—		—		—		20,029
Income tax benefit (expense)		17,792		(938)		21,248		(1,813)		(4,990)
Income (loss) from discontinued    operations		9,385		1,533		9,328		2,965		(46,946)
Net (loss) income	$	(31,941)	$	19,417	$	(65,802)	$	14,451	$	(312,713)
Net (loss) income per share:
Continuing operations		$(1.42)		$0.62		$(2.59)		$0.40		$  (9.23)
Discontinued operations		0.32		0.05		0.32		0.10		(1.63)
Basic		$(1.10)		$0.67		$(2.27)		$0.50		$(10.86)
Continuing operations		$(1.42)		$0.61		$(2.59)		$0.39		$  (9.23)
Discontinued operations		0.32		0.05		0.32		0.10		(1.63)
Diluted		$(1.10)		$0.66		$(2.27)		$0.49		$(10.86)

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Building Materials Holding Corporation

Consolidated Balance Sheets

(thousands, except per share data)

(unaudited)

	June 30		December 31			June 30		December 31
	2008		2007			2008			2007
Assets					Liabilities, Minority Interests and Shareholders’ Equity
Cash and cash equivalents	$	56,192	$	60,587
Marketable securities		787		1,872
Receivables, net of allowances					Accounts payable	$	68,289	$	74,025
of $8,652 and $4,656		195,346		200,995	Accrued compensation		28,224		31,537
Inventory		104,307		115,524	Insurance deductible reserves		23,082		27,189
Unbilled receivables		34,793		39,189	Other accrued liabilities		42,431		28,989
Income tax receivable		49,894		9,812	Billings in excess of costs and estimated
Deferred income taxes		—		11,470	earnings		29,119		20,977
Prepaid expenses and other		8,200		8,973	Current portion of long-term debt		379,991		4,923
Assets of discontinued operations		16,492		10,492	Liabilities of discontinued operations		7,854		8,533
Current assets		466,011		458,914	Current liabilities		578,990		196,173
Property and equipment					Insurance deductible reserves		25,439		27,898
Land		40,711		60,052	Long-term debt		1,246		343,937
Buildings and improvements		129,596		135,009	Other long-term liabilities		40,575		44,503
Equipment		178,182		185,958
Construction in progress		19,855		16,134	Minority interests		—		8,591
Accumulated depreciation		(158,732)		(155,083)
Assets held for sale		23,968		—	Commitments and contingent liabilities		—		—
Marketable securities		38,882		40,039
Deferred income taxes		—		11,269	Shareholders’ equity
Deferred loan costs		6,087		4,358	Common shares, $0.001 par value:
Other long-term assets		27,821		30,956	authorized 50 million shares; issued and
Other intangibles, net		47,320		58,310	outstanding 29.5 and 29.2 million shares		29		29
Goodwill		13,886		14,196	Additional paid-in capital		166,642		164,043
Assets of discontinued operations		—		14,732	Deferred compensation common shares obligation		1,309		1,427
	$	833,587	$	874,844	Deferred compensation common shares		(1,309)		(1,427)
					Retained earnings		28,680		94,482
					Accumulated other comprehensive loss, net		(8,014)		(4,812)
					Shareholders’ equity		187,337		253,742
						$	833,587	$	874,844

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Building Materials Holding Corporation

Consolidated Statements of Cash Flows

(thousands)

(unaudited)

	Six Months Ended June 30				Year Ended December 31
		2008		2007	2007
Operating Activities
Net (loss) income	$	(65,802)	$	14,451	$	(312,713)
Items in net (loss) income not using (providing) cash:
Minority interests (loss) income, net		(63)		376		853
Depreciation and amortization		20,525		24,111		48,781
Deferred loan cost amortization		3,188		561		1,123
Impairment of assets		14,681		—		337,074
Share-based compensation		3,267		4,542		8,944
Gain on sale of discontinued operations		—		—		(20,029)
Gain on sale of assets, net		(4,778)		(8,700)		(8,789)
Realized (gain) loss on marketable securities		(419)		7		(408)
Deferred income taxes		19,671		2,485		(19,452)
Accrued loss for acquisition purchase obligation		—		—		5,500
Changes in assets and liabilities, net of effects of acquisitions and          divestitures of business units:
Receivables, net		(363)		(49,128)		68,385
Inventory		11,049		(12,341)		24,599
Unbilled receivables		4,526		(28,664)		3,610
Income tax receivable		(40,082)		674		(7,304)
Prepaid expenses and other current assets		901		(183)		(454)
Accounts payable		4,047		27,746		(22,621)
Accrued compensation		(3,708)		(7,827)		(16,536)
Insurance deductible reserves		(5,202)		2,785		3,557
Other accrued liabilities		(3,689)		(6,032)		(13,033)
Billings in excess of costs and estimated earnings		7,984		8,211		(3,843)
Other long-term assets and liabilities		17,009		(9,254)		(12,560)
Other, net		(3,068)		(1,332)		2,595
Cash flows (used) provided by operating activities		(20,326)		(37,512)		67,279
Investing Activities
Purchases of property and equipment		(11,150)		(15,992)		(32,995)
Acquisitions and investments in businesses, net of cash acquired		(2,600)		(72,214)		(80,961)
Proceeds from dispositions of property and equipment		8,238		16,154		16,905
Proceeds from sale of discontinued operations		—		—		27,176
Purchase of marketable securities		(26,691)		(17,764)		(35,239)
Proceeds from sales of marketable securities		28,696		17,414		52,650
Other, net		(2,452)		(1,509)		(628)
Cash flows used by investing activities		(5,959)		(73,911)		(53,092)
Financing Activities
Net borrowings under revolver		39,000		87,000		—
Principal payments on term notes		(5,806)		(1,750)		(3,500)
Net payments on other notes		(988)		(4,108)		(4,505)
Decrease in book overdrafts		(1,678)		(1,182)		(7,609)
Proceeds from share options exercised		9		163		203
(Taxes) tax benefit for share-based compensation		(792)		253		259
Dividends paid		(2,938)		(5,832)		(11,709)
Deferred financing costs		(4,917)		—		—
Distributions to minority interests		—		(2,203)		(1,223)
Other, net		—		211		212
Cash flows provided (used) by financing activities		21,890		72,552		(27,872)
Decrease in Cash and Cash Equivalents		(4,395)		(38,871)		(13,685)
Cash and cash equivalents, beginning of period		60,587		74,272		74,272
Cash and cash equivalents, end of period	$	56,192	$	35,401	$	60,587
Supplemental Disclosure of Cash Flow Information
Accrued but unpaid dividends	$	—	$	2,939	$	2,938
Cash paid for interest	$	17,667	$	16,812	$	32,827
Cash paid for income taxes	$	952	$	1,899	$	7,233

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