Building Materials (NASDAQ:BMHC)
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Sales Increase to a Record $885 Million
SAN FRANCISCO, April 25 /PRNewswire-FirstCall/ -- 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 first quarter of 2006 increased 54% to a record $885 million, compared to $573 million in the same quarter a year ago. Net income for the first quarter of 2006 increased 33% to $28.1 million or $0.95 per share compared to $21.1 million or $0.73 per share in the same quarter a year ago. All per share information has been adjusted to reflect the Company's March 2006 two-for-one stock split.
Robert E. Mellor, Chairman, President and Chief Executive Officer, stated, "We are very pleased with our ability to achieve record sales in the first quarter and grow net income by 33%. We completed a number of acquisitions in the last four quarters, which helped drive our record financial performance. While some of our markets have shown softness during the quarter, including parts of California and Colorado, our results also reflect continued strong homebuilding activity in most of our markets, particularly in the Southwest and Texas.
"During the quarter we continued to execute our business strategy focused on broadening our range of construction services and expanding geographically. The additions of Benedetti Construction Management, MWB Building Contractors and Home Lumber to our operations position us to capture additional market share in California and Texas. The high quality of our construction services combined with our ability to reduce construction cycle time add value to the homebuilding process. A significant component of BMHC's recent success has been the increasing market acceptance of our integrated construction services."
Segment Financial Performance
(thousands)
BMC Construction
Three Months Ended March 31
2006 2005
Sales $498,298 $242,242
Income from operations $46,075 $28,532
Sales at BMC Construction increased by $256 million to $498 million, which is more than twice the $242 million reported in the same quarter a year ago. Sales were particularly strong in the Southwest region. Approximately $224 million of the increase reflects acquisitions of construction service
businesses that were not present in the first quarter of 2005. Sales from comparable operations increased 13% or $32 million for the quarter.
Income from operations increased $17.5 million to $46.1 million, up 61% from $28.5 million in the same quarter of the prior year. The increase resulted primarily from acquisitions not present in the first quarter of 2005, as income from comparable operations was approximately level with the first quarter of last year.
BMC West
Three Months Ended March 31
2006 2005
Sales $386,259 $330,686
Income from operations $30,546 $28,875
Sales at BMC West increased by $56 million to $386 million, up 17% compared to $331 million in the same quarter a year ago, primarily reflecting strong sales of building products and manufactured components in Texas as well as the Intermountain and Northwest regions. Sales from comparable operations increased by $48 million, up 15% for the quarter.
Income from operations increased by $1.7 million to $30.5 million, up 6% from $28.9 million in the same quarter a year ago. The increase was principally due to year over year increases at comparable operations.
Corporate
Three Months Ended March 31
2006 2005
Corporate general and administrative $22,235 $17,099
Corporate general and administrative expenses support the operations of our business segments, BMC Construction and BMC West. Although these expenses were $5.1 million higher, they represented only 2.5% of sales compared to 3.0% in the same period a year ago. The first quarter of 2006 included the non-cash impact of $2.2 million of share-based compensation expense as a result of adopting a new accounting principle, various integration expenses related to recent acquisitions and increased incentive compensation.
Credit Facility
The Company also announced that is has exercised an existing option in its syndicated credit facility to add $150 million in borrowing capacity to its revolver. The expansion of the credit facility provides additional flexibility to support the Company's continued growth.
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 first quarter ended March 31, 2006. The conference call may be accessed by dialing 866-277-1181 (Domestic), or 617-597-5358 (International). The required pass code for the live conference call is "BMHC". A replay will be available through Tuesday, May 2, 2006 by dialing 888-286-8010 (Domestic), or 617-801- 6888 (International). The required pass code for the replay is 33345697. The live conference call and replay can also be accessed via audio webcast at BMHC's website at http://www.bmhc.com/. The archive of the webcast will be available for 90 days following the conclusion of the teleconference.
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 Construction 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 http://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, however are not limited to:
* demand for homebuilding 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;
* changes in 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 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; 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, however 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.
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, however 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.
Building Materials Holding Corporation
Consolidated Statements of Income
(thousands, except per share data)
(unaudited)
Three Months Ended
March 31
2006 2005
Sales
Construction services $548,905 $280,045
Building products 335,652 292,883
Total sales 884,557 572,928
Costs and operating expenses
Cost of goods sold
Construction services 448,300 227,484
Building products 246,792 215,648
Selling, general and administrative expenses 136,866 89,993
Other income, net (1,787) (505)
Total costs and operating expenses 830,171 532,620
Income from operations 54,386 40,308
Interest expense 5,590 3,198
Income before income taxes and
minority interests 48,796 37,110
Income taxes 17,810 12,961
Minority interests income, net of income taxes (2,917) (3,001)
Net income $28,069 $21,148
Net income per share:
Basic $0.98 $0.76
Diluted $0.95 $0.73
Building Materials Holding Corporation
Consolidated Balance Sheets
(thousands, except share data)
(unaudited)
March 31 December 31
2006 2005
Assets
Cash and cash equivalents $30,270 $30,078
Marketable securities 8,025 3,645
Receivables, net of allowances of $4,534
and $3,756 412,581 363,527
Inventory 193,663 168,282
Unbilled receivables 86,378 56,128
Deferred income taxes 7,440 5,768
Prepaid expenses and other 9,292 6,967
Total current assets 747,649 634,395
Property and equipment
Land 48,201 47,328
Buildings and improvements 124,363 118,556
Equipment 176,625 166,633
Construction in progress 10,345 9,485
Accumulated depreciation (127,606) (121,525)
Marketable securities 24,613 28,875
Deferred loan costs 3,408 3,616
Other long-term assets 26,270 20,465
Other intangibles, net 78,269 55,227
Goodwill 238,162 187,470
Total assets $1,350,299 $1,150,525
March 31 December 31
Liabilities, Minority Interests 2006 2005
and Shareholders' Equity
Accounts payable $191,189 $146,627
Accrued compensation 51,370 65,928
Insurance deductible reserves 24,816 21,872
Other accrued liabilities 95,458 51,579
Billings in excess of costs and
estimated earnings 40,454 33,799
Current portion of long-term debt 11,939 10,131
Total current liabilities 415,226 329,936
Deferred income taxes 8,375 6,911
Insurance deductible reserves 25,125 20,753
Long-term debt 356,151 278,169
Other long-term liabilities 34,601 30,689
Total liabilities 839,478 666,458
Minority interests 10,770 14,006
Commitments and contingent liabilities -- --
Shareholders' equity
Common shares, $0.001 par value:
authorized 50 million shares; issued and
outstanding 28,939,776 and 28,758,580 shares 29 29
Additional paid-in capital 145,022 143,780
Unearned compensation -- (2,698)
Retained earnings 353,638 328,463
Accumulated other comprehensive income, net 1,362 487
Total shareholders' equity 500,051 470,061
Total liabilities, minority interests
and shareholders' equity $1,350,299 $1,150,525
Building Materials Holding Corporation
Segment Information
(thousands)
(unaudited)
Three Months Ended
March 31
2006 2005 $ change % change
Sales
BMC Construction $498,298 $242,242 $256,056 106%
BMC West 386,259 330,686 55,573 17%
$884,557 $572,928 $311,629 54%
Income from operations
BMC Construction $46,075 $28,532 $17,543 61%
BMC West 30,546 28,875 1,671 6%
Corporate general and
administrative (22,235) (17,099) (5,136) 30%
$54,386 $40,308 $14,078 35%
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, 2006 and 2005 is provided in the following table:
Three Months Ended
March 31
2006 2005 $ change % change
Sales
BMC Construction $498,298 $242,242 $256,056 106%
Less: Acquisitions (223,764) -- (223,764) --
$274,534 $242,242 $32,292 13%
BMC West 386,259 330,686 55,573 17%
Less: Acquisitions (7,551) -- (7,551) --
378,708 330,686 48,022 15%
$653,242 $572,928 $80,314 14%
Income from operations
BMC Construction $46,075 $28,532 $17,543 61%
Less: Acquisitions (17,823) -- (17,823) --
28,252 28,532 (280) (1)%
BMC West 30,546 28,875 1,671 6%
Less: Acquisitions (282) -- (282) --
30,264 28,875 1,389 5%
Corporate general and
administrative (22,235) (17,099) (5,136) 30%
$36,281 $40,308 $(4,027) (10%)
DATASOURCE: Building Materials Holding Corporation
CONTACT: Bill Smartt, Senior Vice President and Chief Financial Officer,
or Mark Kailer, Vice President, Treasurer and Investor Relations Officer, both
of Building Materials Holding Corporation, +1-415-627-9100
Web site: http://www.bmhc.com/