Building Materials (NASDAQ:BMHC)
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Company Reports Second Quarter Record Sales and Net Income
SAN FRANCISCO, July 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 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."
Segment Financial Performance
(thousands)
SelectBuild
Three Months Ended Six Months Ended
June 30 $ % 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 Six Months Ended
June 30 $ % 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.
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 Six Months Ended
June 30 $ % 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 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: 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 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, 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.
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.
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
Building Materials Holding Corporation
Consolidated Balance Sheets
(thousands, except share data)
(unaudited)
June 30 December 31
2006 2005
Assets
Cash and cash equivalents $37,885 $30,078
Marketable securities 1,917 3,645
Receivables, net of allowances
of $5,010 and $3,756 404,691 363,527
deductible reserves 33,075 21,872
Inventory 198,846 168,282
Unbilled receivables 82,695 56,128
Deferred income taxes 6,747 5,768
Prepaid expenses and other 9,731 6,967
Total current assets 742,512 634,395
Property and equipment
Land 49,138 47,328
Buildings and improvements 127,882 118,556
Equipment 183,865 166,633
Construction in progress 18,530 9,485
Accumulated depreciation (131,280) (121,525)
Marketable securities 34,724 28,875
Deferred loan costs 4,674 3,616
Other long-term assets 29,362 20,465
Other intangibles, net 75,162 55,227
Goodwill 244,425 187,470
Total assets $1,378,994 $1,150,525
Liabilities, Minority Interests and
Shareholders' Equity
Accounts payable $176,447 $146,627
Accrued compensation 59,086 65,928
Insurance deductible reserves 33,075 21,872
Other accrued liabilities 89,396 51,579
Billings in excess of costs and estimated earnings 53,721 33,799
Current portion of long-term debt 13,804 10,131
Total current liabilities 425,529 329,936
Deferred income taxes 6,177 6,911
Insurance deductible reserves 22,330 20,753
Long-term debt 339,223 278,169
Other long-term liabilities 39,156 30,689
Total liabilities 832,415 666,458
Minority interests 11,746 14,006
Commitments and contingent liabilities -- --
Shareholders' equity
Common shares, $0.001 par 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
Building Materials Holding Corporation
Segment Information
(thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30 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 Six Months Ended
June 30 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
DATASOURCE: Building Materials Holding Corporation
CONTACT: Bill Smartt, Senior Vice President and Chief Financial Officer,
+1-415-627-9100, or Mark Kailer, Vice President, Treasurer and Investor
Relations Officer, +1-415-627-9100, both of Building Materials Holding
Corporation
Web site: http://www.bmhc.com/