Earnings Roundup: Builders FirstSource and Huttig Building Products

Industrial Distribution staff -- Industrial Distribution, 4/25/2008 7:55:00 AM

Builders FirstSource

First-quarter sales plummeted 34 percent to $270.5 million for the Dallas-based building materials distributor, compared with $411.1 million during the same period last year.

The company posted a quarterly net loss of $15.9 million, compared with net income of $232,000 during the first quarter of 2007.

“The macroeconomic conditions that affect our industry have deteriorated for eight consecutive quarters. Housing starts in our markets fell 39.1 percent in the quarter ending March 2008 when compared to the quarter ending March 2007. On a sequential basis, actual housing starts in our markets were down an estimated 17.9 percent, but we saw a slight seasonal improvement in March,” CEO Floyd Sherman said. “With the prolonged decline in macroeconomic conditions, we are experiencing pricing pressure from both our customers and competitors. As a result of these pricing pressures and the de-leveraging of our fixed costs within our manufacturing operations, we experienced a 310 basis point decline in margins.”

“We continue to do all we can to reduce headcount, drive operational improvements, rationalize physical capacity and restructure underperforming locations,” added senior vice president and CFO Charles Horn.

Builders FirstSource said it expects “difficult market conditions” to persist “at least through the first half of 2009,” with increased competition hurting gross margins “for the foreseeable future.”

Huttig Building Products

The St. Louis-based building products distributor posted sales of $166.8 million for the first quarter, down 25 percent compared with $222.4 million during the same period last year.

Huttig reported a net loss of $9.8 million, compared with a net loss of $3.4 million during the first quarter of 2007.

“While seasonally one of our slowest quarters, the 2008 first quarter was also significantly impacted by the 29 percent year-over-year decline in annualized housing starts, to approximately 1.04 million, from approximately 1.46 million in the 2007 first quarter, with annualized housing starts for March 2008 decreasing to under 950,000," president and CEO Jon Vrabely said. “Given this challenge, we continue to pursue all avenues aimed at controlling expenses, improving operating efficiencies, reducing inventories and generating cash.”

Huttig consolidated distribution centers in Kansas City, Mo., and Greensburg, Pa., incorporating those operations into other facilities nearby.

“Looking ahead, Huttig is implementing a Lean manufacturing initiative to identify additional opportunities to improve production and operational efficiencies. The company is also intensifying its efforts to sell slower moving inventory to free up capital and reduce debt,” Huttig said in a statement.