Building Material Holding Corp.’s 1Q sales plummet 37 percent
Industrial Distribution staff -- Industrial Distribution, 5/12/2008 6:55:00 AM
First-quarter sales for Building Materials Holding Corp. plummeted 37 percent to $355 million, compared with $559 million during the same period last year.The San Francisco-based building materials distributor said its net loss for the quarter was $33.9 million, compared with $5 million during the first quarter of 2007.
BMHC also said it plans to combine the back-office operations of its BMC West and SelectBuild operations and shutter other unprofitable business units that employ 700 people, in a series of moves aimed at saving up to $25 million annually.
“Challenging industry conditions continued across U.S. homebuilding markets during the first quarter. While the very difficult market conditions continued to impact our operating results, once again the distribution side of our business gained market share, with sales declining less than single-family permits in its regions while sustaining gross margins. Our focus remains intently on managing costs, strengthening our balance sheet and structuring for profitability,” chairman and CEO Robert Mellor said. “We are making significant progress on our initiatives to realign our business to the current operating environment. We are aggressively moving forward with plans to streamline our operations. Our employee count was reduced a further 20 percent during the quarter. We are flattening our management structure, simplifying our operational organization and moving ahead with the centralization of key administrative support functions. We will continue to take the necessary actions to realign our business to withstand the prolonged challenging industry dynamics and position the company for the future.”
President and COO Stanley Wilson said the planned streamlining will take the company’s organization from 13 regional operations to seven: Intermountain (Colorado, Idaho, Montana, Utah); Midwest (Illinois); Northwest (Oregon, Washington); Pacific (California, Northern Nevada); Southeast (Florida); Southwest (Arizona, Southern Nevada) and Texas.
“BMC West and SelectBuild have traditionally maintained their independence not only in terms of branding, but also with regard to strategy, purchasing, administration and leadership. While maintaining the unique brand identities of BMC West and SelectBuild, we intend to flatten our management structure and reduce our operational organization from 13 regions into 7 regions. We expect to take advantage of the new synergies created by this realignment, while also working to grow the bottom line by leveraging our purchasing power to improve margins and by streamlining our back-office support functions to reduce expenses,” Wilson said.
Though it did not name the businesses it expects to close, BMHC said those units incurred losses for the last five quarters, representing $120 million in sales and an operating loss of $12 million during 2007. Together the units employ 700 workers.
BMHC said it will also examine another group of businesses for “potential consolidation into other operations.” Those groups, which employ about 1,300 people, posted sales of roughly $435 million last year and operating income of $11 million.
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