Builders FirstSource, the Dallas-based pro dealer, reported third-quarter 2008 net sales fell 30.3% to $288.3 million from $413.9 million in July through September 2007. The company also reported a net loss of $18.9 million for the quarter compared to a net loss of $12 million during the same period last year.
The company said its sales decrease was driven by a drop in housing activity within the company's markets that it said had an estimated 39.4% negative effect on sales. Also, said lower market prices for commodity lumber and lumber sheet goods had a 1.4%negative effect on sales.
BFS' selling, general, and administrative expenses decreased $17.6 million, or 18.9%, from the third quarter of 2007. Average full-time equivalent employees for the third quarter 2008 were 22% lower than in the third quarter of 2007, while salaries and benefits fell $12.4 million from 2007, or 21.7%, compared to a 29.6% volume decline. However, offsetting the dealer's declines in selling, general and administrative expenses was a $0.6 million increase in fuel expenses related to higher fuel prices, the company said.
"Our industry is facing unprecedented times," Floyd Sherman, CEO of Builders FirstSource, said in a statement. "Early in the housing downturn, we redirected our focus to conserving cash, which is essential in this business environment. We are more than two years into the downturn and our cash remains strong at $131.2 million. Accordingly, we believe we are well-positioned to withstand the challenging conditions facing our industry."
During the quarter, BFS decided to close a location in South Carolina and another in Ohio. Last week the company, also revealed it would be exiting the New Jersey market and closing five facilities. Altogether, the company said it is closing nine facilities, it did not mention where the other two are.
"Idling and closing facilities are tough decisions to make, but we must evaluate not only the short-term, but also the long-term prospects of our locations to protect our liquidity and ensure the long-term success of Builders FirstSource. We believe these actions will add $5 [million] to $7 million of liquidity in 2009," Sherman added.
The company also revealed, that in response to shaky credit markets in August and September, BFS borrowed a total of $60 million under its $350 million revolving credit facility. As of Sept. 30, the company's cash on hand was $131.2 million, available borrowing capacity was $23.3 million, net of the $35 million minimum liquidity covenant within the credit agreement, and funded debt was $335 million.
CFO Charles Horn said the company used only $4 million of cash during the quarter and the dealer's liquidity "remains strong" at $154.5 million. "The borrowings on our credit facility were purely in response to the uncertainty in the credit markets," Horn said.
Builders FirstSource ranked seventh on the 2008 ProSales 100 with 2007 total sales of $1.59 billion. The company operates 61 yards and 59 manufacturing facilities in 11 states.