Builders FirstSource (BFS), America's eighth-biggest LBM company, reported today its net loss shrank by half in the second quarter to $22.6 million from $45.9 million in the year-earlier period on a 37.8% drop in sales to $175.5 million. The Dallas-based dealer also said it had closed its Ohio operations.
BFS was able to trim its loss in part by reducing its overhead. Selling, general and administrative expenses dropped 32.3% to $24 million.
Gross margin climbed a bit to 22.3% from 21.7%, or a 0.6 percentage-point rise. Price accounted for 1.8 points of that increase, but volume took away 0.9 point and there was another 0.3-point setback from a shift in sales mix toward lower-margin installed product sales.
Year over year, activity in every major product category shrank during the second quarter: sales of prefabricated components dropped 34.9% to $35.1 million, window and door sales sank 38.8% to $43 million, sales of lumber and sheet goods dropped 43.4% to $39.5 million, millwork sales fell 37.6% to $18.9 million, and sales of other building products and services declined 33% to $40 million.
"The challenging environment facing the housing industry continued through the second quarter of 2009," Floyd Sherman, BFS' CEO, said in a statement. "... The severity and prolonged nature of the housing downturn has forced substantial capacity reduction within our industry. Several of our largest competitors filed for bankruptcy protection during the quarter, and we were forced to make the tough decision to discontinue our Ohio operations. This decision was not taken lightly, but was made to protect the overall financial health of the company and its remaining 78 locations."
According to BFS' website, the company had a distribution center and millwork operation in Cincinnati and a lumberyard, distribution center, truss plant and wall panel plant in Mason, also located in southwestern Ohio.
Roughly $18.6 million of the $22.6 million net loss was from continuing operations while the rest of the loss, net of tax, was from discontinued operations.
"Our action plan of conserving cash, growing market share, reducing physical capacity, adjusting staffing levels, implementing cost containment programs, and prudently managing credit continues to help us successfully mitigate the impact of the depressed housing market on our operations," Sherman said. "For the current quarter our net cash used was only $2.2 million, excluding a $20 million repayment on our revolving credit facility and the $31.8 million federal income tax refund received during the quarter. This is down from net cash used of $6.6 million during the second quarter of 2008, and was achieved on $106.8 million less sales. Market share gains and further penetration into the multi-family and light commercial segments reduced our sales decline compared to the second quarter of 2008 by an estimated 9%.
"From a capacity standpoint, we closed three locations during the current quarter, all related to our Ohio operations," Sherman continued. "Our average full-time equivalent headcount for the quarter was 3,090, down 40.5% from the second quarter of 2008. ... Our bad debt expense was $0.6 million for the quarter, down from $1.7 million in the second quarter of 2008."
The latest results push BFS' net loss for the first six months of this year to $53.2 million compared with $61.8 million in the year-earlier period. That's on a 37.1% decline in sales to $335.1 million.