The Dallas-based company attributed the loss to the slumping home construction market, saying that housing starts in the markets it served had fallen 43.1% in the quarter ended June 30 from the year-earlier period. BFS operates in 13 states concentrated mainly in the South and East. It also noted that it was unable to pass along a 12% increase from the first quarter in the prices it paid for lumber and sheet goods.
The $45.9 million net loss compares with an $8.4 million net profit in 2007's second quarter. Sales declined to $307.3 million this quarter from $465.1 million a year ago. The gross margin percentage shrank to 21.6% from the year-earlier 25.1% due to the slumping market and what BFS called "the de-leveraging of fixed costs within our manufacturing facilities."
"With the continued decline in housing starts and general macroeconomic conditions that affect our industry, we have not wavered from our commitment to reduce operating costs," BFS CEO Floyd Sherman said in a statement. "We continue to evaluate our costs and make necessary reductions. We were able to reduce our selling general and administrative costs by 18.8% from the second quarter of 2007. We also successfully gained market share during the quarter through developing customer relationships and diversifying our customer base."
As examples of expense cuts, BFS noted that the number of fulltime employees was 22% in the second quarter than the year-earlier period, while salaries and benefits expenses fell 22.6% (about $14 million).
With the second-quarter numbers, BFS now has recorded a net loss of $61.8 million for the first half of 2008 on a 33% decline in sales to $577.8 million. Prefabricated components figured into roughly 19.7% of its sales compared with 24.6% for windows and doors, 24.3% for lumber and lumber sheet goods, 10.6% for millwork and 20.8% for other products and services.
BFS said it expects the housing market to remain difficult throughout this year and all 2009.