Bison Building Materials, the nation's 14th-biggest LBM operation, incurred a net loss of $831,274 in January, its worst single month yet, in part because of stocking costs to replace defective merchandise. January's report pushed Bison's total losses to $4.2 million since the Houston-based dealer entered Chapter 11 last June 28.
Bison said in a March 1 filing to U.S. Bankruptcy Court that it took in $8.8 million in January, its best month since October. But its cost of revenues jumped 21% to $6.5 million. In a footnote to its report, Bison said that in January it "began replacing a sginificant amount of products which had previously been sold to customers and which were determined to be defective. The manufacturer has agreed to replace all defective merchandise at no cost to [Bison]. However, the timing of the accounting of these transactions may require a restatement of January financial results in subsequent [monthly operating reports]."
A Bison official told ProSales today that the defective merchandise was a large number of door slabs that went through Bison's door-hanging shop en route to a multifamily project. The door slabs delaminated and had to be replaced, the Bison official said.
Because of that increased cost of goods, Bison's gross profit for January shrank to $2.25 million, its lowest level yet, while its general and administrative costs rose $311,000 to $2.5 million. That left it with a pretax operating loss of $315,469, nearly triple December's loss. Add in over $500,000 in other costs--including $162,131 in reorganization fees--and the total loss came to $831,274.
As of Jan. 31, Bison had $12.9 million in accounts receivable, 23% above December's $10.4 million. Of that January total, $1.5 million, or 11.8%, was past-due at least 91 days. That's down from December's 14.8%.
Bison ranked No. 14 on last year's ProSales 100, with 2008 revenue of $271 million. Based on its second-half 2009 revenue reports, it took in roughly $120 million last year.
In court filings, Bison said its problems came after it began to expand along the Interstate 35 corridor in 2005 and then into Nevada, Arizona, Colorado, Ohio and New Mexico. When the housing downturn occurred, Bison retrenched to its core Texas business in metro Houston and encountered trouble unwinding its ventures outside of Texas.
Last month, the company won a judge's permission to extend its debtor-in-possession creditor facility and to hire WoodRock & Co. to help it find investors or otherwise raise capital. According to the agreement that Houston-based WoodRock made with Bison, WoodRock said its focus would "primarily be related to advising and assistng the company with raising and obtaining equity and/or debt capital." WoodRock also would assist Bison should the company enter into any merger or sale agreement.