Building Materials Holding Corp. (BMHC) returned to using red ink in November, reporting today a combined net loss of $9.2 million that month. But that may end up being an acceptable loss for America's sixth-biggest LBM company, as it aims to reap up to $73 million in income-tax refunds that will help it emerge from Chapter 11.
The $9.2 million aggregate loss across BMHC's 12 business units came primarily on a $5.6 million difference between sales and operating expenses. Sales declined 16.9% in November from the month before to reach $45.1 million, outpacing the 16.3% decline in cost of goods sold (to $36.9 million) and the 13.3% shrinkage in selling, general, and administrative expenses (to $13.7 million).
As of Nov. 30, BMHC had $82.6 million in accounts receivables, down 6.2% from Oct. 31. But $20.2 million of those ARs, were at least 91 days past due. At 24.4% of the total, that's the biggest share of seriously overdue ARs the Boise, Idaha-based BMHC has reported yet.
November's report means that BMHC has incurred $32.1 million in net losses since mid-June, when it filed for protection from creditors under Chapter 11 of the federal bankruptcy laws. The results would have been far worse had the company not booked a $44.8 million income tax benefit in October, enabling it to swing to a $17.9 million profit that month.
BMHC--the No. 6 dealer on this year's ProSales 100, with total sales in 2008 of $1.3 billion--hopes to emerge from Chapter 11 on Jan. 4. It took a huge step toward that goal on Dec. 17 when a federal bankruptcy judge approved the company's reorganization plan and gave the green light for it to make two deals that could reap $23 million in tax refunds.
The ruling in Wilmington, Del., by U.S. Bankruptcy Judge Kevin Carey on the reorganization plan clears the way for Boise, Idaho-based BMHC to solicit a vote from claimholders regarding its recovery. Equally significant was Carey's approval of a motion to let BMHC sell its C Construction unit (better known as Ontario Framing, which operates in Southern California) and wind down its SelectBuild Illinois unit. Both deals are prompted in part by recent legislation that lets a company apply current losses to profits in previous years. The previous limit on Net Operating Loss (NOL) carrybacks, as the prevision is known, was two years. The recent change pushed it to five--a significant shift for many building material companies, given the prices they paid for acquisitions and the amount of profits they earned in the middle of this decade.
"Solely as a result of net operating losses sustained from continuing operations in 2009, [BMHC] will be able to realize approximately $50 million of tax refunds by virtue of the 2009 Act," the company said in a filing to U.S. Bankruptcy Court. But it added that it could reap an additional $23 million in tax refunds if by Dec. 31 it could sell C Construction and wind down SelectBuild Illinois.
