Bolstered by 2005 fourth quarter and annual financial results that again set new company highs, San Francisco–based Building Materials Holding Corp. (BMHC) continues to add additional framing services to its BMC Construction division via acquisition and has declared a two-for-one stock split. As the good times continue to roll for the company, John Fa is climbing on board to plan and coordinate BMHC's real estate activities and long-time company leader and co-founder Ellis Goebel has retired from his position of senior vice president of business development and investor relations.
Goebel, who also held previous roles as vice president and treasurer and as senior vice president of finance, officially retired on Dec. 31, but remains on contract with the company as a consultant for a period of one year. “Ellis was a key player in the 1987 leveraged buyout from Boise Cascade that resulted in the creation of BMC West,” said BMHC chairman, president, and CEO Robert Mellor in an announcement. “As a founder of the company, he has played a significant part in the development and expansion of BMHC over the years. We are grateful for his many contributions and wish him all the best in his well-deserved retirement.”
Goebel, who says he has mixed feelings leaving the BMHC offices, is nevertheless looking forward to spending time traveling with his wife, Nancy. “The thing I have not done since I got out of college about 700 years ago was to take time to travel,” Goebel says. “I've purchased an SUV, and I'm going to start here in the Western United States. To begin with, I've never been to Yosemite, I've never been to the Grand Canyon, I've never been to Glacier National—just so many places that I've heard about and always wanted to go to.”
Goebel points to two distinct milestones as standout memories in his career with BMHC, the first being the aforementioned 1987 leveraged buyout of what was then Boise Cascade's distribution arm, and the second the development and success of BMC Construction, BMHC's construction services division. “At the time of the buyout we had about $150 million in sales, $700,000 in equity, and owed Wells Fargo and others about $40 million, but no one thought for a second that we would ever fail,” Goebel says. “We have always had a lot of faith in our people. It is hard to find someone [at BMHC] that is not fully dedicated and simply just a great human being, and coming with them from $150 million in sales but making no money to where we are today, it's just been extremely exciting.”
As a result of Goebel's retirement, company vice president and treasurer Mark Kailer assumes responsibility for BMHC's investor relations. Business development responsibilities will be assumed by management for the company's operating subsidiaries BMC West and BMC Construction. In other executive moves, the company announced Jan. 4 the appointment of Fa to the position of vice president of real estate. Fa, who holds a degree in construction management from the University of Washington and previously held positions with San Francisco–based Presidio Trust, Charles Dunn Real Estate Services, and Turner Construction Co., will work directly with management to plan and coordinate BMHC's real estate activities associated with its expansion and the establishment of new facilities, including office and facility site location, permitting and construction management, and land and building acquisitions and leasing.
According to Mellor, Fa's appointment comes at a critical time for BMHC as the company continues to make progress on its strategy to increase services and consequently increases the size and complexity of its real estate holdings. “We believe it is [an] appropriate [time] to selectively enhance our staffing,” Mellor said in the announcement. “We are very pleased to welcome John to BMHC and we look forward to his contributions in this newly created position. His experience in construction management and real estate development will be a valuable asset to us as we continue to grow the company.”
Handling Growth Like others in the industry, BMHC has been growing at a healthy clip for the better balance of the last 24 months. With acquisitions and organic operations in both the BMC Construction and BMC West operating divisions adding to the company's bottom line, BMHC has reported record quarterly results since fourth quarter 2004 and record annual results for the past two years. On a Feb. 7 conference call, the company announced total 2005 sales of $2.9 billion, a 39 percent increase over 2004.
Per division, BMC West saw what Mellor described during the call as a “rock solid year” with overall sales increasing 14 percent to $1.5 billion. “BMC West benefited from the strength of its markets, with operations in Texas, the Northwest, and inter-mountain regions performing particularly well,” Mellor said, adding that operating income for the division increased 57 percent over 2004. For BMC Construction, operating income increased by more than 170 percent and sales surged 85 percent to $1.4 billion, due in part to the addition of recent acquisitions and strong home builder activity in the division's core Phoenix and Las Vegas markets. “BMC Construction's performance in 2005 was again outstanding,” said Mellor. “While acquisitions grew BMC Construction at a rapid pace, we were prepared for this growth and are managing the acquisitions with a disciplined approach. The addition of new services has strengthened our position in key home building regions and we anticipate that acquisitions will continue to be a significant component of growth at BMC Construction.”
BMC Construction, in fact, had already completed two separate 2006 acquisitions in January prior to the Feb. 7 conference call. Adding $225 million in annual sales to the division, the Jan. 11 acquisitions of Palm Springs, Calif.–based Benedetti Construction Management and Reno, Nev.–based MWB Building Contractors provide BMC Construction with additional framing services capacity in the Southern California, and the Northern California and Reno, Nev., markets, respectively.
In light of the company's success on both the acquisition and sales sides over the past two years, BMHC announced the two-for-one stock split on Feb. 5. In conjunction with the split, which took effect on March 14 for all shareholders on record as of Feb. 28, the BMHC board of directors also increased the company's quarterly cash dividend by 33 percent and declared a first quarter 2006 cash dividend of 10 cents per common share, on a split-adjusted basis.
“We have been successful in implementing our strategy of expanding geographically and broadening our construction services to better meet the needs of high-volume production home builders while continuing to provide building materials and service solutions to regional and custom home builders,” Mellor said in an announcement. “This stock split, as well as the increase in our dividend for the third consecutive year, reflects our belief in the long-term strategy of the company.”
