Builders FirstSource Reports Third-Quarter 2010 Results; Posts Loss as Compared to Previous QuarterOctober 25th, 2010 by DWM Magazine
Builders FirstSource Inc. has reported its results for the third-quarter ended September 30, 2010. Sales were $180.4 million compared to $188.9 million last year, a decrease of $8.5 million, or 4.5 percent. Net loss was $20.5 million, or $0.22 per diluted share, compared to net loss of $15.2 million, or $0.39 per diluted share.
“The third quarter of 2010 saw a decline in housing starts as the September seasonally adjusted annual rate for U.S. single-family housing starts decreased to 452,000, down 10.8 percent from September last year,” says Floyd Sherman, Builders FirstSource chief executive officer. “Actual U.S. single-family housing starts for the current quarter were 119,600, down 13.5 percent from the third quarter of 2009. We saw a similar level of decline in actual U.S. single-family units under construction, as they decreased 12.8 percent from the same quarter last year.”
He adds,”While pricing in the commodity markets has stabilized, we continue to experience the same competitive pricing conditions we have been faced with in recent years. As a result, our current quarter gross margins declined 1.2 percentage points compared to the third quarter of 2009, though our margins improved 1.4 percentage points from the second quarter of 2010. From an operating expense perspective, we continue to focus on our cost containment initiatives.”
Chad Crow, Builders FirstSource senior vice president and chief financial officer, reported that the company ended the quarter with approximately $126 million in liquidity, which included $121.4 million in available cash.
“Our cash balance at quarter-end was on forecast and our available liquidity slightly higher than forecast. We received $1.2 million in September from a litigation settlement. Cash used for the current quarter, inclusive of this litigation settlement, was $3.2 million. Reductions in working capital contributed $12.1 million of cash during the quarter, which was offset by $1.6 million of cash used for capital expenditures and $13.7 million of cash used to fund operating losses and cash interest expense. Our focus on working capital management continued, as our accounts receivable days decreased to 35.7 days, compared to 36.4 days in the same quarter last year.”
Despite the challenges Sherman added that the company is committed to its strategy of conserving liquidity while monitoring, and adjusting as necessary, physical capacity and staffing levels.
“As expected, seasonal reductions in working capital helped reduce our use of cash during the quarter,” he said. “We still believe our liquidity at year-end will range from $100-$110 million. While we do not expect 2011 to be a robust year of new home construction, we are hopeful we will see some improvement over 2010, and that 2011 will signal the beginning of a sustained recovery.”