Builders FirstSource chief executive officer Floyd Sherman said the company’s near break-even adjusted EBITDA was its best operating performance since the third quarter of 2007. Does this signal more positive news for the residential construction industry?

“We finished the current quarter with sales of $206.4 million, down just 2.4 percent compared to sales of $211.5 million in the second quarter of 2010,” says Sherman. “While U.S. single-family housing starts and average commodity prices were down 13.1 percent and 20.8 percent, respectively, over this same time period, our sales volume was up slightly, which we believe is indicative of significant market share gains during the quarter.”

Chad Crow, Builders FirstSource senior vice president and chief financial officer, adds that the company’s gross margin percentage was 20.7 percent, up 2.4 percentage points from 18.3 percent in the second quarter of 2010.

“The primary drivers of our margin increase were improved pricing on sales of our manufactured products during the quarter, coupled with less volatility in the commodity markets. We also achieved further cost reductions for the quarter, as selling, general and administrative expenses decreased $2.5 million, or 4.8 percent, compared to the second quarter of 2010,” he said.

But the company acknowledges that challenges still persist.

“Despite our improved results, challenges still persist in the housing industry, as the seasonally adjusted annual rate for U.S. single-family housing starts in June 2011 was 453,000, which was basically flat when compared to June 2010,” says Sherman. “However, for the current quarter actual U.S. single-family housing starts were down 13.1 percent, as compared to the second quarter of 2010. We also saw a similar level of decline in actual U.S. single-family units under construction during the quarter, as they decreased 16.7 percent from the second quarter of 2010.

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