BMHC Building Materials

Company Reports Record Sales and Net Income SAN FRANCISCO, Oct. 25 /PRNewswire-FirstCall/ -- Building Materials Holding Corporation (NASDAQ:BMHC), a leading provider of construction services and building materials to professional residential builders and contractors, today reported sales increased 39% to $820 million, compared to $591 million in the same quarter a year ago. For the nine months ended September 30, 2005, sales increased 35% to $2.1 billion compared to $1.6 billion in the same period of 2004. Net income was $41.6 million or $2.81 per share compared to $18.1 million or $1.29 per share in the same quarter a year ago. For the nine months ended September 30, 2005, net income was $96.0 million or $6.57 per share compared to $34.9 million or $2.53 per share in the same period of 2004. "We are pleased to report that our excellent financial performance continued in the third quarter with record sales and net income," said Robert E. Mellor, Chairman, President and Chief Executive Officer. "Our financial results for the quarter were driven by solid performances at BMC West and BMC Construction. Strong demand in our markets, as well as a continued focus on expanding our construction services, enabled us to increase our top line by almost 40% and more than double our net income compared to the same quarter a year ago. We continue to expand and capitalize on our market position in the construction services industry, reflective of our long-term strategy to meet the service and supply needs of our nation's homebuilders." Segment Financial Performance (thousands) BMC West Three Months Ended Nine Months Ended September 30 September 30 2005 2004 2005 2004 Sales $417,428 $379,000 $1,146,000 $1,014,200 Income from operations $43,644 $31,564 $113,549 $72,129 Sales at BMC West increased 10% to $417.4 million compared to $379.0 million in the same quarter a year ago. For the nine months ended September 30, 2005, sales increased 13% to $1.1 billion compared to $1.0 billion in the same period of 2004. Sales increased in all of our operations as construction activity remained strong, especially in our Northwest, Intermountain and Texas regions. Income from operations increased to $43.6 million from $31.6 million in the same quarter a year ago. Income from operations was $113.5 million for the nine months ended September 30, 2005 compared to $72.1 million in the same period of 2004. Record operating income was the result of improved gross margins despite lower commodity wood product prices. BMC Construction Three Months Ended Nine Months Ended September 30 September 30 2005 2004 2005 2004 Sales $402,400 $212,480 $948,277 $537,516 Income from operations $47,118 $17,941 $112,406 $38,008 Sales at BMC Construction nearly doubled to $402.4 million compared to $212.5 million in the third quarter of last year. For the nine months ended September 30, 2005 sales were $948.3 million compared to $537.5 million in the same period a year ago. Sales reflect continuing growth through acquisitions and strong homebuilding activity, particularly in our Las Vegas and Phoenix markets as well as Florida and California. Income from operations increased to $47.1 million from $17.9 million in the same quarter a year ago. Income from operations was $112.4 million for the nine months ended September 30, 2005 compared to $38.0 million in the same period of 2004. The value of our services and effective management of construction contracts as well as recent acquisitions were key factors in the segment's record operating income. Conference Call and Webcast BMHC will host a conference call and audio webcast today at 9 a.m. (Pacific) to discuss financial results for the third quarter ended September 30, 2005. The conference call can be accessed by dialing 877-223-0437 or via audio webcast at http://www.bmhc.com/. A replay will be available through November 1, 2005 by dialing 800-642-1687 (passcode 1297125) and an archive of the webcast will be available on our website for 90 days following the conclusion of the conference call. About BMHC BMHC, a Fortune 1000 company, is one of the largest providers of residential construction services and building materials in the United States. We serve the homebuilding industry through two subsidiaries: BMC West distributes building materials and manufactures building components for professional builders and contractors in the western and southern states; BMC Construction provides construction services to high-volume production homebuilders in key growth markets across the country. To learn more about BMHC, visit our website at http://www.bmhc.com/. BUSINESS RISKS AND FORWARD-LOOKING STATEMENTS There are a number of business risks and uncertainties that affect our operations and therefore could cause future results to differ from past performance or expected results. Additional information regarding business risks and uncertainties is contained in Item 1 of our most recent Form 10-K. These risks and uncertainties may include, but are not limited to: -- demand for homebuilding which is influenced by changes in the overall condition of the U.S. economy, including job formation, interest rates, consumer confidence and other important factors; -- fluctuations in our costs and availability of sourcing channels for commodity wood products and building materials; -- changes in the business models of our customers; -- intense competition; -- integration of acquired businesses may not result in anticipated cost savings and revenue synergies being fully realized or it may take longer to realize than expected; -- our ability to identify suitable acquisition candidates; -- availability of and our ability to attract, train and retain qualified individuals; -- unanticipated weather conditions including natural catastrophic events; -- implementation of cost structures that align with revenue growth; -- actual and perceived vulnerabilities as a result of terrorist activities and armed conflict; and -- numerous other matters of a local and regional scale, including those of a political, economic, business, competitive or regulatory nature. Certain statements made in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements about our expectations, anticipated financial results and future business prospects are forward-looking statements. While these statements represent our current judgment on what the future may hold and we believe these judgments are reasonable, these statements involve risks and uncertainties that could cause our actual results to differ materially from those in forward-looking statements. These factors include, but are not limited to the risks and uncertainties cited in the above paragraph. Undue reliance should not be placed on such forward-looking statements, as such statements speak only as of the date of this news release. We undertake no obligation to update forward-looking statements. Building Materials Holding Corporation Consolidated Statements of Income (thousands, except per share data) (unaudited) Three Months Ended Nine Months Ended September 30 September 30 2005 2004 2005 2004 Sales Building products $360,202 $335,837 $997,717 $902,450 Construction services 459,626 255,643 1,096,560 649,266 Total sales 819,828 591,480 2,094,277 1,551,716 Costs and operating expenses Cost of goods sold Building products 261,384 255,509 730,811 685,900 Construction services 371,963 217,166 889,336 558,772 Impairment of assets -- -- 463 1,273 Selling, general and administrative expenses 112,084 85,284 299,426 235,543 Other income, net (1,423) (1,559) (2,779) (1,976) Total costs and operating expenses 744,008 556,400 1,917,257 1,479,512 Income from operations 75,820 35,080 177,020 72,204 Interest expense 3,629 4,273 10,177 10,184 Income before income taxes and minority interests 72,191 30,807 166,843 62,020 Income taxes 25,474 11,815 58,855 22,763 Minority interests income (5,153) (896) (11,962) (4,393) Net income $41,564 $18,096 $96,026 $34,864 Net income per share: Basic $2.94 $1.34 $6.87 $2.60 Diluted $2.81 $1.29 $6.57 $2.53 Building Materials Holding Corporation Consolidated Balance Sheets (thousands, except share data) (unaudited) September 30 December 31 2005 2004 ASSETS Cash and cash equivalents $45,451 $19,496 Marketable securities 4,707 2,216 Receivables, net of $4,721 and $4,367 365,588 238,071 Inventory 163,255 153,391 Unbilled receivables 55,448 17,196 Deferred income taxes 13,534 11,913 Prepaid expenses and other 4,553 7,317 Total current assets 652,536 449,600 Property and equipment Land 44,821 37,036 Buildings and improvements 117,849 104,667 Equipment 150,044 122,105 Construction in progress 8,441 4,956 Accumulated depreciation (116,385) (104,453) Marketable securities 22,330 16,760 Deferred loan costs 3,679 2,084 Other long-term assets 18,925 16,281 Other intangibles, net 21,837 13,692 Goodwill 160,726 80,316 Total assets $1,084,803 $743,044 September 30 December 31 2005 2004 LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS' EQUITY Accounts payable $153,978 $77,591 Accrued compensation 63,493 34,078 Insurance deductible reserves 39,401 26,639 Other accrued liabilities 43,264 26,177 Billings in excess of costs and estimated earnings 31,154 11,274 Current portion of long-term debt 8,973 3,404 Total current liabilities 340,263 179,163 Deferred income taxes 3,300 297 Long-term debt 264,573 206,419 Other long-term liabilities 28,193 23,162 Total liabilities 636,329 409,041 Minority interests 11,443 6,325 Commitments and contingent liabilities -- -- Shareholders' equity Common stock, $0.001 par value: authorized 50,000,000 shares; issued and outstanding 14,365,233 and 13,852,683 shares 14 14 Additional paid-in capital 142,799 124,594 Unearned compensation (3,050) (1,383) Retained earnings 297,140 205,812 Accumulated other comprehensive income (loss), net 128 (1,359) Total shareholders' equity 437,031 327,678 Total liabilities, minority interests and shareholders' equity $1,084,803 $743,044 Building Materials Holding Corporation Segment Information (thousands) (unaudited) Three Months Ended Nine Months Ended September 30 September 30 2005 2004 2005 2004 Sales BMC West $417,428 $379,000 $1,146,000 $1,014,200 BMC Construction 402,400 212,480 948,277 537,516 $819,828 $591,480 $2,094,277 $1,551,716 Income from operations BMC West $43,644 $31,564 $113,549 $72,129 BMC Construction 47,118 17,941 112,406 38,008 Corporate and other (14,942) (14,425) (48,935) (37,933) $75,820 $35,080 $177,020 $72,204 We evaluate our results of operations including and excluding acquisitions. We believe a presentation of sales and income from operations excluding recent acquisitions enhances an understanding of the acquisitions as well as comparable operations for the respective periods. A reconciliation of sales and income from operations before recent acquisitions for the three and nine months ended September 30, 2005 and 2004 is provided in the following table: Three Months Ended Nine Months Ended September 30 September 30 2005 2004 2005 2004 Sales BMC West $417,428 $379,000 $1,146,000 $1,014,200 Less: Acquisitions (93) -- (19,055) -- 417,335 379,000 1,126,945 1,014,200 BMC Construction 402,400 212,480 948,277 537,516 Less: Acquisitions (116,805) -- (193,803) -- 285,595 212,480 754,474 537,516 $702,930 $591,480 $1,881,419 $1,551,716 Income from operations BMC West $43,644 $31,564 $113,549 $72,129 Less: Acquisitions income 2 -- (236) -- 43,646 31,564 113,313 72,129 BMC Construction 47,118 17,941 112,406 38,008 Less: Acquisitions income (11,688) -- (16,227) -- 35,430 17,941 96,179 38,008 Corporate and other (14,942) (14,425) (48,935) (37,933) $64,134 $35,080 $160,557 $72,204 DATASOURCE: Building Materials Holding Corporation CONTACT: Bill Smartt, Senior Vice President and Chief Financial Officer, +1-415-627-9100, or Mark Kailer, Vice President, Treasurer and Investor Relations, +1-415-627-9100, or Ellis Goebel, Senior Vice President, Business Development and Investor Relations, +1-415-627-9100, all of Building Materials Holding Corporation Web site: http://www.bmhc.com/

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