Two of the industry’s largest pro dealers reported losses for their second fiscal quarters, and neither company predicted a change in fortunes any time soon.
Builders FirstSource reported a net loss of $45.9 million for the second quarter, which ended on June 30, 2008, swinging from net income of $8.4 million for the second quarter of 2007. The Dallas-based pro dealer, which ranks ninth on the Home Channel News Top 350 Pro Dealer Scoreboard, posted $307.3 million in sales for its second quarter, a 34 percent decline from $465.1 million during the same period last year.
“Although we cannot predict how long this down turn will last, we generally expect these difficult operating conditions to at least continue through 2008 and 2009,” said CEO Floyd Sherman during the earnings conference call.
Sherman also said the company is diversifying its customer base “through cultivating relationships with custom builders in markets [where] we previously sold predominately to production builders.”
|Q2 net loss$45.9 million|
|Q2 sales$307.3 million Down 34 percent|
Builders FirstSource has also been attempting to shift more of its business more toward light commercial and multi-family. According to Sherman, the company has more than $25 million in projects awarded that are slated to begin in the third and fourth quarter. These projects put pressure on margins, he warned, due in part to the amount of time spent estimating and bidding the jobs. “Typically, you are bidding against [multiple] people also competing for that job,” Sherman said.
While Sherman pointed to “consolidating within some of [our] markets,” the executive said his company has not exited any major markets—yet.
A continued decline in housing starts could put this consideration on the table, he added.
Building Materials Holding Corp. (BMHC) has already pulled out of the Mid-Atlantic market and Florida, according to chairman and CEO Robert Mellor. Closing unprofitable business units is one of the San Francisco-based pro dealer’s strategies to raise cash and p