LBM Expo kicks off in Connecticut
The Northeastern Retail Lumber Association’s (NRLA’s) marquee event officially begins today at MGM Grand at Foxwoods in Mashantucket, Conn.
Seminars focusing on Wood I-joists, Laminated Veneer Lumber and interior doors bolster an NRLA agenda that also includes an all-day product demonstration zone. The Expo’s show floor will draw to a close Friday, Jan. 27, at 3 p.m.
Other highlights include a "Two Year Outlook for the North American Panel and Softwood Lumber Markets," and a Wednesday night Indusrty Recognition Dinner and Reception.
Obit: Bruce Gale of Higginbothams
Bruce Gale, a 49-year-old lumberyard manager of Higginbotham-Bartlett Co. in Colorado City, Texas, passed away on Jan. 18.
Gale spent most of his life in Colorado City. He was very active in the 4-H association, loved playing golf and was a Tony Stewart fan. He also loved hunting and fishing.
Gale was voted “Most Wittiest” in his High School class. For more information, visit the website of Kiker-Seale Funeral Home.
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S&P downgrades Builders FirstSource
Standard & Poor’s Ratings Services has lowered its rating on the unsecured notes of Building FirstSource to ‘CC’ from ‘CCC-‘ and revised its recovery rating to ‘6’ from ‘5’ to reflect diminished recovery prospects, given a higher level of first-lien obligations, the credit rating company announced. The ‘6’ recovery rating indicates an expectation for a negligible (0% to 10%) recovery in the event of a payment default.
At the same time, S&P affirmed its corporate credit rating for the Dallas-based LBM chain, stating that the pro dealer has adequate liquidity after having bolstered cash balances with proceeds from a new first-lien term loan.
"Our vulnerable business risk opinion acknowledges that the company’s revenues are down nearly 70% from their cyclical peak. Recent sales improved modestly off of deep lows, but we do not anticipate a more-robust recovery until 2013 at the earliest," said Standard & Poor’s credit analyst James Fielding. "Our highly leveraged financial risk assessment reflects a heavy debt burden that was exacerbated by a new secured term loan. However, the cash proceeds from the new loan provided the company much needed financial flexibility, such that we now view its liquidity profile to be adequate despite our expectation for operating cash flow deficits over the next 12 months."
Builders FirstSource appears to be on track to generate $730 million to $740 million of revenue in fiscal 2011, up modestly from $700 million in 2010, according to S&P estimates. The company has significantly downsized its production capacity and overhead structure but is still likely to generate about $20 million of negative adjusted EBITDA for the year, the analyst note said. This will mark an improvement over a $37 million adjusted EBITDA deficit in fiscal 2010, however.
S&P’s baseline scenario for 2012 assumes that U.S. housing starts improve by about 17% and that Builders FirstSource’s revenues improve 20% as the company gains market share because several of its competitors have downsized or exited the business entirely. The negative rating outlook reflects the firm’s opinion that “extremely difficult operating conditions” won’t meaningfully abate for the LBM company until 2013 at the earliest.
Although it expects a larger jump in U.S. housing starts in 2013 – 29% — the ratings agency still questioned whether Builders FirstSource’s EBITA would be able to fully cover an estimated $37 million of annual interest expense.