Losses narrow at Builders FirstSource
Builders FirstSource, one of the industry’s largest pro dealers, reported sales of $154 million for its fourth fiscal quarter, a 20.2% decline from sales of $192.9 million in the same period a year ago. Net income from continuing operations was $6.2 million, compared with a loss of $48.2 million in the same quarter last year. Net income was $6.6 million, compared with a net loss of $58.9 million in the fourth quarter of 2008.
For the full year, the Dallas-based pro dealer posted sales of $677.9 million compared with $992.0 million, a 31.7% decline. Losses from continuing operations were $56.9 million, compared with $120.6 million in fiscal year 2008. Net loss was $61.9 million in 2009, compared with a $139.5 million loss the previous year.
In a prepared statement, Builders FirstSource CEO Floyd Sherman said the company saw an improving trend in housing starts toward the end of 2009. “However, actual single-family starts dropped 28.4% from 622,000 starts in 2008, to 445,200 starts in 2009. Quarter-over-quarter, national single-family starts were relatively flat, but multi-family starts continued to decline, dropping 62% quarter-over-quarter. While our 2009 sales and gross margin were down $314.1 million and $73.1 million, respectively, from 2008, our adjusted EBITDA decreased only $2.7 million. This was accomplished through our continued focus on reducing operating expenses by managing headcount and rationalizing capacity in order to become a more efficient company,” he said.
Sherman sounded a warning note about a trend he observed during the most recent quarter. “For reasons that are unclear, the industry is experiencing delays in housing starts moving to units under construction. A start is triggered once the dirt work begins. Once the foundation has been established, the start becomes a unit under construction, at which time our potential for revenue begins. The continued decline in the number of homes in the construction pipeline has negatively impacted our revenue. This same trend held true for building activity in the south region, as defined by the U.S. Census Bureau (‘South Region’), which encompasses our entire current geographical footprint.”
Losses narrow at LP
Louisiana-Pacific, one of the industry’s leading producers of oriented strand board, siding and engineered wood products, reported sales of $275.1 million for the fourth quarter of 2009, a 10% increase over sales of $250.2 million in the same period of 2008. Losses from continuing operations were $46.8 million for the quarter, which ended on Dec. 31, 2009. This compares with losses of $339.6 million for the fourth quarter a year ago.
For the full year, LP reported net sales of $1.1 billion, a 23% decline compared with sales of $1.4 billion in fiscal year 2008. The company’s net loss from continuing operations for 2009 was $117 million, compared with $565 million in fiscal 2008.
In the company’s oriented strand board (OSB) division, net sales for the fourth quarter of 2009 rose 4% to $114 million. During the quarter, LP operated eight facilities in the segment. Just prior to year’s end, LP made the decision to permanently close the two previously indefinitely curtailed mills in Athens, Ga., and Silsbee, Texas.
The engineered wood product (EWP) segment posted sales in the fourth quarter of 2009 of $44 million, down 2% from $45 million in the year-ago period.
LP’s Siding segment, which sells into both the new construction and remodeling markets, reported net sales of $86 million in the fourth quarter of 2009, up 13% from $76 million in the year-ago fourth quarter.
In a prepared statement, company CEO Rick Frost said he was glad 2009 was in the rearview mirror. “All of our operating segments improved in 2009, despite housing starts falling by 39%,” Frost said.
Going forward, Frost said LP was prepared to deal with whatever the economy had to offer.
“The consensus view is that the housing market in 2010 will be better than last year, although there is much debate about the pace and magnitude of the recovery,” Frost said. “With current stimulus programs scheduled to end and new programs being considered to improve the job situation and access to funds, the economy is likely to remain volatile. From LP’s perspective, we have demonstrated the flexibility to improve results in a declining market. I believe that our people will continue to respond successfully to whatever market situation arises this year.”
CertainTeed to settle class action lawsuit
CertainTeed has announced its intention to settle a class action lawsuit over a line of asphalt shingles manufactured from 1987 to 2005. The organic shingles, made with a felt reinforcement material, were allegedly subject to premature failure or did not perform up to the expectations of end users.
CertainTeed denies these allegations and asserts that the vast majority of the shingles are free of any defect and will last throughout the warranty period. The parties have agreed to the settlement to avoid the expense, inconvenience and distraction of further litigation, according to CertainTeed’s press release.
The shingles in question, sold under the brand names Hallmark Shangle, Independence Shangle, Horizon Shangle, Custom Sealdon, Custom Sealdon 30, Sealdon 20, Sealdon 25, Hearthstead, Solid Slab, Master Slab, Custom Saf-T-Lok/Saf-T-Lok and the Custom Lok 25, were distributed mainly in the upper Midwestern states and in Canadian provinces north of those states. CertainTeed no longer manufactures these shingles.
The settlement, which still must be approved by a U.S. District Court judge in Philadelphia, will provide enhanced compensation for the removal and replacement of organic shingles during the warranty period. The amount paid per claimant will depend upon a number of factors. A hearing date has been set for June 8, 2010. A Web site, CertainTeedShingleSettlement.com, has been set up for potential claimants.