LUMBERYARDS

Defining opportunity at Builders FirstSource

BY HBSDEALER Staff

Builders FirstSource turned in positive fourth-quarter results, including a 31% jump in revenues to $192.7 million. But it was CEO Floyd Sherman’s statement about “[taking] advantage of opportunistic inventory buys” toward the end of the year that caught the attention of many people in the LBM industry. Even the analysts on the Dallas-based company’s Feb. 17 conference call wanted to know more. Was it a temporary thing or a new strategy, one asked?

Praising the acumen of his merchants to make timely buys, Sherman said: “There are times that we can just ride the inventories on a normal replenishment basis, and there are going to be times that we will step in and ensure that we have the complete quarter coverages. So I really can’t say going forward. It is just going to continue to be a mixed bag.”

Another analyst wanted to know if the four-point rise in gross margin points (year-over-year) in commodities was due to the aforementioned “opportunistic inventory buys.”

“That is a combination of good inventory buys [and] fixed-cost absorption,” Sherman said. “It is a combination of improved labor efficiencies in the COG side, the manufacturing side of the business. And also a reflex of slightly improved pricing.”

But how often do these opportunities come along, the analyst wondered? And do you have the money to take advantage of them?

“It is only going to occur a limited number of times during the year,” Sherman said. “Probably 60% of our business is either 60- or 90-day forward pricing. And if we feel that the market conditions for that coverage period is going to be real volatile, then we are going to [protect] the pricing we have in place. We will always look for those small incremental buys that we can do at a real discount to market, just to get the slight improvement in our average costs that we have on materials and inventory. But that is a relatively small piece of the replenishment.”

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Denver Lumber honored by U.S. Senator

BY Brae Canlen

U.S. Senator Mark Udall (D-Colorado) commended Denver Lumber for stocking and selling beetle-killed lumber for construction — and called on home builders and other lumber distributors to do the same. 

"Denver Lumber is filling a much-needed niche in Colorado by supplying beetle-killed wood to home builders,” Udall said in a statement. “I applaud their leadership in putting beetle kill to use and supporting rural economies that depend on our forests." 

The senator pointed out that the Mountain West has millions of acres of beetle-killed trees turning into fuel for wildfires and endangering communities. “Using beetle-killed wood products in home construction is a creative solution that creates multiple wins for Colorado.” Udall added. “It helps clear forests of dead and dying trees, protects public safety, and stimulates jobs in the lumber, forest-management and construction industries across our state.” 

Udall last year called on Colorado home builders to use beetle kill at an event showcasing a home built by New Town Builders, a Denver builder of energy-efficient homes that has pledged to use pine-beetle wood in constructing its homes. Denver Lumber gets its stock from the Intermountain Resources mill, one of the sawmills that was able to renegotiate its timber contracts last year after Udall worked with the U.S. Forest Service to free them from burdensome, pre-recession agreements.

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May-20-2012 09:27 am

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May-12-2012 03:08 pm

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LP restates a larger loss for 2011

BY HBSDEALER Staff

Louisiana-Pacific Corp. reported that it has adjusted its 2011 results to reflect a wider loss in 2011.

After the adjustment, LP’s 2011 net loss was $181.3 million. On Feb. 7, LP reported a net loss of $170.7 million. 

The adjustment comes from a non-cash impairment charge related to its investment in its U.S. Greenfiber joint venture due to information received after the release of earnings.

The building product company said that on Feb. 24, 2012, it was notified that the valuation of this joint venture had decreased significantly based upon work being performed as part of Greenfiber’s annual audit. As a result of this, LP has adjusted its 2011 losses, which were previously reported in a press release dated Feb. 7, 2012.

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