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Here's a Side-by-Side Comparison of How the Big Public LBM Companies Are Doing These Days


External forces overwhelmed internal initiatives at most of the publicly traded LBM operations in the second quarter. BMC, Builders FirstSource (BFS), and BlueLinx cited the sharp year-over-year drop in lumber prices. Beacon Roofing Supply and Foundation Building Materials (FBM) talked about the weather. And Huttig noted how concerns over tariffs on Chinese imports affected its sales.


But these factors tended to be regarded as speed bumps, not obstacles, to the companies' growth plans. Among the more notable ones:


* BMC's third automated truss plant, located in Salt Lake City, will come on line this quarter and another one in Seattle will start up early next year. They join automated plants already running in the Atlanta and Austin, TX, markets. "We have an opportunity for five to 10 more," CEO David Flitman says.

* BFS spent $43 million in July to buy three component manufacturing facilities in Nevada and Arizona, and it plans to invest about $30 million in three new truss plants. BFS says it also has put eight more lines in existing components plants and has expanded its door facilities.

* Beacon estimates its digital sales will total about $350 million in the fiscal year ending Sept. 30. That's triple what it did in fiscal 2018, and it's aiming for $1 billion. "We're seeing those customers who engage with us digitally outgrowing our in-store-only customers," CEO Paul Isabella noted.

* Huttig implemented a new ERP system, replacing software that was so old some manufacturers didn't support Huttig's databases.

* BlueLinx has cut its debt by $113 million over the past year. Going forward, BlueLinx has five facilities from its Cedar Creek merger that it isn't using that it believes could be sold for $13 million.


The sharp drop in lumber prices from a year ago hurt revenues by roughly 8.9% year-over-year at BMC and by about 10% at BFS. On the other hand, gross margins went up at both dealers as well as at BlueLinx.


Meanwhile, new weather-related software at Beacon helped the roofing supplier conclude that severe rain in the April-to-June period resulted in approximately 25% to 30% more days in which roofers couldn't work. Beacon gets 70% of its revenue from roofing products, so rain days hurt. In the latest quarter, it led to $85 million worth of reduced sales, Beacon estimates.


FBM is known primarily as a gypsum provider that caters to the commercial market, but the rain was such a force that even it suffered because it couldn't deliver products. The volume of wallboard delivered at the same stores it had in 2Q18 slipped 0.2% because of the weather, the company said.


There were three internal issues in the publics' reports. The biggest was at Beacon, which reported it has been cutting an undisclosed number of staff positions in an attempt to reduce its cost base by $25 million. The majority of those jobs were "in non-customer-facing positions," the company said.


Meanwhile, Huttig COO Bob Furio said the company's switch to a new ERP system "had an impact on our second quarter sales, particularly in the millwork category, though, [it's] impossible to quantify. ... We believe all issues will be fully remediated in the next 60 to 90 days."


And BMC had to record $4.3 million in bad debt expense after it found that a now-dismissed credit managers was manipulating open customer invoices to keep them from aging properly. While painful, the writeoff had no material impact on the $3.62 billion company.

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