Builders FirstSource Reports Third Quarter 2010 Results
Continuing, Mr. Sherman added, "The South Region, as defined by the U.S. Census Bureau and which encompasses our entire geographic footprint, experienced similar trends as actual single-family housing starts for the third quarter of 2010 decreased to 59,400, down 13.7 percent from the third quarter of 2009, and single-family units under construction were down 5.9 percent over the same period."
"While pricing in the commodity markets has stabilized, we continue to experience the same competitive pricing conditions we have been faced with in recent years. As a result, our current quarter gross margins declined 1.2 percentage points compared to the third quarter of 2009, though our margins improved 1.4 percentage points from the second quarter of 2010. From an operating expense perspective, we continue to focus on our cost containment initiatives. During the current quarter, we temporarily idled four manufacturing facilities, two in Maryland and two in Florida, and two distribution centers in South Carolina, in order to reduce operating expenses and excess capacity. Most of the customer demand from these idled facilities will be serviced by other existing locations within the market."
Commenting on the current quarter results, Chad Crow, Builders FirstSource Senior Vice President and Chief Financial Officer, added, "We ended the quarter with approximately $126 million in liquidity, which included $121.4 million in available cash. Our cash balance at quarter-end was on forecast and our available liquidity slightly higher than forecast. We received $1.2 million in September from a litigation settlement. Cash used for the current quarter, inclusive of this litigation settlement, was $3.2 million. Reductions in working capital contributed $12.1 million of cash during the quarter, which was offset by $1.6 million of cash used for capital expenditures and $13.7 million of cash used to fund operating losses and cash interest expense. Our focus on working capital management continued, as our accounts receivable days decreased to 35.7 days, compared to 36.4 days in the same quarter last year. Offsetting this improvement was a decrease in inventory turns, which dropped to 9.5x, compared to 10.5x in the same quarter last year. Accounts payable days held steady quarter-over-quarter at 28.9 days."
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