BlueLinks Holdings, Inc. ( BXC) Q3 2010 Earnings Conference Call November 4, 2010 10:00 AM ET Executives Maryon Davis – Director Finance & IR George Judd – President and CEO Doug Goforth – SVP, CFO and Treasurer Analysts Steve Chercover – D.A. Davidson Alan Weber – Robotti & Co. Presentation Operator
With that requirement completed, I’d like to remind our listeners that we have posted slides on our website. We will be referring to these slides during the call, and we encourage you to view them during our remarks. Additionally, the slide package contains an appendix of supplementary tables available for your review.Now, let me turn the call over to our Chief Executive Officer, George Judd. George Judd Thanks Maryon. Good morning and thank you for joining us today. Before beginning our remarks regarding the third quarter 2010 results, I’d like to comment on the termination of the tender offer for the outstanding shares of common stock of BlueLinks Holdings Incorporated by Cerberus ABP Investor LLC, or CII. As previously announced, because CII did not receive a tender of 90% for the outstanding shares, CII decided not to close the tender offer. This means that all shares of intent that had been tendered will be returned to the stockholders that own the shares, and the status of BlueLinks as a publicly traded company will not change. During the tender period we continued to focus on our strategic priorities in this difficult building products market. Our priority was to stay focused on our business and to minimize any distractions to our customers, suppliers and employees. We’re pleased to have the support of the investment community and with this distraction behind us, we’ll continue to work and earn your support in the coming years. Thank you for your support and with that, I’d like to turn the call over to Doug Goforth, our Chief Financial Officer. Doug Goforth Thanks George. Good morning. I’ll start with a brief overview of the quarterly results, followed by a more detailed financial review, then George will provide an operations review of the quarter and close with a final perspective.
Let’s begin with the quarterly overview. During the quarter, we continued to feel the effects of volatile wood product markets and a weak economy. Average benchmark wood based structural prices increased approximately 12% from the third quarter of 2009 to the third quarter of 2010. On a sequential quarter basis, product price volatility, which began in the second quarter of 2010, continued to impact our results as average prices declined approximately 20%.Housing continues to remain weak in the wake of the expiration of the government housing tax credit. Total housing starts in September were at seasonally adjusted annual rate of 610,000 units and were 4.1% above September 2009 rate. Actual total U.S. housing starts declined .8% for the third quarter 2010 compared to the same period last year with single family starts, which our business is closely tied to, down 13.5%. The numbers suggest that the market for new home construction is stabilizing. However, it remains incredibly low by historical standards with current rates approximately 66% below 2006’s peak. The environment for home building and home remodeling continues to face substantial headwind with an overhang of lower inventory, low consumer confidence, and high unemployment. Despite the decline in actual building activity, our sales were approximately $465 million, or up 3.4% from sales of approximately $449 million in the third quarter of 2009. Overall, unit volume declined 1.2% compared to the year ago period. Specialty volume grew 1.3% as we continue to focus on increasing our share of value added products. Structural products volume declined 4.3% as demand for these products softened during the quarter and we lowered our own purchased to limit our exposure to rapidly falling demand and prices. Read the rest of this transcript for free on seekingalpha.com