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Pricing Pressures Start to Ease for Builders FirstSource

Builders FirstSource Inc., Dallas, TX, (NASDAQ: BLDR) a supplier and manufacturer of structural and related building products for residential new construction, reported sales for 2010 were $700.3 million, up 3.3 percent. The company reported a loss from continuing operations of 94.3 million.

Fourth-quarter sales were $147.1 million, down 4.5 percent from the same period a year ago. The company said it estimates a gain in sales of 3.1 percent due to commodity inflation, but a decline of 7.6 percent due to volume and competitive price pressure. The company reported a loss of $24.6 million in the fourth quarter.

Floyd Sherman, CEO, said competitive pricing pressures remain a concern. "But we have recently seen signs that suggest pricing discipline may be returning to the market."

Gross margins decreased by 2.2 percentage points from 2009 to 2010. "We were able to partially mitigate this margin pressure by continuing our focus on expense control, management of headcount and flexing capacity where appropriate," Sherman said.

He said that he has seen signs that point to improvements in the business, however. "Recently we have seen a return of certain customers that we had previously lost due to pricing," he said. Sherman expects the first six months of 2011 to be difficult, but he is optimistic about the long-term outlook for the industry.

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