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BlueLinx Holdings Inc., Atlanta, GA, distributor of building products in North America, reported a drop of 17% in revenues to $1.2 billion for the third quarter ended Sept. 30, 2006. Profit was $2.3 million, compared with $13.9 million in the year-ago period.
The revenue decline reflects a 26.8% drop in structural product sales and a 1.1% sales decline in specialty products. About two-thirds of the decline in structural product sales resulted from 17% decrease in unit volume related to a demand slowdown. (Last year's September saw strong demand for structural products after Hurricanes Katrina and Rita.) The company has also worked to preserve structural product margins as wood-based product prices deteriorated through the quarter.
Specialty unit product unit volume decreased 3.9%, partially offset by increased prices. Overall unit volume for the company's estimated end-use markets declined 8.7% for the period.
For the nine months ended Sept. 30, 2006, profit totaled $21.7 million, compared with $30.1 million for the year-ago period. Sales for the nine months were $3.96 billion, down 7.8% from $4.29 billion the same period a year ago, reflecting lower structural product prices and unit volume that were partially offset by a 6.5% increase in specialty product unit volume.
"Our overall financial performance for the third quarter was significantly impacted by the sharp slowdown in new home construction and continued deterioration of wood-based structural product prices," said Stephen Macadam, CEO. "Housing starts for the quarter fell approximately 19% from year-earlier levels, while prices for key grades of lumber, plywood and OSB, continued deteriorating, dropping another 20% on average from the end of the second quarter. This resulted in lower revenue and net income versus the same period a year ago, when our quarterly performance benefited from the accelerated demand that drove prices sharply higher in September 2005 after Hurricanes Katrina and Rita."
Looking forward, Macadam noted: "We expect a challenging fourth quarter. Our housing related business remained weak in October, and November and December historically are slow months for much of our business. Nevertheless, we believe we have taken the steps necessary to continue progressing in this environment toward our long-term objectives."
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