Builders FirstSource reports cash of $131.2 million after 'precautionary' draw on revolver

By Jennifer Lanning Drey

Portland, Ore., Oct. 24 - Builders FirstSource Inc. ended the third quarter with $131.2 million of cash after borrowing $60 million under its revolving credit facility in late September to ensure adequate liquidity, Charles Horn, chief financial officer of Builders FirstSource, said Friday during the company's earnings conference call.

Horn said the draw on the $350 million revolver was a precautionary move, made in light of the pending merger of the facility's lead bank, Wachovia, with Wells Fargo.

"We wanted to be sure we borrowed - had the liquidity there - in case there was a hiccup with Wachovia. It certainly wasn't a case where we needed it," he said.

Following the closing of the bank merger, Builders FirstSource expects to repay the $60 million draw, he added.

Builders FirstSource ended the third quarter with total liquidity of $154.5 million, which included borrowing capacity of $23.3 million under the revolver.

Preserving cash

After facing another challenging quarter, the company intends to hold onto its cash and preserve liquidity, Floyd Sherman, chief executive officer of Builders FirstSource, said during the call.

As part of that effort, the company closed two additional facilities in the third quarter and subsequently decided to exit the New Jersey market, which the company estimates will add between $5 million and $7 million of liquidity in 2009.

Sherman said the company projects challenging market conditions will continue through mid-2010, as the already weakened housing market appears to be getting further damaged by turmoil in the credit markets.

The company's third-quarter sales fell to $288.3 million, compared to $413.9 million in the prior year. Sherman said the 30% decline was primarily driven by decreased housing activity. Lower market prices for commodity lumber and lumber sheet goods also negatively affected sales.

Builders FirstSource posted a third-quarter net loss of $18.9 million, compared to a net loss of $12.0 million in the same period in 2007.

Builders FirstSource is a Dallas-based supplier of building products to professional, large-scale homebuilders.

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