Building Materials Holding Corporation Provides Outlook for Third and Fourth Quarter 2001; Outlook Includes Effects from Knipp Brothers Acquisition.

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--Oct. 17, 2001

Building Materials Holding Corporation (Nasdaq:BMHC), a leading provider of construction products and services to professional builders and contractors, today provided its outlook for the third and fourth quarters of 2001.

Following the acquisition of the remaining 51% of Knipp Brothers Industries and related companies (collectively, "KBI") completed in July, BMHC's management conducted an evaluation of KBI's operations and assessed the impact of the acquisition on BMHC. The Company's sales and earnings forecast for the third and fourth quarters incorporates its current outlook as well as the effects from the acquisition.

Net sales for the third quarter of 2001 are expected to be in the range of $321 million to $326 million, and diluted earnings per share for the third quarter of 2001 are expected to be in the range of $0.58 to $0.60, excluding a $0.05, after-tax write-off of BMHC's investment in BuildNet. As reported in the Company's Form 10-Q for the second quarter of 2001, BuildNet filed under Chapter 11 of the Bankruptcy Code on August 8 of this year and is currently conducting an orderly liquidation of its assets. Based on current market conditions and trends, BMHC expects net sales for the fourth quarter of 2001 to be in the range of $260 million to $265 million, and diluted earnings per share to be in the range of $0.19 to $0.22.

"KBI is making a meaningful contribution to BMHC's continued growth in the second half of 2001," said Robert E. Mellor, president and chief executive officer of Building Materials Holding Corporation. "Due in large part to the acquisition, our third quarter net sales are expected to increase approximately 20% compared to the same period last year. With the addition of KBI's framing operations, value-added sales are now expected to be approximately 50% of total sales, and we currently anticipate an increase in value-added sales in the third quarter in the range of 49% to 52% compared to the same period last year. We remain confident that KBI and our expanding framing business will enable us to further strengthen our leadership position in the residential framing market.

"While sales during July and August were in line with our expectations, orders during the month of September were somewhat softer than anticipated. We believe this is a reflection of economic uncertainties resulting from recent events as well as the beginning of an historically seasonally slower period. Although it is difficult at this time to determine any longer-term impact on our business as a result of a softer economy, overall we remain comfortable with our strong market position and the outlook for our business."

About Building Materials Holding Corporation

Building Materials Holding Corporation is a leader in the residential construction market, specializing in providing high quality, value-added products and services to professional residential builders and contractors. BMHC operates through its subsidiaries BMC West Corporation and BMC Framing Inc., with 137 facilities organized into 60 business units in 13 Western and Southern states. Keys to the Company's success include concentration on housing markets where growth outpaces national averages, and a strong management structure that keeps BMHC close to local market trends and to the service needs of its customers.

Business Risks and Forward-Looking Statements

Certain statements made in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks or uncertainties may include, but are not limited to changes in costs of materials sold; changes in selling prices; competition within the building materials supply industry; changes in economic conditions and interest rates; integration of acquired businesses; increases in raw materials and labor costs; retention of key management personnel; consumer confidence; household and job formation; government regulation; and general economic, business and competitive factors, all or each of which may cause actual results to differ from the statements made in this press release. These risks and uncertainties are discussed in detail in Building Materials Holding Corporation's Form 10-K for the fiscal year ended December 31, 2000. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained in the Annual Report on Form 10-K or this news release.