Building Materials Holding Corporation Reports Record Net Income for a Second Quarter.

SAN FRANCISCO--(BUSINESS WIRE)--July 22, 1999--

Building Materials Holding Corporation (Nasdaq:BMHC) today announced that for the quarter ended June 30, 1999, net income was $7.0 million which represents a 48.1% increase over net income of $4.8 million in the same period of 1998.

Net sales for the second quarter ended June 30, 1999 increased 13.3% to $256.0 million, from $226.0 million in the second quarter last year, reflecting same-store sales growth of 8.8%, as well as contributions from acquisitions. Earnings per share for the second quarter were $0.55 per diluted share compared to $0.38 per diluted share in the second quarter of 1998. Weighted average number of diluted common shares for the second quarter was 12,786,655 versus 12,571,874 in the second quarter of 1998.

Gross margin expanded to 25.1% from 24.2%, primarily as a result of the company's ongoing efforts to improve margins through an increased focus on higher margin value-added products such as roof and floor trusses, pre-hung doors and millwork. Value-added products accounted for 33.5% of total sales for the second quarter ended June 30, 1999 compared to 30.4% in the same period in 1998.

Selling, general and administrative expenses, as a percent of sales, were up slightly to 20.0% in the second quarter ended June 30, 1999 compared to 19.7% for the same period in 1998, largely due to increased sales of value-added products that carry higher selling, general and administrative expenses.

"We continued with the execution of our acquisition strategy during the second quarter, completing the purchase of a 49% interest in Knipp Brothers and the acquisition of Western Door Company," said Robert E. Mellor, president and chief executive officer. "The Western Door acquisition was done through our wholly owned subsidiary BMC West Corporation. Knipp Brothers and Western Door had annual sales in 1998 of approximately $115 million and $9 million, respectively. These transactions strengthen the Company's presence in Phoenix, Arizona and Missoula and Kalispell, Montana as well as open up new market opportunities in Las Vegas, Nevada and Tucson, Arizona. In line with our growth strategy, the Knipp Brothers transaction offers us entry into the framing business, a natural extension of our value-added strategy and our focus on becoming a full-service provider to professional contractors and builders. Through the acquisition of Western Door and its millwork operations, we are now the only one-stop full-service building materials distributor in western Montana, giving us additional leverage in providing superior customer service.

"We continue to build market share through acquisitions, increasing the number of locations that offer value-added products and improving the efficiency and profitability at our existing locations. Our ability to successfully execute our strategies resulted in record second quarter net income and sales, solid same-store sales comparisons and gross margin expansion, while building permit activity in our market areas also enhanced growth during the quarter.

"Looking to the balance of 1999, pursuing acquisition opportunities will remain one of the top priorities as consolidation in the building industry continues. We have operations in some of the most attractive building markets in the nation, and we expect to continue to expand our offerings of value-added products and develop new and innovative ways to better serve the needs of professional contractors and builders."

For the six months ended June 30, 1999, net sales were $471.6 million, a 15.1% increase over net sales of $409.6 million in the same period in 1998. Gross margin expanded to 25.1% for the six months ended June 30, 1999 from 24.1% in the first half of 1998. Net income for the six months ended June 30, 1999 grew 70.6% to $9.6 million from $5.6 million in the prior year period, and earnings per share on a diluted basis were $0.75, an increase of 66.7% over earnings per share of $0.45 for the six months ended June 30, 1998.

This news release includes "forward-looking statements" as that term is used in the securities laws. All statements regarding the company's expected financial position, business, strategies and financing plans are forward-looking statements. In addition, in those and other portions of this news release, the words "anticipates," "believes," "estimates," "seeks," "expects," "plans," "intends" and similar expressions, as they relate to the company or its management, are intended to identify forward-looking statements. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, and have based these expectations on its beliefs as well as assumptions it has made, such expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from such expectations include, without limitation, factors such as increased competition, changes in commodity wood prices, the company's ability to identify companies to acquire or to construct its building centers in new markets, general economic conditions, the cyclical and seasonal nature of its business, uncertainties associated with obtaining financing on acceptable terms for future acquisitions, its substantial leverage and its ability to service debt, its ability to retain and attract employees and its ability to integrate acquisitions. For information with respect to factors that could cause actual results to differ from the expectations stated in the forward-looking statements, see the text under the caption "Risk Factors" in the company's Form 10-K for the fiscal year ended December 31, 1998. Potential investors are urged to consider these factors carefully in evaluating the forward-looking statements contained in this news release. All subsequent written or oral forward-looking statements attributable to the company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included herein are made only as of the date of this news release. The company does not intend, and undertakes no obligation, to update these forward-looking statements.

Building Materials Holding Corporation is a leading distributor of building materials to professional new residential and commercial and industrial contractors and builders as well as professional repair and remodel contractors.

-0-

                BUILDING MATERIALS HOLDING CORPORATION
                  CONSOLIDATED STATEMENTS OF EARNINGS
             (Dollars in Thousands, Except Per Share Data)

                      Three Months Ended          Six Months Ended
                      June 30     June 30       June 30      June 30
                        1999        1998          1999         1998

Net Sales         $   256,005  $   226,017  $   471,630  $   409,648

Cost of Sales         191,840      171,413      353,354      311,079
                  -----------  -----------  -----------  -----------
Gross Profit           64,165       54,604      118,276       98,569

Selling,
 General and
 Administrative
 Expense               51,241       44,523       99,195       84,959

Other Income            1,520          451        2,007          824
                  -----------  -----------  -----------  -----------
Income From
 Operations            14,444       10,532       21,088       14,434

Interest Expense        2,999        2,674        5,543        5,171
                  -----------  -----------  -----------  -----------
Income Before
  Income Taxes         11,445        7,858       15,545        9,263

Income Taxes            4,406        3,104        5,985        3,659
                  -----------  -----------  -----------  -----------

Net Income        $     7,039  $     4,754  $     9,560  $     5,604
                  ===========  ===========  ===========  ===========

Net Income
 Per Diluted
 Common Share     $      0.55  $      0.38  $      0.75  $      0.45
                  ===========  ===========  ===========  ===========

Weighted
 Average Number
 of Diluted
 Common Shares     12,786,655   12,571,874   12,792,103   12,520,335
                  ===========  ===========  ===========  ===========