Question-and-Answer Session
Operator
(Operator Instructions) Your first question will come from the line of Michael Cox - Piper Jaffray.
Michael Cox - Piper Jaffray
I’d be interested if you could comment on the gross margin conditions you are seeing in the non-site-built areas of your business.
William G. Currie
Mike, we are seeing pressures in the DIY business. Everybody is kind of fighting for a little bit of market share. And really what’s happened in the marketplace is traditionally there are spreads between, I don’t want to get too technical here, but there are spreads between different grades of lumber.
And so our model was built on taking advantage of those spreads by doing cuts and yields by buying maybe some low-grade lumber, cutting it up and chopping it up and pulling different grades out of it, and what’s happened right now is those spreads have compressed.
And so the difference between number four lumber and number three, and number three and number two, and number two and number one have really compressed and there’s not a lot of difference between them right now. So that’s impacted our margins as much as our competitors chasing us.
Michael Cox - Piper Jaffray
And within industrial, are the margin characteristics there also challenging?
William G. Currie
Yes, it’s a little bit of the same thing. Our advantage was that are pretty creative on how we do some things, plus we imported quite a bit out of Honduras and Brazil, and a lot of that advantage has kind of dried up with what’s happened with the lumber market and what’s happened over in Brazil. So we still have a major advantage over our customers in terms of our expertise, but a lot of our margin opportunity has shrunk.
Michael Cox - Piper Jaffray
You have a done a very nice job in managing working capital through this downturn. I am curious as to what opportunities do you still have as you look to 2008. And then a follow-up on that, the receivable dates have remained very steady. I was just wondering if you could talk about the overall health of your customers particularly in site-built and perhaps manufactured housing.
Michael R. Cole
Yes, with respect to working capital and inventory, we have a goal of increasing our inventory turns by 10%. That’s part of our 2010 goals and it’s one we are starting to make progress on. Started to in the fourth quarter and would expect that we’d continue to make progress on in 2008 and beyond.
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