The Case for the Homebuilders
Last Thursday, September 3, I suggested that Daily Profit readers might want get some exposure to the homebuilders through a position in Beazer Homes (NYSE:BZH).
Daily Profitreaders have made money on the builders before. I recommended bottom-fishing Hovnanian Enterprises (NYSE:HOV) around $1.90 a share last year. But after the surprise +5% jump in pending home sales for July, the upside story for the builders, and Beazer, just became a lot more compelling.
Beazer is cheap, no doubt. Beazer carries a trailing P/E of 4 and a price-to-book ratio of .69. For investment purposes, the price to book is the important metric because it takes into account the companies assets, rather than just earnings.
What Will Obama Say?
Yesterday, buyers mustered the strength to build on Wednesday's strong rally. In fact, the bulls pushed the S&P 500 above a key resistance point at 1,085.
I've talked at length about how pessimism was at an extreme and a bounce for stocks looked likely. Recent economic data has been good enough to support the notion of an economic recovery, and while not setting records, it is at least strong enough to avoid a double-dip of recession.
Most of the recent data was in line with expectations: factory orders were up 0.1%, productivity was down 1.8% and labor costs were up 1.1%. However, Wednesday's strong new home sales for July (up 5.2% when a loss was expected) was probably the single most important data point.
Hot Topic Inc and Beazer Homes USA Inc Lead Small-Cap Volume
Also included among the results: Sequnom Inc (Nasdaq:SQNM), Xenoport Inc (Nasdaq:XNPT), Callon Pete Co (Nasdaq:CPE), China Agritech Inc (Nasdaq:CAGC) and Energy Conversion Devices Inc (Nasdaq:ENER).
Strategiv Hotels & Resorts Inc and Beazer Homes USA Inc Lead Small-Cap Volume
Also included among the results: Sequnom Inc (Nasdaq:SQNM), Dolan Media Inc (Nasdaq:DM), Eagle Bulk Shipping Inc (Nasdaq:EGLE), Myriad Pharmaceuticals Inc (Nasdaq:MYRX) and Compellent Technologies Inc (Nasdaq:CML).
US Airways Group and Beazer Homes USA Lead Small-Cap Volume
Also included among the results: Dragonwave Inc (Nasdaq:DRWI), Airtran Holdings Inc (Nasdaq:AII), STEC Inc (Nasdaq:STEC), Allos Therapeutics Inc (Nasdaq:ALTH), and Hercules Offshore Inc (Nasdaq:HERO).
Beazer Homes USA and US Airways Group Inc Lead Small-Cap Volume
Also included among the results: Renesola Ltd (Nasdaq:SOL), Tessera Technologies (Nasdaq:TSRA), Energy Conversion Devices (Nasdaq:ENER), MGIC Inventory Corp (Nasdaq:MTG) and Airtran Holdings (Nasdaq:AAI).
Innovative Solutions and Support, Russ Berrie & Co. and Concurrent Computer lead small-cap percentage losers
Innovative Solutions and Support Inc. (Nasdaq:ISSC), Russ Berrie & Co Inc. (Nasdaq:RUS) and Concurrent Computer Corp. (Nasdaq:CCUR) are among the biggest percentage losers in Tuesday's trading among companies with market capitalizations under $1 billion.
Also included among the results: South Finl Group (Nasdaq:TSFG), Berkshire Bancorp Inc. (Nasdaq:BERK), Beazer Homes USA Inc. (Nasdaq:BZH), LandAmerica Financial Group Inc. (Nasdaq:LFG), Clean Diesel Technologies (Nasdaq:CDTI) and Beazer Homes USA Inc. (Nasdaq:BZH).
Here are the biggest percentage losers among small caps:
Protherics, Heelys and Cheviot Financial lead small-cap percentage gainers
Protherics (Nasdaq:PTIL), Heelys Inc. (Nasdaq:HLYS) and Cheviot Financial Corp. (Nasdaq:CHEV) are among the biggest percentage gainers in Thursday's trading among companies with market capitalizations under $1 billion.
Also included among the results: Deltek Inc. (Nasdaq:PROJ), Beazer Homes USA Inc. (Nasdaq:BZH), Noble International (Nasdaq:NOBL), Orexigen Therapeutics Inc. (Nasdaq:OREX), Pzena Investment Management Inc. (Nasdaq:PZN) and Ceco Environmental Corp. (Nasdaq:CECE).
Here are the biggest percentage gainers among small caps:
Russell 2000 outpaces large-cap indices
Small-cap stocks wasted no time validating Friday’s big breakout move, scorching the bears with back-to-back big gains as the inflation picture brightened and the U.S. dollar remained in rally mode. The Russell 2000 (NYSE:IWM) closed up 16.76, or 2.28% at 751.06, notching consecutive daily gains of more than 2% for the first time all year.
Small caps were noticeably strong relative to other large-cap index products, with the percentage gain in the Russell more than double what was generated in the Nasdaq 100, S&P 500 or Dow. “I think small caps are strong relative to other products amid asset shifts. The drop in commodities and investors warming up to equities is helping the small-cap sector,” Nick Kalivas, vice president, financial research with MF Global, told SmallCapInvestor.com in an email interview.
“The action in the small cap sector is a positive for the entire market. I also think that overseas growth is looking relatively weak and this may be causing investors to feel more comfortable with small caps since large corporations have more international exposure,” Kalivas said...
Russell 2000 rebounds, now flat
For no readily apparent reason, small-cap stocks rose above the flat line at about 12:30 p.m. after spending the morning in the red. The index was in the green for only a few minutes before again slipping into negative territory and then bobbing up and down.
Companies providing construction services are among the top performing industry groups. Atlanta-based Beazer Homes USA, Inc. (NYSE:BZH), a small-cap builder of single-family homes, is seeing its stock add more than 10%.
Similarly, shares of Meritage Homes Corp. (NYSE:MTH) are also higher.
Small caps close in the red
The Russell 2000 (NYSE:IWM) fell for the first time this week on news of an unexpected decline in February orders for durable goods. The small-cap index lost 3.16 points, or 0.45%, to 702.11. The Dow Jones Industrial Average (INDU) was off 109.74 points, or 0.88%, to 12,422.86.
On a year-to-date basis, the Russell 2000 has shed 8.34%, while the Dow is down 6.35% and the S&P 500 has decreased 8.66%.
Stocks small and large opened in negative territory and never looked up on news before the start of trading that orders for manufactured durable goods fell 1.7% in February, according to the U.S. Census Bureau. Economists were . . .
Small caps lead the pack
The Russell 2000 (NYSE: IWM) led the pack with the major U.S. indices posting solid gains as investors disregarded mixed earnings news and a decline in housing. The small-cap index added 13.79 points, or 2%, to 702.39. The Dow Jones Industrial Average (INDU) climbed 176.72 points, or 1.45%, to 12,383.89.
On a year-to-date basis, the Russell 2000 has let go 8.31%, while the Dow has let go 6.64% and the S&P 500 has shed 7.79%.
Small-cap stocks began the week with a strong showing despite beginning the session in negative territory following mixed earnings news from major corporate players.
McDonald’s Corp. (NYSE: MCD) reported that sales at restaurants open at least 13 months were unchanged in December, disappointing analysts expecting a rise.
“While severe winter weather throughout the month and softer consumer spending resulted in December U.S. comparable sales being flat, we remain confident in our U.S. business,” said CEO Jim Skinner in a statement.
The result brought out the bears, as consumer spending comprises about 70% of gross domestic product and a decline will surely be bad news for the economy. Previously, retailers had also reported weak December sales, raising the fear that American consumers are pulling back.
However, the fast food chain operator also announced that its net income for the three months ended Dec. 31 increased to $1.27 billion, or $1.06 per share, compared with $1.24 billion, or $1 per share, a year earlier.
Beazer Homes USA completes solicitation of $1.52B in senior notes
Single-family homebuilder Beazer Homes USA, Inc. (NYSE: BZH) reported today that it successfully completed its previously announced solicitation of consents from the holders of its $1.525 billion of outstanding senior notes and senior convertible notes to approve proposed amendments and a proposed waiver for indentures under which the notes were issued.
Beazer said it received consents from holders of more than a majority of the aggregate principal amount of each series of the notes. Beazer, along with its trustee, has executed supplemental indentures to amend the indentures.
Beazer amended the supplemental indentures to change the definition of “permitted liens” in order to restrict it from securing additional debt in excess of $7 million until Beazer has four consecutive fiscal quarters with a consolidated fixed charge coverage ratio of at least 2.0 to 1.0.
The consents also provided Beazer with a waiver of any and all defaults under the indentures that may have occurred or may occur on or prior to May 15, 2008 due to Beazer’s failure to file or deliver reports or other information it would be required to file with the Securities and Exchange Commission.
Shares of Beazer (BZH) gained $0.20, or 1.67%, to $12.20 at 12:22 p.m. ET. Shares of Beazer have been trading in the range of $ 8.00 to $48.60 for the past 52 weeks.
Russell 2000 drops on economic data
The small-cap index (NYSE: IWM) closed in the red on news of generally negative economic reports. The Russell 2000 lost 4.74 points, or 0.58%, to 806.11. The Dow Jones Industrial Average (INDU) dropped 3.33 points, or 0.02%, to 13,671.92.
On a year-to-date basis, the Russell 2000 has increased 2.37%, while the Dow has added 9.60% and the S&P 500 has gained 6.90%.
A volatile day of trading saw small-cap stocks switching from positive to negative territory as investors digested news of the latest economic reports and some earnings news.
The Russell 2000 futures were pointing to a moderately bullish opening following Motorola Inc.’s (NYSE: MOT) announcement that it swung to a third-quarter profit and released a better-than-expected outlook for the fourth quarter.
But small caps spent only a few minutes in the green after the opening, weighed down by news that orders for durable goods fell 1.7% in September, according to the U.S. Commerce Department. Economists were expecting a rise of 1.5% following a downwardly revised drop of 5.3% in August.
However, orders for non-defense capital goods excluding aircraft, a key measure of business investment, added 0.4% after a rise of 1.8% in August.
The major U.S. indices were down but started climbing when the Census Bureau announced that sales of new homes increased 4.8% to an annual pace of 770,000 in September, defying projections of a drop.
Small caps lead the way up
The Russell 2000 (NYSE: IWM) led a mid-session rally that lifted stocks into positive territory, reversing a bearish morning. The small-cap index gained 11.29 points, or 1.41%, to 810.08. The Dow Jones Industrial Average (INDU) added 44.95 points, or 0.33%, to 13,566.97.
On a year-to-date basis, the Russell 2000 has increased 2.88%, while the Dow has added 8.76%.
Small-cap futures were pointing south and stocks opened in the red on news of an economic slowdown. The finance ministers and central bankers from the G7, the world’s top seven industrialized countries, said over the weekend that U.S. economic growth is in for a slowdown due to tighter credit, the housing slump and the high price of oil.
Just before 10 a.m. ET the Russell 2000 had slipped below a level of 790, but then managed to tentatively approach the flat line before finally settling on an upward trajectory at around 12 p.m. ET. The Dow was more volatile and without a clear direction until just before the close.
Helping the bulls was the technology sector, as investors saw a buying opportunity on expectations of strong third-quarter earnings ahead of the release of Apple Inc.’s (Nasdaq: AAPL) third-quarter numbers after the closing.
Small-cap software firm Synplicity Inc. (Nasdaq: SYNP) defied those projections, reporting a slight decline in its third-quarter profit.
Small caps lose big
The bears roared today as the Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) lost ground due to renewed credit fears. The small-cap index dropped 11.80 points, or 1.40%, to 829.37. The Dow retreated 108.28 points, or 0.77%, to 13,984.80.
On a year-to-date basis, the Russell 2000 has increased 5.33%, while the Dow has added 12.11%.
Fears that this summer’s credit problems are still active spread throughout Wall Street today, leading to a steep sell-off.
It all started after Citigroup Inc. (NYSE: C) reported a 57% drop in its third-quarter profit. Net income at the New York-based bank, the largest in the U.S., was $2.38 billion, or $0.47 per share, compared with $5.51 billion, or $1.10 a share, during the same quarter a year earlier.
Citigroup blamed losses from subprime and leveraged loans, fixed-income trading and its U.S. consumer business for the decline in earnings.
Also dragging the financial sector down was news that Citigroup, Bank of America Corp. (NYSE: BAC) and JPMorgan Chase & Co. (NYSE: JPM) will be pooling money to prevent investment funds from having to dump assets into the market.
The pool will try to prop up about $400 billion of structured investment vehicles, which have had trouble refinancing their debt and may even have to sell off assets to pay back investors.
Coldwater Creek, City Telecom and Feldman Mall Properties lead percentage losers
Coldwater Creek Inc. (Nasdaq: CWTR), City Telecom (H.K.) Ltd. (Nasdaq: CTEL) and Feldman Mall Properties, Inc. (NYSE: FMP) are among the biggest percentage losers in Friday's trading among companies with market capitalizations under $750 million.
Here are today's biggest percentage losers:
Beazer Homes USA to restate financials
Beazer Homes USA, Inc. (NYSE: BZH) today said it will need to restate its financial statements for fiscal years 2004 through 2006 and the interim periods of fiscal 2006 and fiscal 2007 as part of the single-family homebuilder’s independent internal investigation into its mortgage origination business and certain accounting and financial reporting matters.
The small cap said the restatement will also impact the financial results for fiscal years 1999 through 2003 and expects it will reflect the impact of financial results for these prior years as a part of the opening balances in the financial statements for the restatement period.
Beazer said it expects the restatement's cumulative impact will likely result in an increase in net income, but will reflect an expected decrease in net income for the company's 2006 fiscal year.
Shares of Beazer (BZH) gained $0.38, or 3.83%, to $10.31 in pre-market trading. Shares of Beazer have been trading in the range of $8.08 to $48.60 for the past 52 weeks.
Isilon Systems, Penwest Pharmaceuticals and Tiens Biotech Group lead small-cap percentage losers
Isilon Systems, Inc. (Nasdaq: ISLN), Penwest Pharmaceuticals (Nasdaq: PPCO) and Tiens Biotech Group Inc. (AMEX: TBV) are among the biggest percentage losers in Thursday's trading among companies with market capitalizations under $750 million.
Here are today's biggest percentage losers:
Beazer Homes to cut expenses, offer discounts
Beazer Homes USA, Inc. (NYSE: BZH) CEO Ian McCarthy said the homebuilder is cutting expenses and offering discounts in order to survive the volatile housing market. The chief executive also told investors Tuesday morning at the Credit Suisse Homebuilder Conference that Beazer is committed to further downsizing if needed.
McCarthy told investors that the Atlanta-based company has cut $60 million in overhead costs and expects to realize $50 million in savings next year.
McCarthy said sales promotions that “hook” buyers will continue.
"I think this is something we have to accept," McCarthy said. "This is something that's part of the business today."
He said an action by the Fed—which cut short-term interest rates for the first time in four years today—would lower borrowing costs to encourage buyers.
He said Beazer will reach cost cutting targets by simplifying its design process and negotiating with suppliers.
In afternoon trading, BZH shares are up 13.83%, or $1.31, at $10.78. Over the last 52 weeks, shares have ranged from $8.10 to $48.60.
Markets continue sharp sell-off
After falling sharply this morning, the Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) have remained under pressure following unexpected bearish employment data indicating that tighter credit might be beginning to take its toll on the broader economy.
Despite a strong sell off, the Russell remains above its 52-week low of 736 reached on August 16. At 12:33 p.m. ET the small-cap index had lost 15.96 points, or 2.01%, to 776.96. The Dow had shed 175.91 points, or 1.32%, to 13,187.44.
The U.S. Labor Department reported before the open that non-farm payrolls fell by 4,000 to the lowest level in four years, from July’s level of 92,000. Economists had forecasted job creation to expand to 115,000.
The unemployment rate clocked in right in line with economists’ estimates, remaining flat at 4.6%, the same rate as in July.
The Labor Department noted that employment in manufacturing, construction, and local government education declined, while job growth continued in health care and food services during the month of August.
Beazer Homes USA receives default notices over delayed Q3 filing
Beazer Homes USA, Inc. (NYSE: BZH) announced before the opening bell that it received default notices from the U.S. Bank National Association, which governs some of the homebuilder’s senior notes. The notices accuse Beazer of defaulting because the company has not yet filed its third quarter report for the three months ended June 30 with regulatory officials.
In a press release, Beazer said the company does not believe it is in default under the indentures governing its outstanding senior notes because the indentures require only that Beazer deliver to the trustee copies of Beazer’s SEC reports within 15 days after such reports are actually filed.
Beazer says the delayed quarterly filing is due to an ongoing internal investigation of the company’s board of directors. Georgia-based Beazer has filed an action in Atlanta’s U.S. District Court against the trustee seeking a legal declaration against the trustee that the delay in filing does not constitute a default.
In pre-market trading, shares of the small-cap are down 6.05%, or $0.66, at $10.25. Over the last 52 weeks, shares have ranged $8.10 and $48.60.
Beazer Homes USA picks Cornerstone OnDemand for employee training
Beazer Homes USA, Inc. (NYSE: BZH) announced before the opening bell that it selected Cornerstone OnDemand, Inc. to support its employee training and development goals. Cornerstone said in a press release that Beazer “required a scalable talent management solution that could be rapidly deployed, easily integrated with existing applications, and offer advanced analytics and metrics tools for management.”
“Cornerstone has also been able to respond to our specific needs for complex integrations and rapid deployment,” said Dorn Fowler, Beazer’s director of training and development, in a press release. “We are happy to have partnered with a vendor who truly understands our business needs.”
Through Cornerstone, Beazer will provide its workforce, arppeoximately 2,700 employees, with 800 online courses and managers will be able to view course progress reports on employees.
“Cornerstone’s talent management suite will positively affect this industry leader’s bottom-line and optimize their workforce, in addition to supporting their plans for growth,” Cornerstone’s CEO Adam Miller said in a statement.
In late afternoon trading, Beazer shares are up 7.66%, or $0.81, at $11.38. Over the last 52 weeks, shares have ranged between $8.10 and $48.60.
Russell 2000 heads rally
At 10:04 a.m. ET the small-cap index had added 9.59 points, or 1.22%, to 797.97. The Dow was up 97.71 points, or 0.75%, to 13,188.57.
MGM Mirage (NYSE: MGM) will sell a 9.5% stake to Dubai World for $5 billion, according to news reports this morning. That comes to a price of $84 per share, 13% above the stock’s closing price of $74.32 on Tuesday.
Under the terms of the deal, which was approved by MGM’s board on Tuesday, Dubai World will also pay $2.7 billion to acquire 50% of CityCenter, a hotel and residential development slated to open in 2009.
Stocks fall on jobs data
The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) are in negative territory following news of weaker-than-expected job creation in July.
At 10:33 a.m. ET the Russell 2000 had lost 7.86 points, or 1%, to 776.13. The Dow was down 94.13 points, or 0.70%, to 13,369.20.
Employers added just 92,000 new jobs in July, down from the 126,000 created in June, the U.S. Labor Department reported before the opening bell. Economists were forecasting non-farm payrolls to increase by 135,000
As a result, the unemployment rate moved up to 4.6%. Observers were expecting it to stay at 4.5%, the level it has held since April.
Government payrolls declined by 28,000, but the services industry added 104,000 jobs.
The average hourly wage for non-supervisory workers increased $0.06, or 0.3%, to $17.45 in July, from $17.39 in June. Workers in the utilities sector were highest paid, while those making a living in the leisure and hospitality industry brought home the smallest paychecks.
The following are the most actively traded company's with market capitalizations under $500 million:
Wall Street fluctuating
The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) are trading sideways on news of conflicting economic reports and credit worries.
At 10:48 a.m. ET the Russell 2000 was down 7.14 points, or 0.92%, to 768.98. The Dow had shed 52.44 points, or 0.40%, to 13,159.65.
An index of pending home resales surprisingly added 5% in June following a 3.7% decline in May, the National Association of Realtors reported after the opening bell.
That’s a sign that the U.S. housing sector may be stabilizing.
Separately, the Institute for Supply Management’s factory index dropped to 53.8 in June, below the forecast 55.5. The index stood at 56 in May. Still, a reading above 50 is a sign of expansion, suggesting that strong global economic growth is driving demand for U.S. manufactured goods.
The indices opened with brief gains but quickly slipped into negative territory following renewed concerns about loans and securities derived from home mortgages. Bear, Stearns & Co. Inc. (NYSE: BSC) triggered the selling after it said that it will prevent investors from pulling their money out of a troubled hedge fund that had bet on securities backed by subprime mortgages.
The following are the most actively traded company's with market capitalizations under $500 million:
Double trouble
The Russell 2000 fell four out of five days this week, dropping a cumulative 58.61 points to its lowest level since March 14.
Credit has been cheap for the past few years, fueling a boom in corporate takeover deals and helping cash-strapped families finance new home purchases.
But fears are mounting that the party is coming to an end.
The U.S. housing sector started to weaken in the second half of 2006, when stagnant prices led to increased delinquencies and foreclosures jumped as borrowers struggled to repay cheap loans.
The pain was first felt by the subprime financial sector, which serves individuals with poor credit histories, but it increasingly appears that there has been a sizeable ripple effect.
A major sell-off
The bears are roaring on fears that U.S. economic growth might slow as the housing sector continues to suffer.
Orders for manufactured durable goods excluding the transportation sector fell 0.7%, the U.S. Census Bureau announced before the opening bell.
Economists, who typically factor out aircraft and automobiles to uncover the underlying trends in orders of durable goods, were expecting a rise of 0.6%.
The backpedaling is a sign that business investment is slowing, a negative development that could chip away at economic growth. Investment is about 20% of the U.S. economy.
Embattled Beazer Homes USA, Inc. slashes costs
During a midday conference call, Beazer Homes USA, Inc. (NYSE: BZH) CEO Ian McCarthy said an oversupply of homes, aggressive price competition from builders and reduced customer demand for new homes will continue to challenge the company. The Atlanta-based company is cutting costs to offset the difficult business environment.
Although the company no longer provides earnings guidance, Beazer expects to have a cash balance that exceeds $300 million at the end of the year, CFO Alan Merrill said.
McCarthy said the company is clearing unsold inventory through a national marketing campaign. For the third quarter ended June 30, Beazer slashed home construction and land sales expenses to $0.65 million, from $0.88 million in the year-ago period. The company also cut its per-home cost. Next year, Beazer expects to benefit from $50 million in cost savings, Merrill said.
Meanwhile, Beazer’s legal troubles continue to mount. In March, Beazer announced that it received a subpoena from the United States Attorney’s office in North Carolina, seeking the company’s documents relating to mortgage origination. On May 1, the SEC launched an informal inquiry to determine if Beazer had violated federal securities laws. On July 20, the company received a formal order of private investigation from the SEC. In addition, McCarthy said the company has been named a defendant in several class action lawsuits.
In response to the legal allegations, Beazer’s audit committee launched an internal review of the company’s mortgage origination business.
“Management is fully cooperating with this investigation,” McCarthy said. “The company cannot predict the ultimate outcome of these matters.”
The results of the investigation could result in criminal or civil fines, an adjustment of business operations or other penalties. On advice of counsel, McCarthy would not divulge any further information to investors, but said the company will not engage in stock or bond buybacks while the investigation is ongoing.
Before the opening bell, Beazer announced a net loss of $123 million, or $3.20 per share, on $761 million in revenue for the third quarter ended June 30. In the same period of 2006, Beazer recorded a profit of $102.6 million, or $2.37 per share, on $1.2 billion in revenue.
Beazer Homes USA Inc. swings to a loss in Q3
Shares of Beazer Homes USA Inc. (NYSE: BZH) are sliding in pre-market trading this morning after the builder of single-family homes reported it swung to a loss in its fiscal third-quarter.
The Atlanta, Ga.-based company said the loss was attributable to price cuts the homebuilder implemented to spur sales as well as major charges taken to write down the value of unsold inventory.
For the three months ended June 30, Beazer Homes recorded a loss of $123 million, or $3.20 per share, compared with a profit of $102.6 million, or $2.37 per share in the same quarter last year.
The company said revenue declined 37% to $761 million from $1.2 billion last year on account of plunging home closings. Beazer Homes reported home closings plummeted to 2,666 from 4,156.
Shares of Beazer Homes slipped 3.46%, or $0.59, to $16.45 in pre-market trading.
Russell 2000 slipping
With little in the way of economic news, investor sentiment is driven by earnings.
Wilmington, Del.-based chemicals company E. I. du Pont de Nemours and Comp. (NYSE: DD), better known as DuPont, reported flat second quarter earnings compared with a year earlier as the depressed U.S. housing sector lowered demand for paint and kitchen countertops.
