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Boise Cascade Company Reports 2016 Second Quarter Net Income of $19.2 Million on Sales of $1,043.8 Million

July 28, 2016 5:46 AM EDT

For Immediate Release:  July 28, 2016

BOISE, Idaho - Boise Cascade Company (Boise Cascade or Company) (NYSE: BCC) today reported net income of $19.2 million, or $0.49 per share, on sales of $1,043.8 million for the second quarter ended June 30, 2016.

Second Quarter 2016 Highlights

  2Q 2016   2Q 2015   % change
           
  (thousands, except per-share data and percentages)
           
Consolidated Results          
Sales $ 1,043,773     $ 955,397     9 %
Net income 19,228     20,230     (5 )%
Net income per common share - diluted 0.49     0.51     (4 )%
EBITDA1 56,447     50,681     11 %
           
Segment Results          
Wood Products sales $ 346,358     $ 339,869     2 %
Wood Products income 16,309     23,712     (31 )%
Wood Products EBITDA1 31,078     34,053     (9 )%
           
Building Materials Distribution sales 850,042     762,078     12 %
Building Materials Distribution income 29,117     19,576     49 %
Building Materials Distribution EBITDA1 32,471     22,450     45 %
           
Corporate loss (7,531 )   (5,888 )   (28 )%
Corporate EBITDA1 (7,102 )   (5,822 )   (22 )%

1 For reconciliations of non-GAAP measures, see summary notes at the end of this press release.

            In second quarter 2016, total and single-family U.S. housing starts increased approximately 1% and 7%, respectively, from the same period last year. Total U.S. housing starts from the July 2016 Blue Chip consensus forecast for 2016 and 2017 reflect 1.20 million and 1.32 million, respectively, or expected annual increases of 8% and 10%.

            "The integration of the Thorsby and Roxboro engineered wood products facilities has gone very well. We are pleased with the additional capabilities the facilities provide as we support the ongoing growth of our customers," stated Tom Corrick, CEO. "Our distribution business had an outstanding second quarter that reflected solid volume growth across its product lines and the benefit of favorable tailwinds on many commodity product prices. We still face oversupply challenges in our plywood business, but did see improvement in pricing compared to the first quarter. We expect modest growth in residential housing construction for the balance of the year, which should drive additional demand for our products and services."

Wood Products

            Sales, including sales to Building Materials Distribution (BMD), increased $6.5 million, or 2%, to $346.4 million for the three months ended June 30, 2016, from $339.9 million for the three months ended June 30, 2015. The increase in sales was driven primarily by increases in sales volumes and prices of laminated veneer lumber and I-joists (collectively EWP). The EWP volume increases were due primarily to our acquisition of two EWP facilities on March 31, 2016. These increases were offset partially by decreases in plywood and lumber sales volumes and prices.

            Wood Products segment income decreased $7.4 million to $16.3 million for the three months ended June 30, 2016, from $23.7 million for the three months ended June 30, 2015. The decline in income was due primarily to lower plywood and lumber sales prices, as well as higher oriented strand board (OSB) costs used in the manufacture of I-joists. In addition, depreciation and amortization expense increased $4.4 million due to the acquisition of two EWP facilities on March 31, 2016, and other capital expenditures. These decreases were offset partially by improved sales volumes and prices of EWP.

Comparative average net selling prices and sales volume changes for plywood, EWP, and lumber are as follows:

    2Q 2016 vs. 2Q 2015   2Q 2016 vs. 1Q 2016
         
 Average Net Selling Prices        
  Plywood   (10)%   4%
  LVL   2%   -%
  I-joists   3%   -%
Lumber   (4)%   3%
 Sales Volumes        
  Plywood   (8)%   -%
  LVL   33%   30%
  I-joists   14%   29%
Lumber   (12)%   3%

Building Materials Distribution

            Sales increased $88.0 million, or 12%, to $850.0 million for the three months ended June 30, 2016, from $762.1 million for the three months ended June 30, 2015. Compared with the same quarter in the prior year, the overall increase in sales was driven by sales volume increases of 13%, offset partially by a decrease in sales prices of 1%. By product line, commodity sales increased 12%, general line product sales increased 10%, and sales of EWP (substantially all of which are sourced through our Wood Products segment) increased 13%.

            BMD segment income increased $9.5 million to $29.1 million for the three months ended June 30, 2016, from $19.6 million for the three months ended June 30, 2015. The increase in income was driven primarily by a higher gross margin of $18.8 million, including an improvement in gross margin percentage of 100 basis points, which was largely driven by favorable trending prices in OSB and lumber during second quarter 2016, as well as stronger margin contribution within our general line products. These increases were offset partially by increased selling and distribution expenses and general and administrative expenses of $7.7 million and $1.0 million, respectively.

Corporate and Other

            Segment loss was $7.5 million for the three months ended June 30, 2016, compared with $5.9 million for the three months ended June 30, 2015. The change was due primarily to higher incentive compensation costs.

Balance Sheet

            Boise Cascade ended the second quarter with $96.1 million of cash and cash equivalents and $319.1 million of undrawn committed bank line availability, for total available liquidity of $415.2 million. The Company reported $464.6 million of outstanding debt at June 30, 2016.

Outlook

The Company expects its capital expenditures during 2016 to be $85-$95 million, inclusive of costs associated with the newly acquired EWP facilities.

            As in recent years, we expect to continue to experience modest demand growth for the products we manufacture and distribute in 2016, and we remain optimistic that the overall improvement in demand for our products will continue as household formation rates and residential construction recover. Future commodity product pricing could be volatile in response to industry operating rates, net import and export activity, inventory levels in our distribution channels, and seasonal demand patterns. We expect to manage our production levels to our sales demand, which will likely result in operating some of our facilities below their capacity, and could also include temporary plant curtailments such as those recently taken in our plywood operations.

                       

About Boise Cascade

            Boise Cascade Company is one of the largest producers of plywood and engineered wood products in North America and a leading U.S. wholesale distributor of building products. For more information, please visit our website at www.bc.com.

Webcast and Conference Call

            Boise Cascade will host a webcast and conference call on Thursday, July 28, at 11 a.m. Eastern, at which time we will review the Company's second quarter.

            You can join the webcast through our website by going to www.bc.com and clicking on the Event Calendar link under the Investor Relations heading. Please go to the website at least 15 minutes before the start of the webcast to register. To join the conference call, dial 844-795-4410 (international callers should dial 661-378-9637), participant passcode 51270007, at least 10 minutes before the start of the call.

            The archived webcast will be available in the Investor Relations section of our website. A replay of the conference call will be available from Thursday, July 28, at 2 p.m. Eastern through Thursday, August 4, at 2 p.m. Eastern. Replay numbers are 855-859-2056 for U.S. calls and 404-537-3406 for international calls, and the passcode will be 51270007.

Basis of Presentation

            We refer to the term EBITDA in this earnings release as a supplemental measure of our performance and liquidity that is not required by or presented in accordance with generally accepted accounting principles in the United States ("GAAP"). We define EBITDA as income before interest (interest expense, interest income, and change in fair value of interest rate swaps), income taxes, and depreciation and amortization.

            EBITDA is the primary measure used by our management to evaluate segment operating performance and to decide how to allocate resources to segments. We believe EBITDA is useful to investors because it provides a means to evaluate the operating performance of our segments and our Company on an ongoing basis using criteria that are used by our management and because it is frequently used by investors and other interested parties when comparing companies in our industry that have different financing and capital structures and/or tax rates. We believe EBITDA is a meaningful measure because it presents a transparent view of our recurring operating performance and allows management to readily view operating trends, perform analytical comparisons, and identify strategies to improve operating performance. EBITDA, however, is not a measure of our liquidity or financial performance under GAAP and should not be considered as an alternative to net income, income from operations, or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity. The use of EBITDA instead of net income or segment income (loss) has limitations as an analytical tool, including the inability to determine profitability; the exclusion of interest expense, interest income, and associated significant cash requirements; and the exclusion of depreciation and amortization, which represent unavoidable operating costs. Management compensates for these limitations by relying on our GAAP results. Our measure of EBITDA is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.

Forward-Looking Statements

            This news release contains statements that are "forward looking" within the Private Securities Litigation Reform Act of 1995. These statements speak only as of the date of this press release. While they are based on the current expectations and beliefs of management, they are subject to a number of uncertainties and assumptions that could cause actual results to differ from the expectations expressed in this release.

Boise Cascade Company

Consolidated Statements of Operations

(unaudited, in thousands, except per-share data)

  Three Months Ended   Six Months Ended
  June 30   March 31,
 2016
  June 30
  2016   2015     2016   2015
                   
Sales $ 1,043,773     $ 955,397     $ 880,695     $ 1,924,468     $ 1,765,300  
                   
Costs and expenses                  
Materials, labor, and other operating expenses (excluding depreciation) 894,715     824,583     769,544     1,664,259     1,529,622  
Depreciation and amortization 18,552     13,281     15,238     33,790     26,868  
Selling and distribution expenses 76,855     68,254     68,041     144,896     130,134  
General and administrative expenses 15,612     12,018     16,052     31,664     24,026  
Other (income) expense, net 172     (98 )   (1,585 )   (1,413 )   (397 )
  1,005,906     918,038     867,290     1,873,196     1,710,253  
                   
Income from operations 37,867     37,359     13,405     51,272     55,047  
                   
Foreign currency exchange gain (loss) 28     41     198     226     (66 )
Interest expense (6,427 )   (5,591 )   (5,802 )   (12,229 )   (11,072 )
Interest income 27     58     149     176     148  
Change in fair value of interest rate swaps (1,532 )   -     (69 )   (1,601 )   -  
  (7,904 )   (5,492 )   (5,524 )   (13,428 )   (10,990 )
                   
Income before income taxes 29,963     31,867     7,881     37,844     44,057  
Income tax provision (10,735 )   (11,637 )   (2,931 )   (13,666 )   (16,210 )
Net income $ 19,228     $ 20,230     $ 4,950     $ 24,178     $ 27,847  
                   
Weighted average common shares outstanding:                  
  Basic 38,814     39,494     38,853     38,834     39,496  
  Diluted 38,972     39,600     38,880     38,850     39,604  
                   
Net income per common share:                  
  Basic $ 0.50     $ 0.51     $ 0.13     $ 0.62     $ 0.71  
  Diluted $ 0.49     $ 0.51     $ 0.13     $ 0.62     $ 0.70  

Wood Products Segment

Statements of Operations

(unaudited, in thousands, except percentages)

  Three Months Ended   Six Months Ended
  June 30   March 31,
 2016
  June 30
  2016   2015     2016   2015
                   
Segment sales $ 346,358     $ 339,869     $ 303,457     $ 649,815     $649,185
                   
Costs and expenses                  
Materials, labor, and other operating expenses (excluding depreciation) 303,803     296,276     273,942     577,745     564,696  
Depreciation and amortization 14,769     10,341     11,634     26,403     21,132  
Selling and distribution expenses 8,108     7,030     7,375     15,483     13,705  
General and administrative expenses 3,173     2,514     6,098     9,271     5,026  
Other (income) expense, net 196     (4 )   (1,477 )   (1,281 )   18  
  330,049     316,157     297,572     627,621     604,577  
                   
Segment income $ 16,309     $ 23,712     $ 5,885     $ 22,194     $ 44,608  
                   
  (percentage of sales)
                   
Segment sales 100.0 %   100.0 %   100.0 %   100.0 %   100.0 %
                   
Costs and expenses                  
Materials, labor, and other operating expenses (excluding depreciation) 87.7 %   87.2 %   90.3 %   88.9 %   87.0 %
Depreciation and amortization 4.3 %   3.0 %   3.8 %   4.1 %   3.3 %
Selling and distribution expenses 2.3 %   2.1 %   2.4 %   2.4 %   2.1 %
General and administrative expenses 0.9 %   0.7 %   2.0 %   1.4 %   0.8 %
Other (income) expense, net 0.1 %   - %   (0.5 )%   (0.2 )%   - %
  95.3 %   93.0 %   98.1 %   96.6 %   93.1 %
                   
Segment income 4.7 %   7.0 %   1.9 %   3.4 %   6.9 %

Building Materials Distribution Segment

Statements of Operations

(unaudited, in thousands, except percentages)

  Three Months Ended   Six Months Ended
  June 30   March 31   June 30
  2016   2015   2016   2016   2015
                   
Segment sales $ 850,042     $ 762,078     $ 717,254     $ 1,567,296     $ 1,384,983  
                   
Costs and expenses                  
Materials, labor, and other operating expenses (excluding depreciation) 743,700     674,503     635,778     1,379,478     1,232,864  
Depreciation and amortization 3,354     2,874     3,235     6,589     5,613  
Selling and distribution expenses 68,574     60,910     60,502     129,076     115,560  
General and administrative expenses 5,356     4,311     4,503     9,859     8,239  
Other (income) expense, net (59 )   (96 )   (137 )   (196 )   (215 )
  820,925     742,502     703,881     1,524,806     1,362,061  
                   
Segment income $ 29,117     $ 19,576     $ 13,373     $ 42,490     $ 22,922  
                   
  (percentage of sales)
                   
Segment sales 100.0 %   100.0 %   100.0 %   100.0 %   100.0 %
                   
Costs and expenses                  
Materials, labor, and other operating expenses (excluding depreciation) 87.5 %   88.5 %   88.6 %   88.0 %   89.0 %
Depreciation and amortization 0.4 %   0.4 %   0.5 %   0.4 %   0.4 %
Selling and distribution expenses 8.1 %   8.0 %   8.4 %   8.2 %   8.3 %
General and administrative expenses 0.6 %   0.6 %   0.6 %   0.6 %   0.6 %
Other (income) expense, net - %   - %   - %   - %   - %
  96.6 %   97.4 %   98.1 %   97.3 %   98.3 %
                   
Segment income 3.4 %   2.6 %   1.9 %   2.7 %   1.7 %

Segment Information

(unaudited, in thousands)

  Three Months Ended   Six Months Ended
  June 30   March 31,
 2016
  June 30
  2016   2015     2016   2015
Segment sales                  
Wood Products $ 346,358     $ 339,869     $ 303,457     $ 649,815     $ 649,185  
Building Materials Distribution 850,042     762,078     717,254     1,567,296     1,384,983  
Corporate and Other 103     -     186     289     -  
Intersegment eliminations (152,730 )   (146,550 )   (140,202 )   (292,932 )   (268,868 )
  $ 1,043,773     $ 955,397     $ 880,695     $ 1,924,468     $ 1,765,300  
                   
Segment income (loss)                  
Wood Products $ 16,309     $ 23,712     $ 5,885     $ 22,194     $ 44,608  
Building Materials Distribution 29,117     19,576     13,373     42,490     22,922  
Corporate and Other (7,531 )   (5,888 )   (5,655 )   (13,186 )   (12,549 )
  37,895     37,400     13,603     51,498     54,981  
                   
Interest expense (6,427 )   (5,591 )   (5,802 )   (12,229 )   (11,072 )
Interest income 27     58     149     176     148  
Change in fair value of interest rate swaps (1,532 )   -     (69 )   (1,601 )   -  
Income before income taxes $ 29,963     $ 31,867     $ 7,881     $ 37,844     $ 44,057  
                   
EBITDA (a)                  
Wood Products $ 31,078     $ 34,053     $ 17,519     $ 48,597     $ 65,740  
Building Materials Distribution 32,471     22,450     16,608     49,079     28,535  
Corporate and Other (7,102 )   (5,822 )   (5,286 )   (12,388 )   (12,426 )
  $ 56,447     $ 50,681     $ 28,841     $ 85,288     $ 81,849  

See accompanying summary notes to consolidated financial statements and segment information.

Boise Cascade Company

Consolidated Balance Sheets

(unaudited, in thousands)

  June 30,
 2016
  December 31,
 2015
   
ASSETS      
       
Current      
Cash and cash equivalents $ 96,089     $ 184,496  
Receivables      
Trade, less allowances of $1,121 and $1,734 278,704     187,138  
Related parties 376     1,065  
Other 7,388     10,861  
Inventories 461,998     384,857  
Prepaid expenses and other 10,755     17,153  
Total current assets 855,310     785,570  
       
Property and equipment, net 552,776     402,666  
Timber deposits 12,246     15,848  
Goodwill 55,433     21,823  
Intangible assets, net 15,893     10,090  
Other assets 11,830     12,609  
Total assets $ 1,503,488     $ 1,248,606  

Boise Cascade Company

Consolidated Balance Sheets (continued)

(unaudited, in thousands, except per-share data)

  June 30,
 2016
  December 31,
 2015
   
LIABILITIES AND STOCKHOLDERS' EQUITY      
       
Current      
Accounts payable      
Trade $ 247,740     $ 159,029  
Related parties 1,954     1,442  
Accrued liabilities      
Compensation and benefits 57,250     54,712  
Interest payable 3,403     3,389  
Other 50,786     40,078  
Total current liabilities 361,133     258,650  
       
Debt      
Long-term debt 464,586     344,589  
       
Other      
Compensation and benefits 93,614     93,355  
Other long-term liabilities 24,136     17,342  
  117,750     110,697  
       
Commitments and contingent liabilities      
       
Stockholders' equity      
Preferred stock, $0.01 par value per share; 50,000 shares authorized, no shares issued and outstanding -     -  
Common stock, $0.01 par value per share; 300,000 shares authorized, 43,518 and 43,413 shares issued, respectively 435     434  
Treasury Stock, 4,767 and 4,587 shares at cost, respectively (126,343 )   (123,711 )
Additional paid-in capital 511,097     508,066  
Accumulated other comprehensive loss (92,244 )   (93,015 )
Retained earnings 267,074     242,896  
Total stockholders' equity 560,019     534,670  
Total liabilities and stockholders' equity $ 1,503,488     $ 1,248,606  

Boise Cascade Company

Consolidated Statements of Cash Flows

(unaudited, in thousands)

  Six Months Ended
  June 30
  2016   2015
Cash provided by (used for) operations      
Net income $ 24,178     $ 27,847  
Items in net income not using (providing) cash      
Depreciation and amortization, including deferred financing costs and other 34,661     27,638  
Stock-based compensation 3,866     2,898  
Pension expense 1,212     2,881  
Deferred income taxes 3,901     7,187  
Change in fair value of interest rate swaps 1,601     -  
Other 72     (622 )
Decrease (increase) in working capital, net of acquisitions      
Receivables (76,937 )   (61,885 )
Inventories (59,304 )   (20,653 )
Prepaid expenses and other (4,508 )   (3,375 )
Accounts payable and accrued liabilities 96,403     78,457  
Pension contributions (2,778 )   (53,203 )
Income taxes payable 18,696     14,499  
Other 4,955     (1,954 )
Net cash provided by operations 46,018     19,715  
       
Cash provided by (used for) investment      
Expenditures for property and equipment (35,101 )   (31,433 )
Acquisitions of businesses and facilities (215,900 )   -  
Proceeds from sales of assets and other 255     263  
Net cash used for investment (250,746 )   (31,170 )
       
Cash provided by (used for) financing      
Borrowings of long-term debt, including revolving credit facility 352,700     50,000  
Payments on revolving credit facility (232,700 )   -  
Treasury stock purchased (2,632 )   (6,109 )
Financing costs (543 )   (655 )
Tax withholding payments on stock-based awards (383 )   (1,063 )
Other (121 )   660  
Net cash provided by financing 116,321     42,833  
       
Net increase (decrease) in cash and cash equivalents (88,407 )   31,378  
       
Balance at beginning of the period 184,496     163,549  
       
Balance at end of the period $ 96,089     $ 194,927  

Summary Notes to Consolidated Financial Statements and Segment Information

            The Consolidated Statements of Operations, Segment Statements of Operations, Consolidated Balance Sheets, Consolidated Statements of Cash Flows, and Segment Information do not include all Notes to Consolidated Financial Statements and should be read in conjunction with the Company's 2015 Form 10-K and the Company's other filings with the Securities and Exchange Commission. Net income for all periods presented involved estimates and accruals.

a.    EBITDA represents income before interest (interest expense, interest income, and change in fair value of interest rate swaps), income taxes, and depreciation and amortization. The following table reconciles net income to EBITDA for the three months ended June 30, 2016 and 2015, and March 31, 2016, and the six months ended June 30, 2016 and 2015:

  Three Months Ended   Six Months Ended
  June 30   March 31,
 2016
  June 30
  2016   2015     2016   2015
                   
  (unaudited, in thousands)
                   
Net income $ 19,228     $ 20,230     $ 4,950     $ 24,178     $ 27,847  
Interest expense 6,427     5,591     5,802     12,229     11,072  
Interest income (27 )   (58 )   (149 )   (176 )   (148 )
Change in fair value of interest rate swaps 1,532     -     69     1,601     -  
Income tax provision 10,735     11,637     2,931     13,666     16,210  
Depreciation and amortization 18,552     13,281     15,238     33,790     26,868  
EBITDA $ 56,447     $ 50,681     $ 28,841     $ 85,288     $ 81,849  

The following table reconciles segment income (loss) to EBITDA for the three months ended June 30, 2016 and 2015, and March 31, 2016, and the six months ended June 30, 2016 and 2015:

  Three Months Ended   Six Months Ended
  June 30   March 31,
 2016
  June 30
  2016   2015     2016   2015
                   
  (unaudited, in thousands)
Wood Products                  
Segment income $ 16,309     $ 23,712     $ 5,885     $ 22,194     $ 44,608  
Depreciation and amortization 14,769     10,341     11,634     26,403     21,132  
EBITDA 31,078     34,053     17,519     48,597     65,740  
                   
Building Materials Distribution                  
Segment income 29,117     19,576     13,373     42,490     22,922  
Depreciation and amortization 3,354     2,874     3,235     6,589     5,613  
EBITDA 32,471     22,450     16,608     49,079     28,535  
                   
Corporate and Other                  
Segment loss (7,531 )   (5,888 )   (5,655 )   (13,186 )   (12,549 )
Depreciation and amortization 429     66     369     798     123  
EBITDA (7,102 )   (5,822 )   (5,286 )   (12,388 )   (12,426 )
                   
Total Company EBITDA $ 56,447     $ 50,681     $ 28,841     $ 85,288     $ 81,849  

Investor contact:  Wayne Rancourt, 208 384 6073

Media contact:  John Sahlberg, 208 384 6451





This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Boise Cascade Company via Globenewswire

HUG#2031260


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