Form 8-K BOISE CASCADE Co For: Nov 07

November 7, 2019 8:10 AM EST

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Boise Cascade Company
Exhibit 99.1
1111 West Jefferson Street Ste 300 PO Box 50 Boise, ID 83728
 
T 208-384-6161 F 208-331-5757
 
News Release
bcclogoa02a04.jpg
Investor Relations Contact - Wayne Rancourt
208 384 6073
 
Media Contact - Lisa Chapman
208 384 6552

For Immediate Release: November 7, 2019
Boise Cascade Company Reports Third Quarter 2019 Net Income of
$27.2 Million on Sales of $1.3 Billion

BOISE, Idaho - Boise Cascade Company ("Boise Cascade," the "Company," "we," or "our") (NYSE: BCC) today reported net income of $27.2 million, or $0.69 per share, on sales of $1.3 billion for the third quarter ended September 30, 2019, compared with net income of $13.8 million, or $0.35 per share, on sales of $1.3 billion for the third quarter ended September 30, 2018. Third quarter 2019 results include $1.0 million of after-tax losses, or $0.03 per share, from a non-cash pension settlement charge. Third quarter 2018 results included $16.7 million of net after-tax losses, or $0.42 per share, from a non-cash pension settlement charge and impairment and sale related losses. These charges also negatively impacted reported EBITDA and adjusted EBITDA, as discussed below.

Third Quarter 2019 Highlights
 
 
3Q 2019
 
3Q 2018
 
% change
 
 
 
 
 
 
 
 
 
(in thousands, except per-share data and percentages)
 
 
 
 
 
 
 
Consolidated Results
 
 
 
 
 
 
Sales
 
$
1,269,524

 
$
1,338,512

 
(5
)%
Net income
 
27,171

 
13,848

 
96
 %
Net income per common share - diluted
 
0.69

 
0.35

 
97
 %
Adjusted EBITDA 1
 
64,054

 
42,721

 
50
 %
 
 
 
 
 
 
 
Segment Results
 
 
 
 
 
 
Wood Products sales
 
$
325,102

 
$
402,672

 
(19
)%
Wood Products income
 
15,597

 
13,929

 
12
 %
Wood Products EBITDA 1
 
30,849

 
32,656

 
(6
)%
 
 
 
 
 
 
 
Building Materials Distribution sales
 
1,145,621

 
1,159,304

 
(1
)%
Building Materials Distribution income
 
38,665

 
23,504

 
65
 %
Building Materials Distribution EBITDA 1
 
43,943

 
28,259

 
56
 %
1 For reconciliations of non-GAAP measures, see summary notes at the end of this press release.




In the third quarter 2019, total U.S. housing starts increased 4% compared to the same period last year. Single-family starts, the primary driver of our sales, also increased 4%, while multi-family starts increased 5%. On a year-to-date basis through September 2019, total and single-family housing starts decreased 1% and 2%, respectively, from the same period in 2018.

“Despite the lack of growth in residential construction and ongoing weakness in commodity wood products pricing that has persisted this year, both of our businesses continue to execute well. BMD delivered outstanding financial results during the third quarter, with solid growth in general line product sales and gross margins. With the operating footprint changes made during the last year, our favorable performance in EWP is more evident in Wood Products' results. The stability of EWP, together with input cost improvements, mitigated the overall earnings impact of the significant year-over-year decline in plywood pricing,” commented Tom Corrick, CEO. “Our operating results have positioned us to comfortably fund our bolt-on acquisitions and internal growth initiatives while strengthening our balance sheet. As part of our capital allocation process, I am pleased our board approved an 11% increase in our regular quarterly dividend to $0.10 per share, as well as a supplemental dividend of $1.00 per share, both payable in December. This is consistent with our objective of generating favorable returns on our shareholders’ invested capital. We remain well positioned to fund anticipated working capital needs in early 2020, as well as having flexibility to take advantage of internal growth initiatives and acquisition opportunities which may occur in the next six to nine months.”

Wood Products

Wood Products sales, including sales to Building Materials Distribution (BMD), decreased $77.6 million, or 19%, to $325.1 million for the three months ended September 30, 2019, from $402.7 million for the three months ended September 30, 2018. The decline in sales was driven primarily by lower sales prices and sales volumes for plywood. The lower sales volume for plywood was mostly due to weaker market conditions and downtime for facility capital improvements, as well as the sale of the Moncure plywood facility on March 1, 2019. The decrease in sales was also attributable to lower sales volumes of lumber and particleboard due to the sale or closure of three lumber mills and our particleboard plant during 2018. Approximately one-third of the decrease in Wood Products sales is attributable to these facility sales or closures. These decreases were offset partially by increases in sales volumes and net sale prices for LVL.

Wood Products segment income increased $1.7 million to $15.6 million for the three months ended September 30, 2019, from $13.9 million for the three months ended September 30, 2018. Third quarter 2018 results included impairment and sales related losses of $11.0 million (Impairment Loss). Excluding the Impairment Loss, segment income decreased due to lower sales prices of plywood, offset partially by lower costs of OSB (used in the manufacture of I-joists) and logs, as well as lower employee-related expenses. In addition, depreciation and amortization expense decreased due primarily to discontinued depreciation on manufacturing facilities curtailed and sold in the last 12 months.

Comparative average net selling prices and sales volume changes for EWP and plywood are as follows:
    
 
 
3Q 2019 vs. 3Q 2018
 
3Q 2019 vs. 2Q 2019
 
 
 
 
 
 Average Net Selling Prices
 
 
 
 
    LVL
 
1%
 
(1)%
    I-joists
 
1%
 
(1)%
    Plywood
 
(29)%
 
(7)%
 Sales Volumes
 
 
 
 
    LVL
 
4%
 
1%
    I-joists
 
(2)%
 
(1)%
    Plywood
 
(7)%
 
—%


2


Building Materials Distribution

BMD's sales decreased $13.7 million, or 1%, to $1,145.6 million for the three months ended September 30, 2019, from $1,159.3 million for the three months ended September 30, 2018. Compared with the same quarter in the prior year, the overall decrease in sales was driven by a sales price decrease of 11%, offset partially by a sales volume increase of 10%. Excluding the impact of the acquisition of wholesale building material distribution locations in Nashville, Tennessee, Medford, Oregon, and Cincinnati, Ohio during 2018, and the Birmingham, Alabama acquisition in 2019, BMD sales would have decreased 4%. By product line, commodity sales decreased 16%, general line product sales increased 18%, and sales of EWP (substantially all of which is sourced through our Wood Products segment) increased 2%.

BMD segment income increased $15.2 million to $38.7 million for the three months ended September 30, 2019, from $23.5 million in the comparative prior year quarter. The improvement in segment income was driven primarily by a gross margin increase of $30.3 million, resulting from improved gross margins on commodity products and higher sales of general line products compared with third quarter 2018. Gross margins on commodity products in the prior year quarter were negatively impacted by sharply falling prices. The increase in gross margin during third quarter 2019 was offset partially by increased selling and distribution expenses of $13.3 million.
    
Balance Sheet

Boise Cascade ended third quarter 2019 with $306.4 million of cash and cash equivalents and $365.4 million of undrawn committed bank line availability, for total available liquidity of $671.8 million. The Company had $440.3 million of outstanding debt at September 30, 2019.

On September 30, 2019, Boise Cascade transferred $19.8 million of its qualified defined benefit pension plan (Pension Plan) assets to The Prudential Insurance Company of America (Prudential) for the purchase of a group annuity contract. Under the arrangement, Prudential assumed ongoing responsibility for administration and benefit payments for approximately 10% of Boise Cascade’s U.S. qualified pension plan projected benefit obligations. As a result of the transfer of pension plan assets, we recorded settlement expense of $1.3 million in third quarter 2019. We also recognized a non-cash pension settlement charge of $11.3 million in third quarter 2018 under a similar transaction in which we transferred $124.8 million of our Pension Plan assets to Prudential.

We adopted the new lease accounting standard on January 1, 2019. The most significant impact of the adoption was the recognition of right-of-use assets and lease liabilities for operating leases, as reflected on the face of our balance sheet as of September 30, 2019. The standard did not have a material impact on our consolidated net earnings and cash flows. For additional information on the impact of this standard on our accounting for leases and additional required qualitative disclosures of our lease policies, see our Form 10-Q for the quarterly period ended September 30, 2019, filed with the Securities and Exchange Commission.

Dividends
    
On October 30, 2019, our board of directors declared a quarterly dividend of $0.10 per share, as well as a supplemental dividend of $1.00 per share, on our common stock payable on December 16, 2019, to stockholders of record on December 2, 2019.


3


Outlook
    
We expect to experience seasonally slower demand growth for the products we manufacture and distribute in fourth quarter 2019. The October 2019 Blue Chip consensus forecast for 2019 and 2020 reflects 1.25 million and 1.27 million total U.S. housing starts, respectively, compared with actual housing starts of 1.25 million in 2018. Although we believe U.S. demographics are supportive of higher levels of housing starts, we expect near-term residential construction growth to be flat to slightly down due to constraints faced by builders, such as availability of labor and building lots, as well as affordability constraints faced by prospective buyers. The pace of household formation rates and residential repair-and-remodeling activity will be affected by employment growth, wage growth, prospective home buyers' access to and cost of financing, housing affordability, and consumer confidence, as well as other factors. Household formation rates in turn will be a key factor behind the demand for new construction. In addition, the size of new single-family residences as well as the mix of single and multi-family starts will influence product consumption. We will continue to manage our production levels to our sales demand. As in past years, we plan to take scheduled capital and maintenance-related downtime at certain plywood facilities during the fourth quarter.

Weak commodity products pricing experienced in the first half of 2019 continued throughout third quarter 2019 as weaker year-to-date residential construction activity and additional industry capacity brought on in 2018 have led to supply and demand imbalances. Commodity product pricing during the remainder of 2019 and into 2020 will be a key driver of our financial results and will be dependent on industry operating rates, net import and export activity, transportation constraints or disruptions, inventory levels in various distribution channels, and seasonal demand patterns. We anticipate that commodity products pricing in the fourth quarter of 2019 will remain at low absolute, although more stable, levels compared to fourth quarter 2018.

We expect our capital spending, excluding acquisitions, to be $85-$95 million in 2019, including spending to improve the efficiency of our veneer production at our Chester, South Carolina, and Florien, Louisiana, facilities. In addition, we expect our capital spending, excluding acquisitions, to also be $85-$95 million in 2020.
    
We expect fourth quarter 2019 financial results to be improved compared with fourth quarter 2018. Included in Wood Products fourth quarter 2018 results were certain items that negatively affected reported earnings. These items include $24.0 million of pre-tax impairment and sale related losses related to the sale of our hardwood plywood facility in Moncure, North Carolina, and $55.0 million and $2.8 million, respectively, of pre-tax accelerated depreciation and other curtailment related costs due to the permanent curtailment of LVL production at our Roxboro, North Carolina, facility.
    
About Boise Cascade
    
Boise Cascade Company is one of the largest producers of engineered wood products and plywood in North America and a leading U.S. wholesale distributor of building products. For more information, please visit the Company's website at www.bc.com.

Webcast and Conference Call

Boise Cascade will host a webcast and conference call on Thursday, November 7, at 11 a.m. Eastern, to review the Company's third quarter results.

You can join the webcast through the Company's 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 2990498, at least 10 minutes before the start of the call.

The archived webcast will be available in the Investor Relations section of the Company's website. A replay of the conference call will be available from Thursday, November 7, at 2 p.m. Eastern through Thursday, November 14, at 2 p.m. Eastern. Replay numbers are 855-859-2056 for U.S. callers and 404-537-3406 for international callers, and the passcode will be 2990498.


4


Use of Non-GAAP Financial Measures
    
We refer to the terms EBITDA and Adjusted EBITDA in this earnings release and the accompanying Quarterly Statistical Information as supplemental measures of our performance and liquidity that are 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 and interest income), income taxes, and depreciation and amortization. Additionally, we disclose Adjusted EBITDA, which further adjusts EBITDA to exclude the change in fair value of interest rate swaps.

We believe EBITDA and Adjusted EBITDA are meaningful measures because they present a transparent view of our recurring operating performance and allow management to readily view operating trends, perform analytical comparisons, and identify strategies to improve operating performance. We also believe EBITDA and Adjusted EBITDA are useful to investors because they provide 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 they are 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. EBITDA and Adjusted EBITDA, however, are not measures of our liquidity or financial performance under GAAP and should not be considered as alternatives to net income, income from operations, or any other performance measure derived in accordance with GAAP or as alternatives to cash flow from operating activities as a measure of our liquidity. The use of EBITDA and Adjusted EBITDA instead of net income or segment income have limitations as analytical tools, 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 measures of EBITDA and Adjusted EBITDA are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.
    
Forward-Looking Statements

This press release includes statements about our expectations of future operational and financial performance that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements preceded or followed by, or that otherwise include, the words "believes," "expects," "anticipates," "intends," "project," "estimates," "plans," "forecast," "is likely to," and similar expressions or future or conditional verbs such as "will," "may," "would," "should," and "could" are generally forward-looking in nature and not historical facts. Such statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties. The accuracy of such statements is subject to a number of risks, uncertainties, and assumptions that could cause our actual results to differ materially from those projected, including, but not limited to, prices for building products, changes in the competitive position of our products, commodity input costs, the effect of general economic conditions, mortgage rates and availability, housing demand, housing vacancy rates, governmental regulations, unforeseen production disruptions, as well as natural disasters. These and other factors that could cause actual results to differ materially from such forward-looking statements are discussed in greater detail in our filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date of this press release. We undertake no obligation to revise them in light of new information. Finally, we undertake no obligation to review or confirm analyst expectations or estimates that might be derived from this release.
    


5


Boise Cascade Company
Consolidated Statements of Operations
(in thousands, except per-share data)
 
Three Months Ended
 
Nine Months Ended
 
September 30
 
June 30,
2019
 
September 30
 
2019
 
2018
 
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
Sales
$
1,269,524

 
$
1,338,512

 
$
1,230,081

 
$
3,541,691

 
$
3,929,485

 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
 
 
Materials, labor, and other operating expenses (excluding depreciation)
1,078,924

 
1,163,020

 
1,049,655

 
3,026,401

 
3,366,716

Depreciation and amortization
20,969

 
23,881

 
19,454

 
59,640

 
70,288

Selling and distribution expenses
106,567

 
93,395

 
98,866

 
292,459

 
273,592

General and administrative expenses
18,603

 
16,891

 
16,786

 
52,064

 
52,754

Other (income) expense, net
(437
)
 
10,870

 
188

 
(557
)
 
9,820

 
1,224,626

 
1,308,057

 
1,184,949

 
3,430,007

 
3,773,170

 
 
 
 
 
 
 
 
 
 
Income from operations
44,898

 
30,455

 
45,132

 
111,684

 
156,315

 
 
 
 
 
 
 
 
 
 
Foreign currency exchange gain (loss)
(200
)
 
163

 
248

 
210

 
(272
)
Pension expense (excluding service costs)
(1,613
)
 
(11,778
)
 
(290
)
 
(2,202
)
 
(24,402
)
Interest expense
(6,532
)
 
(6,585
)
 
(6,486
)
 
(19,455
)
 
(19,527
)
Interest income
837

 
500

 
416

 
1,745

 
1,001

Change in fair value of interest rate swaps
(569
)
 
279

 
(1,551
)
 
(3,103
)
 
2,419

 
(8,077
)
 
(17,421
)
 
(7,663
)
 
(22,805
)
 
(40,781
)
 
 
 
 
 
 
 
 
 
 
Income before income taxes
36,821

 
13,034

 
37,469

 
88,879

 
115,534

Income tax (provision) benefit
(9,650
)
 
814

 
(9,751
)
 
(22,601
)
 
(22,811
)
Net income
$
27,171

 
$
13,848

 
$
27,718

 
$
66,278

 
$
92,723

 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
 
  Basic
39,087

 
38,998

 
39,087

 
39,020

 
38,920

  Diluted
39,292

 
39,461

 
39,199

 
39,202

 
39,397

 
 
 
 
 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
 
 
 
 
  Basic
$
0.70

 
$
0.36

 
$
0.71

 
$
1.70

 
$
2.38

  Diluted
$
0.69

 
$
0.35

 
$
0.71

 
$
1.69

 
$
2.35

 
 
 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.09

 
$
1.07

 
$
0.09

 
$
0.27

 
$
1.21


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

6


Wood Products Segment
Statements of Operations
(in thousands, except percentages)
 
Three Months Ended
 
Nine Months Ended
 
September 30
 
June 30,
2019
 
September 30
 
2019
 
2018
 
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
Segment sales
$
325,102

 
$
402,672

 
$
334,256

 
$
978,881

 
$
1,226,146

 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 

 
 

 
 

 
 

Materials, labor, and other operating expenses (excluding depreciation)
283,354

 
346,361

 
289,545

 
855,929

 
1,045,217

Depreciation and amortization
15,252

 
18,727

 
14,092

 
43,082

 
55,724

Selling and distribution expenses
7,718

 
7,809

 
7,861

 
23,284

 
25,304

General and administrative expenses
3,379

 
5,031

 
3,473

 
10,480

 
13,401

Other (income) expense, net
(198
)
 
10,815

 
377

 
(29
)
 
9,968

 
309,505

 
388,743

 
315,348

 
932,746

 
1,149,614

 
 
 
 
 
 
 
 
 
 
Segment income
$
15,597

 
$
13,929

 
$
18,908

 
$
46,135

 
$
76,532

 
 
 
 
 
 
 
 
 
 
 
(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)
87.2
 %
 
86.0
%
 
86.6
%
 
87.4
 %
 
85.2
%
Depreciation and amortization
4.7
 %
 
4.7
%
 
4.2
%
 
4.4
 %
 
4.5
%
Selling and distribution expenses
2.4
 %
 
1.9
%
 
2.4
%
 
2.4
 %
 
2.1
%
General and administrative expenses
1.0
 %
 
1.2
%
 
1.0
%
 
1.1
 %
 
1.1
%
Other (income) expense, net
(0.1
)%
 
2.7
%
 
0.1
%
 
 %
 
0.8
%
 
95.2
 %
 
96.5
%
 
94.3
%
 
95.3
 %
 
93.8
%
 
 
 
 
 
 
 
 
 
 
Segment income
4.8
 %
 
3.5
%
 
5.7
%
 
4.7
 %
 
6.2
%


7


Building Materials Distribution Segment
Statements of Operations
(in thousands, except percentages)

 
Three Months Ended
 
Nine Months Ended
 
September 30
 
June 30,
2019
 
September 30
 
2019
 
2018
 
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
Segment sales
$
1,145,621

 
$
1,159,304

 
$
1,097,421

 
$
3,150,750

 
$
3,365,468

 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
 
 
Materials, labor, and other operating expenses (excluding depreciation)
996,313

 
1,040,342

 
961,862

 
2,758,375

 
2,982,793

Depreciation and amortization
5,278

 
4,755

 
5,028

 
15,438

 
13,374

Selling and distribution expenses
98,797

 
85,520

 
90,950

 
269,012

 
248,095

General and administrative expenses
6,759

 
5,128

 
5,967

 
18,420

 
17,745

Other (income) expense, net
(191
)
 
55

 
(186
)
 
(477
)
 
(144
)
 
1,106,956

 
1,135,800

 
1,063,621

 
3,060,768

 
3,261,863

 
 
 
 
 
 
 
 
 
 
Segment income
$
38,665

 
$
23,504

 
$
33,800

 
$
89,982

 
$
103,605

 
 
 
 
 
 
 
 
 
 
 
(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)
87.0
 %
 
89.7
%
 
87.6
 %
 
87.5
 %
 
88.6
 %
Depreciation and amortization
0.5
 %
 
0.4
%
 
0.5
 %
 
0.5
 %
 
0.4
 %
Selling and distribution expenses
8.6
 %
 
7.4
%
 
8.3
 %
 
8.5
 %
 
7.4
 %
General and administrative expenses
0.6
 %
 
0.4
%
 
0.5
 %
 
0.6
 %
 
0.5
 %
Other (income) expense, net
 %
 
%
 
 %
 
 %
 
 %
 
96.6
 %
 
98.0
%
 
96.9
 %
 
97.1
 %
 
96.9
 %
 
 
 
 
 
 
 
 
 
 
Segment income
3.4
 %
 
2.0
%
 
3.1
 %
 
2.9
 %
 
3.1
 %

                              

8


Segment Information
(in thousands)
 
Three Months Ended
 
Nine Months Ended
 
September 30
 
June 30,
2019
 
September 30
 
2019
 
2018
 
 
2019
 
2018
Segment sales
 
 
 
 
 
 
 
 
 
Wood Products
$
325,102

 
$
402,672

 
$
334,256

 
$
978,881

 
$
1,226,146

Building Materials Distribution
1,145,621

 
1,159,304

 
1,097,421

 
3,150,750

 
3,365,468

Intersegment eliminations and other
(201,199
)
 
(223,464
)
 
(201,596
)
 
(587,940
)
 
(662,129
)
Total net sales
$
1,269,524

 
$
1,338,512

 
$
1,230,081

 
$
3,541,691

 
$
3,929,485

 
 
 
 
 
 
 
 
 
 
Segment income
 
 
 
 
 
 
 
 
 
Wood Products
$
15,597

 
$
13,929

 
$
18,908

 
$
46,135

 
$
76,532

Building Materials Distribution
38,665

 
23,504

 
33,800

 
89,982

 
103,605

Total segment income
54,262

 
37,433

 
52,708

 
136,117

 
180,137

Unallocated corporate
(9,364
)
 
(6,978
)
 
(7,576
)
 
(24,433
)
 
(23,822
)
Income from operations
$
44,898

 
$
30,455

 
$
45,132

 
$
111,684

 
$
156,315

 
 
 
 
 
 
 
 
 
 
Segment EBITDA (a)
 
 
 
 
 
 
 
 
 
Wood Products
$
30,849

 
$
32,656

 
$
33,000

 
$
89,217

 
$
132,256

Building Materials Distribution
43,943

 
28,259

 
38,828

 
105,420

 
116,979


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



9


Boise Cascade Company
Consolidated Balance Sheets
(in thousands)
 
September 30, 2019
 
December 31, 2018
 
 
ASSETS
 
 
 
 
 
 
 
Current
 
 
 
Cash and cash equivalents
$
306,443

 
$
191,671

Receivables
 
 
 
Trade, less allowances of $1,087 and $1,062
295,585

 
214,338

Related parties
630

 
436

Other
15,728

 
14,466

Inventories
492,588

 
533,049

Prepaid expenses and other
14,156

 
31,818

Total current assets
1,125,130

 
985,778

 
 
 
 
Property and equipment, net
464,373

 
487,224

Operating lease right-of-use assets
65,571

 

Finance lease right-of-use assets
22,238

 

Timber deposits
14,043

 
12,568

Goodwill
60,382

 
59,159

Intangible assets, net
18,103

 
16,851

Deferred income taxes
7,962

 
8,211

Other assets
8,121

 
11,457

Total assets
$
1,785,923

 
$
1,581,248



10


Boise Cascade Company
Consolidated Balance Sheets (continued)
(in thousands, except per-share data)
 
September 30, 2019
 
December 31, 2018
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
Current
 
 
 
Accounts payable
 
 
 
Trade
$
286,704

 
$
210,587

Related parties
2,349

 
1,070

Accrued liabilities
 
 
 
Compensation and benefits
72,901

 
87,911

Interest payable
1,800

 
6,748

Other
80,996

 
63,509

Total current liabilities
444,750

 
369,825

 
 
 
 
Debt
 
 
 
Long-term debt
440,265

 
439,428

 
 
 
 
Other
 
 
 
Compensation and benefits
44,120

 
41,283

Operating lease liabilities, net of current portion
59,591

 

Finance lease liabilities, net of current portion
23,661

 

Deferred income taxes
29,038

 
19,218

Other long-term liabilities
12,932

 
38,904

 
169,342

 
99,405

 
 
 
 
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, 44,343 and 44,076 shares issued, respectively
443

 
441

Treasury stock 5,367 shares at cost
(138,909
)
 
(138,909
)
Additional paid-in capital
531,119

 
528,654

Accumulated other comprehensive loss
(46,748
)
 
(47,652
)
Retained earnings
385,661

 
330,056

Total stockholders' equity
731,566

 
672,590

Total liabilities and stockholders' equity
$
1,785,923

 
$
1,581,248



11


Boise Cascade Company
Consolidated Statements of Cash Flows
(in thousands)
 
Nine Months Ended September 30
 
2019
 
2018
Cash provided by (used for) operations
 
 
 
Net income
$
66,278

 
$
92,723

Items in net income not using (providing) cash
 
 
 
Depreciation and amortization, including deferred financing costs and other
61,340

 
71,832

Stock-based compensation
6,016

 
6,893

Pension expense
2,687

 
25,000

Deferred income taxes
10,008

 
883

Change in fair value of interest rate swaps
3,103

 
(2,419
)
Other
(235
)
 
8,695

Decrease (increase) in working capital, net of acquisitions
 
 
 
Receivables
(77,811
)
 
(64,261
)
Inventories
45,184

 
(88,073
)
Prepaid expenses and other
(3,516
)
 
(2,736
)
Accounts payable and accrued liabilities
66,130

 
83,204

Pension contributions
(1,324
)
 
(21,566
)
Income taxes payable
19,109

 
6,991

Other
(2,219
)
 
2,655

Net cash provided by operations
194,750

 
119,821

 
 
 
 
Cash provided by (used for) investment
 
 
 
Expenditures for property and equipment
(53,249
)
 
(47,705
)
Acquisitions of businesses and facilities
(15,676
)
 
(17,532
)
Proceeds from sales of facilities
2,493

 

Proceeds from sales of assets and other
1,644

 
835

Net cash used for investment
(64,788
)
 
(64,402
)
 
 
 
 
Cash provided by (used for) financing
 
 
 
Borrowings of long-term debt, including revolving credit facility
5,500

 
7,500

Payments of long-term debt, including revolving credit facility
(5,500
)
 
(7,500
)
Dividends paid on common stock
(11,070
)
 
(47,113
)
Tax withholding payments on stock-based awards
(3,575
)
 
(5,135
)
Other
(545
)
 
1,031

Net cash used for financing
(15,190
)
 
(51,217
)
 
 
 
 
Net increase in cash and cash equivalents
114,772

 
4,202

 
 
 
 
Balance at beginning of the period
191,671

 
177,140

 
 
 
 
Balance at end of the period
$
306,443

 
$
181,342


12


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 presented herein do not include the notes accompanying the Company's Consolidated Financial Statements and should be read in conjunction with the Company’s 2018 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 and interest income), income taxes, and depreciation and amortization. Additionally, we disclose Adjusted EBITDA, which further adjusts EBITDA to exclude the change in fair value of interest rate swaps. The following table reconciles net income to EBITDA and Adjusted EBITDA for the three months ended September 30, 2019 and 2018, and June 30, 2019, and the nine months ended September 30, 2019 and 2018:
 
Three Months Ended
 
Nine Months Ended
 
September 30
 
June 30,
2019
 
September 30
 
2019
 
2018
 
 
2019
 
2018
 
(in thousands)
Net income
$
27,171

 
$
13,848

 
$
27,718

 
$
66,278

 
$
92,723

Interest expense
6,532

 
6,585

 
6,486

 
19,455

 
19,527

Interest income
(837
)
 
(500
)
 
(416
)
 
(1,745
)
 
(1,001
)
Income tax provision (benefit)
9,650

 
(814
)
 
9,751

 
22,601

 
22,811

Depreciation and amortization
20,969

 
23,881

 
19,454

 
59,640

 
70,288

EBITDA
63,485

 
43,000

 
62,993

 
166,229

 
204,348

Change in fair value of interest rate swaps
569

 
(279
)
 
1,551

 
3,103

 
(2,419
)
Adjusted EBITDA
$
64,054

 
$
42,721

 
$
64,544

 
$
169,332

 
$
201,929


13


The following table reconciles segment income and unallocated corporate costs to EBITDA and adjusted EBITDA for the three months ended September 30, 2019 and 2018, and June 30, 2019, and the nine months ended September 30, 2019 and 2018:
 
Three Months Ended
 
Nine Months Ended
 
September 30
 
June 30,
2019
 
September 30
 
2019
 
2018
 
 
2019
 
2018
 
(in thousands)
Wood Products
 
 
 
 
 
 
 
 
 
Segment income
$
15,597

 
$
13,929

 
$
18,908

 
$
46,135

 
$
76,532

Depreciation and amortization
15,252

 
18,727

 
14,092

 
43,082

 
55,724

EBITDA
$
30,849

 
$
32,656

 
$
33,000

 
$
89,217

 
$
132,256

 
 
 
 
 
 
 
 
 
 
Building Materials Distribution
 
 
 
 
 
 
 
 
 
Segment income
$
38,665

 
$
23,504

 
$
33,800

 
$
89,982

 
$
103,605

Depreciation and amortization
5,278

 
4,755

 
5,028

 
15,438

 
13,374

EBITDA
$
43,943

 
$
28,259

 
$
38,828

 
$
105,420

 
$
116,979

 
 
 
 
 
 
 
 
 
 
Corporate
 
 
 
 
 
 
 
 
 
Unallocated corporate expenses
$
(9,364
)
 
$
(6,978
)
 
$
(7,576
)
 
$
(24,433
)
 
$
(23,822
)
Foreign currency exchange gain (loss)
(200
)
 
163

 
248

 
210

 
(272
)
Pension expense (excluding service costs)
(1,613
)
 
(11,778
)
 
(290
)
 
(2,202
)
 
(24,402
)
Change in fair value of interest rate swaps
(569
)
 
279

 
(1,551
)
 
(3,103
)
 
2,419

Depreciation and amortization
439

 
399

 
334

 
1,120

 
1,190

EBITDA
(11,307
)
 
(17,915
)
 
(8,835
)
 
(28,408
)
 
(44,887
)
Change in fair value of interest rate swaps
569

 
(279
)
 
1,551

 
3,103

 
(2,419
)
Corporate adjusted EBITDA
$
(10,738
)
 
$
(18,194
)
 
$
(7,284
)
 
$
(25,305
)
 
$
(47,306
)
 
 
 
 
 
 
 
 
 
 
Total company adjusted EBITDA
$
64,054

 
$
42,721

 
$
64,544

 
$
169,332

 
$
201,929






14


Exhibit 99.2
Boise Cascade Company
Quarterly Statistical Information
Wood Products Segment
 
 
 
 
 
 
2019
 
Q1
Q2
Q3
Q4
YTD
 LVL sales volume (MCF)
4,332

4,594

4,632

 
13,558

 I-joist sales volume (MELF)
52,166

60,402

60,018

 
172,586

 Plywood sales volume (MSF 3/8")
335,989

343,035

343,422

 
1,022,446

 Lumber sales volume (MBF)
20,394

22,059

22,001

 
64,454

 LVL mill net sales price ($/CF)
$
18.87

$
18.70

$
18.59

 
$
18.71

 I-joist mill net sales price ($/MELF)
$
1,266

$
1,279

$
1,268

 
$
1,271

 Plywood net sales price ($/MSF 3/8")
$
287

$
272

$
254

 
$
271

 Lumber net sales price ($/MBF)
$
653

$
637

$
601

 
$
630

 Segment sales (000)
$
319,523

$
334,256

$
325,102

 
$
978,881

 Segment income
$
11,630

$
18,908

$
15,597

 
$
46,135

 Segment depreciation and amortization (000)
$
13,738

$
14,092

$
15,252

 
$
43,082

 Segment EBITDA (000)1
$
25,368

$
33,000

$
30,849

 
$
89,217

 EBITDA as a percentage of sales
7.9
%
9.9
%
9.5
%
 
9.1
%
 Capital spending (000)
$
10,694

$
10,883

$
9,045

 
$
30,622

 Receivables (000)
$
65,977

$
69,742

$
65,340

 
 
 Inventories (000)
$
183,413

$
163,846

$
153,801

 
 
 Accounts payable (000)
$
45,370

$
50,589

$
46,238

 
 
 
 
 
 
 
 
 
2018
 
Q1
Q2
Q3
Q4
YTD
 LVL sales volume (MCF)
4,813

4,816

4,463

3,577

17,669

 I-joist sales volume (MELF)
62,525

68,060

61,434

44,995

237,014

 Plywood sales volume (MSF 3/8")
359,911

368,897

368,046

325,870

1,422,724

 Lumber sales volume (MBF)
47,353

45,913

33,911

25,378

152,555

 LVL mill net sales price ($/CF)
$
17.30

$
18.25

$
18.33

$
18.73

$
18.11

 I-joist mill net sales price ($/MELF)
$
1,179

$
1,220

$
1,261

$
1,213

$
1,218

 Plywood net sales price ($/MSF 3/8")
$
356

$
379

$
357

$
306

$
351

 Lumber net sales price ($/MBF)
$
556

$
570

$
623

$
629

$
588

 Segment sales (000)
$
397,991

$
425,483

$
402,672

$
307,124

$
1,533,270

 Segment income (loss) (000)2
$
26,121

$
36,482

$
13,929

$
(86,554
)
$
(10,022
)
 Segment depreciation and amortization (000)3
$
17,544

$
19,453

$
18,727

$
71,265

$
126,989

 Segment EBITDA (000)1,2
$
43,665

$
55,935

$
32,656

$
(15,289
)
$
116,967

 EBITDA as a percentage of sales
11.0
%
13.1
%
8.1
%
(5.0
)%
7.6
%
 Capital spending (000)
$
8,656

$
6,279

$
12,208

$
26,249

$
53,392

 Receivables (000)
$
91,190

$
88,073

$
81,870

$
66,687

 
 Inventories (000)
$
167,579

$
169,492

$
181,534

$
188,380

 
 Accounts payable (000)
$
54,774

$
66,285

$
66,379

$
45,260

 

1





Boise Cascade Company
Quarterly Statistical Information (continued)
Wood Products Segment (continued)
 
 
 
 
 
 
2017
 
Q1
Q2
Q3
Q4
YTD
 LVL sales volume (MCF)
4,544

4,669

4,100

3,997

17,310

 I-joist sales volume (MELF)
61,349

64,520

56,932

52,662

235,463

 Plywood sales volume (MSF 3/8")
336,473

368,974

404,960

347,096

1,457,503

 Lumber sales volume (MBF)
41,999

42,840

44,127

42,451

171,417

 LVL mill net sales price ($/CF)
$
16.63

$
16.65

$
17.22

$
16.69

$
16.79

 I-joist mill net sales price ($/MELF)
$
1,116

$
1,091

$
1,157

$
1,124

$
1,121

 Plywood net sales price ($/MSF 3/8")
$
282

$
301

$
324

$
337

$
312

 Lumber net sales price ($/MBF)
$
504

$
546

$
553

$
557

$
540

 Segment sales (000)
$
325,657

$
350,277

$
366,920

$
330,906

$
1,373,760

 Segment income (000)
$
7,388

$
15,395

$
24,027

$
6,819

$
53,629

 Segment depreciation and amortization (000)
$
15,151

$
15,264

$
15,337

$
17,363

$
63,115

 Segment EBITDA (000)1
$
22,539

$
30,659

$
39,364

$
24,182

$
116,744

 EBITDA as a percentage of sales
6.9
%
8.8
%
10.7
%
7.3
%
8.5
%
 Capital spending (000)
$
12,337

$
8,594

$
12,096

$
21,573

$
54,600

 Receivables (000)
$
73,644

$
75,679

$
78,888

56,488


 Inventories (000)
$
171,133

$
169,100

$
175,276

183,157


 Accounts payable (000)
$
50,177

$
58,163

$
58,136

51,898

 
 
 
 
 
 
 
1Segment EBITDA is calculated as segment income (loss) before depreciation and amortization.
2Segment income (loss) and segment EBITDA in third and fourth quarters 2018 include $11.0 million and $24.0 million, respectively, of charges related to the sale of assets.
3Segment depreciation and amortization in fourth quarter 2018 includes accelerated depreciation of $55.0 million to fully depreciate the curtailed LVL production assets at our Roxboro, North Carolina facility.

2




Boise Cascade Company
Quarterly Statistical Information (continued)
Building Materials Distribution Segment
 
 
 
 
 
2019
 
Q1
Q2
Q3
Q4
YTD
 Commodity sales
43.9
%
41.0
%
40.8
%
 
41.8
%
 General line sales
35.6
%
39.2
%
39.7
%
 
38.3
%
 EWP sales
20.5
%
19.8
%
19.5
%
 
19.9
%
 Total sales (000)
$
907,708

$
1,097,421

$
1,145,621

 
$
3,150,750

 Gross margin1
11.8
%
12.4
%
13.0
%
 
12.5
%
 Segment income (000)
$
17,517

$
33,800

$
38,665

 
$
89,982

 Segment depreciation and amortization (000)
$
5,132

$
5,028

$
5,278

 
$
15,438

 Segment EBITDA (000)2
$
22,649

$
38,828

$
43,943

 
$
105,420

 EBITDA as a percentage of sales
2.5
%
3.5
%
3.8
%
 
3.3
%
 Capital spending (000)3
$
3,634

$
5,163

$
10,582

 
$
19,379

 Receivables (000)
$
264,867

$
288,032

$
276,407

 
 
 Inventories (000)
$
390,447

$
360,605

$
338,787

 
 
 Accounts payable (000)
$
259,368

$
238,932

$
257,818

 
 
 
 
 
 
 
 
 
2018
 
Q1
Q2
Q3
Q4
YTD
 Commodity sales
49.4
%
49.6
%
47.9
%
45.8
%
48.3
%
 General line sales
31.8
%
32.4
%
33.2
%
35.5
%
33.1
%
 EWP sales
18.8
%
18.0
%
18.9
%
18.7
%
18.6
%
 Total sales (000)
$
992,381

$
1,213,783

$
1,159,304

$
922,234

$
4,287,702

 Gross margin1
11.8
%
12.0
%
10.3
%
10.9
%
11.3
%
 Segment income (000)
$
32,388

$
47,713

$
23,504

$
8,905

$
112,510

 Segment depreciation and amortization (000)
$
4,172

$
4,447

$
4,755

$
4,906

$
18,280

 Segment EBITDA (000)2
$
36,560

$
52,160

$
28,259

$
13,811

$
130,790

 EBITDA as a percentage of sales
3.7
%
4.3
%
2.4
%
1.5
%
3.1
%
 Capital spending (000)4
$
4,419

$
8,716

$
7,098

$
5,591

$
25,824

 Receivables (000)
$
294,940

$
321,310

$
277,928

$
193,759

 
 Inventories (000)
$
371,144

$
403,114

$
377,909

$
344,669

 
 Accounts payable (000)
$
282,678

$
304,364

$
260,083

$
178,182






3



Boise Cascade Company
Quarterly Statistical Information (continued)
Building Materials Distribution Segment (continued)
 
 
 
 
2017
 
Q1
Q2
Q3
Q4
YTD
 Commodity sales
46.5
%
46.3
%
48.3
%
50.4
%
47.9
%
 General line sales
33.8
%
34.8
%
33.9
%
32.0
%
33.6
%
 EWP sales
19.7
%
18.9
%
17.8
%
17.6
%
18.5
%
 Total sales (000)
$
815,683

$
980,706

$
1,045,646

$
931,775

$
3,773,810

 Gross margin1
11.6
%
12.1
%
12.4
%
11.6
%
11.9
%
 Segment income (000)
$
19,965

$
34,509

$
39,379

$
22,907

$
116,760

 Segment depreciation and amortization (000)
$
3,726

$
3,856

$
3,910

$
4,012

$
15,504

 Segment EBITDA (000)2
$
23,691

$
38,365

$
43,289

$
26,919

$
132,264

 EBITDA as a percentage of sales
2.9
%
3.9
%
4.1
%
2.9
%
3.5
%
 Capital spending (000)
$
3,966

$
3,903

$
6,240

$
5,192

$
19,301

 Receivables (000)
$
255,716

$
276,079

$
272,127

$
217,519

 
 Inventories (000)
$
311,233

$
321,611

$
284,587

$
293,516

 
 Accounts payable (000)
$
255,415