News Column

Boise Cascade Company Reports 2014 Second Quarter Net Income of $26.4 Million on Sales of $961.2 Million

July 24, 2014

For Immediate Release:  July 24, 2014BOISE, Idaho - Boise Cascade Company (Boise Cascade or Company) (NYSE: BCC) today reported net income of $26.4 million, or $0.67 per share, on sales of $961.2 million for the second quarter ended June 30, 2014. Second Quarter 2014 Highlights %     2Q 2014   2Q 2013   change ------------- ------------- ------- (thousands, except per-share data     and percentages) Consolidated Results Sales   $ 961,187     $ 852,295     13 % Net income   26,418     10,412     154 % Net income per common share - diluted   0.67     0.24     179 % EBITDA(1)   58,652     30,694     91 % Segment Results Wood Products sales   $ 351,011     $ 280,417     25 % Wood Products EBITDA(1)   41,257     29,562     40 % Building Materials Distribution sales   758,375     681,486     11 % Building Materials Distribution EBITDA(1)   21,795     5,493     297 % Corporate EBITDA(1)   (4,400 )   (4,361 )   1 % (1 )For reconciliations of non-GAAP measures, see summary notes at the end of this press release.             In second quarter 2014, total and single-family U.S. housing starts increased approximately 12% and 4%, respectively, from the same period last year. The July 2014 Blue Chip consensus forecast for 2014 reflects 1.04 million total U.S. housing starts, a 12% expected increase from 2013 levels, but still well below the historical average for the last 20 years of approximately 1.4 million starts per year.             "Second quarter demand for the products we manufacture and distribute was markedly better than in first quarter, as weather improved across the country and housing and repair and remodel activity regained momentum.  We generated good sales volume growth in engineered wood products and our distribution business. While plywood prices declined compared to last year's second quarter, pricing remains favorable and we saw improved pricing sequentially on essentially all of our manufactured products," stated Tom Carlile, CEO. Wood Products             Sales, including sales to our Building Materials Distribution (BMD) segment, increased $70.6 million, or 25%, to $351.0 million for the three months ended June 30, 2014, from $280.4 million for the three months ended June 30, 2013. The sales growth was driven primarily by plywood and EWP volume increases. Plywood sales volumes increased 21% primarily due to the acquisition of two plywood manufacturing facilities on September 30, 2013. EWP sales improved with I-joists and LVL sales volumes up 29% and 28%, respectively, and I-joists and LVL sales prices up 8% and 4%, respectively. Improved lumber, particleboard, and byproduct sales also contributed to the increase in sales. These increases were offset partially by 8% lower plywood sales prices.             Wood Products EBITDA increased $11.7 million to $41.3 million for the three months ended June 30, 2014, from $29.6 million for the three months ended June 30, 2013. The improvement in EBITDA included $4.8 million related to the acquired plywood operations. Overall, the increase in EBITDA was due primarily to higher plywood sales volumes and higher EWP and lumber sales prices, as well as lower costs of OSB in the manufacture of I-joists. These improvements in EBITDA were offset partially by lower plywood sales prices and higher log costs. Building Materials Distribution             Sales increased $76.9 million, or 11%, to $758.4 million for the three months ended June 30, 2014, from $681.5 million for the three months ended June 30, 2013. Compared with the same quarter in the prior year, the overall increase in sales was driven primarily by improvements in sales volumes of 15%, offset partially by a decrease in sales prices of 3%. By product line, sales of EWP increased 36%, general line product sales increased 9%, and commodity sales increased 6%.             BMD EBITDA increased $16.3 million to $21.8 million for the three months ended June 30, 2014, from $5.5 million for the three months ended June 30, 2013. The increase in EBITDA was driven primarily by a higher gross margin of $23.7 million, including an improvement in gross margin percentage of 220 basis points.  The relative improvement in gross margin percentage resulted from more stable commodity product pricing during second quarter 2014 as compared with a steady decline in commodity prices throughout second quarter 2013. Balance Sheet                 Boise Cascade ended the second quarter with $129.9 million of cash and cash equivalents and $342.0 million of undrawn committed bank line availability, for total available liquidity of $471.9 million. The company reported $301.5 million of outstanding debt at June 30, 2014. Outlook             We expect to continue to experience demand below 20-year average historical levels for the products we manufacture and distribute. The housing industry in the U.S. improved in 2012 and 2013, and we remain optimistic that the improvement in demand for our products will continue during the balance of 2014. Future commodity product pricing could be volatile in response to industry capacity restarts and operating rates, inventory levels in various 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 until demand improves further. 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 24, 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 855-209-5834 (international callers should dial 315-625-6883), participant passcode 74708726, 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 24, at 2 p.m. Eastern through Thursday, July 31, at 11 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 74708726. 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 and interest income), 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 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     June 30 --------------------------- March 31, ------------------------------   2014   2013    2014   2014   2013 ------------- ------------- ------------- --------------- -------------- Sales $ 961,187     $ 852,295     $ 767,180     $ 1,728,367     $ 1,597,173 Costs and expenses Materials, labor, and other operating expenses (excluding depreciation) 823,532   750,996   672,608   1,496,140   1,395,843 Depreciation and amortization 12,482   8,766   12,320   24,802   17,243 Selling and distribution expenses 67,181   60,102   58,930   126,111   117,106 General and administrative expenses 11,925   10,251   10,665   22,590   20,297 Other (income) expense, net 163   (39 )   (1,900 )   (1,737 )   (173 ) ------------- ------------- ------------- --------------- --------------   915,283     830,076     752,623     1,667,906     1,550,316 ------------- ------------- ------------- --------------- -------------- Income from operations 45,904   22,219   14,557   60,461   46,857 ------------- ------------- ------------- --------------- -------------- Foreign currency exchange gain (loss) 266   (291 )   (89 )   177   (371 ) Interest expense (5,519 )   (4,781 )   (5,512 )   (11,031 )   (9,672 ) Interest income 53   62   70   123   124 ------------- ------------- ------------- --------------- --------------   (5,200 )   (5,010 )   (5,531 )   (10,731 )   (9,919 ) ------------- ------------- ------------- --------------- -------------- Income before income taxes 40,704   17,209   9,026   49,730   36,938 Income tax (provision) benefit (a) (14,286 )   (6,797 )   (3,461 )   (17,747 )   54,310 ------------- ------------- ------------- --------------- -------------- Net income $ 26,418     $ 10,412     $ 5,565     $ 31,983     $ 91,248 ------------- ------------- ------------- --------------- -------------- Weighted average common shares outstanding:   Basic 39,420     43,229     39,372     39,399     40,415   Diluted 39,463     43,233     39,452     39,458     40,417 Net income per common share:   Basic $ 0.67     $ 0.24     $ 0.14     $ 0.81     $ 2.26 ------------- ------------- ------------- --------------- --------------   Diluted $ 0.67     $ 0.24     $ 0.14     $ 0.81     $ 2.26 ------------- ------------- ------------- --------------- -------------- See accompanying summary notes to consolidated financial statements and segment information. Wood Products Segment Statements of Operations (unaudited, in thousands, except percentages)   Three Months Ended   Six Months Ended ---------------------------------------- -------------------------   June 30     June 30 -------------------------- March 31, -------------------------   2014   2013    2014   2014   2013 ------------- ------------ ------------- ------------- ----------- Segment sales $ 351,011     $280,417     $ 293,274     $ 644,285     $549,633 Costs and expenses Materials, labor, and other operating expenses (excluding depreciation) 299,993   241,745   260,863   560,856   475,129 Depreciation and amortization 10,044   6,517   9,980   20,024   12,770 Selling and distribution expenses 7,146   6,709   6,738   13,884   13,402 General and administrative expenses 2,418   2,408   2,649   5,067   4,539 Other (income) expense, net 197   (7 )   (3 )   194   (60 ) ------------- ------------ ------------- ------------- -----------   319,798     257,372     280,227     600,025     505,780 ------------- ------------ ------------- ------------- ----------- Segment income $ 31,213     $ 23,045     $ 13,047     $ 44,260     $ 43,853 ------------- ------------ ------------- ------------- -----------   (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) 85.5 %   86.2 %   88.9 %   87.1 %   86.4 % Depreciation and amortization 2.9 %   2.3 %   3.4 %   3.1 %   2.3 % Selling and distribution expenses 2.0 %   2.4 %   2.3 %   2.2 %   2.4 % General and administrative expenses 0.7 %   0.9 %   0.9 %   0.8 %   0.8 % Other (income) expense, net 0.1 %   - %   - %   - %   - % ------------- ------------ ------------- ------------- -----------   91.1 %   91.8 %   95.6 %   93.1 %   92.0 % ------------- ------------ ------------- ------------- ----------- ------------- ------------ ------------- ------------- ----------- Segment income 8.9 %   8.2 %   4.4 %   6.9 %   8.0 % ------------- ------------ ------------- ------------- ----------- Building Materials Distribution Segment Statements of Operations (unaudited, in thousands, except percentages)   Three Months Ended   Six Months Ended ------------------------------------------ -------------------------------   June 30     June 30 --------------------------- March 31, -------------------------------   2014   2013    2014   2014   2013 ------------- ------------- -------------- ---------------- -------------- Segment sales $ 758,375     $ 681,486     $ 585,530     $ 1,343,905     $ 1,262,615 Costs and expenses Materials, labor, and other operating expenses (excluding depreciation) 672,355   619,174   523,344   1,195,699   1,136,176 Depreciation and amortization 2,394   2,217   2,307   4,701   4,395 Selling and distribution expenses 60,035   53,393   52,192   112,227   103,704 General and administrative expenses 4,232   3,480   3,766   7,998   7,222 Other (income) expense, net (42 )   (54 )   (1,940 )   (1,982 )   (155 ) ------------- ------------- -------------- ---------------- --------------   738,974     678,210     579,669     1,318,643     1,251,342 ------------- ------------- -------------- ---------------- -------------- Segment income $ 19,401     $ 3,276     $ 5,861     $ 25,262     $ 11,273 ------------- ------------- -------------- ---------------- --------------   (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) 88.7 %   90.9 %   89.4 %   89.0 %   90.0 % Depreciation and amortization 0.3 %   0.3 %   0.4 %   0.3 %   0.3 % Selling and distribution expenses 7.9 %   7.8 %   8.9 %   8.4 %   8.2 % General and administrative expenses 0.6 %   0.5 %   0.6 %   0.6 %   0.6 % Other (income) expense, net - %   - %   (0.3 )%   (0.1 )%   - % ------------- ------------- -------------- ---------------- --------------   97.4 %   99.5 %   99.0 %   98.1 %   99.1 % ------------- ------------- -------------- ---------------- -------------- ------------- ------------- -------------- ---------------- -------------- Segment income 2.6 %   0.5 %   1.0 %   1.9 %   0.9 % ------------- ------------- -------------- ---------------- -------------- Segment Information (unaudited, in thousands)   Three Months Ended   Six Months Ended ----------------------------------------- ------------------------------   June 30     June 30 --------------------------- March 31, ------------------------------   2014   2013    2014   2014   2013 ------------- ------------- ------------- --------------- -------------- Segment sales Wood Products $ 351,011   $ 280,417   $ 293,274   $ 644,285   $ 549,633 Building Materials Distribution 758,375   681,486   585,530   1,343,905   1,262,615 Intersegment eliminations (148,199 )   (109,608 )   (111,624 )   (259,823 )   (215,075 ) ------------- ------------- ------------- --------------- --------------   $ 961,187     $ 852,295     $ 767,180     $ 1,728,367     $ 1,597,173 ------------- ------------- ------------- --------------- -------------- Segment income (loss) Wood Products $ 31,213   $ 23,045   $ 13,047   $ 44,260   $ 43,853 Building Materials Distribution 19,401   3,276   5,861   25,262   11,273 Corporate and Other (4,444 )   (4,393 )   (4,440 )   (8,884 )   (8,640 ) ------------- ------------- ------------- --------------- --------------   46,170     21,928     14,468     60,638     46,486 ------------- ------------- ------------- --------------- -------------- Interest expense (5,519 )   (4,781 )   (5,512 )   (11,031 )   (9,672 ) Interest income 53   62   70   123   124 ------------- ------------- ------------- --------------- -------------- Income before income taxes $ 40,704   $ 17,209   $ 9,026   $ 49,730   $ 36,938 ------------- ------------- ------------- --------------- -------------- EBITDA (b) Wood Products $ 41,257   $ 29,562   $ 23,027   $ 64,284   $ 56,623 Building Materials Distribution 21,795   5,493   8,168   29,963   15,668 Corporate and Other (4,400 )   (4,361 )   (4,407 )   (8,807 )   (8,562 ) ------------- ------------- ------------- --------------- --------------   $ 58,652     $ 30,694     $ 26,788     $ 85,440     $ 63,729 ------------- ------------- ------------- --------------- -------------- See accompanying summary notes to consolidated financial statements and segment information. Boise Cascade Company Consolidated Balance Sheets (unaudited, in thousands) June 30, December 31,      2014    2013 --------------- -------------- ASSETS Current Cash and cash equivalents   $ 129,919     $ 118,249 Receivables Trade, less allowances of $2,249 and $2,509   218,940     152,240 Related parties   714     583 Other   6,373     7,268 Inventories   410,565     383,359 Deferred income taxes   18,028     18,151 Prepaid expenses and other   8,727     7,855 --------------- -------------- Total current assets   793,266     687,705 --------------- -------------- Property and equipment, net   355,358     360,985 Timber deposits   6,386     6,266 Deferred financing costs   7,753     8,334 Goodwill   21,823     21,823 Intangible assets, net   10,230     10,277 Deferred income taxes   -     760 Other assets   8,749     8,036 --------------- -------------- Total assets   $ 1,203,565     $ 1,104,186 --------------- -------------- Boise Cascade Company Consolidated Balance Sheets (continued) (unaudited, in thousands, except per-share data) June 30, December 31,      2014    2013 --------------- -------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Accounts payable Trade   $ 204,324     $ 139,636 Related parties   2,378     2,484 Accrued liabilities Compensation and benefits   52,588     60,527 Income taxes payable   9,249     166 Interest payable   3,297     3,294 Other   34,834     32,910 --------------- -------------- Total current liabilities   306,670     239,017 --------------- -------------- Debt Long-term debt   301,516     301,613 --------------- -------------- Other Compensation and benefits   91,606     96,536 Other long-term liabilities   16,964     14,539 --------------- --------------     108,570     111,075 --------------- -------------- 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, 43,271 and 43,229 shares issued, respectively   433   432 Treasury Stock, 3,864 shares at cost   (100,000 )   (100,000 ) Additional paid-in capital   498,945     496,593 Accumulated other comprehensive loss   (55,257 )   (55,249 ) Retained earnings   142,688     110,705 --------------- -------------- Total stockholders' equity   486,809     452,481 --------------- -------------- Total liabilities and stockholders' equity   $ 1,203,565     $ 1,104,186 --------------- -------------- Boise Cascade Company Consolidated Statements of Cash Flows (unaudited, in thousands)     Six Months Ended     June 30 --------------------------     2014   2013 ------------- ------------ Cash provided by (used for) operations Net income   $ 31,983     $ 91,248 Items in net income not using (providing) cash Depreciation and amortization, including deferred financing costs and other   25,616   18,131 Stock-based compensation   2,310     1,073 Pension expense   357     5,434 Deferred income taxes   2,721     (66,314 ) Other   (1,729 )   (277 ) Decrease (increase) in working capital Receivables   (65,953 )   (71,487 ) Inventories   (27,206 )   (42,544 ) Prepaid expenses and other   (3,424 )   (2,523 ) Accounts payable and accrued liabilities   58,393     36,661 Pension contributions   (780 )   (9,970 ) Income taxes payable   10,993     (881 ) Other   (3,956 )   (4,546 ) ------------- ------------ Net cash provided by (used for) operations   29,325     (45,995 ) ------------- ------------ Cash provided by (used for) investment Expenditures for property and equipment   (21,971 )   (14,042 ) Proceeds from sales of assets   4,637     546 Other   32     10 ------------- ------------ Net cash used for investment   (17,302 )   (13,486 ) ------------- ------------ Cash provided by (used for) financing Net proceeds from issuance of common stock   -     262,599 Issuances of long-term debt, including revolving credit facility   57,600   55,000 Payments of long-term debt, including revolving credit facility   (57,600 )   (80,000 ) Financing costs   (11 )   (321 ) Other   (342 )   191 ------------- ------------ Net cash provided by (used for) financing   (353 )   237,469 ------------- ------------ Net increase in cash and cash equivalents   11,670     177,988 Balance at beginning of the period   118,249     45,893 ------------- ------------ Balance at end of the period   $ 129,919     $ 223,881 ------------- ------------ 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 2013 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. The six months ended June 30, 2013 includes a $68.7 million income tax benefit associated with the recording of net deferred tax assets upon the Company's conversion from a limited liability company to a corporation. b. EBITDA represents income before interest (interest expense and interest income), income taxes, and depreciation and amortization. The following table reconciles net income to EBITDA for the three months ended June 30, 2014 and 2013, and March 31, 2014, and the six months ended June 30, 2014 and 2013:   Three Months Ended   Six Months Ended -------------------------------------- ------------------------   June 30     June 30 ------------------------- March 31, ------------------------   2014   2013    2014   2014   2013 ------------ ------------ ------------ ------------ -----------   (unaudited, in thousands) Net income $ 26,418     $ 10,412     $ 5,565     $ 31,983     $ 91,248 Interest expense 5,519     4,781     5,512     11,031     9,672 Interest income (53 )   (62 )   (70 )   (123 )   (124 ) Income tax provision (benefit) 14,286   6,797   3,461   17,747   (54,310 ) Depreciation and amortization 12,482   8,766   12,320   24,802   17,243 ------------ ------------ ------------ ------------ ----------- EBITDA $ 58,652     $ 30,694     $ 26,788     $ 85,440     $ 63,729 ------------ ------------ ------------ ------------ ----------- The following table reconciles segment income (loss) to EBITDA for the three months ended June 30, 2014 and 2013, and March 31, 2014, and the six months ended June 30, 2014 and 2013:     Three Months Ended   Six Months Ended -------------------------------------- ------------------------     June 30     June 30 ------------------------- March 31, ------------------------     2014   2013    2014   2014   2013 ------------ ------------ ------------ ------------ -----------     (unaudited, in thousands) Wood Products Segment income   $ 31,213     $ 23,045     $ 13,047     $ 44,260     $ 43,853 Depreciation and amortization   10,044   6,517   9,980   20,024   12,770 ------------ ------------ ------------ ------------ ----------- EBITDA   41,257     29,562     23,027     64,284     56,623 ------------ ------------ ------------ ------------ ----------- Building Materials Distribution Segment income   19,401     3,276     5,861     25,262     11,273 Depreciation and amortization   2,394   2,217   2,307   4,701   4,395 ------------ ------------ ------------ ------------ ----------- EBITDA   21,795     5,493     8,168     29,963     15,668 ------------ ------------ ------------ ------------ ----------- Corporate and Other Segment loss   (4,444 )   (4,393 )   (4,440 )   (8,884 )   (8,640 ) Depreciation and amortization   44   32   33   77   78 ------------ ------------ ------------ ------------ ----------- EBITDA   (4,400 )   (4,361 )   (4,407 )   (8,807 )   (8,562 ) ------------ ------------ ------------ ------------ ----------- Total Company EBITDA   $ 58,652   $ 30,694   $ 26,788   $ 85,440   $ 63,729 ------------ ------------ ------------ ------------ ----------- Investor contact:  Wayne Rancourt, 208-384-6073 Media contact:  John Sahlberg, 208-384-6451 This announcement is distributed by GlobeNewswire on behalf of GlobeNewswire clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Boise Cascade Company via GlobeNewswire [HUG#1836073]


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