Boise Cascade Company Reports Third Quarter 2013 Net Income of $15.9 Million on Sales of $878.0 Million

GlobeNewswire Europe

For Immediate Release:  October 21, 2013

  
BOISE, Idaho - Boise Cascade Company (BCC) today reported third quarter sales of $878.0 million, 15% above the same quarter in 2012. Net income was $15.9 million in the third quarter, or $0.39 per share, on 40.6 million weighted average shares outstanding.

Third Quarter 2013 Highlights

  • The Company reported earnings before interest, taxes, depreciation, and amortization (EBITDA) of $39.5 million, up 7% from the $36.8 million reported in third quarter 2012. 

  • Wood Products third quarter segment sales, including sales to the Company`s Building Materials Distribution (BMD) segment, were $283.2 million, an increase of 9% from the year ago quarter. EBITDA was $24.6 million, down 14% from the $28.6 million reported in third quarter 2012 primarily as a result of higher wood fiber costs and lower plywood sales prices. 

  • BMD segment sales were $721.5 million, an increase of 19% from the year ago quarter. EBITDA was $20.1 million, up 60% from the $12.6 million reported in third quarter 2012 due to higher gross margin dollars and positive expense leverage from higher sales. 

  • The Company repurchased 3.9 million shares of its common stock for $100.0 million of cash in July. 

  • In August, the Company issued an additional $50 million of 6 3/8% senior notes at a price of 103.5% and increased its committed bank line capacity to $350 million to facilitate future growth opportunities. 

  • The Company acquired two plywood plants for $102.0 million in cash on September 30, 2013. 

Using the available July and August 2013 data, total U.S. housing starts were up 18%, with single-family starts up approximately 15% from the same period in 2012. The October 2013 Blue Chip consensus forecast for 2013 reflects 930,000 total U.S. housing starts, a 19% increase from 2012 levels. Total housing activity levels remain below the historical average for the last 20 years of approximately 1.4 million starts per year.  

"We had solid operating performances in both businesses in the third quarter. Our distribution business rebounded sharply from a challenging second quarter and posted strong sales and earnings growth sequentially and compared to the prior year quarter. Wood Products executed well on internal veneer production, which allowed us to grow engineered wood product sales while maintaining plywood sales volumes. On the last day of the quarter, we completed the acquisition of two plywood operations in the Carolinas. These added facilities position us well to support our existing, as well as new, customers in the Southeast," commented Tom Carlile, CEO. "We remained focused on opportunities to grow revenues and earnings."

3Q 2013 3Q 2012 2Q 2013
(thousands)
Consolidated Results
Sales $ 877,979 $ 764,596 $ 852,295
EBITDA1 39,510 36,821 30,694
Net income 15,860 23,503 10,412
Segment Results
Wood Products segment sales $ 283,204 $ 259,759 $ 280,417
Wood Products segment EBITDA1 24,614 28,628 29,562
BMD segment sales 721,523 605,206 681,486
BMD segment EBITDA1 20,108 12,563 5,493
Corporate segment EBITDA1 (5,212 ) (4,370 ) (4,361 )

1Reconciliations between our results reported in accordance with U.S. generally accepted accounting principles (GAAP) and EBITDA are included in the summary notes at the end of this press release.

Wood Products Segment

Wood Products segment sales in the third quarter were $283.2 million, up 9% or $23.4 million from the same quarter a year ago. The sales increase was attributable primarily to increased engineered wood products (EWP) volumes and prices, resulting in increases of $14.0 million and $10.2 million, respectively. Higher lumber prices contributed an additional $4.3 million to sales compared to the year ago quarter. The sales gains were partially offset by lower plywood sales prices. The segment reported EBITDA of $24.6 million for the quarter, compared with $28.6 million reported in third quarter 2012. The decrease in EBITDA was due primarily to higher wood fiber costs and lower plywood sales prices, offset partially by higher EWP and lumber sales prices.

Building Materials Distribution Segment

BMD segment sales were $721.5 million in the third quarter, up 19% or $116.3 million from the same quarter a year ago. The gains were driven by improvements in volume and in prices of 16% and 2%, respectively. Commodity sales increased $58.3 million; EWP sales increased $32.3 million; and general line product sales increased $25.7 million. BMD reported quarterly EBITDA of $20.1 million compared with $12.6 million in third quarter 2012. While third quarter 2013 gross margins at 11.6% were down 0.4 percentage points from the 12.0% reported in third quarter 2012, the strong growth in sales resulted in the generation of significantly higher gross margin dollars. In addition, the business achieved positive sales growth leverage on selling and distribution expenses, as well as on general and administrative expenses.

Balance Sheet

Boise Cascade ended third quarter 2013 with $157.0 million of cash and cash equivalents and $274.7 million of undrawn committed bank line availability, for total available liquidity of $431.7 million. At September 30, 2013, Boise Cascade had outstanding debt of $326.7 million.

Outlook

For the balance of 2013, we expect to continue to experience demand below 20-year average historical levels for the products we manufacture and distribute. However, the housing industry has shown signs of improvement in the U.S., and we remain optimistic that the improvement in demand for our products will continue. Commodity product pricing was more stable in third quarter 2013 than in the first half of the year. Future pricing could be volatile in response to industry 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 engineered wood products and plywood 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 Monday, October 21, at 11 a.m. Eastern, at which time we will review the Company`s third quarter results.

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. The archived webcast will be available in the Investor Relations section of our website.

To participate in the conference call, dial 866-271-5140 and use passcode 80336097 (international callers should dial 617-213-8893) at least 10 minutes before the start of the call. A replay of the conference call will be available from October 21 at 3 p.m. Eastern through October 28, at 11 p.m. Playback numbers are 888-286-8010 for U.S. callers and 617-801-6888 for international callers. The replay passcode will be 57261872.

Basis of Presentation

We refer to the terms EBITDA and adjusted net income in this earnings release. EBITDA and adjusted net income are 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. We define adjusted net income as net income before certain unusual items.

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 and adjusted net income 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. We believe EBITDA and adjusted net income 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. EBITDA and adjusted net income, however, are not measures 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 and adjusted net income 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 measures of EBITDA and adjusted net income 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 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 Nine Months Ended
September 30 June 30,
2013
September 30
2013 2012 2013 2012
Sales $ 877,979 $ 764,596 $ 852,295 $ 2,475,152 $ 2,084,482
Costs and expenses
Materials, labor, and other operating expenses (excluding depreciation) 759,777 653,125 750,996 2,155,620 1,795,856
Depreciation and amortization 8,962 8,461 8,766 26,205 24,918
Selling and distribution expenses 66,244 62,572 60,102 183,350 176,854
General and administrative expenses 12,867 12,185 10,251 33,164 31,922
Other (income) expense, net (350 ) 121 (39 ) (523 ) 406
847,500 736,464 830,076 2,397,816 2,029,956
Income from operations 30,479 28,132 22,219 77,336 54,526
Foreign exchange gain (loss) 69 228 (291 ) (302 ) 125
Interest expense (5,174 ) (4,840 ) (4,781 ) (14,846 ) (14,471 )
Interest income 88 87 62 212 281
(5,017 ) (4,525 ) (5,010 ) (14,936 ) (14,065 )
Income before income taxes 25,462 23,607 17,209 62,400 40,461
Income tax (provision) benefit (a) (9,602 ) (104 ) (6,797 ) 44,708 (243 )
Net income $ 15,860 $ 23,503 $ 10,412 $ 107,108 $ 40,218
Weighted average common shares outstanding:
Basic 40,625 29,700 43,229 40,486 29,700
Diluted 40,640 29,700 43,233 40,492 29,700
Net income per common share:
Basic $ 0.39 $ 0.79 $ 0.24 $ 2.65 $ 1.35
Diluted $ 0.39 $ 0.79 $ 0.24 $ 2.65 $ 1.35

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 Nine Months Ended
September 30 June 30,
2013
September 30
2013 2012 2013 2012
Segment sales $ 283,204 $ 259,759 $ 280,417 $ 832,837 $ 712,744
Costs and expenses
Materials, labor, and other operating expenses (excluding depreciation) 249,037 221,328 241,745 724,166 618,128
Depreciation and amortization 6,686 6,164 6,517 19,456 18,182
Selling and distribution expenses 6,637 7,059 6,709 20,039 20,535
General and administrative expenses 3,039 2,608 2,408 7,578 6,628
Other (income) expense, net (123 ) 136 (7 ) (183 ) 448
265,276 237,295 257,372 771,056 663,921
Segment income $ 17,928 $ 22,464 $ 23,045 $ 61,781 $ 48,823
(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) 87.9 % 85.2 % 86.2 % 87.0 % 86.7 %
Depreciation and amortization 2.4 % 2.4 % 2.3 % 2.3 % 2.6 %
Selling and distribution expenses 2.3 % 2.7 % 2.4 % 2.4 % 2.9 %
General and administrative expenses 1.1 % 1.0 % 0.9 % 0.9 % 0.9 %
Other (income) expense, net - % 0.1 % - % - % 0.1 %
93.7 % 91.4 % 91.8 % 92.6 % 93.1 %
Segment income 6.3 % 8.6 % 8.2 % 7.4 % 6.9 %

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

Three Months Ended Nine Months Ended
September 30 June 30,
2013
September 30
  2013 2012 2013 2012
Segment sales $ 721,523 $ 605,206 $ 681,486 $ 1,984,138 $ 1,637,167
Costs and expenses
Materials, labor, and other operating expenses (excluding depreciation) 637,719 532,812 619,174 1,773,895 1,444,171
Depreciation and amortization 2,245 2,263 2,217 6,640 6,639
Selling and distribution expenses 59,607 55,513 53,393 163,311 156,319
General and administrative expenses 4,175 4,372 3,480 11,397 12,017
Other (income) expense, net (86 ) (54 ) (54 ) (241 ) (159 )
703,660 594,906 678,210 1,955,002 1,618,987
Segment income $ 17,863 $ 10,300 $ 3,276 $ 29,136 $ 18,180
(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) 88.4 % 88.0 % 90.9 % 89.4 % 88.2 %
Depreciation and amortization 0.3 % 0.4 % 0.3 % 0.3 % 0.4 %
Selling and distribution expenses 8.3 % 9.2 % 7.8 % 8.2 % 9.5 %
General and administrative expenses 0.6 % 0.7 % 0.5 % 0.6 % 0.7 %
Other (income) expense, net - % - % - % - % - %
97.5 % 98.3 % 99.5 % 98.5 % 98.9 %
Segment income 2.5 % 1.7 % 0.5 % 1.5 % 1.1 %

Segment Information
(unaudited, in thousands)

Three Months Ended Nine Months Ended
September 30 June 30,
2013
September 30
2013 2012 2013 2012
Segment sales
Wood Products $ 283,204 $ 259,759 $ 280,417 $ 832,837 $ 712,744
Building Materials Distribution 721,523 605,206 681,486 1,984,138 1,637,167
Intersegment eliminations (126,748 ) (100,369 ) (109,608 ) (341,823 ) (265,429 )
$ 877,979 $ 764,596 $ 852,295 $ 2,475,152 $ 2,084,482
Segment income
Wood Products $ 17,928 $ 22,464 $ 23,045 $ 61,781 $ 48,823
Building Materials Distribution 17,863 10,300 3,276 29,136 18,180
Corporate and Other (5,243 ) (4,404 ) (4,393 ) (13,883 ) (12,352 )
30,548 28,360 21,928 77,034 54,651
Interest expense (5,174 ) (4,840 ) (4,781 ) (14,846 ) (14,471 )
Interest income 88 87 62 212 281
Income before income taxes $ 25,462 $ 23,607 $ 17,209 $ 62,400 $ 40,461
EBITDA (b)
Wood Products $ 24,614 $ 28,628 $ 29,562 $ 81,237 $ 67,005
Building Materials Distribution 20,108 12,563 5,493 35,776 24,819
Corporate and Other (5,212 ) (4,370 ) (4,361 ) (13,774 ) (12,255 )
$ 39,510 $ 36,821 $ 30,694 $ 103,239 $ 79,569

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

Boise Cascade Company
Consolidated Balance Sheets
(unaudited, in thousands)

September 30,
2013
December 31,
2012
ASSETS
Current
Cash and cash equivalents $ 157,019 $ 54,507
Receivables
Trade, less allowances of $3,150 and $2,696 203,935 134,743
Related parties 470 674
Other 8,643 6,204
Inventories 369,180 325,806
Deferred income taxes 21,324 2
Prepaid expenses and other 8,997 5,521
Total current assets 769,568 527,457
Property and equipment, net 355,091 265,924
Timber deposits 5,701 6,221
Deferred financing costs 8,437 7,562
Goodwill 20,477 12,170
Intangible assets 10,300 8,900
Deferred income taxes 41,133 -
Other assets 7,252 8,164
Total assets $ 1,217,959 $ 836,398

Boise Cascade Company
Consolidated Balance Sheets (continued)
(unaudited, in thousands, except per-share data)

September 30,
2013
December 31,
2012
LIABILITIES AND STOCKHOLDERS` EQUITY
Current
Accounts payable
Trade $ 191,613 $ 140,192
Related parties 2,159 1,950
Accrued liabilities
Compensation and benefits 59,177 61,814
Interest payable 8,073 3,188
Other 40,793 29,043
Total current liabilities 301,815 236,187
Debt
Long-term debt 326,694 275,000
Other
Compensation and benefits 194,346 206,668
Other long-term liabilities 15,146 14,336
209,492 221,004
Redeemable equity - 6,443
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, 43,229 issued and 39,365 outstanding and 29,700 shares issued and outstanding 432 297
Treasury Stock, 3,864 and 0 shares at cost (100,000 ) -
Additional paid-in capital 495,587 256,927
Accumulated other comprehensive loss (116,938 ) (121,229 )
Retained earnings (accumulated deficit) 100,877 (38,231 )
Total stockholders` equity 379,958 97,764
Total liabilities and stockholders` equity $ 1,217,959 $ 836,398

Boise Cascade Company
Consolidated Statements of Cash Flows
(unaudited, in thousands)

Nine Months Ended
September 30
2013 2012
Cash provided by (used for) operations
Net income $ 107,108 $ 40,218
Items in net income not using (providing) cash
Depreciation and amortization, including deferred financing costs and other 27,573 26,732
Stock-based compensation 1,862 -
Pension expense 8,104 9,398
Deferred income taxes (65,095 ) -
Other (628 ) (500 )
Decrease (increase) in working capital, net of acquisitions
Receivables (63,987 ) (53,308 )
Inventories (36,440 ) (34,599 )
Prepaid expenses and other (1,624 ) (1,973 )
Accounts payable and accrued liabilities 54,200 82,333
Pension contributions (10,352 ) (8,181 )
Income taxes payable 2,218 67
Other (862 ) 4,685
Net cash provided by operations 22,077 64,872
Cash provided by (used for) investment
Expenditures for property and equipment (29,935 ) (17,682 )
Acquisitions of businesses and facilities (102,002 ) (2,355 )
Proceeds from sales of assets 1,536 171
Other 9 (3 )
Net cash used for investment (130,392 ) (19,869 )
Cash provided by (used for) financing
Net proceeds from issuance of common stock 262,488 -
Treasury stock purchased (100,000 ) -
Issuances of long-term debt 130,000 -
Payments of long-term debt (80,000 ) -
Distributions to members - (2,790 )
Financing costs (1,854 ) (250 )
Other 193 -
Net cash provided by (used for) financing 210,827 (3,040 )
Net increase in cash and cash equivalents 102,512 41,963
Balance at beginning of the period 54,507 182,455
Balance at end of the period $ 157,019 $ 224,418

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 2012 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.

  1. Adjusted net income represents net income before certain unusual items. The nine months ended September 30, 2013 includes $68.7 million of income tax benefit associated with recording net deferred tax assets upon the Company`s conversion from a limited liability company to a corporation. The following table reconciles net income to adjusted net income for the nine months ended September 30, 2013 and 2012: 

Nine Months Ended
September 30
2013 2012
(unaudited, in thousands,                                        except per-share amounts)
Net income (GAAP basis) $ 107,108 $ 40,218
Impact of deferred tax benefit (68,666 ) -
Adjusted net income (non-GAAP basis) $ 38,442 $ 40,218
Weighted average common shares outstanding:
Basic 40,486 29,700
Diluted 40,492 29,700
Adjusted net income (non-GAAP basis), per share:
Basic $ 0.95 $ 1.35
Diluted $ 0.95 $ 1.35
  1. 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 September 30, 2013 and 2012, and June 30, 2013, and the nine months ended September 30, 2013 and 2012: 

Three Months Ended Nine Months Ended
September 30 June 30,
2013
September 30
2013 2012 2013 2012
(unaudited, in thousands)
Net income $ 15,860 $ 23,503 $ 10,412 $ 107,108 $ 40,218
Interest expense 5,174 4,840 4,781 14,846 14,471
Interest income (88 ) (87 ) (62 ) (212 ) (281 )
Income tax provision (benefit) 9,602 104 6,797 (44,708 ) 243
Depreciation and amortization 8,962 8,461 8,766 26,205 24,918
EBITDA $ 39,510 $ 36,821 $ 30,694 $ 103,239 $ 79,569

The following table reconciles segment income (loss) to EBITDA for the three months ended September 30, 2013 and 2012, and June 30, 2013, and nine months ended September 30, 2013 and 2012:

Three Months Ended Nine Months Ended
September 30 June 30,
2013
September 30
2013 2012 2013 2012
(unaudited, in thousands)
Wood Products
Segment income $ 17,928 $ 22,464 $ 23,045 $ 61,781 $ 48,823
Depreciation and amortization 6,686 6,164 6,517 19,456 18,182
EBITDA 24,614 28,628 29,562 81,237 67,005
Building Materials Distribution
Segment income 17,863 10,300 3,276 29,136 18,180
Depreciation and amortization 2,245 2,263 2,217 6,640 6,639
EBITDA 20,108 12,563 5,493 35,776 24,819
Corporate and Other
Segment loss (5,243 ) (4,404 ) (4,393 ) (13,883 ) (12,352 )
Depreciation and amortization 31 34 32 109 97
EBITDA (5,212 ) (4,370 ) (4,361 ) (13,774 ) (12,255 )
Total Company EBITDA $ 39,510 $ 36,821 $ 30,694 $ 103,239 $ 79,569

Investor contact:  Wayne Rancourt, 208-384-6073
Media contact:  John Sahlberg, 208-384-6451




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