Boise Cascade (BCC) to Acquire Brockway-Smith for $172M
Boise Cascade Company BCC inked a deal to acquire Brockway-Smith Company and its two full-scale distribution centers. The transaction value of $172 million will be financed using BCC's existing cash reserves. The deal is expected to close in the early fourth quarter of 2023, subject to customary closing conditions.
The acquisition of BROSCO, a well-established leading wholesale distributor specializing in doors and millwork, complements BCC's growth strategy. BROSCO's strong reputation, expansive manufacturing capacity and loyal customer base in the Northeast aligns well with BCC's focus. This move enhances BCC's position by adding valuable offerings like interior and exterior doors, windows, mouldings and composite products, reinforcing the company's presence in the millwork sector.
Shares of BCC have increased 51.4% in the past year against the Zacks Building Products - Wood industry’s 1.9% fall.
Image Source: Zacks Investment Research
Although the company’s revenues witnessed a tough year-over-year comparison due to a decline in total U.S. housing starts and single-family housing starts, the company reported sequentially higher revenues in second-quarter 2023. The company has been benefiting from solid demand across its businesses. Also, its focus on growth initiatives in distribution and engineered wood products (EWP) businesses and acquisitions bodes well.
During second-quarter 2023, the Building Materials Distribution (BMD) segments gross margin expanded 110 basis points (bps) to 15% compared with 13.9% reported in the year ago quarter, driven by stable commodity prices. So far in third quarter 2023, BMD's sales remained strong with daily average sales being in line with second quarter levels. Owing to this the company expects to report strong financial results in the third quarter.
The company continues to expand its BMD segment organically with the recent commencement of the Kansas City door shop and expected completion and start-up of the Marion, Ohio greenfield expansion project by the end of this year. So far in 2023, the company has allocated $49 million toward the expansion of this segment.
The company remains optimistic in this regard and anticipates expansions to drive growth. For 2023, the company expects capital expenditure in the range of $120-$140 million.
Zacks Rank & Other Key Picks
Boise Cascade currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks from the Zacks Construction sector are:
Summit Materials, Inc. SUM sports a Zacks Rank #1. SUM has a trailing four-quarter earnings surprise of 13.1%, on average. Shares of SUM have gained 18.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for SUM’s 2023 sales and earnings per share (EPS) indicates rises of 7.1% and 23.6%, respectively, from the year-ago period’s levels.
EMCOR Group, Inc. EME flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 17.2%, on average. Shares of EME have risen 76.6% in the past year.
The Zacks Consensus Estimate for EME’s 2023 sales and EPS suggests growth of 11.5% and 35.9%, respectively, from the year-ago period’s levels.
TopBuild Corp. BLD flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 14.1%, on average. Shares of BLD have surged 45.3% in the past year.
The Zacks Consensus Estimate for BLD’s 2023 sales and EPS indicates gains of 3.3% and 6.1%, respectively, from the year-ago period’s levels.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
EMCOR Group, Inc. (EME) : Free Stock Analysis Report
Boise Cascade, L.L.C. (BCC) : Free Stock Analysis Report
TopBuild Corp. (BLD) : Free Stock Analysis Report
Summit Materials, Inc. (SUM) : Free Stock Analysis Report
