Boise Cascade Posts Mixed 1st-Quarter Results
Boise Cascade Co. (NYSE:BCC) released its first-quarter 2020 results after the market closed on May 7.
Snapshot of the quarter
The North American manufacturer of wood products and wholesale distributer of building materials recorded net income of $12.2 million and earnings per share of 31 cents, up from net income of $11.4 million and EPS of $0.29 per share the year before. Analysts were anticipating EPS of 45 cents. Revenue declined 12% from the prior-year quarter to $1.17 billion, surpassing expectations of $1.09 billion.
Reflecting on the company's performance, CEO Nate Jorgensen said:
"Our first quarter financial results were strong in both businesses, demonstrating the strength of our integrated business model. We will continue to take the necessary steps to preserve our financial position and effectively support our customers, and ultimately will strive to balance the priorities of the various stakeholders that depend on us."
How did wood products fare?
Wood product sales, including sales to building materials distributors, amounted to $320.1 million in the first-quarter, up from $319.5 million reported in the year-ago quarter. The company credited the high sales volume of engineered wood products (EWP) for the growth. This was only partly offset by lower prices and sales volumes for plywood.
Net income in the wood products segment decreased by $7.9 million to $3.8 million. Lower sales price for plywood and higher depreciation contributed to the decline. These declines were slightly offset by lower manufacturing costs and higher sales volume of EWP.
Performance of building materials distribution
Building material distribution sales rose 16% year-over-year to $1.05 billion due to a 17% increase in sales volume, which was partially offset by a 1% decline in sales price.
For the reported quarter, the division's net income was $29.3 million, reflecting a growth of $11.8 million from the year-ago quarter.
Guidance
Boise Cascade did not provide 2020 guidance.
The company expects demand for its products to slow down in 2020. Total U.S. housing starts were projected to be 1.6 million for 2020 until the mid of March. The Covid-19 pandemic has escalated quickly since then, which unfavourably affected the residential construction activity and building products demand. Household formation rates will play a key role in determining the demand for the company's building materials.
Disclosure: I do not hold any positions in the stocks mentioned.
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