BOISE, Idaho–(BUSINESS WIRE)–Boise Cascade Company (“Boise Cascade,” the “Company,” “we,” or “our”) (NYSE: BCC) today reported net income of $219.6 million, or $5.52 per share, on sales of $2.2 billion for the third quarter ended September 30, 2022, compared with net income of $91.7 million, or $2.31 per share, on sales of $1.9 billion for the third quarter ended September 30, 2021.
“The outstanding work of associates across our organization was evident as both businesses reported strong financial results during the third quarter despite the softening economic landscape. In addition, we have made good progress on successfully integrating the recently acquired Coastal operations as we work to expand our EWP capacity and further leverage our integrated business model,” commented Nate Jorgensen, CEO. “We also recently rewarded our shareholders with an increase in our quarterly dividend and an additional special dividend without sacrificing significant balance sheet flexibility. We remain committed to supporting our vendor and customer partners and executing our key strategic priorities as we navigate market uncertainties and clear signals of weaker near-term demand for new residential construction.”
Third Quarter 2022 Highlights
3Q 2022
3Q 2021
% change
(in thousands, except per-share data and percentages)
Consolidated Results
Sales
$
2,154,647
$
1,879,451
15
%
Net income
219,587
91,699
139
%
Net income per common share – diluted
5.52
2.31
139
%
Adjusted EBITDA 1
326,029
149,313
118
%
Segment Results
Wood Products sales
$
595,320
$
497,316
20
%
Wood Products income
155,972
122,056
28
%
Wood Products EBITDA 1
177,257
135,970
30
%
Building Materials Distribution sales
1,956,802
1,721,244
14
%
Building Materials Distribution income
154,436
16,565
832
%
Building Materials Distribution EBITDA 1
161,196
22,578
614
%
1 For reconciliations of non-GAAP measures, see summary notes at the end of this press release.
In third quarter 2022, total U.S. housing starts decreased 7%, driven by a decrease in single-family housing starts of 18% compared to the same period in 2021. On a year-to-date basis through September 2022, total housing starts increased 1%, driven by an increase in multi-family housing starts compared to the same period in 2021. However, single-family housing starts decreased 6% when compared with the same period in 2021. Single-family housing starts are the key demand driver for our sales.
Wood Products
Wood Products’ sales, including sales to Building Materials Distribution (BMD), increased $98.0 million, or 20%, to $595.3 million for the three months ended September 30, 2022, from $497.3 million for the three months ended September 30, 2021. The increase in sales was driven primarily by higher sales prices for I-joists and LVL (collectively referred to as EWP) and higher sales volumes for LVL. In addition, plywood sales volumes increased due to our acquisition of Coastal Plywood and its plywood manufacturing operations on July 25, 2022 (the Acquisition). These increases were offset partially by lower plywood sales prices and lower sales volumes for I-joists.
Comparative average net selling prices and sales volume changes for EWP and plywood are as follows:
3Q 2022 vs. 3Q 2021
3Q 2022 vs. 2Q 2022
Average Net Selling Prices
LVL
52%
19%
I-joists
54%
18%
Plywood
(15)%
(16)%
Sales Volumes
LVL
12%
13%
I-joists
(15)%
(7)%
Plywood
5%
17%
Wood Products’ segment income increased $33.9 million to $156.0 million for the three months ended September 30, 2022, from $122.1 million for the three months ended September 30, 2021. The increase in segment income was due primarily to higher EWP sales prices, offset partially by lower plywood sales prices, as well as higher manufacturing costs. In addition, the Acquisition was the primary driver of the increase in depreciation and amortization and general and administrative expenses.
Building Materials Distribution
BMD’s sales increased $235.6 million, or 14%, to $1,956.8 million for the three months ended September 30, 2022, from $1,721.2 million for the three months ended September 30, 2021. Compared with the same quarter in the prior year, the overall increase in sales was driven by a sales price increase of 15%, offset partially by a sales volume decrease of 1%. By product line, commodity sales increased 1%, general line product sales increased 19%, and sales of EWP (substantially all of which are sourced through our Wood Products segment) increased 33%.
BMD segment income increased $137.8 million to $154.4 million for the three months ended September 30, 2022, from $16.6 million in the comparative prior year quarter. The increase in segment income was driven primarily by a gross margin increase of $166.1 million, resulting primarily from margin improvements on commodity products. In addition, selling and distribution expenses increased $25.7 million.
Balance Sheet and Liquidity
Boise Cascade ended third quarter 2022 with $867.1 million of cash and cash equivalents and $396.2 million of undrawn committed bank line availability, for total available liquidity of $1,263.2 million. The Company had $444.2 million of outstanding debt at September 30, 2022.
On September 9, 2022, we entered into the Eighth Amendment to the Amended and Restated Credit Agreement (the Amendment) related to the Company’s senior secured asset-based revolving credit facility and term loan. The Amendment increases the maximum amount available for revolving loans from $350 million to $400 million, extends the maturity date of the agreement, and replaced the LIBOR rate with Secured Overnight Financing Rate (SOFR). The term loan remains at $50.0 million. For additional information regarding the Amendment, see our Form 10-Q for the quarterly period ended September 30, 2022, filed with the Securities and Exchange Commission.
Excluding acquisitions, we expect capital expenditures in 2022 to total approximately $100 million to $120 million. Our 2022 capital expenditures range includes funding for our BMD organic expansions in Ohio, Kentucky, and Minnesota, replacement of a dryer at our Chester, South Carolina, veneer and plywood plant, and post-acquisition veneer equipment related spending at our Chapman, Alabama facility. We expect capital expenditures in 2023 to total approximately $120 million to $140 million. These levels of capital expenditures could increase or decrease as a result of several factors, including acquisitions, efforts to further accelerate organic growth, exercise of lease purchase options, our financial results, future economic conditions, availability of engineering and construction resources, and timing and availability of equipment purchases.
Dividends
On October 27, 2022, our board of directors declared a quarterly dividend of $0.15 per share on our common stock, as well as a special dividend of $1.00 per share on our common stock, both payable on December 15, 2022, to stockholders of record on December 1, 2022.
Future dividend declarations, including amount per share, record date and payment date, will be made at the discretion of our board of directors and will depend upon, among other things, legal capital requirements and surplus, our future operations and earnings, general financial condition, material cash requirements, restrictions imposed by our asset-based credit facility and the indenture governing our senior notes, applicable laws, and other factors that our board of directors may deem relevant.
Outlook
Demand for the products we manufacture, as well as the products we purchase and distribute, is correlated with new residential construction, residential repair-and-remodeling activity and light commercial construction. Consensus forecasts for 2022 single- and multi-family housing starts in the U.S are between 1.5 million and 1.6 million units, or essentially flat compared to 2021. In addition, the age of U.S. housing stock and elevated levels of homeowner equity provide a favorable backdrop for repair-and-remodel spending. However, continued actions by the Federal Reserve to increase interest rates to combat high levels of inflation have significantly increased mortgage rates and created a great deal of uncertainty broadly across the U.S. economy. As such, due to home affordability constraints and a weakening economy, the pace of new residential construction has slowed and we expect demand to continue to decline for the remainder of 2022 and into 2023. Consensus forecasts for 2023 single- and multi-family housing starts in the U.S. are estimated to be 15% to 20% below 2022 levels. While likely tempered by an economic slowdown, we anticipate the primary drivers of repair-and-remodeling activity to continue to be supportive of homeowners’ further investment in their residences.
As a manufacturer of certain commodity products, we have sales and profitability exposure to declines in commodity product prices and rising input costs. Our distribution business purchases and resells a broad mix of commodity products with periods of increasing prices providing the opportunity for higher sales and increased margins, while declining price environments expose us to declines in sales and profitability. We expect future commodity product pricing and commodity input costs to be volatile in response to economic uncertainties, industry operating rates, transportation constraints or disruptions, net import and export activity, inventory levels in various distribution channels, and seasonal demand patterns. In addition, we expect future price erosion on our EWP and general line products as economic activity slows and demand weakens for new residential construction.
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 to discuss third quarter earnings on Tuesday, November 1, 2022, at 11 a.m. Eastern.
To join the webcast, go to the Investor Relations section at www.bc.com and select the Event Calendar link. Analysts and investors who wish to ask questions during the Q&A session can register for the call here.
The archived webcast will be available in the Investor Relations section of Boise Cascade’s website.
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 (loss) 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 (loss), income (loss) 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 (loss) or segment income (loss) 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, including, but not limited to, statements regarding our outlook. 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, our ability to efficiently and effectively integrate the Coastal Plywood acquisition, the effect of COVID-19 and related variants, 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.
Boise Cascade Company
Consolidated Statements of Operations
(in thousands, except per-share data) (unaudited)
Three Months Ended
Nine Months Ended
September 30
June 30, 2022
September 30
2022
2021
2022
2021
Sales
$
2,154,647
$
1,879,451
$
2,278,072
$
6,759,001
$
6,143,928
Costs and expenses
Materials, labor, and other operating expenses (excluding depreciation)
1,655,979
1,594,405
1,797,948
5,183,823
4,909,362
Depreciation and amortization
28,374
20,299
20,694
69,611
60,258
Selling and distribution expenses
142,176
114,466
134,279
423,106
366,119
General and administrative expenses
27,622
21,002
27,701
81,375
64,252
Other (income) expense, net
1,126
(107
)
375
(987
)
(485
)
1,855,277
1,750,065
1,980,997
5,756,928
5,399,506
Income from operations
299,370
129,386
297,075
1,002,073
744,422
Foreign currency exchange loss
(1,674
)
(353
)
(499
)
(2,041
)
(52
)
Pension expense (excluding service costs)
(41
)
(19
)
(41
)
(253
)
(57
)
Interest expense
(6,398
)
(6,279
)
(6,317
)
(18,969
)
(18,501
)
Interest income
3,238
63
1,385
4,688
173
Change in fair value of interest rate swaps
1,134
59
394
3,594
1,058
(3,741
)
(6,529
)
(5,078
)
(12,981
)
(17,379
)
Income before income taxes
295,629
122,857
291,997
989,092
727,043
Income tax provision
(76,042
)
(31,158
)
(73,886
)
(248,794
)
(183,632
)
Net income
$
219,587
$
91,699
$
218,111
$
740,298
$
543,411
Weighted average common shares outstanding:
Basic
39,544
39,442
39,544
39,521
39,413
Diluted
39,776
39,661
39,763
39,762
39,623
Net income per common share:
Basic
$
5.55
$
2.32
$
5.52
$
18.73
$
13.79
Diluted
$
5.52
$
2.31
$
5.49
$
18.62
$
13.71
Dividends declared per common share
$
0.12
$
0.10
$
2.62
$
2.86
$
2.30
Wood Products Segment
Statements of Operations
(in thousands, except percentages) (unaudited)
Three Months Ended
Nine Months Ended
September 30
June 30, 2022
September 30
2022
2021
2022
2021
Segment sales
$
595,320
$
497,316
$
536,030
$
1,690,294
$
1,524,220
Costs and expenses
Materials, labor, and other operating expenses (excluding depreciation)
398,008
348,167
351,557
1,093,274
1,010,691
Depreciation and amortization
21,285
13,914
13,653
48,578
41,388
Selling and distribution expenses
11,164
9,124
10,349
30,743
26,958
General and administrative expenses
7,717
4,023
5,826
18,189
12,214
Other (income) expense, net
1,174
32
544
(679
)
100
439,348
375,260
381,929
1,190,105
1,091,351
Segment income
$
155,972
$
122,056
$
154,101
$
500,189
$
432,869
(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)
66.9
%
70.0
%
65.6
%
64.7
%
66.3
%
Depreciation and amortization
3.6
%
2.8
%
2.5
%
2.9
%
2.7
%
Selling and distribution expenses
1.9
%
1.8
%
1.9
%
1.8
%
1.8
%
General and administrative expenses
1.3
%
0.8
%
1.1
%
1.1
%
0.8
%
Other (income) expense, net
0.2
%
—
%
0.1
%
—
%
—
%
73.8
%
75.5
%
71.3
%
70.4
%
71.6
%
Segment income
26.2
%
24.5
%
28.7
%
29.6
%
28.4
%
Building Materials Distribution Segment
Statements of Operations
(in thousands, except percentages) (unaudited)
Three Months Ended
Nine Months Ended
September 30
June 30, 2022
September 30
2022
2021
2022
2021
Segment sales
$
1,956,802
$
1,721,244
$
2,131,200
$
6,199,835
$
5,528,765
Costs and expenses
Materials, labor, and other operating expenses (excluding depreciation)
1,655,257
1,585,804
1,835,845
5,221,905
4,806,084
Depreciation and amortization
6,760
6,013
6,728
20,064
17,749
Selling and distribution expenses
131,012
105,342
123,930
392,363
339,163
General and administrative expenses
9,480
7,816
10,558
31,264
24,627
Other (income) expense, net
(143
)
(296
)
(169
)
(397
)
(1,980
)
1,802,366
1,704,679
1,976,892
5,665,199
5,185,643
Segment income
$
154,436
$
16,565
$
154,308
$
534,636
$
343,122
(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)
84.6
%
92.1
%
86.1
%
84.2
%
86.9
%
Depreciation and amortization
0.3
%
0.3
%
0.3
%
0.3
%
0.3
%
Selling and distribution expenses
6.7
%
6.1
%
5.8
%
6.3
%
6.1
%
General and administrative expenses
0.5
%
0.5
%
0.5
%
0.5
%
0.4
%
Other (income) expense, net
—
%
—
%
—
%
—
%
—
%
92.1
%
99.0
%
92.8
%
91.4
%
93.8
%
Segment income
7.9
%
1.0
%
7.2
%
8.6
%
6.2
%
Segment Information
(in thousands) (unaudited)
Three Months Ended
Nine Months Ended
September 30
June 30, 2022
September 30
2022
2021
2022
2021
Segment sales
Wood Products
$
595,320
$
497,316
$
536,030
$
1,690,294
$
1,524,220
Building Materials Distribution
1,956,802
1,721,244
2,131,200
6,199,835
5,528,765
Intersegment eliminations
(397,475
)
(339,109
)
(389,158
)
(1,131,128
)
(909,057
)
Total net sales
$
2,154,647
$
1,879,451
$
2,278,072
$
6,759,001
$
6,143,928
Segment income
Wood Products
$
155,972
$
122,056
$
154,101
$
500,189
$
432,869
Building Materials Distribution
154,436
16,565
154,308
534,636
343,122
Total segment income
310,408
138,621
308,409
1,034,825
775,991
Unallocated corporate costs
(11,038
)
(9,235
)
(11,334
)
(32,752
)
(31,569
)
Income from operations
$
299,370
$
129,386
$
297,075
$
1,002,073
$
744,422
Segment EBITDA (a)
Wood Products
$
177,257
$
135,970
$
167,754
$
548,767
$
474,257
Building Materials Distribution
161,196
22,578
161,036
554,700
360,871
See accompanying summary notes to consolidated financial statements and segment information.
Boise Cascade Company
Consolidated Balance Sheets
(in thousands) (unaudited)
September 30, 2022
December 31, 2021
ASSETS
Current
Cash and cash equivalents
$
867,064
$
748,907
Receivables
Trade, less allowances of $3,165 and $2,054
511,047
444,325
Related parties
191
211
Other
18,004
17,692
Inventories
767,187
660,671
Prepaid expenses and other
17,944
14,072
Total current assets
2,181,437
1,885,878
Property and equipment, net
744,547
495,240
Operating lease right-of-use assets
59,631
62,663
Finance lease right-of-use assets
27,151
29,057
Timber deposits
9,563
9,461
Goodwill
134,356
60,382
Intangible assets, net
169,538
15,351
Deferred income taxes
7,852
6,589
Other assets
14,459
8,019
Total assets
$
3,348,534
$
2,572,640
Boise Cascade Company
Consolidated Balance Sheets (continued)
(in thousands, except per-share data) (unaudited)
September 30, 2022
December 31, 2021
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current
Accounts payable
Trade
$
398,397
$
334,985
Related parties
1,988
1,498
Accrued liabilities
Compensation and benefits
147,548
128,518
Income taxes payable
12,365
—
Interest payable
5,081
9,886
Other
174,084
165,859
Total current liabilities
739,463
640,746
Debt
Long-term debt
444,175
444,628
Other
Compensation and benefits
30,562
28,365
Operating lease liabilities, net of current portion
51,992
55,263
Finance lease liabilities, net of current portion
30,547
31,898
Deferred income taxes
50,884
3,641
Other long-term liabilities
17,839
15,480
181,824
134,647
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, 44,815 and 44,698 shares issued, respectively
448
447
Treasury stock, 5,367 shares at cost
(138,909
)
(138,909
)
Additional paid-in capital
548,035
543,249
Accumulated other comprehensive loss
(902
)
(1,047
)
Retained earnings
1,574,400
948,879
Total stockholders’ equity
1,983,072
1,352,619
Total liabilities and stockholders’ equity
$
3,348,534
$
2,572,640
Contacts
Investor Relations Contact – Kelly Hibbs
208 384 3638
Media Contact – Lisa Tschampl
208 384 6552