Boise Cascade Holdings narrows Q4 net loss to US$13.79M from US$16.21M a year earlier; CEO says company is in competitive position after reinvesting in manufacturing, distribution to lower costs, expand capacity

Wendy Lisney

BOISE, Idaho , March 1, 2012 (press release) – Boise Cascade Holdings, L.L.C. (BC Holdings or Company) announced a $13.8 million net loss for the quarter ended December 31, 2011, and a $46.4 million full year 2011 net loss. The Company's wholly owned operating subsidiary, Boise Cascade, L.L.C. (Boise Cascade), reported fourth quarter 2011 earnings before interest, taxes, depreciation, and amortization (EBITDA) of $0.5 million, compared with negative EBITDA of $2.6 million in fourth quarter 2010. Boise Cascade reported full year 2011 sales of $2.2 billion and EBITDA of $9.5 million, which included $3.3 million in costs related to the closure of a production facility and noncash asset writedowns. This compared with 2010 sales of $2.2 billion and EBITDA of $22.1 million, which included a $4.6 million gain from a litigation settlement.

Boise Cascade ended 2011 with $182.5 million of cash and $141.8 million of undrawn committed bank line availability, for total available liquidity of $324.3 million. At December 31, 2011, Boise Cascade reported outstanding debt of $219.6 million.

Boise Cascade's 2011 revenues and earnings continued to be negatively impacted by reduced demand for our products. New residential construction remained weak in 2011 with single-family housing starts down 9% from last year. Total 2011 housing starts of 609,000 were slightly higher than the 587,000 starts experienced in 2010; however, the mix in 2011 included a higher proportion of multi-family units which use less of the products we produce and sell. Starts in 2011 were approximately 58% lower than the 10-year historical trend of about 1.4 million per year.

"We made good progress on a number of fronts in 2011, but we are clearly disappointed in the lack of growth in residential construction activity and the adverse impact it is having on performance. The mix of housing starts was not conducive to demand growth and there wasn't really any catalyst for price movement during the year. We succeeded in winning incremental business with several key customers during the year, which we expect to help our sales volumes in 2012," commented Tom Carlile, CEO. "Last year, we reinvested in our existing manufacturing and distribution operations to lower costs and expand capacity; purchased a laminated beam plant in Idaho; and negotiated the purchase of a sawmill in Washington, which was completed in February 2012. Thanks to the good work of our employees and support of our owners, we have continued to improve the Company's competitive position despite the poor housing environment."

Building Materials Distribution (BMD) segment sales were $429.4 million in the fourth quarter, up 7% from the same quarter a year ago. Volumes for the segment were up approximately 4%, with prices up about 3%. BMD reported $1.3 million of EBITDA in fourth quarter. This was down from the $2.4 million reported in fourth quarter 2010. Gross margins declined approximately 10 basis points in the quarter compared to the same quarter a year ago and total expenses were higher as a percent of sales, resulting in a lower operating margin. For the full year 2011, BMD reported positive EBITDA of $10.4 million on $1.8 billion of sales, which included $1.2 million of noncash asset writedowns. This compares to 2010 sales of $1.8 billion and EBITDA of $19.1 million, which includes $4.1 million of income from a litigation settlement related to vendor product pricing.

Wood Products segment sales in the fourth quarter were $180.3 million, up 15% from the same quarter a year ago. The sales increase was attributable primarily to 6% higher plywood sales volumes and 9% higher plywood prices; 25% higher laminated veneer lumber (LVL) sales volumes offset in part by 9% lower LVL net price realizations; 14% higher I-joist sales volumes offset in part by 4% lower I-joist net price realizations, and higher byproduct sales. The segment reported positive $2.2 million of EBITDA for the quarter compared to the negative $1.8 million of EBITDA reported in fourth quarter 2010. The main factors contributing to the improved financial performance were improved plywood pricing and higher sales volumes for engineered wood products (EWP), offset in part by lower EWP net price realizations and higher raw material costs. For the full year 2011, Wood Products reported sales of $712.5 million, and positive EBITDA of $13.3 million, which included $2.2 million of expense related to the closure of a production facility and noncash asset writedowns. This compares to 2010 sales of $687.4 million and EBITDA of $19.0 million, which includes $0.5 million of income from a litigation settlement related to vendor product pricing.

Outlook

Absent a decline in unemployment and a reduction in the housing supply overhang, we expect to continue to experience below historical demand for the products we distribute and manufacture. Industry commodity wood product prices could be volatile in response to operating rates and inventory levels in various distribution channels. We expect to manage our production levels to our sales demand, which will likely cause us to operate our facilities below their capacity.

About Boise Cascade

BC Holdings is a privately held company headquartered in Boise, Idaho. Our wholly owned subsidiary, Boise Cascade, L.L.C., is a leading U.S. wholesale distributor of building products and one of the largest producers of engineered wood products and plywood in North America. For more information, please visit our website at www.bc.com .

Webcast and Conference Call

BC Holdings will host a webcast and conference call on Thursday, March 1, at 11 a.m. Eastern, at which time we will review the company's recent performance. You can join the webcast through our website by going to www.bc.com and clicking on the link to the webcast under the News & Events heading. Please go to the website at least 15 minutes before the start of the webcast to register. To join the conference call, dial 800-299-7928 (international callers should dial 617-614-3926), participant passcode 93638970, at least 10 minutes before the start of the call.

The archived webcast will be available in the News & Events section of our website. A replay of the conference call will be available from Thursday March 1, at 2 p.m. Eastern through Thursday, March 8, at 11 p.m. Eastern. Playback numbers are 888-286-8010 for U.S. calls and 617-801-6888 for international calls, and the passcode will be 39741054.

Industry Intelligence Editor’s Note: In an omitted table, the company reported a Q4, 2011 net loss of US$13.791 million and a Q4, 2010 net loss of US$16.212 million. Q4 sales were US$542.288 million compared with US$502.985 million a year earlier. 

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