Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Boise Cascade Co (BCC, Financial) reported consolidated third quarter sales of $1.7 billion, demonstrating resilience despite a challenging economic environment.
- The company continues to deploy capital effectively through organic growth projects and shareholder returns, including $220 million in dividends and $165 million in share repurchases year-to-date.
- Boise Cascade Co (BCC) maintains a strong position in the market with its two-step distribution model, which is crucial for delivering nationwide service across leading brands.
- The BROSCO acquisition has positively impacted the Building Materials Distribution (BMD) segment, contributing to a 4% increase in general line product sales.
- The company is well-prepared for upcoming modernization projects, ensuring minimal disruption to inventory availability for customers.
Negative Points
- Boise Cascade Co (BCC) experienced a 7% decline in consolidated third quarter sales compared to the same period in 2023, reflecting challenges in the housing market.
- Net income decreased significantly from $143.1 million in the prior year quarter to $91 million, indicating pressure on profitability.
- Wood product sales fell by 12% year-over-year, with segment EBITDA dropping due to lower sales prices and higher conversion costs.
- The Building Materials Distribution (BMD) segment saw a 6% decline in sales, with gross margin dollars decreasing by $7.7 million compared to the previous year.
- The company anticipates seasonally lower volumes and potential price erosion in the fourth quarter, which could further impact financial performance.
Q & A Highlights
Q: Can you discuss the progression of sales in the Building Materials Distribution (BMD) segment during the quarter?
A: Kelly Hibbs, CFO, noted that daily sales pace was steady throughout the quarter, with no significant deviations. The only impact in September was due to having two fewer sales days.
Q: What are your major customers in BMD saying about demand and inventory levels?
A: Jeff Strom, EVP of Building Materials Distribution, mentioned that customers are proceeding cautiously. While there was strong commodity activity recently, the market is expected to lean more on distribution due to seasonality.
Q: Have you seen any shift from Engineered Wood Products (EWP) to lumber due to low lumber prices?
A: Nate Jorgensen, CEO, stated that builders remain consistent in their product choices, independent of pricing environments. EWP remains important for reducing construction cycle times, and there hasn't been a significant shift to dimensional lumber.
Q: How might rising lumber prices affect EWP pricing and margins?
A: Kelly Hibbs explained that EWP pricing is more influenced by demand and operating rates rather than lumber prices. While EWP margins have seen some pressure, the overall business remains strong.
Q: How is Boise Cascade approaching inventory management in the distribution business given current market conditions?
A: Jeff Strom indicated that while they are mindful of seasonal slowdowns, they aim to maintain sufficient inventory to serve customers effectively, erring on the side of having enough stock.
Q: Can you provide an update on the Oakdale, Louisiana plant modernization and its impact?
A: Troy Little, EVP of Wood Products, stated that the project will involve downtime but they are well-prepared with accumulated veneer and have ensured other facilities are ready to offset any capacity loss.
Q: How is the BROSCO acquisition performing?
A: Jeff Strom reported that the BROSCO business has been performing well, meeting and exceeding expectations.
Q: What is the outlook for EWP operating rates and capacity?
A: Kelly Hibbs noted that EWP operating rates were around 80% in the third quarter. Troy Little added that they are prepared to adjust production as needed, with flexibility to shift between veneer and plywood production.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
