Boise Cascade Company Reports First Quarter 2023 Results
Boise Cascade Company (“Boise Cascade,” the “Company,” “we,” or “our”) (NYSE: BCC) today reported net income of $96.7 million, or $2.43 per share, on sales of $1.5 billion for the first quarter ended March 31, 2023, compared with net income of $302.6 million, or $7.61 per share, on sales of $2.3 billion for the first quarter ended March 31, 2022.
“During the first quarter, the expected weaker environment from lower new single-family starts and commodity product prices was evident. Despite those headwinds, the strength and resilience of our business model and our associates were in clear view as the Company delivered solid financial results,” stated Nate Jorgensen, CEO. “As we look to the second quarter, economic uncertainties persist, but we remain focused on providing high service levels to our vendor and customer partners. The strength of our balance sheet also allows us to remain committed to our strategies and the continued execution of our growth initiatives. In addition, together with our Board of Directors, we again took action to reward our shareholders through our recently announced special dividend.”
First Quarter 2023 Highlights
|(in thousands, except per-share data and percentages)||1Q 2023||1Q 2022||% change|
|Net income per common share – diluted||2.43||7.61||(68)%|
|Adjusted EBITDA 1||158,674||426,132||(63)%|
|Wood Products sales||$437,428||$558,944||(22)%|
|Wood Products income||69,395||190,116||(63)%|
|Wood Products EBITDA 1||93,185||203,756||(54)%|
|Building Materials Distribution sales||1,379,242||2,111,833||(35)%|
|Building Materials Distribution income||69,685||225,892||(69)%|
|Building Materials Distribution EBITDA 1||76,755||232,468||(67)%|
|1||For reconciliations of non-GAAP measures, see summary notes at the end of this press release.|
In first quarter 2023, total U.S. housing starts decreased 18%, driven by a decrease in single-family housing starts of 29% compared to the same period in 2022. Single-family housing starts are the key demand driver for our sales.
Wood Products’ sales, including sales to Building Materials Distribution (BMD), decreased $121.5 million, or 22%, to $437.4 million for the three months ended March 31, 2023, from $558.9 million for the three months ended March 31, 2022. The decrease in sales was driven by lower plywood sales prices and lower sales volumes for I-joists and LVL (collectively referred to as EWP). These decreases were offset partially by higher plywood sales volumes and higher EWP sales prices.
Comparative average net selling prices and sales volume changes for EWP and plywood are as follows:
|1Q 2023 vs. 1Q 2022||1Q 2023 vs. 4Q 2022|
|Average Net Selling Prices|
Wood Products’ segment income decreased $120.7 million to $69.4 million for the three months ended March 31, 2023, from $190.1 million for the three months ended March 31, 2022. The decrease in segment income was due primarily to lower plywood sales prices and lower EWP sales volumes. In addition, segment income was negatively impacted by higher per-unit conversion costs and an increase in depreciation and amortization expense due to the acquisition of two plywood facilities on July 25, 2022. These decreases in segment income were offset partially by higher EWP sales prices and higher plywood sales volumes, as well as lower OSB costs (used in the manufacture of I-joists).
Building Materials Distribution
BMD’s sales decreased $732.6 million, or 35%, to $1,379.2 million for the three months ended March 31, 2023, from $2,111.8 million for the three months ended March 31, 2022. Compared with the same quarter in the prior year, the overall decrease in sales was driven by sales price and sales volume decreases of 20% and 15%, respectively. By product line, commodity sales decreased 50%, general line product sales decreased 13%, and sales of EWP (substantially all of which are sourced through our Wood Products segment) decreased 24%.
BMD segment income decreased $156.2 million to $69.7 million for the three months ended March 31, 2023, from $225.9 million in the comparative prior year quarter. The decrease in segment income was driven by a gross margin decrease of $177.3 million, resulting primarily from lower margins on commodity products and lower sales volumes, offset partially by decreased selling and distribution expenses of $20.3 million.
Balance Sheet and Liquidity
Boise Cascade ended first quarter 2023 with $1,000.7 million of cash and cash equivalents and $395.9 million of undrawn committed bank line availability, for total available liquidity of $1,396.7 million. The Company had $444.6 million of outstanding debt at March 31, 2023.
We expect capital expenditures in 2023 to total approximately $120 million to $140 million. Our 2023 capital expenditures range includes funding for greenfield distribution centers in South Carolina and Texas, projects at our mills in the southeast to expand our EWP capacity, and the purchase of property to house an additional door shop assembly operation in Kansas City, Missouri. This level 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.
On May 4, 2023, our board of directors declared a quarterly dividend of $0.15 per share on our common stock, as well as a special dividend of $3.00 per share on our common stock, both payable on June 15, 2023, to stockholders of record on June 1, 2023.
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.
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. U.S. housing starts in March 2023 were approximately 1.42 million on a seasonally adjusted annual rate basis, as reported by the U.S. Census Bureau. In addition, mortgage rates have declined from peak levels in late 2022, and measures of builder sentiment have improved from fourth quarter 2022 levels. However, home affordability remains a challenge for consumers, and the Federal Reserve’s ongoing actions in response to inflationary data and what impacts these actions have on future mortgage rates and the broader economy will influence the near-term demand environment. As such, the full year outlook for 2023 is uncertain and is reflected in various industry forecasts for 2023 U.S housing starts that generally range from 1.2 million to 1.4 million units, compared with actual housing starts of 1.55 million in 2022, as reported by the U.S. Census Bureau. Regarding home improvement spending, the age of U.S. housing stock and elevated levels of homeowner equity have provided a favorable backdrop for repair-and-remodel spending. However, industry forecasts project continued moderation of year-over-year growth in renovation spending, and economic uncertainty may also negatively impact 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. Future commodity product pricing and commodity input costs may 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, EWP volumes will continue to be influenced by demand for new residential construction, particularly single-family housing starts and we expect further EWP price erosion in the second quarter.
For the complete press release, click here.
About Boise Cascade
Boise Cascade Company (NYSE: BCC) 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.
Kelly Hibbs – Investor Relations Contact – (208) 384-3638
Source: Boise Cascade Company