BOISE, Idaho - Boise Cascade Company (Boise Cascade or Company) BCC +0.13% today reported financial results for the fourth quarter and year ended December 31, 2013.
Fourth Quarter and Year End 2013 Highlights
- Total Company sales in fourth quarter 2013 were $798.3 million, 15% above the same quarter in 2012, with sales growth of 31% in Wood Products and 11% in Building Materials Distribution (BMD). Total Company sales for the year ended 2013 were $3,273.5 million, up 18% from 2012, with sales growth of 20% in Wood Products and 19% in BMD.
- Net income was $9.8 million in the fourth quarter, or $0.25 per share. For the year, net income was $116.9 million, or $48.3 million, after adjusting for a $68.7 million income tax benefit associated with recording net deferred tax assets upon the Company's conversion from a limited liability company to a corporation in first quarter 2013. Earnings per share and adjusted earnings per share for the year were $2.91 and $1.20, respectively.
- The Company reported earnings before interest, taxes, depreciation, and amortization (EBITDA) of $33.1 million in fourth quarter 2013, up 95% from the $17.0 million recorded in fourth quarter 2012. For the year, total Company EBITDA was $136.4 million, or a 41% increase from 2012 results. Wood Products annual EBITDA was $106.3 million, up 33% from 2012, and BMD annual EBITDA was $49.2 million, up 50% from the prior year.
Total U.S. housing starts improved 19% in 2013, with single-family starts up 16% from 2012. The February 2014 Blue Chip consensus forecast for 2014 reflects 1.1 million total U.S. housing starts, a 20% expected increase from 2013 levels. Total housing activity levels remain below the historical average for the last 20 years of approximately 1.4 million starts per year.
"We are pleased by our accomplishments in 2013. Our manufacturing business continued to execute well, capturing the benefit of higher prices and increased engineered wood products sales volumes. In addition, the two plywood plants we acquired at the end of the third quarter have been successfully integrated and provided incremental volume and earnings consistent with our expectations. Our distribution business managed its way through the volatile commodity pricing in the first half of the year and had a solid second half of the year providing positive cost leverage on the 2013 sales growth. The operational achievements and acquisition, along with our initial public offering in February, made for an exciting 2013," commented Tom Carlile, CEO. "In 2014, we look forward to taking further advantage of improvements in construction activity, growing the company, and executing on the strategic initiatives of our existing operations."
4Q 2013 4Q 2012 3Q 2013 2013 2012 (thousands) Consolidated Results Sales $ 798,344 $ 694,580 $ 877,979 $ 3,273,496 $ 2,779,062 EBITDA 1 33,132 17,006 39,510 136,371 96,575 Net income 9,828 1,278 15,860 116,936 41,496 Adjusted net income 1 9,828 1,278 15,860 48,270 41,496 Segment Results Wood Products sales $ 301,252 $ 230,508 $ 283,204 $ 1,134,089 $ 943,252 Wood Products EBITDA 1 25,100 13,233 24,614 106,337 80,238 BMD sales 615,467 553,068 721,523 2,599,605 2,190,235 BMD EBITDA 1 13,388 8,055 20,108 49,164 32,874 Corporate EBITDA 1 (5,356 ) (4,282 ) (5,212 ) (19,130 ) (16,537 )
1 For reconciliations of non-GAAP measures, see summary notes at the end of this press release.
Wood Products sales in the fourth quarter were $301.3 million, up 31% or $70.7 million from the same quarter a year ago. The sales increase was primarily due to increased engineered wood products (EWP) volumes and prices, and higher plywood sales volumes, driven by the acquisition of two plywood plants on September 30, 2013. EBITDA was $25.1 million in fourth quarter, compared with $13.2 million in fourth quarter 2012. The increase in EBITDA was due primarily to higher EWP and lumber prices, as well as higher plywood sales volumes, offset partially by higher wood fiber costs.
For the full year 2013, Wood Products reported sales of $1,134.1 million, up 20% from 2012 results. The sales increase was primarily due to increased prices and volumes for plywood, EWP, and lumber. EBITDA was $106.3 million, compared to $80.2 million in 2012, or an increase of 33%. The increase in EBITDA was driven primarily by higher plywood, EWP, and lumber prices, as well as higher sales volumes of plywood and EWP. These improvements were partially offset by higher wood fiber costs.
Comparative average net selling prices and sales volume results for plywood and EWP are as follows:
4Q 2013 vs. 4Q 2012 2013 vs. 2012 Average Net Selling Prices Plywood -1% +7% LVL +10% +6% I-joists +13% +9% Sales Volumes Plywood +26% +9% LVL +28% +22% I-joists +27% +24%
Building Materials Distribution
BMD sales were $615.5 million in the fourth quarter, up 11% or $62.4 million from the same quarter a year ago. Volumes were up approximately 9%, with prices up about 2%. EBITDA was $13.4 million in fourth quarter, up from the $8.1 million reported in fourth quarter 2012. The combination of gross margin improvement to 11.7% in the quarter, compared with 11.5% in the same quarter a year ago, and the strong growth in sales resulted in the generation of higher gross margin dollars. In addition, the business achieved positive sales growth leverage on selling and distribution expenses, as well as on general and administrative expenses.
For the full year 2013, BMD reported sales of $2,599.6 million, up 19% from 2012 results. Volumes were up approximately 10%, with prices up about 8%. EBITDA was $49.2 million, compared to $32.9 million in 2012, or an increase of 50%. In spite of an 80 basis point decline in gross margins, strong sales growth drove higher gross margin dollars. BMD also experienced favorable leverage on expenses, as selling and distribution expenses as a percentage of sales were lower by 110 basis points.
Boise Cascade ended 2013 with $118.2 million of cash and cash equivalents and $258.3 million of undrawn committed bank line availability, for total available liquidity of $376.6 million. The company repaid $25.0 million of borrowings under our revolving credit facility during the fourth quarter and reported $301.6 million of outstanding debt at December 31, 2013.
We expect to continue to experience demand below 20-year average historical levels for the products we manufacture and distribute. The housing industry in the U.S. improved in 2012 and 2013, and we remain optimistic that the improvement in demand for our products will continue. However, as we begin 2014, our plywood price realizations are approximately 10% below first quarter 2013. Future commodity product pricing could be volatile in response to industry capacity restarts and operating rates, inventory levels in various distribution channels, and seasonal demand patterns. We expect to manage our production levels to our sales demand, which will likely result in operating some of our facilities below their capacity until demand improves further.
About Boise Cascade
Boise Cascade Company is one of the largest producers of plywood and engineered wood products in North America and a leading U.S. wholesale distributor of building products. For more information, please visit our website at www.bc.com .
Basis of Presentation
We refer to the terms EBITDA and adjusted net income in this earnings release. EBITDA and adjusted net income are 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 before interest (interest expense and interest income), income taxes, and depreciation and amortization. We define adjusted net income as net income before certain unusual items.
EBITDA is the primary measure used by our management to evaluate segment operating performance and to decide how to allocate resources to segments. We believe EBITDA and adjusted net income 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. We believe EBITDA and adjusted net income 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. EBITDA and adjusted net income, however, are not measures of our liquidity or financial performance under GAAP and should not be considered as an alternative to net income, income from operations, or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity. The use of EBITDA and adjusted net income instead of net income or segment income has limitations as an analytical tool, 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 net income are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.
Boise Cascade Company
Consolidated Statements of Operations
(in thousands, except per-share data)
Three Months Ended Year Ended December 31 September 30, December 31 2013 2013 2012 2013 2012 Sales $ 798,344 $ 694,580 $ 877,979 $ 3,273,496 $ 2,779,062 Costs and expenses Materials, labor, and other operating expenses (excluding depreciation) 690,994 607,589 759,777 2,846,614 2,403,445 Depreciation and amortization 11,833 8,489 8,962 38,038 33,407 Selling and distribution expenses 61,933 58,201 66,244 245,283 235,055 General and administrative expenses 12,325 11,200 12,867 45,489 43,122 Other (income) expense, net (162 ) 496 (350 ) (685 ) 902 776,923 685,975 847,500 3,174,739 2,715,931 Income from operations 21,421 8,605 30,479 98,757 63,131 Foreign exchange gain (loss) (122 ) (88 ) 69 (424 ) 37 Interest expense (5,580 ) (7,286 ) (5,174 ) (20,426 ) (21,757 ) Interest income 29 111 88 241 392 (5,673 ) (7,263 ) (5,017 ) (20,609 ) (21,328 ) Income before income taxes 15,748 1,342 25,462 78,148 41,803 Income tax (provision) benefit (a) (5,920 ) (64 ) (9,602 ) 38,788 (307 ) Net income $ 9,828 $ 1,278 $ 15,860 $ 116,936 $ 41,496 Weighted average common shares outstanding: Basic 39,365 29,700 40,625 40,203 29,700 Diluted 39,435 29,700 40,640 40,226 29,700 Net income per common share: Basic $ 0.25 $ 0.04 $ 0.39 $ 2.91 $ 1.40 Diluted $ 0.25 $ 0.04 $ 0.39 $ 2.91 $ 1.40
Source: Boise Cascade Co.
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