Boise Cascade, which reported a 2% decline in total sales for 2024, reaching $6.7 billion, compared to $6.8 billion in 2023, remains focused on capital investments, according to a recent earnings call. 

"Looking forward to 2025," said Kelly Hibbs, CFO and treasurer, "we expect our capital spending to be between $220 million and $240 million. This range includes additional spending on our multiyear investments in support of EWP production capabilities, including adding I-joist production at our Thorsby, Alabama EWP facility and the significant modernization projects at our Hopedale, Louisiana, veneer and plywood mill. In BMD, we are making great progress on our greenfield distribution center in Hondo, Texas."

These investments come on the heels of last year's announcement that it planned to invest $140 million in Alabama and Louisiana facilities to support its engineered wood products (EWP) growth strategy.

In Alabama, the company said it was adding I-joist production capabilities to its Thorsby EWP mill and converting a plywood layup line to a parallel laminated veneer line at the Chapman plywood facility in Louisiana.

The Chapman investment adds to its integration into Boise Cascade’s EWP growth plans. In addition, the Chapman plywood facility extended employment opportunities to approximately 50 of the 80 associates affected by the recently announced Chapman lumber operations curtailment. 

At its Oakdale, Louisiana facility, major projects planned include the upgrade and redesign of the log utilization center, a new veneer dryer and press, and modification of an existing veneer dryer. These investments are expected to take place over two years. These projects are said to increase veneer production capacity by 30 percent and allow the facility to produce up to 400 million square feet of dry veneer annually.

Results 

Nate Jorgensen, CEO, said "We reported full-year net income of $376.4 million or $9.57 per diluted share. We grew our distribution business through both our organic and acquisition initiatives, made progress on significant capital investments to support our EWP growth strategy, and provided meaningful capital returns to our shareholders."

Wood product sales in the fourth quarter, including sales for Boise's distribution segment, were $419.7 million, down 7% compared to the fourth quarter of 2023. Wood Products segment EBITDA was $56.6 million compared to EBITDA of $92.7 million reported in the year-ago quarter, according to Hibbs. The decrease in segment EBITDA was due primarily to lower EWP and plywood sales prices. In BMD, our sales in the quarter were $1.4 billion, down 4% from the fourth quarter of 2023. BMD reported segment EBITDA of $84.5 million in the fourth quarter, compared to segment EBITDA of $80.6 million in the prior year quarter. Despite the sales decline, a 60 basis point increase in gross margin percentage positioned BMD to deliver comparable year-over-year gross margin dollars.

In addition, BMD's general administrative expenses decreased by $3.6 million due primarily to acquisition-related expenses in the prior year quarter for the acquisition of Brodsco. On a year-over-year basis, fourth quarter volumes for LVL increased an impressive 11% and I-joist volumes were down 2%. Both better than the 4% year-over-year decline in single-family starts, which we believe is a testament to the strength of our tightly aligned manufacturing and nationwide distribution. As expected, seasonal declines in construction activity drove lower volumes on a sequential basis with the LVL and I-joist volumes down 8% and 10% respectively. Again, for this comparative period, our volume changes were better than underlying activity in single-family starts would imply.

At current demand levels, competition for share is prevalent in the marketplace today, and its sequential LVL pricing for LVL and I-joists were down 2% and 1% respectively. Fourth quarter plywood sales volume was 371 million feet compared to 363 million feet in the fourth quarter of 2023. The $354 average plywood net sales price in the fourth quarter was down 7% on a year-over-year basis. However, plywood net sales prices were up 5% sequentially. We experienced higher plywood pricing through the first half of the fourth quarter before expected seasonal declines set in, with December average price realizations of approximately $340 per thousand. BMD's year-over-year fourth quarter sales decline of 4% was driven by a 2% decrease in commodity sales, general line product sales, and sales of EWP decreased 11%.

BMD's fourth quarter gross margin percentage was 15.8%, up 60 basis points year-over-year. In particular, our commodity inventory position coupled with strengthening commodity markets during the first half of the fourth quarter provided tailwinds for our commodity margins. BMD's EBITDA margin was 5.9% for the quarter, up from the 5.4% reported in the year-ago quarter and up 30 basis points sequentially, very strong results in a seasonally slower quarter.Weather has made for a difficult start to the quarter as we have had a couple of days of unplanned downtime across several of our manufacturing and distribution locations. As we look forward to our expectations for the first quarter, EWP volumes are expected to increase modestly from fourth quarter levels, and EWP pricing is expected to reflect low single-digit sequential declines.

"In plywood," said Hibbs, "the significant modernization projects at our Oakdale facility are progressing well. As planned, that facility will be down for the entirety of the first quarter and is expected to operate near 50% of capacity in the second quarter. As a result, our plywood volumes and cost absorption will be negatively impacted in the near term. For the first quarter, we expect plywood volumes to decline mid to high single digits sequentially, and that we will incur negative cost impacts of approximately $7 million due to the Oakdale downtime. On plywood pricing, quarter-to-date realizations are approximately 3% below fourth quarter averages. In regards to BMD sales, seasonal impacts are evident with our quarter-to-date daily sales pace about 8% below our fourth quarter daily sales averages."

We'd expect activity to strengthen as we move towards the spring building season. We had capital expenditures of $230 million in 2024 and $108 million of spending in BMD. Looking forward to 2025, we expect our capital spending to be between $220 million and $240 million. This range includes additional spending on our multiyear investments in support of EWP production capabilities, including adding I-joist production at our Thorsby, Alabama EWP facility and the significant modernization projects at our Hopedale, Louisiana veneer and plywood mill. In BMD, we are making great progress on our greenfield distribution center in Hondo, Texas. Activity at the Walterboro, South Carolina greenfield has been slow, but we expect to gain momentum there in the back half of 2025.

Speaking to shareholder returns in 2024, we paid $220 million in regular and special dividends, which was comprised of $0.82 per share in regular quarterly dividends and a $5 per share special dividend. Our board of directors also recently approved a $0.21 per share quarterly dividend on common stock. Shareholders of record as of February 24th will receive payment of this dividend on March 9th. For the thirteen months ended January 2025, we have repurchased approximately 1.75 million shares or 4.5% of our outstanding shares for approximately $225 million. Today, we have about 1.6 million shares available for repurchase under our share repurchase program. As our actions demonstrate, we continue to strive for a balanced approach to capital allocation that includes ongoing investments in our existing asset base, organic growth projects, and returns to our shareholders.

Our balance sheet also gives us the flexibility to pursue M&A if opportunities surface that align with our strategy. I will now turn it back over to Nate to share our business outlook and closing remarks.

According to Jorgensen, current industry forecasts for total U.S. housing starts are around 1.35 million for 2025, essentially flat with actual housing starts in 2024 as reported by the U.S. Census Bureau. Single-family housing starts in 2024 outpaced 2023 levels by 7% and are expected to again be around the 1 million level despite the affordability challenges consumers are facing in the current rate environment. Multifamily starts, which declined sharply in 2024, are expected to continue to face headwinds in 2025 due to prohibitive capital costs for developers, combined with elevated levels of multifamily unit completions in both 2023 and 2024. For home improvement spending, we expect 2025 to reflect modest growth as the age of U.S. housing stock, elevated levels of homeowner equity, and some recent improvement in existing home sales will provide a favorable backdrop for repair and remodel spending.

Uncertainties around the macro economy and policy decisions from the new administration make it challenging to predict the near-term demand environment, but our constructive view on the medium and longer-term housing fundamentals remains. This affords us the ability to maintain a clear focus on our strategy and execution of our growth initiatives. Lastly, I would like to take the opportunity to congratulate Jeff Strom and Joe Barney on their recently announced promotions. Both are seasoned and accomplished leaders, and I look forward to their continued contributions in their new roles. These changes were part of our intentional strategic succession planning process as we position the company for continued service and support to our stakeholders in the future.

Thank you for joining us on our call today and for your continued interest in and support of Boise Cascade. We welcome any questions at this time. Josh, would you please open the phone lines?

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