BOISE, Idaho - 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.
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.
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.
Basis of Presentation
We present our consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP). Our earnings release also supplements the GAAP presentations by reflecting EBITDA, a non-GAAP financial measure. EBITDA represents income (loss) before interest (interest expense and interest income), income taxes, and depreciation and amortization. EBITDA is the primary measure used by our chief operating decision maker to evaluate segment operating performance and to decide how to allocate resources to segments. We believe EBITDA is useful to investors because it provides a means to evaluate the operating performance of our segments and our company on an ongoing basis using criteria that are used by our internal decision makers and because it is 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 is a meaningful measure because it presents a transparent view of our recurring operating performance and allows management to readily view operating trends, perform analytical comparisons, and identify strategies to improve operating performance. EBITDA, however, is not a measure of our liquidity or financial performance under GAAP and should not be considered as an alternative to net income (loss), income (loss) 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 instead of net income (loss) or segment income (loss) 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 the limitations of EBITDA by relying on our GAAP results. Our measure of EBITDA is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.
Boise Cascade Holdings, L.L.C.
Consolidated Statements of Income (Loss)
Three Months Ended December31 September30, 2011 2011 2010 Sales Trade $ 542,288 $ 502,985 $ 623,199 Related parties 5,154 5,368 4,787 547,442 508,353 627,986 Costs and expenses Materials, labor, and other operating expenses 476,772 449,098 538,794 Materials, labor, and other operating expenses from related parties 8,918 6,292 12,346 Depreciation and amortization 9,522 8,955 9,352 Selling and distribution expenses 51,666 47,472 55,346 General and administrative expenses 8,786 8,389 10,299 Other (income) expense, net (a) 854 (39) (298) 556,518 520,167 625,839 Income (loss) from operations (9,076) (11,814) 2,147 Foreign exchange gain (loss) 99 239 (936) Gain on repurchase of long-term debt - 28 - Interest expense (4,813) (4,743) (5,001) Interest income 93 148 91 (4,621) (4,328) (5,846) Loss before income taxes (13,697) (16,142) (3,699) Income tax provision (94) (70) (12) Net loss $ (13,791) $ (16,212) $ (3,711)
Three Months Ended December31 September30, 2011 2011 2010 Segment sales Building Materials Distribution $ 429,424 $ 402,692 $ 501,458 Wood Products 180,250 156,569 194,843 Intersegment eliminations and other (62,232) (50,908) (68,315) $ 547,442 $ 508,353 $ 627,986 Segment income (loss) Building Materials Distribution (a) $ (830) $ 455 $ 6,040 Wood Products (a) (5,073) (8,766) (71) Corporate and Other (3,074) (3,264) (4,758) (8,977) (11,575) 1,211 Gain on repurchase of long-term debt - 28 - Interest expense (4,813) (4,743) (5,001) Interest income 93 148 91 Loss before income taxes $ (13,697) $ (16,142) $ (3,699) EBITDA (e) Building Materials Distribution (a) $ 1,344 $ 2,421 $ 8,164 Wood Products (a) 2,216 (1,845) 7,101 Corporate and Other (3,015) (3,196) (4,702) Gain on repurchase of long-term debt - 28 - $ 545 $ (2,592) $ 10,563
Boise Cascade Holdings, L.L.C.
Consolidated Statements of Income (Loss)
Year Ended December 31 2011 2010 Sales Trade $ 2,229,325 $ 2,215,332 Related parties 18,763 25,259 2,248,088 2,240,591 Costs and expenses Materials, labor, and other operating expenses 1,952,619 1,947,362 Materials, labor, and other operating expenses from related parties 40,058 33,613 Depreciation and amortization 37,022 34,899 Selling and distribution expenses 204,998 202,464 General and administrative expenses 37,243 38,464 General and administrative expenses from related party - 1,576 Other (income) expense, net (b) 3,195 (4,624) 2,275,135 2,253,754 Loss from operations (27,047) (13,163) Equity in net income of affiliate (c) - 1,889 Gain on sale of shares of equity affiliate (c) - 25,308 Foreign exchange gain (loss) (497) 352 Gain on repurchase of long-term debt - 28 Interest expense (18,987) (21,005) Interest income 407 790 (19,077) 7,362 Loss before income taxes (46,124) (5,801) Income tax provision (240) (300) Net loss $ (46,364) $ (6,101) Year Ended December 31 2011 2010 Segment sales Building Materials Distribution $ 1,779,369 $ 1,777,969 Wood Products 712,461 687,439 Intersegment eliminations and other (243,742) (224,817) $ 2,248,088 $ 2,240,591 Segment income (loss) Building Materials Distribution (b) $ 1,988 $ 11,632 Wood Products (b) (15,071) (8,099) Corporate and Other (14,461) (16,344) (27,544) (12,811) Equity in net income of affiliate (c) - 1,889 Gain on sale of shares of equity affiliate (c) - 25,308 Gain on repurchase of long-term debt - 28 Interest expense (18,987) (21,005) Interest income 407 790 Loss before income taxes $ (46,124) $ (5,801) EBITDA (e) Building Materials Distribution (b) $ 10,384 $ 19,089 Wood Products (b) 13,316 18,997 Corporate and Other (14,222) (15,998) Equity in net income of affiliate (c) - 1,889 Gain on sale of shares of equity affiliate (c) - 25,308 Gain on repurchase of long-term debt - 28 $ 9,478 $ 49,313 Source: Boise Cascade LLC
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