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.

Outlook

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)

(in thousands)

                                                                             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)
        


Segment Information

(in thousands)

                                              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)

(in thousands)

                                                                             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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