BOISE, Idaho - Boise Cascade Company (Boise Cascade or Company) (NYSE: BCC) today reported net income of $26.4 million, or $0.67 per share, on sales of $961.2 million for the second quarter ended June 30, 2014.
In second quarter 2014, total and single-family U.S. housing starts increased approximately 12% and 4%, respectively, from the same period last year. The July 2014 Blue Chip consensus forecast for 2014 reflects 1.04 million total U.S. housing starts, a 12% expected increase from 2013 levels, but still well below the historical average for the last 20 years of approximately 1.4 million starts per year.
“Second quarter demand for the products we manufacture and distribute was markedly better than in first quarter, as weather improved across the country and housing and repair and remodel activity regained momentum. We generated good sales volume growth in engineered wood products and our distribution business. While plywood prices declined compared to last year's second quarter, pricing remains favorable and we saw improved pricing sequentially on essentially all of our manufactured products,” stated Tom Carlile, CEO.
Sales, including sales to our Building Materials Distribution (BMD) segment, increased $70.6 million, or 25%, to $351.0 million for the three months ended June 30, 2014, from $280.4 million for the three months ended June 30, 2013. The sales growth was driven primarily by plywood and EWP volume increases. Plywood sales volumes increased 21% primarily due to the acquisition of two plywood manufacturing facilities on September 30, 2013. EWP sales improved with I-joists and LVL sales volumes up 29% and 28%, respectively, and I-joists and LVL sales prices up 8% and 4%, respectively. Improved lumber, particleboard, and byproduct sales also contributed to the increase in sales. These increases were offset partially by 8% lower plywood sales prices.
Wood Products EBITDA increased $11.7 million to $41.3 million for the three months ended June 30, 2014, from $29.6 million for the three months ended June 30, 2013. The improvement in EBITDA included $4.8 million related to the acquired plywood operations. Overall, the increase in EBITDA was due primarily to higher plywood sales volumes and higher EWP and lumber sales prices, as well as lower costs of OSB in the manufacture of I-joists. These improvements in EBITDA were offset partially by lower plywood sales prices and higher log costs.
Building Materials Distribution
Sales increased $76.9 million, or 11%, to $758.4 million for the three months ended June 30, 2014, from $681.5 million for the three months ended June 30, 2013. Compared with the same quarter in the prior year, the overall increase in sales was driven primarily by improvements in sales volumes of 15%, offset partially by a decrease in sales prices of 3%. By product line, sales of EWP increased 36%, general line product sales increased 9%, and commodity sales increased 6%.
BMD EBITDA increased $16.3 million to $21.8 million for the three months ended June 30, 2014, from $5.5 million for the three months ended June 30, 2013. The increase in EBITDA was driven primarily by a higher gross margin of $23.7 million, including an improvement in gross margin percentage of 220 basis points. The relative improvement in gross margin percentage resulted from more stable commodity product pricing during second quarter 2014 as compared with a steady decline in commodity prices throughout second quarter 2013.
Boise Cascade ended the second quarter with $129.9 million of cash and cash equivalents and $342.0 million of undrawn committed bank line availability, for total available liquidity of $471.9 million. The company reported $301.5 million of outstanding debt at June 30, 2014.
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 during the balance of 2014. 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.
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