Boise Cascade Holdings Reports First Quarter 2011 Financial Results

BOISE, Idaho, May 4, 2011 /PRNewswire/ -- Boise Cascade Holdings, L.L.C. (BC Holdings or Company) announced a $19.0 million net loss and ending cash position of $182.8 million for the quarter ended March 31, 2011.  Its wholly owned operating subsidiary, Boise Cascade, L.L.C. (Boise Cascade), reported negative first quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) of $5.6 million, which included $2.6 million of charges related to the curtailment of a production facility and noncash asset write-downs.  Boise Cascade reported EBITDA losses of $1.8 million and $2.6 million in the first and fourth quarters of 2010, respectively.

Boise Cascade had total available liquidity of $291.4 million at the end of the quarter, with committed bank line availability of $108.6 million in addition to its $182.8 million cash position.  We used $81.9 million of cash in the first quarter, principally to fund $40.1 million of seasonal growth in inventories, $37.4 million growth in accounts receivable as a result of higher sales in the month of March 2011 compared with December 2010, and $9.6 million in capital spending.  

Our first quarter 2011 revenues and earnings were negatively impacted by depressed demand for the products we distribute and manufacture.  U.S. housing starts declined approximately 10% in the first quarter of 2011 from the levels experienced in 2010.  Single-family starts, which are a primary driver of our sales, were particularly weak, experiencing a decline of 21% from the year-ago quarter.  With the poor start to the year, the Blue Chip consensus forecast for U.S. housing starts for 2011 has been revised downward to 630,000 as of April 10, 2011.  The final U.S. housing start level reported for 2010 was 587,000.

"New residential construction activity was abysmal in the first few months of 2011, as a number of major market areas in the U.S. contended with the ongoing overhang of distressed housing inventory, exceptionally harsh winter weather, or both.  March sales improved in a number of our key markets, but we remain concerned about the overall new residential construction environment and the prospects for a meaningful recovery in housing starts this year.  We took advantage of our balance sheet strength to invest in inventories earlier this year and believe it will pay off as we move through the second quarter," stated Tom Carlile, CEO.  

Building Materials Distribution (BMD) segment sales were $377.8 million in the first quarter, down 3% from the same quarter a year ago.  Prices for the segment were up approximately 3%, with volumes down about 6%.  BMD reported negative $2.5 million of EBITDA in first quarter, which included a $0.8 million noncash asset write-down.  BMD reported positive $1.1 million and positive $2.4 million of EBITDA in first and fourth quarters 2010, respectively.

Wood Products segment sales in the first quarter were $154.9 million, up about 5% from the same quarter a year ago.  The increase in sales was due primarily to increased plywood prices and volumes, higher lumber volumes, and higher by-product chip sales.  In addition, engineered wood products (EWP) prices were up about 8%, but lower EWP sales volumes mostly offset that increase.  The segment reported negative $0.5 million of EBITDA in first quarter, which included $1.8 million of curtailment charges and noncash asset write-downs, compared to positive $0.1 million and negative $1.8 million in the first and fourth quarters of 2010, respectively.  

Outlook

Absent a decline in unemployment and a reduction in the housing supply overhang, we expect to continue to experience below normal 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.  

About Boise Cascade

BC Holdings is a privately held company headquartered in Boise, Idaho.  Our wholly owned subsidiary, Boise Cascade, L.L.C., is a leading U.S. wholesale distributor of building products and one of the largest producers of engineered wood products and plywood in North America.  For more information, please visit our website at www.bc.com.  

Webcast and Conference Call

BC Holdings will host a webcast and conference call on Thursday, May 5, at 11 a.m. Eastern, at which time we will review the company's recent performance.  You can join the webcast through the Boise Cascade website.  Go to www.bc.com and click 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 800-374-0165 (international callers should dial 706-902-1407) at least 10 minutes before the start of the call.

The archived webcast will be available in the News & Events section of Boise Cascade's website.  A replay of the conference call will be available from Thursday, May 5, at 2 p.m. Eastern through Thursday, May 12, at 11 p.m. Eastern.  Playback numbers are 800-642-1687 for U.S. calls and 706-645-9291 for international calls, and the passcode will be 63179343.

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 makers 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.

Forward-Looking Statements

This news release contains statements that are "forward looking" within the Private Securities Litigation Reform Act of 1995.  These statements speak only as of the date of this press release.  While they are based on the current expectations and beliefs of management, they are subject to a number of uncertainties and assumptions that could cause actual results to differ from the expectations expressed in this release.

SOURCE Boise Cascade Holdings, L.L.C.