Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Boise Cascade Co (BCC, Financial) maintained a strong balance sheet, which supports strategic investments and capital returns to shareholders.
- The company experienced improved sales velocity in March, leading to EBITDA margins similar to recent quarters.
- Boise Cascade Co (BCC) is making significant progress on modernization projects, such as the Oakdale facility, which is expected to enhance EWP production capabilities.
- The company has a robust capital allocation strategy, including share repurchases and dividends, demonstrating a commitment to shareholder returns.
- Boise Cascade Co (BCC) benefits from a strong distribution network, allowing it to shift volumes to areas of strength and maintain high service levels across the country.
Negative Points
- First-quarter sales and net income declined compared to the previous year, with sales down 7% and net income significantly lower.
- The company faced challenges from constrained demand, uncertain trade policies, and difficult weather conditions, impacting financial performance.
- A planned outage at the Oakdale facility negatively impacted first-quarter results, with an $8 million impact on EBITDA.
- Economic uncertainty and elevated mortgage rates have dampened consumer and homebuilder confidence, affecting demand.
- Boise Cascade Co (BCC) experienced pricing pressure in the EWP segment due to constrained demand and competition for market share.
Q & A Highlights
Q: Can you provide insights on the general line side of the business and how customers are leveraging the two-step distribution model?
A: Nate Jorgensen, CEO, explained that customers are heavily reliant on two-step distribution for out-of-warehouse support, especially for job packs and smaller units. This model is crucial as customers manage their working capital and inventory levels. The introduction of new products and SKUs also increases dependency on two-step distribution, as customers are cautious about stocking new items.
Q: How is the Oakdale project progressing, and what impact will it have as it comes back online?
A: Troy Little, Head of Wood Products Operations, stated that the Oakdale facility's veneer production primarily supports EWP operations. As Oakdale resumes operations, it will reduce the need to purchase veneer on the open market, with limited plywood volume adjustments based on demand.
Q: What are Boise Cascade's capital allocation priorities for this year, and is there any notable activity in the M&A pipeline?
A: Kelly Hibbs, CFO, mentioned that while the M&A pipeline is quieter due to current uncertainties, the company remains open to growth opportunities. The focus is on organic project work and opportunistic share repurchases, maintaining a balanced capital allocation strategy.
Q: Can you discuss the competitive pressures in the EWP market and any changes in pricing dynamics?
A: Kelly Hibbs noted that the EWP market remains competitive, with pricing pressures expected to be similar to the first quarter. The order file for EWP has strengthened seasonally, but underlying demand remains below 1 million single-family housing starts, maintaining competition for market share.
Q: How is Boise Cascade positioned in terms of inventory levels, and what is the outlook for BMD's EBITDA margins?
A: Jeff Strom, COO, stated that the company is well-positioned with inventory, having leaned into winter buys. The distribution-friendly market allows Boise Cascade to serve both suppliers and customers effectively. Kelly Hibbs added that BMD's EBITDA margins are expected to improve to mid-5% in the second quarter, supported by a stronger sales pace and better leverage on the cost base.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
