Boise Cascade’s Mixed Earnings Call: Gains & Challenges

Boise Cascade Company ((BCC)) has held its Q4 earnings call. Read on for the main highlights of the call.

Boise Cascade’s recent earnings call presented a mixed sentiment, highlighting both achievements and challenges. The company showcased strong full-year financial performance and improvements in segments like Building Materials Distribution (BMD) and Laminated Veneer Lumber (LVL) volumes. However, there were notable challenges, including a decline in sales and income, particularly in wood products, and operational disruptions attributed to weather conditions.

Strong Full-Year Financial Performance

Boise Cascade reported a robust full-year net income of $376.4 million or $9.57 per diluted share, reflecting solid financial performance for 2024. This demonstrates the company’s ability to maintain a strong financial position despite the challenges faced in specific segments.

BMD Segment Margin Improvement

The Building Materials Distribution (BMD) segment experienced a notable improvement in its EBITDA margin, which increased to 5.9% in the fourth quarter, up from 5.4% in the previous year and 30 basis points sequentially. This improvement came despite a 4% decline in sales, highlighting the segment’s operational efficiency.

LVL Volume Growth

The company experienced impressive growth in Laminated Veneer Lumber (LVL) volumes, with a year-over-year increase of 11% in the fourth quarter. This growth stands out as it outperformed the 4% decline in single-family starts, indicating strong demand in this segment.

Shareholder Returns

Boise Cascade demonstrated its commitment to shareholder returns by distributing $220 million through regular and special dividends and repurchasing approximately 1.75 million shares, representing 4.5% of outstanding shares, for $225 million.

Decline in Fourth Quarter Sales and Income

The fourth quarter saw a decline in consolidated sales to $1.6 billion, down 5% year-over-year. Net income also decreased to $68.9 million, compared to $97.5 million in the prior year, highlighting the challenges faced in maintaining sales and income levels.

Wood Product Sales Decline

Sales in the wood products segment suffered a 7% decline in the fourth quarter, totaling $419.7 million. This was primarily due to lower sales prices for Engineered Wood Products (EWP) and plywood, indicating pricing pressure in the market.

Challenges with Plywood and Oakdale Facility

Plywood sales volumes and pricing faced significant challenges, compounded by the modernization project at the Oakdale facility, which is expected to negatively impact volumes and costs in the near term.

Weather-Related Operational Disruptions

The company faced operational disruptions at the start of the first quarter due to unplanned downtime caused by adverse weather conditions across several manufacturing and distribution locations.

Forward-Looking Guidance

Looking forward, Boise Cascade anticipates modest increases in EWP volumes but expects sequential declines in pricing for the first quarter of 2025. Capital expenditures for 2025 are projected between $220 million and $240 million, with investments in EWP production capabilities and new distribution centers. The company remains committed to a balanced capital allocation strategy, having returned $220 million to shareholders through dividends and share repurchases in 2024.

The earnings call for Boise Cascade highlighted a mixed sentiment, with strong financial performance and improvements in specific segments. However, challenges such as declining sales, particularly in wood products, and operational disruptions due to weather were also evident. The company remains focused on its forward-looking strategies and capital allocation to drive future growth and shareholder value.