Yahoo Finance Boise Cascade Co (BCC) (Q1 2024) Earnings Call Transcript Highlights: Strong Performance with ...
Consolidated Sales: $1.6 billion, up 7% from Q1 2023
Net Income: $104.1 million, up from $96.7 million in Q1 2023
Earnings Per Share (EPS): $2.61, up from $2.43 in Q1 2023
Wood Products Sales: $468.9 million, up from $437.4 million in Q1 2023
Wood Products Segment EBITDA: $95.6 million, up from $93.2 million in Q1 2023
BMD Sales: $1.5 billion, up 9% from Q1 2023
BMD Segment EBITDA: $83.6 million, up from $76.8 million in Q1 2023
Gross Margin: Increased by $22.9 million in BMD, driven by higher sales volumes and improved margins
Depreciation and Amortization: $16.5 million in selling and distribution expenses, $4 million in depreciation and amortization
Total Company Depreciation and Amortization for 2024: Expected to be approximately $140 million
Effective Tax Rate: Remains at 25%
Capital Expenditures: $34 million in Q1, with $250 million to $270 million expected for 2024
Shareholder Returns: $11 million in dividends, $27 million in share repurchases
Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Boise Cascade Co reported a 7% increase in consolidated first quarter sales, reaching $1.6 billion compared to the first quarter of 2023.
Net income for the first quarter was $104.1 million, or $2.61 per share, up from $96.7 million, or $2.43 per share, in the year-ago quarter.
Wood Products segment EBITDA increased due to higher sales volumes and plywood sales prices, despite some offsetting factors.
Building Materials Distribution (BMD) segment saw a 9% increase in sales, with EBITDA also rising due to improved gross margins from higher sales volumes and margins on general line and commodity products.
Capital expenditures were managed effectively, with $34 million spent in the first quarter and a robust plan for continued investment throughout 2024.
Negative Points
The increase in segment EBITDA for Wood Products was partially offset by lower engineered wood products (EWP) prices and higher wood fiber costs.
Increased selling and distribution expenses and depreciation and amortization expenses partially offset the gross margin improvements in the BMD segment.
First quarter plywood volumes decreased as production shifted towards EWP due to higher demand, indicating potential volatility in product focus.
Pricing pressure in the market led to a sequential decrease in pricing for I-joists and LVL by 4%, with expectations of continued, albeit moderated, price erosion.
Uncertainty in panel markets is expected to lead to downward pricing pressure on plywood as the company moves through the second quarter of 2024.
Q & A Highlights
Q: What is the outlook for repair-and-remodel, and is there more momentum in do-it-yourself projects or pro contractor? A: Nathan R. Jorgensen, CEO of Boise Cascade, noted that repair and remodel activity has decreased but remains historically strong. The professional side of the market is steadier compared to DIY, supported by an aging housing stock and high homeowner equity.
Q: How did Boise Cascade manage inventory in the face of commodity price declines? A: Jeffrey Robert Strom, EVP of Building Materials Distribution, explained that the company anticipated the decline and adjusted inventory levels accordingly, especially for OSB. They aim to maintain sufficient stock to meet customer needs without overcommitting.
Q: What is the company's approach to capital allocation, particularly regarding share repurchases and dividends? A: Kelly E. Hibbs, CFO, emphasized a balanced approach to capital allocation, including ongoing investments and returning capital to shareholders through dividends and share repurchases, depending on market conditions and potential M&A activities.
Q: Can you discuss the geographic variations in market conditions observed in Q1? A: Nathan R. Jorgensen mentioned that there were no significant geographic variations in market conditions across different regions in Q1, attributing any differences mainly to weather-related impacts.
Q: How is the competitive dynamic between I-joist and open web trusses, and how are builders responding to affordability challenges? A: Nathan R. Jorgensen described that I-joists are well-positioned against open web trusses in terms of cost and lead times. Builders are focused on reducing construction cycle times, where I-joists offer advantages. However, efforts to address affordability through smaller home designs could impact the volume of structural materials used.
Q: What is the impact of recent commodity price fluctuations on Boise Cascade's Building Materials Distribution (BMD) segment? A: Kelly E. Hibbs noted that while there has been significant volatility, particularly in OSB prices, the company's proactive inventory management has positioned it well to navigate these changes. They continue to adjust inventory levels based on market conditions to optimize financial performance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
