Boise Cascade Holdings Reports First Quarter 2011 Financial Results

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BOISE, Idaho, May 4, 2011 /CNW/ -- 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.

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    Outlook
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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.

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    About Boise Cascade
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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.

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    Webcast and Conference Call
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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.

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    Basis of Presentation
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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.

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    Forward-Looking Statements
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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.

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                                  Boise Cascade Holdings, L.L.C.
                             Consolidated Statements of Income (Loss)
                                     (unaudited, in thousands)
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                                     Three Months Ended
                                     ------------------
                               March 31
                               --------
                                   2011         2010    December 31,
                                   ----         ----    ------------
                                                                     2010
                                                                     ----
    Sales
    Trade                      $478,807     $477,422         $502,985
    Related parties               4,440        9,831            5,368
                                483,247      487,253          508,353
                                -------      -------          -------
    Costs and expenses
    Materials, labor, and
     other operating expenses   422,832      425,901          449,098
    Materials, labor, and
     other operating expenses
     from related parties         8,443        6,222            6,292
    Depreciation and
     amortization                 8,907        8,590            8,955
    Selling and distribution
     expenses                    46,970       48,165           47,472
    General and administrative
     expenses                     8,278        7,458            8,389
    General and administrative
     expenses from related
     party                           -        1,576               -
    Other (income) expense,
     net (a)                      2,589          (80)             (39)
                                498,019      497,832          520,167
                                -------      -------          -------
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    Loss from operations        (14,772)     (10,579)         (11,814)
                                -------      -------          -------
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    Equity in net income of
     affiliate (b)                   -        1,889               -
    Gain on sale of shares of
     equity affiliate (b)            -       25,308               -
    Foreign exchange gain           310          147              239
    Gain on repurchase of
     long-term debt                  -           -               28
    Interest expense             (4,589)      (5,520)          (4,743)
    Interest income                 146          194              148
                                 (4,133)      22,018           (4,328)
                                 ------       ------           ------
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    Income (loss) before
     income taxes               (18,905)      11,439          (16,142)
    Income tax provision            (96)         (45)             (70)
                                    ---
    Net income (loss)          $(19,001)     $11,394         $(16,212)
                               ========      =======         ========



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                                    Segment Information
                                 (unaudited, in thousands)
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                                      Three Months Ended
                                      ------------------
                                March 31
                                --------
                                    2011          2010   December 31,
                                    ----          ----            2010
                                                                      ----
    Segment sales
    Building Materials
     Distribution               $377,796      $389,118        $402,692
    Wood Products                154,941       148,000         156,569
    Intersegment eliminations
     and other                   (49,490)      (49,865)        (50,908)
                                $483,247      $487,253        $508,353
                                ========      ========        ========
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    Segment loss
    Building Materials
     Distribution (a)            $(4,559)        $(733)           $455
    Wood Products (a)             (7,265)       (6,599)         (8,766)
    Corporate and Other           (2,638)       (3,100)         (3,264)
                                 (14,462)      (10,432)        (11,575)
                                 -------       -------         -------
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    Equity in net income of
     affiliate (b)                    -         1,889              -
    Gain on sale of shares of
     equity affiliate (b)             -        25,308              -
    Gain on repurchase of long-
     term debt                        -            -              28
    Interest expense              (4,589)       (5,520)         (4,743)
    Interest income                  146           194             148
    Income (loss) before income
     taxes                      $(18,905)      $11,439        $(16,142)
                                ========       =======        ========
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    EBITDA (c)
    Building Materials
     Distribution (a)            $(2,511)       $1,096          $2,421
    Wood Products (a)               (468)           65          (1,845)
    Corporate and Other           (2,576)       (3,003)         (3,196)
    Equity in net income of
     affiliate (b)                    -         1,889              -
    Gain on sale of shares of
     equity affiliate (b)             -        25,308              -
    Gain on repurchase of long-
     term debt                        -            -              28
                                 $(5,555)      $25,355         $(2,592)
                                 =======       =======         =======



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                             Boise Cascade Holdings, L.L.C.
                               Consolidated Balance Sheets
                                (unaudited, in thousands)
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                                                March 31,   December 31,
                                                       2011        2010
                                                       ----        ----
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ASSETS

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    Current
    Cash and cash equivalents                      $182,755    $264,606
    Receivables
    Trade, less allowances of $2,705 and $2,492     141,021     102,906
    Related parties                                     272         297
    Other                                             3,899       4,571
    Inventories                                     301,295     261,202
    Prepaid expenses and other                        5,787       3,808
                                                    635,029     637,390
                                                    -------     -------
    Property
    Property and equipment, net                     269,424     273,569
    Timber deposits                                  11,098      10,588
                                                    280,522     284,157
                                                    -------     -------
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    Deferred financing costs                          3,400       3,626
    Goodwill                                         12,170      12,170
    Intangible assets, net                            8,903       8,906
    Other assets                                      6,271       5,989
    Total assets                                   $946,295    $952,238
                                                   ========    ========



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                              Boise Cascade Holdings, L.L.C.
                         Consolidated Balance Sheets (continued)
                                (unaudited, in thousands)
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                                                     March 31,   December 31,
                                                            2011        2010
                                                            ----        ----
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LIABILITIES AND CAPITAL

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    Current
    Accounts payable
    Trade                                               $129,849    $112,414
    Related parties                                        1,390         394
    Accrued liabilities
    Compensation and benefits                             32,030      39,827
    Interest payable                                       7,202       3,291
    Other                                                 19,336      22,530
                                                         189,807     178,456
                                                         -------     -------
    Debt
    Long-term debt                                       219,560     219,560
                                                         -------     -------
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    Other
    Compensation and benefits                            122,644     121,709
    Other long-term liabilities                           14,056      14,116
                                                         136,700     135,825
                                                         -------     -------
    Redeemable equity units
    Series B equity units - 2,650 units and 2,736
     units outstanding                                     2,650       2,736
    Series C equity units - 14,329 units and 14,425
     units outstanding                                     6,500       6,563
                                                           9,150       9,299
                                                           -----       -----
    Commitments and contingent liabilities
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    Capital
    Series A equity units - no par value; 66,000
     units authorized and outstanding                     98,059      96,162
    Series B equity units - no par value; 550,000
     units authorized; 532,673 units and 532,558
     units outstanding                                   293,019     312,936
    Series C equity units - no par value; 44,000
     units authorized; 12,075 units and 11,980 units
     outstanding                                              -          -
                                                            ---        ---
    Total capital                                        391,078     409,098
    Total liabilities and capital                       $946,295    $952,238
                                                        ========    ========



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                           Boise Cascade Holdings, L.L.C.
                        Consolidated Statements of Cash Flows
                              (unaudited, in thousands)
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                                                  Three Months Ended
                                                       March 31
                                                       --------
                                                   2011                2010
                                                   ----                ----
    Cash provided by (used for) operations
    Net income (loss)                          $(19,001)            $11,394
    Items in net income (loss) not using
     (providing) cash
    Equity in net income of affiliate                   -              (1,889)
    Gain on sale of shares of equity affiliate          -             (25,308)
    Depreciation and amortization of deferred
     financing costs and other                    9,328               9,123
    Pension expense                               3,804               2,087
    Management equity units expense                  -                 434
    Other                                           754                (221)
    Decrease (increase) in working capital
    Receivables                                 (37,418)            (55,027)
    Inventories                                 (40,093)            (35,739)
    Prepaid expenses and other                     (793)               (389)
    Accounts payable and accrued liabilities     13,965              65,488
    Pension contributions                          (882)             (2,976)
    Other                                        (1,792)                155
                                                 ------
    Cash used for operations                    (72,128)            (32,868)
                                                -------             -------
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    Cash provided by (used for) investment
    Proceeds from sale of shares of equity
     affiliate, net                                  -              86,123
    Expenditures for property and equipment      (9,608)             (3,245)
    Other                                          (115)             (1,027)
    Cash provided by (used for) investment       (9,723)             81,851
                                                 ------              ------
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    Cash provided by (used for) financing            -                  -
                                                   ---                ---
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    Increase (decrease) in cash and cash
     equivalents                                (81,851)             48,983
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Balance at beginning of the period 264,606 287,101

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    Balance at end of the period               $182,755            $336,084
                                               ========            ========



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    Summary Notes to Consolidated Financial Statements and Segment
     Information
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    The Consolidated Statements of Income (Loss), Consolidated
     Balance Sheets, Consolidated Statements of Cash Flows, and
     Segment Information do not include all Notes to Consolidated
     Financial Statements and should be read in conjunction with the
     company's 2010 Form 10-K and the company's Quarterly Report on
     Form 10-Q for the period ended March 31, 2011. Net income
     (loss) for all periods presented involved estimates and
     accruals.
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             In first quarter 2011, we committed to indefinitely
             curtail a manufacturing plant in our Wood Products
             segment, and we recorded the related expense of $1.4
             million in "Other (income) expense, net" and $0.1
             million of accelerated depreciation in "Depreciation and
             Amortization" in our Consolidated Statement of Income
             (Loss). Also, during the three months ended March 31,
             2011, we recorded $1.2 million of noncash asset write-
             downs in "Other (income) expense, net," of which $0.8
             million was recorded in our Building Materials
             Distribution segment and $0.4 million was recorded in
    (a)      our Wood Products segment.
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             In March 2010, we sold our remaining investment in Boise
             Inc. and discontinued the equity method of accounting.
             During the three months ended March 31, 2010, we sold
             18.3 million Boise Inc. shares and recorded a gain of
             $25.3 million in "Gain on sale of shares of equity
             affiliate" in our Consolidated Statements of Income
             (Loss). The 2010 related-party activity with Boise Inc.
             includes only those sales and costs and expenses
             transacted prior to March 2010, when BC Holdings and
    (b)      Boise Inc. were related parties.
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             EBITDA represents income (loss) before interest (interest
             expense and interest income), income taxes, and
             depreciation and amortization. The following table
             reconciles BC Holdings net income (loss) to BC Holdings
             EBITDA and Boise Cascade EBITDA for the three months
    (c)      ended March 31, 2011 and 2010, and December 31, 2010:


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                                   Three Months Ended
                                   ------------------
                             March 31
                             --------
                                2011                 2010 December 31,
                                ----                 ----          2010
                                                                       ----
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(unaudited, in thousands)

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    BC Holdings net income
     (loss)                 $(19,001)             $11,394      $(16,212)
    Interest expense           4,589                5,520         4,743
    Interest income             (146)                (194)         (148)
    Income tax provision          96                   45            70
    Depreciation and
     amortization              8,907                8,590         8,955
    BC Holdings EBITDA        (5,555)              25,355        (2,592)
                              ------               ------        ------
    Equity in net income of
     affiliate                    -               (1,889)           -
    Gain on sale of shares
     of equity affiliate          -              (25,308)           -
    Boise Cascade EBITDA     $(5,555)             $(1,842)      $(2,592)
                             =======              =======       =======






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SOURCE Boise Cascade Holdings, L.L.C.

For further information: Investors, Wayne Rancourt of Boise Cascade, +1-208-384-6073 Web Site: http://www.bc.com

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