Boise Reports Second Quarter Loss
Monday, August 08, 2011
Press release from the issuing company
BOISE, Idaho - Boise Cascade Holdings, L.L.C. (BC Holdings or Company) announced a $9.9 million net loss for the quarter ended June 30, 2011. Second quarter 2011 earnings before interest, taxes, depreciation, and amortization (EBITDA) was $3.9 million, compared to negative EBITDA of $5.6 million in first quarter 2011, and positive EBITDA of $18.8 million in second quarter 2010. First quarter 2011 results included $2.6 million of charges related to the curtailment of a production facility and noncash asset write-downs.
The Company concluded the quarter with $202.8 million of cash and $219.6 million of debt. Total available liquidity was $311.2 million at the end of the quarter, consisting of committed bank line availability of $108.4 million and our $202.8 million cash position. Subsequent to quarter end, we replaced our $170 million credit facility with a new $250 million credit facility that, when compared with the previous facility, has both lower pricing and an extended maturity. Had the new facility been in place at June 30, our total available liquidity would have exceeded $381 million. In addition, our cash position improved by $20.1 million during the second quarter, with cash from operations more than offsetting the cost of acquisitions, capital spending, and a semi-annual interest payment on our senior subordinated notes.
Our second quarter 2011 revenues and earnings were negatively impacted by depressed demand for the products we distribute and manufacture. U.S. housing starts declined approximately 4% in the second quarter of 2011 compared to the year-ago quarter. Single- family starts, which are a primary driver of our sales, were particularly weak, experiencing a decline of 13% for the quarter and 17% for the first six months of the year compared to the same periods in 2010. In addition, we did not enjoy the commodity price run that boosted second quarter 2010 results. At the midway point of the year, the Blue Chip consensus forecast for U.S. housing starts for 2011 has been revised downward to 590,000, a level consistent with the final U.S. housing starts level reported for 2010 of 587,000.
"New residential construction activity remained weak during the second quarter. While our June sales activity was stronger than previous months this year, we remain concerned about the overall new residential construction environment and the timing of an eventual recovery in housing starts. That being said, we remain confident in the steps we have taken to improve productivity and manage our cost structure in this lower demand environment without sacrificing our ability to fully serve our customers now and when the eventual housing recovery surfaces. We continue to evaluate opportunities to grow our businesses and I am particularly pleased with the laminated beam and decking plant acquisition during the quarter," stated Tom Carlile, CEO.
Building Materials Distribution (BMD) segment sales were $470.7 million in the second quarter, down 9% from the same quarter a year ago. Prices for the segment decreased approximately 6%, with volumes down about 3%. BMD reported positive $3.4 million of EBITDA in the second quarter, as compared to negative $2.5 million in the first quarter of 2011 and positive $9.1 million in second quarter 2010. BMD's EBITDA decreased from the prior year quarter as lower sales activity generated fewer gross margin dollars, the negative impact of which was partially offset by lower operating expenses.
Wood Products segment sales in the second quarter were $182.4 million, down about 9% from the same quarter a year ago. The segment reported positive $4.5 million of EBITDA in second quarter, as compared to negative $0.5 million in the first quarter of 2011 and positive $14.9 million in the second quarter of 2010. The decrease in sales and EBITDA compared to the prior year quarter was due primarily to lower plywood and lumber prices. In addition, engineered wood products (EWP) sales were flat, as a 4% improvement in pricing was mostly offset by lower volumes.
We expect to experience below normal demand for the products we distribute and manufacture until there is a meaningful reduction in the overhang of distressed homes for sale. Industry commodity wood product prices could be volatile in response to operating rates and inventory levels in 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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