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Boise Cascade Holdings Third Quarter 2011 Earnings Up 37%

Friday, February 03, 2012

Press release from the issuing company

Boise Cascade Holdings, L.L.C. (BC Holdings or Company) announced a $3.7 million net loss for the quarter ended September 30, 2011. Third quarter 2011 earnings before interest, taxes, depreciation, and amortization (EBITDA) were $10.6 million, up $2.9 million, or 37%, compared to reported EBITDA of $7.7 million in third quarter 2010. Third quarter 2010 results included $4.6 million of income related to the settlement of class action litigation. The Company reported EBITDA of $3.9 million in second quarter 2011.

Sales in third quarter 2011 were 6% higher than the prior year quarter and 7% higher than second quarter 2011. U.S. housing starts in third quarter 2011 were up 6% when compared with the year-ago quarter; however, single-family housing starts, which are a primary driver of our sales, declined 1%.

The Company cash position remained essentially unchanged during the quarter. We ended September 2011 with $203.1 million of cash and $219.6 million of debt. Total available liquidity was $377.6 million, consisting of committed bank line availability of $174.5 million and our $203.1 million cash position. During the quarter, 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.  

“New single-family residential construction remained weak during the third quarter; however, we believe we are continuing to gain market share. We remain cautious with regard to the overall new residential construction environment and the timing of an eventual recovery in housing starts. We have good liquidity and continue to evaluate acquisition opportunities that add value, add to our market position, or help lower our costs,” stated Tom Carlile, CEO.

Building Materials Distribution (BMD) segment sales were $501.5 million in the third quarter, up 7% from the same quarter a year ago. Volumes sold increased approximately 5% and prices increased 2%. BMD reported $8.2 million of EBITDA in the third quarter, up $1.7 million from the $6.5 million earned in third quarter 2010 (which included a $4.1 million benefit from the class action settlement). BMD's EBITDA increased from the prior year quarter as a result of higher sales, improved gross margins, and good expense control. In second quarter 2011, BMD reported EBITDA of $3.4 million.

Wood Products segment sales in third quarter were $194.8 million, up 6% from the same quarter a year ago.  The growth in sales was primarily due to increased sales volumes of engineered wood products (EWP), as well as higher byproduct sales, partially offset by decreases in plywood prices and volumes. Specific to our EWP business, laminated veneer lumber and I-joist volumes increased 23% and 13%, respectively.  The segment reported positive $7.1 million of EBITDA in third quarter 2011. EBITDA was up 22% compared to $5.8 million in third quarter 2010 (which included a $0.5 million benefit from the class action settlement). EBITDA improved from the prior year quarter primarily due to lower per-unit EWP conversion costs and lower per-unit raw material costs across all of our key product lines, as well as higher EWP sales volumes and lumber prices. These improvements were partially offset by a 7% decline in plywood prices. Reported EBITDA was $4.5 million in second quarter 2011.  Outlook.

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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