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Boise Cascade Holdings Report Q1 Loss

Press release from the issuing company

BOISE, Idaho - 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.


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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