Boise Cascade Holdings Reports Fourth Quarter 2010 Financial Results
BOISE, Idaho, March 2, 2011 /PRNewswire/ -- Boise Cascade Holdings, L.L.C. (BC Holdings or Company) announced a $16.2 million net loss for the quarter ended December 31, 2010, and a $6.1 million full year 2010 net loss. During 2010, BC Holdings sold its remaining equity interest in Boise Inc. for net proceeds of $86.1 million and recognized a $25.3 million gain. The Company contributed the proceeds to its wholly owned operating subsidiary, Boise Cascade, L.L.C.
Boise Cascade, L.L.C. reported negative fourth quarter 2010 earnings before interest, taxes, depreciation, and amortization (EBITDA) of $2.6 million, compared with negative EBITDA of $12.4 million in fourth quarter 2009. Boise Cascade, L.L.C. reported full year 2010 sales of $2.2 billion and positive EBITDA of $22.1 million, which included $4.6 million of litigation proceeds. This compared with 2009 sales of $2.0 billion and negative EBITDA of $35.3 million, which included a $6.0 million gain on debt repurchases and $3.7 million of asset closure costs. At December 31, 2010, we had $264.6 million of cash and $219.6 million of debt.
The Company's 2010 revenues and earnings continued to be negatively impacted by reduced demand for the products it distributes and manufactures. New residential construction remained weak in 2010 with housing starts of approximately 587,000. 2010 housing starts were slightly higher than the 554,000 starts experienced in 2009, but were still approximately 60% lower than the 10-year historical trend of about 1.5 million per year.
"I am proud of how both of our businesses performed last year at the second lowest level of housing starts in over 50 years. Our Wood Products and BMD operating segments reported a combined $38.1 million of EBITDA, which was a $66.8 million year-over-year improvement. In addition, we were able to improve our net debt position by $61 million in 2010, and we are well positioned for the year ahead," stated Tom Carlile, CEO.
Building Materials Distribution (BMD) segment sales were $402.7 million in the fourth quarter, up 9% from the same quarter a year ago. Prices for the segment were up approximately 8%, with volumes up about 1%. BMD reported $2.4 million of EBITDA in fourth quarter. This was up from the $1.0 million reported in fourth quarter 2009. Gross margins declined 70 basis points in the quarter compared to the same quarter a year ago; however, gross margin dollars increased as a result of higher sales. Total expenses were lower as a percent of sales, resulting in an improved operating margin. For the full year of 2010, BMD reported positive EBITDA of $19.1 million on $1.8 billion of sales.
Wood Products segment sales in the fourth quarter were $156.6 million, up 14% from the same quarter a year ago. The sales increase was attributable primarily to 12% higher plywood sales volumes, 7% higher I-joist sales volumes, 12% higher I-joist net selling prices, and 13% higher laminated veneer lumber net selling prices. The segment reported negative $1.8 million of EBITDA for the quarter, an improvement of $7.6 million from the negative $9.4 million reported in fourth quarter 2009. The main factors contributing to the improved financial performance were improved product pricing for engineered wood products and lower per-unit manufacturing costs for plywood. For the full year of 2010, Wood Products reported positive EBITDA of $19.0 million on $687.4 million of sales.
Outlook
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.
About Boise Cascade
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.
Webcast and Conference Call
BC Holdings will host a webcast and conference call on Wednesday, March 2, 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 Wednesday, March 2, at 2 p.m. Eastern through Wednesday, March 9, 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 39857763.
Basis of Presentation
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 and net debt (cash), both non-GAAP financial measures. 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. Net debt (cash) is defined as total debt minus cash and cash equivalents. Management views net debt (cash) as a measure of the Company's leverage. Like EBITDA, the use of net debt (cash) has limitations as an analytical tool. Management compensates for the limitations of these non-GAAP measures by relying on our GAAP results. Our measures of EBITDA and net debt (cash) are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.
Forward-Looking Statements
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.
Boise Cascade Holdings, L.L.C. Consolidated Statements of Income (Loss) (unaudited, in thousands) |
||||||
Three Months Ended |
||||||
December 31 |
September 30, |
|||||
2010 |
2009 |
2010 |
||||
Sales |
||||||
Trade |
$ 502,985 |
$ 447,739 |
$ 588,605 |
|||
Related parties (a) |
5,368 |
11,897 |
4,892 |
|||
508,353 |
459,636 |
593,497 |
||||
Costs and expenses |
||||||
Materials, labor, and other operating expenses |
449,098 |
410,412 |
514,514 |
|||
Materials, labor, and other operating expenses |
||||||
from related parties (a) |
6,292 |
5,199 |
10,549 |
|||
Depreciation and amortization |
8,955 |
8,680 |
8,759 |
|||
Selling and distribution expenses |
47,472 |
46,705 |
54,197 |
|||
General and administrative expenses |
8,389 |
6,772 |
11,412 |
|||
General and administrative expenses |
||||||
from related party (a) |
- |
2,551 |
- |
|||
Other (income) expense, net (b) |
(39) |
487 |
(4,565) |
|||
520,167 |
480,806 |
594,866 |
||||
Loss from operations |
(11,814) |
(21,170) |
(1,369) |
|||
Equity in income of affiliate (a) |
- |
18,193 |
- |
|||
Gain on sale of shares of equity affiliate (a) |
- |
41,755 |
- |
|||
Foreign exchange gain |
239 |
121 |
321 |
|||
Gain on repurchase of long-term debt |
28 |
- |
- |
|||
Interest expense |
(4,743) |
(5,380) |
(4,721) |
|||
Interest income |
148 |
126 |
249 |
|||
(4,328) |
54,815 |
(4,151) |
||||
Income (loss) before income taxes |
(16,142) |
33,645 |
(5,520) |
|||
Income tax provision |
(70) |
(37) |
(95) |
|||
Net income (loss) |
$ (16,212) |
$ 33,608 |
$ (5,615) |
|||
Segment Information (unaudited, in thousands) |
||||||
Three Months Ended |
||||||
December 31 |
September 30, |
|||||
2010 |
2009 |
2010 |
||||
Segment sales |
||||||
Building Materials Distribution |
$ 402,692 |
$ 368,911 |
$ 470,725 |
|||
Wood Products |
156,569 |
136,752 |
183,424 |
|||
Intersegment eliminations and other |
(50,908) |
(46,027) |
(60,652) |
|||
$ 508,353 |
$ 459,636 |
$ 593,497 |
||||
Segment income (loss) |
||||||
Building Materials Distribution (b) |
$ 455 |
$ (832) |
$ 4,645 |
|||
Wood Products (b) |
(8,766) |
(16,218) |
(972) |
|||
Corporate and Other |
(3,264) |
(3,999) |
(4,721) |
|||
(11,575) |
(21,049) |
(1,048) |
||||
Equity in net income of affiliate (a) |
- |
18,193 |
- |
|||
Gain on sale of shares of equity affiliate (a) |
- |
41,755 |
- |
|||
Gain on repurchase of long-term debt |
28 |
- |
- |
|||
Interest expense |
(4,743) |
(5,380) |
(4,721) |
|||
Interest income |
148 |
126 |
249 |
|||
Income (loss) before income taxes |
$ (16,142) |
$ 33,645 |
$ (5,520) |
|||
EBITDA (f) |
||||||
Building Materials Distribution (b) |
$ 2,421 |
$ 1,003 |
$ 6,505 |
|||
Wood Products (b) |
(1,845) |
(9,350) |
5,838 |
|||
Corporate and Other |
(3,196) |
(4,022) |
(4,632) |
|||
Equity in net income of affiliate (a) |
- |
18,193 |
- |
|||
Gain on sale of shares of equity affiliate (a) |
- |
41,755 |
- |
|||
Gain on repurchase of long-term debt |
28 |
- |
- |
|||
$ (2,592) |
$ 47,579 |
$ 7,711 |
||||
Boise Cascade Holdings, L.L.C. Consolidated Statements of Income (Loss) (in thousands) |
||||
Year Ended December 31 |
||||
2010 |
2009 |
|||
Sales |
||||
Trade |
$ 2,215,332 |
$ 1,935,353 |
||
Related parties (a) |
25,259 |
37,897 |
||
2,240,591 |
1,973,250 |
|||
Costs and expenses |
||||
Materials, labor, and other operating expenses (c) |
1,947,362 |
1,757,068 |
||
Materials, labor, and other operating expenses |
||||
from related parties (a) |
33,613 |
29,915 |
||
Depreciation and amortization (c) |
34,899 |
40,874 |
||
Selling and distribution expenses |
202,464 |
190,431 |
||
General and administrative expenses |
38,464 |
27,401 |
||
General and administrative expenses from related party (a) |
1,576 |
10,169 |
||
Other (income) expense, net (b) (c) |
(4,624) |
842 |
||
2,253,754 |
2,056,700 |
|||
Loss from operations |
(13,163) |
(83,450) |
||
Equity in net income of affiliate (a) |
1,889 |
79,729 |
||
Gain on sale of shares of equity affiliate (a) |
25,308 |
42,752 |
||
Impairment of investment in equity affiliate (d) |
- |
(43,039) |
||
Foreign exchange gain |
352 |
1,025 |
||
Change in fair value of contingent value rights |
- |
194 |
||
Gain on repurchase of long-term debt (e) |
28 |
6,026 |
||
Interest expense |
(21,005) |
(22,520) |
||
Interest income |
790 |
886 |
||
7,362 |
65,053 |
|||
Loss before income taxes |
(5,801) |
(18,397) |
||
Income tax provision |
(300) |
(660) |
||
Net loss |
$ (6,101) |
$ (19,057) |
||
Segment Information (in thousands) |
||||
Year Ended December 31 |
||||
2010 |
2009 |
|||
Segment sales |
||||
Building Materials Distribution |
$ 1,777,969 |
$ 1,609,767 |
||
Wood Products |
687,439 |
550,818 |
||
Intersegment eliminations and other |
(224,817) |
(187,335) |
||
$ 2,240,591 |
$ 1,973,250 |
|||
Segment income (loss) |
||||
Building Materials Distribution (b) |
$ 11,632 |
$ 7,954 |
||
Wood Products (b) (c) |
(8,099) |
(77,258) |
||
Corporate and Other |
(16,344) |
(13,121) |
||
(12,811) |
(82,425) |
|||
Equity in net income of affiliate (a) |
1,889 |
79,729 |
||
Gain on sale of shares of equity affiliate (a) |
25,308 |
42,752 |
||
Impairment of investment in equity affiliate (d) |
- |
(43,039) |
||
Change in fair value of contingent value rights |
- |
194 |
||
Gain on repurchase of long-term debt (e) |
28 |
6,026 |
||
Interest expense |
(21,005) |
(22,520) |
||
Interest income |
790 |
886 |
||
Loss before income taxes |
$ (5,801) |
$ (18,397) |
||
EBITDA (f) |
||||
Building Materials Distribution (b) |
$ 19,089 |
$ 15,515 |
||
Wood Products (b) (c) |
18,997 |
(44,262) |
||
Corporate and Other |
(15,998) |
(12,804) |
||
Equity in net income of affiliate (a) |
1,889 |
79,729 |
||
Gain on sale of shares of equity affiliate (a) |
25,308 |
42,752 |
||
Impairment of investment in equity affiliate (d) |
- |
(43,039) |
||
Change in fair value of contingent value rights |
- |
194 |
||
Gain on repurchase of long-term debt (e) |
28 |
6,026 |
||
$ 49,313 |
$ 44,111 |
|||
December 31 |
||||
2010 |
2009 |
|||
Net debt (cash) |
||||
Long-term debt |
$ 219,560 |
$ 303,146 |
||
Less cash and cash equivalents |
(264,606) |
(287,101) |
||
Net debt (cash) |
$ (45,046) |
$ 16,045 |
||
Boise Cascade Holdings, L.L.C. Consolidated Balance Sheets (in thousands) |
||||
December 31 |
||||
2010 |
2009 |
|||
ASSETS |
||||
Current |
||||
Cash and cash equivalents |
$ 264,606 |
$ 287,101 |
||
Receivables |
||||
Trade, less allowances of $2,492 and $1,584 |
102,906 |
95,398 |
||
Related parties (a) |
297 |
2,604 |
||
Other |
4,571 |
3,495 |
||
Inventories |
261,202 |
232,774 |
||
Prepaid expenses and other |
3,808 |
1,870 |
||
637,390 |
623,242 |
|||
Property |
||||
Property and equipment, net |
273,569 |
270,229 |
||
Timber deposits |
10,588 |
9,264 |
||
284,157 |
279,493 |
|||
Investment in equity affiliate (a) (d) |
- |
62,967 |
||
Deferred financing costs |
3,626 |
5,734 |
||
Goodwill |
12,170 |
12,170 |
||
Intangible assets, net |
8,906 |
8,919 |
||
Other assets |
5,989 |
8,359 |
||
Total assets |
$ 952,238 |
$ 1,000,884 |
||
Boise Cascade Holdings, L.L.C. Consolidated Balance Sheets (continued) (in thousands, except for equity units) |
||||
December 31 |
||||
2010 |
2009 |
|||
LIABILITIES AND CAPITAL |
||||
Current |
||||
Accounts payable |
||||
Trade |
$ 112,414 |
$ 89,253 |
||
Related parties (a) |
394 |
2,449 |
||
Accrued liabilities |
||||
Compensation and benefits |
39,827 |
27,887 |
||
Interest payable |
3,291 |
3,644 |
||
Other |
22,530 |
16,695 |
||
178,456 |
139,928 |
|||
Debt |
||||
Long-term debt |
219,560 |
303,146 |
||
Other |
||||
Compensation and benefits |
121,709 |
113,290 |
||
Other long-term liabilities |
14,116 |
14,301 |
||
135,825 |
127,591 |
|||
Redeemable equity units |
||||
Series B equity units – 2,735,524 units and 2,764,854 units outstanding |
2,736 |
2,765 |
||
Series C equity units – 14,424,806 units and 16,270,616 units outstanding |
6,563 |
5,202 |
||
9,299 |
7,967 |
|||
Commitments and contingent liabilities |
||||
Capital |
||||
Series A equity units – no par value; 66,000,000 units |
||||
authorized and outstanding |
96,162 |
88,908 |
||
Series B equity units – no par value; 550,000,000 units authorized; |
||||
532,588,003 units and 532,558,673 units outstanding |
312,936 |
333,344 |
||
Series C equity units – no par value; 44,000,000 units authorized; |
||||
11,979,941 units and 11,951,751 units outstanding |
- |
- |
||
Total capital |
409,098 |
422,252 |
||
Total liabilities and capital |
$ 952,238 |
$ 1,000,884 |
||
Boise Cascade Holdings, L.L.C. Consolidated Statements of Cash Flows (in thousands) |
||||
Year Ended December 31 |
||||
2010 |
2009 |
|||
Cash provided by (used for) operations |
||||
Net loss |
$ (6,101) |
$ (19,057) |
||
Items in net loss not using (providing) cash |
||||
Equity in net income of affiliate |
(1,889) |
(79,729) |
||
Gain on sale of shares of equity affiliate |
(25,308) |
(42,752) |
||
Impairment of investment in equity affiliate |
- |
43,039 |
||
Depreciation and amortization of deferred financing costs and other |
37,674 |
43,679 |
||
Pension expense |
7,449 |
12,315 |
||
Management equity units expense |
1,625 |
2,736 |
||
Gain on repurchase of long-term debt |
(28) |
(6,026) |
||
Facility closure and curtailment costs |
- |
1,968 |
||
Other |
(343) |
(1,240) |
||
Decrease (increase) in working capital, net of acquisitions |
||||
Receivables |
(6,338) |
(17,250) |
||
Inventories |
(28,428) |
47,086 |
||
Prepaid expenses and other |
(300) |
(569) |
||
Accounts payable and accrued liabilities |
32,419 |
11,441 |
||
Pension contributions |
(3,873) |
(28,385) |
||
Current and deferred income taxes |
91 |
198 |
||
Other |
3,636 |
(2,678) |
||
Cash provided by (used for) operations |
10,286 |
(35,224) |
||
Cash provided by (used for) investment |
||||
Proceeds from sale of assets |
1,254 |
467 |
||
Proceeds from sale of shares of equity affiliate, net |
86,123 |
83,172 |
||
Expenditures for property and equipment |
(35,751) |
(16,806) |
||
Acquisitions of businesses and facilities |
- |
(4,598) |
||
Other |
(956) |
637 |
||
Cash provided by investment |
50,670 |
62,872 |
||
Cash provided by (used for) financing |
||||
Issuances of long-term debt |
45,000 |
60,000 |
||
Payments of long-term debt |
(128,451) |
(65,627) |
||
Tax distributions to members |
- |
(10,705) |
||
Repurchase of management equity units |
- |
(18) |
||
Cash used for financing |
(83,451) |
(16,350) |
||
Increase (decrease) in cash and cash equivalents |
(22,495) |
11,298 |
||
Balance at beginning of the period |
287,101 |
275,803 |
||
Balance at end of the period |
$ 264,606 |
$ 287,101 |
||
Summary Notes to Consolidated Financial Statements and Segment Information |
|||
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. Net income (loss) for all periods presented involved estimates and accruals. |
|||
(a) |
In March 2010, we sold our remaining investment in Boise Inc. and discontinued the equity method of accounting. We sold 18.3 million Boise Inc. shares and recorded a $25.3 million gain in "Gain on sale of shares of equity affiliate" in our Consolidated Statement of Income (Loss) for the year ended December 31, 2010. |
||
The 2010 related-party activity with Boise Inc. includes only those sales and costs and expenses transacted prior to March 2010, when BC Holdings owned equity of Boise Inc. Subsequent to the sale of our remaining investment in Boise Inc., we were no longer related parties. |
|||
During the three months and year ended December 31, 2009, we sold 17.6 million and 18.8 million Boise Inc. shares and recorded gains of $41.8 million and $42.8 million in "Gain on sale of shares of equity affiliate" in our Consolidated Statements of Income (Loss). |
|||
(b) |
During the three months ended September 30, 2010, and year ended December 31, 2010, we recorded $4.6 million of income in "Other (income) expense, net," for cash received from a litigation settlement related to vendor product pricing. We recorded $4.1 million of income in our Building Materials Distribution segment and $0.5 million in our Wood Products segment. |
||
(c) |
In June 2009, we closed the lumber manufacturing facility in La Grande, Oregon. For the year ended December 31, 2009, we recorded $3.1 million of expense in "Other (income) expense, net" in the Wood Products segment in our Consolidated Statement of Income (Loss). In addition, we recorded $5.2 million of accelerated depreciation in "Depreciation and amortization" and $0.6 million of expenses in "Materials, labor, and other operating expenses" in the Wood Products segment in our Consolidated Statement of Income (Loss) for the year ended December 31, 2009. |
||
(d) |
On March 31, 2009, we concluded that our investment in Boise Inc. met the definition of other than temporarily impaired. Accordingly, we recorded a $43.0 million charge in "Impairment of investment in equity affiliate" in our Consolidated Statements of Income (Loss) for the year ended December 31, 2009. For more information, see the Notes to Consolidated Financial Statements in our Form 10-K for the year ended December 31, 2010. |
||
(e) |
The year ended December 31, 2009, included a $6.0 million net gain on the repurchase of $11.9 million of senior subordinated notes. |
||
(f) |
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, L.L.C., EBITDA for the three months ended December 31, 2010 and 2009, and September 30, 2010: |
||
Three Months Ended |
||||||
December 31 |
September 30, |
|||||
2010 |
2009 |
2010 |
||||
(unaudited, in thousands) |
||||||
BC Holdings net income (loss) |
$(16,212) |
$ 33,608 |
$ (5,615) |
|||
Interest expense |
4,743 |
5,380 |
4,721 |
|||
Interest income |
(148) |
(126) |
(249) |
|||
Income tax provision |
70 |
37 |
95 |
|||
Depreciation and amortization |
8,955 |
8,680 |
8,759 |
|||
BC Holdings EBITDA |
(2,592) |
47,579 |
7,711 |
|||
Equity in net income of affiliate |
- |
(18,193) |
- |
|||
Gain on sale of shares of equity affiliate |
- |
(41,755) |
- |
|||
Boise Cascade, L.L.C., EBITDA |
$ (2,592) |
$(12,369) |
$ 7,711 |
|||
The following table reconciles BC Holdings net loss to BC Holdings EBITDA and Boise Cascade, L.L.C., EBITDA for the year ended December 31, 2010 and 2009:
Year Ended December 31 |
||||
2010 |
2009 |
|||
(in thousands) |
||||
BC Holdings net loss |
$ (6,101) |
$(19,057) |
||
Interest expense |
21,005 |
22,520 |
||
Interest income |
(790) |
(886) |
||
Income tax provision |
300 |
660 |
||
Depreciation and amortization |
34,899 |
40,874 |
||
BC Holdings EBITDA |
49,313 |
44,111 |
||
Equity in net income of affiliate |
(1,889) |
(79,729) |
||
Gain on sale of shares of equity affiliate |
(25,308) |
(42,752) |
||
Impairment of investment in equity affiliate |
- |
43,039 |
||
Boise Cascade, L.L.C., EBITDA |
$22,116 |
$(35,331) |
||
SOURCE Boise Cascade Holdings, L.L.C.
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