Boise cascade company reports first quarter 2022 results
Boise, idaho--(business wire)--boise cascade company ("boise cascade," the "company," "we," or "our") (nyse: bcc) today reported net income of $302.6 million, or $7.61 per share, on sales of $2.3 billion for the first quarter ended march 31, 2022, compared with net income of $149.2 million, or $3.76 per share, on sales of $1.8 billion for the first quarter ended march 31, 2021. “both businesses delivered tremendous financial results in the first quarter. i am very thankful for our associates and their continued focus on providing exceptional service to our customer and supplier partners,” commented nate jorgensen, ceo. “as we move into second quarter, we continue to experience steady demand across product lines and strong pricing on engineered wood and general line products. our team has also done a great job of mitigating exposure to commodity price declines experienced early in the quarter. with the strength of our balance sheet we are intent on deploying capital to create shareholder value, including execution of our growth strategies.” first quarter 2022 highlights 1q 2022 1q 2021 % change (in thousands, except per-share data and percentages) consolidated results sales $ 2,326,282 $ 1,821,316 28% net income 302,600 149,156 103% net income per common share - diluted 7.61 3.76 102% adjusted ebitda 1 426,132 224,935 89% segment results wood products sales $ 558,944 $ 432,335 29% wood products income 190,116 97,052 96% wood products ebitda 1 203,756 110,398 85% building materials distribution sales 2,111,833 1,634,777 29% building materials distribution income 225,892 120,219 88% building materials distribution ebitda 1 232,468 126,038 84% 1 for reconciliations of non-gaap measures, see summary notes at the end of this press release. in the first quarter 2022, total u.s. housing starts increased 10% compared to the same period in 2021. single-family housing starts, the key demand driver for our sales, also increased 4%. wood products wood products' sales, including sales to building materials distribution (bmd), increased $126.6 million, or 29%, to $558.9 million for the three months ended march 31, 2022, from $432.3 million for the three months ended march 31, 2021. the increase in sales was driven primarily by higher net sales prices for i-joists and lvl (collectively referred to as ewp) and plywood, as well as higher sales volumes for plywood and lvl. these increases were offset partially by lower sales volumes for i-joists. comparative average net selling prices and sales volume changes for ewp and plywood are as follows: 1q 2022 vs. 1q 2021 1q 2022 vs. 4q 2021 average net selling prices lvl 39% 2% i-joists 42% 3% plywood 24% 72% sales volumes lvl 6% 3% i-joists (9)% (2)% plywood 4% 4% wood products' segment income increased $93.1 million to $190.1 million for the three months ended march 31, 2022, from $97.1 million for the three months ended march 31, 2021. the increase in segment income was due primarily to higher ewp and plywood sales prices. these improvements were offset partially by higher wood fiber costs and other manufacturing costs. building materials distribution bmd's sales increased $477.1 million, or 29%, to $2,111.8 million for the three months ended march 31, 2022, from $1,634.8 million for the three months ended march 31, 2021. compared with the same quarter in the prior year, the overall increase in sales was driven by sales price increases of 29%, as sales volumes were flat. by product line, commodity sales increased 22%, general line product sales increased 30%, and sales of ewp (substantially all of which is sourced through our wood products segment) increased 54%. bmd segment income increased $105.7 million to $225.9 million for the three months ended march 31, 2022, from $120.2 million in the comparative prior year quarter. the improvement in segment income was driven by a gross margin increase of $133.6 million, resulting from improved gross margins across substantially all product lines compared with first quarter 2021. the margin improvement was offset partially by increased selling and distribution expenses of $25.5 million. balance sheet and liquidity boise cascade ended first quarter 2022 with $922.7 million of cash and cash equivalents and $346.0 million of undrawn committed bank line availability, for total available liquidity of $1,268.7 million. the company had $444.8 million of outstanding debt at march 31, 2022. we expect capital expenditures in 2022 to total approximately $110 million to $130 million. our 2022 capital expenditures range includes funding to complete our bmd organic expansions in ohio, kentucky, and minnesota, and a new dryer at our chester, south carolina, veneer and plywood plant. this level of capital expenditures could increase or decrease as a result of a number of factors, including acquisitions, efforts to further accelerate organic growth, exercise of lease purchase options, our financial results, future economic conditions, availability of engineering and construction resources, and timing and availability of equipment purchases. dividends on may 5, 2022, our board of directors declared a quarterly dividend of $0.12 per share on our common stock, as well as a supplemental dividend of $2.50 per share on our common stock, both payable on june 15, 2022, to stockholders of record on june 1, 2022. future dividend declarations, including amount per share, record date and payment date, will be made at the discretion of our board of directors and will depend upon, among other things, legal capital requirements and surplus, our future operations and earnings, general financial condition, material cash requirements, restrictions imposed by our asset-based credit facility and the indenture governing our senior notes, applicable laws, and other factors that our board of directors may deem relevant. outlook demand for the products we manufacture, as well as the products we purchase and distribute, is correlated with new residential construction, residential repair-and-remodeling activity and light commercial construction. current demographics in the united states (u.s.), as well as continuation of work-from-home practices by many in the economy, continue to create a favorable demand environment for new residential construction. we expect demand to remain strong during 2022, with april 2022 blue chip economic indicators consensus forecasts for 2022 single- and multi-family housing starts in the u.s. of 1.65 million units compared with actual housing starts of 1.60 million in 2021, as reported by the u.s. census bureau. in addition, limited new and existing home inventory availability and the age of the u.s. housing stock will continue to provide a favorable backdrop for residential construction and repair-and-remodel spending. although we believe that current u.s. demographics support the forecasted level of housing starts, and many national home builders are reporting strong near-term backlogs, labor shortages and supply induced constraints on residential construction activity may continue to extend build times and limit activity. in addition, the pace of residential construction and repair-and-remodeling activity may be affected by the economic impact of the cost of building materials and construction, housing affordability, increasing mortgage interest rates, wage growth, prospective home buyers' access to financing, and consumer confidence, as well as other factors. as a manufacturer of certain commodity products, we have sales and profitability exposure to declines in commodity product prices and rising input costs. our distribution business purchases and resells a broad mix of commodity products with periods of increasing prices providing the opportunity for higher sales and increased margins, while declining price environments expose us to declines in sales and profitability. our first quarter 2022 financial results were favorably impacted by higher commodity wood products pricing compared to pricing in the same period last year, as well as rising prices for ewp and general line products. current composite panel and lumber prices have declined by approximately 24% and 15% from levels at the end of first quarter 2022. we expect future commodity product pricing and commodity input costs to be volatile in response to capacity restoration and industry operating rates, transportation constraints or disruptions, net import and export activity, inventory levels in various distribution channels, and seasonal demand patterns. ewp and general line products have historically experienced limited price volatility, and we expect the firm pricing environment to continue during 2022. about boise cascade boise cascade company is one of the largest producers of engineered wood products and plywood in north america and a leading u.s. wholesale distributor of building products. for more information, please visit the company's website at www.bc.com. webcast and conference call boise cascade will host a webcast and conference call to discuss first quarter earnings on friday, may 6, 2022, at 11 a.m. eastern. to participate in the conference call, dial 844-795-4410 and use participant passcode 4607268 (international callers should dial 661-378-9637). to join the webcast, go to the investor relations section at www.bc.com and select the event calendar link. a replay of the conference call will be available from friday, may 6, 2022, at 2 p.m. eastern through friday, may 13, 2022, at 2 p.m. eastern. replay numbers are 855-859-2056 for u.s. callers and 404-537-3406 for international callers with a passcode of 4607268. the archived webcast will be available in the investor relations section of boise cascade's website. use of non-gaap financial measures we refer to the terms ebitda and adjusted ebitda in this earnings release and the accompanying quarterly statistical information as supplemental measures of our performance and liquidity that are not required by or presented in accordance with generally accepted accounting principles in the united states (gaap). we define ebitda as income (loss) before interest (interest expense and interest income), income taxes, and depreciation and amortization. additionally, we disclose adjusted ebitda, which further adjusts ebitda to exclude the change in fair value of interest rate swaps. we believe ebitda and adjusted ebitda are meaningful measures because they present a transparent view of our recurring operating performance and allow management to readily view operating trends, perform analytical comparisons, and identify strategies to improve operating performance. we also believe ebitda and adjusted ebitda are useful to investors because they provide a means to evaluate the operating performance of our segments and our company on an ongoing basis using criteria that are used by our management and because they are 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. ebitda and adjusted ebitda, however, are not measures of our liquidity or financial performance under gaap and should not be considered as alternatives to net income (loss), income (loss) from operations, or any other performance measure derived in accordance with gaap or as alternatives to cash flow from operating activities as a measure of our liquidity. the use of ebitda and adjusted ebitda instead of net income (loss) or segment income (loss) have limitations as analytical tools, 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 these limitations by relying on our gaap results. our measures of ebitda and adjusted ebitda 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 press release includes statements about our expectations of future operational and financial performance that are forward-looking statements within the meaning of section 27a of the securities act of 1933 and section 21e of the securities exchange act of 1934, including, but not limited to, statements regarding our outlook. statements preceded or followed by, or that otherwise include, the words "believes," "expects," "anticipates," "intends," "project," "estimates," "plans," "forecast," "is likely to," and similar expressions or future or conditional verbs such as "will," "may," "would," "should," and "could" are generally forward-looking in nature and not historical facts. such statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties. the accuracy of such statements is subject to a number of risks, uncertainties, and assumptions that could cause our actual results to differ materially from those projected, including, but not limited to, prices for building products, changes in the competitive position of our products, commodity input costs, the effect of general economic conditions, the effect of covid-19, mortgage rates and availability, housing demand, housing vacancy rates, governmental regulations, unforeseen production disruptions, as well as natural disasters. these and other factors that could cause actual results to differ materially from such forward-looking statements are discussed in greater detail in our filings with the securities and exchange commission. forward-looking statements speak only as of the date of this press release. we undertake no obligation to revise them in light of new information. finally, we undertake no obligation to review or confirm analyst expectations or estimates that might be derived from this release. boise cascade company consolidated statements of operations (in thousands, except per-share data) (unaudited) three months ended march 31 december 31, 2021 2022 2021 sales $ 2,326,282 $ 1,821,316 $ 1,782,183 costs and expenses materials, labor, and other operating expenses (excluding depreciation) 1,729,896 1,450,434 1,390,714 depreciation and amortization 20,543 19,539 20,495 selling and distribution expenses 146,651 120,917 124,897 general and administrative expenses 26,052 25,262 18,976 other (income) expense, net (2,488 ) (97 ) (280 ) 1,920,654 1,616,055 1,554,802 income from operations 405,628 205,261 227,381 foreign currency exchange gain 132 154 42 pension expense (excluding service costs) (171 ) (19 ) (19 ) interest expense (6,254 ) (5,875 ) (6,305 ) interest income 65 59 22 change in fair value of interest rate swaps 2,066 1,024 687 (4,162 ) (4,657 ) (5,573 ) income before income taxes 401,466 200,604 221,808 income tax provision (98,866 ) (51,448 ) (52,733 ) net income $ 302,600 $ 149,156 $ 169,075 weighted average common shares outstanding: basic 39,474 39,355 39,442 diluted 39,768 39,630 39,735 net income per common share: basic $ 7.67 $ 3.79 $ 4.29 diluted $ 7.61 $ 3.76 $ 4.26 dividends declared per common share $ 0.12 $ 0.10 $ 3.12 wood products segment statements of operations (in thousands, except percentages) (unaudited) three months ended march 31 december 31, 2021 2022 2021 segment sales $ 558,944 $ 432,335 $ 446,584 costs and expenses materials, labor, and other operating expenses (excluding depreciation) 343,709 308,608 322,215 depreciation and amortization 13,640 13,346 13,861 selling and distribution expenses 9,230 8,999 8,783 general and administrative expenses 4,646 4,319 3,414 other (income) expense, net (2,397 ) 11 (55 ) 368,828 335,283 348,218 segment income $ 190,116 $ 97,052 $ 98,366 (percentage of sales) segment sales 100.0 % 100.0 % 100.0 % costs and expenses materials, labor, and other operating expenses (excluding depreciation) 61.5 % 71.4 % 72.2 % depreciation and amortization 2.4 % 3.1 % 3.1 % selling and distribution expenses 1.7 % 2.1 % 2.0 % general and administrative expenses 0.8 % 1.0 % 0.8 % other (income) expense, net (0.4 %) — % — % 66.0 % 77.6 % 78.0 % segment income 34.0 % 22.4 % 22.0 % building materials distribution segment statements of operations (in thousands, except percentages) (unaudited) three months ended march 31 december 31, 2021 2022 2021 segment sales $ 2,111,833 $ 1,634,777 $ 1,645,513 costs and expenses materials, labor, and other operating expenses (excluding depreciation) 1,730,803 1,387,351 1,378,206 depreciation and amortization 6,576 5,819 6,258 selling and distribution expenses 137,421 111,920 116,114 general and administrative expenses 11,226 9,581 7,230 other (income) expense, net (85 ) (113 ) (258 ) 1,885,941 1,514,558 1,507,550 segment income $ 225,892 $ 120,219 $ 137,963 (percentage of sales) segment sales 100.0 % 100.0 % 100.0 % costs and expenses materials, labor, and other operating expenses (excluding depreciation) 82.0 % 84.9 % 83.8 % depreciation and amortization 0.3 % 0.4 % 0.4 % selling and distribution expenses 6.5 % 6.8 % 7.1 % general and administrative expenses 0.5 % 0.6 % 0.4 % other (income) expense, net — % — % — % 89.3 % 92.6 % 91.6 % segment income 10.7 % 7.4 % 8.4 % segment information (in thousands) (unaudited) three months ended march 31 december 31, 2021 2022 2021 segment sales wood products $ 558,944 $ 432,335 $ 446,584 building materials distribution 2,111,833 1,634,777 1,645,513 intersegment eliminations (344,495 ) (245,796 ) (309,914 ) total net sales $ 2,326,282 $ 1,821,316 $ 1,782,183 segment income wood products $ 190,116 $ 97,052 $ 98,366 building materials distribution 225,892 120,219 137,963 total segment income 416,008 217,271 236,329 unallocated corporate costs (10,380 ) (12,010 ) (8,948 ) income from operations $ 405,628 $ 205,261 $ 227,381 segment ebitda (a) wood products $ 203,756 $ 110,398 $ 112,227 building materials distribution 232,468 126,038 144,221 see accompanying summary notes to consolidated financial statements and segment information. boise cascade company consolidated balance sheets (in thousands) (unaudited) march 31, 2022 december 31, 2021 assets current cash and cash equivalents $ 922,721 $ 748,907 receivables trade, less allowances of $3,110 and $2,054 665,136 444,325 related parties 184 211 other 14,926 17,692 inventories 804,668 660,671 prepaid expenses and other 15,270 14,072 total current assets 2,422,905 1,885,878 property and equipment, net 491,395 495,240 operating lease right-of-use assets 60,007 62,663 finance lease right-of-use assets 28,409 29,057 timber deposits 8,954 9,461 goodwill 60,382 60,382 intangible assets, net 15,045 15,351 deferred income taxes 8,822 6,589 other assets 10,008 8,019 total assets $ 3,105,927 $ 2,572,640 boise cascade company consolidated balance sheets (continued) (in thousands, except per-share data) (unaudited) march 31, 2022 december 31, 2021 liabilities and stockholders' equity current accounts payable trade $ 493,732 $ 334,985 related parties 1,557 1,498 accrued liabilities compensation and benefits 103,778 128,518 income taxes payable 93,393 — interest payable 4,998 9,886 other 182,705 165,859 total current liabilities 880,163 640,746 debt long-term debt 444,836 444,628 other compensation and benefits 28,062 28,365 operating lease liabilities, net of current portion 52,449 55,263 finance lease liabilities, net of current portion 31,451 31,898 deferred income taxes 5,112 3,641 other long-term liabilities 15,165 15,480 132,239 134,647 commitments and contingent liabilities stockholders' equity preferred stock, $0.01 par value per share; 50,000 shares authorized, no shares issued and outstanding — — common stock, $0.01 par value per share; 300,000 shares authorized, 44,815 and 44,698 shares issued, respectively 448 447 treasury stock, 5,367 shares at cost (138,909 ) (138,909 ) additional paid-in capital 541,737 543,249 accumulated other comprehensive loss (933 ) (1,047 ) retained earnings 1,246,346 948,879 total stockholders' equity 1,648,689 1,352,619 total liabilities and stockholders' equity $ 3,105,927 $ 2,572,640 boise cascade company consolidated statements of cash flows (in thousands) (unaudited) three months ended march 31 2022 2021 cash provided by (used for) operations net income $ 302,600 $ 149,156 items in net income not using (providing) cash depreciation and amortization, including deferred financing costs and other 20,993 19,950 stock-based compensation 2,392 2,092 pension expense 171 19 deferred income taxes (729 ) (2,244 ) change in fair value of interest rate swaps (2,066 ) (1,024 ) other (2,412 ) 4 decrease (increase) in working capital receivables (218,018 ) (161,833 ) inventories (143,997 ) (108,220 ) prepaid expenses and other (3,227 ) (2,444 ) accounts payable and accrued liabilities 147,425 125,064 pension contributions (655 ) (78 ) income taxes payable 95,352 52,565 other 1,116 (756 ) net cash provided by operations 198,945 72,251 cash provided by (used for) investment expenditures for property and equipment (17,448 ) (13,301 ) proceeds from sales of assets and other 2,581 136 net cash used for investment (14,867 ) (13,165 ) cash provided by (used for) financing dividends paid on common stock (5,939 ) (4,440 ) tax withholding payments on stock-based awards (3,930 ) (2,729 ) other (395 ) (317 ) net cash used for financing (10,264 ) (7,486 ) net increase in cash and cash equivalents 173,814 51,600 balance at beginning of the period 748,907 405,382 balance at end of the period $ 922,721 $ 456,982 summary notes to consolidated financial statements and segment information the consolidated statements of operations, segment statements of operations, consolidated balance sheets, consolidated statements of cash flows, and segment information presented herein do not include the notes accompanying the company's consolidated financial statements and should be read in conjunction with the company’s 2021 form 10-k and the company's other filings with the securities and exchange commission. net income for all periods presented involved estimates and accruals. (a) ebitda represents income before interest (interest expense and interest income), income taxes, and depreciation and amortization. additionally, we disclose adjusted ebitda, which further adjusts ebitda to exclude the change in fair value of interest rate swaps. the following table reconciles net income to ebitda and adjusted ebitda for the three months ended march 31, 2022 and 2021, and december 31, 2021: three months ended march 31 december 31, 2021 2022 2021 (in thousands) net income $ 302,600 $ 149,156 $ 169,075 interest expense 6,254 5,875 6,305 interest income (65 ) (59 ) (22 ) income tax provision 98,866 51,448 52,733 depreciation and amortization 20,543 19,539 20,495 ebitda 428,198 225,959 248,586 change in fair value of interest rate swaps (2,066 ) (1,024 ) (687 ) adjusted ebitda $ 426,132 $ 224,935 $ 247,899 the following table reconciles segment income and unallocated corporate costs to ebitda and adjusted ebitda for the three months ended march 31, 2022 and 2021, and december 31, 2021: three months ended march 31 december 31, 2021 2022 2021 (in thousands) wood products segment income $ 190,116 $ 97,052 $ 98,366 depreciation and amortization 13,640 13,346 13,861 ebitda $ 203,756 $ 110,398 $ 112,227 building materials distribution segment income $ 225,892 $ 120,219 $ 137,963 depreciation and amortization 6,576 5,819 6,258 ebitda $ 232,468 $ 126,038 $ 144,221 corporate unallocated corporate costs $ (10,380 ) $ (12,010 ) $ (8,948 ) foreign currency exchange gain 132 154 42 pension expense (excluding service costs) (171 ) (19 ) (19 ) change in fair value of interest rate swaps 2,066 1,024 687 depreciation and amortization 327 374 376 ebitda (8,026 ) (10,477 ) (7,862 ) change in fair value of interest rate swaps (2,066 ) (1,024 ) (687 ) corporate adjusted ebitda $ (10,092 ) $ (11,501 ) $ (8,549 ) total company adjusted ebitda $ 426,132 $ 224,935 $ 247,899
