Boise Cascade Company Second Quarter 2014 Earnings Webcast July 24, 2014
Forward-Looking Statements
This presentation includes statements about our expectations of future operational and financial performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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, the effect of general economic conditions, 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 presentation. 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 presentation.
This presentation includes references to EBITDA, which is a non-GAAP financial measure within the meaning of the Securities and Exchange Commission’s Regulation G. Reconciliations of net income to EBITDA and segment income to segment EBITDA are included as an appendix and are posted on the company’s website at www.bc.com.
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July 24, 2014
Executive Summary
Second quarter activity was much better than first quarter. There may have been some recapture of business lost in first quarter due to weather.
U.S. housing starts increased 12% from the same period last year.
Second quarter sales were $961.2 million, up 13% from the prior year quarter.
Second quarter net income was $26.4 million, or $0.67 per share.
Tone of business remains positive as we move into third quarter.
Consensus U.S. housing starts estimate for 2014 is 1.04 million units. Expect recovery to continue in 2015 with consensus at 1.23 million units.
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July 24, 2014
2Q 2014 Financial Highlights Sales
$ Millions $1,200
$70
+13%
$1,100
+91%
$60
$1,000
$58.7
$961.2
$900
758.4
$700
21.8
$50
$852.3
$800
$600
EBITDA
$ Millions
$40
681.5 $30
$500
5.5 $30.7
$400
$200 $100
351.0
280.4
$0 ($100)
(109.6)
(148.2)
2Q 2013
2Q 2014
($200)
29.6 $10 $0
(4.4)
(4.4)
2Q 2013
2Q 2014
($10)
Wood
Slide 4
41.3
$20
$300
BMD
Eliminations
Wood
BMD
Corporate
July 24, 2014
Wood Products Plywood Net Sales Price
Sales Volume (mmsf 3/8” basis)
($/msf 3/8” basis)
450
430
414
$350
428
400 350
346
355
$300
331
328
294
301
1Q
2Q
303
302
344
$250 300 250
$200
200
$150
150 $100 100 $50
50 0
$0 1Q
2Q
3Q
4Q
2013 Slide 5
3Q
4Q
2014 July 24, 2014
Wood Products EWP LVL
(mmcf) 4.0
3.4
3.5 3.0
(mmelf) 60 55 50 41 40 45 40 35 30 25 20 15 10 5 0 1Q
3.0 2.7
2.6
2.7
2.7
2.5 2.0 1.5 1.0 0.5 0.0 1Q
2Q
3Q
4Q
($/cf)
57 51 44
44
2Q
3Q
4Q
($/melf)
$18
1,068
$1,100 1,016
$16
I-joists
16.0 15.3
16.3 15.7
15.9
15.9
$1,000
964
989
1,017
1,024
$900 $800
$14
$700 $12 $600 $10
$500 1Q
Slide 6
2Q
3Q
4Q
1Q
2013
2014
2Q
3Q
4Q July 24, 2014
Building Materials Distribution Sales ($ Millions)
(% of Sales) 100
$900 $800
758 681
$700 $600
722
14
17
17
16
17
31
35
34
32
32
34
54
51
49
51
52
49
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
80
615
581 586
15
60
$500 $400
40
$300 $200
20
$100 0
$0 1Q
2Q 2013
Slide 7
3Q 2014
4Q
Commodity
General Line
EWP
July 24, 2014
Working Capital Balance Sheet Items ($ Millions)
6/30/2014
3/31/2014
Receivables Inventory Other current assets*
$ 226.0 410.6 8.7 645.3
$ 206.8 421.1 9.7 637.5
206.7 100.0 306.7
199.6 86.6 286.2
$ 338.6
$ 351.3
Accounts payable Accrued liabilities
Net working capital*
Change $
19.2 (10.5) (1.0) 7.8 7.1 13.4 20.5
$
(12.7)
*Excludes cash and deferred taxes
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July 24, 2014
Debt and Liquidity Highlights 6/30/2014
($ Millions)
3/31/2014
Net Debt Long-term debt Cash & cash equivalents Net debt
$ $
301.5 (129.9) 171.6
$
342.0 129.9 471.9
$
$
301.6 (86.0) 215.6
Liquidity Position ABL excess availability Cash & cash equivalents Total liquidity
Slide 9
$ $
$
341.3 86.0 427.3
July 24, 2014
Outlook
The current consensus estimate for 2014 U.S. housing starts is 1.04 million, up about 12% from 925,000 in 2013.
We believe the long-term demand fundamentals for housing are still sound based on demographics in the U.S. and expect housing starts to return to 1.4 to 1.5 million starts over the next few years.
We are focused on meeting our customers’ needs as demand continues to strengthen.
We expect our business to continue to demonstrate year-over-year improvement in the second half of 2014:
Full year benefit of acquisition of plywood operations we completed September 30, 2013
Growth in EWP sales as single-family new residential construction further improves
Growth in Building Materials Distribution revenues and earnings with increased new construction and repair-and-remodel activity
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July 24, 2014
Appendix July 24, 2014
Appendix EBITDA represents income before interest (interest expense and interest income), income taxes, and depreciation and amortization. The following table reconciles net income to EBITDA for the three months ended June 30, 2014 and 2013:
($ Millions) Net income
$
26.4
2Q13 $
10.4
Interest expense
5.5
4.8
Interest income
(0.1)
(0.1)
Income tax provision
14.3
6.8
Depreciation and amortization
12.5
8.8
EBITDA
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2Q14
$
58.7
$
30.7
July 24, 2014
Appendix Segment EBITDA represents segment income before depreciation and amortization. The following table reconciles segment income to EBITDA for the three months ended June 30, 2014 and 2013: ($ Millions)
2Q14
2Q13
$ 31.2
$ 23.0
10.0
6.5
$ 41.3
$ 29.6
$ 19.4
$ 3.3
2.4
2.2
$ 21.8
$ 5.5
Wood Products Segment income Depreciation and amortization Segment EBITDA Building Materials Distribution Segment income Depreciation and amortization Segment EBITDA
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July 24, 2014
