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Boise Cascade (BCC) 5 Nov 24 2024 Q3 Earnings call transcript

AInvestWednesday, Nov 6, 2024 12:43 pm ET
1min read

Boise Cascade's third quarter earnings call for 2024 provided insights into the company's performance and future outlook amidst the challenging housing market conditions. The call, led by Vice President Finance and Investor Relations, Chris Forrey, along with key executives Nate Jorgensen, Kelly Hibbs, Troy Little, and Jeff Strom, highlighted the company's resilience and adaptability in the face of a constrained demand environment.

Market Overview and Financial Performance

In the third quarter, Boise Cascade reported sales of $1.7 billion, marking a 7% decline from the previous year. Despite the decrease, both Wood Products and Building Materials Distribution (BMD) segments performed well, contributing to a net income of $91 million, or $2.33 per share. The housing starts in the U.S. decreased by 3% for total housing and 1% for single-family homes, reflecting the broader market challenges.

Key Themes and Trends

The call highlighted the impact of home affordability challenges and economic uncertainties on the housing market. The company's ability to navigate these challenges, coupled with its focus on organic growth projects and shareholder returns, underscores its strategic positioning. The BMD segment, which includes sales of Engineered Wood Products (EWP) and plywood, experienced a decrease in sales and EBITDA, primarily due to lower sales prices and higher conversion costs. The Wood Products segment, on the other hand, reported a decrease in sales and EBITDA, influenced by a decline in I-joist sales and pricing pressure.

Capital Allocation and Future Outlook

Looking ahead, Boise Cascade is projected to have capital spending between $200 million and $220 million in 2025. The company also expects seasonal price declines for both EWP and plywood in the fourth quarter. Despite these challenges, Boise Cascade remains committed to its capital deployment strategy, which includes ongoing investments in its existing asset base, organic growth projects, and shareholder returns. The company also maintains flexibility for M&A opportunities that align with its strategy.

Investor Insights

Analysts on the call raised concerns about the market outlook, particularly with regards to housing starts and affordability challenges. The company's executives provided insights into these issues, emphasizing the importance of new residential construction as a source of housing supply. The company's focus on strategic investments and shareholder returns, along with its ability to navigate market challenges, highlights its resilience and adaptability.

Conclusion

Boise Cascade's third quarter earnings call underscored the company's ability to navigate the challenging housing market conditions, with a focus on strategic investments and shareholder returns. The company's outlook for the future, including its capital spending plans and expectations for housing starts, provides a glimpse into the broader industry trends. As Boise Cascade continues to navigate the complexities of the housing market, its strategic positioning and adaptability are key factors to watch.

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