Boise Cascade Company Reports Fourth Quarter and Full Year 2022 Results

Boise Cascade Company (“Boise Cascade,” the “Company,” “we,” or “our”) today reported fourth quarter net income of $117.4 million, or $2.95 per share, on sales of $1.6 billion. For the full year 2022, Boise Cascade reported net income of $857.7 million, or $21.56 per share, on sales of $8.4 billion. For 2021 comparative results, see the table below.

“As we close out 2022, I first want to recognize our associates for their tireless work, as they made our outstanding results possible. In addition to our financial results, we had strong performance in safety during a challenging period. I am also very pleased that we were able to take meaningful steps via acquisition and organic initiatives that will allow us to expand our EWP capacity and further grow our distribution capabilities,” stated Nate Jorgensen, CEO. “Our balance sheet remains well positioned for us to execute the growth initiatives started during 2022. In addition, we have the flexibility to further demonstrate our balanced approach to capital allocation, including the ability to pursue additional growth initiatives that align with our strategy. We recognize the industry will face challenges during 2023 given current economic uncertainties and weaker near-term demand for new residential construction; however, we remain committed to providing high service levels to our vendor and customer partners through industry cycles.”

Fourth Quarter and Year End 2022 Highlights

		4Q 2022		4Q 2021		% change		2022		2021		% change
		(in thousands, except per-share data and percentages)
Consolidated Results
Sales		$	1,628,306		$	1,782,183		(9)%		$	8,387,307		$	7,926,111		6 %
Net income			117,360			169,075		(31)%			857,658			712,486		20 %
Net income per common share – diluted			2.95			4.26		(31)%			21.56			17.97		20 %
Adjusted EBITDA 1			188,174			247,899		(24)%			1,257,564			1,052,470		19 %
Segment Results
Wood Products sales		$	425,602		$	446,584		(5)%		$	2,115,896		$	1,970,804		7 %
Wood Products income			74,978			98,366		(24)%			575,167			531,235		8 %
Wood Products EBITDA 1			99,708			112,227		(11)%			648,475			586,484		11 %
Building Materials Distribution sales			1,443,780			1,645,513		(12)%			7,643,615			7,174,278		7 %
Building Materials Distribution income			92,455			137,963		(33)%			627,091			481,085		30 %
Building Materials Distribution EBITDA 1			99,396			144,221		(31)%			654,096			505,092		30 %
1 For reconciliations of non-GAAP measures, see summary notes at the end of this press release.

In fourth quarter 2022, total U.S. housing starts decreased 15%, driven by a decrease in single-family housing starts of 27% compared to the same period in 2021. For the full year 2022, total and single-family housing starts decreased 3% and 11%, respectively, compared to the same period in 2021. Single-family housing starts are the key demand driver for our sales.

Wood Products

Wood Products’ sales, including sales to Building Materials Distribution (BMD), decreased $21.0 million, or 5%, to $425.6 million for the three months ended December 31, 2022, from $446.6 million for the three months ended December 31, 2021. The decrease in sales was driven primarily by lower sales volumes for I-joists and LVL (collectively referred to as EWP). EWP volumes decreased due to a decline in housing starts and significant inventory destocking through the customer channel. These decreases were offset partially by higher EWP sales prices and higher plywood sales volumes. The increase in plywood sales volumes was due to our acquisition of Coastal Plywood and its plywood manufacturing operations on July 25, 2022 (the Acquisition). Wood Products’ segment income decreased $23.4 million to $75.0 million for the three months ended December 31, 2022, from $98.4 million for the three months ended December 31, 2021. The decrease in segment income was due primarily to lower EWP sales volumes and higher wood fiber costs and other manufacturing costs. In addition, the Acquisition was the primary driver of the increase in depreciation and amortization expense. These decreases in segment income were offset partially by higher EWP sales prices.

For the year ended December 31, 2022, sales, including sales to BMD, increased $145.1 million, or 7%, to $2,115.9 million from $1,970.8 million in 2021. The increase in sales was driven by higher EWP sales prices and higher plywood sales volumes. Plywood sales volumes increased due to the Acquisition. These increases were offset partially by lower plywood sales prices and EWP sales volumes. EWP volumes decreased due to a decline in housing starts and significant inventory destocking through the customer channel. Wood Products’ segment income increased $44.0 million to $575.2 million for the year ended December 31, 2022, from $531.2 million for the year ended December 31, 2021. The increase in segment income was due primarily to higher EWP sales prices. This increase in segment income was offset partially by lower plywood sales prices, lower EWP sales volumes, and higher wood fiber costs and other manufacturing costs. In addition, the Acquisition was the primary driver of the increase in depreciation and amortization and general and administrative expenses during 2022.

Comparative average net selling prices and sales volume changes for EWP and plywood are as follows:

		4Q 2022 vs. 4Q 2021		2022 vs. 2021
Average Net Selling Prices
LVL		32%		41%
I-joists		40%		44%
Plywood		(1)%		(14)%
Sales Volumes
LVL		(30)%		(3)%
I-joists		(55)%		(21)%
Plywood		29%		5%

Building Materials Distribution

BMD’s sales decreased $201.7 million, or 12%, to $1,443.8 million for the three months ended December 31, 2022, from $1,645.5 million for the three months ended December 31, 2021. Compared with the same quarter in the prior year, the overall decrease in sales was driven by a sales volume decrease of 14%, offset partially by sales price increases of 2%. By product line, commodity sales decreased 17%, general line product sales decreased 2%, and sales of EWP (substantially all of which are sourced through our Wood Products segment) decreased 19%. BMD segment income decreased $45.5 million to $92.5 million for the three months ended December 31, 2022, from $138.0 million in the comparative prior year quarter. The decrease in segment income was driven primarily by a gross margin decrease of $39.7 million, resulting from decreased sales volumes and declining commodity prices during fourth quarter 2022. In addition, selling and distribution expenses increased $3.6 million.

For the year ended December 31, 2022, sales increased $469.3 million, or 7%, to $7,643.6 million from $7,174.3 million in 2021. The increase in sales was driven by sales price increases of 11%, offset partially by a sales volume decrease of 4%. By product line, commodity sales decreased 7%, general line product sales increased 17%, and sales of EWP increased 28%. BMD segment income increased $146.0 million to $627.1 million for the year ended December 31, 2022, from $481.1 million for the year ended December 31, 2021. The increase in segment income was driven by a gross margin increase of $215.5 million, primarily related to improved margins across our EWP and general line products. The improvement was offset partially by increased selling and distribution expenses and general and administrative expenses of $56.8 million and $7.8 million, respectively.

Unallocated Corporate Costs

Unallocated corporate expenses increased $3.9 million to $44.4 million for the year ended December 31, 2022, from $40.5 million for the year ended December 31, 2021. The increase was due primarily to higher employee-related expenses, offset partially by lower self-insurance losses during 2022.

Balance Sheet and Liquidity

Boise Cascade ended fourth quarter 2022 with $998.3 million of cash and cash equivalents and $396.2 million of undrawn committed bank line availability, for total available liquidity of $1,394.5 million. The Company had $444.4 million of outstanding debt at December 31, 2022.

We expect capital expenditures in 2023 to total approximately $120 million to $140 million. Our 2023 capital expenditures range includes funding for greenfield distribution centers in South Carolina and Texas, which will allow us to better serve our customers in several high-growth markets, projects at our mills in the southeast to expand our EWP capacity, and the recently announced purchase of property to house an additional door shop assembly operation in Kansas City, Missouri. This level of capital expenditures could increase or decrease as a result of several 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 February 7, 2023, our board of directors declared a quarterly dividend of $0.15 per share on our common stock, payable on March 15, 2023, to stockholders of record on February 22, 2023.

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. While mortgage rates have declined from peak levels in late 2022 and home price increases have moderated, home affordability remains a challenge for consumers. The Federal Reserve’s upcoming actions in response to inflationary data and what impacts these actions have on mortgage rates and the broader economy will continue to influence the near-term demand environment. We expect a deceleration in housing starts, with various industry forecasts for 2023 single- and multi-family housing starts in the U.S generally ranging from 1.1 million to 1.3 million units, compared with actual housing starts of 1.55 million in 2022 and 1.60 million in 2021, as reported by the U.S. Census Bureau. As it relates to home improvement spending, the age of U.S. housing stock and elevated levels of homeowner equity provide a favorable backdrop for repair-and-remodel spending. While likely tempered by an economic slowdown, we anticipate the primary drivers of repair-and-remodeling activity to continue to be supportive of homeowners’ further investment in their residences.

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. We expect future commodity product pricing and commodity input costs to be volatile in response to economic uncertainties, industry operating rates, transportation constraints or disruptions, net import and export activity, inventory levels in various distribution channels, and seasonal demand patterns. In addition, we have experienced price erosion and reduced volumes on our EWP products due to slowing economic activity and decreased demand for new residential construction. As such, we have and will continue to manage our production levels to meet current and expected sales demand, which will result in operating some of our facilities below their capacity until demand improves.

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About Boise Cascade

Boise Cascade Company (NYSE: BCC) 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.

Contact:

Kelly Hibbs – Investor Relations Contact – (208) 384-3638

Source: Boise Cascade Company