Boise Cascade's (NYSE:BCC) Third Quarter 2023 Earnings Conference Call revealed a 15% decrease in consolidated sales to $1.8 billion from the previous year. The net income was reported at $143.1 million, or $3.58 per share, a drop from $219.6 million, or $5.52 per share, in the same period last year. Despite the decline, the company expressed confidence in its position and outlook for the remainder of the year, citing favorable long-term demand drivers for new residential construction and repair and remodeling activity.
Key takeaways from the call include:
- Wood Products sales were down, standing at $515.2 million compared to $595.3 million in Q3 2022.
- Building Materials Distribution (BMD) sales also decreased by 15% from the same period last year, totaling $1.7 billion.
- The company's outlook for 2023 U.S. housing starts is 1.4 million units, down from 1.55 million in 2022.
- Boise Cascade has successfully completed the acquisition of BROSCO, with integration efforts progressing satisfactorily.
- The company is actively seeking further acquisitions in the millwork business.
- Executives expressed confidence in the trend of Engineered Wood Products (EWP) adoption continuing into 2024, thanks to its quality, consistency, availability, and speed of construction.
- The company expects modest price erosion in the fourth quarter for EWP and does not see Open Web Trusses as a significant threat.
- Boise Cascade's go-forward maintenance CapEx is approximately $125 million, primarily focused on Wood Products.
- Share repurchases remain an option for capital allocation, depending on restrictions and other opportunities.
During the call, CEO Nate Jorgensen highlighted the successful acquisition of BROSCO and expressed appreciation for the company's employees. The company remains focused on executing their strategies and making investments to grow the business. They also provided updates on various strategic initiatives, such as door shop expansions and acquisitions.
While acknowledging potential risks related to volumes, demand, and commodity prices, the company noted that the dependence on out-of-warehouse support remains high, which can be a margin opportunity in a weaker demand environment. They also discussed wood products costs, mentioning that web stock costs are buffered by a rolling average and that log costs are relatively stable in the Southeastern United States while showing some fluctuations in the Pacific Northwest.
The company also discussed their expansion in the millwork business through the BROSCO acquisition and expressed optimism about future growth opportunities in that area. They mentioned that EWP plays a role in reducing cycle time on the job site and does not attribute the price erosion to seasonality but rather specific market-related factors. They do not expect significant price erosion going forward.
Finally, Boise Cascade mentioned that Open Web Trusses are gaining momentum in single-family construction, but they do not see significant share erosion in that area. They concluded the call by stating that share repurchases are still a potential option for capital allocation, depending on the company's opportunities and restrictions.
InvestingPro Insights
Boise Cascade Company (BCC) boasts several impressive financial indicators, as revealed by InvestingPro's real-time data. As of Q3 2023, the company's P/E Ratio stands at a low 7.44, indicating that the stock might be undervalued. The company's Revenue for the last twelve months as of Q3 2023 was reported at a substantial 6822.3M (NYSE:MMM) USD, despite a decrease in growth of -20.12%.
InvestingPro Tips also shed light on BCC's financial health. A noteworthy tip is that BCC holds more cash than debt on its balance sheet, indicating a strong financial position. Furthermore, the company's strong earnings should allow management to continue dividend payments, which is promising for investors seeking regular income. Lastly, BCC operates with a high return on assets, demonstrating efficient use of its resources.
InvestingPro offers a plethora of additional tips for BCC and other companies, providing valuable insights for investors looking to make informed decisions. These tips, along with real-time data, are part of the comprehensive package offered by InvestingPro, making it an invaluable tool for anyone interested in investing.
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