Boise Cascade(BCC) - 2025 Q2 - Quarterly Results

Q2 2025 Financial & Operational Overview Consolidated Financial Highlights Boise Cascade's Q2 2025 profitability significantly declined, with net income falling 45% to $62.0 million and sales dropping 3% to $1.7 billion | Metric | 2Q 2025 | 2Q 2024 | % Change | | :--- | :--- | :--- | :--- | | Sales | $1,740.1M | $1,797.7M | (3)% | | Net Income | $62.0M | $112.3M | (45)% | | Diluted EPS | $1.64 | $2.84 | (42)% | | Adjusted EBITDA | $119.0M | $181.2M | (34)% | Management Commentary & Market Context Management noted subdued new residential construction demand and completed the Oakdale mill modernization, as U.S. housing starts declined - CEO Nate Jorgensen highlighted that underlying demand for new residential construction was muted, despite seasonal volume growth[2] - The completion of the Oakdale plywood mill modernization project is a key milestone expected to improve operational efficiency and strengthen veneer production capabilities[2] Housing Starts (2Q 2025 vs 2Q 2024) | Housing Starts (2Q 2025 vs 2Q 2024) | % Change | | :--- | :--- | | Total U.S. Housing Starts | (1)% | | Single-Family Housing Starts | (8)% | Segment Performance Analysis Wood Products The Wood Products segment experienced a significant Q2 2025 downturn, with sales down 9% to $447.2 million and income down 81% to $14.0 million - Segment income fell sharply by $58.8 million, driven by lower EWP and plywood sales prices and higher per-unit conversion costs from the Oakdale mill downtime[5] Price & Volume Changes (2Q 2025 vs. 2Q 2024) | Price & Volume Changes | 2Q 2025 vs. 2Q 2024 | | :--- | :--- | | Average Net Selling Prices | | | LVL | (10)% | | I-joists | (8)% | | Plywood | (6)% | | Sales Volumes | | | LVL | 8% | | I-joists | (5)% | | Plywood | (7)% | Building Materials Distribution (BMD) The Building Materials Distribution segment saw Q2 2025 sales decrease 2% to $1.61 billion and income decrease 9% to $78.0 million, mainly due to higher expenses - By product line, commodity sales fell 5%, general line product sales grew 4%, and EWP sales dropped 12% compared to Q2 2024[7] - The decrease in segment income was primarily driven by higher selling and distribution expenses, which more than offset an increase in gross margin from general line products[7] Financial Position and Capital Allocation Balance Sheet and Liquidity As of June 30, 2025, Boise Cascade maintained strong liquidity of $876.2 million, with $481.0 million in cash and $450.0 million in outstanding debt Liquidity Position (as of June 30, 2025) | Liquidity Position (as of June 30, 2025) | Amount | | :--- | :--- | | Cash and cash equivalents | $481.0 million | | Undrawn committed bank line | $395.2 million | | Total available liquidity | $876.2 million | | Outstanding debt | $450.0 million | Capital Allocation The company plans 2025 capital expenditures of $220-240 million and returned capital via $18.4 million in dividends and $86.0 million in share repurchases in H1 2025 - Projected capital expenditures for 2025 are estimated to be between $220 million and $240 million[9] - A quarterly dividend of $0.22 per share was declared, payable on September 17, 2025[10] - The company repurchased 837,352 shares for $86.0 million in the first six months of 2025 and an additional 117,000 shares for approximately $10 million in July 2025[11] Business Outlook Market Outlook Near-term demand is expected to be soft due to affordability and sentiment, while long-term residential construction fundamentals remain strong due to undersupply and aging stock - Near-term demand is expected to be soft due to factors like mortgage rates, home affordability, and cautious consumer sentiment[12] - Long-term demand drivers for residential construction, such as housing undersupply and an aging U.S. housing stock, remain robust[12] Business Outlook Boise Cascade anticipates dynamic commodity pricing and distribution margin pressure, with 2025 production and inventory guided by end-market demand and customer decisions - Future product pricing, especially for commodities like plywood, is expected to remain dynamic and subject to market fluctuations[13] - Production and inventory strategies for the rest of 2025 will be responsive to end-market demand and customer inventory levels[13] Financial Statements Consolidated Statements of Operations For Q2 2025, Boise Cascade's sales decreased to $1.74 billion, with income from operations falling to $80.5 million and net income declining to $62.0 million Consolidated Statements of Operations | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Sales (in millions) | $1,740.1 | $1,797.7 | | Income from operations (in millions) | $80.5 | $147.0 | | Net income (in millions) | $62.0 | $112.3 | | Diluted EPS | $1.64 | $2.84 | Segment Statements of Operations In Q2 2025, Wood Products' income margin significantly compressed to 3.1% from 14.9%, and Building Materials Distribution's income margin slightly decreased to 4.8% from 5.2% Segment Income (Q2 2025 vs Q2 2024) | Segment Income (Q2 2025 vs Q2 2024) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Wood Products | | | | Segment Sales | $447.2M | $489.8M | | Segment Income | $14.0M | $72.8M | | Building Materials Distribution | | | | Segment Sales | $1,614.9M | $1,655.2M | | Segment Income | $78.0M | $85.4M | Consolidated Balance Sheets As of June 30, 2025, total assets increased slightly to $3.45 billion, driven by higher receivables and inventories, while cash decreased to $481.0 million Consolidated Balance Sheets | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents (in millions) | $481.0 | $713.3 | | Inventories (in millions) | $919.0 | $803.3 | | Total current assets (in millions) | $1,911.1 | $1,886.1 | | Total assets (in millions) | $3,445.5 | $3,369.4 | | Long-term debt, net (in millions) | $444.9 | $446.2 | | Total stockholders' equity (in millions) | $2,152.1 | $2,151.3 | Consolidated Statements of Cash Flows For H1 2025, net cash from operations significantly declined to $4.7 million, leading to a $232.2 million net cash decrease due to increased investment and financing outflows Consolidated Statements of Cash Flows | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operations (in millions) | $4.7 | $169.2 | | Net cash used for investment (in millions) | ($122.1) | ($76.7) | | Net cash used for financing (in millions) | ($114.8) | ($120.0) | | Net decrease in cash (in millions) | ($232.2) | ($27.5) | Non-GAAP Financial Measures Definition and Use of Non-GAAP Measures The company uses non-GAAP measures like EBITDA and Adjusted EBITDA to assess recurring operating performance, with EBITDA defined as income before interest, taxes, depreciation, and amortization - The company uses EBITDA, Adjusted EBITDA, and Segment EBITDA as supplemental measures to evaluate recurring operating performance, which are not presented in accordance with GAAP[17] - Management acknowledges limitations of these non-GAAP measures, such as the exclusion of interest, taxes, and depreciation, and compensates by also relying on GAAP results[18] Reconciliation of Non-GAAP Measures In Q2 2025, net income of $62.0 million reconciled to Adjusted EBITDA of $119.0 million, compared to $112.3 million and $181.2 million in Q2 2024, with segment EBITDA also presented Reconciliation | Reconciliation | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income (in millions) | $62.0 | $112.3 | | (+) Interest, Taxes, D&A (in millions) | $56.6 | $68.4 | | EBITDA (in millions) | $118.6 | $180.7 | | (+) Change in fair value of interest rate swaps (in millions) | $0.4 | $0.5 | | Adjusted EBITDA (in millions) | $119.0 | $181.2 | Segment EBITDA | Segment EBITDA | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Wood Products (in millions) | $37.3 | $95.1 | | Building Materials Distribution (in millions) | $91.8 | $97.1 |