Boise Cascade(US:BCC)2022-08-02 21:17Financial Data and Key Metrics Changes - Consolidated second quarter sales were $2.3 billion, down 7% from the second quarter of 2021 [7] - Net income was $218.1 million or $5.49 per share, compared to $302.6 million or $7.63 per share in the prior year quarter [7] - Total U.S. housing starts increased 3% compared to the same period last year, with multifamily starts driving the increase [8] Business Line Data and Key Metrics Changes - Wood Products reported segment EBITDA of $167.8 million, down from $227.9 million in the year-ago quarter, impacted by lower plywood sales prices and higher per unit costs [8][10] - Building Materials Distribution (BMD) reported segment EBITDA of $161 million on sales of $2.1 billion, compared to $212.3 million on sales of $2.2 billion in the prior year quarter [8][11] - BMD sales were down 2% from the second quarter of 2021, driven by a sales volume decrease of 4% offset partially by a sales price increase of 2% [13] Market Data and Key Metrics Changes - Plywood sales volumes decreased to 281 million feet from 338 million feet in the second quarter of 2021, primarily due to downtime related to facility upgrades and staffing shortages [12] - Average plywood net sales price was $569 per 1000 feet, down 35% from the second quarter of 2021 and down 17% sequentially [12] Company Strategy and Development Direction - The company completed the acquisition of Coastal Plywood for $517 million, which is expected to enhance production capacity and support housing construction in the Southern and Eastern U.S. [18][19] - The acquisition is anticipated to be EPS accretive in 2022, with a mid-cycle EBITDA benefit of approximately $80 million once fully integrated [19][20] - The company plans to focus on integrating Coastal Plywood operations and expanding EWP production capacity [22] Management's Comments on Operating Environment and Future Outlook - The company expects a slowdown in new residential construction in the second half of 2022 due to home affordability constraints and a weakening economy [21] - Despite potential economic downturns, the company remains optimistic about long-term housing demand and plans to continue supporting growth through strategic investments [22][23] - Management highlighted the importance of managing inventory levels and maintaining margins in a potentially challenging economic environment [34][82] Other Important Information - The company finished the second quarter with $1 billion in cash and total available liquidity of approximately $1.4 billion [15] - A quarterly dividend of $0.12 per share was approved, along with a share repurchase program authorization for an additional 1.5 million shares [17] Q&A Session Summary Question: Sustainability of EWP pricing in a slowing macro environment - Management indicated that EWP pricing may come under pressure in the forthcoming quarters, but remains robust for the near term [26][27] Question: Trajectory of BMD margins in a stable pricing environment - Management noted that margins have held up well in July and expect some normalization but above historical levels as they continue to execute their strategy [28][29] Question: Supply-demand tension in distribution products - Management described a mixed bag in supply-demand dynamics, with some products still under tension while others are easing [36][37] Question: Labor issues and their impact - Labor availability remains challenging, particularly in manufacturing, with some improvement in applications but specific roles like truck drivers still difficult to fill [42][43] Question: Impact of Coastal acquisition on future capacity and operations - Management confirmed that the acquisition will enhance production capabilities and allow for better market positioning, particularly in EWP [48][56]