Boise Cascade(US:BCC)2025-02-21 17:45Financial Data and Key Metrics Changes - The company reported full-year net income of $376.4 million or $9.57 per diluted share, with fourth quarter sales of $1.6 billion down 5% from the previous year [7][9] - Fourth quarter net income was $68.9 million or $1.78 per share, compared to $97.5 million or $2.44 per share in the year-ago quarter [9][10] - The decrease in earnings per share in the year-ago quarter was negatively impacted by approximately $0.18 per share from accelerated depreciation and transaction expenses [10] Business Line Data and Key Metrics Changes - Wood product sales in the fourth quarter, including distribution segment sales, were $419.7 million, down 7% compared to the fourth quarter of 2023 [11] - The Wood Products segment EBITDA was $56.6 million, down from $92.7 million in the prior year quarter, primarily due to lower EWP and plywood sales prices [11] - BMD sales in the quarter were $1.4 billion, down 4% from the fourth quarter of 2023, but reported segment EBITDA of $84.5 million, up from $80.6 million in the prior year quarter [12] Market Data and Key Metrics Changes - Total U.S. housing starts and single-family housing starts decreased 6% and 4% respectively compared to the prior year quarter [8] - Fourth quarter plywood sales volume was 371 million feet, with an average net sales price down 7% year-over-year but up 5% sequentially [15][16] - The company expects total U.S. housing starts to be around 1.35 million for 2025, essentially flat with 2024 levels [26] Company Strategy and Development Direction - The company is focused on capital investments to support its EWP growth strategy and has made significant progress in its distribution business through organic and acquisition initiatives [7][8] - Capital expenditures for 2024 were $230 million, with expectations for 2025 to be between $220 million and $240 million, including investments in EWP production capabilities [22] - The company aims for a balanced approach to capital allocation, including ongoing investments, organic growth projects, and returns to shareholders [23] Management's Comments on Operating Environment and Future Outlook - Management noted that affordability remains a key concern for builders, impacting home prices and the cost of money [62] - There is optimism about the medium to long-term housing fundamentals, despite short-term uncertainties related to the macro economy and policy decisions [27] - The company anticipates modest growth in home improvement spending in 2025 due to the aging U.S. housing stock and elevated homeowner equity [27] Other Important Information - The company paid $220 million in regular and special dividends in 2024, including a $5 per share special dividend [23] - The board approved a $0.21 per share quarterly dividend on common stock, with payment scheduled for March 9 [24] - The company repurchased approximately 1.75 million shares for about $225 million, with 1.6 million shares remaining available for repurchase [24] Q&A Session Summary Question: Impact of tariffs on EWP supply - Management acknowledged the uncertainty surrounding tariffs and their potential impact on supply and demand dynamics, particularly regarding affordability challenges [34][36] Question: EWP pricing and market equilibrium - Management indicated that while there is competition for share, the market is close to finding equilibrium, but modest price erosion is expected if demand remains stable [46][48] Question: Operating environment and builder sentiment - Builders are managing their operations cautiously due to affordability concerns, but there remains optimism about the long-term outlook for housing [62][66] Question: BMD margin performance - Management attributed the strong BMD margin in Q4 to warehouse sales and favorable commodity pricing, but expects erosion in Q1 due to declining sales pace [78][81] Question: Growth in LVL sales - The company reported an 11% increase in LVL sales volume, attributed to effective sales strategies and strong demand for beams and headers [82][85] Question: M&A opportunities - Management expressed interest in M&A opportunities, particularly on the distribution side, as seller expectations moderate [111][112]