Boise Cascade(BCC)2024-02-21 22:06Financial Data and Key Metrics Changes - For the full year 2023, the company reported net income of $483.7 million or $12.12 per diluted share on sales of $6.8 billion [4] - Fourth quarter sales were $1.6 billion, up 1% from the fourth quarter of 2022, while net income was $97.5 million or $2.44 per share, down from $117.4 million or $2.95 per share in the prior year quarter [5] - The fourth quarter results included $6.2 million of pretax accelerated depreciation and approximately $3 million of transaction expenses related to the BROSCO acquisition [5][7] Business Line Data and Key Metrics Changes - Wood Products sales in the fourth quarter were $449.7 million, up from $425.6 million in the same quarter of 2022, with segment EBITDA of $92.7 million, down from $99.7 million [7] - Building Materials Distribution (BMD) sales were $1.5 billion, up 3% from the fourth quarter of 2022, with segment EBITDA of $80.6 million, down from $99.4 million [8][11] - Fourth quarter volumes for I-joists and LVL were up 79% and 29% respectively, driven by improved single-family housing starts [9] Market Data and Key Metrics Changes - Total U.S. housing starts increased by 4%, with single-family housing starts up 23% compared to the prior year quarter [4] - Plywood sales volumes in Wood Products decreased to 363 million feet from 393 million feet in the fourth quarter of 2022, with average net sales price down 5% year-over-year [10] Company Strategy and Development Direction - The company is focused on executing its growth strategy through organic and acquisition initiatives, with a balanced approach to capital allocation [5][15] - The 2024 capital expenditure plan includes significant investments in both Wood Products and BMD, with a total expected range of $250 million to $270 million [14][15] - The company aims to maintain a strong balance sheet while investing in existing assets and organic growth projects, with potential for M&A opportunities [15][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the housing market, noting that new residential construction is expected to remain a key supply source for homebuyers despite challenges in home affordability [16][17] - The company anticipates continued robust home improvement spending due to the age of U.S. housing stock and elevated homeowner equity, although mid-single declines are projected for 2024 [17] - Management highlighted the importance of maintaining high service levels and inventory to meet demand during peak building seasons [32][35] Other Important Information - The company paid $346 million in dividends and completed $6.4 million in share repurchases in 2023, with a quarterly dividend of $0.20 per share recently approved [15][60] - Management acknowledged the upcoming retirements of key leadership team members and expressed confidence in the succession plans [19] Q&A Session Summary Question: EWP capacity and competitive positioning - Management discussed the capacity additions from the Coastal acquisition and emphasized their high level of veneer self-sufficiency, which positions them well in the market [22][24] Question: Share shifts in EWP categories - Management noted changes in demand dynamics during the pandemic and highlighted the favorable position of I-joists due to ease of installation and transportation [25][27] Question: Impact of builder preferences on capacity - Management explained that while the absolute level of starts is important, the penetration of I-joists and LVL into those starts is also crucial for growth [30][32] Question: General line performance and margin stability - Management indicated that investments in general line products have led to higher-margin growth, and they expect normalized margins to be better than pre-pandemic levels [46][48] Question: Pricing pressures in EWP - Management acknowledged ongoing pricing pressures in certain geographies but emphasized their strategy to maintain value through service and product offerings [61][63]