Boise Cascade Q3 profits surge
Boise battled lower sales volume and prices in the third quarter.
Boise Cascade Company reported third quarter 2019 sales slipped 5% to $1.3 billion compared to sales of $1.3 billion in the third quarter 2018.
But the Boise, Idaho-based company posted a third quarter net income of $27.2 million, nearly doubling profits of $13.8 million for the same period a year ago. The third quarter of 2019 included $1 million of after-tax losses while the third quarter of 2018 included $16.7 million of net after-tax losses.
Boise’s wood products sales, including sales to Building Materials Distribution (BMD), decreased $77.6 million, or 19%, to $325.1 million for the quarter, from sales $402.7 million for the third quarter 2018. The decline in sales was driven primarily by lower sales prices and sales volumes for plywood. The lower sales volume for plywood was mostly due to weaker market conditions and downtime for facility capital improvements, as well as the sale of the Moncure plywood facility on March 1, the company said.
The decrease in sales was also attributable to lower sales volumes of lumber and particleboard due to the sale or closure of three lumber mills and Boise’s particleboard plant during 2018. Approximately one-third of the decrease in Wood Products sales is attributable to these facility sales or closures, Boise reported. The decreases were offset partially by increases in sales volumes and net sale prices for laminated veneer lumber (LVL).
BMD’s sales decreased 1% to $1.15 billion for the quarter. Compared with the same quarter in the prior year, the overall decrease in sales was driven by a sales price decrease of 11%, offset partially by a sales volume increase of 10%.
The bottom line: Sales fall 5% at Boise Cascade as the company battles lower sales prices and lower sales volume.
What the CEO said: “Despite the lack of growth in residential construction and ongoing weakness in commodity wood products pricing that has persisted this year, both of our businesses continue to execute well. BMD delivered outstanding financial results during the third quarter, with solid growth in general line product sales and gross margins. With the operating footprint changes made during the last year, our favorable performance in EWP is more evident in Wood Products’ results. The stability of EWP, together with input cost improvements, mitigated the overall earnings impact of the significant year-over-year decline in plywood pricing,” said Tom Corrick, CEO of Boise Cascade. “Our operating results have positioned us to comfortably fund our bolt-on acquisitions and internal growth initiatives while strengthening our balance sheet.”
Company info: The full third quarter 2019 report from Boise Cascade can be read here.
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