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01/11 04:03
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals disappointing financial results with declining net income, EPS, and sales. Although there is some optimism in BMD margins and shareholder returns, the Q&A indicates uncertainties around tariffs and competitive pressures. The management's vague responses to key questions further contribute to a negative sentiment. Given the company's market cap, these factors are likely to result in a stock price decline of -2% to -8%.
Net Income $68.9 million, down from $97.5 million (down 29% year-over-year). The decrease was attributed to lower sales and the prior year’s earnings being negatively impacted by accelerated depreciation and transaction expenses.
Earnings Per Share (EPS) $1.78 per share, down from $2.44 per share (down 27% year-over-year). This decline is linked to the overall decrease in net income.
Consolidated Sales $1.6 billion, down 5% from the fourth quarter of 2023. The decline was primarily due to decreased housing starts.
Wood Products Sales $419.7 million, down 7% compared to the fourth quarter of 2023. The decrease was mainly due to lower EWP and plywood sales prices.
Wood Products Segment EBITDA $56.6 million, down from $92.7 million (down 39% year-over-year). The decrease was primarily due to lower sales prices.
BMD Sales $1.4 billion, down 4% from the fourth quarter of 2023. This decline was driven by a decrease in commodity sales and EWP sales.
BMD Segment EBITDA $84.5 million, up from $80.6 million (up 2% year-over-year). The increase was due to a 60 basis point increase in gross margin percentage and a decrease in general administrative expenses.
BMD Gross Margin Percentage 15.8%, up 60 basis points year-over-year. This improvement was supported by a favorable commodity inventory position and strengthening commodity markets.
Plywood Sales Volume 371 million feet, up from 363 million feet in the fourth quarter of 2023. The increase in volume was despite a decrease in average sales price.
Average Plywood Net Sales Price $354, down 7% year-over-year. However, prices were up 5% sequentially.
Capital Expenditures $230 million in 2024. This includes investments in EWP production capabilities and distribution centers.
Shareholder Returns $220 million in dividends, including a $5 per share special dividend. Additionally, $225 million was spent on share repurchases.
EWP Production Capabilities: Significant capital investments made to support EWP growth strategy, including adding I-joist production at Thorsby, Alabama facility.
Plywood Modernization Projects: Modernization projects at Oakdale facility progressing well, expected to operate at 50% capacity in Q2 2025.
U.S. Housing Starts Forecast: Current industry forecasts for total U.S. housing starts are around 1.35 million for 2025, flat with 2024 levels.
Single-Family Housing Starts: Single-family housing starts in 2024 outpaced 2023 levels by 7% and are expected to remain around 1 million in 2025.
Multifamily Starts: Multifamily starts are expected to continue facing headwinds in 2025 due to high capital costs and elevated completions.
Capital Expenditures: Capital expenditures of $230 million in 2024, expected to be between $220 million and $240 million in 2025.
Shareholder Returns: Paid $220 million in dividends in 2024, including a $5 per share special dividend.
Leadership Changes: Promotions of Jeff Strom to COO and Joe Barney, part of strategic succession planning.
Housing Market Risks: Total U.S. housing starts decreased by 6% and single-family housing starts decreased by 4% compared to the prior year, indicating a potential slowdown in demand.
Competitive Pressures: Competition for market share is prevalent, with sequential pricing for LVL and I-joists down 2% and 1% respectively, reflecting increased competitive pressures.
Supply Chain Challenges: Weather-related unplanned downtimes across manufacturing and distribution locations have negatively impacted operations.
Regulatory and Economic Factors: Uncertainties around the macro economy and policy decisions from the new administration create challenges in predicting near-term demand.
Capital Expenditure Risks: Significant capital expenditures of $230 million in 2024 and expected spending of $220 million to $240 million in 2025 may pose financial risks if returns do not meet expectations.
Plywood Production Risks: Modernization projects at the Oakdale facility will result in downtime, negatively impacting plywood volumes and incurring approximately $7 million in costs.
Market Demand Uncertainty: Forecasts for total U.S. housing starts in 2025 are flat compared to 2024, with multifamily starts facing headwinds due to high capital costs and elevated completions.
Capital Expenditures: In 2024, Boise Cascade had capital expenditures of $230 million, with expectations for 2025 to be between $220 million and $240 million. This includes investments in EWP production capabilities and modernization projects.
Shareholder Returns: In 2024, the company paid $220 million in dividends, including a special dividend of $5 per share. A quarterly dividend of $0.21 per share was also approved.
Share Repurchase Program: Approximately 1.75 million shares (4.5% of outstanding shares) were repurchased for about $225 million, with 1.6 million shares remaining available for repurchase.
Strategic Succession Planning: Promotions of Jeff Strom and Joe Barney were part of the strategic succession planning process to position the company for future growth.
2025 Housing Starts: Current forecasts for total U.S. housing starts in 2025 are around 1.35 million, flat compared to 2024. Single-family starts are expected to remain around 1 million.
Home Improvement Spending: Modest growth in home improvement spending is expected in 2025 due to factors like aging housing stock and homeowner equity.
EWP Volumes and Pricing: EWP volumes are expected to increase modestly in Q1 2025, with low single-digit sequential declines in pricing.
Plywood Volumes and Pricing: Plywood volumes are expected to decline mid to high single digits sequentially in Q1 2025, with pricing approximately 3% below Q4 averages.
Regular Dividends: $0.82 per share in regular quarterly dividends.
Special Dividends: $5 per share special dividend.
Total Dividends Paid: $220 million in regular and special dividends.
Upcoming Dividend: $0.21 per share quarterly dividend approved, payable on March 9th.
Share Repurchase: Approximately 1.75 million shares or 4.5% of outstanding shares repurchased for approximately $225 million.
Remaining Shares for Repurchase: About 1.6 million shares available for repurchase under the share repurchase program.
The earnings call presents a mixed outlook. While there are positive elements, such as growth opportunities in multifamily and strong partnerships, there are concerns about seasonal slowdowns, operational inefficiencies, and unclear guidance on certain key metrics. The stable financial performance and strategic focus on expansion and partnerships are offset by challenges in maintaining margins and uncertainties in specific segments, resulting in a neutral sentiment. Given the company's market cap of $4.68 billion, the stock is likely to show limited movement, staying within the -2% to 2% range over the next two weeks.
The earnings call reflects mixed signals: while there are positive aspects like LVL volume growth and strong general line product performance, there are concerns with declining EWP pricing, plywood sales, and lower EBITDA margins. The Q&A section highlights competitive challenges and uncertain demand, with management not providing clear guidance on wallet share gains. The market cap suggests moderate sensitivity to these factors. Overall, the mixed performance and lack of strong guidance or new partnerships lead to a neutral sentiment, expecting minimal stock price movement in the short term.
The earnings call revealed a decline in financial performance, with significant drops in sales, net income, and EBITDA across segments. The Q&A highlighted competitive pressures and lack of clarity on future M&A opportunities. Although there are some positives like the Oakdale project's progress and improved daily sales, the overall sentiment is negative due to weak financial results and guidance, coupled with uncertainties in pricing and margins. Given the company's market cap, the stock is likely to experience a negative reaction in the range of -2% to -8% over the next two weeks.
The earnings call reveals disappointing financial results with declining net income, EPS, and sales. Although there is some optimism in BMD margins and shareholder returns, the Q&A indicates uncertainties around tariffs and competitive pressures. The management's vague responses to key questions further contribute to a negative sentiment. Given the company's market cap, these factors are likely to result in a stock price decline of -2% to -8%.
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