Boise Cascade (BC) Holdings' wood products group recorded negative EBITDA of $9.4 million in the fourth quarter, sharply lower than its $24.7 million loss in the previous year, while BC's building materials distribution unit swung to a $1 million profit from a year-earlier $2.9 million loss, the company reported late Monday.
The improvement in EBITDA (earnings before interest, taxes, depreciation, and amortization) came even though sales in the wood products group fell 12.4% to $136.8 million and sales in the buildings materials distribution group slid 10.3% to $368.9 million. For wood products, the decline in the EBITDA loss "occurred in the face of lower average prices for our key manufactured products," BC said in a statement. "Plywood and EWP [engineered wood products] prices were down 5% and 4%, respectively, compared to fourth quarter 2008." Meanwhile, building products distribution owed its return to the black to improved gross margins as well as cost reductions and operations improvements.
"We expect 2010 end-product demand to remain weak when compared to normal historical demand levels," BC said. "However, most economists and building products industry forecasters do expect 2010 demand for new residential construction to show modest improvement from the record low levels experienced in 2009. Absent a change in unemployment trends, stronger levels of consumer confidence, and a reduction in foreclosures, we will continue to have weak demand for the products we distribute and manufacture.
"Industry product sales volumes are likely to remain depressed and commodity wood product prices will largely depend on operating rates," the company added. "We expect to manage our production levels to our sales demand, which will likely cause us to operate our facilities below their capacity."
Company-wide, BC recorded net income of $33.6 million in the fourth quarter, but that included a $41.8 million gain on the sale of Boise Inc. shares and $18.2 million in noncash income related to BC's remaining stockholdings in Boise Inc. BC sold off its paper and transportation businesses in February 2008; the spinoff became Boise Inc. It posted a company-wide EBITDA loss of $12.4 million for the quarter, down from a $31.5 million loss in the final three months of 2008.
For all 2009, the wood products group recorded an EBITDA loss of $44.3 million vs. a $27.4 million loss in 2008, while the building material distribution shrunk to an EBITDA profit of $15.5 million in 2008 from a year-earlier $27.2 million.