A 25% increase in sales enabled Boise Cascade Holdings LLC (BC) to swing to an operating profit of $10.6 in the second quarter from a $15.7 million loss in the year-earlier period, but net income slid to $4.3 million from $9.3 million, the manufacturer and distributor of lumber reported today.
Total sales jumped to $651.5 million from $521.2 million in April through June 2009, while expenses climbed 19.4% to $640.9 million. The resulting $25 million difference in operating profit nearly made up for the $30.3 million worth of Boise Inc. stock that Boise Cascade sold in last year's second quarter but didn't sell this year; BC sold the last of its Boise Inc. shares in the first quarter of this year. EBITDA--earnings before intest, taxes, depreciation, and amortization--swung to a positive $18.8 million from a negative $3.5 million last year.
"U.S. pricing for lumber, plywood, and a number of other commodity wood products moved up sharply early in the second quarter in response to constrained inventory levels and supply curtailments, as well as a disruption in imports," the Boise, Idaho-based company said in a statement. "However, without strong underlying end-product demand, the pricing strength quickly abated mid-second quarter, with a number of key commodity product prices approaching levels seen at the beginning of the year. Absent a decline in unemployment, stronger household formation, and a reduction in foreclosures, we expect to continue to experience below normal demand for the products we distribute and manufacture. Industry commodity wood product prices will be volatile in response to operating rates and inventory levels in various distribution channels."
The building materials distribution segment's income slipped by $300,000 from a year earlier to total $7.3 million despite a 19% increase in sales to $515.4 million. EBITDA slipped to $9.1 million from $9.6 million in 2009's second quarter. "The decrease in income was driven by increased occupancy related expenses at the building materials distribution facilities we added or expanded in the last year, and a 1.1% decrease in gross margin, which was due primarily to lower of cost or market adjustments recorded as a result of the steep decline in commodity product prices during second quarter 2010," the company said. Facility additions and expansions in the past year caused selling and distribution expenses to rise 10%, it noted.
Average net selling prices in the building materials distribution segment rose 23% from where they stood in 2009's second quarter. Commodities accounts for half of all sales revenue, up from 44% a year before, while engineered wood's share held steady at 11% and general line accounted for 39% of sales, down from 45%.
Meanwhile, the wood products segment's income more than tripled to $27.4 million from a year-earlier $8.2 million on a 48% increase in sales to $199.4 million. EBITDA swung to a positive $14.9 million from a negative $9.8 million. Higher prices helped--plywood prices increased 38% from the prior year and lumber prices were up 49%--but increased shipments also played a role. The volume of laminated veneer lumber climbed by about a third to 1.9 million cubit feet, and I-joist output grew by nearly half to 32 million lineal feet. Meanwhile, plywood volume (3/8-inch basis) increased 14% to 279 million square feet, and lumber volume increased 11% to 39 million board feet. Shipments of particleboard (3/4-inch basis) slipped nearly 5% to 20 million square feet.