Boise Cascade Holdings swung into the red during the second quarter with a $9.9 million net loss, compared to a $4.3 million net income during the same period a year ago. Total sales at the company fell 9.5% to $589.4 million.
"Home sales and housing starts continued at or near all-time lows, and our second quarter 2011 operating results were negatively affected by depressed demand for the products we distribute and manufacture," said the company in its Security and Exchange Commission filing. "Low levels of residential construction activity translated into weak sales volumes."
The company's building materials distribution segment, which is run under the Boise Cascade, LLC subsidiary, saw sales fall 8.6% to $470.7 million and posted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $3.4 million, down 62.6% compared to the same time last year. The wood products segment, which includes engineered wood, suffered an 8.5% decline in sales to $182.4 million. The segment posted a 69.8% decrease in EBITDA to finish at $4.5 million.
Overall, Boise Cascade Holdings posted a $5.4 million operating loss, a huge swing from the $10.6 million operating profit the company posted during last year's second quarter. Costs for materials, labor, and other operating expenses fell 7.8% to $514.2 million.
During the quarter, the company entered into a new credit agreement with Wells Fargo Capital Finance which will expand its revolving credit facility to $250 million, an $80 million increase over its old agreement with Bank of America.
"For the remainder of 2011, we expect the demand for new residential construction to remain depressed, as excess housing inventory levels, a weak labor market, competition from distressed home sales, and restrictive lending conditions for both home buyers and builders persist," said the company.
The company said the continued weakness of the residential construction market will likely cause it to operate below capacity and manage production levels more closely.