Boise Cascade Holdings (BC) plunged to a $19 million net loss in the first quarter from an $11.4 million profit in the 2010's opening period, the company announced today. The loss comes despite a $1 million increase in net sales to $478.8 million. It's the fourth consecutive quarter that the lumber manufacturer and building material distributor has been in the red. Loss from operations also deepened by more than $4 million from the first quarter of 2010 to reach $14.8 million.
The Boise, Idaho-based company said its earnings before interest, taxes, depreciation and amortization (EBITDA) deepened to a negative $5.6 million from a negative $1.8 million a year ago. Total costs jumped just $200,000 to $498 million, although materials, labor, and other operating expenses dropped by more than $3 million to $422.8 million.
The building materials distribution segment's net sale declined 3% to $377.8 million and finished the quarter with negative EBITDA of $2.5 million. Segment prices were up about 3%, while volumes were down almost 6% during the quarter.
BC's wood products segment finished with a negative EBITDA of $500,000 on $154.9 million in sales, up 5% increase from the same period a year ago. The company said increased plywood prices and volumes, higher lumber volumes, and higher byproduct chip sales helped drive the sales increase. Engineered wood product prices were up almost 8%, but were offset by lower sales volumes.
The company cited a number of reasons for the poor performance, including a low new construction numbers and harsh weather.
"New residential construction activity was abysmal in the first few months of 2011, as a number of major market areas in the U.S. contended with the ongoing overhang of distressed housing inventory, exceptionally harsh winter weather, or both," said CEO Tom Carlile. "March sales improved in a number of our key markets, but we remain concerned about the overall new residential construction environment and the prospects for a meaningful recovery in housing starts this year."
The company predicted more below-average performance in the coming quarters due to the poor state of the residential construction industry as well as the excess number of houses already built and on the market. The company also cautioned that commodity wood product prices could become volatile due to overproduction and the amount of inventory already available. Therefore, the company plans to operate based on demand for its products, which will cause it to operate most facilities below capacity.