Business Wire | Oct 30, 2020 04:05PM EDT

Boise Cascade Company Reports Third Quarter 2020 Results

Oct. 30, 2020

BOISE, Idaho--(BUSINESS WIRE)--Oct. 30, 2020--Boise Cascade Company ("Boise Cascade," the "Company," "we," or "our") (NYSE: BCC) today reported net income of $103.2 million, or $2.61 per share, on sales of $1.6 billion for the third quarter ended September 30, 2020, compared with net income of $27.2 million, or $0.69 per share, on sales of $1.3 billion for the third quarter ended September 30, 2019. Third quarter 2020 results include a $10.5 million after-tax loss on extinguishment of debt, or $0.27 per share, as the Company refinanced its senior notes at a lower interest rate with an extended maturity. Third quarter 2019 results include $1.0 million of after-tax losses, or $0.03 per share, from a non-cash pension settlement charge.

"Extraordinary market conditions, along with great execution by both of our businesses, helped us deliver outstanding results in the third quarter. Financial results aside, I am proud that associates across our organization continue to effectively adapt to challenges brought about by the pandemic without losing focus on our core value of safety. It has also been inspiring to witness our teams in Louisiana and Oregon caring for each other and their communities in response to the gulf coast hurricanes and the catastrophic fires in the Pacific Northwest," commented Nate Jorgensen, CEO. "We look to the future with optimism, as our balance sheet provides us the flexibility to pursue organic and acquisition growth opportunities in support of our customers and suppliers. Together with our Board of Directors, we took action to return a portion of our higher than targeted cash balance to our shareholders through our recently announced supplemental dividend."

Third Quarter 2020 Highlights

3Q 2020 3Q 2019 % change

(in thousands, except per-share data and

percentages)

Consolidated Results

Sales $ 1,589,313 $ 1,269,524 25 %

Net income 103,192 27,171 280 %

Net income per common share - diluted 2.61 0.69 278 %

Adjusted EBITDA ^1 178,564 64,054 179 %

Segment Results

Wood Products sales $ 363,674 $ 325,102 12 %

Wood Products income 66,035 15,597 323 %

Wood Products EBITDA ^1 79,973 30,849 159 %

Building Materials Distribution sales 1,437,683 1,145,621 25 %

Building Materials Distribution income 107,901 38,665 179 %

Building Materials Distribution EBITDA 113,587 43,943 158 %^1

1

For reconciliations of non-GAAP measures, see summary notes at the end of this press release.

In response to rapidly evolving market conditions and economic uncertainties surrounding the impact of COVID-19, and various restrictions that limited residential construction activity, our Wood Products segment and many other producers in our industry reduced production levels early in the second quarter. In addition, many companies involved in the manufacture and distribution of building materials dramatically reduced inventory levels in late first quarter and early second quarter in response to falling commodity wood products prices and future demand uncertainty. As restrictions were loosened or rescinded, construction activity resumed mid-second quarter and continued at a robust pace through the third quarter. Across commodity product lines, product demand in the third quarter exceeded supply, and producers struggled to restore capacity because of COVID-19 related disruptions and natural disasters, causing significant increases in commodity products prices. Our BMD warehouse sales were strong throughout the third quarter as our retail lumberyard customers are relying on our broad base of inventory and high service levels to minimize their working capital investment given COVID-19 related uncertainties and historically high commodity product prices. In addition, we have had strong demand from our home center customers in response to elevated repair and remodel and "do-it-yourself" activity as people are spending more time at home during the pandemic.

In the third quarter 2020, total U.S. housing starts increased 11% compared to the same period last year. Single-family housing starts, the primary driver of our sales volumes, also increased 17%. On a year-to-date basis through September 2020, total and single-family housing starts increased 5% and 6%, respectively, compared with the same period in 2019.

Wood Products

Wood Products' sales, including sales to Building Materials Distribution (BMD), increased $38.6 million, or 12%, to $363.7 million for the three months ended September 30, 2020, from $325.1 million for the three months ended September 30, 2019. The increase in sales was driven primarily by higher plywood prices and higher sales volumes for I-joists. Demand for plywood in third quarter 2020 far outpaced industry production levels, driving the sharp increase in pricing. These increases were offset partially by lower sales volumes for plywood and LVL, as well as decreased net sales prices for LVL and I-joists (collectively referred to as EWP).

Wood Products' segment income increased $50.4 million to $66.0 million for the three months ended September 30, 2020, from $15.6 million for the three months ended September 30, 2019. The increase in segment income was due primarily to higher plywood sales prices, offset partially by higher wood fiber costs, as well as lower net sales prices of EWP. In addition, selling and distribution expenses and general and administrative expenses increased $2.0 million and $1.7 million, respectively.

Comparative average net selling prices and sales volume changes for EWP and plywood are as follows:

^1 For reconciliations of non-GAAP measures, see summary notes at the end of this press release.

In response to rapidly evolving market conditions and economic uncertainties surrounding the impact of COVID-19, and various restrictions that limited residential construction activity, our Wood Products segment and many other producers in our industry reduced production levels early in the second quarter. In addition, many companies involved in the manufacture and distribution of building materials dramatically reduced inventory levels in late first quarter and early second quarter in response to falling commodity wood products prices and future demand uncertainty. As restrictions were loosened or rescinded, construction activity resumed mid-second quarter and continued at a robust pace through the third quarter. Across commodity product lines, product demand in the third quarter exceeded supply, and producers struggled to restore capacity because of COVID-19 related disruptions and natural disasters, causing significant increases in commodity products prices. Our BMD warehouse sales were strong throughout the third quarter as our retail lumberyard customers are relying on our broad base of inventory and high service levels to minimize their working capital investment given COVID-19 related uncertainties and historically high commodity product prices. In addition, we have had strong demand from our home center customers in response to elevated repair and remodel and "do-it-yourself" activity as people are spending more time at home during the pandemic.

In the third quarter 2020, total U.S. housing starts increased 11% compared to the same period last year. Single-family housing starts, the primary driver of our sales volumes, also increased 17%. On a year-to-date basis through September 2020, total and single-family housing starts increased 5% and 6%, respectively, compared with the same period in 2019.

Wood Products

Wood Products' sales, including sales to Building Materials Distribution (BMD), increased $38.6 million, or 12%, to $363.7 million for the three months ended September 30, 2020, from $325.1 million for the three months ended September 30, 2019. The increase in sales was driven primarily by higher plywood prices and higher sales volumes for I-joists. Demand for plywood in third quarter 2020 far outpaced industry production levels, driving the sharp increase in pricing. These increases were offset partially by lower sales volumes for plywood and LVL, as well as decreased net sales prices for LVL and I-joists (collectively referred to as EWP).

Wood Products' segment income increased $50.4 million to $66.0 million for the three months ended September 30, 2020, from $15.6 million for the three months ended September 30, 2019. The increase in segment income was due primarily to higher plywood sales prices, offset partially by higher wood fiber costs, as well as lower net sales prices of EWP. In addition, selling and distribution expenses and general and administrative expenses increased $2.0 million and $1.7 million, respectively.

Comparative average net selling prices and sales volume changes for EWP and plywood are as follows:

3Q 2020 vs. 3Q 2019 3Q 2020 vs. 2Q 2020



Average Net Selling Prices

LVL (2)% (1)%

I-joists (2)% (2)%

Plywood 69% 49%

Sales Volumes

LVL (2)% 19%

I-joists 5% 27%

Plywood (8)% 1%

Building Materials Distribution

BMD's sales increased $292.1 million, or 25%, to $1,437.7 million for the three months ended September 30, 2020, from $1,145.6 million for the three months ended September 30, 2019. Compared with the same quarter in the prior year, the overall increase in sales was driven by sales price increases of 25%, with relatively flat sales volumes. By product line, commodity sales increased 54%, general line product sales increased 6%, and sales of EWP (substantially all of which is sourced through our Wood Products segment) increased 6%.

BMD segment income increased $69.2 million to $107.9 million for the three months ended September 30, 2020, from $38.7 million in the comparative prior year quarter. The increase in segment income was driven by a gross margin increase of $86.7 million, resulting primarily from improved gross margins on commodity products compared with third quarter 2019. The margin improvement was offset partially by increased selling and distribution expenses and general and administrative expenses of $14.3 million and $2.5 million, respectively.

Unallocated Corporate Costs

Unallocated corporate expenses increased $6.0 million to $15.4 million from $9.4 million for the three months ended September 30, 2020, compared with the same period in the prior year. The increase was due primarily to higher incentive compensation and business interruption losses. As part of our self-insured risk retention program, corporate absorbed approximately $3.2 million of estimated business interruption losses at Wood Products facilities in third quarter 2020. The losses resulted from downtime at our Louisiana manufacturing facilities due to Hurricane Laura and from a fire-related production disruption at our Chester, South Carolina, plywood plant.

Balance Sheet and Liquidity

Boise Cascade ended third quarter 2020 with $503.9 million of cash and cash equivalents and $345.4 million of undrawn committed bank line availability, for total available liquidity of $849.3 million. The Company had $443.6 million of outstanding debt at September 30, 2020.

On July 27, 2020, we issued $400 million of 4.875% senior notes due July 1, 2030 (2030 Notes). With proceeds from the 2030 Notes issuance, we retired $350 million of 5.625% senior notes due 2024 (2024 Notes) and paid-off our American AgCredit term loan of $45.0 million. In connection with these transactions, we recognized a pre-tax loss on extinguishment of debt of $14.0 million during third quarter 2020.

In response to the uncertainty of the impacts of COVID-19, we reduced our planned capital spending for 2020 from our previously expected range of $85-to-$95 million to $60-to-$75 million. We expect our capital spending, excluding acquisitions, to be approximately $80-to-$90 million in 2021.

We have announced our intention to terminate our qualified defined benefit pension plan (Pension Plan). We expect to fully eliminate the liabilities of our Pension Plan in fourth quarter 2020, upon which we will record the related non-cash accounting adjustments as required by the application of pension settlement accounting rules. We do not expect any further cash contributions to terminate the Pension Plan. For additional information on the termination of our Pension Plan, see our Form 10-Q for the quarterly period ended September 30, 2020, filed with the Securities and Exchange Commission.

Dividends

On September 28, 2020, our board of directors declared a supplemental dividend of $1.60 per share on our common stock, payable on November 2, 2020, to stockholders of record on October 15, 2020. At September 30, 2020, we accrued $62.7 million in "Dividends payable" on our Consolidated Balance Sheets, representing our supplemental dividend declaration. On October 29, 2020, our board of directors declared a quarterly dividend of $0.10 per share on our common stock, payable on December 15, 2020, to stockholders of record on December 1, 2020.

Future dividend declarations, including amount per share, record date and payment date, will be made at the discretion of our board of directors and will depend upon, among other things, legal capital requirements and surplus, our future operations and earnings, general financial condition, contractual restrictions, and other factors that our board of directors may deem relevant.

Outlook

As we begin the fourth quarter, Wood Products continues to make efforts to restore production rates to pre-COVID-19 levels in response to strong end-product demand, particularly for our EWP. However, we continue to experience periodic short-term disruptions at many locations due to COVID-19. In addition, we expect activity levels across our distribution network to continue to vary widely as COVID-19 impacts geographies across the U.S. to differing degrees, and federal, state, or local restrictions are implemented or rescinded. To date, we have not experienced significant supply chain disruptions that would limit our ability to meet customer delivery commitments or source the necessary raw materials and finished goods needed by our operations. We continue to conduct business with modifications to mill and distribution center housekeeping and cleanliness protocols, employee travel, employee work locations, and virtualization or cancellation of certain sales and marketing events, among other modifications. In addition, we continue to actively monitor evolving developments and may take actions that alter our business operations as may be required by federal, state, or local authorities, or that we determine are in the best interests of our employees, customers, suppliers, communities, and stockholders.

While there continues to be a heightened level of economic uncertainty given the pandemic, low mortgage rates, continuation of work-from-home practices by many in the economy, and demographics in the U.S. have created a favorable demand environment for new residential construction, which we expect to continue into next year. Furthermore, with homeowners spending more time at home, repair and remodel spending may continue to strengthen as homeowners invest in existing homes. As of October 2020, the Blue Chip Economic Indicators consensus forecast for 2020 and 2021 single- and multi-family housing starts in the U.S. were 1.32 million and 1.38 million units, respectively, compared with actual housing starts of 1.29 million in 2019, as reported by the U.S. Census Bureau. Although we believe that current U.S. demographics support a higher level of housing starts, and many national home builders are reporting strong near-term backlogs, the impacts of COVID-19 on residential construction are uncertain. A re-acceleration of COVID-19 cases could prompt state or local officials to reinstitute restrictions that could limit or constrain building activity. In addition, the economic consequences of COVID-19 may adversely affect the pace of household formation rates and residential repair-and-remodeling activity due to high unemployment rates, lower wages, reduced consumer confidence, prospective home buyers' lack of ability to view homes in person, homebuyers' access to and cost of financing, and housing affordability, as well as other factors.

Strong demand when coupled with capacity constraints in third quarter 2020 created supply/demand imbalances in the marketplace and historically high pricing levels for commodity lumber and panel products. However, October 2020 composite lumber and panel prices have declined by approximately 35% and 10% from the peaks reached in September 2020 and are at risk for further price erosion that will be dependent on the impact of COVID-19 on residential construction, capacity restoration and industry operating rates, net import and export activity, transportation constraints or disruptions, inventory levels in various distribution channels, and seasonal demand patterns. As a wholesale distributor of a broad mix of commodity products and a manufacturer of certain commodity products, we have sales and profitability exposure to declines in commodity product prices. As previously announced, we will also continue to evaluate plywood market conditions, log supply availability, operating costs, environmental permits, and other factors influencing our Elgin plywood operations as we approach 2021.

About Boise Cascade

Boise Cascade Company is one of the largest producers of engineered wood products and plywood in North America and a leading U.S. wholesale distributor of building products. For more information, please visit the Company's website at www.bc.com.

Webcast and Conference Call

Boise Cascade will host a webcast and conference call to discuss third quarter earnings on Monday, November 2, 2020, at 11 a.m. Eastern.

To participate in the conference call, dial 844-795-4410 and use participant passcode 2863868 (international callers should dial 661-378-9637). To join the webcast, go to the Investor Relations section at www.bc.com and select the Event Calendar link.

A replay of the conference call will be available from Monday, November 2, 2020, at 2 p.m. Eastern through Monday, November 9, 2020, at 2 p.m. Eastern. Replay numbers are 855-859-2056 for U.S. callers and 404-537-3406 for international callers with a passcode of 2863868. The archived webcast will be available in the Investor Relations section of Boise Cascade's website.

Use of Non-GAAP Financial Measures

We refer to the terms EBITDA and Adjusted EBITDA in this earnings release and the accompanying Quarterly Statistical Information as supplemental measures of our performance and liquidity that are not required by or presented in accordance with generally accepted accounting principles in the United States (GAAP). We define EBITDA as income (loss) before interest (interest expense and interest income), income taxes, and depreciation and amortization. Additionally, we disclose Adjusted EBITDA, which further adjusts EBITDA to exclude the change in fair value of interest rate swaps and loss on extinguishment of debt.

We believe EBITDA and Adjusted EBITDA are meaningful measures because they present a transparent view of our recurring operating performance and allow management to readily view operating trends, perform analytical comparisons, and identify strategies to improve operating performance. We also believe EBITDA and Adjusted EBITDA are useful to investors because they provide a means to evaluate the operating performance of our segments and our Company on an ongoing basis using criteria that are used by our management and because they are frequently used by investors and other interested parties when comparing companies in our industry that have different financing and capital structures and/or tax rates. EBITDA and Adjusted EBITDA, however, are not measures of our liquidity or financial performance under GAAP and should not be considered as alternatives to net income (loss), income (loss) from operations, or any other performance measure derived in accordance with GAAP or as alternatives to cash flow from operating activities as a measure of our liquidity. The use of EBITDA and Adjusted EBITDA instead of net income (loss) or segment income (loss) have limitations as analytical tools, including: the inability to determine profitability; the exclusion of interest expense, interest income, and associated significant cash requirements; and the exclusion of depreciation and amortization, which represent unavoidable operating costs. Management compensates for these limitations by relying on our GAAP results. Our measures of EBITDA and Adjusted EBITDA are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.

Forward-Looking Statements

This press release includes statements about our expectations of future operational and financial performance that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements preceded or followed by, or that otherwise include, the words "believes," "expects," "anticipates," "intends," "project," "estimates," "plans," "forecast," "is likely to," and similar expressions or future or conditional verbs such as "will," "may," "would," "should," and "could" are generally forward-looking in nature and not historical facts. Such statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties. The accuracy of such statements is subject to a number of risks, uncertainties, and assumptions that could cause our actual results to differ materially from those projected, including, but not limited to, prices for building products, changes in the competitive position of our products, commodity input costs, the effect of general economic conditions, the effect of COVID-19, mortgage rates and availability, housing demand, housing vacancy rates, governmental regulations, unforeseen production disruptions, as well as natural disasters. These and other factors that could cause actual results to differ materially from such forward-looking statements are discussed in greater detail in our filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date of this press release. We undertake no obligation to revise them in light of new information. Finally, we undertake no obligation to review or confirm analyst expectations or estimates that might be derived from this release.

Boise Cascade Company

Consolidated Statements of Operations

(in thousands, except per-share data)

Three Months Ended Nine Months Ended

September 30 June 30, September 30

2020 2019 2020 2020 2019



Sales $ 1,589,313 $ 1,269,524 $ 1,242,760 $ 4,002,607 $ 3,541,691



Costs and expenses

Materials,labor, andotheroperating 1,261,697 1,078,924 1,048,902 3,302,869 3,026,401 expenses(excludingdepreciation)

Depreciationand 20,029 20,969 19,899 75,260 59,640 amortization

Selling anddistribution 122,884 106,567 103,566 325,913 292,459 expenses

General andadministrative 26,060 18,603 18,755 60,899 52,064 expenses

Loss oncurtailment of - - 38 1,707 - facility

Other (income) 71 (437 ) (170 ) 70 (557 ) expense, net

1,430,741 1,224,626 1,190,990 3,766,718 3,430,007



Income from 158,572 44,898 51,770 235,889 111,684 operations



Foreigncurrency 265 (200 ) 409 (199 ) 210 exchange gain(loss)

Pensionexpense (302 ) (1,613 ) (302 ) (991 ) (2,202 ) (excludingservice costs)

Interest (7,002 ) (6,532 ) (6,633 ) (20,056 ) (19,455 ) expense

Interest 113 837 190 958 1,745 income

Change in fairvalue of 147 (569 ) (514 ) (2,681 ) (3,103 ) interest rateswaps

Loss onextinguishment (13,968 ) - - (13,968 ) - of debt

(20,747 ) (8,077 ) (6,850 ) (36,937 ) (22,805 )



Income before 137,825 36,821 44,920 198,952 88,879 income taxes

Income tax (34,633 ) (9,650 ) (11,334 ) (49,974 ) (22,601 ) provision

Net income $ 103,192 $ 27,171 $ 33,586 $ 148,978 $ 66,278



Weightedaverage common sharesoutstanding:

Basic 39,315 39,087 39,312 39,264 39,020

Diluted 39,526 39,292 39,387 39,396 39,202



Net income per common share:

Basic $ 2.62 $ 0.70 $ 0.85 $ 3.79 $ 1.70

Diluted $ 2.61 $ 0.69 $ 0.85 $ 3.78 $ 1.69



Dividendsdeclared per $ 1.70 $ 0.09 $ 0.10 $ 1.90 $ 0.27 common share

See accompanying summary notes to consolidated financial statements and segment information.

Wood Products Segment

Statements of Operations

(in thousands, except percentages)

Three Months Ended Nine Months Ended

September 30 June 30, September 30

2020 2019 2020 2020 2019



Segment sales $ 363,674 $ 325,102 $ 281,505 $ 965,240 $ 978,881



Costs and expenses

Materials, labor,and other operating 268,930 283,354 239,626 782,590 855,929 expenses (excludingdepreciation)

Depreciation and 13,938 15,252 13,931 57,472 43,082 amortization

Selling anddistribution 9,684 7,718 7,552 25,220 23,284 expenses

General andadministrative 5,084 3,379 3,451 11,547 10,480 expenses

Loss on curtailment - - 38 1,707 - of facility

Other (income) 3 (198 ) (167 ) (168 ) (29 ) expense, net

297,639 309,505 264,431 878,368 932,746



Segment income $ 66,035 $ 15,597 $ 17,074 $ 86,872 $ 46,135



(percentage of sales)



Segment sales 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %



Costs and expenses

Materials, labor,and other operating 73.9 % 87.2 % 85.1 % 81.1 % 87.4 %expenses (excludingdepreciation)

Depreciation and 3.8 % 4.7 % 4.9 % 6.0 % 4.4 %amortization

Selling anddistribution 2.7 % 2.4 % 2.7 % 2.6 % 2.4 %expenses

General andadministrative 1.4 % 1.0 % 1.2 % 1.2 % 1.1 %expenses

Loss on curtailment - % - % - % 0.2 % - %of facility

Other (income) - % (0.1 ) % (0.1 ) % - % - %expense, net

81.8 % 95.2 % 93.9 % 91.0 % 95.3 %



Segment income 18.2 % 4.8 % 6.1 % 9.0 % 4.7 %

Building Materials Distribution Segment

Statements of Operations

(in thousands, except percentages)

Three Months Ended

Nine Months Ended

September 30

June 30,

2020

September 30

2020

2019

2020

2019

Segment sales

$

1,437,683

$

1,145,621

$

1,134,260

$

3,621,940

$

3,150,750

Costs and expenses

Materials, labor, and other operating expenses (excluding depreciation)

1,201,722

996,313

982,385

3,101,948

2,758,375

Depreciation and amortization

5,686

5,278

5,584

16,614

15,438

Selling and distribution expenses

113,146

98,797

95,958

300,527

269,012

General and administrative expenses

9,282

6,759

7,206

22,623

18,420

Other (income) expense, net

(54

)

(191

)

(83

)

(185

)

(477

)

1,329,782

1,106,956

1,091,050

3,441,527

3,060,768

Segment income

$

107,901

$

38,665

$

43,210

$

180,413

$

89,982

(percentage of sales)

Segment sales

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Costs and expenses

Materials, labor, and other operating expenses (excluding depreciation)

83.6

%

87.0

%

86.6

%

85.6

%

87.5

%

Depreciation and amortization

0.4

%

0.5

%

0.5

%

0.5

%

0.5

%

Selling and distribution expenses

7.9

%

8.6

%

8.5

%

8.3

%

8.5

%

General and administrative expenses

0.6

%

0.6

%

0.6

%

0.6

%

0.6

%

Other (income) expense, net

-

%

-

%

-

%

-

%

-

%

92.5

%

96.6

%

96.2

%

95.0

%

97.1

%

Segment income

7.5

%

3.4

%

3.8

%

5.0

%

2.9

%

Building Materials Distribution Segment

Statements of Operations

(in thousands, except percentages)

Three Months Ended Nine Months Ended

September 30 June 30, September 30

2020 2019 2020 2020 2019



Segment sales $ 1,437,683 $ 1,145,621 $ 1,134,260 $ 3,621,940 $ 3,150,750



Costs and expenses

Materials, labor,and other operating 1,201,722 996,313 982,385 3,101,948 2,758,375 expenses (excludingdepreciation)

Depreciation and 5,686 5,278 5,584 16,614 15,438 amortization

Selling anddistribution 113,146 98,797 95,958 300,527 269,012 expenses

General andadministrative 9,282 6,759 7,206 22,623 18,420 expenses

Other (income) (54 ) (191 ) (83 ) (185 ) (477 ) expense, net

1,329,782 1,106,956 1,091,050 3,441,527 3,060,768



Segment income $ 107,901 $ 38,665 $ 43,210 $ 180,413 $ 89,982



(percentage of sales)



Segment sales 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %



Costs and expenses

Materials, labor,and other operating 83.6 % 87.0 % 86.6 % 85.6 % 87.5 %expenses (excludingdepreciation)

Depreciation and 0.4 % 0.5 % 0.5 % 0.5 % 0.5 %amortization

Selling anddistribution 7.9 % 8.6 % 8.5 % 8.3 % 8.5 %expenses

General andadministrative 0.6 % 0.6 % 0.6 % 0.6 % 0.6 %expenses

Other (income) - % - % - % - % - %expense, net

92.5 % 96.6 % 96.2 % 95.0 % 97.1 %



Segment income 7.5 % 3.4 % 3.8 % 5.0 % 2.9 %

Segment Information

(in thousands)

Three Months Ended

Nine Months Ended

September 30

June 30,

2020

September 30

2020

2019

2020

2019

Segment sales

Wood Products

$

363,674

$

325,102

$

281,505

$

965,240

$

978,881

Building Materials Distribution

1,437,683

1,145,621

1,134,260

3,621,940

3,150,750

Intersegment eliminations

(212,044

)

(201,199

)

(173,005

)

(584,573

)

(587,940

)

Total net sales

$

1,589,313

$

1,269,524

$

1,242,760

$

4,002,607

$

3,541,691

Segment income

Wood Products

$

66,035

$

15,597

$

17,074

$

86,872

$

46,135

Building Materials Distribution

107,901

38,665

43,210

180,413

89,982

Total segment income

173,936

54,262

60,284

267,285

136,117

Unallocated corporate costs

(15,364

)

(9,364

)

(8,514

)

(31,396

)

(24,433

)

Income from operations

$

158,572

$

44,898

$

51,770

$

235,889

$

111,684

Segment EBITDA (a)

Wood Products

$

79,973

$

30,849

$

31,005

$

144,344

$

89,217

Building Materials Distribution

113,587

43,943

48,794

197,027

105,420

See accompanying summary notes to consolidated financial statements and segment information.

Segment Information

(in thousands)

Three Months Ended Nine Months Ended

September 30 June 30, September 30

2020 2019 2020 2020 2019

Segment sales

Wood Products $ 363,674 $ 325,102 $ 281,505 $ 965,240 $ 978,881

BuildingMaterials 1,437,683 1,145,621 1,134,260 3,621,940 3,150,750 Distribution

Intersegment (212,044 ) (201,199 ) (173,005 ) (584,573 ) (587,940 ) eliminations

Total net sales $ 1,589,313 $ 1,269,524 $ 1,242,760 $ 4,002,607 $ 3,541,691



Segment income

Wood Products $ 66,035 $ 15,597 $ 17,074 $ 86,872 $ 46,135

BuildingMaterials 107,901 38,665 43,210 180,413 89,982 Distribution

Total segment 173,936 54,262 60,284 267,285 136,117 income

Unallocated (15,364 ) (9,364 ) (8,514 ) (31,396 ) (24,433 ) corporate costs

Income from $ 158,572 $ 44,898 $ 51,770 $ 235,889 $ 111,684 operations



Segment EBITDA (a)

Wood Products $ 79,973 $ 30,849 $ 31,005 $ 144,344 $ 89,217

BuildingMaterials 113,587 43,943 48,794 197,027 105,420 Distribution

See accompanying summary notes to consolidated financial statements and segment information.

Boise Cascade Company

Consolidated Balance Sheets

(in thousands)

September 30, December 31, 2019 2020



ASSETS



Current

Cash and cash equivalents $ 503,935 $ 285,237

Receivables

Trade, less allowances of $1,629 and 425,585 215,894 $591

Related parties 375 568

Other 11,929 15,184

Inventories 454,327 497,596

Prepaid expenses and other 17,368 8,285

Total current assets 1,413,519 1,022,764



Property and equipment, net 447,330 476,949

Operating lease right-of-use assets 63,231 64,228

Finance lease right-of-use assets 30,033 21,798

Timber deposits 13,945 12,287

Goodwill 60,382 60,382

Intangible assets, net 16,880 17,797

Deferred income taxes 7,619 7,952

Other assets 6,897 9,194

Total assets $ 2,059,836 $ 1,693,351

Boise Cascade Company

Consolidated Balance Sheets (continued)

(in thousands, except per-share data)

September 30, 2020

December 31, 2019

LIABILITIES AND STOCKHOLDERS' EQUITY

Current

Accounts payable

Trade

$

381,038

$

222,930

Related parties

1,654

1,624

Accrued liabilities

Compensation and benefits

118,437

83,943

Income taxes payable

16,606

-

Interest payable

3,596

6,723

Dividends payable

62,722

-

Other

92,335

69,772

Total current liabilities

676,388

384,992

Debt

Long-term debt

443,583

440,544

Other

Compensation and benefits

32,005

45,586

Operating lease liabilities, net of current portion

57,494

58,029

Finance lease liabilities, net of current portion

31,923

23,419

Deferred income taxes

24,275

26,694

Other long-term liabilities

16,032

12,757

161,729

166,485

Commitments and contingent liabilities

Stockholders' equity

Preferred stock, $0.01 par value per share; 50,000 shares authorized, no shares issued and outstanding

-

-

Common stock, $0.01 par value per share; 300,000 shares authorized, 44,568 and 44,353 shares issued, respectively

446

444

Treasury stock, 5,367 shares at cost

(138,909

)

(138,909

)

Additional paid-in capital

536,025

533,345

Accumulated other comprehensive loss

(49,732

)

(50,248

)

Retained earnings

430,306

356,698

Total stockholders' equity

778,136

701,330

Total liabilities and stockholders' equity

$

2,059,836

$

1,693,351

Boise Cascade Company

Consolidated Balance Sheets (continued)

(in thousands, except per-share data)

September 30, December 31, 2020 2019



LIABILITIES AND STOCKHOLDERS' EQUITY



Current

Accounts payable

Trade $ 381,038 $ 222,930

Related parties 1,654 1,624

Accrued liabilities

Compensation and benefits 118,437 83,943

Income taxes payable 16,606 -

Interest payable 3,596 6,723

Dividends payable 62,722 -

Other 92,335 69,772

Total current liabilities 676,388 384,992



Debt

Long-term debt 443,583 440,544



Other

Compensation and benefits 32,005 45,586

Operating lease liabilities, net of current 57,494 58,029 portion

Finance lease liabilities, net of current 31,923 23,419 portion

Deferred income taxes 24,275 26,694

Other long-term liabilities 16,032 12,757

161,729 166,485



Commitments and contingent liabilities



Stockholders' equity

Preferred stock, $0.01 par value per share;50,000 shares authorized, no shares issued - - and outstanding

Common stock, $0.01 par value per share;300,000 shares authorized, 44,568 and 44,353 446 444 shares issued, respectively

Treasury stock, 5,367 shares at cost (138,909 ) (138,909 )

Additional paid-in capital 536,025 533,345

Accumulated other comprehensive loss (49,732 ) (50,248 )

Retained earnings 430,306 356,698

Total stockholders' equity 778,136 701,330

Total liabilities and stockholders' equity $ 2,059,836 $ 1,693,351

Boise Cascade Company

Consolidated Statements of Cash Flows

(in thousands)

Nine Months Ended September 30

2020

2019

Cash provided by (used for) operations

Net income

$

148,978

$

66,278

Items in net income not using (providing) cash

Depreciation and amortization, including deferred financing costs and other

76,784

61,340

Stock-based compensation

5,839

6,016

Pension expense

1,492

2,687

Deferred income taxes

(2,460

)

10,008

Change in fair value of interest rate swaps

2,681

3,103

Loss on curtailment of facility (excluding severance)

1,476

-

Other

205

(235

)

Loss on extinguishment of debt

13,968

-

Decrease (increase) in working capital, net of acquisitions

Receivables

(205,995

)

(77,811

)

Inventories

42,904

45,184

Prepaid expenses and other

(9,641

)

(3,516

)

Accounts payable and accrued liabilities

213,935

66,130

Pension contributions

(12,659

)

(1,324

)

Income taxes payable

17,121

19,109

Other

(857

)

(2,219

)

Net cash provided by operations

293,771

194,750

Cash provided by (used for) investment

Expenditures for property and equipment

(46,994

)

(53,249

)

Acquisitions of businesses and facilities

-

(15,676

)

Proceeds from sales of facilities

-

2,493

Proceeds from sales of assets and other

563

1,644

Net cash used for investment

(46,431

)

(64,788

)

Cash provided by (used for) financing

Borrowings of long-term debt, including revolving credit facility

400,000

5,500

Payments of long-term debt, including revolving credit facility

(405,774

)

(5,500

)

Payments of deferring financing costs

(6,222

)

-

Dividends paid on common stock

(12,553

)

(11,070

)

Tax withholding payments on stock-based awards

(3,309

)

(3,575

)

Other

(784

)

(545

)

Net cash used for financing

(28,642

)

(15,190

)

Net increase in cash and cash equivalents

218,698

114,772

Balance at beginning of the period

285,237

191,671

Balance at end of the period

$

503,935

$

306,443

Summary Notes to Consolidated Financial Statements and Segment Information

The Consolidated Statements of Operations, Segment Statements of Operations, Consolidated Balance Sheets, Consolidated Statements of Cash Flows, and Segment Information presented herein do not include the notes accompanying the Company's Consolidated Financial Statements and should be read in conjunction with the Company's 2019 Form 10-K and the Company's other filings with the Securities and Exchange Commission. Net income for all periods presented involved estimates and accruals.

Boise Cascade Company

Consolidated Statements of Cash Flows

(in thousands)

Nine Months Ended September 30

2020 2019

Cash provided by (used for) operations

Net income $ 148,978 $ 66,278

Items in net income not using (providing) cash

Depreciation and amortization, including 76,784 61,340 deferred financing costs and other

Stock-based compensation 5,839 6,016

Pension expense 1,492 2,687

Deferred income taxes (2,460 ) 10,008

Change in fair value of interest rate swaps 2,681 3,103

Loss on curtailment of facility (excluding 1,476 - severance)

Other 205 (235 )

Loss on extinguishment of debt 13,968 -

Decrease (increase) in working capital, net of acquisitions

Receivables (205,995 ) (77,811 )

Inventories 42,904 45,184

Prepaid expenses and other (9,641 ) (3,516 )

Accounts payable and accrued liabilities 213,935 66,130

Pension contributions (12,659 ) (1,324 )

Income taxes payable 17,121 19,109

Other (857 ) (2,219 )

Net cash provided by operations 293,771 194,750



Cash provided by (used for) investment

Expenditures for property and equipment (46,994 ) (53,249 )

Acquisitions of businesses and facilities - (15,676 )

Proceeds from sales of facilities - 2,493

Proceeds from sales of assets and other 563 1,644

Net cash used for investment (46,431 ) (64,788 )



Cash provided by (used for) financing

Borrowings of long-term debt, including 400,000 5,500 revolving credit facility

Payments of long-term debt, including revolving (405,774 ) (5,500 ) credit facility

Payments of deferring financing costs (6,222 ) -

Dividends paid on common stock (12,553 ) (11,070 )

Tax withholding payments on stock-based awards (3,309 ) (3,575 )

Other (784 ) (545 )

Net cash used for financing (28,642 ) (15,190 )



Net increase in cash and cash equivalents 218,698 114,772



Balance at beginning of the period 285,237 191,671



Balance at end of the period $ 503,935 $ 306,443

Summary Notes to Consolidated Financial Statements and Segment Information

The Consolidated Statements of Operations, Segment Statements of Operations, Consolidated Balance Sheets, Consolidated Statements of Cash Flows, and Segment Information presented herein do not include the notes accompanying the Company's Consolidated Financial Statements and should be read in conjunction with the Company's 2019 Form 10-K and the Company's other filings with the Securities and Exchange Commission. Net income for all periods presented involved estimates and accruals.

EBITDA represents income before interest (interest expense and interest income), income taxes, and depreciation and amortization. Additionally, we disclose Adjusted EBITDA, which further adjusts EBITDA to exclude the(a) change in fair value of interest rate swaps and loss on extinguishment of debt. The following table reconciles net income to EBITDA and Adjusted EBITDA for the three months ended September 30, 2020 and 2019, and June 30, 2020, and the nine months ended September 30, 2020 and 2019:

Three Months Ended

Nine Months Ended

September 30

June 30,

2020

September 30

2020

2019

2020

2019

(in thousands)

Net income

$

103,192

$

27,171

$

33,586

$

148,978

$

66,278

Interest expense

7,002

6,532

6,633

20,056

19,455

Interest income

(113

)

(837

)

(190

)

(958

)

(1,745

)

Income tax provision

34,633

9,650

11,334

49,974

22,601

Depreciation and amortization

20,029

20,969

19,899

75,260

59,640

EBITDA

164,743

63,485

71,262

293,310

166,229

Change in fair value of interest rate swaps

(147

)

569

514

2,681

3,103

Loss on extinguishment of debt

13,968

-

-

13,968

-

Adjusted EBITDA

$

178,564

$

64,054

$

71,776

$

309,959

$

169,332

The following table reconciles segment income and unallocated corporate costs to EBITDA and adjusted EBITDA for the three months ended September 30, 2020 and 2019, and June 30, 2020, and the nine months ended September 30, 2020 and 2019:

Three Months Ended Nine Months Ended

September 30 June 30, September 30

2020 2019 2020 2020 2019

(in thousands)

Net income $ 103,192 $ 27,171 $ 33,586 $ 148,978 $ 66,278

Interest expense 7,002 6,532 6,633 20,056 19,455

Interest income (113 ) (837 ) (190 ) (958 ) (1,745 )

Income tax 34,633 9,650 11,334 49,974 22,601 provision

Depreciation and 20,029 20,969 19,899 75,260 59,640 amortization

EBITDA 164,743 63,485 71,262 293,310 166,229



Change in fair (147 ) 569 514 2,681 3,103 value of interest rate swaps

Loss on extinguishment of 13,968 - - 13,968 - debt

Adjusted EBITDA $ 178,564 $ 64,054 $ 71,776 $ 309,959 $ 169,332

The following table reconciles segment income and unallocated corporate costs to EBITDA and adjusted EBITDA for the three months ended September 30, 2020 and 2019, and June 30, 2020, and the nine months ended September 30, 2020 and 2019:

Three Months Ended Nine Months Ended

September 30 June 30, September 30

2020 2019 2020 2020 2019

(in thousands)

Wood Products

Segment income $ 66,035 $ 15,597 $ 17,074 $ 86,872 $ 46,135

Depreciation and 13,938 15,252 13,931 57,472 43,082 amortization

EBITDA $ 79,973 $ 30,849 $ 31,005 $ 144,344 $ 89,217



BuildingMaterials Distribution

Segment income $ 107,901 $ 38,665 $ 43,210 $ 180,413 $ 89,982

Depreciation and 5,686 5,278 5,584 16,614 15,438 amortization

EBITDA $ 113,587 $ 43,943 $ 48,794 $ 197,027 $ 105,420



Corporate

Unallocated $ (15,364 ) $ (9,364 ) $ (8,514 ) $ (31,396 ) $ (24,433 ) corporate costs

Foreign currencyexchange gain 265 (200 ) 409 (199 ) 210 (loss)

Pension expense(excluding (302 ) (1,613 ) (302 ) (991 ) (2,202 ) service costs)

Change in fairvalue of interest 147 (569 ) (514 ) (2,681 ) (3,103 ) rate swaps

Loss onextinguishment of (13,968 ) - - (13,968 ) - debt

Depreciation and 405 439 384 1,174 1,120 amortization

EBITDA (28,817 ) (11,307 ) (8,537 ) (48,061 ) (28,408 )

Change in fairvalue of interest (147 ) 569 514 2,681 3,103 rate swaps

Loss onextinguishment of 13,968 - - 13,968 - debt

Corporate $ (14,996 ) $ (10,738 ) $ (8,023 ) $ (31,412 ) $ (25,305 ) adjusted EBITDA



Total company $ 178,564 $ 64,054 $ 71,776 $ 309,959 $ 169,332 adjusted EBITDA

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CONTACT: Investor Relations Contact - Wayne Rancourt 208 384 6073

CONTACT: Media Contact - Lisa Tschampl 208 384 6552