Boise Cascade Company (BCC) is a leading North American producer of engineered wood products (EWP) and plywood, as well as a prominent U.S. wholesale distributor of building materials. With a storied history spanning over 80 years, the company has evolved to become a diversified player in the building products industry, weathering various market cycles and emerging as a resilient force.
Company History
Boise Cascade Company has a rich history dating back to its inception in 2004. The company was formed when it acquired the forest products assets of OfficeMax, Incorporated on October 29, 2004. This marked the beginning of Boise Cascade's journey as one of the largest producers of engineered wood products (EWP) and plywood in North America, as well as a leading U.S. wholesale distributor of building materials.
Over the years, Boise Cascade has faced various challenges and achieved significant milestones. In 2013, the company completed an initial public offering of its common stock, marking an important step in its growth and development. This provided additional resources to invest in its operations and expand its presence in the industry.
One notable challenge Boise Cascade encountered was the 2020 indefinite curtailment of lumber production at its Chapman, Alabama facility. This decision resulted in the company incurring accelerated depreciation charges and other closure costs. However, Boise Cascade was able to navigate through this challenge and continue its operations.
Boise Cascade's commitment to innovation and technology has also been a key part of its history. The company has invested in improving its manufacturing processes, enhancing its distribution capabilities, and leveraging digital technologies to better serve its customers. These efforts have enabled Boise Cascade to maintain its competitive edge and adapt to the evolving market dynamics.
Throughout its history, Boise Cascade has demonstrated its resilience and ability to overcome obstacles. The company's focus on operational excellence, customer service, and strategic investments has positioned it as a leading player in the wood products and building materials industries.
Business Segments
Today, Boise Cascade operates two distinct business segments: Wood Products and Building Materials Distribution (BMD). The Wood Products segment manufactures a range of structural and specialty wood products, including laminated veneer lumber (LVL), I-joists, and plywood panels, primarily serving the residential construction, repair-and-remodel, and light commercial construction markets. The BMD segment, on the other hand, is a leading national wholesale distributor of building materials, offering a diverse product portfolio that includes commodities, general line items, and EWP.
Wood Products Segment
Boise Cascade's Wood Products segment is one of the largest producers of engineered wood products (EWP) and plywood in North America. This segment primarily manufactures laminated veneer lumber (LVL), I-joists, and laminated beams, which are collectively referred to as EWP. These structural products are used in applications where extra strength and consistent quality are required, such as headers and beams. LVL is also used in the manufacture of I-joists, which are assembled by combining a vertical web of oriented strand board (OSB) with top and bottom LVL or solid wood flanges. I-joists are used primarily in residential and commercial flooring and roofing systems and other structural applications, offering superior strength, lightness, and straightness compared to conventional lumber products.
In addition to EWP, the Wood Products segment also manufactures structural, appearance, and industrial grade plywood panels, as well as ponderosa pine lumber. The company believes EWP has favorable characteristics when compared to competing products, as it reduces labor and installed costs, provides cycle time advantages, and results in less material usage and waste.
For the year ended December 31, 2024, the Wood Products segment reported sales of $1.83 billion, a decrease of 5% compared to the prior year. This decrease was driven by lower sales prices of 7% for both LVL and I-joists, as well as a 5% decrease in plywood sales volumes and prices. However, these declines were offset partially by higher sales volumes for LVL and I-joists of 11% and 7%, respectively. Segment income from operations for the Wood Products segment decreased by $105.7 million to $231.5 million, primarily due to the lower product prices and higher wood fiber and conversion costs, partially offset by the higher EWP sales volumes.
Building Materials Distribution Segment
Boise Cascade's Building Materials Distribution (BMD) segment is a leading national stocking wholesale distributor of building materials. This segment distributes a broad line of building materials, including oriented strand board (OSB), plywood, and lumber (collectively referred to as commodities), as well as general line items such as siding, composite decking, doors and millwork, metal products, roofing, and insulation, and engineered wood products (EWP). Except for EWP, which is substantially sourced from the company's Wood Products segment, BMD purchases most of these building materials from third-party suppliers.
The BMD segment sells products through two primary distribution methods: warehouse sales, where products are distributed from the company's warehouses to customers, and direct sales, where products are shipped from the manufacturer to the customer without BMD taking physical possession of the inventory. For the year ended December 31, 2024, the BMD segment reported sales of $6.17 billion, a decrease of less than 1% compared to the prior year. This slight decrease was driven by a 3% decrease in sales prices, offset partially by a 3% increase in sales volumes. By product line, commodity sales decreased 5%, general line product sales increased 7%, and sales of EWP decreased 4%.
Segment income from operations for the BMD segment decreased by $32.4 million to $303.4 million. This decline was driven by increased selling and distribution expenses and depreciation and amortization expense, partially offset by a $15.1 million increase in gross margin, resulting primarily from improved gross margins on general line products, offset partially by lower gross margins on EWP and commodity products.
Overall, Boise Cascade's two reportable segments, Wood Products and Building Materials Distribution, operate with a high degree of integration, with the Wood Products segment being the largest customer of the BMD segment. This integrated model provides the company with advantages over less integrated competitors and unique value to its customers.
Financials
Boise Cascade's financial performance has been marked by periods of strong growth and profitability, with the company reporting net income of $376.4 million, or $9.57 per diluted share, on sales of $6.72 billion in the fiscal year ended December 31, 2024. However, the company's results in the fourth quarter of 2024 were impacted by lower sales prices across its product offerings, contributing to a 5% year-over-year decline in consolidated sales to $1.6 billion. Net income for the quarter came in at $68.9 million, or $1.78 per share, missing analyst estimates and decreasing from $97.5 million, or $2.44 per share, in the prior-year quarter.
For the full fiscal year 2024, Boise Cascade generated annual operating cash flow of $438.3 million and annual free cash flow of $208.8 million. The company's performance in foreign markets remained relatively small, with sales to foreign unaffiliated customers amounting to approximately $99 million in 2024.
Wood Products Segment Performance
The Wood Products segment experienced a 7% year-over-year decline in sales to $419.7 million in the fourth quarter, as lower EWP and plywood prices weighed on the segment's performance. Segment EBITDA decreased to $56.6 million from $92.7 million in the prior-year quarter.
Building Materials Distribution Segment Performance
In the BMD segment, sales declined 4% to $1.4 billion, though the segment managed to grow its EBITDA to $84.5 million from $80.6 million in the fourth quarter of 2023, driven by a 60-basis-point improvement in gross margin percentage.
Liquidity
Boise Cascade's financial position remains strong, with a debt-to-capitalization ratio of just 3.2% as of December 31, 2024. The company's liquidity position is also robust, with $713.3 million in cash and cash equivalents and $395.7 million of available committed bank line capacity at the end of the fiscal year. Other key financial metrics include:
- Debt/Equity ratio: 0.03
- Current ratio: 3.34
- Quick ratio: 1.92
These ratios indicate a healthy balance sheet with low leverage and strong liquidity, positioning the company well to navigate potential market challenges and pursue growth opportunities.
Future Outlook and Strategy
Looking ahead, the company is navigating a complex operating environment characterized by macroeconomic uncertainties, including concerns around housing affordability and potential policy changes that could impact trade and supply chains. Despite these challenges, Boise Cascade remains focused on executing its strategic initiatives, including continued investment in its EWP manufacturing capabilities and expansion of its nationwide distribution network.
In 2024, the company invested $230 million in capital expenditures, with plans to spend between $220 million and $240 million in 2025. These investments are primarily targeted at projects that will enhance the company's EWP production capacity and drive operational efficiency, such as the ongoing modernization of its Oakdale, Louisiana veneer and plywood mill.
Boise Cascade's capital allocation strategy also includes a balanced approach to returning capital to shareholders. In 2024, the company paid $220 million in regular and special dividends and repurchased approximately 1.75 million shares, or 4.5% of its outstanding shares, for $225 million. The board of directors recently declared a quarterly dividend of $0.21 per share, payable on March 19, 2025, to shareholders of record as of February 24, 2025.
For the first quarter of 2025, Boise Cascade expects EWP volumes to increase modestly from Q4 2024 levels, with EWP pricing expected to see low single-digit sequential declines. Plywood volumes are anticipated to decline mid to high single digits sequentially, with $7 million in negative cost impacts due to the Oakdale facility being down for the entire quarter. BMD sales are expected to be about 8% below the Q4 2024 daily sales pace, with activity expected to strengthen as they move towards the spring building season.
Looking at the full year 2025, Boise Cascade forecasts total U.S. housing starts around 1.35 million, essentially flat with 2024 levels. Single-family housing starts are expected to be around 1 million units, despite affordability challenges. Home improvement spending is anticipated to see modest growth in 2025.
Despite the challenges faced in the fourth quarter of 2024, Boise Cascade remains well-positioned to navigate the evolving market landscape. The company's diversified business model, strong balance sheet, and strategic investments in growth initiatives provide a solid foundation for long-term value creation. As the housing market and broader economic conditions continue to unfold, investors will be closely watching Boise Cascade's ability to leverage its operational expertise and capitalize on emerging opportunities in the building materials industry.