Building products company Boise Cascade Company (NYSE:BCC) reported Q1 CY2025 results exceeding the market’s revenue expectations , but sales fell by 6.6% year on year to $1.54 billion. Its non-GAAP profit of $1.06 per share was 17.8% below analysts’ consensus estimates.
Revenue: $1.54 billion vs analyst estimates of $1.51 billion (6.6% year-on-year decline, 1.6% beat)
Adjusted EPS: $1.06 vs analyst expectations of $1.29 (17.8% miss)
Adjusted EBITDA: $91.61 million vs analyst estimates of $102.1 million (6% margin, 10.3% miss)
Operating Margin: 3.5%, down from 8.1% in the same quarter last year
Free Cash Flow was -$81.68 million compared to -$6.87 million in the same quarter last year
Market Capitalization: $3.46 billion
StockStory’s Take
Boise Cascade's first quarter results reflected the ongoing challenges in the U.S. housing market, with management citing decreased homebuyer affordability and elevated economic uncertainty as key drivers impacting demand. CEO Nate Jorgensen specifically pointed to constrained demand, uncertain trade policies, and adverse weather as major headwinds. The planned outage at the Oakdale, Louisiana facility also weighed on results, but management emphasized ongoing modernization efforts and a steady focus on customer service and operational execution.
Looking ahead, management expressed caution regarding the predictability of end-market demand for the remainder of the year, referencing continued volatility in housing starts and interest rates. While the company is optimistic about long-term structural demand for residential construction, Jorgensen noted, "significant macroeconomic uncertainties and elevated mortgage rates have dampened consumer and homebuilder confidence." The leadership team reiterated its commitment to capital investments, shareholder returns, and maintaining a strong balance sheet as it navigates near-term headwinds.
Key Insights from Management’s Remarks
Boise Cascade’s management attributed the quarter’s performance to persistent softness in housing starts, operational disruptions from facility upgrades, and competitive pricing pressures. The company also highlighted several product-focused developments and operational strategies that shaped the quarter.
Housing Market Weakness: Management pointed to a decline in single-family housing starts and affordability challenges as the main factors behind lower sales volumes, with builder and consumer confidence dampened by economic uncertainty and high mortgage rates.
Oakdale Facility Modernization: The planned outage and ongoing upgrades at the Oakdale, Louisiana plywood and veneer plant negatively impacted wood products sales and margins, with full operational status expected by the end of next quarter.
Competitive Pricing Pressure: Decreased pricing for engineered wood products (EWP) and plywood, along with continued competition among EWP producers, contributed to margin declines. Management expects these pressures to persist until demand strengthens.
Distribution Market Dynamics: The Building Materials Distribution (BMD) segment saw a decline in both volume and price, with management emphasizing the importance of their two-step distribution model as customers and suppliers manage inventories more cautiously.
Strategic Capital Allocation: The company continued investments in facility upgrades and distribution expansion, while maintaining flexibility for opportunistic share repurchases and potential M&A, supported by a strong balance sheet.
Drivers of Future Performance
Management’s outlook for the coming quarters is shaped by uncertainty in housing demand, ongoing facility upgrades, and the company’s ability to capitalize on operational improvements as the market stabilizes.
Housing Market Volatility: Management believes that end-market demand will remain unpredictable due to elevated mortgage rates and fluctuating housing starts, which may continue to affect sales volumes and pricing.
Operational Upside from Facility Investments: The completion of the Oakdale modernization and the upcoming Thorsby I-line are expected to enhance EWP production efficiency and capacity, positioning the company to better serve builders when demand recovers.
Distribution and Inventory Management: Boise Cascade expects its national distribution network and inventory strategy to provide resilience in a distribution-focused market, allowing the company to respond flexibly as regional demand shifts.
Top Analyst Questions
Susan Maklari (Goldman Sachs): Asked about supplier and customer inventory trends in the general line business and the value of the two-step distribution model; management explained that customers are increasingly relying on just-in-time services and two-step distribution to manage working capital and inventory risk.
Kurt Yinger (D.A. Davidson): Inquired about sequential EWP pricing trends and competitive dynamics; management guided for continued low single-digit declines amid ongoing competition, with any pricing recovery dependent on demand improvement.
George Staphos (Bank of America): Sought clarity on current competitive pressures in EWP and supply chain risks related to tariffs; management indicated most pressure is from other EWP producers, and that tariff impact is limited except for some metal products in general line distribution.
Zack Pacheco (Loop Capital): Asked about LVL volume outlook and share gains; management noted that volumes were down less than housing starts in Q1, highlighting relative outperformance and best-in-class distribution.
Ketan Mamtora (BMO Capital Markets): Questioned year-over-year declines in I-joist volumes and inventory management, with management attributing lower volumes to weaker housing starts rather than loss of share, and stating that current inventory levels are well-positioned for anticipated demand.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace of recovery in housing starts and its impact on both wood products and distribution volumes, (2) the successful ramp-up and operational benefits from the Oakdale and Thorsby facility upgrades, and (3) the company’s ability to maintain or improve gross margins amid ongoing pricing and competitive pressures. Progress on inventory management and responsiveness to shifting regional demand will also be key markers of execution.
Boise Cascade currently trades at a forward P/E ratio of 10.9×. Is the company at an inflection point that warrants a buy or sell? The answer lies in our free research report.
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