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It has been about a month since the last earnings report for Boise Cascade (BCC). Shares have added about 5.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Boise Cascade due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Boise Cascade Q3 Earnings Lag Estimates, Sales Beat, Both Dip Y/Y
Boise Cascade reported tepid third-quarter 2024 results, with earnings missing the Zacks Consensus Estimate and declining year over year. Although quarterly sales marginally topped the consensus mark, it declined year over year.
The company's quarterly performance was marred by softer sales volume and lower sales prices across the products it manufactures and distributes. The downtrend in volumes can be attributed to the soft single-family residential demand, which is the key driver of BCC’s sales.
The slow demand environment is likely to take a toll on the company’s prospects, with seasonality during the winter months being around the corner. However, the optimism regarding the Fed reducing interest rates and its key strategic investment initiatives is expected to foster growth in the upcoming period. Also, it aims to allocate its capital and ensure shareholders’ value, besides focusing on business growth.
Detailed Discussion of BCC
Boise Cascade reported adjusted earnings per share (EPS) of $2.33, which missed the Zacks Consensus Estimate of $2.37 by 1.7%. In the year-ago quarter, the company reported an adjusted EPS of $3.58.
Quarterly sales of $1.714 billion topped the consensus mark of $1.711 million by 0.2% but dropped 7% year over year.
Adjusted EBITDA of $154.5 million was down 29% from the prior-year quarter.
Boise Cascade’s Segmental Analysis
Wood Products: The segment’s sales (including sales to the BMD segment) of $453.9 million were down 12% from the prior-year period’s level. The downside in sales was due to lower plywood sales prices, reduced LVL and I-joist prices (collectively referred to as EWP) and a drop in lumber and residual byproducts sales. Adjusted EBITDA was $77.4 million, down 37% from $122.9 million reported a year ago. During the quarter, the segment’s costs and expenses — as a percentage of segment sales — increased year over year to 88.1% from 80.7%. The increase in materials, labor and other operating expenses contributed to the uptick.
Building Materials Distribution or BMD: Sales in the segment plunged 6% year over year to $1.57 billion, primarily due to a sales price decrease of 6%, as sales volumes remained flat year over year. The segment’s adjusted EBITDA fell 16% year over year to $87.7 million from $104.9 million. The segment’s costs and expenses — as a percentage of segment sales — increased year over year to 95.2% from 94.2%. The increase in selling and distribution expenses, along with depreciation and amortization, caused the uptick.