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Boise Announces First Quarter 2007 Financial Results
BOISE, Idaho, May 9 /PRNewswire/ -- Boise Cascade Holdings, L.L.C. today reported net income of $10.5 million for the first quarter 2007, compared with net income of $2.0 million for both the first quarter 2006 and the fourth quarter 2006. Income from operations for the first quarter 2007 was $33.3 million, compared to $32.4 million in the same period of 2006 and $28.7 million for the fourth quarter 2006. "The first quarter results reflected the balance of our business mix," said Tom Stephens, chairman and chief executive officer. "Our Paper business had the advantage of strong markets; our packaging business performed well in a seasonally weaker environment; and our Building Materials Distribution and Wood Products segments were both profitable despite the challenging housing market. On the strategic front, we began shipping product from our new Building Materials Distribution facility in Milton, Florida, and we continued with the conversion of our fine paper machine in Wallula, Washington, to equip it to produce both pressure-sensitive papers as well as its current mix of commodity papers. We have reduced our net debt by over 60% since the LBO in October 2004. The refinancing we completed early in the second quarter shows that the credit markets also recognize our progress by lowering our financing costs and increasing our flexibility." FINANCIAL HIGHLIGHTS
($ in millions)
1Q 2007 1Q 2006 4Q 2006
Sales $1,321.0 $1,470.3 $1,269.5
Income from operations $33.3 $32.4 $28.7
Net income $10.5 $2.0 $2.0
EBITDA(a) $73.9 $69.4 $68.3
(a) For reconciliation of net income to EBITDA, see "Segment Information"
in the financial section.
Sales
Sales for the first quarter 2007 were $1.3 billion, compared to $1.5 billion in the first quarter 2006 and $1.3 billion in the fourth quarter 2006. Year-over-year sales were lower in both the Building Materials Distribution and Wood Products segments offset, in part, by sales increases in both our Paper and Packaging & Newsprint segments. Comparing the first quarter 2007 to the same period of 2006, Building Materials Distribution segment sales decreased 20% due to lower sales volumes and lower commodity and engineered wood products sales prices. Wood Products segment sales were down 19%, due primarily to lower prices for plywood, engineered wood, and lumber, coupled with lower sales volumes of laminated veneer lumber (LVL) and I-joists, which were down 23% and 20%, respectively. Paper segment sales were up 7% over the same period in 2006 due to higher sales prices offset, in part, by lower sales volumes. Packaging & Newsprint segment sales increased 8% due to the acquisition of CTC and higher container and linerboard sales prices. Income From Operations Income from operations increased 3% in the first quarter 2007 to $33.3 million from $32.4 million in first quarter 2006. Segment income decreased in both Building Materials Distribution and Wood Products, driven by softer housing markets, and segment income increased in both Paper and Packaging & Newsprint due to improved sales prices in those businesses, reflecting improved supply-demand balances in those markets. Comparing first quarter 2007 with first quarter 2006, segment income in Building Materials Distribution decreased $8.1 million, from $18.6 million in 2006 to $10.5 million, due primarily to lower sales volumes and lower commodity and engineered wood products sales prices offset, in part, by lower purchased materials costs and lower operating costs. Segment income in Wood Products decreased $15.1 million, from $18.8 million in first quarter 2006 to $3.7 million in first quarter 2007, due primarily to lower sales prices and sales volumes coupled with higher conversion costs offset, in part, by lower wood costs. Paper segment income increased $17.2 million, from $0.8 million in first quarter 2006 to $18.0 million in first quarter 2007, due primarily to higher sales prices offset, in part, by higher input costs, especially fiber costs in the Pacific Northwest and purchased pulp, coupled with lower sales volumes. Packaging & Newsprint segment income increased $7.2 million, from $0.9 million in first quarter 2006 to $8.1 million in first quarter 2007, due primarily to increased prices in the packaging business and increased container and sheet sales volumes and lower manufacturing costs offset, in part, by higher fiber costs and lower newsprint prices. About Boise Cascade Boise, headquartered in Boise, Idaho, manufactures engineered wood products, plywood, lumber, and particleboard and distributes a broad line of building materials, including wood products manufactured by the company. Boise also manufactures a wide range of specialty and premium papers, including imaging papers for the office and home and papers for pressure- sensitive applications, as well as printing and converting papers, containerboard and corrugated boxes, newsprint, and market pulp. Visit Boise's website at http://www.bc.com/. Webcast and Conference Call Boise will host an audiovisual webcast and conference call on Wednesday, May 9, 2007, at 11:00 a.m. Eastern, at which time we will review the company's recent performance. You can join the webcast through the Boise website. Go to http://www.bc.com/ and click on the link to the webcast under the News & Events heading. Slides will be posted 15 minutes before the beginning of the webcast. Please go to the website at least 15 minutes before the start of the webcast to register and to download and install any necessary audio software. To join the conference call, dial (800) 374-0165 (international callers should dial (706) 634-0995) at least 10 minutes before the start of the call. Forward-Looking Statements This news release may contain statements that are "forward-looking" with Private Securities Litigation Reform Act of 1995. These statements speak only as of the date of this press release. While they are based on the current expectations and beliefs of management, they are subject to a number of uncertainties and assumptions that could cause actual results to differ from the expectations expressed in this release. Boise Cascade Holdings, L.L.C.
Consolidated Statements of Income
(unaudited, in thousands)
Three Months Ended
March 31 December 31,
2007 2006 (a) 2006 (a)
Sales
Trade $1,163,173 $1,337,498 $1,118,483
Related parties 157,795 132,765 150,984
1,320,968 1,470,263 1,269,467
Costs and expenses
Materials, labor, and other
operating expenses 1,156,899 1,310,812 1,104,377
Depreciation, amortization,
and depletion 40,360 36,657 40,921
Selling and distribution
expenses 68,408 71,077 69,397
General and administrative
expenses 19,495 21,462 21,019
Other (income) expense, net 2,546 (2,125)(b) 5,086
1,287,708 1,437,883 1,240,800
Income from operations 33,260 32,380 28,667
Foreign exchange gain (loss) 242 379 (1,249)
Interest expense (22,343) (30,176) (25,218)
Interest income 601 604 1,334
(21,500) (29,193) (25,133)
Income before income taxes 11,760 3,187 3,534
Income tax provision (1,223) (1,218) (1,492)
Net income $10,537 $1,969 $2,042
Segment Information
(unaudited, in thousands)
Three Months Ended
March 31 December 31,
2007 2006 (a) 2006 (a)
Segment sales
Building Materials Distribution $608,658 $761,846 $599,119
Wood Products 253,923 312,639 229,447
Paper 395,034 370,364 369,170
Packaging & Newsprint 193,972 178,787 190,144
Intersegment eliminations
and other (130,619) (153,373) (118,413)
$1,320,968 $1,470,263 $1,269,467
Segment income (loss)
Building Materials Distribution $10,455 $18,591 $12,088
Wood Products 3,709 18,823 (4,388)
Paper 18,026 793 16,257
Packaging & Newsprint 8,083 869 14,528
Corporate and Other (6,771) (6,317)(b) (11,067)
33,502 32,759 27,418
Interest expense (22,343) (30,176) (25,218)
Interest income 601 604 1,334
Income before income taxes $11,760 $3,187 $3,534
EBITDA (c)
Building Materials Distribution $12,331 $20,939 $14,201
Wood Products 10,993 25,140 3,183
Paper 34,599 15,410 32,807
Packaging & Newsprint 21,495 12,941 27,816
Corporate and Other (5,556) (5,014) (9,668)
$73,862 $69,416 $68,339
Summary Notes to Consolidated Statements of Income and Segment Information
The Consolidated Statements of Income, Consolidated Balance Sheets, Consolidated Statements of Cash Flows, and Segment Information do not include all Notes to Consolidated Financial Statements and should be read in conjunction with the company's 2006 Annual Report on Form 10-K. Net income for all periods presented involved estimates and accruals. (a) In January 2007, we adopted Financial Accounting Standards Board
Staff Position (FSP) No. AUG AIR-1, Accounting for Planned Major
Maintenance Activities. Prior to adopting this FSP, we charged
planned shutdown maintenance costs in our Paper and Packaging &
Newsprint segments to income (loss) ratably over the year. The FSP
prohibits this and as a result, we recast our 2006 interim financial
information using the direct expense method. The FSP increases the
volatility of earnings in the period a planned shutdown occurs, but
it has no impact on our annual results of operations. For the three
months ended March 31 and December 31, 2006, income increased
(decreased) by the following amounts:
Three Months Ended
March 31, December 31,
2006 2006
(unaudited, in thousands)
Paper $3,361 $(2,057)
Packaging & Newsprint (1,451) 956
$1,910 $(1,101)
(b) Includes a $3.7 million gain for changes in our retiree healthcare
programs.
(c) EBITDA represents income before interest (interest expense and
interest income), income taxes, and depreciation, amortization, and
depletion. The following table reconciles net income to EBITDA for
the three months ended March 31, 2007 and 2006, and December 31, 2006:
Three Months Ended
March 31 December 31,
2007 2006 (a) 2006 (a)
(unaudited, in thousands)
Net income $10,537 $1,969(b) $2,042
Interest expense 22,343 30,176 25,218
Interest income (601) (604) (1,334)
Income tax provision 1,223 1,218 1,492
Depreciation, amortization,
and depletion 40,360 36,657 40,921
EBITDA $73,862 $69,416 $68,339
Boise Cascade Holdings, L.L.C.
Consolidated Balance Sheets
(unaudited, in thousands)
March 31, December 31,
2007 2006
ASSETS
Current
Cash and cash equivalents $66,176 $45,169
Receivables
Trade, less allowances of $2,027
and $1,734 379,454 327,138
Related parties 44,134 37,986
Other 16,736 19,027
Inventories 658,054 640,826
Other 11,770 13,027
1,176,324 1,083,173
Property
Property and equipment, net 1,468,277 1,462,315
Fiber farms and timber deposits 40,042 40,492
1,508,319 1,502,807
Deferred financing costs 29,930 31,474
Goodwill 21,846 21,846
Intangible assets, net 36,376 37,507
Other assets 24,732 28,390
Total assets $2,797,527 $2,705,197
Boise Cascade Holdings, L.L.C.
Consolidated Balance Sheets (continued)
(unaudited, in thousands, except for equity units)
March 31, December 31,
2007 2006
LIABILITIES AND CAPITAL
Current
Short-term borrowings $-- $3,200
Accounts payable 376,315 341,201
Accrued liabilities
Compensation and benefits 74,989 93,287
Interest payable 18,685 11,847
Other 39,354 54,600
509,343 504,135
Debt
Long-term debt 1,273,900 1,213,900
Other
Compensation and benefits 118,605 111,676
Other long-term liabilities 39,578 36,642
158,183 148,318
Redeemable equity units
Series B equity units - 17,052,889 and
17,107,889 units outstanding 17,422 17,477
Series C equity units - 39,562,560 and
39,576,540 units outstanding 7,256 6,434
24,678 23,911
Commitments and contingent liabilities
Capital
Series A equity units - no par value;
66,000,000 and 66,000,000 units
authorized and outstanding 73,975 78,290
Series B equity units - no par value;
550,000,000 and 550,000,000 units
authorized; 530,356,601 and
530,356,601 units outstanding 744,614 724,988
Series C equity units - no par value;
44,000,000 and 44,000,000 units
authorized 12,834 11,655
Total capital 831,423 814,933
Total liabilities and capital $2,797,527 $2,705,197
Boise Cascade Holdings, L.L.C.
Consolidated Statements of Cash Flows
(unaudited, in thousands)
Three Months Ended
March 31
2007 2006
Cash provided by (used for) operations
Net income $10,537 $1,969
Items in net income not using
(providing) cash
Depreciation, depletion, and amortization
of deferred financing costs and other 40,084 38,380
Related-party interest expense -- 5,417
Deferred income taxes 493 --
Pension and other postretirement benefit
expense 6,066 7,417
Gain on changes in retiree healthcare
programs -- (3,741)
Management equity units expense 822 934
Other 1,193 2,194
Decrease (increase) in working capital,
net of acquisitions
Receivables (56,662) (55,939)
Inventories (20,309) (16,041)
Prepaid expenses 4,234 2,150
Accounts payable and accrued liabilities 19,466 26,055
Pension and other postretirement benefit
payments (339) (346)
Current and deferred income taxes 771 --
Other 4,397 2,853
Cash provided by operations 10,753 11,302
Cash provided by (used for) investment
Expenditures for property and equipment (47,242) (36,508)
Acquisitions of businesses and facilities -- (42,589)
Sales of assets 3,384 27,249
Other 166 (1,394)
Cash used for investment (43,692) (53,242)
Cash provided by (used for) financing
Issuances of long-term debt 100,000 150,000
Payments of long-term debt (40,000) (57,600)
Note payable to related party, net -- (137)
Tax distributions to members (2,753) --
Other (3,301) (148)
Cash provided by financing 53,946 92,115
Increase in cash and cash equivalents 21,007 50,175
Balance at beginning of the period 45,169 88,171
Balance at end of the period $66,176 $138,346
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