Boise Cascade Company Reports 2016 Third Quarter Net Income of $10.0 Million on Sales of $1,067.2 Million
For Immediate Release: October 24, 2016
BOISE, Idaho - Boise Cascade Company (Boise Cascade or Company) (NYSE: BCC) today reported net income of $10.0 million, or $0.26 per share, on sales of $1,067.2 million for the third quarter ended September 30, 2016. Third quarter results included a $9.5 million pre-tax loss on the extinguishment of debt, or a $0.15 per share after-tax impact, as the Company refinanced its senior notes at a lower interest rate with an extended maturity.
Third Quarter 2016 Highlights
| 3Q 2016 | 3Q 2015 | % change | ||||||||
| (thousands, except per-share data and percentages) | ||||||||||
| Consolidated Results | ||||||||||
| Sales | $ | 1,067,214 | $ | 991,580 | 8 | % | ||||
| Net income | 9,981 | 22,007 | (55 | )% | ||||||
| Net income per common share - diluted | 0.26 | 0.56 | (54 | )% | ||||||
| EBITDA1 | 50,726 | 54,541 | (7 | )% | ||||||
| Segment Results | ||||||||||
| Wood Products sales | $ | 340,928 | $ | 340,621 | - | % | ||||
| Wood Products income | 11,564 | 21,876 | (47 | )% | ||||||
| Wood Products EBITDA1 | 27,189 | 32,925 | (17 | )% | ||||||
| Building Materials Distribution sales | 889,026 | 798,982 | 11 | % | ||||||
| Building Materials Distribution income | 26,415 | 22,684 | 16 | % | ||||||
| Building Materials Distribution EBITDA1 | 29,929 | 25,805 | 16 | % | ||||||
| Corporate loss | (6,712 | ) | (4,268 | ) | (57 | )% | ||||
| Corporate EBITDA1 | (6,392 | ) | (4,189 | ) | (53 | )% | ||||
1 For reconciliations of non-GAAP measures, see summary notes at the end of this press release.
In third quarter 2016, total U.S. housing starts decreased by approximately 2% compared to the same period last year, driven by an approximate 9% decrease in the volatile multi-family segment. Single-family starts, which are the primary driver of our sales, increased approximately 2% in third quarter 2016 and have increased approximately 9% on a year-to-date basis. Total U.S. housing starts from the October 2016 Blue Chip consensus forecast for 2016 and 2017 reflect 1.18 million and 1.28 million, respectively, or expected annual increases of 6% and 8%.
"Both of our businesses executed well during the quarter," stated Tom Corrick, CEO. "Our distribution business posted another outstanding quarter. In our manufacturing business, elevated oriented strand board costs used in the manufacture of I-joists, planned downtime in plywood, along with ramp-up and transition activities at the recently acquired Thorsby and Roxboro engineered wood products facilities, have and will continue to negatively impact our near-term results. However, we have made great progress on key capital projects, including the restart of laminated veneer lumber production at Roxboro and the recently completed dryer projects at our Florien, Louisiana and Chester, South Carolina plywood operations. These projects leave us well positioned as we look forward to the 2017 building season."
Wood Products
Sales, including sales to Building Materials Distribution (BMD), increased $0.3 million to $340.9 million for the three months ended September 30, 2016, from $340.6 million for the three months ended September 30, 2015. The slight increase in sales was driven primarily by increases in sales volumes of laminated veneer lumber and I-joists (collectively EWP). These EWP volume increases were due primarily to our acquisition of two engineered wood products facilities on March 31, 2016, as well as improved single-family housing starts. These increases were offset by decreases in plywood and lumber sales volumes compared to the year ago quarter. Sales prices for EWP, plywood, and lumber were relatively flat compared with the same period in the prior year.
Wood Products segment income decreased $10.3 million to $11.6 million for the three months ended September 30, 2016, from $21.9 million for the three months ended September 30, 2015. The decline in income was due primarily higher oriented strand board costs used in the manufacture of I-joists, as well as higher conversion costs resulting from lower plywood and lumber sales volumes. In addition, depreciation and amortization expense increased $4.6 million due primarily to the acquisition of two EWP facilities on March 31, 2016, and other capital expenditures.
Comparative average net selling prices and sales volume changes for EWP, plywood, and lumber are as follows:
| 3Q 2016 vs. 3Q 2015 | 3Q 2016 vs. 2Q 2016 | |||
| Average Net Selling Prices | ||||
| LVL | -% | (1)% | ||
| I-joists | (1)% | (3)% | ||
| Plywood | 2% | 6% | ||
| Lumber | 1% | 4% | ||
| Sales Volumes | ||||
| LVL | 17% | (4)% | ||
| I-joists | 8% | (5)% | ||
| Plywood | (7)% | 2% | ||
| Lumber | (16)% | (7)% |
Building Materials Distribution
Sales increased $90.0 million, or 11%, to $889.0 million for the three months ended September 30, 2016, from $799.0 million for the three months ended September 30, 2015. Compared with the same quarter in the prior year, the overall increase in sales was driven by sales volume and sales price increases of 8% and 3%, respectively. By product line, commodity sales increased 15%, general line product sales increased 7%, and sales of EWP (substantially all of which are sourced through our Wood Products segment) increased 11%.
BMD segment income increased $3.7 million to $26.4 million for the three months ended September 30, 2016, from $22.7 million for the three months ended September 30, 2015. The increase in income was driven primarily by a higher gross margin of $10.8 million generated from a sales increase of 11%, offset partially by increased selling and distribution expenses and general and administrative expenses of $6.1 million and $1.0 million, respectively.
Corporate and Other
Segment loss was $6.7 million for the three months ended September 30, 2016, compared with $4.3 million for the three months ended September 30, 2015. The change was due primarily to higher incentive compensation costs, professional fees, and pension expense.
Balance Sheet
Boise Cascade ended the third quarter with $131.2 million of cash and cash equivalents and $122.9 million of restricted cash deposits with the trustee for its 6.375% senior notes (2020 Notes). At September 30, 2016, we had $354.8 million of undrawn committed bank line availability, for total available liquidity (cash and cash equivalents and undrawn committed bank line availability) of $486.0 million. The Company reported $581.6 million of outstanding debt at September 30, 2016.
On August 29, 2016, we issued $350 million of 5.625% senior notes due September 1, 2024 (2024 Notes). In connection with the 2024 Notes issuance, we commenced a tender offer to purchase any and all of our $300.0 million aggregate principal amount of 2020 Notes then outstanding. Concurrently, we accepted for purchase an aggregate principal amount of $184.5 million of the 2020 Notes that were tendered. In connection with these transactions, we recognized a pre-tax loss on the extinguishment of debt of $9.5 million during the third quarter of 2016. On August 29, 2016, we irrevocably deposited $122.9 million of cash with the trustee of our 2020 Notes to pay the remaining $115.5 million principal amount, call premium, and all interest payable on November 1, 2016. Accordingly, we expect to recognize an additional pre-tax loss on the extinguishment of debt of $4.8 million in the fourth quarter of 2016.
Outlook
The Company expects its capital expenditures during 2016 to be $85-$95 million, inclusive of capital spending associated with the recently acquired EWP facilities. During 2017, the Company expects its capital expenditures to be $70-$80 million.
We expect to experience seasonally slower demand in fourth quarter 2016. On an annual basis, housing starts in the U.S. continue to show modest improvement and we remain optimistic that the improvement in demand for our products will continue as household formation rates and residential construction recover. We expect to manage our production levels to our sales demand, which will likely result in operating some of our facilities below their capacity, and could also include temporary plant curtailments in our plywood operations. In addition, maintenance related capital projects at our plywood plant in Chester, South Carolina, will cause that facility to be down for approximately one month during the fourth quarter. Future commodity product pricing could be volatile in response to industry operating rates, net import and export activity, inventory levels in our distribution channels, and seasonal demand patterns.
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 our website at www.bc.com.
Webcast and Conference Call
Boise Cascade will host a webcast and conference call on Monday, October 24, at 11 a.m. Eastern, at which time we will review the Company's third quarter.
You can join the webcast through our website by going to www.bc.com and clicking on the Event Calendar link under the Investor Relations heading. Please go to the website at least 15 minutes before the start of the webcast to register. To join the conference call, dial 844-795-4410 (international callers should dial 661-378-9637), participant passcode 99522546, at least 10 minutes before the start of the call.
The archived webcast will be available in the Investor Relations section of our website. A replay of the conference call will be available from Monday, October 24, at 2 p.m. Eastern through Monday, October 31, at 2 p.m. Eastern. Replay numbers are 855-859-2056 for U.S. calls and 404-537-3406 for international calls, and the passcode will be 99522546.
Basis of Presentation
We refer to the term EBITDA in this earnings release as a supplemental measure of our performance and liquidity that is not required by or presented in accordance with generally accepted accounting principles in the United States ("GAAP"). We define EBITDA as income before interest (interest expense, interest income, change in fair value of interest rate swaps, and loss on extinguishment of debt), income taxes, and depreciation and amortization.
EBITDA is the primary measure used by our management to evaluate segment operating performance and to decide how to allocate resources to segments. We believe EBITDA is useful to investors because it provides 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 it is 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. We believe EBITDA is a meaningful measure because it presents a transparent view of our recurring operating performance and allows management to readily view operating trends, perform analytical comparisons, and identify strategies to improve operating performance. EBITDA, however, is not a measure of our liquidity or financial performance under GAAP and should not be considered as an alternative to net income, income from operations, or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity. The use of EBITDA instead of net income or segment income (loss) has limitations as an analytical tool, 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 measure of EBITDA is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.
Forward-Looking Statements
This news release contains statements that are "forward looking" within the 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 Company
Consolidated Statements of Operations
(unaudited, in thousands, except per-share data)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30 | June 30, 2016 | September 30 | |||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| Sales | $ | 1,067,214 | $ | 991,580 | $ | 1,043,773 | $ | 2,991,682 | $ | 2,756,880 | |||||||||
| Costs and expenses | |||||||||||||||||||
| Materials, labor, and other operating expenses (excluding depreciation) | 922,101 | 854,134 | 894,715 | 2,586,360 | 2,383,756 | ||||||||||||||
| Depreciation and amortization | 19,459 | 14,249 | 18,552 | 53,249 | 41,117 | ||||||||||||||
| Selling and distribution expenses | 80,026 | 72,668 | 76,855 | 224,922 | 202,802 | ||||||||||||||
| General and administrative expenses | 14,367 | 11,345 | 15,612 | 46,031 | 35,371 | ||||||||||||||
| Other (income) expense, net | (46 | ) | (1,256 | ) | 172 | (1,459 | ) | (1,653 | ) | ||||||||||
| 1,035,907 | 951,140 | 1,005,906 | 2,909,103 | 2,661,393 | |||||||||||||||
| Income from operations | 31,307 | 40,440 | 37,867 | 82,579 | 95,487 | ||||||||||||||
| Foreign currency exchange gain (loss) | (40 | ) | (148 | ) | 28 | 186 | (214 | ) | |||||||||||
| Interest expense | (7,135 | ) | (5,729 | ) | (6,427 | ) | (19,364 | ) | (16,801 | ) | |||||||||
| Interest income | 60 | 73 | 27 | 236 | 221 | ||||||||||||||
| Change in fair value of interest rate swaps | 836 | - | (1,532 | ) | (765 | ) | - | ||||||||||||
| Loss on extinguishment of debt | (9,525 | ) | - | - | (9,525 | ) | - | ||||||||||||
| (15,804 | ) | (5,804 | ) | (7,904 | ) | (29,232 | ) | (16,794 | ) | ||||||||||
| Income before income taxes | 15,503 | 34,636 | 29,963 | 53,347 | 78,693 | ||||||||||||||
| Income tax provision | (5,522 | ) | (12,629 | ) | (10,735 | ) | (19,188 | ) | (28,839 | ) | |||||||||
| Net income | $ | 9,981 | $ | 22,007 | $ | 19,228 | $ | 34,159 | $ | 49,854 | |||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||
| Basic | 38,814 | 39,127 | 38,814 | 38,827 | 39,372 | ||||||||||||||
| Diluted | 39,120 | 39,240 | 38,972 | 38,950 | 39,473 | ||||||||||||||
| Net income per common share: | |||||||||||||||||||
| Basic | $ | 0.26 | $ | 0.56 | $ | 0.50 | $ | 0.88 | $ | 1.27 | |||||||||
| Diluted | $ | 0.26 | $ | 0.56 | $ | 0.49 | $ | 0.88 | $ | 1.26 | |||||||||
Wood Products Segment
Statements of Operations
(unaudited, in thousands, except percentages)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30 | June 30, 2016 | September 30 | |||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| Segment sales | $ | 340,928 | $ | 340,621 | $ | 346,358 | $ | 990,743 | $989,806 | ||||||||||
| Costs and expenses | |||||||||||||||||||
| Materials, labor, and other operating expenses (excluding depreciation) | 302,667 | 299,744 | 303,803 | 880,412 | 864,440 | ||||||||||||||
| Depreciation and amortization | 15,625 | 11,049 | 14,769 | 42,028 | 32,181 | ||||||||||||||
| Selling and distribution expenses | 7,594 | 6,465 | 8,108 | 23,077 | 20,170 | ||||||||||||||
| General and administrative expenses | 2,978 | 2,456 | 3,173 | 12,249 | 7,482 | ||||||||||||||
| Other (income) expense, net | 500 | (969 | ) | 196 | (781 | ) | (951 | ) | |||||||||||
| 329,364 | 318,745 | 330,049 | 956,985 | 923,322 | |||||||||||||||
| Segment income | $ | 11,564 | $ | 21,876 | $ | 16,309 | $ | 33,758 | $ | 66,484 | |||||||||
| (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) | 88.8 | % | 88.0 | % | 87.7 | % | 88.9 | % | 87.3 | % | |||||||||
| Depreciation and amortization | 4.6 | % | 3.2 | % | 4.3 | % | 4.2 | % | 3.3 | % | |||||||||
| Selling and distribution expenses | 2.2 | % | 1.9 | % | 2.3 | % | 2.3 | % | 2.0 | % | |||||||||
| General and administrative expenses | 0.9 | % | 0.7 | % | 0.9 | % | 1.2 | % | 0.8 | % | |||||||||
| Other (income) expense, net | 0.1 | % | (0.3 | %) | 0.1 | % | (0.1 | )% | (0.1 | %) | |||||||||
| 96.6 | % | 93.6 | % | 95.3 | % | 96.6 | % | 93.3 | % | ||||||||||
| Segment income | 3.4 | % | 6.4 | % | 4.7 | % | 3.4 | % | 6.7 | % | |||||||||
Building Materials Distribution Segment
Statements of Operations
(unaudited, in thousands, except percentages)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30 | June 30 | September 30 | |||||||||||||||||
| 2016 | 2015 | 2016 | 2016 | 2015 | |||||||||||||||
| Segment sales | $ | 889,026 | $ | 798,982 | $ | 850,042 | $ | 2,456,322 | $ | 2,183,965 | |||||||||
| Costs and expenses | |||||||||||||||||||
| Materials, labor, and other operating expenses (excluding depreciation) | 781,978 | 702,759 | 743,700 | 2,161,456 | 1,935,623 | ||||||||||||||
| Depreciation and amortization | 3,514 | 3,121 | 3,354 | 10,103 | 8,734 | ||||||||||||||
| Selling and distribution expenses | 72,237 | 66,183 | 68,574 | 201,313 | 181,743 | ||||||||||||||
| General and administrative expenses | 5,451 | 4,421 | 5,356 | 15,310 | 12,660 | ||||||||||||||
| Other (income) expense, net | (569 | ) | (186 | ) | (59 | ) | (765 | ) | (401 | ) | |||||||||
| 862,611 | 776,298 | 820,925 | 2,387,417 | 2,138,359 | |||||||||||||||
| Segment income | $ | 26,415 | $ | 22,684 | $ | 29,117 | $ | 68,905 | $ | 45,606 | |||||||||
| (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) | 88.0 | % | 88.0 | % | 87.5 | % | 88.0 | % | 88.6 | % | |||||||||
| Depreciation and amortization | 0.4 | % | 0.4 | % | 0.4 | % | 0.4 | % | 0.4 | % | |||||||||
| Selling and distribution expenses | 8.1 | % | 8.3 | % | 8.1 | % | 8.2 | % | 8.3 | % | |||||||||
| General and administrative expenses | 0.6 | % | 0.6 | % | 0.6 | % | 0.6 | % | 0.6 | % | |||||||||
| Other (income) expense, net | (0.1 | )% | - | % | - | % | - | % | - | % | |||||||||
| 97.0 | % | 97.2 | % | 96.6 | % | 97.2 | % | 97.9 | % | ||||||||||
| Segment income | 3.0 | % | 2.8 | % | 3.4 | % | 2.8 | % | 2.1 | % | |||||||||
Segment Information
(unaudited, in thousands)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30 | June 30, 2016 | September 30 | |||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| Segment sales | |||||||||||||||||||
| Wood Products | $ | 340,928 | $ | 340,621 | $ | 346,358 | $ | 990,743 | $ | 989,806 | |||||||||
| Building Materials Distribution | 889,026 | 798,982 | 850,042 | 2,456,322 | 2,183,965 | ||||||||||||||
| Corporate and Other | 74 | - | 103 | 363 | - | ||||||||||||||
| Intersegment eliminations | (162,814 | ) | (148,023 | ) | (152,730 | ) | (455,746 | ) | (416,891 | ) | |||||||||
| $ | 1,067,214 | $ | 991,580 | $ | 1,043,773 | $ | 2,991,682 | $ | 2,756,880 | ||||||||||
| Segment income (loss) | |||||||||||||||||||
| Wood Products | $ | 11,564 | $ | 21,876 | $ | 16,309 | $ | 33,758 | $ | 66,484 | |||||||||
| Building Materials Distribution | 26,415 | 22,684 | 29,117 | 68,905 | 45,606 | ||||||||||||||
| Corporate and Other | (6,712 | ) | (4,268 | ) | (7,531 | ) | (19,898 | ) | (16,817 | ) | |||||||||
| 31,267 | 40,292 | 37,895 | 82,765 | 95,273 | |||||||||||||||
| Interest expense | (7,135 | ) | (5,729 | ) | (6,427 | ) | (19,364 | ) | (16,801 | ) | |||||||||
| Interest income | 60 | 73 | 27 | 236 | 221 | ||||||||||||||
| Change in fair value of interest rate swaps | 836 | - | (1,532 | ) | (765 | ) | - | ||||||||||||
| Loss on extinguishment of debt | (9,525 | ) | - | - | (9,525 | ) | - | ||||||||||||
| Income before income taxes | $ | 15,503 | $ | 34,636 | $ | 29,963 | $ | 53,347 | $ | 78,693 | |||||||||
| EBITDA (a) | |||||||||||||||||||
| Wood Products | $ | 27,189 | $ | 32,925 | $ | 31,078 | $ | 75,786 | $ | 98,665 | |||||||||
| Building Materials Distribution | 29,929 | 25,805 | 32,471 | 79,008 | 54,340 | ||||||||||||||
| Corporate and Other | (6,392 | ) | (4,189 | ) | (7,102 | ) | (18,780 | ) | (16,615 | ) | |||||||||
| $ | 50,726 | $ | 54,541 | $ | 56,447 | $ | 136,014 | $ | 136,390 | ||||||||||
See accompanying summary notes to consolidated financial statements and segment information.
Boise Cascade Company
Consolidated Balance Sheets
(unaudited, in thousands)
| September 30, 2016 | December 31, 2015 | ||||||
| ASSETS | |||||||
| Current | |||||||
| Cash and cash equivalents | $ | 131,184 | $ | 184,496 | |||
| Restricted cash deposits with trustee | 122,856 | - | |||||
| Receivables | |||||||
| Trade, less allowances of $1,388 and $1,734 | 263,199 | 187,138 | |||||
| Related parties | 439 | 1,065 | |||||
| Other | 8,687 | 10,861 | |||||
| Inventories | 451,056 | 384,857 | |||||
| Prepaid expenses and other | 9,842 | 17,153 | |||||
| Total current assets | 987,263 | 785,570 | |||||
| Property and equipment, net | 557,213 | 402,666 | |||||
| Timber deposits | 11,545 | 15,848 | |||||
| Goodwill | 55,433 | 21,823 | |||||
| Intangible assets, net | 15,720 | 10,090 | |||||
| Other assets | 11,631 | 12,609 | |||||
| Total assets | $ | 1,638,805 | $ | 1,248,606 | |||
Boise Cascade Company
Consolidated Balance Sheets (continued)
(unaudited, in thousands, except per-share data)
| September 30, 2016 | December 31, 2015 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current | |||||||
| Current portion of long-term debt | $ | 114,342 | $ | - | |||
| Accounts payable | |||||||
| Trade | 245,091 | 159,029 | |||||
| Related parties | 2,176 | 1,442 | |||||
| Accrued liabilities | |||||||
| Compensation and benefits | 62,007 | 54,712 | |||||
| Interest payable | 4,998 | 3,389 | |||||
| Other | 49,633 | 40,078 | |||||
| Total current liabilities | 478,247 | 258,650 | |||||
| Debt | |||||||
| Long-term debt, less current portion | 467,232 | 344,589 | |||||
| Other | |||||||
| Compensation and benefits | 93,374 | 93,355 | |||||
| Other long-term liabilities | 27,478 | 17,342 | |||||
| 120,852 | 110,697 | ||||||
| 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, 43,518 and 43,413 shares issued, respectively | 435 | 434 | |||||
| Treasury Stock, 4,767 and 4,587 shares at cost, respectively | (126,343 | ) | (123,711 | ) | |||
| Additional paid-in capital | 513,212 | 508,066 | |||||
| Accumulated other comprehensive loss | (91,885 | ) | (93,015 | ) | |||
| Retained earnings | 277,055 | 242,896 | |||||
| Total stockholders' equity | 572,474 | 534,670 | |||||
| Total liabilities and stockholders' equity | $ | 1,638,805 | $ | 1,248,606 | |||
Boise Cascade Company
Consolidated Statements of Cash Flows
(unaudited, in thousands)
| Nine Months Ended | |||||||
| September 30 | |||||||
| 2016 | 2015 | ||||||
| Cash provided by (used for) operations | |||||||
| Net income | $ | 34,159 | $ | 49,854 | |||
| Items in net income not using (providing) cash | |||||||
| Depreciation and amortization, including deferred financing costs and other | 54,609 | 42,314 | |||||
| Stock-based compensation | 5,980 | 4,330 | |||||
| Pension expense | 1,749 | 2,844 | |||||
| Deferred income taxes | 7,008 | 20,722 | |||||
| Change in fair value of interest rate swaps | 765 | - | |||||
| Other | 67 | (1,853 | ) | ||||
| Loss on extinguishment of debt | 9,525 | - | |||||
| Decrease (increase) in working capital, net of acquisitions | |||||||
| Receivables | (62,794 | ) | (59,381 | ) | |||
| Inventories | (48,362 | ) | (10,154 | ) | |||
| Prepaid expenses and other | (3,678 | ) | (2,241 | ) | |||
| Accounts payable and accrued liabilities | 102,313 | 76,485 | |||||
| Pension contributions | (3,338 | ) | (53,701 | ) | |||
| Income taxes payable | 13,623 | 13,489 | |||||
| Restricted cash deposits with trustee for interest payments | (3,681 | ) | - | ||||
| Other | 5,309 | (4,782 | ) | ||||
| Net cash provided by operations | 113,254 | 77,926 | |||||
| Cash provided by (used for) investment | |||||||
| Expenditures for property and equipment | (55,426 | ) | (56,698 | ) | |||
| Acquisitions of businesses and facilities | (215,900 | ) | - | ||||
| Proceeds from sales of assets and other | 546 | 2,959 | |||||
| Net cash used for investment | (270,780 | ) | (53,739 | ) | |||
| Cash provided by (used for) financing | |||||||
| Borrowings of long-term debt, including revolving credit facility | 835,000 | 50,000 | |||||
| Payments on long-term debt, including revolving credit facility | (602,096 | ) | - | ||||
| Restricted cash deposits with trustee for debt payments | (119,175 | ) | - | ||||
| Treasury stock purchased | (2,632 | ) | (23,711 | ) | |||
| Financing costs | (6,319 | ) | (702 | ) | |||
| Tax withholding payments on stock-based awards | (383 | ) | (1,160 | ) | |||
| Other | (181 | ) | 621 | ||||
| Net cash provided by financing | 104,214 | 25,048 | |||||
| Net increase (decrease) in cash and cash equivalents | (53,312 | ) | 49,235 | ||||
| Balance at beginning of the period | 184,496 | 163,549 | |||||
| Balance at end of the period | $ | 131,184 | $ | 212,784 | |||
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 do not include all Notes to Consolidated Financial Statements and should be read in conjunction with the Company's 2015 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.
(a) EBITDA represents income before interest (interest expense, interest income, change in fair value of interest rate swaps, and loss on extinguishment of debt), income taxes, and depreciation and amortization. The following table reconciles net income to EBITDA for the three months ended September 30, 2016 and 2015, and June 30, 2016, and the nine months ended September 30, 2016 and 2015:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30 | June 30, 2016 | September 30 | |||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| (unaudited, in thousands) | |||||||||||||||||||
| Net income | $ | 9,981 | $ | 22,007 | $ | 19,228 | $ | 34,159 | $ | 49,854 | |||||||||
| Interest expense | 7,135 | 5,729 | 6,427 | 19,364 | 16,801 | ||||||||||||||
| Interest income | (60 | ) | (73 | ) | (27 | ) | (236 | ) | (221 | ) | |||||||||
| Change in fair value of interest rate swaps | (836 | ) | - | 1,532 | 765 | - | |||||||||||||
| Loss on extinguishment of debt | 9,525 | - | - | 9,525 | - | ||||||||||||||
| Income tax provision | 5,522 | 12,629 | 10,735 | 19,188 | 28,839 | ||||||||||||||
| Depreciation and amortization | 19,459 | 14,249 | 18,552 | 53,249 | 41,117 | ||||||||||||||
| EBITDA | $ | 50,726 | $ | 54,541 | $ | 56,447 | $ | 136,014 | $ | 136,390 | |||||||||
The following table reconciles segment income (loss) to EBITDA for the three months ended September 30, 2016 and 2015, and June 30, 2016, and the nine months ended September 30, 2016 and 2015:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30 | June 30, 2016 | September 30 | |||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| (unaudited, in thousands) | |||||||||||||||||||
| Wood Products | |||||||||||||||||||
| Segment income | $ | 11,564 | $ | 21,876 | $ | 16,309 | $ | 33,758 | $ | 66,484 | |||||||||
| Depreciation and amortization | 15,625 | 11,049 | 14,769 | 42,028 | 32,181 | ||||||||||||||
| EBITDA | 27,189 | 32,925 | 31,078 | 75,786 | 98,665 | ||||||||||||||
| Building Materials Distribution | |||||||||||||||||||
| Segment income | 26,415 | 22,684 | 29,117 | 68,905 | 45,606 | ||||||||||||||
| Depreciation and amortization | 3,514 | 3,121 | 3,354 | 10,103 | 8,734 | ||||||||||||||
| EBITDA | 29,929 | 25,805 | 32,471 | 79,008 | 54,340 | ||||||||||||||
| Corporate and Other | |||||||||||||||||||
| Segment loss | (6,712 | ) | (4,268 | ) | (7,531 | ) | (19,898 | ) | (16,817 | ) | |||||||||
| Depreciation and amortization | 320 | 79 | 429 | 1,118 | 202 | ||||||||||||||
| EBITDA | (6,392 | ) | (4,189 | ) | (7,102 | ) | (18,780 | ) | (16,615 | ) | |||||||||
| Total Company EBITDA | $ | 50,726 | $ | 54,541 | $ | 56,447 | $ | 136,014 | $ | 136,390 | |||||||||
Investor contact: Wayne Rancourt, 208-384-6073
Media contact: John Sahlberg, 208-384-6451