Boise Cascade Company ((BCC)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The latest earnings call from Boise Cascade Company painted a mixed picture, reflecting both achievements and challenges. While the company celebrated the successful modernization of the Oakdale mill and improvements in gross margins for its Building Materials Distribution (BMD) segment, it also faced significant hurdles. Declines in housing starts, consolidated sales, and segment EBITDA, coupled with operational disruptions from scheduled outages and a strike at one facility, highlighted the complex landscape the company is navigating.
Oakdale Mill Modernization
The modernization project at the Oakdale mill is now substantially complete, marking a significant milestone for Boise Cascade. This enhancement is expected to boost operational efficiency and reliability, positioning the company to better handle future demands and challenges.
BMD Gross Margin Improvement
Boise Cascade reported a notable increase in BMD’s gross margin percentage, which rose by 60 basis points year-over-year to 15.4%. This improvement was primarily driven by increased margins on general line products, showcasing the segment’s robust performance despite broader market challenges.
Strong Capital Expenditure and Shareholder Returns
In the first half of 2025, Boise Cascade invested $132 million in capital expenditures, focusing on Wood Products and BMD. Additionally, the company returned value to shareholders by paying $18 million in dividends and repurchasing approximately $96 million in common stock, demonstrating a commitment to shareholder value.
LVL Volume Growth
The company experienced a strong demand for Laminated Veneer Lumber (LVL), with volumes increasing by 8% year-over-year and 18% sequentially. This growth indicates a robust market for this product category, contributing positively to the company’s overall performance.
Completion of Lease Buyouts
Boise Cascade completed lease buyouts for distribution centers in Chicago and Minneapolis, which is expected to enhance its market presence and operational capabilities in these key regions.
Decline in Housing Starts
The earnings call highlighted a decline in housing starts, with total U.S. housing starts and single-family housing starts decreasing by 1% and 8%, respectively, compared to the prior-year quarter. This trend poses a challenge for the company’s growth in the residential construction sector.
Decrease in Consolidated Sales
Consolidated sales for the second quarter stood at $1.7 billion, marking a 3% decline from the same period in 2024. This decrease reflects the broader market challenges and competitive pressures faced by Boise Cascade.
Wood Products Sales and EBITDA Decline
Sales of wood products fell by 9% year-over-year, with segment EBITDA dropping from $95.1 million to $37.3 million. The decline was attributed to lower sales prices and volumes, underscoring the difficulties in this segment.
Scheduled Outage and Maintenance Impact
Operational disruptions due to the Oakdale mill outage and the Kettle Falls maintenance project negatively impacted plywood sales and EBITDA, highlighting the operational challenges the company faced during the quarter.
BMD Sales Decline
Despite flat sales volumes, BMD sales decreased by 2% year-over-year, driven by a 2% decrease in prices. This decline reflects the competitive pressures and market dynamics affecting the segment.
Strike at Billings Facility
An ongoing strike at the Billings facility, involving 19 union representatives, was noted as a limited but significant disruption. The company is working to address the situation and minimize its impact on operations.
Forward-Looking Guidance
Looking ahead, Boise Cascade anticipates continued headwinds in residential construction activity for the third quarter. The company projects EBITDA for the Wood Products segment to be between $20 million and $30 million, with expected declines in EWP volumes and pricing. For the BMD segment, EBITDA is estimated to be between $70 million and $80 million. Despite these challenges, the company remains committed to investing in growth opportunities and maintaining strong service standards, emphasizing the importance of distribution flexibility and inventory management.
In conclusion, Boise Cascade’s earnings call reflected a complex mix of achievements and challenges. While the successful modernization of the Oakdale mill and improvements in BMD gross margins are positive developments, declines in housing starts, sales, and EBITDA underscore the hurdles the company faces. Looking forward, Boise Cascade remains focused on navigating market uncertainties and investing in growth opportunities.