Boise Posts Decline in Second Quarter Income
Aug. 3, 2006 - Boise Cascade Holdings, L.L.C., today reported second quarter 2006 income from operations of $60.1 million, compared with $30.5 million for the first quarter of 2006. In second quarter 2005, Boise reported income from operations of $77.4 million.
Second quarter 2006 net income was $33.4 million, compared with $0.1 million in the first quarter of 2006, which included $2.1 million of income for special items. This compares with a net loss of $14.5 million for the same period a year ago, which included $51.9 million of loss for special items.
"We continue to track well with our plans," said Tom Stephens, chairman and chief executive officer. "Our Paper business continues to make progress in growing sales of higher value specialty and premium papers while taking advantage of strengthening commodity markets through our relationship with OfficeMax. Our Packaging & Newsprint business is well positioned to take advantage of the strengthening packaging markets, and our recent acquisition of Central Texas Corrugated (CTC) is adding very significant results. While housing markets are softening, our Building Materials Distribution business continued to grow and is improving their product mix. While our Wood Products business experienced lower commodity prices, the conversion of more of our veneer into engineered wood has mitigated the impact of commodity price declines."
At June 30, 2006, the company's net debt was $1.3 billion. The aggregate leveraged buyout debt at October 29, 2004, was $3.2 billion, including $1.2 billion of debt incurred by Boise Land & Timber Corporation, which was repaid in February 2005. Net debt includes long- and short-term debt owed to third parties, less cash and cash equivalents. It excludes a $279 million note payable to a related party.
Sales in second quarter 2006 were $1.6 billion, compared with $1.5 billion in both the first quarter of 2006 and the second quarter of 2005.
Comparing second quarter 2006 with the same period a year ago, Building Materials Distribution sales increased 5%, due primarily to increased sales volumes. Wood Products sales were down 6% relative to the same period in 2005, due primarily to lower plywood and engineered wood products prices. This decrease was offset, in part, by improved particleboard prices. Paper sales increased 8%, due primarily to improved pricing for commodity papers and increased sales volumes of specialty and premium papers offset, in part, by a modest decrease in commodity sales volumes. Packaging & Newsprint sales increased 14%, due primarily to improved newsprint pricing coupled with the addition of CTC, which we purchased in February. These increases were offset, in part, by the adoption of a new accounting standard that related to containerboard trade sales. In January 2006, we adopted Emerging Issues Task Force 04-13, Accounting for Purchases and Sales of Inventory with the Same Counterparty. Had this consensus been in effect in 2005, it would have reduced sales $19.6 million for the three months ended June 30, 2005, and would have reduced materials, labor, and other operating expenses by about the same amount.
Income From Operations
Income from operations decreased $17.3 million to $60.1 million in second quarter 2006, compared with $77.4 million in the same period a year ago. Income from operations in first quarter 2006 was $30.5 million.
Comparing second quarter 2006 with second quarter 2005, segment income in Building Materials Distribution increased $4.3 million, from $21.0 million a year ago to $25.3 million, due primarily to increased sales volumes and a better product mix offset, in part, by lower commodity margins and higher operating costs. Segment income in Wood Products declined $14.1 million, from $31.3 million a year ago to $17.2 million, due primarily to lower plywood and EWP prices that were lower due to product mix, coupled with higher delivered- log costs. The negative impacts on segment income were offset, in part, by improved particleboard prices. Segment income in Paper decreased $10.6 million, from $27.1 million a year ago to $16.5 million, due primarily to increases in energy, chemical, and fiber costs offset, in part, by higher uncoated free sheet prices. Segment income in Packaging & Newsprint increased $3.7 million, from $10.1 million a year ago to $13.8 million, due primarily to improved prices for newsprint and the addition of CTC offset, in part, by higher energy, chemical, and fiber costs.
SOURCE: Boise Cascade Holdings, L.L.C.