BCC - Earnings call transcript Q1 2018

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Operator

Good morning. My name is Bruce, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Boise Cascade First Quarter 2018 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. begin, statements you business about anticipated performance. we may this prospects Before financial forward-looking contain the Instructions] I that remind call and [Operator company's future company guarantees performance, These update of are duty to not and statements the undertakes no them. future

management's those reflect they today, in call. expressed of or statements a results may are uncertainties. risks implied and these Actual to differ number expectations Although subject business materially from this

anticipated, of discussion It differ factors that refer conference. actual recent cause Cascade's to Cascade. results pleasure is to SEC. the may from introduce Wayne results filings the your CFO President, Mr. you of For Vice and please my the Boise Boise you to Rancourt, to begin a with Executive Treasurer Rancourt, now may

Wayne Rancourt

everyone. like to would Bruce. Thank Update. to XXXX Call morning, you, Cascade's Boise and Good you Earnings Business Quarter First welcome I

call Joining Operations. Head Products our Wood Hutchinson, me Corrick, our on Materials Dan Nick of today's our CEO; of Head Building and are Operations; Tom Stokes, Distribution

Turning net to appendix our would from information the and reconciliations includes statements. out GAAP our point forward-looking to EBITDA. regarding The EBITDA adjusted Slide income X, I

Now I to Corrick. over the would turn to call Tom like

Tom Corrick

you today. Thanks, X. everyone. us morning, Thank earnings call joining Wayne. our I Good for Slide on am for

Our the billion first quarter XXXX. were sales of from quarter first $X.X of up XX%

ago income was quarter. year up share, the net Our from $XX.X million per or substantially $X.XX

results stronger businesses. its performances quarter reflect first both The in

lumber OSP $XX.X higher year’s offset segment improved the to of pricing ago the higher stronger pricing, Our EWP Wood $X.X year costs. much last the first benefit million log the by plywood, Wood in quarter. first on to with Products Business Manufacturing and partially when of and million input income in quarter quarter compared reported compared products

you quarter $XX.X Materials Distribution the sales on executed quarterly the tailwinds comments taking through more the I million Wayne take $XXX of back with outstanding more Building income questions. will we well million. and and before quarter then growing in come advantage business of by line general walk volumes and will on BMD detail, in of Our segment outlook financial few and EWP commodity pricing. first your results a with an reported

Wayne Rancourt

Tom. you, $XXX in first Products first up sales quarter XX% to the segment, including quarter, X. Slide distribution sales on Wood our I million, XXXX. Thank am were from

income compared in those from income in leverage. in million improvement million of other be adjusted costs million. XXXX the driven of as million segment prior can amounts negative and The $X.X The As costs to Tom motioned, of the for release. of income $XX.X was EBITDA EBITDA of profit million items quarter. quarter first XXXX. with This $XX.X plywood, EBITDA first Reported the sales in reported $XX.X prices offset items $XX and well to million, year net partially northwest of the ago fourth Wood of and higher higher corporate higher volumes in EBITDA almost manufacture business dollars from reported our EWP first of in the OSB by earnings Products used income higher in expense unallocated of the by was in gross negative I-joist. operating sales $XX.X log BMD the the quarter year reported was impacting quarter. X%, million The and segment double segment XX% $XX.X million of increase for due increased lumber, and and sales respectively. Sales million, $XXX BMD’s up primarily as sales compares resulting in found quarter. XX% were $XX.X in EBITDA costs quarter XXXX. the was quarter the positive our of reported or EBITDA million the prices tables specific $X.X in The

X. Slide to Turning

up quarter first Pricing and LVL X% X% in I-joist volumes were quarter first ago respectively, quarter was quarter. the first sales and for LVL XXXX. and X% I-joist compared up for X% with and from Our year

to for as the this through move to XXXX comparisons EWP expect favorable of rest to pricing we continue We year. see

X. Slide to Turning

products quarter million first plywood Our feet, quarter from volume sales first and X% was wood $XXX XXXX. up

demand up operated net we remained internally quarter. unusually allowing Plywood significant and a sales in the XXXX XX% was our quarter directed in we advantage amount of for to $XXX and While veneer pricing for production plywood plywood expected. quarter, stronger price strong the quarter, than pricing. our pricing veneer The from in us first early quarter has strong was of much EWP in first produced take plywood. the second average for during first mills Pricing plywood well quarter frankly the

meaningful However, a we of a in had on and pricing supply/demand Changes industry of plywood addressed. from to do in comes have moderate in capacity plywood transportation Canada year of not imports and experienced few and in number new strand Brazil balance board the this constraints online first U.S. first volume quarter oriented the expect as in the the impact later the regions months are XXXX.

of we XX.X% products first million, increased of BMD’s interest, The reported the set and of seasonal up quarter quarter representing our increase this key a elements gross BMD's the XX%, first offset to accrued XXXX. the payable. working Moving seasonal increased by million was accounts capital, increase XX.X%, during percentage BMD’s and quarter The from items tax XX% fully use points margin quarter, Sales accounts up which was first first area, improvement the was sales By income up margin XXXX. significant excluding basis to and the Slide in out quarter, have of were not products Slide the EBITDA receivable the EWP year-ago volume company for inventories working first General XX%. growth in from sales increased in $XXX in net capital. cash. commodity X.X% $XXX.X quarter. The X. X.X% and meaningful cash, was X, again expense increased quarter. On earnings leverage BMD part once reported a product was in XX XX%. line quarter the BMD's for

we also is use incentive customer the normally liabilities. rebates accrued the and accruals As to pay during compensation out quarter, cash reducing case,

this as broken more has payable information Exhibit to million by of inventory I'm now segments reminder, for Slide detail. down in We X-K and filed the a accounts that As interested cash. with statistical receivables, XX.X X. quarter data our those $XXX.X on finished first are

approximately total lines. availability Our which was $XXX our reflects our our cash March bank at under liquidity million, and available XX

Distributors Nashville quarter, value for gross acquisition acquisition business week during Capital management and with last currently remains the the and We below are other priority leverage the for Each We we debt-to-EBITDA. in a outlook April, our of and shareholder cash for strong executing board. our board. target to of our create uses high similar X.X company. well times as allocation our review our opportunities stated Lumberman’s focus Wholesale opportunity on a of close remains did as

$XX a is tax between our not recent we major Our million expected year, excluding result and be legislation to this million capital do and of spending spending, acquisitions, in $XX as the changes. the anticipate changes

in first a rate a result higher expected was Our as divested the in share creating first quarter. equity quarter incentives booked appreciation, of tax price we lower deduction for the than tax

expect rate around continue We our book effective to be normally XX%. to

to Our lastly, return. contribution prior plan make our a And be discretionary in I’d like cash attention to tax XXXX rate XX%. third for XXXX federal around quarter finalizing the should tax

of in We We note. to been a of retirees one-third will our July in completed payouts are more ongoing take XX% right portion those of to of for benefit benefit our advantage X. with One transferred of that April payments obligations. item already a no and are responsibility final the pension prudential, has in for million a risk approximately modest XXXX, assume administration for They considering starting pension contribution for pension for payments made. and We deduction status. pension plans late take insurance but effect $XXX.XX will assets over they prudential discussion

to the We million the to result settlement than it $XX expected in wrap a of in pension one-time is quarter up. not going booked material result in pension you the will settlement to as forward. turn Other will charge, I transaction. record back the our expense second Tom, transaction change a charge non-cash over

Tom Corrick

Wayne. housing starts million XXXX is in The U.S. consensus X.XX from up X.X XXXX. for Thank million, you, estimate April

While challenges many availability, very building for housing new as are constraints demand the on pressures, continued labor support facing remains margin builders for block providing product and encouraging markets. cost-driven key our

return X.X million. believe to normalized continue encouraged that starts by remain X.X market an the I We environment. in to demographics current housing million U.S. will support of the eventual to

variance Wood control have our to BMD and earnings we and within number revenue Importantly, to also Products a continue growth. of drive in

activity. internally captures the system and Wood is increases into products to Our the more gaining its veneer traction, responding proportion flexible engineered pricing the by and efforts demand supported construction more changes are EWP growth a us be of getting in which be plywood allows improves, will as in in we home to believe on Products market. wood margin produced higher

activities operate price Effectively products, both We are changes job provides We national our opportunities done an the in that managing that BMD pricing just to this for distribution a at and cost measurable output that as improvements terrific executing our appropriate safely, recognize has our return at as the operational quality remain will which impacts and responding returns and at produce the are a of shareholder of forefront distribution do from In the reliability requires a year. on level. commodity group on important seeing generating capital. results mills our arena, front. and market so the local competitive

acquisitions the the was panel the quarter to announced second in this issues will compared Wood of on looking of to Distributors impact this earnings for earnings. direction product Clearly, Products its gain week markets are geographic pleased completed near active we efforts infill year traction Medford, the lumber up are and to our On Nashville, which capacity acquisitions. historic planned both demand a and online has Norman have garnering robust discussing BMD with and sales and of and line trade our pricing to levels. Both been add extensions Oregon, in It peak team seeking of hovering head last this industry prices year, also avenues lot attention. to acquisition big markets at predict to rate pricing other start difficult earlier pursuing side, lumber of structural Commodity Distribution very a likely pricing Wholesale to week. with BMD, the panels [Indiscernible] Lumberman’s in specific change and businesses. see locations in growth acquisition to and geographic last where these push is additions Tennessee, and of and levels. at improve, beginning I’m coming

a the but with commodity and of each XXXX, time. job set Bruce, Our first have the employees want of you leveraging another balance we us year. would the it close, the for excellent would good us doing execution for as financial quarter. in you questions will this of We strong results first last an this depend safety enjoyed phone our To performance appreciate market our best for in lot on call quarter welcome doing the a open outstanding thank quarter up at morning. company performance I our of lines? to the history I joining on in safely, any please pricing

Operator

question Bank Staphos comes George from first line from our And Instructions] of the America. of [Operator

now is line open. Your

George Staphos

you some how Tom, I’ll given imports turn routs? from X% Should for versus your or up view? from the do so spreads dollar of impact cost, you say much would it quickly questions how the XX% and that in Europe? start over. question where another we side, are three think to one. would two at what terms because in on supply two. we the of Brazilian worry the If chain went dollar adjust That's the not quickly see Question could the supply cash here, ask about

last plywood obviously Just now existing well you how there the have OSB and their my where some taking given the pretty right residuals been operating Are question delays do any of demand new some the with and are think markets much Thank markets issues out for noted from you of capacity curiosity. cue pickup Asia? you. in coming issues coming just then on? And seeing out fiber of

Tom Corrick

year to the you Brazil, pretty into similar the perspective, it's think U.S., would I increase the close I last U.S. in Brazilians. in pretty with our On market for and We're attractive tell it's very from currently currency pricing similar the seeing to $X.X, that shipments

into perspective, Brazilians balance for it like the obviously So feels From now, far the U.S. time had a the major there for impact hasn’t at this the on profitable go sell market the the European market it much would is same more clearly a very, at on very to Brazilians here, limits how point. right is profitable in supply/demand but market this our Europe. be but

is the U.S. So relative I be exists underlying to think the to add going unutilized as continue volume real into question capacity in what markets. to additional Brazil

As to need that go, you -- you George? got what

George Staphos

It's a good comment.

follow we [Indiscernible]? the up point, just the then on But question what OSB I will equation, later had And perhaps. and and plywood We that on say there? on

Tom Corrick

I Well, situation have supplies in Particularly growth frankly. demand plywood veneer think and we the good are on AWP, now, supply tight. a seeing of that with we're right

And plants you tight. would related been OSB So for OSB But We away is tight had in market. veneer markets with continuing prices a that major on Canada. plywood. pulled of large driven March-April substitute timeframe. has also very the I tell and had high from in to couple there has freight for issue plywood very supply are a the that We've OSB outrages outrages

there in this plywood OSB, where clearly, it think pricing. lift with I type is pricing to we’re of helps environment

George Staphos

just of what think Or here? from Tom, you can That question. I it. on drive kind a would quickly. plywood they the Do OSB disconnect? didn’t was that will think frame you

Tom Corrick

vice OSB if third tick think driven by effect. the plywood substitution tick I with versa, So just question continues And up, to George? underlying again, your And George. won't it,

George Staphos

you in in just seeing some terms of are there demand virgin of -- in kind residual Just fiber? any well pickup advertised of the issues Asia given

Tom Corrick

the now. right western seeing definitely in U.S. higher residual are pricing We

Operator

next our from from the comes line Brian of Goldman Maguire question And Sachs.

line is now open. Your

Brian Maguire

on had ago some question really volume. year we there’s the than a are lot stronger when EWP pre-buying. Just modeled. I And comp They a know had a you tough

if what's production wondered point to of on And could comment with in quarter? then pre-buying demand year? just if keep up robust Just if just ability if be production similarly mean, of capability rest it continue have overall there? you view, there the to the could this the been your some for I from the your

Dan Hutchinson

Brian. Dan, is This

first little I’ll the and will. a price question, after typically increase, think the bit the strong our price saw do you the files increase have if today, and had, some that very - on we pre-buying, And On both this you but of like order see remained I the a EWP you some tell when you quite you East time that, West.

some had is to demand there question And our capacity like forward. with second going looks it on. So do going real your

Brian Maguire

double Yes, market yes, just looking continue you at single - high of if maybe be grow your to housing even that? see line with ramp able digits, you in kind would digits, to the production

Dan Hutchinson

Coast, the pretty a On now. we situation West tight are in right

yet. all But have kind of we’ve at Southeast, do capacity. of the added assets those not in So full speeds we running

bit And we of we Roxboro on So that. maybe think a more but are little find our facilities. ramping to limited by ability up find we're veneer, some I still can

the we in X% X% think or are Southeast, I moves it yes, So if fine.

Brian Maguire

on up Winston lumber plywood the that the ramping capacity you're and mill and update in any hearing Wayne, beyond other is the making then, how progress, markets? that And with the

Dan Hutchinson

Dan Brian, is this again.

and along I startup the think the be yet, I quite progress. they Winston think don't through think they mill want I are moving where is making but they’re curve, to

Wayne Rancourt

I'm But And some and be hearing new major, expansion rebuilds, within put capacity. into or talk plant about creek now. There the plan always capacity anybody multiple not anything dry about a those industry. the greenfielding I’m to right continue major not hearing

Brian Maguire

the EBIT rough kind one. that you about announced size way year? frame have how to relative or you this ballpark far think acquisitions last Just can contribution a those? from to of any Maybe two so And the

Wayne Rancourt

includes sales markets think put either and the to mix But on locations just out those, given million going oday. like at more XXX with end get we topline the to take think or in one think again, that across markets up of EBITDA reasons at a others, faster the not you the of the way purposely And it’s number you very XX-plus I one is has, of one it scale. if are large than we Lumberman's in look materiality. Yes, about is, north a it Nashville very acquisition, really well but the terms we wanted that Nashville mix country. Dallas, great scope growing one Houston, of And and below its to with Denver narrow Boise’s that’s and product Nashville into and

and We us California, have to Oregon. the in opportunity story with truck in access up and our Northern southern Nevada serving Oregon. have revenue got we Southern the we in gives at Nashville hauls topline of think That much the And market. substantial been out Memphis the better location, EBITDA and freight ramp similar

Norman revenue of a think it relatively small the in impact, be again, that in world. part market presents but good opportunity relative will So the us acquisition terms the of for we

Operator

our Markets. the line [Kevin question And Mentor] from next Capital comes of from BMO

line Your is now open.

Unidentified Analyst

I First curious. are of lumber are levels from we wood and grids, and that with you have some just record gaining prices in seeing the on share mean, seen see this question. I'm hit market rally we’ve lumber? any engineered

Dan Hutchinson

Dan demand product, that. the -- to in prices very obviously and continued what EWP. have it I demand would is is that EWP the do. LVL price It's impacted spite if But of particularly that say strong. But strong better maybe It's higher strong for substitute is being on the the the we side lumber to EWP growth lumber again. one This our is sell by in demand,

Wayne Rancourt

of the family generally single starts. model Wood slightly volumes LVL ahead

with LVL starts number southeast, there of grade housing slab is you U.S. construction. or is some still think the southern the If there in the on being a penetration on side, more

based little there pretty longer-term multifamily it's I not swing forth see of a starts single-family But LVL of trend. effect I-joist, price. the on it’s in some with bit. that they lagging one’s backend will think actually it's sticky is both a some substitution And [Indiscernible] but with on issues, directions. design a is And penetration for homebuilders, lumber, the So maybe most or you again,

Dan Hutchinson

think in mature both points. directions. in I pretty key the this I-joist product really, there at particular is sticky point that’s It's very is

I in a So drop significant drop wouldn’t significant saw I-joist expect in lumber prices. the if we

Unidentified Analyst

Second QX? that expectations are exceeded quarter the the things three into of of expectations what or year out looking start at QX, to last Relative in the of your kind or the think two question. you end at your

Tom Corrick

lumber peak and Clearly A where on very in West grow of number things I months, -- see prices pretty would been summer levels a weather. particularly northeastern through. in normal this when the are normally on tight only than handle we we've had gone that kind storms cooperative has U.S. has our of the think weather year

are are or around in committing or I So are again, think or part supply either little I than people I working funding longer on nervousness and transportation world first good times. these levels volumes in having at issues a frankly at have think that difficulty down of overall lead then year. balance probably And getting channel clearly the the the five pricing in I quarter product these just tightness capital side think that capital some been levels. weaker think of number But the requirement contributed the those bit price working has the

the transportation valuation. are I because So hand and and the people has continuing and mouth good on to of products, absolute a of go again of lot think because demand been

I there support on So demand lot think pricing. a for is the side, the of

supply balanced move of job construction seen have demand good and people giving is a and terms to what and in to pretty on builders but there activity. demand are sites they nervousness, with needs some lot material think of clearly I

Unidentified Company Representative

add I a my at would would tactical from I level. just perspective be very quickly.

the we of are specific a of every they think in how strength quarter. surprise markets been really a escalation surprise pretty the are on I in and the Those U.S. think meaningful as been northwest it's log rapid cost the western corresponding I well. impacts perform

Unidentified Analyst

trend? those see think it get as ease to so kind you you to these normal take trucking transportation So May? issues just Or back of longer things, is to on have your started into move going two to

Nick Stokes

improvement that I anything less next Nick a of At point, out did, it's particularly at at Canada. indicate is weeks still Stokes. as rail will south Canada a see have border be but challenging this and least several months of trucking not The to challenge don't get over that the we going the rail significant didn’t it in forward. of out This the seen bad issues as

Unidentified Analyst

on How And quarter-over-quarter? much year-over-year kind then the prices your either high one drag very one. West log and was quick OSB Coast of results a or

Wayne Rancourt

that probably increase on first component you log drag. for first in web Oregon, $X and first drag. look price is Northwest, tell quarter Western the it were you the at if million on costs compared the you to stock Pacific I’d has Yes, a if primary OSB, And ago, input, million it’s the year similarly, compared to where negative about quarter 'XX $X year we quarter a it’s about ago been

Operator

next our comes Garner question And Global. from of the from Reuben line Seaport

Your now is line open.

Reuben Garner

levels as following next a drag it for and lower quarters? the that the OSB could at in where would what's the few you drag prices? that was maybe outlook QX of few cost next is and then your pricing couple what be if last up question of on what over in add just gave kind transportation you And costs, retains couple quarters -- numbers, So today's inflation maybe can

Tom Corrick

to up the it as the Asia, situation. seen I to cost particularly transportation on But hit trucking higher are see persists the levels started the I in year. drive pricing going to in transportation, on to Demand levels to that on and in costs customers. think long it’s It lumber XX% dimension log business, as likely the probably in through Northwest, will west ramp that. tried on X% export at going move we late is. change the And distribution last level think that the in On as wood. range. costs are we absolute that Nick haven't in costs increased logs. see we a log think pass particularly continue huge I in in the inbound in to Dan's And to, alluded delivered it we

through So in over drag before of the from doesn’t we roll as of then. price million that you anniversary likely will will probably be in early $X standpoint continue into most it and and start part year Northwest 'XX get 'XX we latter the will a this per if quarter that

the had OSB side, particularly panel 'XX. we in strong the very On pricing hurricanes following late

I see have So and in the see prices. will of as XQ second we comp quarter, as we into will happens another million like still quarter. that we what we third a issues. negative OSB but to know don't come same got does certainly those will both $X kind certainly of third drag early get late comp quarter we on quarter, plants on That But in on panel have negative second

Reuben Garner

discuss better couple to side year big through you given update can long geographical that whether markets start term? exposure on us the the of think or distribution the now States or can acquisitions in then maybe near the to the you maybe and in do you what left greenfield And M&A you or on maybe want your merger year, negative term have then serve this positive how the the and many from impact earlier

Tom Corrick

to fill-in. up the mean done. represent terms in recent my third of I I Nashville St. as we've decided the essentially geographic Greenfield. ended fill-ins we where we the mind think team kind Louis, in Norman in of will with to one

fill-in. is Oregon Southern

take there a currently geographic XX fair where like probably and you time conversations X, terms in develops. expansion and of or and good continuing it's markets Nick's I how the lot lot a industrial time working efforts would lift on of on getting business, amount spending fill-in. four a other spending map, U.S. in is that those category, X with in But cases to pretty or commercial we’re And of five sales team of think you not we're spend where and in it's XX we well. if probably multifamily, of time I see in do as a will tell couple or we people is the and products also

Operator

Chip from comes of Vertical. question next Dillon Our the line from

is line now Your open.

Chip Dillon

-- about plant, are few a expectations yet maybe you plant, Could Roxboro longer grow. stays especially you but seem diminished, run It update if wasn’t And minutes. more I demand apologize more Roxboro the continues But strong? an stands? the like on first us develop talked the see give I little that term and this. that is plan if there to any obviously the market to that consistently and there the where

Dan Hutchinson

Dan is is a there Yes, certainly planned consistently. more it This is run Hutchinson. have to

the the of by think seeing levels progress there. restarted the a end of how restarted needed I over we press quarter. to. a quarters out comfortable shipping consistent towards the couple that while there last going basis on and of quite up really real we're on getting the about the We line It's that's I it's a we towards back we’ll be

the to clearly demand good to get running will a intention So it a company. and on our steady basis. And be we've consistent it it situation, got I'm the about feel sure better for starting is with contributor

Chip Dillon

second Okay, and then on question. a

opinion have the if first just to all situation so of CapEx I’d love lot to to where we of because housing of build activity us gave still bigger guidance you to population about for as of million and your what why you this. for still your still able you expanding course X.X first CapEx years, well, is - with is feel with on that actually feel under year in know don’t are the back people constrain kind it XX this to way relative see it be You and of all labor would in seems that, the like a significant strange terms you mind, would availability. here out X.X, if do that X.X current of evidence us see of look next you XX your I cutting ways do But parachute know And of some still that in wonder in at - does permitted years of the years the you Do because maybe like in is or starts, now crisis, couple kind at terms near and of to we the and exceeding down. or Or you when talking stay use of after right maybe thinking about. to of levels? land you XX%

Wayne Rancourt

Wayne, I fingers you. honest this should of pointing with is a one. be This lot saying I’ll and answer

dollars the position of continued the and to got to distribution the got sure is, into going there be I you on and put make pretty from cost know, that Having Dan really side, much don’t where has to the probably alluded think long will mills And the growth. point the low view eventual footprint are would comes. he's to rather as that support want us paid. Nick’s EWP organic cost short and overcapacity. single-family frankly adding as And importantly, us cycle whenever number give real any for of And our some rather our I the the well that’s add defend, sure capacity to long the while it continue than mill, out to we’ve to. fill heavily manufacturing what standpoint demand work to see to your tooth creek. manufacturing there dentist this he productivity to a growth, in that, we a at on meaningful group state good make point continued side we with more us we than on maintained. we downturn been will I’d added and I And it footprint. the put in slower the is in footprint. said continue markets

the Jersey, it’s growth think, eventual partially Nick's for from for capital, if XX his costs over Done I We’re Dan’s working additional I’m in cycle. will in deploy of cycle, on next the support the to similar some probably but -- build XX, out. And resiliency Louis scale downturn We’ll reduce what to and stuff up doing business situation, next months this Nashville. example. sure it footprint the St. New to increase the the fixed be we in in

Tom Corrick

see few that a spend talking that I need From been on Chip, add, would assets on now our reflects to competitive. for own significantly that million But million on that years would or the that I the we make that current to materially will down number that to to And And up we $XX things relative today there asset be have. base the we think that. may number $XX don't some we them we've sense. keep think I perspective, anything about change margin

Chip Dillon

trough, very in million? plywood around in course And thought. guess then in these but be I million a I and doing you. is terms public talking certainly not Got have question. the mid-cycle, EWP all going came It’s were added GP now since certainly together, East, When then the are would not not of have what general made north six of think of adding a mid-cycle mills business peak view you $XXX $XXX I that would what quite better ago, business. you than of of not be With just acquisitions you you And would you thought. mention. to distribution, mills. the that a years your you EBITDA we to maybe One great added those and guys don’t

Tom Corrick

mid-cycle, you Well, Chip, housing What talking as the let's same at of starts view make are sure mid-cycle. you think or both what X.X do are about do X.X we or mid-cycle? definition

Chip Dillon

it probably it’s keeps head the that it but to say my be that, I’d population, XXX. in given my a feels heart place telling higher be like that's should me by good listing certainly

are there that even means yet. So we not

Tom Corrick

with Nick’s underway have in billion said $X somewhere and I maybe around got revenues. fill-in, get with business Yes, to $X.X organics that think would originally billion of to we efforts geographic the the we the we business

what given think will standpoint to a said given billion where towards another we we $X.X obviously from probably prices. in geographic do commodity these I that and some been ’XX, that is and has fill-in, billion, on not there able $X.X I growth think he of revenue seeing we're I of what we billion or some there have pushing of would were depends early that in are where $X

of side So of out of get the would we on fall or somewhere acquisition the said that would synergies around - of X Nick’s ledge. have thought the XXX. recently X we synergies GP We of

looks thought we XXX got been in we side obviously so he funded the pretty cost you shot that the we've currently take XXX what the I at relative not business and would level, thought XXX today, to we And XXX. got ’XX, to this acquisitions, mid-cycle seeing. thought We so Nick’s costs the a and little some decent on around we area product you at have snapshot then of if thought we somewhere to be. be And We kind would we in be that are log could well bit quarter of with are XXX. plywood OSB prices of maybe think a wood are or Again, careful. where would some would we be above

So seeing the But I'd about area XXX towards pretty wood that I sit where wouldn’t on business, XXX we input if and good to to plywood. cost based what kind pricing feel mid-cycle think the say we're can in I of that. here push today close on on anywhere

XXX were would seeing from north you distribution we are mid-cycle and at here wood are have XXX I the the think out to is on we then I to day and input we've I able business think see side on the a business to of pricing got side. on but based anticipated the upside every think today realizations still of more what in but product of less hopefully logs out come and probably total of XXX likely is so slightly hard think contribution will I probably EWP OSB on working on retrenchment that cost we

Operator

Sidoti. Jacome question line Dan from of next the comes from Our

Dan Jacome

Just Lumberman's wanted go very to high quickly back very on level.

news third-party overlap you wanted your was wondering you base you any if as relationship relationships, first? just said brought then markets or And into current, it and more Nashville Just with it to the get you high on to brought maybe mix about maybe guys? LBL, talk sort have but you a there this, of it I-joist like penetration some may if can thought level what don’t very or just I

Nick Stokes

This is Nick Stokes.

suppliers along. As have you Nashville there in have we bit that was of a historically little expect to, there than been heavier presence a so are a exposed some regional drag

Medford we’re well cases regarded they they and currently Nashville relationships with of One customers how for that and are, suppliers them. have the both with and was key doing those and in the attributes are that many ones business suppliers

component to and to doing As and add that's it current big relates obviously their of EWP that continue. very expect successful we Nashville, a business. of They've been to

Tom Corrick

very the a as are there team some we've And a relationship for that new quite team, risk They had basis. integration would said, supplier we management with for key the we and Nick overlap on of on transition Boise true is commercial market. they the and distributor But Cascade going EWP on as the in place longstanding Norman. considered side we same want a the into of management knowledge low, the

Nick Stokes

issues thing is other integration The add I’d of expect on the based operations. we zero both of supplier those

Dan Jacome

and just about plain then all the side, And on brick low-hanging of like vanilla thinking on bulk marketing? customer but - do or like think you the service just future maybe sell distribution is of the here, no opportunities I’m is straight expert fruit it in things above? and Or packaging

Nick Stokes

the of It’s above. all

Dan Jacome

about from me. that XX on XX All do remodel we repair it outlook and think months? then to And you right. high-level as And Fair next very have was the enough. a

Tom Corrick

we and think repair favorable. will Generally, remodel activity be

good growth, are had reasonably employment home move-up in Interest good values. rates have still low. We

et very existing you favorable. employment, the So home cetera sales, are all backdrop need in terms of

thinking general. positive in remodel, -- X% we and pretty probably impact So we in to and still it’s repair growth see are X% a

Operator

And a line of from follow-up Staphos. we George have the

is Your open. line now

George Staphos

back And kind going-forward well to when convert you that X%. do revenue or dig and said there I got some saw various terms BMD on as Or around between of typical bit that growth in you this drove I you tailwind that's that pricing mentioned means raised to benchmark and revenue how a want pricing I and converted like incremental? the of have would X% growth through you into I look in forward? the think your margins expect in you you you EBIT a leverage still going operations think And surprised Were little as what margin. getting and EBITDA incremental ability to as you in think terrible the quarter. is good you the as basis. environment

Wayne Rancourt

Well, remiss X% I’d you would told wasn’t Nick to number about. think I think you and appropriate if kick me that the be

as probably right the given from where the margin we just point. the and low conversations the of and number we more caution than went this we from internal first the commodities quarter January still and about at everyone, like is going are towards on getting our second in today somewhere about we as benefited are quarter, think I’d think to high a EBITDA thinking are XX% think XX% I X.X% that X% lift But to leverage or from think first quarter a that’s I in to you versus occupancy X.X% scale to in X%-plus March.

gross elevated quarter. first price second same held constant have the have tailwind but in quarter, not today, on Nick’s will margin levels -- business had are in they that if We those he would

a margin static at that’s benefit environment than get but absolute basis revenue higher. more expense the in on leverage, and dollars will lift the higher rising you an of get will you’ll the percentage in gross So and you the

new that commodity revenues the on Nick’s of implying we level. reasonable again, X% do leverage get and I about very but on be may think would I'd that about past, forward. X.X% be towards pricing is in been X% X.X% capturing has on EBITDA revenue. assuming volume on going able X% the growing that environment the given cautious be more kind over would trend spoken to share three and the to EBITDA So cautious I’d the the And leverage group still will some appropriate that that level more be business weeks

George Staphos

to a an a and $X.X saying goal $X.X X.X% revenue revenue be question can ones than $X.X billion, in I of billion. mid-cycle appear are bit push what should apply just The you for $X I even EBITDA of to to different billion comparable you now asked are billion it with. higher towards it heat mathematically maybe kind you If and little and the incremental way. growth,

we’ve of convert quite a again numbers there next than BMD. to given of of in reason this, incremental kind a just at what overanalyzing normal we've other the growth seen the probably the benefit and So cycle tranche and is for business recognizing revenue were why pricing BMD, doesn’t big that would law margin

Wayne Rancourt

Well $X.X billion million X.XX% would for guess again, $XXX I if I say I mean, EBITDA.

smart, $XXX it's I'm [Indiscernible]. on whether X.X% that So $XXX a or but of Yes, million, not EBITDA million $XXX million Nick revenues. did

that to we nice some $XXX be imply EBITDA may So on sustained large are know compete the commodities the returns advantage would take or capital using of our as clearly think environment. to if profitability. so on favorable sales, comfortable done we think and willing my can volatility while side the had position what people again and is we if managing doing math out getting leverage don’t and material these business selling ahead price a we've our in of inventory capital about sustain execution, to 'XX. favorable take it and very before And be terms very it about guys and levels had and are on customers of re-large right. at risk I commodity renew EBITDA. of of the quarter working buy with people are And realistic job investment. also commodity see $X.X or get warehouse return leverage risk return a what on what great $X.X look going job I pricing of if I'm a Because an and would number appropriate again $XX and of the way reluctant who for first vendors But I million of we have incremental on don’t take of these got the at in think level investment of warehouse of business a trend not take million large people we Nicks taking business in think it doing on willingness put million, to and 'XX on more And look I will and of a million we guys roughly, a would out to direct incremental cost X% I'm I pricing

George Staphos

of reminds unpunished It Understood. phrase, “No goes anyway. good me did deed the way”so

Tom Corrick

pretty Yes, want be job are and I to I I are doing just wanted think be also the realistic. and to but don't great a guys negative,

George Staphos

ones the last me from Two appreciate I’ll turn it We color. and over.

then lead I think businesses now relative just And are a question but to ago? rely rely ago? talked what those, across could your to you question you times, where a you one. if operating if average year say like don’t I at are had number I freight would about on That's look to times sector lead rates, is now -- veneer we versus way know their a year by however

Nick Stokes

This is Nick.

lead the bit. number. that to I’d a depends products relates that think says to you the stand do [indiscernible] it data As it on times, to I that get in have little a My the bit of

longer on probably commodities touched were ago, would year panel about side the lead significantly they the significantly than -- what a mill except longer both out Canada side rail Certainly for are on year think are terms not you in are were issues a of mentioned the but Canada. if probably longer, they rail and in side, OSB times on issues they lead of plywood the associated ago. So the times

EWP tariffs of of on the same, embroiled side, and On wood the they And about has products. Those a I lead about some metal ago. with talked in think kinds were line already been of exception year times series are the have EWP probably Dan general products that than longer conversations. a those

George Staphos

- don’t number. that call I

appreciate could that I’d that. you relate, If

Nick Stokes

That’s got. the I best

lead a they been year a bit EWP have longer would think times just I than out little back. are

Dan Hutchinson

This the the operating rates near is Dan. EWP? is on is going -- question veneers It’s of percentage our what a question, that

George Staphos

more pulling capacity, capacity at to some now veneer in right your relate point? you little to put at More you available what a are bit in need might and

Dan Hutchinson

to it go you where if veneer sense internally about are So the EWP. capacity into our we generated across system, makes really our it maximizing think

we are some so plants plants We -- away facility have far the from too plywood don’t those. use

the more outside a also southeast. west were ago of we are than veneer purchases on the both aggressive year We and

forward years, we over EWP some will and have will veneer you our Southeast, projects the think next increase that which going do to it addition which will the primarily capacity about capital that capacity. few our In in we increase

be we to will as look out market the continuing and So as outside suppliers to with get spending that to we grow capital of ourselves continues veneer. forward, realign

Tom Corrick

today. running United What we as I’d far degree, Brazilians hard the comply right capacity and wild The all I’m are capacity to are EWP. point to the States aware, the to going be in And card dryers EWP towards with a very at in full. the on see now. say would of though this veneer as U.S. diversion grow veneer continues Obviously is

Operator

And from we up follow have the Maguire. a Brian

open. now Your line is

Brian Maguire

to like off on allocation. get capital a without couldn’t I question

through last think sort working quarter become I about through other what a you talked with the you capital may do went So about cash quarter. of you question that it’s obviously back XQ. the to you this seasonal great In words, in after build

I level. release of sounds the smaller into You nothing in these have working seems know balance there, like seasonal and done that are with above might capital of it uses be cash getting cash earnings It [ph], deals. like a couple market terms and before get we might pickup massively said XXX you of of we

of in redeploying how about you you're cash this frame So point. just shareholders maybe thinking to at could particular kind

Tom Corrick

as tell are come explore. to I it’s things should competitive a continue it the than would they be things are a things bit thinking the people think distribution couple Tom. dramatically do it the is pipeline it you to to have same you tell in that the a haven't would don’t, we’re have this I space. been we’ve pretty a or to Maybe recently, we think fruition few we closer about gone more on Brian, in the on we and We side other the getting like price. prices be and successful feels things think in we don’t I much different while ought but through. those we from that

continuing infill. are to look at we So

distribution opportunities. adjacent look We to at continue

work that to we on be at there significant mentioned deploy to a at plan a would as -- and topic. But flow along to assessment reasonable -- a reasonable sit don’t later our our a don't we if the in it borrowing I the year. view been assuming continued should topic ongoing is down correct have line, performance a -- our have our that deploy are But our looking are we fundamentals and Wayne about think continue acquisition we way is this small way we shareholders. reasonable I the if we to you how cash to return it's cash, think we earlier think I and pension will issue think contribution

Brian Maguire

anything And relative still to you moved is there that method back the returning does options? special is a the other conversation or Or would under dividend burner preferred is to be that cash? that think for

Wayne Rancourt

capital doesn’t a in to that if just that to dividend describe go a to is than Tom’s to point, allocation this through clear that a try would occasion. a we But way the but market the we it on want from And decided praising, that set we anticipate I is change one mechanic, behavior think dividend. make we in leave regular in will our it's thinking this engaging more of

than whatever, our to our for standpoint a reduce operations we shareholders. going have significant a free if to in the find from would find we a sizeable more call variable the and ways we something week find special leverage we is even in to from move half deals, not capital flow, have if it, we have dividend those this a is did need to like good we still or if And think and deals through the anticipation again uses if in shareholders continue back it And -- if year acquisitions we 'XX, ourselves a more one-time standpoint. with would of as board and that this only. year, cash do look don't of the Norman-type dividend debt, as we you the and situation ourselves positions Lumberman’s-type cash the was pipeline, a if of than in this of various longer cash a be terms it we what of is whether intent the we and at than borrowing we we have return organic needed ourselves would couple currently back But of longer special this that’s or conversation again, don’t a generate don't So the appropriate. to getting again in

our board it's in to with when likely be So a August. conversation we meet

Tom Corrick

say current of in we stay trajectory the we pricing. terms Assuming on

Operator

And [Indiscernible]. line we have of a follow-up from the

Unidentified Analyst

So just special said, just fine doing than not trying you a me all Would of more open to to drop a a on to dividend. what fair -- kind you dividend having line it but be two characterization? sounded having variable that a are one-time that then

Tom Corrick

for that shareholders. think are Well, priorities a company in adds our value grow the again, I our way

dividend. or I special our that for wanted a opportunity, ourselves kind million take generate with if think is So value we acquisition variable dividend to over to we because going find variable shareholders, don’t of describe dividend significant precedent would any a that $XXX as a it

Wayne Rancourt

focused dividends and to to and well. our generate capital. are And and we But [Indiscernible]. But think the the normalize our level compounded dividend the money opportunity where we back. over a think as and will continue XX% do I to we as acquisition on we comes. regular that, is that view sure to whatever we If on opportunities dividend our its the we either having trying time balances grow the cash on the organically what have stewardship to for and good making are don’t see distribution focused we of option And have right EWP, regular And I when are capture we I of XX combination the share to cash. It’s us and TBD. on going overtime have being appropriate resiliency investments things. and we in repurchases is very at the got making Tom don't don't We increase again, acquisitions move as we next if next months downturn there we towards sure board returns view quarterly cash. pipeline, flows think over give make And can part our some out don't hopefully be we value good upside, high-accessed the on value it the to stockpile we is view that will

Tom Corrick

we to I favorable because that that positioned of to it, to add would doesn't obviously we going to also values. are able on like our sitting the I’d mean about mountain are at because to focus X% and Waynes cash point, downside as they in be acquire I continue returns. the But to on think the downside certainly, more liquidity weather be

Unidentified Analyst

on I if of order pension much the yet, order actually helpful. any to I be? if just contribution, But this this. And of magnitude, you very how that not would one That’s you but decide for missed sense question. just last know I’m and were decided magnitude, sorry making Wayne, just all have

Wayne Rancourt

I it’s million could a I’d think a I we not transfer think than number. we smaller of or would debate. lower place. of $XXX good day market to And million. pretty plan be of And remeasure, higher but when roughly the over their but amount opened funded relative reasonably $XX $XX million for midpoint, is thankfully be small. it prudential, than and it’s you mean, remaining I third in the a having assets will liabilities our reason that, kind a as would about certainly I tell cap,

That the pension exit to it, to So advantage more reason take it. of the 'XX, XX% funds, to up strategic we if it would more do to be tactical be pension be don’t do that. window the federal And and probably of sooner a and rate set did a the later. big got than we in tax drops rather to us would liabilities anticipate again, have limited being

Operator

the And our comes next Staphos. question from George of line

George Staphos

I downturn, your talked right we in back Across consistent look investing next saw out system, with breakeven your wondering XXXX. how what right you below you mills would XXXX the and many to pricing and you move depending if now. you in terms operations about of your at or was And assumed of be or don’t Have way up perspective do that where your would look analysis neutral positive? in what percentage EBITDA? right if on How many trying would that’s the be to at curve be you down and the fact stand to When it.

Tom Corrick

My times internally. not to although through quickly. through couple it exercise we've takes about experience through the and to of are of think I it those things of causes think pin” the cost been are OSB about on and are tend have that work analytically kind businesses the and EWP That’s challenges in log particular cost is question “angels we which a pretty for part margin I control already than head to a back, in business. question woods is But as side flipping the is, on reality drop one adjusted this major be been that But really harder really input from do experientially, of prices hate we both of I the and kind some long the it's businesses of the is downturn dancing it. all those for the a so thinking you challenging price adjust how demand adjust, levered typically And driven back, pretty that obviously costs. to by

Wayne Rancourt

think there’s I I really say George. question, to was going two

pricing said XXX,XXX housing drops you and we to volumes or X% loan are get back but starts. fall you XXX,XXX by XX%, If or different if very outcomes and a going

fell different we mix cost said occupancy, if very cover and is if there by has maintenance than volume if get So you XX%. over business, a can the outcome a we volumes can you amortize

capacity, outcome downturn cost. at next last well situation, mills better running mix running a given obviously in to to are is we side, get it now estate component what at as really about think on XX% in whenever on they leverage is. EWP think or real will business the the if downturn think on done important that XX%. if good negative particular, job did support very we And the different so price a what But you And we've were manage comes. do you I I a in are get it's again, thinking occupancy the how as XX% and thinking we the Dan level I volume business, -- if than very

George Staphos

was I it Whatever real again what so you be in continued. thinking downturn, have But pricing the and would water. see last in the to wood more probably a ultimately your guys. and maybe Understood your that's terms Anyway, in itself. business more breakeven to above comments. did assumptions volume to about maybe would and be interesting capacity, well of next would talk much downturn, you versus again, We’ll soon. that's lesson you how or capacity Thanks below of be

Tom Corrick

wrap I today, guess To George. quick I up comments. This Tom. fill is would Thanks, just

And position pleased strong particularly progressing is our great obviously are currently operational today. geographic you with enjoying for and believe first are to again performance We perspective. a Distribution encouraging. well quarter a Thank distribution is profit market of from very we the acquiring safety, I until today advantage we us weekend. and have take are joining

Operator

And gentlemen, conclude you thank This day. in today's conference. a great participation disconnect. Everyone, the your have program. may for does Ladies you and all

Boise Cascade (BCC) 5 May 182018 Q1 Earnings call transcript