BCC - Earnings call transcript Q3 2018

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Operator

Good morning. My name is Lauren, and I will be your conference facilitator today.

As a reminder, this call is being recorded. At this time, I would like to welcome everyone to Boise Cascade's Third Quarter 2018 Conference Call. [Operator Instructions].

remind the this and company's performance. I forward-looking may anticipated begin, about statements future we you call that contain financial Before business prospects statements and future duty These update guarantees undertakes to company no performance, them. not are the of

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

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

Wayne Rancourt

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

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

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

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

Thomas Corrick

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

were Our third quarter up of third $X.X quarter sales billion from X% XXXX.

in $X.XX a million, Our third of held noncash for share, income settlement down Oregon. from $XX.X net quarter the and pension a sale per per $X.XX quarter. from on XXXX $XX.X income net or impairment Reported $X.XX assets million, year was charge share, or after-tax for per ago noncash share includes loss losses northeast in

business the product to million the quarter. results year manufacturing of reported segment stronger income segment Our in compared into of $XX reflect third ago These income pricing. quarter, Wood $XX.X Products

in Northwest, the However, by was the log in loss Oregon. than offset and Pacific northeast impairment more costs higher better pricing

quarter. gross million of third segment segment significant Distribution compared to Materials Building reported for come describe margin walk the $XX.X I'll the Products quarterly the in talk business Wood capital pressures financial you detail, quarterly back -- then pricing for questions. our business $X our the Wayne we your falling results sales quarter, quarter. allocation to will $X.X of in are and taking of outlook on prior to billion commodity through $XX.X we in billion caused provide actions more and income Rapidly before income year million on on Our sales take the comparative distribution

Wayne Rancourt

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

Wood a reported mentioned, the As costs million, $XX.X $X.X of decrease EBITDA sales Tom Northwest in in for the higher third third $XX.X for The Noncash $XX.X those Products release. million million and compared in sales $X.X was of business corporate negatively $XX.X the items pension impacting, throughout with million, income EBITDA of quarter in in primarily negative of million amounts X% Sales EBITDA from items plywood The or X% This third quarter loss million income third gross $XX.X $XX.X quarter. the net by and to adjusted and decrease by margin million, tables was in prior up offset a impacted resulting primarily our quarter. quarter billion, XXXX. BMD decline the from in negative segment million driven EBITDA XXXX. part third quarter noncash $XX.X due of was $XX.X BMD in reported decline the and million. segment third a quarter. of prices increased in other XX% Reported unallocated segment XXXX EBITDA higher from compares products impairment to costs million wood earnings of were $XX.X volumes commodity $XX.X in reported EBITDA in was income the the respectively. found pricing. by Pacific million. income year of year and ago the XXXX quarter steady in million and settlement The quarter. down be EBITDA log engineered of prices A $XX.X charges can our

X. Slide to Turning

I-joists up X% in veneer reflecting Our price third the for and increase laminated third year from XXXX. and Pricing XXXX ago third taken quarter earlier quarter X% was respectively this X% year. volumes for sales and quarter X% and lumber and were with compared LVL quarter, actions in up I-joists

X. Slide Turning to

plywood XXX third in third quarter $XXX compared to the sales sales in average quarter was third price The was XXX Our from XX% Wood volume net million XXXX. quarter quarter XXXX. feet feet the up Products in third million plywood

to XX% quarter plywood Fourth the about plywood above pricing I declined pricing the to and Slide was hit very in has chart average in our since below 'XX, reported quarter remained composite has On levels XXXX from the impacting X, the panel X, down pricing start The what the trends, of Lumber for quarter pricing story similar On While historic BMD's drop you decline during of to end showing sharp XXXX, a can structural fell month were the XXXX seen another distribution during recently have Lengths quarter in and and transition and third discussing average. Lumber our the June third well Slide be On in is key lumber. is XXXX, composite Slide to happened Random Lengths XX% third October. pricing. for a of September have prices XXXX. a Random quarter. see to we results business. roughly in and factor and showing earnings October began likely not weaken throughout XXXX. and chart continued lumber X, the for lumber to quarter well 'XX will panel the the

XX.X% up reported products XX%, of line general was basis quarter, billion, sales $X.X points X% XX% shown increased gross Slide in quarter. was was XX.X%, The gross sales products of to increased for XX%. for BMD from a decline quarter in from quarter the area, and the EBITDA price percentage sales X. product XXX the the decline from third Moving direct down X.X% XXXX. By were third increased result commodity previous quarter quarter margin EWP XXXX. reported margin BMD's margin BMD's The ago on year slides. the third commodity down the BMD's X.X% in third

broken quarter receivables on by Exhibit and for accrued in for cash. held levels, a meaningful fourth inventory in as in deceleration decreased pricing XX.X challenged quarter. to Slide We more BMD panels are well currently X-K with during I'm working and segment in assets quarter Slide the structural that the third our in quarter before panel margins finished XX. the those now and year-end, this fell. payable income lumber inventory key and down third sale could are pricing deflation accounts decreased payable commodity cash, be lumber anticipating receivable with again XX, not compressed Company We million items, distribution With gross The interest, will of million detail. capital, interested the so Accounts excluding negatively also quarter. pricing set operating rebound of our expense statistical $XXX fourth has price have accounts with XXXX leverage of tax elements filed as sales networking $XX.X structural all capital. for the and below data we out impact information quarter. On

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

now spending Our Despite to XXXX book excluding continue we in execute discuss capital to turn on year. South in rate going effective tax between Carolina and quarter, capital forward. priorities be spending, XX% acquisitions, the $XX will million Louisiana. our this expected be manufacturing I likely unusual Florien, Chester, the and be it to projects our to over $XX back million as and Capital and between our is $XX outlook. expect about at million to Tom $XX book allocation this million operations tax we rate will

Thomas Corrick

Slide on I'm Wayne. XX. Thanks,

approved the to utilization a in an share. a self-sufficiency. board over our working key plant grow veneer XX business to Last upcoming planned plans plywood project As position board log in am Cascade additional The distribution proceeding that has we to for Carolina. our authorized diligently also we manner and value past our per our modernize our and for stakeholders. next The creates Fill discussed the also Boise center deploy $X.XX Florien, put our I we've on in on quarterly that key from $X.XX capital increase priority. our pleased shareholders in South capital Chester, strategic Louisiana and at competitive improve remain months. other discussed very are acquisitions a quarter, calls, spending in the mill will dividend strong

acquire reached which expected Arling an are in Lumber to pleased year-end. very to We close have Cincinnati, is before agreement to

Slide outlook are X.XX to consensus to on is constraints modest million and demand. on as October to only XXXX Moving starts XX. XXXX. U.S. underlying estimate implies XXXX up starts The affordability labor in X.X X.XX headwinds growth from the consensus million demographic-driven the million, housing issues construction estimate acting The for for as

the generating next achieving areas driving in reaccelerate cash manufacturing Northeast Wood our Oregon of of returns. drive Products, focusing improvement. operational proceeds $XX on control than sale earnings are and facilities focused veneer-based the better million. are and week, both we revenue focus. could excellence to completed and Woodgrain fit starts We on X with year, we housing believe operation last our with saw Woodgrain we can Those we While In improved Millwork mills to particleboard

maintain up LVL I-joists, veneer of we to the Roxboro group we forefront to customers support facilities which will also of and effort to impact to related we operating it to the costs Roxboro, Wood Carolina been will Roxboro of The report Roxboro, is show We we Products Alabama quarter. Wood essentially writeoff not our us for expected growth. our have impacts acquired expansion of on from we permanently allow in curtailment a will approximately the have current Unfortunately, our outcome plan and as early remains curtailment capacity additional laminated as when the we an at Louisiana depreciation. cease given at in EWP lumber the at team the by this year-end. action both laminated our at where and quarter facility Products anticipate great and stand and a production after also the distribution produce is price declines continue future additional the obviously XXXX, opportunities Thorsby, we $XX manufacturing profile announced reduce to veneer the to curtailment, Roxboro million Effectively commodity take. need morning but fourth in service unable in managing our that lumber level. Alexandria, all by acceptable North no the performance,

BMD, impact revenue quarter For out price to this is the in play half XXXX. the and commodity the likely comparisons for of make declines of first earning difficult and

our his and I pursuing progress specific make line looking push in well Nick questions thank call employees and pricing this of team I To extensions, strategy to falling avenues and acquisitions you our appreciate good on close, environment their on to seeking welcome at executing However, any each time. continue earnings. us want morning. sales for and safely. geographic up working a at product to in this markets, joining commodity other of would We

Operator

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

now Your line open. is

Molly Baum

impact actually you. Boise's for production other earnings to additional term? that plans from depreciation, And top My LVL about on Molly are longer of what product for Are first this is perhaps into wood Thank should Roxboro? we think move guys, that, than question, there line the at sitting opportunities the shutting grades? in how other the George. Hi Baum

Wayne Rancourt

Roxboro, is had and over million call on many Molly, $XXX,XXX $X slightly an basis On a an and that in 'XX facility. month, we EBITDA XXXX between that as in on in this losses Rancourt. basis Wayne EBITDA know, ranged million lost on $XX the

to unfortunately, started $X very Tom we running issues an around year, against progress the going million, that thought position sense As basis cost year-to-date, we laminated be that up portion so to basically mentioned, we made operating this EBITDA are respectable permanently technical and to a on but veneer get insurmountable, the losses of we're curtailing. Roxboro were operate over able weren't we and lumber time, to made

backs I-joists will footprint. Brunswick. at are Louisiana our Alexandria, to of capacity It continue have have I-joist They We production we the in the make southeastern and Roxboro. part important we an New up at

at Roxboro the production And so we the anticipate I-joist continue foreseeable for to future.

Daniel Hutchinson

Yes, Hutchinson. this is Dan

the I-joist does. production deeper producing Just the I-joist it at capability Roxboro, on our than Alexandria a has of facility

that deeper light in that wrap to be commercial southeast. continue to able to And help to and so get in I-joist as -- we multifamily up, we the continue areas use we'll us

Molly Baum

you're supply other grades? over. follow that. And for ons. turn Thank then just you and last you, on and latest then inventories one, and imports quick two plywood chain the How plywood? are on Brazil I'll just hearing And Thank for product the from it

Daniel Hutchinson

Dan this Yes, Hutchinson is I'll again. that. part of answer

assume decrease to and and I'll fall that LVL it what about in inventories to recent side, start let import about off, have has haven't our Nick year I'm and is going inventories to very talk supply monthly the from impact, it been LVL chain. then talk a plywood and data going the our in at about are the -- he On but Brazil, strong mills dramatic have let the latest seen the Brazil. I from I coming pricing plywood in chain. should Nick some to and thinks excellent.

Nick Stokes

morning. Good

on products, northern call the months much of available, and degree to as dimension, so to rely I expecting the price product and the no commodity those products. conversations. geographies slide have plywood our there's think into everyone few seasonal most the commodity in how that From across around customers Certainly, over of anecdotal winter, evidence tell of empirical terms reductions the board, adjustments is customers on sort inventoried you some trying to lean. they're of As they're I on adequately wood think to data conversations, reacted keep any them you they last some particularly knows, from inventory some would

that, on I over would they based the next to expect that XX they're to think for adequate XX you that I volumes tell XX So the days.

Operator

Brian question comes Maguire from Sachs. next our And Goldman with

is now line Your open.

Brian Maguire

October. the comment in Wayne, appreciated the on in interquarter pricing trends plywood

roughly got of a could you've your price in like us you pricing if what average, on kind sensitivity remind versus could the if third wondered seasonal you XQ. Just is us and realization tell of quarter quarter the that today

Wayne Rancourt

Great question, Brian.

I For a of XX%. from end September. said, basis. XX% quarter end X/X on as the fell down as And third the quarter the were October, was XXX about the of beginning quarter average, we we of And over another the the of it to

Brian Maguire

from number? Down XX% maybe so or that

Wayne Rancourt

closer of the much the our on we're we'll it's imagine how XXX lag by on so of going at to if were we up get XXX, what average. versus Lengths, Yes, not but spot Random see that we pricing in an showing to terms quarter move to hard end fourth

Brian Maguire

slower far Got area sensitivity, XXX as I -- the right. but as you, a you something little all typically? then probably as for it's think And seasonally, quarter, bit of volume, in a

Wayne Rancourt

environment, guess Yes, XXX plywood volume. may, some on in the again, the Northwest. I would going pricing to range on we'll reaction particularly what's in We Pacific be somewhere, have in downtime, that in the

That's Thanksgiving where would trying So on to a Year's. we'll plywood it be on market are we a the production, on inventory. between in into And because somewhere depend XXX and EWP time quarter obviously XXX deal where produce New better the area stuff ahead bit of come on in my can to out put EWP and guess will we fourth volumes. than little

run So that again, for the sensitivity, point, I third at a then the but XXX range think is $XX volume probably $XX. in relative down XXX to to to guess and quarter could this

Daniel Hutchinson

again. Brian, Yes, Hutchinson Dan this is

the a really on LVL. We stated earlier, have, good at inventory mills as position I

modest looking be frankly, do we'll really downtime to closely quarter. pricing, as prices. taken on Wayne's And as out, and pointed the market we plywood So have through we'll we quite roll some so continue at based

Brian Maguire

cost probably of XQ of a know in was input get log you costs, or just bit little relief helpful. in saw western benefit through. a to any if Switching XQ there's some think wondering lag kind factors. that's to and flowing in I the expect we've prices, some seen those I from Great, OSB I in you over there starting

Daniel Hutchinson

This is Dan again.

the show We some in won't costs income expensive have we up of relatively the in logs as in you Northwest. you have log reduction our that seen Pacific might log think much as statement Unfortunately, on because decks. see

is course, relatively do, TUC, also We contract, historically we expensive. or of this which have, under timber

costs log the think come will I So up.

that fallen plywood as me peaked the financial fallen -- see not it's out will as You pointed for price the northwest, nearly our OSB Wayne day, our in on also. it coming off. think starting -- as log off the fast starting to and reductions the or greatly to do out is you think see and hasn't OSB haven't price. costs we're we come statements, as might see other it impact web we're some also as our the -- to But web And in

Thomas Corrick

sorts we're Idaho. of Canada our plant that both seeing note glulam for our for also and would reductions I-joist in similar in I plant And lumber

Brian Maguire

Okay, one just last for me.

EWP know not applications there are to where Just I but substitutes. there a thinking prices. direct it's some price, about are lumber correlation

EWP with are pressure? you're be the lumber so we fall under of do pricing? sharp to looking prices, but in Just as should wouldn't some wondering think usually prices kind set, 'XX, expect in expect EWP annually you anything ahead And come I those worried 'XX, to

Daniel Hutchinson

Certainly, again. opportunity significant other like fluctuate those to prices. pressure downward But the some change make is, but certainly situations, conversations doesn't you -- If stated, in price. substitutional we're more lumber in EWP that as commodity where will we be make right see there Dan challenging. or not continue it'll a a it these there -- now, stays is of anticipating tends to a

Thomas Corrick

OSB I the the users the to additions. capacity in become different or going chain situation's would of even tend note the significant would Yes, supply-demand have and lumber pretty I-joist year, think has to tight tight, users side, and that and in pricing. that slight to to impact been there and EWP in users pretty see what housing, add quite product we've some And which we last mature, will thing seen than Corrick. And be the side's I-joists, quite this of the supply have lumber of where tend probably supply an of was the on obviously the I users be continue if is the side line I Tom other is growth remain lumber. I-joists

Operator

Research. Dillon comes Chip And Vertical question next with our from

line Your is open. now

Clyde Dillon

to that fourth that what I Could it Roxboro could in mentioned be in little shutdown. say the And you be? for that fair bit of a through of you the would employment guess, proportion about the charge, is taking roughly you You range the quarter talk the is the Or roughly? amount wood or put of, facility maybe, of terms that's half there? what kind

Wayne Rancourt

this Chip, is Wayne.

are We We to XX the But there's and facilities. probably would we that on folks vast some a people depreciation. side going LVL couple and severance. all move some quarter, There's we and obviously, in other anticipate on approximately, impacted, do fourth majority side. million slightly that to we over the employees $XX to bucks, like either charge, or the other of Roxboro that, will anticipate have at employees take a be more the but keep I-joist salaried and million being than some retain

about working books in Roxboro, had investment facility Roxboro. LVL the we're we of related So represents X/X on the and at for the But the morning. investment that terms announcement at through of the assets this that

Clyde Dillon

move remove salvage Okay. kind and I either to it the another value? expecting place? terms of you And or it equipment, building to then that in someone equipment guess, to you a, sell in are of Are some

Wayne Rancourt

whether expanding move production cost them up prohibitive look scrap think prices, from up building would line do effectively. future. plan footprint what look assets it's the the remove and not But storage or those I-joist at is or and for it we'll If veneer that and reasonable them costs remove LVL 'XX the direction. time free at, outdoor and can site those be cost free place. we that's and assets a the going look out we we're If the demolition storage I for do to and in in use can the the we'd on at to footprint, space at more to I-joists in will we'll and assets, production we for potentially over the Yes, cost then essentially uneconomic that given scrap to leave in the

Thomas Corrick

our the I we'll been just the billets to is Thorsby, -- line the add This mill would has Tom. the around there. Alabama and bulk in that the mill with be activity press, LVL I of bringing from

Clyde Dillon

were point Or mills Okay, behind some ago? And what anyway those lumber that's good you few planning was sell there, those of helpful. you sold, took you thinking the which timing then pretty advantage a were your strong seemed mills market months the of and to assets divestitures? at

Wayne Rancourt

Chip, this is Wayne.

low-cost break number a it three where they've operations of Woodgrain looking In the year-to-date, things been up those a revenue have in million clearly logical and we're looked been not And and facilities and operating facilities. a in align on assets, two that even for And We region, mills were strategic footprint, and of much a those operation to to in about you the customer that head strategically and out the more producer for trying integrated vertically northeast millwork lumber we're particleboard think if the basically with be at owner asset is for and get basis. at they're that's years. it's we our income Oregon, frankly, $XX us. reinvesting reinvestment case in setting of an to very were going these

successful factors. And procurement plywood Oregon it's them, trade, on timberlands have we'll our if and we we're be so going because the cooperate this operation can Elgin, other And think, with mills. and for advantage they beneficial to those to is still in

our it's the in distribution plywood strategic a forward. So a as EWP support I and to case, towards we of and operations growing to going it's veneer really question where want And allocate capital business. say,

Daniel Hutchinson

retain sorry, is our continue that included we'll that -- that We'll region also. our Dan region in AllJoist Chip, also -- again. this And and facility Homedale we'll -- glulam also at

facility we So plywood the retain and glulam facility. the

Clyde Dillon

the a and quarter. your mark fourth the in quarter have Would at break seems to distribution typically plywood if just can to EBIT for line It be about you're with I'm of sure saw, in just in to then on business, pretty that And what a sense. guidance bit even that like just makes like things we saying when for as I the happens it downdraft, XXXX we you that that? had look example, modeling. we think you when agree have the Okay,

Wayne Rancourt

In with would that. probably Wood I agree

we BMD, I not we'd in prices it of there it'll on well, going be think up lot turned unless December to distribution. as I go what have seen were inventory dependent in November happens of October, pressure into move up, we have probably month on that put generate price. in although were in compression EBITDA we're as buying based as through what that we and October, a selling on we'll up obviously end yet prices November, we'll a significant we've lot falling would October in distribution. in And margin in margin haven't tell the you

your break think could on the right. It EBIT in fourth to each quarter. businesses the basis caution to I an So tough even get of is be in

Operator

from Reubin Global with question Securities. our And Seaport next Garner comes

now is line Your open.

Reuben Garner

line on make I same year? more on capital next think the working the so of on impact you price margin -- about decremental decremental Can think will for next with How looking about on you want specifically. be that QX. deflation you out -- do than how and maybe your of understand to I'm a BMD in the year what then do price sure in to you a help us declines, I talking guys deflation impact try to

Wayne Rancourt

this Wayne. Reuben, is

of on grow into is we sales plan the working capital our Let expect would capital, working sales because up What inverse true. way have falling the growth easier. me one one's be take that the that XX% as about I said to we and the

shorter show capital although have end typically commodities of get other I of is We come values as year thing happens down. terms. that the much inventory then some and to will expect this up by most the And that working payables benefit, receivables

lot a up the or get only when it's we So in get on line commodity versus we on of general about prices ramp XX-day inventory, days. products the a commodities XX turns XX

back at I you to a if toward go more we as get look think it'll ratios, to So our normal year-end. inventory level payables

that around say, As for generate margin typically would a margin deleveraging, get obviously in of decrement costs. the it what at, I $XXX sales expect margin as somewhere EBITDA sells gross as $XXX up And similar we to all stabilized as at X%. prices OSB, lumber lose we from deflation drop would at happens that other if percentage terms will with is percentage higher dollars a of $XXX would creep OSB shipping gross versus probably cover we typically you're operating or have slightly from lower looking But the that a through in gross on got decline deflation, associated I same at still mean, the you than price. our But activity far fall costs prices price. if the

Reuben Garner

maybe the what just helpful. you It's savings least. for all sales together, then very in a putting just opportunity the improvement these And or parts the mean and the and to for XXXX? investments facilities, what's the all Okay, whether moving XXXX? making at a profit just a relative this about all from big different together of talk pieces with picture closure could lot part opportunity you Roxboro, guys Can of are of assets XXXX

Wayne Rancourt

let me And have well Okay, crystal ball. a wood. don't start I again, in

ultimately happens be on think our the to for 'XX, commodity going compare and pretty plywood I input what to X plywood is are pricing calculate. parts the moving you And 'XX major cost. if easy to

at in plywood where variance barring are going on think to think $XXX settle time we we that, times spent you year probably price so next around Just And of prices whatever somewhere said take out. well a over we'd housing. price trend the a variance, volume ends We've a above expect rebound negative of 'XX X/X price strong basis. lot obviously I a up

Dan As log the Pacific Northwest costs to moderate. expect would in we said,

drain expecting to period of and for seen We northwest the just the in the the log the costs south. in south, costs prices not even and aggregate evenly an on in the growth we're it our of is price of time, on between where haven't the is south. south pressures ratios basis a in split majority in scale We in log cost and are. south of the logs pay than the we northwest are for the though Part any do inventories in in considerable operations pretty inflation log log northwest, actual The production more northwest. the given

as stock time. web in think on in the Florien relief steps so we're cost operations they the then in reinvestment had Oregon Roxboro, that's help EBITDA the will at focused return writeoff, businesses investment on capital. even of we We'll for on we've help wood. And really, one I-joists very I we and slightly Oregon into we clearly the will and X business investment. wood our some are EBITDA break get invested positive will flow northeast And with We we're an And our of divestiture and free avoid on taken or a over for on on Roxboro 'XX, we've the essentially actions had the Roxboro, where the cash obviously, return wood, that northeast on were both the the I in things doing closure basis. think positive to the and particularly losses Chester return in in relative said, is

Thomas Corrick

of projects timeframe to just those and Chester, is going than to in the projects show more completed, real them get Now, the XXXX. XXXX up, the given at benefit Florien

Wayne Rancourt

falling Having that, in make the escalating odds expecting in in think some year. I kind think if expense see leverage just shot BMD's leverage first tailwinds to are think line line full and prices Then commodity you'll half mean, since commodity to think up price prices are comparisons we year comparisons top year, and legitimate year probably I challenging. a where I we've operating on But periods the of in distribution, very mid-June. the flat of the I first BMD top on challenging revenue for events, some barring pricing, we on be finish there, 'XX said unusual I'm the, having some beating the to of but the I deflation in of the ways, the half given got expense of taken comparisons

pretty it's comparison recover the a going modest a housing we'll of be to have difficult probably think months, X comparisons pace, and half good I at for 'XX. back in continues to if

Operator

comes And from Davidson. our next question Kurt with Yinger

now Your line is open.

Kurt Yinger

My you talk first about And did $XX the Products? roughly could million for flow question, Wayne, missed but don't if into the how impairment was? that EBIT I Wood this noncash much number charge I know

Wayne Rancourt

was numbers, cash, their there Yes, included the would Wood million $XX.X that of not in been $XXX,XXX $XX in in was and that $XX million was and million, Products have other related settlement -- severance to pension unallocated basis. And there the related other been on there corporate, costs. million would transaction then would have to in in been corporate, and pretax have a $XX.X

Kurt Yinger

Okay.

think? with forward, so I sort $X being pension done charge quarter an the going you assume that is And the do mean, quarter, I of in third million per

Wayne Rancourt

risk off transfers pension retiree is annuity and did Prudential did we contract. a under liabilities assets we with what handed where two and we group Prudential to No,

to $XXX of is fixed million assets status XX, pension we over remaining we've in liabilities match And haven't plan the reached at in effectively gone income. million. payout roughly now $XXX or pension we from million we obviously, yet, that our and about have duration December people So what that have in measure but $XXX XX%

duration income. million to with matched fully and fixed So moved the did to $XX contribution we're funded rates, XXXX take advantage of portfolio heavy essentially the we we've tax very

neutralized the markets. capital little pension minimal forward, funded very what company volatility in happens risk of have in in going the our expense we and very, status regardless So effectively XXXX and pension we've for should

Kurt Yinger

was seen? sense, last it announcements that -- maybe thanks guys my be my the Wayne. declines you then industry, higher some curtailment to level. Could talk just last the question And views Seen the lumber, response makes or your whether from plywood Okay, already. about on we've

just a think better to You've log pricing orders? or running of those market-related little are talked about Do bit discipline downtime. cost, you more

Wayne Rancourt

if even. things where cost normalize. little of a have Yes, for you short-term supply break is But bit demand. year, would levels probably think I And a you're pricing and chart little really first the cash what to covered mismatch the marginal curve returning are we X we up a guys' the pricing the the seeing would today it's where a below bit think between months

next frankly on if returning get was decline housing, balance lumber, probably demand. a with would for the and think so and margins But plywood. just response normalized get cash you'll dimension OSB supply we view And portion of for good we demand year improved we to a think I a price more -- good

Thomas Corrick

reasons, startup There note in would had in new we that of a and factors and of that supply was think those fact last where that the that the we've a created impacting other I increase. huge a that housing of really months very bad the as driver reverse, drove year, X actually into a is little probably I overshot inventories issues, got kind kind serious think direct for constraints the direction, seen of a multitude we price of that. a in really were And whole freight bunch result pretty some some going I mark really weather lot X, fixed, issues, early the starts. return in the year, of that -- good too-lean And demand the the pricing things

Kurt Yinger

to in last we've XXXX, I part in question that logistics next this rebound trucking's and much year? better. the heard a been bit Right. I freight better than is I going of guess we my a if be anecdotes get think is demand do the you aspect first seasonal But some mean, year mean,

Wayne Rancourt

Nick's think chain, it's throughout in look issue now, constraints. point, people "Do risk And I I are terms the the demand Well, now ground," calloused on chain, you the supply strong. supply at supply the right right is to is not of, at of okay pretty if but I particularly inventory think need

maybe it and that need price call the in is the get think be. is they order they on can people I product are what got if and going days, you to two confident and XX they pretty files, weeks price So probably be going to

on if of we I think lot building March, in slack could February first building had just most in and chain. you of I a the there's not expected of I don't I buy quarter really than think half on there's supply absorber risk they're to a not at because there's winter the and any feeling there supply are pretty chain is warm decent was in in And good think again, the price shock right rally get of more enough escalation, product sitting activity like activity think cover side now unusually an products. the availability it. if But and the robust second people

to feeling So anybody short trying you ahead But or have that a within can to like constraints they're be supply to be buy kind don't and there's inventories. of normal couple that change literally going I going see of replenishment. weeks.

Thomas Corrick

have note impact of issues that, predictions make really avoid months future as any some first and if well. railroads serious operational an that'll last two repeating not I would X but about in they can obviously, the And to year. the the that, large X performance, had or

Daniel Hutchinson

I going we on the be at don't improved. When it's is going about Yes, Dan. least have that think into this to reason Products trucking Wood side, believe, any to 'XX,

be note were to we I it well to were that like I we handled also this product year. able our think we our think from I and would we're to that going mills challenged customers. get quite our

I realigning the but I relative I system. out, going some going to in to cause challenges suspect their did what CSX know UP think strategy. don't how to that's believe's it's pan I the doing operational

Operator

question our from Mark Instructions]. next of [Operator Montreal. with Bank Wilde And comes

Your line is now open.

Mark Wilde

back a for were at prices we inventories prices there fall. actually minute. you I sounded and Pacific like bought that be your if commentary so Am you suggested when to logs may log both stumpage log log log had may It could cost just the you we a lag come between when kind that just about real I Northwest wondered reading of see costs and have fall correctly? higher carrying

Wayne Rancourt

we'll we as is in the season, that will decks spring get and get Yes, this look do, in we have lot time the roads of out, snowed if can we Typically year a Wayne. build you log breakup Mark, dry we or of because Pacific if get areas this what or out Northwest the the rains. across

And rely one that logs things can what roughly over if in wood timber as sales found the can market on in the periodically prices, and our buyers the in a the with our late in avoid spot be if bleed we where increases at can with spikes we under contract we of see gets quarter and sharp of in XXX% degree XX bid XX% bids reflecting first state so a in was years needs, look year, in we not at you has a in keep that the contract spot lot our were the to what market And we obviously, and elevated play if put first to we on ground the on years market. and try lesser on timber what decks But on so timber spot selective it's typically is it of along and is availability we prices half out with going the tough. the all if going represent and typically lumber represent, market going to that to do under of happened exports. background spot 'XX, spot And on we that log to we XX in we of opportunistically needs the wood what months, to purchases. cut rely dimension federal but market certain get was

down?" that will spot's and 'XX. in this harvest log So have logs you aren't and deck off timber in. have 'XX, we'll for bring that come How of our we'll log "Well, think said, under your if are We in XX% I contract part costs

opposed or a if XX% XX% XX% see came prices market may soft and costs you to to as continued so spot And decline in or XX% dimension down. log stay

Mark Wilde

capacity your looking Perfect, log always sawmill was for I'm there. that's like what in though. parts both a addition. seeing down just engineered curious, lot pretty it increase and of comfortable the you're and outlook We we're wood that log sounded even some know markets localized, in some south there are exactly And are the south. where I cost capacity very with of

you you're your what So and seeing? baskets just could particular talk about

Daniel Hutchinson

is this Mark, Yes, Dan.

I that the in don't forward and markets, south. costs log some You're on large But impact regional to depending to are there not mills little in significant put relative baskets, log us robust going on it. our there on really That where 'XX the situations could doesn't put impact are something see happen mean are pressure that. have a a that's and way located anything south been in might right happening, that in in some that what's going facilities log have in, have

Thomas Corrick

the Couple say to would for focus of was value is out looking Service I'd the is where not and in the day, tend at operations, a time entire log about other we in hard States. is in talking really the recognizing of United the it. log guys freight one there's say, a forest use plywood a One lot going larger markets that is And They the sawmill harvest our incremental the things thing what Mark. I in on. even the have play. I the exceeded inventory capacity at you're data other growth in, Forest southeast a XXXX,

there's gap a So for in the logs demand and south between right supply clearly now.

Wayne Rancourt

the logs, year-to-date Yes, southern to give you one and the we a change gate. delivered 'XX east Mark, operations of in compared X on that year-to-date in 'XX, consider in the Carolinas. data so the just bit to the little Those at

basis, If costs you XX%. a on year-to-date look at the were Pacific Northwest, up log

Mark Wilde

seems hit even helpful. is is also through a a guys a from There bounce and think on read the maybe of distribution? on you the more speculation lumber you Okay, housing market. to that's distribution issue has The lumber we've the days I just provide whether based bottomed flowing here. that market standpoint, thing can And what's primed maybe little a how last over for color bottom a the address of be few you lot last in maybe wondered

Nick Stokes

Nick. Mark, is this

recover producers the On market, they days some of indicate some prices to seen by to XX that commentary X don't to over the in have the XXXX next week high of pricing the expectation expect the we months. that of last the levels

-- a think I I -- that's think a that's

Wayne Rancourt

of that the on We who call. names won't name earnings said

Nick Stokes

to that's a hit willing that hasn't mean I that I days. think you week confidence in -- you existed tell X to there an we've that but XX but been of the to outlier, some buy out doesn't would would probably more customers have And bottom, I tell that ago. a degree, some bit there's weeks

I of and obviously winter, we're it severe think they as staring down on, see throat the the backdrop is we'll these supply come increases and how is. just

August, some anticipate is -- won't said it's night November settlement area, lot we'll dour expectation it that going everybody price don't a Christmas we Eve close goes. a to upside that, we a December going to so their we're said in to settlement next in area, coal might ago. we And Our Having experience be pretty say if XX see same erosion days. in the that when I how stocking, thing in did of month but the bottom, and but the gets I have there's

it's slowed that tell don't you fill. that pretty lot what and sporadic. still visibility of in else have deal, orders that us In pent housing As a some other to up retailers they're does tell would the a cases, anybody we our it's to In lot terms there's activity that of housing. I of places is waiting down.

Thomas Corrick

but will is to that growth say Basically, think their year, hearing hearing Tom. I or on we in flat anyone down. we're manufacturing forecasts next talking reached is what the Mark, our about not this builders they national general that be for side. are accounts starts are out moderating people their

Mark Wilde

helpful. veneer. like sound last I in some or that's correct have question Tom, about over to assets need The sale the From everything think you you me doesn't Okay, plywood that? time, are I more for there south. buy Am said I it the feel had, to plywood

Thomas Corrick

to shape into it's we'd plywood's go always in our that on be I I unlikely Florien, investment that making I good recent to we're think, strategy, at see Chester we'll self-sufficiency. so very going And clearly It's in acquisition tied sake. us to and space. do an projects with think don't an very be Mark, in the looking plywood for EWP

Operator

remarks. am not Tom Corrick this any any showing to time. would Mr. call closing I I to at further questions over And like back for turn the now

Thomas Corrick

Lauren. challenging Thank Obviously, third a had quarter. you, we

in pleased done a during strategic Medford, number quite and However, continue with really, strengthening in quarter BMD with we've intel focus the I'm acquisitions year on progress I of really this we position. fronts, that and on and pleased during bit Nashville upcoming made Cincinnati. am our a of geographic the acquisition the and XXXX to on has the the XXXX. of and the the in focus with the sale Chester Roxboro to modernization Florien northeast final mills steps taking on operations our operations and And rationalize started we're our southeast that core businesses LVL the plywood Oregon and continue complete closure in at of we of we line. assets to the the work with announced to

all where fund I we've think million in forward. financial on sitting also, strengthen going liquidity. we've to position situation done our $XXX able really We're this in to been growth

shareholders. as have enjoys all -- were for cash that, I'd We to position. given We're quarter, with investors. to return I'm we great the we additional holiday and challenging even our our have recent a all and fundamentally future that company to to did for the line fund value a facing like in, really very strengthen And season. confident debt our hope on about our We everyone thank everybody a funded, many this did we that, conservative able environment calling I the actions and in to but pension drive

Wayne Rancourt

you, Lauren. Thank

Operator

you conclude a disconnect. and wonderful in day. Thank does thank may have all Ladies participating This gentlemen, Everyone today's program, and for you. today's conference. you

Boise Cascade (BCC) 11 Nov 182018 Q3 Earnings call transcript