BCC - Earnings call transcript Q1 2020

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Operator

Good morning. My name is Valerie, and I'll be your conference facilitator today. At this time, I would like to welcome everyone to Boise Cascade's First Quarter 2020 Conference Call. [Operator Instructions].

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

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

For of with filings the that the may differ results to recent a results Boise anticipated, Cascade's discussion from please factors actual refer to SEC.

Boise President, Cascade. to introduce Rancourt, to Wayne CFO now and your is Vice Treasurer, begin my pleasure may It Mr. Rancourt, you you Executive conference.

Wayne Rancourt

to would Thank Cascade's you, everyone. call morning, XXXX Valerie. and quarter Good like I to business update. welcome you first earnings Boise

our are Head me Wood Nick Products today's call CEO; of Operations. our and of Materials Nate Building Joining Distribution our Brown, Mike Operations; on Head Jorgensen, Stokes,

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

Nate Jorgensen

quarter everyone. Good billion slide On on us earnings our first Wayne. for from joining Thank today. Thanks, X, XX% first up sales of call our were quarter $X.X number you XXXX. morning,

or $X.XX our after Roxboro, accelerated pre-tax of of Carolina at share depreciation and related $X.X per income includes of compared per million was net share for North quarter XXXX costs, other due $XX or ago income first $X.XX $XX.X million quarter. million permanent production net year Our of income to million tax I-joist or the to curtailment share the $XX.X facility. in per $X.XX Reported net curtailment

model. integrated the performance in operating both Our demonstrating was strong strength our of business businesses

compared in income manufacturing first business million $XX.X quarter. reported the million Our to $X.X the of ago Wood Products segment in year quarter

Roxboro the The mentioned include charges. quarter of XXXX results previously first

of quarterly Materials of quarter. of segment the comparative compared income $XX.X on $XXX billion year million Distribution sales million to business income segment first $X quarterly Building the million reported sales in $XX.X on of for quarter Our

come our back -- to take outlook results Wayne through and financial walk business an will COVID-XX provide the our response to detail, Wayne? I'll impact businesses on before we update then questions. your ongoing in more ongoing

Wayne Rancourt

Wood sales you, our the Slide in distribution quarter X. segment, I'm to on quarter, million flat first including sales were first Products XXXX. Thank $XXX Nate. with

As of Nate mentioned, our $XX.X income $X.X to of prior Roxboro other mentioned. first compared million primarily at year facility accelerated depreciation Wood of and quarter. in due Products $X.X the in million in decrease reported million $XX segment A income million related as cost quarter, Nate was to closure segment the

Reported EBITDA lower for EWP the first million, XXXX. business the the improved year costs ago Higher contributed and XXXX up drag was plywood pricing first on $XX.X Lower from compared a of in performance. reported quarter manufacturing quarter to quarter. was EBITDA comparative performance $XX.X EBITDA with million volumes

to with million gross BMD's prior business sales line products primarily by margin was This and general the million EWP while XXXX. improvement of year first a commodity first of distribution quarter $XX.X and driven offset gross EBITDA increase segment $XX.X income increase sales XXXX. Sales million was quarter. increase of XX% margins $XX.X volumes in segment The selling in X%. reported higher compares of XX% income the million of quarter were from a income first up partially a quarter in and prices quarter. expenses. by from declined $X sales or the million resulting The $XX.X products $XX.X improved in in in segment compared on billion, This million were EBITDA $XX.X up of

of $X.X EBITDA and The other negative with of our first million in net of items negative our quarter earnings impacting The the million first can quarter XXXX. items found reported those in amount release. of was $X.X compared for be the XXXX in cost unallocated the corporate tables

up LVL strong combined X, and at our of X% quarter the our year robust the favorable single XX% beginning for with for XXXX. good quite Slide construction. to as volumes did I-joist sales first Turning respectively, with economic and weather start was new quarter factors compared family Housing residential demand were activity first create

schedules We We begin until with of the of slowdown quarter COVID-XX an changing the EWP to adjusted to didn't family the to be early situation part building our much of construction excess the inventories. see impact second operating avoid March. latter pace single mill in the induced of the demand and in-tune in new

pricing I-joist was quarter first XXXX. quarter LVL X% Pricing compared up and down X% for was in with first

facility worked in first showed volume Turning compared XXXX. first Plywood the to customers but to net production pricing throughout slowed sale X% reflects XXXX. to $XXX for to was a of as the to the feet, We Moncure momentum COVID-XX pandemic. sales the first quarter was quarter Plywood in in quarter from nice X, quarter, million proportion first significantly plywood were our first volume orders XXX Products began down the quarter in of sales March able first weaken XXX price push sales during their buying veneer of the XXXX. Wood in Also lower Slide inventory into feet quarter demand higher the down plywood distribution average quarter fundamentals. response The levels plywood our and EWP solid first million most in given

is demand prices pricing our quarter below thus in second to far April. quarter first Plywood XXXX in average. in led weaker approximately X% Declines

commodity volumes line quarter XXXX. first for product sales in sales increased margin general the quarter products from to up of of BMD quarter XX% XX.X% first up By in Moving XX%, Gross to XX.X%, first gross from X, commodity in product XXXX, resulted XX of area, EWP first on gross general and line XXXX. percentage The products BMD's Slide sales first higher increased XX%, down points sales margin margins $X basis reported quarter compared and were increased BMD's EWP X%. and sales increased the with improved was XX%. pricing up quarter XX% billion, from

serviced that our sales the the to but for handling was line we reported X.X% margin a X.X% from higher ago in in quarter. the As and associated tend reminder, EBITDA margins, through general higher up quarter, costs. gross also year BMD's our EWP branches products have

Robust that construction activity pricing in XXXX, adjusted of as first in the $X.X starts seasonally few commodity mid-March. increases around by in drove evidenced of months sharp products housing peaked million

production the prices. a since impacts However, sharp concerns decline building the industry impacted construction and negatively demand of about activity products COVID-XX then have curtailments residential of resulting across and in commodity in and uncertainty

XX% similar the peaks are March mid approximately in second will Current products of levels, the pricing experienced current price anticipate quarter the XXXX. at We the which levels composite prices below to be in remain quarter panel will XXXX. low commodity of lumber second

first Slide positions. in end rates stabilize chain the predictable comfortable should XXXX, adjusted X, shows of producers most consumption more response months is in operating lumber lumber major the the of which pricing market to four once more establishing situation, inventory becomes roller of supply demand pricing help coaster and ride have the the

pattern to chain the in see there've been supply many length X, On Again, panel downstream the OSB curtailments same of one behaviors. response random can significant by pricing index. for plywood the Slide and composite producers

net have increase accrued first million tax capital. increase interest seasonal the items, capital, receivable payable. working On cash. Slide of fully the in cash, The key seasonal elements quarter, during in by and we XX a excluding was accounts inventories the of $XX.X increased out not set income our use Company accounts representing working and offset

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

remain of accounts in of quarter, inventory the statistical cash If Exhibit June down to by segment capital and our by result receivables, broken weaker the additional X-K conditions generation. business expect the The those end for working meaningfully filed has balance detail, our I the fall to payable for interested. information and levels as second XX.XX would

Slide now million of we quarter I'm $XXX finished on cash. XX; first with

XX We had and between but plan on no this expected past in committed the under originally light available the outstanding with March million from our prior and $XXX million line. reflects of debt was of which spending at March total million maturities XXXX. to the Our year, XX $XX $XXX million in reduced flow We to million businesses. capital availability million were cash approximately the to our targeting $XX bank lower $XX $XX liquidity we

Dallas, reduced The and log plywood funds to includes Texas. complete facility veneer as in utilization well the spending Louisiana at project store level expansion center shop our Florien, as BMD’s in improvement

to We the under adjustments Act. going expect rate XX% forward with effective XX% and book be between tax our potential CAREs approximately

business will our it update Nate over to I back outlook. as discuss to COVID-XX well as the turn

Nate Jorgensen

of safety conduct we business It first our that to continues on with health Thanks, we crisis priority appropriately our those from and we In and community the important based our during Wayne. XX, do to the and associates expenses. several and adjusted the a efforts I'm implemented be support whom number CDC Slide is conditions reduced next business. spending others. continue and quarters, our production actions reduce upon over of guidance preserve anticipation capital manufacturing of the levels, weaker among the plans, to cash business number

actions in move the apparent economic identified, outlook environment a which further the unlikely timeframe. demand to deeper quarter will reasonable implement we as reverse we becomes if We is it have and into

to our lean experience the planning financial have We response. last crisis of the on COVID-XX and

fiscal a depth the monetary the early actions and to is the the mitigate recovery. the likely believe respond path with stimulus damage to of federal we However, economic to and shorten at level

portions states that to the curve period seeing hope has in to a actions shorter following are We much activity already and thoughtfully infections financial will in see of economies where crisis. XXXX provides the a the flattened, return us which normal we of reopen

was the million consensus half X starts new for considerably weeks, new rate Order the construction All the an hard of several rates year very have distancing second term to we spec I’m would construction million factors as for XXXX. produce extended distribute. for has builders practices through consumption and back to but as builders construction at is cancellation the housing We products we housing led X.XX over April. slowed for homes. and near many consensus the moved million the have last of and X.X start family, U.S. rate XX, The those predict. Many Slide increased scaled progress next number have timeframes. safe expect starts their of on published and expectation fall completion to of blue-chip between single

to sales in April The approximately per and impacted ripple the negatively pandemic pace compared COVID-XX XX% day effects BMD’s as March. by

in safety construction Our measures. slowed adjustments constrained as heightened activity including pace and sales shelter by volumes a construction residential place orders markets builder other site result declined of as in construction in markets

products prices XXXX. wood experienced relative the also month quarter first for We of of during revenue from April commodity deflation lower to

in earnings reopen are and COVID-XX customers second essential in than both Because respond expect sales as be categorized to position excellent the of We to impact expected. sequentially to we vast states result customers more in our jurisdictions, as distribution -- should an we their demand in quickly slowly the and quarter pandemic economies. business rebound quickly to in lower manufacturing continue an support majority

is appropriately. and difficulties appropriate in our levels is BMD with capital we in in-market and ahead, wood be could their of make uncertainties commodity months use working will inventories judging maintaining customers the the react on-ground rates, high demand dollars. the With operating effective products helping pricing volatile service in

continue integrity, to of pursuit safety, of our and values excellence. will guided We by be respect

we our centering associates side of communities, customers, successfully strength and will and financial to benefit our to suppliers, and get use our by health the this of and shareholders. of crisis the on We sure safety other making the operating

for open Valerie, would Cascade. time. We any would in you support interest questions welcome this please today the us and joining Thank for your phone lines? continued Boise you and at

Operator

[Operator Instructions].

Maguire Our comes of from question Sachs. first Brian Goldman

line is open. Your

Brian Maguire

of or comments I week-over-week to towards the a things about it wanted XX% activity signs clarify lot resuming in on that BMD. trying and year-over-year, obviously like there how down bottom some if outlook gotten improvement I then, find we early any of or you end into decelerated and April to any or just as are XQ green May appreciate the talking it of sounds still was have I here, a guess XQ shoots sort we've the on of you these into numbers? And seen that. were quarter-over-quarter

Wayne Rancourt

March rate Brian, daily this with daily The the XX% is comparison the the of April. in rate in Wayne. sales sales is

XX% of deflation. price is to So that be part going

Those case that of shut that in our are good, in of at we're states is declines, the positive that some designation, we've And non-essential. reopening, will with think -- as the And week. the would think part in sales into be March seeing of particularly volume states the have we're part I seeing construction a And down been it activity. and pretty And have people first I pickup May you May of the taking slowed pace April. changed seen reopening. the tell end some feel the I and volumes in that in general first the pretty what as

what part to of comfort is level, the and think we're I dealer more trying rebuild inventory. at seeing

the in a marked the of tell they're would pace think getting price inventory fear I anecdotal don't with with these So caught down stuff to future. be caught out see, there from And you, I if is I levels accelerates, would at get think missing people want short. less concerned the I that

supply is the a is chain. improvement seeing more in So and what of on seeing what part comfort activity field I part restocking you're little think an of you're

Brian Maguire

some might -- hopefully provide have worsen, But is other take don’t to sort that. on able And see what other you can more be specific if you’ve things there anything got? actions you do of to incited you you cash and any options

Wayne Rancourt

I we been put would not again, implemented it's but as have we already capital these to reduce in Yes, do, try list the positions, spending, cetera. I to to that that salary don't that freeze, fill I the XXXX. are ones together hope describe what mean, et open easy have somewhat laundry would same take to And

happens can on in we eliminate at 'XX, that reduce a if base looked worse more suspects That got we the a broadly, look that’s the our XXXX and this variable. at other there's compensation But that The would because in senior list and we of we would be found reductions obviously like pay positions. level. already amount director management fees, automatically reductions, if ourselves can cuts something considerable pay probably more lot salary

to several is to months you'll that this us over where out. really particularly positions salary We're short-term it's One protect talent table. salary doing be the trying of things protect I the see to obviously, positions, hard think next in locations plays those we positions. areas likely would try to geographic But how while on in the see or the refill

base surprised try of repurchases I dividends, personally, very the I probably maintain any dividend, Speaking us would do see to in be the maintain side, sheet active don't would debt balance that we I certainly know on we share to supplemental And would a but to would environment. downside necessarily as liquidity possible. the pay to be much retirement kind on as that but try

Nate Jorgensen

a to maybe forward. have condition be to the environment described, it what of that, potentially could to just Brian add terms scenarios But as as Wayne that business of and different at of in number looking business we're terms we move we in

think some like. metrics we've in what use think the of in and actions us the described, as kind cost need certainly I business spot. So got of optics we front and May, into prior slowly of I slowly the same see stabilize it's terms right But right of heading we've encouraging look we responded. as that levels reduction Wayne And finished that off April that kind -- to should to done and get of

about So, sit we feel we're do different our cost if I as required. to today, position good think something prepared we

Brian Maguire

Okay, Wayne. last for one from me,

for potential a level just extended environment? just receivables. your collections in to customers And having take -- issues And some might start start creeping backseat the overall other are payment we expense either of bad of customers Just terms. if if this sort be that a up for question to asking see on debt

Wayne Rancourt

And because the got very, we've minimal a be we through very team downturn the credit write-off. same on last expect place. in now to credit would I we're true the same had general conservative As rule, and

expectation about that and -- keep have number Nick We been in you. terms. have the customers his reached continue you I out us is general team, and a had of asked the to and to within we has promise you to us, our time And extensions back think terms will is service response pay will and your up, our which promise on having of inventory [both ready trucks] and to that you to

I and from cases, customer I accelerate see for and warehouse And we the terms. more the lot has received in we particularly far, so tell in modest shifts I slowdown. XX-day I expect of that this And We we have on continue out if in activity did April, reasonably less would And you, manufacturers. lot think a to to see shipments to started terms. well. of the direct of think -- the allow products, would been a mills commodity XX-day see

And I I the down number if a on would slows personnel I'd competitors public we got sheet some of in staying and saw standpoint. expect we've start stressed through of channel, wholesale instead from that in us our and very 'XX clearly balance direct. level having X And essence, of they're comments, relying a So stock expect shipments the steps taking their activity significant and, by don't -- to end are that back And we're inventories the dealers on of that ground those ratcheting more in XXXX inventories. cushion around that cushion we're probably that and some confident, frame to factors and we make the that picked being that will customers support And and do the going be mentioned, the short debt time X off. losses. that respond are probably on highly fall will of business help I up to -- and sure can But bad going as think that help activity. able with to we

it make it to denied other out this where we chase ugly. wholesalers through get where are to and likely credit think to not being going are turns they're people We don't business if

Operator

Bank comes from of question of Wilde Montreal. next Our Mark

open. is line Your

Mark Wilde

more kind see a the in had, the you channel possible, like sounded in channel. yes. color, loop maybe, that last on it's some where there I'd inventory the like just of were It just back or and if to inventory in little suggesting you get rebuilding been week

Wayne Rancourt

want time? Nick, touch on to seeing real what do you you are guys

Nick Stokes

Yes. Thanks, Wayne.

but I shift And conversations quite as some function they no significant a, willing they're order have have would that: seen positions take about, time to on pretty As a And are I really big big the system. working we've a that's function you intake, -- what appetite we've tell customers focused It's talked our to capital articulates, don't frankly, particularly commodity own suppliers. impressions pretty I saying. inventory people there's risk; given in b, that there's and with from metrics, their Wayne our think strong this a for inventories, pretty across customers but a and situation. products market own just just in very

a up customers out So so continue a across of terms inventory that over more the the you've creep the I in years, that's I and again, starting of side increases little which will business. think bit play and time function think really low. on seen to a thing of a price and level of couple a weeks. supply of kind into everybody And hands last And think, warehouse many few our And over that cases, system, the last way, demand last the in in reflection that price weeks of I of it think inventories dramatic channel you, I plays up are probably I the to relatively tell as opens bit would lower levels relatively the this X a commodity low. appreciation are any than in

there, the So I got best that's Mark.

Mark Wilde

noticing X I last when some these quite Nick? over terms, seen in the we've percentage because actually weeks are night. that's X, was random last really really X, helpful of that Yes, out dramatic mean, came increases lengths I

Nick Stokes

obviously, and that side when Yes. us kind of it both provides the the on escalation, sales we a Absolutely. side. for And price little tailwind get margin

we're there. to here see So happy and of a little that

Mark Wilde

you that big the on way how we a manage big Can you drop, that that? up bit get when a end guys little color maybe taking on of in we give us inventory hit a saw so March don't just you

Nick Stokes

short what years lack before to say we've What to is We here. will inventory. had more sauce No, it. may lot nor years, that of movement, in we secret when little -- are a do, the sell buy fudge plan had when to you the the is and Mark, not years to And a of we a to give strategy never that out big going we've bit. way based And go risks on voodoo-ism, the market term. sell take and get we're try and a for there's better they're this we're that when going we escalating and we and the to commodity on little tried prices we and deescalating. for I'll a

every and Our day, customers every commitment day to to flow the our suppliers the is and our steady. keep buy in market

certainly, every of and terms the the our fact, in do really and the in they're that cost-to-market have a and both when local you that for side focus swings pretty the and in what it's customers are the of more time the consistent we Those is leverage side, that customer guys because selling. scale on for get and have we the knowing it's and size certainly, a we going to us in made we where as to XXXX, quantities. the terms order markets. we kind the did, gals But buying of all where can, March Obviously, and try good prices for some dramatic flow. at Now customer and of in day says of but part scope of the are customer the talking are -- should like we the March saw when level that those value April, and month supplier decisions month decisions create function with in making on some location and that reserves the of be strategy the That's in just time adjustments.

Mark Wilde

with a moving of kind DCs for kind that little you months, Dallas kind capital I that from of advantage But whether bit know see talk door wondered, you of me. might talk for one M&A a you a could product range that next of of And allocation over kind has ahead some of I an just XX the of you're Okay. from I of take broadening kind the out if shop. I'd market. guys. Last standpoint, opportunities Nate, to of a about that. people And what be the like standpoint can also XX and been you the the in to your priority

Nate Jorgensen

as Yes, we at a and our category, strategy pretty product continue look Mark, including been to I footprint, we've from overall to a grow you think from specifically perspective, doors, consistent perspective that in as regards and both millwork BMD, to as desire our as a geography mentioned. well about

I So even think, around our ability to continue of I the kind marketplace. COVID-XX, kind more of and against strategy to encouraged up as grow pressed the think we we're, our

described, that path continue I suppliers our term. position, our strong and really Nick short in As think here, a of and be of important we support will terms term very forward to our have long growing customers part and from

So either in going support, dependent of upon business, that, be warehouse as and around well, have to for in we're our terms as we I prepared and I think, Nick, that distribution again, described our customers the us to and looking are well. think, we're optimism forward confidence terms very Wayne as of and,

over maybe different an to described, organization move opportunities, XX some to meaningful X even want opportunities financially. be suspect that I going as think that well X to we compared months, forward, And the we XX to perhaps to ago. to next And As will there's continue we emerge you grow we're months as as prepared business.

of the want that unemployment. given measured, look funny when we morning, unemployment this of XX% just terms including the uncertainties be in it's at Mark, front think from I you all to are nearly number in us,

expansions platform can think be conviction forward. growing distribution range around measured path our we including But We of as I our and continue platform appropriate. we'll and services, see products forward. in of of belief that's terms for in certainly and to invest move our that where a part So

Operator

Our Benchmark next question Reuben from The of comes Garner Company.

open. Your line is

Reuben Garner

on the business. starting in strong the growth Very again maybe quarter. So line general

and row vast you've pretty of M&A, X but here it a still that had volume impressive string continue help may forward market of assume a majority you a growth. that give self-kind a an bit of little of I just with to the is quarters offset is probably it's gone you in think declines share of the us X some just update be there? gains. Can growth -- or because And initiative? can I and

Wayne Rancourt

Nick Yes. Reuben, Wayne. follow-on is I'll if up. mess I this this let

and think of would products have you're got in to, to we've line is part probably siding what being very decking general seeing on X the are I of composite couple key and section, a I that continue point important we that good like that to very results there.

a part picked siding product in arena up in the in good we of a that of number category. a key supplier As you had and last with relationship branches middle very recall, in the we've year, growth may our

base in So part year. that that XQ 'XX to of the seeing growth a in not being compared sales those is what sales comparison you're in has those necessarily category

that think that certainly, into I down in supplier continuing slow know I Those I don't pay that say are attention that's point to. you quarter-over-quarter X of So on and the growth arena. numbers would I add very relationship Nick, said, good siding the areas the but correct what XXXX, would to. decking but as back the or I of that of the X And we get category. if that performance will win I'd beyond composite And some again, half

Nick Stokes

No. This again. is Nick

I touched on the And third Reuben, you think, it you that. hit leg I think on. of

the first acquisitions those didn't have operation about in we this made in do our year. we've If we the And you Birmingham think of quarter obviously, numbers. 'XX,

think it. those about So all you of the should things I think is sum X how

Reuben Garner

next took plywood bring back helpful. ties anticipated? in you in as demand quickly a And or a in that if know benefits capacity early your maybe it That's R&R seeing I you are business And question into at very not is guess, kind we've bit seen little my all can some how as initially -- particularly bit the of channel. space I DIY you you of part quite guys strength, in on out that as bad it of of volume QX? the is

Wayne Rancourt

want Mike, do that take one? to you

Mike Brown

Mike. you're is This sure. Yes, right. Yes,

If quite big stunning, improvement boxes, really panel recently you the demand in products. the at consistency the look and

that's all they're So I projects than home at can't explain many exactly that DIY are perhaps people that why sheltering other have happening undertaking.

the to week done necessary. go period them to have were may I some necessary? we folks helpful in earlier it us that can if can done, of continues, up work with back we been we that we The maintaining time line to we or those out, locations, and even sales but which in if summer. call were a of hope the terms what in required. that off are it's folks I'd have through that And more, unfortunately our certain still products. for Or around volumes, either we ability for a question say, into that opportunity. increase short where And we of overtime laid within, course, get plywood very if So as a levels list have would callback so, volume the in be produce ramp we relatively weeks today. we working be There's can and producing the ago with So put stated usually, our basically us

stage. huge to up demand meet this a of if the at see in ramping don't I problem volumes required, for terms So

Operator

[Operator Instructions].

America. from Our Staphos question comes George Bank next of of

is line open. Your

George Staphos

question can The I I I had question to go first Brian that back the you up. wanted a comment think extent teed to that that on had,

coming or cash that go what but shock that absorber, be might given just less quantify be look able cycle, So need to wanted And to to your flow to be fact, hopefully, trends a sounded I by, it able buffer but to looks might you confirm we of step. to results next potential get it to if, in what there what this in out like it way that. that to had into never May, to April likely, like is it

Wayne Rancourt

are the through we particularly on run where mean, in May. I as rate, Yes. will distribution we we see go

running basically hours Mike day. a our a can XX in week, Wood We're as Products general think jump days rule, I X facilities here. a

opposed So XX/X. to as

pay think, months the I prices this in be going So I rates products. the way next we'll But attention of you and what's going terms activity on several what obviously levels do operating distribution. cost we on reductions. it to describe with the to to over would key, through is in see

at concerned not sheet all are liquidity and and balance We cash. about

immediately. this we on to is We about continue EBITDA. want make I'm of our And debt through decline a What give any to sure were also not do to dividends. getting much of you earnings annualizes ratios pay example, paying to an again, to downturn, of we are list. issues will cuts And match, very to we we terms from million. and standpoint. we make $XX obviously, don't our if an XXX(k) when because, in and I'll So if that levels. have kind focused CapEx too this interest an we will for And we out But cash of to earnings attention suspend taking saying fund again, we example, attention affordability we're foresee appropriate, think we're

that eliminated prefer $XX give worth Now go this would them in do employees would in to pension, don't retirement I like our XXXX, ask our and contributions. that. benefits. to, -- we to I and we prefer But not suspended to need million XXXX looked if up essence, of XXX(k) we

dividends. out And do we're don't to ratios not of go Yes. that in think if to from line, we be don't out could our to playbook of borrowing standpoint. base of be conscious our we into type The with I overhead. preserve pay a cuts that in need cash got taking along prefer again, and We for to do would are and in the do our same going situation. seeing And that pay, that very could so if corporate do Would or take across But million to million affordability we draconian dollars expense or we be I Nate And corporate debt-to-EBITDA a comp. reductions corporate couple liquidity dollars I team. that? to we're relevant not several pay variable you interest that's to want an of what want

at a will to mentioned, continue as number the probably there's to on like footprint. the because, be distribution strength much capital closer to as expand do improving, of things need So earnings lower we Nate the if XX spending couple maintain be end we if we range. things are appropriate. like again, that of that as docket to the we would that to will we And And be, see would

depending a how scenario. scale So to becomes. we've situation could if an reductions, got meaningful you that into expense $XX if from to be million number the million got X a on basis build $XX to annualized on we would that it And bad anywhere the list said

George Staphos

didn't Again, great get an mean sheet and candor, job it guys experiencing positioning -- right done purposely in the that's for that Wayne, like I I granular. actually appreciate it balance aggregate I we're great. didn't way. to you a have for said things I now.

but So done great you've I that mean, it's unfortunate, it's that.

Wayne Rancourt

just pay aligns no get products one to do, you, our take for we're the and concerned are market your them what preserving if a suppliers that customers, it. business and grow and We're our we partner that will with message to preserving product take continue to franchise, prepared be again, very share. to sending if your help and and trying And you're support -- for suppliers strong open trying can distribution Yes. to of having a about very thoughtful frankly, and very,

Nate Jorgensen

on to Maybe, George, it's add Nate. that. Maybe just

of -- in challenge. depth balance we as think, well meet think this think positioned see climate. very our we difficult as company it's a the are I And we a sheet. to team But our with Obviously, this combination experience including, opportunity. I and momentum a

challenges, share, takes So gain as whenever gain really of an out it's about that place. think to opportunity we the momentum accelerate coming and this

that's that's great and And we're we're then we got stabilized thinking our of place customers make a to Wayne have that things well. And suppliers. provide move as prepared south, in correct levels things want thinking terms turn the today. improved. of both certainly to sure described, think spending sure support, And making to slightly part part if in kind service are even in we've of as our So of and our position to we forward. But

George Staphos

in were quarter. take of up little quarters, been America. Understood. EWP in although time know Again, at up, was increases some last been you XQ. Arauco into with point, opportunity South about in pricing guidance it's and brought flat Copec, change Are pretty present seeing EWP, though exporting its their as potential imports your there? talking What in seems Nate. seeing directional yet. to any that, Product But for more share you been just can an side? it that Is you XQ, hasn't into and/or but not pretty, the on reported it That's the numbers talking you understood, humdrum few outlook, supply the I down at has helpful, have haven't on dynamic running. peers relatedly from baked about any bit Wood are bit this factor. year on business, pricing the thank today your if in given a of gain some the they difficulty having when No, from how It and CMPC of the a like Are call the a earnings swing demand. either to prices much even

Wayne Rancourt

that? on you do touch Mike, want to

Mike Brown

guess the it's Yes, sure. issue, George, pretty as would South I usual. I much business say American

highs. off either that a has you're real, plywood tracking seen at I things like past. But COVID-XX and the increase. I know our haven't record significant they're having the in I try aware, well what's are fall happening bit related or little some is with pricing at mean, which full-time the a to more. the over fact would very great think And We If in great Brazilian they ship you issues Brazil recent moment. more, a as the with appreciated they social to state could produce

be get quarter or think it more I X. they happen if will a get don't and from to try think and the over might can send today So of on it. it some tomorrow, to that's it but they produced next going I boat,

pricing. EWP about question a asked You

competitive some given that a price in around EWP think -- a challenge time, Yes. I to would related comment ample it the and as I -- would think out it, all speak I very but situation market the pricing they're as at our be price look, competitors. of from to moment, I'll tough they're question to a raise other want pricing. it our do which at sort the go the situation, our that relates But as just one that say, this both. well to and of to to first. a EWP costs veneer. be additional as get force partners of yes, I your incurring can't amount it's relates the homebuilders point supply we is facing. it and to dealer I have challenges increase

by impacted because the outside self-sufficient. buy we're XXX% to not mostly having really quite, not market on veneer we're So

ample one honest. haven't finished with competitors and their ample of time, of a have recent I to of there if be on And capacity, may falls but sort that some be have lot production we heard We opportunities current our inventory service to our sword, customers. of

Wayne Rancourt

lot in that we from a market least if any capacity the been it's impact that, it's not new haven't this was point, show capacity. been fortunate supply in to we facility fair that I meaningful has at that the demand, this to time think marketplace in because much that had in impact And seen Okay. say up slow a the have declines have market. a to that has would And of the have up seen ramping incremental the given bad But coming date. at

Nate Jorgensen

it's maybe George, the other one thing other Nate. I thing. sorry, just -- George, add

really EWP at more probably Just it's matters side so dependent out or where point time, in the when -- terms a products, given for kind or producer whether of of these distribution in you of the this warehouse. of in moments the great other

and manufacturers to independent have, and And strong service execute better about a position other really our with model the so BMD of the I maybe franchise, think in some as we are different in with the we Wood along and and maybe integrated distributors I have, we're think EWP obviously, there. of marketplace, EWP some Products, that out than the

our share, BMD. point and your we distribution market, capabilities, on feel support with certainly good to ability to starting really our the So about service

Operator

Our of George of America of Bank question next D.A. comes Steve Staphos from Chercover Davidson.

Steven Chercover

been of in So here. just questions my to have a get me a couple asked try but couple let

to So amazingly, the appear likes. recent both the charts the composite exceed lumber according QX 'XX the to panel And composite and poised most prices. average and random

volumes cost on the presumably, for real is absorption. you guys and So hit

sorry, can how So you understand decremental impact your might volumes just the diminished -- help might us margins? diminished

Wayne Rancourt

again, Mike Sure. chime can I'll And shot. or in. Nick a take

of if see week states part with XXXX be if as in go be been we I seen. decremental to cost we have reopening, but X we the to combination said, that going that a out Wood in year, full back a prices to with be of And reluctant remains going your on instead the X. biggest days really to end salary to the the hit view potentially take volume. operating challenge want a But with to lot is to point, later I flat schedule will think XQ in in I think the running of prices, up we're

if XX% will -- to facilities, be as that the and think for we of them identify might that would of to days, and out out XX% have take number a to to that more said costs. would in get more basis, have time, or of if would, higher-cost go fixed Wood -- would one dark back a I on the suspect decremental pull closer margins short-term on instead range. conclusion in here, that. typically, facilities we we extended more EBITDA than And to running in it the was So this I I be going period came an X X start that's we an

somewhat distribution the is on similar story. side, think this I

way revenues. X% we that EBITDA On suspect lose we about X.X% than will margins talk out, on be margin worse the as incremental decremental a I typically slightly volume. or that

last pre-COVID we and billion our of at at managers, as his the number Nick business team locations, structure fewer cost look in we geographic time, pick growing If and looked have the put branch some we've what I et like, place that had , fewer were $X you been things in a revenues, cetera. about the think

we XX% the we drop-off or a way revenues to cost in a need to structural cost billion XX% from basis to where fixed BMD, to if to make $X were in back get the fixed see in up. would changes revenues So we were of on

the in margins on the of terms guiding of down, X.X% term, in least decremental number north near the in terms in So a at I think way BMD. of would of

margins versus $XXX I'm drop-off to the billion Wood, I the we looking we margin basis volumes is think in said at I of fully whole the indicative a May margin if the in an XX% example, be commodity June. it in meaningful we're down for BMD sure in drop, if XX% see incremental or $XXX impact into margins And decremental compression on you'll in on went pricing points near will million term. will EBITDA, think XX somewhat that the the running at in you revenues from pretty a to I be million variation Wood going likely, hard of and on and the to But book? in steep billion down because on revenues. if look generation do EBITDA $X volumes, impact quarter have $X.X remaining and expect second in lose again, April the you on sales, not lose on the

Steven Chercover

This sound X X days days have because X shifts are logistics the you but what going a from on off? and how goofy work? of I like days? to do follow-on, mean X days that that Or does go might

Wayne Rancourt

Mike, do you to... want

Mike Brown

off, Yes, cut got yes. on. I'm back. back please I but I'm

Yes. Okay.

explaining mill of way the it simple use the So plywood I'll example, as an generally, Steve. is,

have in X-shift are each in shifts shift a of basis. that means X a and the operation, there that shift, run there a we are day, we X And additional rolling on shift. substitutes sort X So hours which

a clearly, you -- have, you cases, when effectively but we X of days So less most but week up deck a up we you in I end number those still simply you can people the And go people, chairs. you a from to configuration, needing not think, X all. reorganized days week, rolling reduce end with

-- in we sort works representing just as there's some have it's on bumping a a employees, where locations called. a a essentially, So our tenure. of union it and it's list hierarchy or And

first are to somebody -- to came that's go that wishes unless that or were out. tenured last the more those off senior So opt on

weeks take run effectively and X-day and facilities does our a little bit to our time, all from indicated of So now, operation that but not mills moved as X, ago XX/X. it all weeks we've we

as side. situation, the As market EWP we taking not -- this

got anywhere capacity have million X.X using staff. that near haven't or Is We we recently the that X.X million Steve? enough, we been haven't obviously housing because

Steven Chercover

Yes. it point finally, comes appropriate return No, a when posture, that's capital? And takes to cash on over now then your helpful. generation at we operating an where are or contribution precedence generating

Wayne Rancourt

again, sheet preserving preserving forward let's the franchise. the to get the P&L back the preserving and Well, balance versus

we XX this we you, days. years, X maintain to at not would very point, So remain but X return-on-capital-focused, I return-on-capital-focus tell over

way, a going by cost, payroll terms you're think maintaining X the in P&L continue what positions, of will to the sub-optimizing may of We franchise franchise to take for et part the and including, growth, this can shareholders XXX-day So holding our grow cetera. investing inventory you're And over see share. if or if X mean paid that to measuring on years, we period. XX- get and

an We're if and financial And the may the costs, generate trying advantage position, to it that step much so not create would. million but better very but pun rewards sounds, think we in get as for down we -- to focused bet, could in And focused to gain near-term focused, care point our the we that if taking on people really capital involve a figure up opportunity we don't sure from strange take on accelerator and number on our of X be think on XXXX, $X people. standpoint? show and We great the if over better X think 'XX, will customers next shareholders and for we now, shareholders from to from 'XX stay and years that our right X intended, more suppliers to X otherwise years will a and as work And do now. frankly, of You second the out "How market, commitment and, to show we capital we service years and from balance reported it to draconian while says, as incremental to said, next we suppliers we're do this everybody let's shareholders? a and make compound doing X as $X we than trying return And cetera." X months. absolutely. that would much pay or into have years, really, returns my leverage et view dividends had results quarter focus, the we X our allocation some we No over million in X you return Are for with 'XX. customers our commitment

Operator

comes of Our Bank question next from of Babcock John America.

Your line is open.

John Babcock

want actually just from George question a to here. relay I

producers. it our So past business overall, is the our with experience for has our challenging been in that

is this overcapacity. of Some driven by

doors? Boise procurement And supply Or else? to mean, generally, business so is why that side it gives is this the of in it good is BMD? you for attractive something then I build-out the And

Wayne Rancourt

in branches. So with like the Therma-Tru number we the very have in a BMD other door Texas, franchise, good on shop relationship of a

the like it's it model same And taking we in business so really is to Atlanta with Therma-Tru geography. very that this the franchise again, extending And relationship Therma-Tru. with and have a good Texas. We're taking

XXXX. until be And We be achieve may years. we this X be this for we to by us opportunity in fill us. this actually offering we to advantage handful the We delay, got fact more think market We marketplace that's of the an in if to will likely to and have we delay we've where for 'XX have a take an if environment true dynamics, We capital that in of geographies think think that creates And next opportunities. share we'll that year. were relative the there can very can be afford good on X to and a in year fill Texas inventories way, to the BMD's difficult we market out think think place map. into capture going able and the we We high share ground to capture we available. people share the this again, levels. trade-off. over And great keep to a think competitive opportunity have is is continue a And keep service to to we

the we're our going really market we negative think customers. to incremental does said, but don't position you need not, capacity? that real balance we is the think on and from suppliers going to we're give again, Maybe have advantage we doing a playing strengthen. a margins a If from to us necessarily impact sheet think And with because

Nick Stokes

One John, a you of and clarification here, miss bit. point is this maybe hearing I Nick.

customers that to scale units. or we and in situation, do manufacture in What do do going we and finished our mix it's and Dallas terms just things that we a or we the But we our the Wayne's to for And existing facilities door not Dallas product those not slabs what in components. that. share. an our the door are are components assemble intend door our more adds product take can We light anything the is mix And manufacturer, assemble it frames to service to components. We're point, service from capabilities manufacturing clarity, but taking in to of are not anticipate standpoint manufacture to going really like buying of customers. current augmentation

lumber pre-hung units components take assembling are into yard. to that We we the

Operator

at no like call Nate for back questions further the to time. closing showing I'm I'd over to Jorgensen any remarks. this turn

Nate Jorgensen

Valerie. you, Thank Great.

express and care their our have required the want customers. to efforts pandemic other and actions our thoughtful take negative I safely, communities focus personal and to associates on appreciation continuing seen up, of of safety, to situation wrap and my never we've to service their The a rapid community each before. to we Before impacts responsive work for like

that associates to appreciative have they absolutely are all and Our doing. tremendously risen proud occasion. I'm the of

safe, issues first, untold on to first-responders to every day the This those efforts safely food like as security the are that including time beginning is that the There the In the a people this well economies unity the this done and crisis. putting others driven to is chance, housing are weeks time together. be good others take and when Have recover and in months will help many ahead, states thoughtfully. signs and also showing through and to we others by And calls need you will shelter-in-place going tirelessly stay helping good thank for orders working of incredible relaxed. -- have take are it compassion. and be you. are There time slowly to weekend, of COVID-XX number It everyone. other to medical to side a the go is up get I'd professionals, of and the outbreak. recognize

Operator

today's does conference. this and you. Thank Ladies gentlemen, conclude

great a Have disconnect. day. all may You

Wayne Rancourt	Executive VP, CFO & Treasurer
Nate Jorgensen	CEO, COO & Director
Nick Stokes	EVP of Building Materials Distribution
Dean Michael Brown	EVP of Wood Products Division
Brian Maguire	Goldman Sachs
Mark Wilde	Bank of Montreal
Reuben Garner	The Benchmark Company
George Staphos	Bank of America Merrill Lynch
Steve Chercover	D.A. Davidson
John Babcock	Bank of America

Boise Cascade (BCC) 9 May 202020 Q1 Earnings call transcript