Boise Cascade reported net sales edged up during the second quarter of 2020 while net income increased significantly in the quarter on a year-over-year (YOY) basis. Net sales ticked up 1% YOY to $1.2 billion, according to the company’s quarterly earnings report. Net income for Boise Cascade increased 21% YOY to $33.6 million in the quarter from $27.7 million in the second quarter of 2019.
Boise Cascade’s wood product sales, including building materials distribution, decreased $52.8 million to $281.5 million in the second quarter when compared to the prior year period. The decrease was primarily driven by lower sales volumes for I-joists and laminated veneer lumber (LVL), as well as decreased sales volumes for plywood. Lumber, LVL, and I-joists all experienced net sales price decreases in the quarter, according to Boises Cascade. Income for the wood products segment decreased $1.8 million from the first quarter of 2019 to $17.1 million, primarily due to lower sales volumes and prices for engineered wood products such as I-joists and LVLs as well as lower lumber sales prices.
Building materials distribution sales increased 3% YOY to $1.1 billion during the second quarter of 2019. The increase in sales was driven by a sales price increase of 4%, according to Boise Cascade. Commodity sales increased 9% YOY during the quarter, general line product sales increased 4% compared to the second quarter of 2019, and sales of engineered wood products decreased 10% on a YOY basis. Income for the building materials distribution segment increased to $43.2 million for the second quarter of 2020 from $33.8 million in the comparative prior year quarter. The increase in segment income was driven by a gross margin increase of $16.3 million.
“Both our businesses delivered strong financial results in the face of this unprecedented environment,” Boise Cascade CEO Nate Jorgensen said in a news release. “Wood products’ continued focus on manufacturing cost improvements was especially notable given production curtailments and modifications. Building materials and distribution’s sales and income were robust, and our long-term strategy and commitment to consistently carry a broad base of in-stock products, supported by high service levels and a solid financial position, continues to deliver value to our vendor and customer partners in the supply chain, as well as our shareholders.”
According to Boise Cascade, in response to evolving market conditions and economic uncertainties tied to the coronavirus (COVID-19) pandemic, the company’s wood products segment implemented temporary curtailments and reduced operating schedules early in the second quarter. The decisions were made to accommodate for weaker anticipated demand for Boise Cascade’s manufactured products. As restrictions were loosened and rescinded during the second quarter, construction activity resumed at a robust pace and building materials distribution sales were particularly strong for Boise Cascade. Boise Cascade also reported strong demand from its home center customers in response to elevated repair and remodel and DIY activity during the second quarter.
As a result of the uncertainty related to COVID-19 impacts, Boise Cascade also reported reducing its planned capital spending to $50-$70 million from $85-$95 million. Boise Cascade’s wood products segment is in the process of restoring production rates to pre-COVID-19 levels in response to strong demand experienced during the beginning of the third quarter. The company continues to conduct its business with modifications to mill and distribution center housekeeping and cleanliness protocols, employee travel, employee work locations, and virtualization or cancellation of certain sales and marketing events.
Boise, Idaho-based Boise Cascade products engineered wood products and plywood in North America and is a wholesale distributor of building products.
