Q4 2024 Boise Cascade Co Earnings Call
Good morning, My name is Josh and I will be your conference facilitator today at this time I would like to welcome everyone to Boise Cascades fourth quarter and full year 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a <unk>.
And answer period. It is now my pleasure to turn it to introduce you to Chris Barry Vice President Finance and Investor Relations Boise Cascade. Mr. Flores you may begin your conference.
Chris Barry: Thank you Josh and good morning, everyone I'd like to welcome you to Boise Cascade's fourth quarter 2024 earnings call and business update joining me on today's call are Nate Jorgensen, our CEO Kelly Hill, our CFO and treasurer.
Chris Barry: Troy Little head of our wood products operations, and just from a recently announced C O O and former head of our building materials distribution operations.
Chris Barry: Turning to slide two this call will contain forward looking statements. Please review the warning statements in our press release on the presentation slides and in our filings with the SEC regarding the risks associated with these forward looking statements.
Chris Barry: Also please note that the appendix includes reconciliations from our GAAP net income to EBITDA and adjusted EBITDA and segment income to segment EBITDA I will now turn the call over to Nate.
Nate Jorgensen: Thanks, Chris Good morning, everyone. Thank you for joining us for earnings call today I'm on slide number three.
Nate Jorgensen: Start by highlighting some of our accomplishments as I reflect on our 2024 results. We reported full year net income of $376 4 million or $9.57 per diluted share. We grew our distribution business through our both with our organic acquisition organic and <unk>.
Nate Jorgensen: Acquisition initiatives made progress on significant capital investments to support our AWP growth strategy and provided meaningful capital returns to our shareholders and grateful to our associates as they have shown commitment to our values and steadfast support for our customers suppliers and each other.
Nate Jorgensen: Let me now turn to the fourth quarter results total U S housing starts and single family housing starts increased 6% and 4% respectively compared to the prior year quarter, our consolidated fourth quarter sales of $1 6 billion were down 5% from fourth quarter 2023.
Nate Jorgensen: Our net income was $68 9 million or $1 78 per share compared to net income of $97 5 million or $2 44 per share and a year ago quarter.
Nate Jorgensen: <unk> quarter earnings per share were negatively impacted by approximately <unk> <unk> per share from accelerated depreciation related to the Chapman, Alabama, Lubbock facility closure and transaction expenses for processing the rasco acquisition.
Nate Jorgensen: Kelly will now walk through our segment financial results give some early insights on our first quarter and then provide an update on our capital allocation in more detail after which I'll provide our outlook before we take your questions Kelly.
Nate Jorgensen: Thank you Nate wood product sales in the fourth quarter, including sales to our distribution segment were $419 7 million down 7% compared to fourth quarter 2023 Wood products segment, EBITDA was $56 6 million compared to EBITDA of $92 7 million reported in the year ago quarter. The decrease in segment EBITDA.
Nate Jorgensen: Was due primarily to lower AWP in plywood sales prices.
In BMD, our sales in the quarter were $1 4 billion down 4% from fourth quarter 2023, BMD reported segment EBITDA of $84 5 million in the fourth quarter compared to segment EBITDA of $80 6 million in the prior year quarter. Despite the sales decline a 60 basis point increase in gross margin percentage.
Nate Jorgensen: Physician BMD to deliver comparable year over year gross margin dollars. In addition, <unk> general and administrative expenses decreased by $3 6 million due primarily to acquisition related expenses in the prior year quarter for the acquisition of Rasco.
Nate Jorgensen: Turning to slide five on a year over year basis fourth quarter volumes for LVL increased an impressive 11% in I joist volumes were down 2%, both better than the 4% year over year decline in single family starts, which we believe is a testament to the strength of our tightly aligned manufacturing and nationwide distribution capability.
Nate Jorgensen: <unk>.
Nate Jorgensen: As expected seasonal declines in construction activity drove lower volumes on a sequential basis with LVL and I joist volumes down, 8% and 10% respectively, but again for this comparative period, our volume changes were better than underlying activity in single family starts would imply.
Nate Jorgensen: At current demand levels competition for share is prevalent in the marketplace today, and our sequential LVL pricing for LVL, and I joists were down 2% and 1% respectively.
Nate Jorgensen: Turning to slide six.
Nate Jorgensen: Our fourth quarter plywood sales volume was 371 million feet compared to 363 million feet in fourth quarter 2023 to 350 per thousand average plywood net sales price in the fourth quarter was down 7% on a year over year basis. However, plywood net sales prices were up 5% sequentially we expect.
Speaker Change: Rates higher plywood pricing through the first half of the fourth quarter before expected seasonal decline set in with December average price realizations are approximately 340 per thousand.
Speaker Change: Moving to slide seven and eight bmd's year over year fourth quarter sales decline of 4% was driven by a 2% decrease in both sales price and volume.
Speaker Change: Product line commodity sales decreased 4% General line product sales increased 1% and sales of AWP decreased 11% as I alluded as I alluded to earlier Bmd's fourth quarter gross margin percentage was 15, 8% up 60 basis points year over year in particular, our commodity inventory position.
Speaker Change: <unk>, coupled with strengthening commodity markets during the first half of the fourth quarter provided a tailwind for our commodity margins.
Speaker Change: Bmd's EBITDA margin was five 9% for the quarter up from the five 4% reported in the year ago, and up 30 basis points sequentially very strong results in a seasonally slower quarter.
Speaker Change: Yes.
Speaker Change: I'm now on slide nine.
Speaker Change: Whether it's made for a difficult start to the quarter as we have had a couple of days of unplanned downtime across several of our manufacturing and distribution locations as we look forward to our expectations for the first quarter AWP volumes are expected to increase modestly from fourth quarter levels and AWP pricing pricing is expected to.
Speaker Change: To reflect low single digit sequential declines in plywood the significant modernization projects at our Oakdale facility are progressing well as planned that facility will be down for the entirety of the first quarter and is expected to operate near 50% of capacity in the second quarter as a result, our plywood volume.
Speaker Change: And cost absorption will be negatively impacted in the near term for the first quarter, we expect plywood volumes to decline mid to high single digit sequentially and that we will incur negative cost impacts of approximately <unk> 7 million due to the oakdale downtime on plywood pricing quarter to date realizations are approximately three <unk>.
Speaker Change: Percent below fourth quarter averages.
Speaker Change: With regards to BMD sales seasonal impacts are evident with our quarter to date daily sales pace about 8% below our fourth quarter daily sales averages, we would expect activity to strengthen as we move towards the spring building season.
Speaker Change: Now on Slide 10, we had capital expenditures of $230 million in 2024 with $122 million of spending in wood products and $108 million of spending in BMD looking forward to 2025, we expect our capital spending to be between $220 million and $240 million. This range includes additional.
Speaker Change: Spending on our multi year investments in support of AWP production capabilities, including adding I joist production at our <unk>, Alabama, AWP facility and a significant modernization.
Speaker Change: Projects at our Oakdale, Louisiana veneer and plywood mill in BMD, we are making great progress on our Greenfield distribution center in Hondo, Texas activity at the Walter barrels South Carolina Greenfield has been slow, but we expect to gain momentum there in the back half of 2025.
Speaker Change: Speaking to shareholder returns in 2024, we paid $229 million in regular and special dividends, which was comprised of 82 per share in regular quarterly dividends and a $5 per share special dividend. Our board of directors also recently improved <unk> 21 per share quarterly dividend on our common stock shareholders of <unk>.
Speaker Change: As of February 24th we will receive payment of this dividend on March 19th.
Speaker Change: For the 13 months ended January 2025, we have repurchased approximately 175 million shares or four 5% of our outstanding shares for approximately $225 million today, we have about one 6 million shares available for repurchase under our share repurchase program.
Speaker Change: Our actions demonstrate we continue to strive for a balanced approach to capital allocation that includes ongoing investments in our existing asset base organic growth projects and returns to our shareholders. Our balance sheet also gives us the flexibility to pursue M&A opportunities surface that align with our strategy I will now.
Speaker Change: Turn it back over to Nate to share our business outlook and closing remarks. Thanks, Kelly I am on slide number 11 current industry forecast for total U S housing starts around $135 million for 2025, essentially flat with actual housing starts in 2024 as reported by the U S Census Bureau single family housing starts in 2024 outpaced 2000.
Speaker Change: 'twenty three levels by 7% and are expected to again be around $1 million that $1 million level. Despite the affordability challenges consumers are facing in the current rate environment.
Speaker Change: Family starts declined sharply in 2024 are expected to continue to face headwinds in 2025 due to prohibit a capital cost for developers combined with elevated levels of multifamily unit completions in both 2023 and 2024 for.
Speaker Change: For home improvement spending we expect 2025 to reflect modest growth as the AWS U S housing stock elevated levels of homeowner equity and some recent improvement in existing home sales will provide a favorable backdrop for repair and remodel spending.
Speaker Change: While uncertainties around the macro economy and policy decisions from the new administration make it challenging to predict the near term demand environment, our constructive view on the medium and longer term housing fundamentals remains which affords us the ability to maintain a clear focus on our strategy and execution of our growth initiatives Lastly, I would like to take the opportunity to congratulate Jeff.
Speaker Change: And Joe Barney on the recently announced promotions both are seasoned and accomplished leaders and look forward to their continued contributions in their new roles. These changes were part of our intentional strategic and intentional and strategic succession planning process as we position the company for continued service and support to our shareholders or stakeholders in the future. Thank you for joining us.
Speaker Change: Our call today, and your continued interest and support in Boise Cascade. We welcome any questions at this time, Josh would you. Please open the phone lines.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.
Speaker Change: Our first question comes from Kurt Yinger with D. A Davidson you May proceed.
Kurt Yinger: Great. Thanks, and good morning, everyone.
Speaker Change: Okay.
Speaker Change: I just wanted to start off on tariffs.
Speaker Change: You have pretty robust data on lumber and OSB and how important Canadian supply is there, but uwp as kind of a murkier picture.
Speaker Change: I guess first off could you maybe frame.
Speaker Change: Canadian supply relative to U S consumption, maybe where you run into some of those.
Call It secondary suppliers in the market and how youre thinking about opportunities that could arise for Boise, if we were to see some sort of tariff implementation.
Speaker Change: Hey, Curtis Nate let me, let me start that.
Speaker Change: We and others can jump in.
Speaker Change: Yes, I think in terms of the kind of the tariff question.
Speaker Change: Obviously there is.
Speaker Change: More unknowns unknowns relative to that to your point there is.
Clarity in terms of how much volume is moving across I think largely from an industry perspective and for Boise Cascade from Canada into the U S and some of that is obviously around some of our commodities.
Speaker Change: But as you think about the.
Speaker Change: Sure.
Speaker Change: Some of the other items that we bring across the border whether its web stock or other items.
Speaker Change: It is.
Speaker Change: I think in terms of the impact we haven't we've done a lot of modeling and a lot of work Kurt just to make sure. We understand some of the actions or decisions. We may need to take as a result of tariffs, but there's nothing that we've kind of concluded at this date in terms of.
Speaker Change: Kind of anything immediate that we'll be doing in the marketplace. At this point. The other thing that we're looking at is the demand environment in terms of the kind of the ripple effect on affordability as we've talked about is a potential challenge with tariffs. So as we think about kind of the consequences of what could take place not just on the lumber.
Speaker Change: Items, but other items as well.
Speaker Change: That's going to be something that we're watching carefully and closely but we've done a lot of work just to make sure. We're prepared to move forward should that tariff arrive in and again theres a lot of discussion debate on when and if the best possible. So maybe with that Kelly anything you would add just in terms of.
Kelly Hill: We're thinking about that and just maybe a backdrop on that yes sure Nate so good good.
Good to hear you Kurt.
Kelly Hill: So yes for us kind of think about it.
Kelly Hill: And our two segments.
Kelly Hill: As you well know our manufacturing is substantially based in the U S and today's point, we would have some cost pressure from OSB Webster out that we do get.
Kelly Hill: From Canada, but we are very well positioned there.
Kelly Hill: And so feel good about our ability to operate again given that.
<unk> point there is.
Kelly Hill: A lot more unknowns in there are unknowns in that space and then it would be in BMD.
Kelly Hill: As we if there are tariffs and we do import a lot of commodity products from Canada for example.
Kelly Hill: If there were higher costs, there our intent would be to push those through and maintain our normal margin percentage.
Kelly Hill: And that's kind of how we play the market every day, if you will and so that would be our expectation the broader concern is probably if it gets.
Kelly Hill: If the tariffs end up to <unk> point, it, causing further affordability challenges do we have demand destruction and that would be a bigger broader concern.
Kelly Hill: Maybe just to kind of close out on that Curt I think.
Kelly Hill: What do you think about the <unk>.
Speaker Change: Some of the policy.
Speaker Change: Certainty that's out there and even kind of the weather that Kelly described it's just.
Speaker Change: Kind of the risk reward there is a lot of hesitancy in the marketplace and so I think we're seeing and experiencing that I think for us. The good news is that we're seeing.
Speaker Change: Continued strength out of warehouse as people kind of mitigate and manage that risk reward. So.
Speaker Change: Warehouse business remains steady, but you can certainly hear the influence of that policy risk and the conversations across the industry.
Speaker Change: Right Okay.
Speaker Change: That's great color I appreciate it and then.
Speaker Change: Moving on to AWP pricing, it's been kind of this slide over the last two years.
Speaker Change: Maybe some of that's bringing out some excess margin and now it seems like more supply and demand finding a balance you talked about some of the competitive dynamics in terms of securing share I guess as we look out to 2025 thinking about ABF flattish kind of housing starts environment do you feel like the mark.
Speaker Change: It is pretty close to finding that equals librium or are there any other big variables on the supply side.
Speaker Change: That you're watching more closely.
Kelly Hill: Yes, Kurt this is Kelly again.
Kurt Yinger: On the on the supply side I don't know that there's a lot of a lot of variables. There I mean, there is no new capacity coming online here in the near term.
Kurt Yinger: But I do think if were four and a 135 total over a one point no single family environment.
Kurt Yinger: I think there will continue to be.
Kurt Yinger: Competition for sure and so we've continued to see that.
Kurt Yinger: And some modest price erosion and if if the environment stays like that we would expect to see some erosion and then there could be some seasonally stronger periods, where maybe maybe it's a little less competitive at times, but there's no reason for us to believe we won't continue to see some level of erosion if demand kind of stays where it is.
Kurt Yinger: Hey, Curtis maybe the other thing I would just add is when you think about AWP relative to other options. So I think it's still represents the right answer for the builder in terms of.
Kurt Yinger: The cycle time at the job site.
Kurt Yinger: The simplicity and relative to other options and materials that might be available. So as we look at the backdrop of AWP overall I think again, it's favorable in terms of what the builders looking at needing to get done at the job site and so we feel good about that.
Kurt Yinger: <unk> to be at kind of a tailwind for AWP moving forward.
Speaker Change: Got it and maybe if I could just sneak one more in following up on that I mean.
Speaker Change: Historically I don't think you guys have ever viewed pricing on lumber as a huge driver of substitution between solid sawn I joist or are open web floor trusses, but if we were to see kind of more upward pressure there on the commodity pricing is that something on the margin that you think could be a.
Speaker Change: <unk> positive or is there not really any historical evidence to support that.
Speaker Change: Yes generally credits.
Speaker Change: Most most of the builders generally stayed pretty true to the product whether it's dimensional lumber to your point.
Speaker Change: Open web floor trusses or <unk>. So I think there's a fair bit of consistency there, but to your point if theyre at the margin.
Speaker Change: If there is a higher pressure on pricing on dimensional lumber as an example.
Speaker Change: That will probably create some discussion and some opportunities for potential conversion. So.
Speaker Change: But I think the builder.
Speaker Change: Continue to look at the affordability side of things Thats certainly.
Speaker Change: First and foremost on their mind and part of that affordability is not just materials, but also speed on the job site and simplicity at the job site as well.
Speaker Change: Alright, Okay awesome I appreciate all the color guys. Thank you.
Robert: Thanks Robert.
Speaker Change: Thank you and as a reminder to ask a question. Please press star one on your telephone.
Speaker Change: Our next question comes from Susan Macquarie with Goldman Sachs. You May proceed.
Susan Macquarie: Thank you good morning, everyone.
Thanks, Dave.
Speaker Change: Good morning, and congrats to Jeff.
Speaker Change: Thank you Steve I appreciate that.
Speaker Change: I wanted to start by talking a bit about the operating environment. You know you mentioned the impact to whether that will come through in the first quarter, but can you talk a bit about how we should think of the weather the macro environment and what you're hearing is what builders are starting to get into the early parts of this selling season.
Nate: Yes, I think sue it's Nate I think the builders.
Speaker Change: There is.
Nate: Affordability remains.
Nate: First and foremost in the conversation. So I think when you look at home prices. When you look at cost of money Thats remains front and center and they've been some of the builders as you know been active in terms of buy.
Nate: Buying down right. So I think that's been an important part of what we experienced as we close 2024 and I think what the builders are describing in terms of 2025 I think in terms of the kind of the medium to longer term that I think.
Nate: There's still a lot of optimism and belief that we still are under belt as a country and so that I think that narrative remains.
Nate: More again, probably for the medium to longer term in the short term again I think there is some complexity and unknowns and part of that is certainly around.
Nate: The economy, and what could be happening there, including things like tariffs that could drive that.
Nate: But this that could maybe hesitancy is maybe more of a theme that we've heard here over the past couple of weeks. So I don't think Thats for me, there's a lot of <unk>.
Nate: <unk> is simply people are probably a little bit more measured at least in the short term until they have a better view of what the what the environment is so I think the homebuilders remain I think still.
Optimistic about certainly the future and I think in the near term theyre going to kind of manage it.
Nate: Day by day basis to make sure that they're making the right choices and decisions for each of our stakeholders, including the shareholders.
Speaker Change: Yes, Okay. That's helpful color and then thinking about the environment and the fact that maybe there is some increasing competition on commodity AWP products can you talk about the potential benefits and they're more resilient nature of the general line part of the business and how that could perhaps be a relative offset in this kind of situation.
Jeff: This is Jeff.
Nate: The general line.
Nate: It continues to hold up very well that being said.
Nate: It is competitive out there and as things slow down and people are looking for market share.
Nate: Does getting incredibly competitive and we're able to keep our eye on that and react where we need them.
Nate: Yes.
Nate: Okay. That's helpful. And then I just wanted to sneak one more in which it was.
Nate: Nice to see the buybacks that came through in 2024.
Nate: Think about your approach to capital allocation for this year can you talk a bit about shareholder returns and how youre thinking about buybacks versus perhaps a special dividend just any color there.
Nate: Yes, sure Steve So let me.
Nate: Let's start maybe a little more broadly and then we can work our way to your specific question. So capital allocation as you have seen in the materials we have.
Nate: The second year of a for us a pretty heavy capital spending programs. So that is going to be the main focus here is to make sure we execute on our capital spending objectives go get M&A, if we find something that makes sense.
Nate: Specific to shareholder returns.
Nate: We're going.
Nate: <unk> us to Opportunistically stay in the market and buying shares on a more consistent basis and then like we've seen recently and then special dividend that will be a conversation.
Nate: With the board, but I would anticipate that would be more later in the year and more like a third quarter event.
Nate: If the board chooses to do that and again that could be also dependent upon.
Nate: What might we find in the M&A space and or do we seek out and find some additional organic growth opportunities.
Nate: Okay, well I got an answer from all three of you, which I appreciate and so good luck to everyone. We'll talk soon.
Nate: Thanks, Dave.
Nate: Thank you.
Speaker Change: Our next question comes from Mike <unk> with <unk> Securities You May proceed.
Speaker Change: Yes, hi, thanks, very much for taking my questions and congrats on all the progress.
Speaker Change: Good morning, Good morning, Mike.
Speaker Change: Yes, I can tell you as you noted BMD margin was strong at <unk>, certainly better than we expected.
Speaker Change: Spikes in sales pace deterioration during the quarter.
Speaker Change: Mix was also unfavorable versus <unk> so.
Speaker Change: Can you help us understand how you generated a higher sequential margin, especially as margins are seasonally lower sequentially.
Speaker Change: Was any of that due to we need to point on increasing warehouse sales just any color you can provide about the around the margin and how you're able to achieve the type of margin and <unk>.
Speaker Change: Yes.
Speaker Change: There are several components in there and you hit on several of them. Mike said, the one is yes warehouse and again the uncertainty in the marketplace and how that is.
Speaker Change: Increases reliance from our customers on our inventory position. So that helps and then I would also say commodities had a decent little run kind of the first part in the first half of the fourth quarter and that really gave us.
Speaker Change: Some tailwind that we were able to capture in the fourth quarter.
Speaker Change: Got it so when you think about.
Speaker Change: The transition from <unk> to <unk> in terms of EBITDA margin.
Speaker Change: How should we think about it because obviously you're guiding to a sales pace has deteriorated further.
Speaker Change: <unk> relative to <unk>.
Speaker Change: Obviously decided went through whether it is uncertainty I get all of that but.
Speaker Change: Youre able to.
Speaker Change: <unk> maintained that level in <unk> or should we assume some type of erosion because of the sales piece deterioration relative to 14.
Speaker Change: Yes, we will see erosion from fourth quarter for sure Mike I mean, given the.
Speaker Change: The 8% sales pace.
Speaker Change: Time that we've seen so far in the first quarter compared to the fourth quarter.
Speaker Change: And that coupled with.
No no tailwind in terms of across any product lines in terms of price appreciation, yes, we will not.
Speaker Change: We will not report that same level of EBITDA margin here in the first quarter.
Speaker Change: Got it and then one last one.
Speaker Change: For me can.
Speaker Change: Can you help us understand what drove the growth in LVL.
Speaker Change: Obviously very strong growth through <unk> up 11% I think single family starts were down 4% to 5%.
Speaker Change: Why you're gaining share against your peers is that something that you expect to continue just help us frame what happened and how we should think about the go forward.
Speaker Change: Yes.
Speaker Change: Yes, that's a great.
Speaker Change: Segue for me to give a great shout out to the combined efforts of the.
Speaker Change: Wood products and BMD sales teams.
Speaker Change: Very active this year in.
Speaker Change: Getting out and selling our value proposition and that's really showing up in our volumes and like I alluded to in my comments volumes better than what underlying single family starts would imply and so really good execution and again that linkage between our manufacturing distribution showed up really well.
Nate Jorgensen: Yes, Mike it's Nate.
Speaker Change: You think about LVL.
Speaker Change: Kind of the applications for that in terms of beams and headers, it's really it's a steady and probably growing application opportunity. So we've talked many times about competitiveness on EWC, specifically with I joists, and open web floor trusses and dimensional lumber.
Speaker Change: Is the complexity of designs as such continues to support.
Speaker Change: <unk> had our use and so I think in terms of the backdrop on the opportunity and how that shows up for that product category, specifically, we feel good about what that represents and obviously that's consistent with how we thought about continue to invest and grow that part of our business from a production standpoint. So.
Speaker Change: Yes, thanks for kind of calling that out and again, we feel good about where we finished and really what's in front of us somewhat independent of the housing market.
Speaker Change: Got it great great color appreciate and wishing you the best of luck this year.
Speaker Change: Thanks, Mike.
Speaker Change: Our next question comes from George Staphos with Bank of America Securities You May proceed.
Speaker Change: Hi, everyone. Good morning, Thanks for the details and congrats to Jeff and Joe.
Speaker Change: I guess my first question, maybe I'll I'll segue off of the discussion we were just having with Mike So given the complexity of homes and the way that this is supporting greater demand for beam in header use.
Speaker Change: Other hand, you talk about inflation and affordability.
Speaker Change: What can you talk to about weather.
Speaker Change: Size of home conservation materials, how that might be impacting if at all demur.
Speaker Change: Demand for for AWP as Youre seeing it right now related Lee.
Speaker Change: Guys I know, it's hard to say.
Speaker Change: The parser precisely right, but are you seeing more of the price erosion coming from.
Speaker Change: Competition against other AWP products in the market or is it coming from dimension or is it coming from.
Speaker Change: Trust is how should we think about that.
Speaker Change: Sure.
Speaker Change: Yes, so I'll start George so to answer your second question first good morning, Kelly. The price erosion is is related to competition for like AWP products its not from its not from.
Speaker Change: Competing product slate.
Speaker Change: Like dimension lumber as you referenced the DWP and then and then Youre right in terms of the <unk>, how does the demand environment or how does the size of the homes impact.
Demand.
Speaker Change: Yes. It will if you have smaller homes that will create.
Speaker Change: Less less footage.
Speaker Change: In our home.
Speaker Change: Not necessarily.
Speaker Change: In terms of the applications or products that home builders will use but it's the footprint is smaller the usage will be smaller.
Nate Jorgensen: Hey, George It's Nate maybe just Kelly good morning. Good morning, Good morning, when you think about.
Speaker Change: The square footage I think Thats to me.
Nate Jorgensen: Probably focuses more on.
Nate Jorgensen: The I joist kind of statement in terms of that kind of consumption.
Nate Jorgensen: Certainly beams headers are part of that and wall framing, but again when you look at the design today, even though those footprints are getting a little bit smaller that complexity continues to grow in terms of the open spaces and the expectations around that so I think that backdrop and theme remains and thats really supportive of.
Nate Jorgensen: The beams and our LVL growth as a result, so the other piece of it as you know as housing starts are really.
Nate Jorgensen: The consumption of AWP is really dependent on the geography basis. So.
Nate Jorgensen: And Florida is different than in Colorado.
And so as you think about where does that housing start resides that has influence in terms of what's expected as well so but overall I think the beam and header market is generally has a little more stability around it in part based upon some of the construction techniques that remain out there.
Nate Jorgensen: So I mean, just to summarize it and look we're never going to hold you to this we just want understand what youre seeing in terms of the market even with some of the headwinds.
Nate Jorgensen: On square footage and like your view holding everything else constant dangerous phrase. There is that you should see incrementally better demand for AWP because of those points on complexity of design and the related factors would that be fair.
Speaker Change: Yes, I would say more on the kind of the <unk> header side of thanks, George as opposed to the <unk>.
Nate Jorgensen: For system, So I would say pretty.
Speaker Change: Kind of separated to separate those two product categories.
Speaker Change: But again I joists do have a role in terms of again, creating that simplicity and that speed up the job site and thats important to the bill there always has been and it certainly is today. So I think that's.
Speaker Change: That's going to be favorable relative to other options that are out there.
Nate: Thanks Nate.
Nate: Kelly you called out Oakdale, and I think it's kind of a $7 million impact in the quarter coming up is there any residual effect that we should build into the model and then Relatedly you and we appreciate it.
Speaker Change: Qualitatively called out Hey, it's a little bit tougher start to the <unk> from weather than would normally be the case for weather and the <unk> is there any sort of number you would sort of give us hey, this has been the effect above and beyond the normal <unk> anything that we could do to size our models.
Speaker Change: And really my last question and again I appreciate all the color.
Speaker Change: Kind of where is your inventory position right now.
Speaker Change: BMD relative to where you'd like it to be.
Speaker Change: Yes, sure George So I guess kind of on the Q1 indicators.
Speaker Change: I would I would point you towards the table there in terms of the volume and price expectations for wood products and then for BMD sales pace is really going to matter, that's very important and that will very much have an impact on how we close out the quarter and.
Speaker Change: We've had multiple locations with multiple down days, even even several locations. This week were down because of some very tough weather. So yes. It has created some challenges for us.
Speaker Change: And then oakdale.
Speaker Change: We've been working a project for some time now.
Speaker Change: So as expected that facility is down and it will be down for the entirety of this quarter as we do that significant modernization project and we're excited to do and again Thats a big important veneer supplier.
Speaker Change: Alexandria, Louisiana email and so yes, we will lose some volume from that and certainly that will have give us some negative sequential cost impacts, but again. It was part of the plan and we're on schedule and then we will see probably some of that continue into the second quarter.
George Staphos: There because we will be running at 50% ish in the second quarter as we work towards completion of those projects by the end of the second quarter, and then I think inventory position I'll turn that one over to Mr stroke, Hey, George Jeff on our inventory position overall.
George Staphos: I feel pretty good.
George Staphos: Right now with all of the uncertainty lack of clarity out there people are pulling more and more material out of warehouse and talking to our dealers.
George Staphos: Years I've been doing this I've never heard so much conversation about level about net working capital and days on hand, So there is a real reliance and so we're sitting there ready to serve every single day.
George Staphos: Okay.
Speaker Change: No doubt. Thank you guys I'll turn it over and good luck on the quarter. Thank.
George Staphos: Thank you.
George Staphos: Okay.
Speaker Change: Our next question comes from Keith <unk> with BMO capital markets. You May proceed.
Good morning, and thanks for taking my question.
Speaker Change: Maybe to start with on the on the BMD side, you'll have the slide but you look at the last <unk> EBITDA margin.
Speaker Change: Clearly the operating environment benign credit for.
Speaker Change: Certainly it looks like the start of this year is kind of probably below normalized levels would you think given what you guys have done over the last few years in terms of the product mix.
Speaker Change: That you can pay back the nonstop trough level margins in BMD.
Speaker Change: Little bit above 5% is that.
Speaker Change: Would that be fair characterization.
Speaker Change: Yes.
Speaker Change: Our expectation and our strategy with the investments we've made and with the product mix shifts that we've made is that.
Speaker Change: <unk> margin is through a cycle is in the mid fives and we've demonstrated that.
Speaker Change: And then and now we could have periods like for example here in the first quarter with the challenges on the top line.
Speaker Change: We may not hit 5% here in the first quarter because of this pretty significant erosion here and the sales pace in the first quarter, but yes over time, absolutely. The strategy is we're at mid fives.
Speaker Change: Understood.
Speaker Change: And then.
Speaker Change: Curious as you look at your M&A pipeline is that something that could be.
Speaker Change: Proppant <unk>.
Speaker Change: Hello expectations moderate either on the distribution side are on.
Speaker Change: On the wood product side, and then just related to that are there any other product categories within distribution that you would think would make sense for you guys.
Speaker Change: Yes.
Speaker Change: On the M&A front, keeping the short answer is yes, we would have interest if it aligns with our strategy.
Speaker Change: And I would say there is.
Speaker Change: Probably more more potential opportunity on the distribution side than there would be on the wood products side.
Speaker Change: And then as it relates to new product categories, and I think you were kind of focused towards.
Speaker Change: Towards the BMD side I think.
Speaker Change: Yes.
Speaker Change: As we've talked before we're very fortunate to be in line with.
Speaker Change: Lot of.
Speaker Change: Really world class suppliers, and and oftentimes, they're continuing to add products to their SKU set and we get some natural growth.
Speaker Change: Organic growth opportunity.
Speaker Change: From there he can.
Speaker Change: Nate maybe just add to Kelly's comments is I think as we look at new opportunities.
Speaker Change: We always try to start the conversation with the customer.
Speaker Change: Market is okay, what do they need what are they experiencing where there are opportunities where boise cascade can step in.
And we had tried to have that same type of conversation with our suppliers. As Kelly described then in many cases, they are bringing out new products, new Skus, which is which is exciting. So I think it's a deliberate conversation, we always look to have and where customers ask us to step into a different opportunity it needs to kind of fit with our strategy and our competencies, but that's been an important part.
Speaker Change: Our growth story and I think we'll continue as we move forward.
Speaker Change: Got it that's very helpful I'll jump back in the queue. Good luck.
Speaker Change: Thanks Stacy.
Speaker Change: Thank you I would now like to turn the call back over to Nate Jorgensen for any closing remarks.
Speaker Change: Sure.
Nate Jorgensen: Great. Thank you I appreciate everyones.
At a time on the call today and interest in Boise Cascade, and we'll look forward to getting caught up with this team here.
Nate Jorgensen: In the first quarter. So again, thank you and have a great day.
Nate Jorgensen: Thank you. This concludes the conference. Thank you for your participation you may now disconnect.
Nate Jorgensen: Yes.
Nate Jorgensen: [music].
Nate Jorgensen: Okay.
Nate Jorgensen: Okay.
Nate Jorgensen: [music].
Nate Jorgensen: Thank you.
Nate Jorgensen: [music].
Nate Jorgensen: Okay.
Nate Jorgensen: [music].
Nate Jorgensen: <unk>.
Nate Jorgensen: [music].
Nate Jorgensen: So.
Nate Jorgensen: Okay.
Nate Jorgensen: [music].
Nate Jorgensen: Sure.
Nate Jorgensen: [music].
Yes.
Nate Jorgensen: Okay.
Nate Jorgensen: Thank you.
Nate Jorgensen: [music].
Nate Jorgensen: Sure.
Nate Jorgensen: [music].
Nate Jorgensen: Okay.
Nate Jorgensen: <unk>.
Nate Jorgensen: [music].
Nate Jorgensen: Okay.
Nate Jorgensen: Okay.
Nate Jorgensen: Okay.
Nate Jorgensen: Sure.
Nate Jorgensen: Okay.
Nate Jorgensen: [music].
Nate Jorgensen: Okay.
Nate Jorgensen: [music].
Nate Jorgensen: Okay.
Nate Jorgensen: [music].
Nate Jorgensen: Yes.
Nate Jorgensen: Sure.
Nate Jorgensen: Okay.
Nate Jorgensen: [music].
Nate Jorgensen: Okay.
Nate Jorgensen: Yes.
Nate Jorgensen: Okay.
Nate Jorgensen: [music].
Nate Jorgensen: Okay.
Nate Jorgensen: [music].
Nate Jorgensen: Yes.
Nate Jorgensen: Okay.
Nate Jorgensen: [music].