Boise Cascade earned $10.4 million in net income from April to June, reporting increased sales but a steady drop in prices for its wood products during the second quarter of the year. The Boise-based wood products company also bought two wood plants in the southeast U.S. for $102 million.
The two plants are Chester Wood Products in Chester, S.C. and Moncure Plywood in Moncure, N.C. Boise Cascade bought the plants from Wood Resources, which is part of Atlas Holdings. The deal is expected to close before Sept. 30, according to filings with the Securities and Exchange Commission.
Carlile called the two plants “a very nice fit to our strategy, filling a gap in the southeast where we didn’t have manufacturing facilities.” He also said that Boise Cascade built the Chester plant and had owned both plants before selling them to Willamette Industries.
Boise Cascade financed the deal with its existing cash and credit. At the end of the second quarter, the company reported having $232 million in cash and $290.7 million of undrawn committed bank line availability, as well as $250 million in outstanding debt on June 30. Company leaders said more expansion is possible, though they wouldn’t mention specific plants.
“There are other things on our wish list that we have an interest in,” said Chief Financial Officer Wayne Rancourt. He said the two Carolina plants fit with the company’s need for more capacity in the Southeast and East Coast.
“When these plants became available, it was a very, very good fit,” he said.
The $10.4 million profit was down from $15 million during the same quarter in 2012. The drop was due to income tax payments related to the company offering public stock, Carlile said in the company’s earnings conference call July 23.
Total sales rose 16 percent, year over year, to $852 million in the second quarter. Boise Cascade saw dropping commodity prices for composite lumber and panel composite, with prices dipping below 2012 levels during parts of the second quarter. However, the company saw higher prices on many of its Building Materials Distribution products.
Boise Cascade also saw higher sales volumes, which Carlile attributed to increased demand for new houses.
“We are seeing the impact of more residential construction activity on demand for our products in most areas of the country,” he said.