Investor Presentation March 2018

Transcription

1 Investor Presentation March 2018

2 Forward-Looking Statements Non-GAAP Financial Measures Forward-Looking Statements During the course of this presentation, we may make forward-looking statements or provide forwardlooking information. All statements that address expectations or projections about the future are forward-looking statements. Some of these statements include words such as expects, anticipates, believes, estimates, plans, intends, projects, and indicates. Although they reflect our current expectations, these statements are not guarantees of future performance, but involve a number of risks, uncertainties, and assumptions which are difficult to predict. Some of the factors that may cause actual outcomes and results to differ materially from those expressed in, or implied by, the forwardlooking statements include, but are not necessarily limited to, prices for building products, the effect of general economic conditions, mortgage rates and availability, housing demand, housing vacancy rates, governmental regulations, unforeseen production disruptions, as well as natural disasters. The Company does not undertake any obligation to update any forward-looking statements as a result of future developments or new information. Non-GAAP Financial Measures Included in this presentation are certain non-gaap financial measures, including EBITDA and Adjusted EBITDA, designed to complement the financial information presented in accordance with generally accepted accounting principles in the United States of America because management believes such measures are useful to investors. Our non-gaap financial measures are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the metrics of calculation. For a reconciliation of net income to EBITDA and Adjusted EBITDA and segment income (loss) to segment EBITDA, see the Appendix to this presentation. 1

3 Investment Highlights Leadership Positions in Wood Products Manufacturing and Building Materials Distribution on a National Scale Distinctive Competence in Managing Vertical Integration to Create Value Low-Cost Manufacturing and Distribution Footprint Driven by Business Models and Capital Investment Experienced Management with Track Record of Cost Discipline and Growth Well Positioned for Continued Growth with Housing Recovery 2

4 Company at a Glance Large, vertically-integrated building products company operating through two segments: Wood Products 2017 Sales of ~$1.4Bn and EBITDA of $117mm (8.5% margin) Building Materials Distribution ( BMD ) 2017 Sales of ~$3.8Bn and EBITDA of $132mm (3.5% margin) Broad geographic footprint 55 facilities across North America 2017 Sales 1 Sales: $4,431mm 2017 Adjusted EBITDA 2 51% Adjusted EBITDA: $122mm Products primarily used in: Geographic Footprint New home construction, repair and remodel, light commercial construction, and certain industrial applications Extensive product offerings sold to over 4,500 customers Significant available capacity to capitalize on the continued housing recovery Approximately 6,400 employees (1) Segment percentages are calculated before intersegment eliminations. (2) Segment percentages exclude Corporate and Other segment expenses. WA MT OR ID WY NV UT CA CO AZ NM Headquarters EWP Manufacturing Facilities (6) Plywood/Veneer Manufacturing Facilities (9) Lumber Manufacturing Facilities (5) Particleboard Manufacturing Facility (1) BMD Facilities (33) Truss Manufacturing Plant (1) ND SD NE KS OK TX MN WI IA IL MO AR MS LA NH ME VT MA NY MI CT PA RI IN OH NJ DE WV VA MD KY DC NC TN SC GA AL FL 3

5 Diversified Business Mix Top Customers Wood Products 1 Product Mix BMD Top 10 customers make up ~35% of sales Balanced portfolio with a wide variety of wood products and other building products, from BCC s manufacturing platform and third-party suppliers (1) Includes intersegment sales to BMD of $715.6 million. Note: All charts are based on 2017 figures. 4

6 Business Plan Wood Products Manufacturing Grow in engineered wood products ( EWP ) Optimize veneer use within manufacturing system Drive continuous improvement in cost position Building Materials Distribution Leverage footprint in place Grow market share Advantage of in-house distribution Access to downstream customers Leverage relationship between manufacturing and distribution Acquisitions Expand core businesses Consider complimentary adjacent businesses Maintain balance sheet discipline 5

7 Vertical Integration Drives Value Proposition Manufacturing has superior access to the market through a committed distributor BMD benefits from committed manufacturing partnership Joint service offerings provide unique and significant value to customers From manufacturing sales through BMD, the Company captures EBITDA margin at both levels Wood Products ( Manufacturing ) Execution of Vertical Integration is Key Driver of Success Building Materials Distribution ( BMD ) 6

8 Wood Products Overview Segment Description Sales by Product 2017 Manufactures EWP, plywood, ponderosa pine lumber, studs, and particleboard Market leading positions in EWP and plywood 9% 4% 44% Products used primarily in new residential construction, repair and remodel, light commercial construction, and certain industrial applications Historical Price and Volume Building Materials Distribution is largest customer - accounts for 52% of 2017 segment sales Includes Wood Products sales volumes: EWP (71%), plywood (31%), and lumber (7%) Plywood EWP (1) Includes intersegment sales to BMD of $715.5 million. 7

9 Leading Manufacturing Platform Highlights #2 EWP producer in North America #2 plywood producer in North America Manufacturing facilities located in 8 states throughout the United States and 1 location in New Brunswick, Canada Competitive Landscape 2017 N.A. EWP Solid Section Production Capacity Louisiana Pacific Roseburg Forest Products 13% 6% 9% 5% 6% Pacific WoodTech Murphy Other Manufacturing Footprint Weyerhaeuser 34% 27% Boise Cascade WA MT ND MN OR ID SD WI WY NE IA NV UT IL CA CO KS MO OK AZ NM AR MS TX LA Headquarters EWP Manufacturing Facilities (6) Plywood/Veneer Manufacturing Facilities (9) Lumber Manufacturing Facilities (5) Particleboard Manufacturing Facility (1) Truss Manufacturing Plant (1) ME VT NH NY MA MI CT PA RI NJ IN OH DE WV VA MD KY DC NC TN SC AL GA FL Source: BCC estimates, FEA, APA, 10-K filings 2017 N.A. Plywood Production Capacity Weyerhaeuser West Fraser Martco Plywood Roseburg Forest Products 5% 6% 4% 7% Georgia Pacific Source: BCC estimates, FEA, APA 24% 37% All Other 17% Boise Cascade 8

10 Building Method Trends Favor EWP Increased use in residential construction Laminated Veneer Lumber (LVL) Wall Framing LVL Beam Stronger and longer than lumber Glulam Fewer pieces used Open rooms and taller walls Lower installed cost Reduced need for skilled labor LVL Light Duty Header Simplified mechanical runs Consistent, high-quality products result in fewer builder call-backs Rimboard LVL Window & Door Header Stair Stringer I-Joists EWP primarily used in new residential construction 9

11 Overview Primary Operations (2017) Plywood/PLV Production 1,828 mmsf 1,828 mmsf veneer Sold as Plywood 1,458 mmsf 31% of plywood volume BCC Distribution Dry Veneer Production(1) 411 mmsf PLV 2,366 mmsf 538 mmsf veneer Production LVL/Flange 26.2 mmcf I-joist 228 mmlf Sales LVL 17.3 mmcf I-joist 235 mmlf 71% of EWP volume (1) Includes net purchases of approximately 43mmsf. 10

12 Structural Panels Total Structural Panel Usage for North America 40 Source: FEA, APA, Boise Cascade billion square feet - 3/8" basis % of Total Exports Repair & Remodel Industrial Non-Residential New Residential 60% 56% 40% 56% 75% 64% 62% 61% 55% 54% 55% 43% 42% 41% 55% 54% 55% 75% 77% 79% 65% 56% 44% 56% 79% 65% 56% 43% 56% 79% - (5) Imports Percentages represent OSB's portion of each market 11

13 Softwood Plywood Imports Softwood Plywood Offshore Imports & Total Demand North American (NA) Demand NA Offshore Ply Imports % Imports of Total Demand 6 Source: FEA (December 2017) 16% 5 14% billion square feet - 3/8" basis % 10% 8% 6% 4% 1 2% 0 Q1-05 Q1-06 Q1-07 Q1-08 Q1-09 Q1-10 Q1-11 Q1-12 Q1-13 Q1-14 Q1-15 Q1-16 Q1-17 0% 12

14 Building Materials Distribution Overview Segment Description Sales by Product 2017 One of the largest U.S. wholesale building products distributors in North America with 33 distribution facilities and one truss manufacturing plant Broad product line Approximately 4.37 million square feet of warehouse space Engineered Wood Products Commodity Plywood OSB Framing Lumber General Line Siding Metal Products Insulation Roofing Composite Decking More than 1,100 third-party suppliers, ranging from large manufacturers to smaller regional producers Markets primarily to retail lumberyards and home improvement centers Many competitors are specialized or local distributors with narrow product ranges Key Services Logistics Truckload shipments, break bulk / packaging, mill direct shipments Financial Credit, price risk mitigation related to commodities Sales & Marketing Market development / product knowledge, customer service (special orders, warranty claims), technical service (EWP design and specification) 13

15 BMD Established Relationship with Suppliers and Customers Key Suppliers Key Customers Customer Sales Breakdown Local market focus supported by national footprint serving large, national and regional customers 14

16 Primary Driver of New Residential Construction Cumulative immigration and natural increases will drive continued population growth Population growth and resulting household formation key driver of new construction 15

17 U.S. Housing Still in Multi-year Recovery New residential construction should return to long-term trend demand levels 3.0 Shelter Demand and Household Formation Source: IHS Global millions Single-family Starts Mobile Home Shipments Multi-family Starts Household Formation Household formation key driver of new construction 16

18 Segment Performance Wood Products Segment Revenue ($MM) Building Materials Distribution Segment Revenue ($MM) Segment EBITDA ($MM) Segment EBITDA ($MM) 17

19 Overview Capital Allocation $350 EBITDA and Uses of Capital $300 $250 $200 (millions) $150 $100 $50 $ ($50) EBITDA (before Pension Expense) Working Capital CAPEX Pension Funding Acquisitions Stock Repurchases/Dividends 18

20 Capital Allocation Priorities Support organic growth Pursue distribution acquisitions Repurchase shares opportunistically Authorization for up to 2 million shares announced March 2015 Through December 31, 2017, 1,303,011 shares repurchased at an average price of $26.08 per share Target gross debt-to-ebitda of 2.5x Quarterly dividend initiated at $0.07 per share 19

21 Balance Sheet Metrics Dec. 31, 2017 Dec. 31, 2016 ($millions) Net Debt Total debt $ $ Cash & cash equivalents (177.1) (104.0) Net debt $ $ Liquidity Postion Bank line excess availability $ $ Cash & cash equivalents Total liquidity $ $ Adjusted LTM EBITDA $ $ Total Debt to Adjusted LTM EBITDA 2.0x 2.9x Net Debt to Adjusted LTM EBITDA 1.2x 2.2x Continued progress toward leverage target 20

22 Click to edit Master title style Appendix 21

23 Total Company EBITDA Reconciliation and Supplemental Segment Information EBITDA represents income before interest (interest expense and interest income), income taxes, and depreciation and amortization. Additionally, we disclose Adjusted EBITDA, which further adjusts EBITDA to exclude the change in fair value of interest rate swaps and loss on extinguishment of debt. Dollars in millions Year Ended December Net income $41.5 $116.9 $80.0 $52.2 $38.3 $83.0 Interest expense Interest income (0.4) (0.2) (0.2) (0.3) (0.4) (0.5) Income tax provision (benefit) 0.3 (38.8) Depreciation and amortization EBITDA $96.6 $136.4 $196.6 $158.5 $142.4 $222.8 Change in fair value of interest rate swaps (4.2) (0.5) Loss on extinguishment of debt Adjusted EBITDA $96.6 $136.4 $196.6 $158.5 $152.5 $222.3 Wood Products $943.3 $1,134.1 $1,317.0 $1,282.1 $1,280.4 $1,373.8 Building Materials Distribution $2,190.2 $2,599.6 $2,786.7 $2,891.3 $3,227.2 $3,773.8 Eliminations & Other ($354.4) ($460.2) ($529.9) ($540.0) ($596.4) ($715.6) Total Sales $2,779.1 $3,273.5 $3,573.7 $3,633.4 $3,911.2 $4,432.0 Wood Products $80.2 $106.3 $149.8 $107.5 $83.5 $116.7 Building Materials Distribution $32.9 $49.2 $66.5 $72.7 $98.1 $132.3 Corporate & Other ($16.5) ($19.1) ($19.8) ($21.7) ($29.0) ($26.8) Total Company Adjusted EBITDA $96.6 $136.4 $196.6 $158.5 $152.5 $

24 Historical Financial Performance Wood Products Year Ended December 31, Dollars in millions Segment income $55.8 $77.7 $108.4 $64.2 $25.9 $53.6 Depreciation and amortization Segment EBITDA $80.2 $106.3 $149.8 $107.5 $83.5 $116.7 Building Materials Distribution Year Ended December 31, Dollars in millions Segment income $24.0 $39.9 $56.7 $60.8 $84.4 $116.8 Depreciation and amortization Segment EBITDA $32.9 $49.2 $66.5 $72.7 $98.1 $

25 Composite Lumber Price $560 $520 First Quarter Second Quarter Third Quarter Fourth Quarter $480 $440 $400 $360 $320 $ Week Source: Random Lengths

26 Panel Composite Price $560 $520 First Quarter Second Quarter Third Quarter Fourth Quarter $480 $440 $400 $360 $320 $ Week Source: Random Lengths

27 Plywood Pricing BCC WP Plywood Realization v. Random Lengths Composite Indexes WP Plywood Realizations Southern Pine Plywood Composite Western Fir Plywood Composite $800 $400 Random Lengths Composite Price $700 $600 $500 $400 $300 $200 Source: Random Lengths, Boise Cascade $350 $300 $250 $200 $150 $100 $50 BCC WP Average Realization ($/msf-3/8" basis) $100 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 $0 26

28 Plywood Imports Brazilian Plywood export volume to US compared to Br Real/USD ** Sourced from ABIMCI (Associação Brasileira Da Indústria De Madeira Processada Mecanicamente) Jan 18' Dec 17' Nov 17' Oct 17' Sept 17' Aug 17' July 17' June 17' May 17' April 17' March 17' Feb 17' Jan 17' Dec 16' Nov 16' Oct 16' Sept 16' Aug 16' July 16' June 16' May 16' April 16' Mar 16' Feb 16' Jan 16' Dec 15' Nov 15' Oct 15' Sept 15' Aug 15' July 15' June 15' May 15' April 15' Mar 15' Feb 15' Jan 15' Dec 14' Nov 14' Oct 14' Sept 14' Aug 14' July 14' June 14' May 14' Apr 14' Mar 14' Feb 14' Jan 14' Volume (per m3) of Brazilian Plywood to the US Currency Exchange (Br. Real/USD) 0 27