Boise Cascade Posts Jump in Profit

Boise Cascade (BCC) posted a jump in third-quarter profit, helped in part by a one-time gain and a jump in plywood sales, but the company provided a mixed fourth-quarter outlook.

The Idaho-based forest products company earned $32.9 million, or 48 cents a share, compared with $8.5 million, or 9 cents a share, in the prior-year quarter. Included in the current-quarter earnings was a $2.9 million one-time tax benefit, or 5 cents a share, from a favorable tax court ruling, the company said.

Before items, the company would have earned $30 million, or 43 cents a share. Analysts were calling for 42 cents a share. On Oct. 8, the company, which is in the midst of acquiring OfficeMax (OMX), had upped its internal quarterly guidance to earnings of 40 cents to 44 cents a share.

Total sales were $2.1 billion, compared with $1.9 billion in the year-ago period. Revenue in the company's office business was $934 million, up from $905 million in the third quarter 2002, and operating income in the segment was $31 million, from $29.8 million last year.

In its building segment, sales rose to $828 million, from last year's $693 million. The unit had an operating profit of $56.4 million, compared with the prior year's $14.5 million. Boise Cascade said high housing starts, a compressed building season and low inventories resulted in increases in wood product prices during the quarter.

The company also said average plywood prices increased 28% from a year ago, while lumber prices fell 5%. As a result, plywood unit sales volume rose 8% year over year, while lumber volume fell 9%.

At the company's paper unit, operating income was $200,000, down from $17.2 million a year ago, due to lower unit sales volume and higher unit manufacturing costs. Sales were up modestly at $474 million from $459 million a year ago. Boise Cascade noted that average paper prices were flat from a year ago and that combined energy and chemical unit costs rose 5%, while fiber costs increased 7%.

Looking to the fourth quarter, the company expects year-over-year same-location sales in its office segment to stay positive. However, the company said the building products markets are expected to "weaken seasonally." As a result, Boise Cascade sees its building segment posting lower income in the fourth quarter than in the third quarter.

The paper market is seen being "lackluster," the company said, and it expects similar performance as the third quarter in the fourth quarter.

Analysts are calling for earnings of 19 cents a share in the fourth quarter. The company earned 5 cents a share a year ago.

Shares of the company were down fractionally at $27.99 Tuesday morning.