Updated from 9:59 a.m. EDT
Third-quarter sales and earnings soared at
(BCC - Get Report)
thanks to its acquisition of OfficeMax, strong product prices and the sales of some of its Idaho timberlands. But the stock lost more than 10% on a tepid outlook.
The forest products company, in the
midst of transforming itself
into an office supply retailer, said Tuesday it earned $61.1 million, or 63 cents a share, nearly double last year's $32.9 million, or 48 cents a share. That figure, which included a $13.1 million pretax gain on the sale of timberlands, beat Wall Street estimates calling for earnings of 60 cents a share, according to Thomson First Call.
The stock came under pressure in afternoon trading, however, falling $3.90, or 11.5%, to $30.02. The company reportedly expressed caution about its back-to-school season on a post-earnings conference call.
In the third quarter, sales increased 73% to $3.65 billion, due largely to Boise's acquisition of OfficeMax, the nation's third-largest office supply retailer, in December 2003. It also benefited from price increases in some of its products, with paper up an average of 7% over last year, plywood up 14% and lumber up 29%.
The contract segment of Boise's office supply business posted a 17% increase in sales over the same quarter last year, and the retail segment's sales dipped 1% lower than OfficeMax retail sales on a pro forma basis in the third quarter of 2003.
Operating income for its lumber business totaled $94.6 million in the third quarter, compared with $56.4 million in the same quarter last year, while its paper business brought in $20.8 million, up from last year's $200,000.
The company is currently in the process of selling its forest product assets to Madison Dearborn Partners LLC, a private equity group, for approximately $3.7 billion. It expects to complete the sale on Oct. 29 and shift its core focus to the office products distribution business, facing off with the likes of
(SPLS - Get Report)
(ODP - Get Report)
. It will change its name to OfficeMax and trade under the ticker symbol OMX on the
New York Stock Exchange
Following the completion of the sale, it will pay up to $800 million to repurchase all or a portion of certain outstanding debt securities. In addition, the company is making a simultaneous offer to pay up to $177 million to redeem its senior floating rate debentures.
The company is also expected to buy back shares or pay a dividend to shareholders following the sale.