We estimate that the net proceeds from our issuance and sale of 11,764,706
shares of common stock in this offering will be approximately $228.4 million,
after deducting underwriting discounts and commissions and estimated offering
expenses payable by us.
If the underwriters exercise their option to purchase additional shares in full,
we estimate that the net proceeds from this offering will be approximately
$262.9 million, after deducting underwriting discounts and commissions and
estimated offering expenses payable by us.
We expect to use $25.0 million of the net proceeds from this offering to repay
borrowings under our revolving credit facility and the remainder for general
corporate purposes, but we have not allocated the remainder of the proceeds for
any specific purpose at this time. As a result, our management will retain broad
discretion over the allocation of the net proceeds from this offering.
As of December 31, 2012, the outstanding indebtedness under our revolving credit
facility was $25.0 million, with an interest rate of 1.96% per annum. Our
revolving credit facility matures on July 13, 2016. Affiliates of Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC and J.P. Morgan
Securities LLC, three of the underwriters in this offering, are lenders under
our revolving credit facility and therefore will receive a portion of the net
proceeds of this offering.
Pending use of the proceeds from this offering, we intend to invest the proceeds
in a variety of capital preservation investments, including short-term,
investment-grade and interest-bearing instruments.
The competitive environment in the U.S. continues to be challenging as new
residential and light commercial construction activity and repair and remodel
spending remain substantially below average historical levels. Industry capacity
in a number of product markets, including those in which we compete, far exceeds
the current level of demand. Our products and services compete with similar
products manufactured and distributed by others. Many factors influence our
competitive position in the markets in which we operate. Those factors include
price, service, quality, product selection and convenience of location.
Some of our competitors are larger than we are and have greater financial
resources. These resources may afford those competitors greater purchasing
power, increased financial flexibility and more capital resources for expansion
and improvement.
Wood Products. The wood products manufacturing markets in which we operate are
large and highly competitive. We compete against several major North American
EWP producers, such as Weyerhaeuser Company and Louisiana Pacific Corporation,
as well as several other smaller, regional firms. Our EWP products also face
competition from numerous dimension lumber producers because EWP may be
substituted by dimension lumber in many building applications. In plywood, we
compete with Georgia-Pacific, the largest manufacturer in North America, other
large producers such as Roseburg Forest Products, and several smaller producers.
We have leading market positions in the manufacture of EWP, plywood and
ponderosa pine lumber. We hold much smaller market positions in our other
manufactured products. In the wood products manufacturing markets, we compete
primarily on the basis of price, quality and, particularly with respect to EWP,
levels of customer service. Most of our competitors are located in the United
States and Canada, although we also compete with manufacturers in other
countries. Our competition includes not only manufacturers and distributors of
similar building products but also manufacturers and distributors of products
made from alternative materials, such as steel and plastic. Some of our
competitors enjoy strong reputations for product quality and customer service
and these competitors may have strong relationships with certain distributors,
making it more difficult for our products to gain additional market share. Some
of our competitors in this segment are also vertically-integrated and/or have
access to internal sources of wood fiber, which may allow them to subsidize
their base manufacturing business in periods of rising fiber prices.
Building Materials Distribution. The building materials distribution markets
in which we operate are highly fragmented and we compete in each of our
geographic and product markets with national, regional and local distributors.
Our national wholesale distribution competitors include BlueLinx Holdings Inc.
and Weyerhaeuser Company. Cedar Creek Inc. is one of our regional competitors
in the Southeastern United States. We also compete with wholesale brokers such
as Forest City Trading Group, and certain buying cooperatives such as Lumbermens
Merchandise Cooperative. We compete on the basis of delivered cost, product
selection and availability, quality of service and compatibility with
customers' needs. We also distribute products for some manufacturers that also
engage in direct sales. In recent years, there has been consolidation among
retail lumberyards and home improvement centers. As the customer base
consolidates, this dynamic could impact our ability to maintain margins.
Proximity to customers is an important factor in minimizing shipping costs and
facilitating quick order turnaround and on-time delivery. We believe our ability
to obtain quality materials, from both internal and external sources, the scale
and efficiency of our national footprint and our focus on customer service are
our primary competitive advantages in thissegment. Also, financial stability is important to suppliers and
customers in choosing distributors and allows for more favorable terms on which
we are able to obtain our products from our suppliers and sell our products to
our customers.
"EWP") and plywood in
North America, according to the Resource Information System, Inc.'s ("RISI")
2012 Capacity Report ("RISI's Capacity Report"). We believe we are also one of
the largest stocking wholesale distributors of building products in the United
States. Our broad line of products is used primarily in new residential
construction, residential repair and remodeling projects, light commercial
construction and industrial applications. We have a broad base of more than
4,500 customers, which includes a diverse mix of leading wholesalers, home
improvement centers, retail lumberyards and industrial converters. We believe
our large, vertically-integrated operations provide us with significant
advantages over less integrated competitors and position us to optimally serve
our customers. For the LTM period, we generated sales of $2,631.9 million, net
income of $26.4 million, income before interest and taxes of $45.7 million and
EBITDA of $80.1 million.
We supply our customers through 49 strategically located facilities
(consisting of 18 manufacturing facilities and 31 distribution facilities). In
addition to the vertical integration between our manufacturing and distribution
operations, our EWP manufacturing facilities are closely integrated with our
nearby plywood operations, which allows us to optimize both production
processes. Throughout the housing downturn, we have continued to make strategic
capital investments to increase our manufacturing capacity and expand our
building materials distribution network. We believe that our scale, closely
integrated businesses and significant capital investments throughout the
downturn provide us with substantial operating leverage to benefit from a
recovery in the U.S. housing market.
We operate our company through two primary segments: our Wood Products
segment and our Building Materials Distribution segment.
Wood Products ($69.2 million, or 73%, of LTM EBITDA). Our Wood Products
segment is the second largest manufacturer of EWP and plywood in North America,
according to RISI's Capacity Report, with a highly integrated national network
of 17 manufacturing facilities. Our wood products are used primarily in new
residential construction, residential repair and remodeling projects and light
commercial construction. We manufacture LVL, I-joists and laminated beams, which
are high-grade, value-added structural products used in applications where
additional strength and consistent quality are required. We also produce
plywood, studs, particleboard and ponderosa pine lumber, a premium lumber grade
sold primarily to manufacturers of specialty wood windows, moldings and doors.
Our EWP manufacturing facilities are closely integrated with our nearby plywood
operations to optimize our veneer utilization by enabling us to dedicate higher
quality veneers to higher margin applications and lower quality veneers to
plywood products, giving us an advantage over our less integrated competitors.
For the LTM period, EWP, plywood and lumber accounted for 35%, 44% and 9%,
respectively, of our Wood Products sales. Most of our wood products are sold to
leading wholesalers (including our Building Materials Distribution segment),
home improvement centers, retail lumberyards and industrial converters. For the
LTM period, approximately 37% of our Wood Products sales, including
approximately 71% of our EWP sales, were to our Building Materials Distribution
segment. For the LTM period, our Wood Products segment generated sales, income
before interest and taxes and EBITDA of $893.0 million, $43.7 million and
$69.2 million, respectively.
Building Materials Distribution ($26.2 million, or 27%, of LTM EBITDA). We
believe we are one of the largest national stocking wholesale distributors of
building materials in the United States. Our nationwide network of 31
strategically-located distribution facilities sells a broad line of building
materials, including EWP, oriented strand board ("OSB"), plywood, lumber and
general line items such as framing accessories, composite decking, roofing,
siding and insulation. We also operate a truss manufacturing plant located in
Maine. Our products are used in the construction of new residential housing,
including single-family, multi-family and manufactured homes, repair and
remodeling projects and the construction of light industrial and commercial
buildings. Except for EWP, we purchase most of these building materials from
more than 1,000 third-party suppliers ranging from large manufacturers, such as
James Hardie Building Products, Trex Company, Louisiana-Pacific and
Georgia-Pacific, to smaller regional producers.
We market our products primarily to retail lumberyards and home improvement
centers that then sell the products to end customers, who are typically
professional builders, independent contractors and homeowners engaged in
residential construction projects. We also market our products to industrial
converters, which use our products to assemble windows, doors, agricultural bins
and other value-added products used in industrial and repair and remodel
applications. Unlike many of our competitors who focus primarily on a narrow
range of products, we are a one-stop resource for our customers' building
materials needs, which allows for more cost-efficient ordering, delivery and
receiving. For the LTM period, our Building Materials Distribution segment
generated sales, income before interest and taxes and EBITDA of $2,066.6
million, $17.4 million and $26.2 million, respectively.
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We were formed under the name Boise Cascade, L.L.C., a Delaware limited
liability company, in October 2004 in connection with our acquisition of
OfficeMax's forest products and paper assets. On February 4, 2013, we converted
from a limited liability company into a Delaware corporation and became Boise
Cascade Company.
Our principal executive offices are located at 1111 West Jefferson Street,
Suite 300, Boise, Idaho 83702. Our telephone number at that location is
(208) 384-6161. Our website address is www.bc.com.