BCC, Boise Cascade L.L.C.

Will it survive?

• Can it pay its interest? 8.4×
  Comfortable
  Operating income $183M ÷ interest expense $22M
  What this means

  Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.

• How heavy is the debt, net of cash? +$32M
  Net cash
  Cash $477M − debt $445M
  What this means

  Cash and short-term investments exceed every dollar of debt by $32M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? —
  Not enough data
  What this means

  The filing data didn't include the inputs for this check.

Is it a good business?

• Return on invested capital 20%
  High through the cycle
  9-yr median, range 7%–70%; 7% latest = NOPAT $135M ÷ invested capital $2.0B
  Industry peers: median 14%
  What this means

  The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 9 years (it ran 7% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.

• Owner-earnings margin 4%
  Thin through the cycle
  10-yr median margin, range 1%–11%; latest $96M = operating cash $254M − maintenance capex $158M
  Industry peers: median 6%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 1% of revenue this year, a 4% median across 10 years. It chose to put $83M more into growth, so free cash flow this year was $13M — the gap is investment, not weakness. Treating stock comp as the real expense it is (less $12M of SBC) leaves $84M.

• Are earnings backed by cash? 1.91×
  Cash-backed
  Cash from ops $254M ÷ net income $133M
  What this means

  How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

• Where do the earnings go? 227%
  Returned more than it generated
  Dividends + buybacks $218M ÷ Owner Earnings $96M — this fiscal year
  What this means

  The company returned more than it generated: against $96M of Owner Earnings, $218M (227%) went back to shareholders, $35M dividends, $183M buybacks — the excess came from the balance sheet or borrowing, not the year's operations. Net of $12M stock comp, the real buyback was about $171M. Sustained, that pattern draws down cash or adds debt; the net-debt line above shows where it stands. This year's proportion is 227%; across the record (2016–2025) it is 51%, the capital-allocation section below.

• Investing or harvesting? 1.53×
  Expanding
  Capex $241M ÷ depreciation & amortization as filed $158M
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

The promise and the pay packet

• Is the buyback buying ownership, or mopping up? 0.2%
  The count is genuinely shrinking
  Stock compensation $12M (fiscal 2025), 0.2% of revenue · repurchases $183M · diluted shares -5.4% since 2022
  What this means

  Stock handed to employees is a real cost paid in the owner's own currency: it is charged against profit, but the shares it creates are permanent. Many companies repurchase stock at the same time, which looks like a return of capital and often is not — if the count barely moves, the cash merely cancelled the pay packet and bought the owner nothing. The three states worth telling apart are a count genuinely shrinking, a count standing still despite large repurchases, and a count rising because the issuance was never offset at all.

Graham’s defensive tests · 5 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

• Adequate size Pass
  Revenue ≥ $2B · $6.4B
  What this means

  Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.

• Strong liquidity Pass
  Current ratio ≥ 2× · 3.36×
  What this means

  Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.

• Conservative debt Pass
  Debt ≤ working capital · $445M vs $1.2B WC
  What this means

  Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.

• Earnings stability Pass
  A profit every year (10-yr record) · no losses
  What this means

  Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.

• Dividend record Near
  Uninterrupted dividends · 9 of 10 yrs
  What this means

  An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.

• Earnings growth Pass
  Earnings +33% over the record · +601%
  What this means

  At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.

• Moderate price —
  P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
  What this means

  Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $9.49/share (latest year $3.81), the averaged base the calculator's gate runs on, and book value is $59.47/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 10 of 10
  What this means

  Never lost money over the record, the earnings stability Graham insisted on.

• Return on capital ≥ 15% 5 of 10 yrs
  What this means

  A moat shows up as a high return on invested capital that holds year after year, not one good vintage.

• Operating margin 2% → 6% (3-yr avg ends)

  In the filing’s words The record and the words agree: the margin widened and the filing attributes the gain to its own pricing, not volume alone.

  What this means

  Through the cycle the operating margin widened — about 2% early to 6% lately, median 3% — pricing power intact or improving.

• Reinvestment, incremental ROIC 26%
  What this means

  Every extra dollar the business reinvested came back at a high incremental return — the lens GBM read for a moat that reinvests rather than merely harvests. The record and the 10-K are where you check whether the rate holds.

• Owner earnings growth +12%/yr
  What this means

  Owner earnings grew about 12% a year over the record.

• Worst year 2018 · 1.4% op. margin
  What this means

  Stayed profitable even in its hardest year, the resilience that survives recessions.

• Share count −0.4%/yr
  What this means

  Roughly flat share count, little dilution, little buyback.

• Dividend record rising
  What this means

  Paid and raised the dividend across the record, the continuity Graham prized.