Here's Why Boise Cascade (NYSE:BCC) Can Manage Its Debt Responsibly

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We note that Boise Cascade Company (NYSE:BCC) does have debt on its balance sheet. But is this debt a concern to shareholders?

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When Is Debt A Problem?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Boise Cascade Carry?

As you can see below, Boise Cascade had US$446.4m of debt, at March 2025, which is about the same as the year before. You can click the chart for greater detail. But it also has US$561.8m in cash to offset that, meaning it has US$115.4m net cash.

How Healthy Is Boise Cascade's Balance Sheet?

According to the last reported balance sheet, Boise Cascade had liabilities of US$702.5m due within 12 months, and liabilities of US$652.1m due beyond 12 months. On the other hand, it had cash of US$561.8m and US$474.2m worth of receivables due within a year. So it has liabilities totalling US$318.6m more than its cash and near-term receivables, combined.

Of course, Boise Cascade has a market capitalization of US$3.32b, so these liabilities are probably manageable. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. While it does have liabilities worth noting, Boise Cascade also has more cash than debt, so we're pretty confident it can manage its debt safely.

See our latest analysis for Boise Cascade

The modesty of its debt load may become crucial for Boise Cascade if management cannot prevent a repeat of the 35% cut to EBIT over the last year. When a company sees its earnings tank, it can sometimes find its relationships with its lenders turn sour. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Boise Cascade can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. Boise Cascade may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. During the last three years, Boise Cascade produced sturdy free cash flow equating to 69% of its EBIT, about what we'd expect. This free cash flow puts the company in a good position to pay down debt, when appropriate.

Summing Up

We could understand if investors are concerned about Boise Cascade's liabilities, but we can be reassured by the fact it has has net cash of US$115.4m. The cherry on top was that in converted 69% of that EBIT to free cash flow, bringing in US$134m. So we are not troubled with Boise Cascade's debt use. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. We've identified 2 warning signs with Boise Cascade , and understanding them should be part of your investment process.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.