Page 12 - RosboroAR2018

Maintaining operational excellence requires a keen focus on continuous improvement. Rosboro added a full-time Continuous Improvement Manager in 2018 who helped to transform company culture. As a result, the company achieved over $1 million in reduced costs.
unleashed, will provide solid growth in housing and signi cant demand and improvement in the wood products markets.
There are several tailwinds that lead to optimism in the housing market and therefore, wood products markets. The Consumer Sentiment index has been rising steadily since 2012, and 2018’s monthly average is the highest during this current economic expansion.
Real GDP growth is expected to land between 2.5% - 3% in 2019, which is well above the potential GDP as estimated by the Congressional Budget O ce. Unemployment is below 4% leaving numbers we haven’t seen since the pre-recession 1999/2000 era. The US housing stock is aging and underbuilt (potentially 3 million housing units relative to underlying demand). Demographics for the millennials suggest increases in household formations as the two most common ages in the US are 27 and 28.
However, there are also several headwinds to this optimism
as we head into 2019. The two biggest
impairments to single family homes not
increasing at a faster
pace haven’t changed in
the last several
years. They are the availability of labor and buildable lots. This could explain why builder con dence hit a 44-month low in December 2018 with NAHB respondents claiming scarcity of labor as a major concern.
The Company plans to signi cantly increase its lumber production in 2019. Stud sales are expected to rise from 117 mmbf to 150 mmbf, an increase of 28%, while dimension lumber production is planned to rise from 113 mmbf to 146 mmbf, a 29% increase
The Glulam side of the business is also expected to see a signi cant increase in sales and production volumes in 2019 from 86 mmbf to 104 mmbf (21% increase) with the acquisition of Western Structures and the introduction of new innovative products, in addition to the standard glulam product line.
With housing starts projected to incrementally improve 1% over 2018, we expect glulam volume to increase in line with housing starts but also add signi cant additional market share. With the Glulam plants still running at less than 65% capacity, the company has plenty of opportunity for growth in this segment. Having a committed distributor base, rather than transactional trading, adds a layer of consistency to the projected margin. In addition, having 100% of the raw materials for the stock glulam facilities internally sourced helps ensure overall company pro tability, whether in the glulam operations or the lumber manufacturing operation.
Scott Nelson
Chief Executive O cer
12
ANNUAL REPORT 2018