Boise Cascade has become James Hardie's sole national distributor for ten years, and the agreement stops it stocking named competing products at designated branches
Read the exclusivity clause before the term. Boise Cascade Building Materials Distribution has been appointed James Hardie's sole full line national distributor for the whole of its exterior building products portfolio, effective 31 July, and in exchange it has committed to buy all of its requirements of those products exclusively from James Hardie and to sell them at every location it has now or opens later.
Subject to certain exceptions, it has also agreed not to stock, advertise, promote, sell, distribute, install or market specified competing products at designated branches. The filing does not say which products or which branches. The agreement is not attached as an exhibit, so neither is on the public record.
The transition is being paid for
The 8-K says the agreement provides for various incentives and support payments from James Hardie to Boise Cascade, to mitigate the financial impact of moving off competitive product lines and onto these ones. It puts no number on them.
That is the mechanism the joint press release describes from the other end. Boise Cascade will transition away from distributing competitive siding, trim and exterior moulding products, and the portfolio it takes on grows: Hardie siding and trim, and now AZEK trim and moulding and TimberTech decking and railing. James Hardie, for its part, says it will consolidate its distribution network across all regional markets.
Ten years, and a door that does not open for 39 months
The initial term runs ten years from 31 July and does not renew automatically. If the two sides cannot agree renewal terms in writing, it simply ends when the term does.
Either party may terminate for a material breach, subject to notice and cure, or on the insolvency or bankruptcy of the other. The strategic exit is narrower. Only after the first 39 months may either side terminate on a material strategic business change affecting a party, the market, or its ability to perform, and even then the other side gets notice and a chance to address the concern. Boise Cascade has guaranteed all of its subsidiary's obligations.
The same filing carried second quarter results. Net income of $57.3 million, or $1.63 a share, on sales of $1.8 billion, against $62.0 million and $1.64 a share on sales of $1.7 billion a year earlier, a quarter that included $5.8 million of after tax gains, worth 15 cents a share, on sales of non-operating properties.
