PART I—FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Boise Cascade reported significant Q3 2022 profitability growth, with net income reaching $219.6 million on $2.15 billion sales, strengthening its balance sheet and cash flow Consolidated Statements of Operations Highlights (Three Months Ended Sep 30) | Financial Metric | 2022 (in thousands) | 2021 (in thousands) | Change | | :--- | :--- | :--- | :--- | | **Sales** | $2,154,647 | $1,879,451 | +14.6% | | **Income from operations** | $299,370 | $129,386 | +131.4% | | **Net income** | $219,587 | $91,699 | +139.5% | | **Diluted EPS** | $5.52 | $2.31 | +138.9% | Consolidated Balance Sheet Highlights | Account | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | Change | | :--- | :--- | :--- | :--- | | **Total current assets** | $2,181,437 | $1,885,878 | +15.7% | | **Total assets** | $3,348,534 | $2,572,640 | +30.2% | | **Total current liabilities** | $739,463 | $640,746 | +15.4% | | **Total stockholders' equity** | $1,983,072 | $1,352,619 | +46.6% | Consolidated Statements of Cash Flows Highlights (Nine Months Ended Sep 30) | Cash Flow Activity | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | **Net cash provided by operations** | $814,125 | $527,091 | | **Net cash used for investment** | ($575,622) | ($50,824) | | **Net cash used for financing** | ($120,346) | ($94,763) | | **Net increase in cash** | $118,157 | $381,504 | [Note 1. Nature of Operations and Consolidation](index=11&type=section&id=1.%20Nature%20of%20Operations%20and%20Consolidation) Boise Cascade operates in Wood Products (EWP, plywood) and Building Materials Distribution (BMD) segments, with consolidated financial statements reflecting interim period adjustments - The company is a major North American producer of EWP and plywood and a leading U.S. wholesale distributor of building products[29](index=29&type=chunk) - The business is structured into two reportable segments: Wood Products and Building Materials Distribution (BMD)[29](index=29&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note details accounting policies for revenue recognition, rebates, leases, and financial instruments, highlighting interest rate swap usage and significant customer credit risk concentration - Customer rebates payable were **$136.1 million** as of September 30, 2022, recorded as a decrease in Sales[36](index=36&type=chunk) - The company manages interest rate risk on its **$50.0 million** variable-rate debt using receive-variable, pay-fixed interest rate swaps, with fair value changes recognized in earnings[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - As of September 30, 2022, two customers represented a significant concentration of credit risk, accounting for approximately **18% and 12% of total receivables**[52](index=52&type=chunk) [Note 3. Income Taxes](index=15&type=section&id=3.%20Income%20Taxes) The effective tax rate was **25.7%** for Q3 2022 and **25.2%** for the nine months, slightly above the federal rate due to state taxes Income Tax Expense and Effective Rates | Period | Income Tax Expense (in millions) | Effective Tax Rate | | :--- | :--- | :--- | | **Q3 2022** | $76.0 | 25.7% | | **Q3 2021** | $31.2 | 25.4% | | **Nine Months 2022** | $248.8 | 25.2% | | **Nine Months 2021** | $183.6 | 25.3% | [Note 4. Net Income Per Common Share](index=15&type=section&id=4.%20Net%20Income%20Per%20Common%20Share) Basic and diluted net income per common share significantly increased year-over-year, with Q3 2022 diluted EPS at **$5.52** and nine-month diluted EPS at **$18.62** Net Income Per Common Share | Period | Basic EPS | Diluted EPS | | :--- | :--- | :--- | | **Q3 2022** | $5.55 | $5.52 | | **Q3 2021** | $2.32 | $2.31 | | **Nine Months 2022** | $18.73 | $18.62 | | **Nine Months 2021** | $13.79 | $13.71 | [Note 5. Acquisition](index=16&type=section&id=5.%20Acquisition) Boise Cascade acquired Coastal Plywood for **$516.9 million** in July 2022 to expand EWP capacity, with a preliminary **$74.0 million** goodwill allocation and Q3 contributions of **$43.0 million** sales - Completed the acquisition of Coastal Plywood Company on July 25, 2022, for a purchase price of **$516.9 million**, funded with cash on hand[60](index=60&type=chunk) - The strategic rationale for the acquisition is to secure incremental stress-rated veneer to optimize and expand southeastern U.S. EWP production capacity[61](index=61&type=chunk) Preliminary Purchase Price Allocation (in thousands) | Asset/Liability | Fair Value | | :--- | :--- | | Property and equipment | $251,329 | | Customer relationships | $156,700 | | **Goodwill** | **$73,974** | | Inventories | $22,300 | | **Net assets acquired** | **$516,881** | [Note 6. Goodwill and Intangible Assets](index=18&type=section&id=6.%20Goodwill%20and%20Intangible%20Assets) Goodwill increased to **$134.4 million** and net intangible assets to **$169.5 million** as of September 30, 2022, primarily due to the Coastal Plywood acquisition - Goodwill increased by **$74.0 million** to a total of **$134.4 million**, entirely due to the Coastal Plywood acquisition[68](index=68&type=chunk) - Net intangible assets grew to **$169.5 million**, with the majority of the increase from acquired customer relationships with a weighted-average useful life of approximately **10 years**[69](index=69&type=chunk)[70](index=70&type=chunk) [Note 7. Debt](index=19&type=section&id=7.%20Debt) Total long-term debt was **$444.2 million** as of September 30, 2022, following an amendment to increase the revolving credit facility to **$400 million** and extend its maturity to 2027 Long-Term Debt Composition (in thousands) | Debt Instrument | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Asset-based credit facility term loan due 2027 | $50,000 | $50,000 | | 4.875% senior notes due 2030 | $400,000 | $400,000 | | Deferred financing costs | ($5,825) | ($5,372) | | **Total Long-term debt** | **$444,175** | **$444,628** | - On September 9, 2022, the company amended its credit agreement, increasing the revolving credit facility to **$400 million** and extending the maturity to 2027[73](index=73&type=chunk) [Note 8. Leases](index=21&type=section&id=8.%20Leases) Total lease cost for Q3 2022 was **$7.1 million**, with total lease obligations of **$63.4 million** for operating leases and **$32.3 million** for finance leases as of September 30, 2022 Lease Costs (in thousands) | Lease Component | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | **Operating lease cost** | $3,588 | $3,474 | $10,734 | $10,199 | | **Finance lease cost** | $1,204 | $1,190 | $3,625 | $3,578 | | **Total lease cost** | $7,147 | $6,869 | $21,264 | $19,898 | - As of September 30, 2022, total future minimum lease payments are **$79.2 million** for operating leases and **$53.2 million** for finance leases[93](index=93&type=chunk) [Note 9. Stock-Based Compensation](index=22&type=section&id=9.%20Stock-Based%20Compensation) Stock-based compensation expense was **$3.3 million** for Q3 2022, with **$16.9 million** of unrecognized expense remaining as of quarter-end, to be recognized over **1.9 years** Stock-Based Compensation Expense (in thousands) | Period | PSUs | RSUs | Total | | :--- | :--- | :--- | :--- | | **Q3 2022** | $1,933 | $1,354 | $3,287 | | **Q3 2021** | $1,190 | $991 | $2,181 | | **Nine Months 2022** | $4,934 | $3,756 | $8,690 | | **Nine Months 2021** | $3,024 | $2,660 | $5,684 | - Total unrecognized compensation expense related to nonvested share-based awards was **$16.9 million** as of September 30, 2022[101](index=101&type=chunk) [Note 10. Stockholders' Equity](index=24&type=section&id=10.%20Stockholders'%20Equity) The board declared a quarterly dividend of **$0.15 per share** and a special dividend of **$1.00 per share**, while increasing the stock repurchase authorization to approximately **2.0 million shares** - On October 27, 2022, the board declared a quarterly dividend of **$0.15 per share** and a special dividend of **$1.00 per share**[103](index=103&type=chunk) - The stock repurchase program was increased by **1.5 million shares** in July 2022, for a total authorization of approximately **2.0 million shares**; no shares were purchased in the first nine months of 2022[105](index=105&type=chunk) [Note 11. Transactions With Related Party](index=24&type=section&id=11.%20Transactions%20With%20Related%20Party) The company transacts with Louisiana Timber Procurement Company (LTP), a 50%-owned joint venture, reporting **$10.6 million** in sales to LTP and **$67.4 million** in purchases from LTP for the nine months ended September 30, 2022 - Transactions are with Louisiana Timber Procurement Company, L.L.C. (LTP), a **50/50 joint venture** with Packaging Corporation of America (PCA) for wood fiber procurement[108](index=108&type=chunk) Related Party Transactions with LTP (Nine Months Ended Sep 30, in millions) | Transaction Type | 2022 | 2021 | | :--- | :--- | :--- | | **Sales to LTP** | $10.6 | $10.2 | | **Purchases from LTP** | $67.4 | $63.3 | [Note 12. Segment Information](index=25&type=section&id=12.%20Segment%20Information) Both Wood Products and BMD segments reported significant Q3 2022 operating income increases, driven by higher EWP prices and improved gross margins on commodity products, respectively Segment Operating Income (Three Months Ended Sep 30, in thousands) | Segment | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | **Wood Products** | $155,972 | $122,056 | +27.8% | | **Building Materials Distribution** | $154,436 | $16,565 | +832.3% | | **Total segment operating income** | $310,408 | $138,621 | +123.9% | [Note 13. Commitments, Legal Proceedings and Contingencies, and Guarantees](index=26&type=section&id=13.%20Commitments,%20Legal%20Proceedings%20and%20Contingencies,%20and%20Guarantees) No material changes to commitments, legal proceedings, contingencies, or guarantees have occurred since the 2021 Form 10-K, with no expected material adverse effects from current legal actions - There have been no material changes to commitments, legal proceedings, or guarantees since the 2021 Form 10-K[114](index=114&type=chunk)[116](index=116&type=chunk) - The company is not party to any legal action expected to have a material adverse effect on its financial results[115](index=115&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Strong Q3 2022 operating income of **$299.4 million** was driven by EWP price increases and BMD margin improvements, despite concerns over rising interest rates impacting future demand [Executive Overview](index=28&type=section&id=Executive%20Overview) Q3 2022 income from operations more than doubled to **$299.4 million**, driven by strong segment performance and the **$516.9 million** Coastal Plywood acquisition, ending with **$1.26 billion** in liquidity - Q3 2022 income from operations was **$299.4 million**, a significant increase from **$129.4 million** in Q3 2021[122](index=122&type=chunk) - Completed the acquisition of Coastal Plywood for **$516.9 million** using cash on hand to expand EWP production capacity[123](index=123&type=chunk) - Ended Q3 2022 with total available liquidity of **$1,263.2 million**, comprising **$867.1 million** in cash and **$396.2 million** in undrawn bank line availability[124](index=124&type=chunk) [Factors That Affect Our Operating Results and Trends](index=28&type=section&id=Factors%20That%20Affect%20Our%20Operating%20Results%20and%20Trends) Operating results are influenced by commodity prices, housing starts, interest rates, and raw material costs, with demand expected to decline into 2023 due to rising interest rates - Key influencing factors include commodity price volatility, housing starts, interest rates, raw material costs (wood fiber, glues), and transportation costs[127](index=127&type=chunk)[128](index=128&type=chunk) - Due to rising mortgage rates and home affordability constraints, the company expects demand to decline for the remainder of 2022 and into 2023[125](index=125&type=chunk) - Consensus forecasts for 2023 U.S. housing starts are estimated to be **15% to 20% below 2022 levels**[125](index=125&type=chunk) [Our Operating Results](index=30&type=section&id=Our%20Operating%20Results) Total Q3 2022 sales increased **15%** to **$2.15 billion**, driven by **20%** growth in Wood Products sales and a significant increase in BMD segment gross margin to **15.4%** Wood Products - Average Net Selling Prices (Q3 2022 vs Q3 2021) | Product | Q3 2022 Price | Q3 2021 Price | % Change | | :--- | :--- | :--- | :--- | | **Laminated veneer lumber (LVL)** (per cubic foot) | $33.82 | $22.30 | +51.7% | | **I-joists** (per 1,000 lineal feet) | $2,429 | $1,575 | +54.2% | | **Plywood** (per 1,000 sq. ft.) | $477 | $561 | -15.0% | - BMD segment gross margin percentage increased significantly to **15.4%** in Q3 2022 from **7.9%** in Q3 2021, primarily due to margin improvements on commodity products[133](index=133&type=chunk)[149](index=149&type=chunk) - Selling and distribution expenses increased **24%** in Q3 2022, primarily due to higher employee-related incentive compensation and increased shipping costs[145](index=145&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity with **$867.1 million** in cash and **$1.26 billion** total available liquidity, generating **$814.1 million** from operations for the nine months ended September 30, 2022 Sources and Uses of Cash (Nine Months Ended Sep 30, in thousands) | Category | 2022 | 2021 | | :--- | :--- | :--- | | **Net cash provided by operations** | $814,125 | $527,091 | | **Net cash used for investment** | ($575,622) | ($50,824) | | **Net cash used for financing** | ($120,346) | ($94,763) | - The primary use of cash for investment activities in 2022 was the **$516.9 million** acquisition of Coastal Plywood[161](index=161&type=chunk) - Projected capital expenditures are expected to be **$100 million to $120 million** in 2022 and increase to approximately **$120 million to $140 million** in 2023, excluding acquisitions[162](index=162&type=chunk)[163](index=163&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in exposure to market risks, including commodity prices, interest rates, and foreign currency, have occurred since the 2021 Form 10-K - There have been no material changes in the company's exposure to market risk since the 2021 Form 10-K[178](index=178&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2022[179](index=179&type=chunk) - No changes occurred during Q3 2022 that materially affected internal control over financial reporting[180](index=180&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary legal proceedings but anticipates no material adverse effect on its financial position or results - The company does not believe it is party to any legal action that could reasonably be expected to have a material adverse effect on its financial position or results[182](index=182&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) A key risk involves potential difficulties in efficiently integrating acquired operations, such as Coastal Plywood, which could disrupt business and hinder expected benefit realization - A key risk is the inability to efficiently integrate acquired operations, such as the recent Coastal Plywood acquisition, which could disrupt business and prevent the realization of expected benefits[184](index=184&type=chunk)[185](index=185&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported - None[186](index=186&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Eighth Amendment to the Credit Agreement and required certifications - Key exhibits include the Eighth Amendment to the Amended and Restated Credit Agreement and CEO/CFO certifications[188](index=188&type=chunk)

Financial Data and Key Metrics Changes - Consolidated second quarter sales were $2.3 billion, down 7% from the second quarter of 2021 [7] - Net income was $218.1 million or $5.49 per share, compared to $302.6 million or $7.63 per share in the prior year quarter [7] - Total U.S. housing starts increased 3% compared to the same period last year, with multifamily starts driving the increase [8] Business Line Data and Key Metrics Changes - Wood Products reported segment EBITDA of $167.8 million, down from $227.9 million in the year-ago quarter, impacted by lower plywood sales prices and higher per unit costs [8][10] - Building Materials Distribution (BMD) reported segment EBITDA of $161 million on sales of $2.1 billion, compared to $212.3 million on sales of $2.2 billion in the prior year quarter [8][11] - BMD sales were down 2% from the second quarter of 2021, driven by a sales volume decrease of 4% offset partially by a sales price increase of 2% [13] Market Data and Key Metrics Changes - Plywood sales volumes decreased to 281 million feet from 338 million feet in the second quarter of 2021, primarily due to downtime related to facility upgrades and staffing shortages [12] - Average plywood net sales price was $569 per 1000 feet, down 35% from the second quarter of 2021 and down 17% sequentially [12] Company Strategy and Development Direction - The company completed the acquisition of Coastal Plywood for $517 million, which is expected to enhance production capacity and support housing construction in the Southern and Eastern U.S. [18][19] - The acquisition is anticipated to be EPS accretive in 2022, with a mid-cycle EBITDA benefit of approximately $80 million once fully integrated [19][20] - The company plans to focus on integrating Coastal Plywood operations and expanding EWP production capacity [22] Management's Comments on Operating Environment and Future Outlook - The company expects a slowdown in new residential construction in the second half of 2022 due to home affordability constraints and a weakening economy [21] - Despite potential economic downturns, the company remains optimistic about long-term housing demand and plans to continue supporting growth through strategic investments [22][23] - Management highlighted the importance of managing inventory levels and maintaining margins in a potentially challenging economic environment [34][82] Other Important Information - The company finished the second quarter with $1 billion in cash and total available liquidity of approximately $1.4 billion [15] - A quarterly dividend of $0.12 per share was approved, along with a share repurchase program authorization for an additional 1.5 million shares [17] Q&A Session Summary Question: Sustainability of EWP pricing in a slowing macro environment - Management indicated that EWP pricing may come under pressure in the forthcoming quarters, but remains robust for the near term [26][27] Question: Trajectory of BMD margins in a stable pricing environment - Management noted that margins have held up well in July and expect some normalization but above historical levels as they continue to execute their strategy [28][29] Question: Supply-demand tension in distribution products - Management described a mixed bag in supply-demand dynamics, with some products still under tension while others are easing [36][37] Question: Labor issues and their impact - Labor availability remains challenging, particularly in manufacturing, with some improvement in applications but specific roles like truck drivers still difficult to fill [42][43] Question: Impact of Coastal acquisition on future capacity and operations - Management confirmed that the acquisition will enhance production capabilities and allow for better market positioning, particularly in EWP [48][56]

Boise Cascade Company (NYSE:BCC) Q1 2022 Results Conference Call May 6, 2022 11:00 AM ET Company Participants Kelly Hibbs - Senior Vice President, Chief Financial Officer and Treasurer Nate Jorgensen - Chief Executive Officer Mike Brown - Head, Wood Products Operations Jeff Strom - Head, Building Materials Distribution Conference Call Participants Mark Wilde - Bank of Montreal Susan Maklari - Goldman Sachs Kurt Yinger - D. A. Davidson Reuben Garner - Benchmark George Staphos - Bank of America Operator Good ...

Boise Cascade Company (NYSE:BCC) Q4 2021 Earnings Conference Call February 23, 2022 11:00 AM ET Company Participants Kelly Hibbs – Senior Vice President, Chief Financial Officer and Treasurer Nate Jorgensen – Chief Executive Officer Mike Brown – Head-Wood Products Operations Jeff Strom – Head-Building Materials Distribution Conference Call Participants Mark Wilde – Bank of Montreal George Staphos – Bank of America Susan Maklari – Goldman Sachs Kurt Yinger – D. A. Davidson Reuben Garner – Benchmark Operator ...

Part I [Business](index=7&type=section&id=Item%201.%20Business) Boise Cascade is a leading North American producer of engineered wood products and building materials, operating through two integrated segments - **Boise Cascade** is **one of the largest producers** of engineered wood products (EWP) and plywood in North America and a **leading U.S. wholesale distributor** of building products[18](index=18&type=chunk) - The company operates through **two reportable segments**: Wood Products and Building Materials Distribution (BMD), which are **highly vertically integrated**[21](index=21&type=chunk) - **Key business strategies** focus on **increasing earnings and stability** by **growing EWP sales**, **expanding distribution capabilities** through acquisitions and organic growth, **leveraging the integrated model**, **driving operational excellence**, and **accelerating innovation, digital technology, and diversity & inclusion efforts**[23](index=23&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) [Wood Products Segment](index=15&type=section&id=1.1%20Wood%20Products%20Segment) The Wood Products segment manufactures engineered wood products, plywood, and lumber, with **2021 sales of $1,970.8 million** and **segment income of $531.2 million** Wood Products Segment Financials (in millions) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Segment sales | $1,970.8 | $1,323.9 | $1,275.2 | | Segment income (loss) | $531.2 | $127.7 | $54.2 | | Segment EBITDA | $586.5 | $198.9 | $111.9 | Wood Products Sales Volumes (in millions) | Product | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | LVL (cubic feet) | **18.2 cubic feet** | 17.3 | 17.9 | | I-joists (lineal feet) | **290 lineal feet** | 241 | 227 | | Plywood (sq. ft. 3/8" basis) | **1,259 sq. ft. 3/8" basis** | 1,253 | 1,337 | - In 2021, EWP and plywood accounted for **51%** and **40%** of Wood Products sales, respectively. The BMD segment is the **largest customer**, representing **62% of the segment's sales**[58](index=58&type=chunk) - Wood fiber is the **primary raw material**, accounting for approximately **45% of operating expenses** (excluding depreciation) in 2021. Logs make up **66% of wood fiber costs**[52](index=52&type=chunk)[53](index=53&type=chunk) [Building Materials Distribution (BMD) Segment](index=18&type=section&id=1.2%20Building%20Materials%20Distribution%20(BMD)%20Segment) The BMD segment operates a nationwide network of 38 distribution facilities, achieving **$7,174.3 million in sales** and **$481.1 million in segment income** in 2021 BMD Segment Financials (in millions) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Segment sales | $7,174.3 | $4,952.0 | $4,137.7 | | Segment income | $481.1 | $247.5 | $116.2 | | Segment EBITDA | $505.1 | $270.0 | $137.0 | BMD Product Line Sales Mix (% of Sales) | Product Line | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Commodity | **51.6%** | 46.6% | 41.7% | | General line | **30.2%** | 35.6% | 38.2% | | Engineered wood products | **18.2%** | 17.8% | 20.1% | - The segment operates a **nationwide network of 38 building materials distribution facilities** and one component manufacturing **plant**[62](index=62&type=chunk) - The segment markets products to dealers, home improvement centers, and specialty distributors through a decentralized sales force, utilizing both warehouse and direct sales channels[63](index=63&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) [Customers and Competition](index=19&type=section&id=1.3%20Customers%20and%20Competition) The company's **largest customers are Builders FirstSource and Home Depot**, competing in fragmented markets based on price, quality, and service - Builders FirstSource and Home Depot are the company's **largest customers**[68](index=68&type=chunk) - Wood Products competes with major North American producers such as Weyerhaeuser, Louisiana-Pacific, and Georgia-Pacific, primarily on price, quality, and availability[69](index=69&type=chunk) - BMD competes in a highly fragmented market against national and local distributors like BlueLinx Holdings and Weyerhaeuser, based on pricing, product availability, service, and geographic coverage[70](index=70&type=chunk) [Human Capital Management](index=20&type=section&id=1.4%20Human%20Capital%20Management) Boise Cascade employed **6,110 associates** in 2021, prioritizing safety and offering a comprehensive Total Rewards program for talent retention - The company employed **6,110 associates** and prioritizes health and safety as a core value, implementing programs for hazard identification and COVID-19 mitigation[73](index=73&type=chunk) - A comprehensive **Total Rewards program** is in place, offering competitive pay, health benefits, 401(k) plans, and career development to support talent retention and development[74](index=74&type=chunk)[75](index=75&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks related to its business, regulations, and stock ownership, including commodity price volatility and operational disruptions - A portion of products are commodities (OSB, plywood, lumber) with **volatile pricing** dependent on supply and demand, which is closely tied to cyclical U.S. new residential construction[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - Operational risks include **potential disruptions** from the COVID-19 pandemic, **cyber security breaches**, equipment failure at manufacturing facilities, **labor shortages** (with **23% of employees** under collective bargaining agreements), and dependence on third-party transportation[107](index=107&type=chunk)[109](index=109&type=chunk)[111](index=111&type=chunk)[114](index=114&type=chunk)[119](index=119&type=chunk) - Financial risks include **significant customer concentration** (top ten customers were **42% of 2021 sales**), **credit risk**, **potential impairment** of long-lived assets and goodwill, and **restrictive covenants** in debt agreements that limit dividends and investments[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[139](index=139&type=chunk) - Regulatory risks include compliance costs for environmental laws, potential impacts from climate change legislation, and evolving data privacy laws[141](index=141&type=chunk)[142](index=142&type=chunk)[145](index=145&type=chunk) [Unresolved Staff Comments](index=40&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved comments from the SEC staff - The company reports no unresolved comments from the SEC staff[159](index=159&type=chunk) [Properties](index=40&type=section&id=Item%202.%20Properties) Boise Cascade owns all Wood Products manufacturing facilities and operates **38 BMD warehouse facilities**, with a portion owned and the rest leased - The Wood Products segment owns all its manufacturing facilities, including **8 plywood/veneer plants**, **5 LVL/I-joist/laminated beam plants**, and **2 sawmills** across the U.S. and Canada[161](index=161&type=chunk)[162](index=162&type=chunk) - The BMD segment operates **38 warehouse facilities** with a total of **5.5 million square feet**, of which **2.4 million is owned** and the rest is leased[163](index=163&type=chunk) [Legal Proceedings](index=40&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings but does not believe any will have a material adverse effect on its financials - The company is involved in ordinary course legal proceedings but does not believe any will have a material adverse effect on its financials[164](index=164&type=chunk) [Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[165](index=165&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=41&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Boise Cascade's common stock trades on the NYSE under 'BCC', with a common stock repurchase program having **496,989 shares** remaining available as of December 31, 2021 - Common stock is traded on the New York Stock Exchange (NYSE) under the symbol BCC[167](index=167&type=chunk) - A stock repurchase program allows for the purchase of up to two million shares; as of December 31, 2021, **496,989 shares** may still be purchased under the program[171](index=171&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2021, **income from operations surged to $971.8 million** on **$7.9 billion sales**, driven by strong demand and favorable pricing, with **$667.0 million cash from operations** [Results of Operations](index=46&type=section&id=7.1%20Results%20of%20Operations) Total sales increased **45% to $7.9 billion** in 2021, with income from operations rising to **$971.8 million**, driven by higher prices and volumes in both segments Consolidated Operations (in millions) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Sales | $7,926.1 | $5,474.8 | $4,643.4 | | Income from operations | $971.8 | $335.0 | $136.5 | | Net income | $712.5 | $175.0 | $80.9 | - **2021 vs. 2020:** **Total sales increased by $2,451.3 million** (**45%**), driven by higher sales prices and a **16% increase** in U.S. housing starts. **Wood Products sales rose 49%** due to higher prices for plywood (**+75%**) and EWP (**+19-22%**). **BMD sales grew 45%** from price (**+42%**) and volume (**+3%**) increases[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) - **2020 vs. 2019:** **Total sales increased by $831.4 million** (**18% to $5.5 billion**), driven by higher commodity prices and a **7% increase** in U.S. housing starts. **Wood Products sales rose 4%** due to higher plywood prices (**+30%**) offsetting volume declines. **BMD sales grew 20%** from price (**+13%**) and volume (**+7%**) increases[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=7.2%20Liquidity%20and%20Capital%20Resources) The company ended 2021 with **$748.9 million in cash** and **$1,094.9 million in total available liquidity**, with 2022 capital expenditures projected at **$110-$130 million** - **Ended 2021 with $748.9 million in cash** and cash equivalents and **total available liquidity of $1,094.9 million** (including undrawn credit lines)[228](index=228&type=chunk) Cash Flow Summary (in thousands) | Activity | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Net cash provided by operations | $666,984 | $294,516 | $245,647 | | Net cash used for investment | ($105,586) | ($78,716) | ($94,065) | | Net cash used for financing | ($217,873) | ($95,655) | ($58,016) | - **Capital expenditures for 2022 are expected to be between $110 million and $130 million**, focusing on business improvement, replacement, and expansion projects[241](index=241&type=chunk) - In 2021, the company **paid $213.7 million in dividends**, including a regular quarterly dividend and supplemental dividends[244](index=244&type=chunk) [Critical Accounting Estimates](index=62&type=section&id=7.3%20Critical%20Accounting%20Estimates) Critical accounting estimates include EWP rebates and allowances, with a **$117.5 million payable** at year-end 2021, and long-lived asset impairment assessment - **EWP Rebates and Allowances**: Estimating rebates is inherently difficult due to the time lag of information as products move through the supply chain. The EWP rebates **payable was $117.5 million** at December 31, 2021[282](index=282&type=chunk) - **Long-Lived Asset Impairment**: The company reviews assets for impairment when a triggering event occurs. This requires significant assumptions about future sales, pricing, and costs. No triggering events were identified in 2021[283](index=283&type=chunk)[285](index=285&type=chunk) [Financial Statements and Supplementary Data](index=65&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents consolidated financial statements for 2019-2021, showing significant growth in 2021 with **net income reaching $712.5 million** [Consolidated Financial Statements](index=65&type=section&id=8.1%20Consolidated%20Financial%20Statements) The consolidated financial statements show 2021 sales of **$7.9 billion**, net income of **$712.5 million**, and total assets of **$2.57 billion** Consolidated Statement of Operations Highlights (in thousands, except per-share data) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Sales | $7,926,111 | $5,474,838 | $4,643,404 | | Income from operations | $971,803 | $335,029 | $136,459 | | Net income | $712,486 | $174,979 | $80,925 | | Diluted EPS | **$17.97** | $4.44 | $2.06 | Consolidated Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $1,885,878 | $1,308,855 | | Total Assets | $2,572,640 | $1,965,718 | | Total Current Liabilities | $640,746 | $524,002 | | Long-term Debt | $444,628 | $443,792 | | Total Stockholders' Equity | $1,352,619 | $850,799 | [Notes to Consolidated Financial Statements](index=71&type=section&id=8.2%20Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, segment information, debt, and retirement plans, including a **$138.1 million rebate payable** and **$444.6 million long-term debt** in 2021 - **Revenue Recognition (Note 3):** Revenue is recognized when control of goods transfers to the customer. Customer rebates, a significant estimate, are recorded as a reduction to sales. The rebate **payable was $138.1 million** at year-end 2021[339](index=339&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk) - **Debt (Note 9):** As of Dec 31, 2021, **long-term debt totaled $444.6 million**, consisting mainly of a **$50 million ABL Term Loan** due 2025 and **$400 million in 4.875% Senior Notes due 2030**. The company had **$346.0 million of availability** under its revolving credit facility[363](index=363&type=chunk)[366](index=366&type=chunk) - **Retirement Plans (Note 11):** The company **terminated its qualified defined benefit pension plan** in December 2020, resulting in a non-cash settlement charge of **$6.2 million**. It continues to sponsor defined contribution (401k) and nonqualified deferred compensation plans[383](index=383&type=chunk)[384](index=384&type=chunk) - **Segment Information (Note 16):** In 2021, Wood Products had **segment operating income of $531.2 million** on sales of **$1.97 billion**. BMD had **segment operating income of $481.1 million** on sales of **$7.17 billion**[440](index=440&type=chunk) [Controls and Procedures](index=106&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021, with an unqualified auditor opinion - The CEO and CFO concluded that as of December 31, 2021, the company's **disclosure controls and procedures were effective** at a reasonable assurance level[466](index=466&type=chunk) - Management concluded that the company's **internal control over financial reporting was effective** as of December 31, 2021. This assessment was audited by KPMG LLP, which also issued an **unqualified opinion**[469](index=469&type=chunk) Part III [Directors, Executive Officers, and Corporate Governance](index=109&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2022 Proxy Statement - Required information regarding directors and corporate governance is incorporated by reference from the company's Proxy Statement for the 2022 annual meeting of stockholders[474](index=474&type=chunk) [Executive Compensation](index=109&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive and board compensation is incorporated by reference from the 2022 Proxy Statement - Required information regarding executive compensation is incorporated by reference from the company's Proxy Statement for the 2022 annual meeting of stockholders[475](index=475&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=109&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the 2022 Proxy Statement - Required information regarding security ownership is incorporated by reference from the company's Proxy Statement for the 2022 annual meeting of stockholders[476](index=476&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=109&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related-person transactions and director independence is incorporated by reference from the 2022 Proxy Statement - Required information regarding related transactions and director independence is incorporated by reference from the company's Proxy Statement for the 2022 annual meeting of stockholders[477](index=477&type=chunk) [Principal Accountant Fees and Services](index=109&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the 'Audit Committee Report' section of the 2022 Proxy Statement - Required information regarding accountant fees and services is incorporated by reference from the company's Proxy Statement for the 2022 annual meeting of stockholders[478](index=478&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=110&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements and exhibits filed as part of the Form 10-K, including consolidated financial statements and various agreements - This section contains the **list of all financial statements and exhibits** filed as part of the Form 10-K[479](index=479&type=chunk)[480](index=480&type=chunk)