Boise Cascade Company (NYSE:BCC) Q2 2021 Earnings Conference Call August 3, 2021 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 Jesse Barone - BMO Capital Markets Charles Perron - Goldman Sachs Reuben Garner - The Benchmark George Staphos - Bank of America Operator Good morning. My nam ...

[PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This part details Boise Cascade Company's unaudited quarterly financial statements, including operations, balance sheets, cash flows, and comprehensive notes, along with management's discussion and analysis of financial condition and results of operations [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Boise Cascade Company's unaudited quarterly consolidated financial statements, including statements of operations, comprehensive income, balance sheets, cash flows, and stockholders' equity, along with detailed condensed notes explaining significant accounting policies, debt, leases, and segment performance for the periods ended June 30, 2021 and 2020 [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) This section provides the consolidated statements of operations, detailing sales, income from operations, net income, and earnings per share for the three and six months ended June 30, 2021 and 2020 Consolidated Statements of Operations (Three Months Ended June 30) | Metric | 2021 (thousands) | 2020 (thousands) | Change (%) | | :------------------------------------------ | :--------------- | :--------------- | :--------- | | Sales | $2,443,161 | $1,242,760 | 96.6% | | Income from operations | $409,775 | $51,770 | 691.5% | | Income before income taxes | $403,582 | $44,920 | 798.4% | | Income tax provision | $(101,026) | $(11,334) | 791.4% | | Net income | $302,556 | $33,586 | 799.3% | | Basic Net income per common share | $7.67 | $0.85 | 796.5% | | Diluted Net income per common share | $7.62 | $0.85 | 796.5% | | Dividends declared per common share | $2.10 | $0.10 | 2000.0% | Consolidated Statements of Operations (Six Months Ended June 30) | Metric | 2021 (thousands) | 2020 (thousands) | Change (%) | | :------------------------------------------ | :--------------- | :--------------- | :--------- | | Sales | $4,264,477 | $2,413,294 | 76.7% | | Income from operations | $615,036 | $77,317 | 695.5% | | Income before income taxes | $604,186 | $61,127 | 888.4% | | Income tax provision | $(152,474) | $(15,341) | 894.0% | | Net income | $451,712 | $45,786 | 886.5% | | Basic Net income per common share | $11.47 | $1.17 | 879.5% | | Diluted Net income per common share | $11.40 | $1.16 | 882.8% | | Dividends declared per common share | $2.20 | $0.20 | 1000.0% | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the consolidated statements of comprehensive income, including net income and other comprehensive income (loss), for the three and six months ended June 30, 2021 and 2020 Consolidated Statements of Comprehensive Income (Three Months Ended June 30) | Metric | 2021 (thousands) | 2020 (thousands) | Change (%) | | :----------------------- | :--------------- | :--------------- | :--------- | | Net income | $302,556 | $33,586 | 799.3% | | Other comprehensive income (loss), net of tax | $(3) | $150 | -102.0% | | Comprehensive income | $302,553 | $33,736 | 796.8% | Consolidated Statements of Comprehensive Income (Six Months Ended June 30) | Metric | 2021 (thousands) | 2020 (thousands) | Change (%) | | :----------------------- | :--------------- | :--------------- | :--------- | | Net income | $451,712 | $45,786 | 886.5% | | Other comprehensive income (loss), net of tax | $(7) | $365 | -101.9% | | Comprehensive income | $451,705 | $46,151 | 878.8% | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This section provides the consolidated balance sheets, detailing assets, liabilities, and stockholders' equity as of June 30, 2021, and December 31, 2020 Consolidated Balance Sheets (June 30, 2021 vs December 31, 2020) | Metric | June 30, 2021 (thousands) | December 31, 2020 (thousands) | Change (%) | | :------------------------------------------ | :------------------------ | :-------------------------- | :--------- | | **ASSETS** | | | | | Cash and cash equivalents | $653,767 | $405,382 | 61.3% | | Total current assets | $2,007,430 | $1,308,855 | 53.4% | | Total assets | $2,647,440 | $1,965,718 | 34.7% | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | | Total current liabilities | $854,257 | $524,002 | 63.0% | | Long-term debt | $444,210 | $443,792 | 0.1% | | Total stockholders' equity | $1,215,710 | $850,799 | 42.9% | | Total liabilities and stockholders' equity | $2,647,440 | $1,965,718 | 34.7% | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the consolidated statements of cash flows, categorizing cash activities into operations, investment, and financing for the six months ended June 30, 2021 and 2020 Consolidated Statements of Cash Flows (Six Months Ended June 30) | Metric | 2021 (thousands) | 2020 (thousands) | Change (%) | | :------------------------------------------ | :--------------- | :--------------- | :--------- | | Net cash provided by operations | $291,179 | $118,276 | 146.2% | | Net cash used for investment | $(31,002) | $(28,443) | 9.0% | | Net cash used for financing | $(11,792) | $(13,634) | -13.4% | | Net increase in cash and cash equivalents | $248,385 | $76,199 | 226.0% | | Balance at end of the period | $653,767 | $361,436 | 80.9% | [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in stockholders' equity, including common stock, retained earnings, and accumulated other comprehensive loss, for the periods ended June 30, 2021, and December 31, 2020 Consolidated Statements of Stockholders' Equity (June 30, 2021 vs December 31, 2020) | Metric | June 30, 2021 (thousands) | December 31, 2020 (thousands) | Change (%) | | :------------------------------------------ | :------------------------ | :-------------------------- | :--------- | | Common stock, $0.01 par value per share | $447 | $446 | 0.2% | | Treasury stock | $(138,909) | $(138,909) | 0.0% | | Additional paid-in capital | $538,841 | $538,006 | 0.2% | | Accumulated other comprehensive loss | $(1,085) | $(1,078) | 0.6% | | Retained earnings | $816,416 | $452,334 | 80.5% | | Total stockholders' equity | $1,215,710 | $850,799 | 42.9% | - Common stock dividends declared for the six months ended June 30, 2021, totaled **$83,514 thousand**[24](index=24&type=chunk) [Condensed Notes to Unaudited Quarterly Consolidated Financial Statements](index=10&type=section&id=Condensed%20Notes%20to%20Unaudited%20Quarterly%20Consolidated%20Financial%20Statements) This section provides condensed notes explaining significant accounting policies, debt, leases, and segment performance for the unaudited quarterly consolidated financial statements [1. Nature of Operations and Consolidation](index=10&type=section&id=1.%20Nature%20of%20Operations%20and%20Consolidation) This note describes Boise Cascade Company's business segments, Wood Products and Building Materials Distribution, and its operational headquarters - Boise Cascade Company is a building products company headquartered in Boise, Idaho, operating two reportable segments: Wood Products (manufactures EWP and plywood) and Building Materials Distribution (wholesale distributor)[30](index=30&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's key accounting policies, including revenue recognition, rebates, derivative instruments, credit risk, and the impact of new accounting standards - Revenue is recognized when control of promised goods or services is transferred to customers[34](index=34&type=chunk) - Customer rebates are estimated and recorded as a decrease in 'Sales', while vendor rebates reduce 'Materials, labor, and other operating expenses' or 'Selling and distribution expenses'[36](index=36&type=chunk)[37](index=37&type=chunk) - The company uses interest rate swaps to mitigate variable interest rate exposure, not for speculation, with changes in fair value recognized in the Consolidated Statements of Operations[49](index=49&type=chunk)[51](index=51&type=chunk) - Receivables from two customers accounted for approximately **18% and 10% of total receivables** at June 30, 2021, indicating a concentration of credit risk[52](index=52&type=chunk) - The adoption of ASU 2020-04 and 2021-01 related to Reference Rate Reform is not expected to have a material effect on financial statements[53](index=53&type=chunk) [3. Income Taxes](index=14&type=section&id=3.%20Income%20Taxes) This note details the income tax provision and effective tax rates, explaining the primary drivers of differences from the federal statutory rate and cash taxes paid Income Tax Provision and Effective Rate (Three and Six Months Ended June 30) | Metric | 3 Months 2021 (millions) | 3 Months 2020 (millions) | 6 Months 2021 (millions) | 6 Months 2020 (millions) | | :----------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Income tax provision | $101.0 | $11.3 | $152.5 | $15.3 | | Effective rate | 25.0% | 25.2% | 25.2% | 25.1% | - The primary reason for the difference between the federal statutory income tax rate of 21% and the effective tax rate was the effect of state taxes[55](index=55&type=chunk) - Cash paid for taxes, net of refunds, for the six months ended June 30, 2021, was **$155.5 million**, significantly up from **$8.9 million** in 2020[56](index=56&type=chunk) [4. Net Income Per Common Share](index=14&type=section&id=4.%20Net%20Income%20Per%20Common%20Share) This note presents the basic and diluted net income per common share for the three and six months ended June 30, 2021 and 2020 Net Income Per Common Share (Three and Six Months Ended June 30) | Metric | 3 Months 2021 | 3 Months 2020 | 6 Months 2021 | 6 Months 2020 | | :------------------------------------------ | :------------ | :------------ | :------------ | :------------ | | Basic Net income per common share | $7.67 | $0.85 | $11.47 | $1.17 | | Diluted Net income per common share | $7.62 | $0.85 | $11.40 | $1.16 | [5. Curtailment of Manufacturing Facility](index=15&type=section&id=5.%20Curtailment%20of%20Manufacturing%20Facility) This note describes the permanent curtailment of I-joist production at the Roxboro facility in 2020 and the associated accelerated depreciation and closure costs - On February 20, 2020, the company decided to permanently curtail I-joist production at its Roxboro, North Carolina facility by March 31, 2020[60](index=60&type=chunk) - As a result, **$15.0 million** of accelerated depreciation and **$1.7 million** of closure-related costs were recorded in the first quarter of 2020[60](index=60&type=chunk) [6. Debt](index=15&type=section&id=6.%20Debt) This note provides details on the company's long-term debt, including its asset-based credit facility, senior notes, and related interest rates and availability Long-Term Debt (June 30, 2021 vs December 31, 2020) | Metric | June 30, 2021 (thousands) | December 31, 2020 (thousands) | | :------------------------------------------ | :------------------------ | :-------------------------- | | Asset-based credit facility term loan due 2025 | $50,000 | $50,000 | | 4.875% senior notes due 2030 | $400,000 | $400,000 | | Long-term debt | $444,210 | $443,792 | - The company has a **$350 million** senior secured asset-based revolving credit facility (Revolving Credit Facility) and a **$50.0 million** term loan (ABL Term Loan) maturing on March 13, 2025[62](index=62&type=chunk) - At June 30, 2021, there were no borrowings outstanding under the Revolving Credit Facility, and Availability was **$345.3 million**[64](index=64&type=chunk)[67](index=67&type=chunk) - The effective average net interest rate on the ABL Term Loan was approximately **0.9%** during the six months ended June 30, 2021, after patronage distributions[69](index=69&type=chunk) - Cash payments for interest for the six months ended June 30, 2021, were **$9.6 million**, down from **$11.5 million** in 2020[74](index=74&type=chunk) [7. Leases](index=17&type=section&id=7.%20Leases) This note presents information on total lease costs, weighted-average lease terms, discount rates, and long-term lease obligations for operating and finance leases Total Lease Cost (Three and Six Months Ended June 30) | Metric | 3 Months 2021 (thousands) | 3 Months 2020 (thousands) | 6 Months 2021 (thousands) | 6 Months 2020 (thousands) | | :----------------------- | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | Total lease cost | $6,625 | $6,125 | $13,022 | $12,204 | Weighted-Average Lease Terms and Discount Rates (June 30, 2021) | Metric | Operating Leases | Finance Leases | | :------------------------------------------ | :--------------- | :------------- | | Weighted-average remaining lease term (years) | 7 | 15 | | Weighted-average discount rate | 6.4% | 7.7% | Long-Term Lease Obligations (June 30, 2021) | Lease Type | Amount (thousands) | | :----------------------- | :--------------- | | Operating leases | $50,967 | | Finance leases | $30,661 | [8. Retirement and Benefit Plans](index=19&type=section&id=8.%20Retirement%20and%20Benefit%20Plans) This note details the net periodic benefit expense for retirement plans and expected cash payments to nonqualified pension plan participants Net Periodic Benefit Expense (Three and Six Months Ended June 30) | Metric | 3 Months 2021 (thousands) | 3 Months 2020 (thousands) | 6 Months 2021 (thousands) | 6 Months 2020 (thousands) | | :----------------------- | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | Net periodic benefit expense | $19 | $468 | $38 | $1,023 | - The significant decrease in net periodic benefit expense was primarily due to changes in interest cost and expected return on plan assets[82](index=82&type=chunk) - The company expects to make approximately **$0.2 million** in cash payments to nonqualified pension plan participants for the remainder of 2021[83](index=83&type=chunk) [9. Stock-Based Compensation](index=19&type=section&id=9.%20Stock-Based%20Compensation) This note outlines the stock-based compensation granted, total compensation expense recognized, and unrecognized compensation expense for nonvested share-based awards - During the six months ended June 30, 2021, the company granted **73,265 PSUs** and **99,588 RSUs**[85](index=85&type=chunk)[86](index=86&type=chunk) Total Stock-Based Compensation (Three and Six Months Ended June 30) | Metric | 3 Months 2021 (thousands) | 3 Months 2020 (thousands) | 6 Months 2021 (thousands) | 6 Months 2020 (thousands) | | :----------------------- | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | PSUs | $745 | $691 | $1,834 | $1,301 | | RSUs | $666 | $980 | $1,669 | $2,044 | | Total | $1,411 | $1,671 | $3,503 | $3,345 | - As of June 30, 2021, total unrecognized compensation expense related to nonvested share-based compensation arrangements was **$14.9 million**, expected to be recognized over a weighted-average period of **2.1 years**[91](index=91&type=chunk) [10. Stockholders' Equity](index=20&type=section&id=10.%20Stockholders'%20Equity) This note discusses changes in stockholders' equity, including declared dividends and the accumulated other comprehensive loss - On June 28, 2021, the board of directors declared a supplemental dividend of **$2.00 per share** on common stock, resulting in an accrued **$78.7 million** in 'Dividends payable' at June 30, 2021[93](index=93&type=chunk) - A quarterly dividend of **$0.10 per share** was declared on July 29, 2021[93](index=93&type=chunk) Accumulated Other Comprehensive Loss (Three and Six Months Ended June 30) | Metric | 3 Months 2021 (thousands) | 3 Months 2020 (thousands) | 6 Months 2021 (thousands) | 6 Months 2020 (thousands) | | :----------------------- | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | Beginning balance, net of taxes | $(1,082) | $(50,033) | $(1,078) | $(50,248) | | Ending balance, net of taxes | $(1,085) | $(49,883) | $(1,085) | $(49,883) | [11. Transactions With Related Party](index=21&type=section&id=11.%20Transactions%20With%20Related%20Party) This note details transactions with Louisiana Timber Procurement Company, L.L.C., an unconsolidated variable-interest entity, including sales and wood fiber purchases - Boise Cascade is **50% owner** of Louisiana Timber Procurement Company, L.L.C. (LTP), an unconsolidated variable-interest entity[96](index=96&type=chunk) Related-Party Transactions with LTP (Three and Six Months Ended June 30) | Metric | 3 Months 2021 (millions) | 3 Months 2020 (millions) | 6 Months 2021 (millions) | 6 Months 2020 (millions) | | :----------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Sales to LTP | $3.4 | $2.5 | $6.7 | $6.8 | | Wood fiber purchases from LTP | $20.7 | $13.8 | $41.0 | $36.4 | [12. Segment Information](index=22&type=section&id=12.%20Segment%20Information) This note provides financial information by segment, detailing net sales and operating income for Wood Products and Building Materials Distribution Net Sales by Segment (Three and Six Months Ended June 30) | Segment | 3 Months 2021 (thousands) | 3 Months 2020 (thousands) | 6 Months 2021 (thousands) | 6 Months 2020 (thousands) | | :------------------------------------------ | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | Wood Products | $594,569 | $281,505 | $1,026,904 | $601,566 | | Building Materials Distribution | $2,172,744 | $1,134,260 | $3,807,521 | $2,184,257 | | Total net sales | $2,443,161 | $1,242,760 | $4,264,477 | $2,413,294 | Segment Operating Income (Three and Six Months Ended June 30) | Segment | 3 Months 2021 (thousands) | 3 Months 2020 (thousands) | 6 Months 2021 (thousands) | 6 Months 2020 (thousands) | | :------------------------------------------ | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | Wood Products | $213,761 | $17,074 | $310,813 | $20,837 | | Building Materials Distribution | $206,338 | $43,210 | $326,557 | $72,512 | | Total segment operating income | $420,099 | $60,284 | $637,370 | $93,349 | | Unallocated corporate costs | $(10,324) | $(8,514) | $(22,334) | $(16,032) | | Income from operations | $409,775 | $51,770 | $615,036 | $77,317 | - For the six months ended June 30, 2020, Wood Products segment operating income included **$15.0 million** of accelerated depreciation and **$1.7 million** of other closure-related costs due to the curtailment of I-joist production[104](index=104&type=chunk) [13. Commitments, Legal Proceedings and Contingencies, and Guarantees](index=23&type=section&id=13.%20Commitments%2C%20Legal%20Proceedings%20and%20Contingencies%2C%20and%20Guarantees) This note confirms no material changes to commitments, legal proceedings, contingencies, or guarantees since the prior annual report - As of June 30, 2021, there have been no material changes to commitments, legal proceedings, or guarantees disclosed in the 2020 Form 10-K[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=24&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on Boise Cascade's financial performance, liquidity, and capital resources for the quarter ended June 30, 2021 [Understanding Our Financial Information](index=24&type=section&id=Understanding%20Our%20Financial%20Information) This section advises reading the discussion in conjunction with consolidated financial statements and notes, highlighting the inherent uncertainty of forward-looking statements - This discussion should be read in conjunction with the consolidated financial statements and related notes in Item 1 of this Form 10-Q, as well as the 2020 Form 10-K[109](index=109&type=chunk) - Forward-looking statements are based on management's estimates and assumptions, which are inherently uncertain and subject to numerous risks and uncertainties[109](index=109&type=chunk) [Executive Overview](index=24&type=section&id=Executive%20Overview) This overview highlights significant income growth driven by strong market conditions and commodity pricing, and discusses the company's liquidity and market outlook - Income from operations for the three months ended June 30, 2021, was **$409.8 million**, a significant increase from **$51.8 million** in the prior year[111](index=111&type=chunk) - Wood Products segment income increased by **$196.7 million** to **$213.8 million**, and Building Materials Distribution segment income increased by **$163.1 million** to **$206.3 million**[111](index=111&type=chunk) - The company ended Q2 2021 with **$653.8 million** in cash and cash equivalents and **$345.3 million** in undrawn bank line availability, totaling **$999.1 million** in liquidity[112](index=112&type=chunk) - Lumber pricing peaked in May 2021 and then dropped sharply, driven by declining repair and remodel and 'do-it-yourself' activity[112](index=112&type=chunk) - A favorable demand environment for new residential construction, particularly single-family housing starts, is expected to continue in 2021 and into next year[116](index=116&type=chunk) - Current composite panel and lumber prices have declined by approximately **53%** and **48%**, respectively, from levels at the end of Q2 2021[117](index=117&type=chunk) [Factors That Affect Our Operating Results and Trends](index=25&type=section&id=Factors%20That%20Affect%20Our%20Operating%20Results%20and%20Trends) This section identifies key factors influencing operating results, including commodity prices, economic conditions, competition, supply chain, and regulatory compliance - Operating results are influenced by commodity product price movements, general economic conditions (e.g., housing starts, interest rates), and the impacts of the COVID-19 pandemic[118](index=118&type=chunk) - Other factors include industry competition, disruptions to information systems, material disruptions at manufacturing facilities, customer concentration, product shortages, labor issues, raw material costs, and compliance with government regulations[118](index=118&type=chunk)[119](index=119&type=chunk) [Our Operating Results](index=27&type=section&id=Our%20Operating%20Results) This section analyzes the company's operating results, including sales volumes, prices, costs, expenses, and income from operations for the reported periods Income from Operations and Percentage of Sales (Three and Six Months Ended June 30) | Metric | 3 Months 2021 (millions) | 3 Months 2020 (millions) | 6 Months 2021 (millions) | 6 Months 2020 (millions) | | :----------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Income from operations | $409.8 | $51.8 | $615.0 | $77.3 | | Income from operations (% of sales) | 16.8% | 4.2% | 14.4% | 3.2% | [Sales Volumes and Prices](index=28&type=section&id=Sales%20Volumes%20and%20Prices) This section analyzes changes in sales volumes and prices for Wood Products and Building Materials Distribution, noting the impact of housing starts and commodity prices Total Sales (Three and Six Months Ended June 30) | Metric | 3 Months 2021 (millions) | 3 Months 2020 (millions) | 6 Months 2021 (millions) | 6 Months 2020 (millions) | | :----------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Total sales | $2,443.2 | $1,242.8 | $4,264.5 | $2,413.3 | - U.S. housing starts increased **43%** in Q2 2021, with single-family starts up **42%** from the same period in 2020[128](index=128&type=chunk) - Average composite panel and lumber prices for Q2 2021 were **280%** and **210% higher**, respectively, than in Q2 2020[128](index=128&type=chunk) - Wood Products sales increased **111%** in Q2 2021, primarily due to **206% higher plywood prices** and increased I-joist and LVL sales volumes[129](index=129&type=chunk) - Building Materials Distribution sales increased **92%** in Q2 2021, driven by **83% sales price** and **9% volume increases**, with commodity sales up **167%**[131](index=131&type=chunk) [Costs and Expenses](index=29&type=section&id=Costs%20and%20Expenses) This section details changes in materials, labor, operating expenses, depreciation, selling, distribution, and general and administrative expenses - Materials, labor, and other operating expenses (excluding depreciation) increased **78%** to **$1,864.5 million** for Q2 2021, but decreased as a percentage of sales due to improved leveraging and gross margins[133](index=133&type=chunk) - Depreciation and amortization decreased **28%** for the six months ended June 30, 2021, to **$40.0 million**, primarily due to **$15.0 million** of accelerated depreciation recorded in Q1 2020[135](index=135&type=chunk) - Selling and distribution expenses increased **26%** to **$130.7 million** for Q2 2021, mainly due to **$19.7 million** higher employee-related expenses, mostly incentive compensation[136](index=136&type=chunk) - General and administrative expenses increased **24%** to **$43.3 million** for the six months ended June 30, 2021, primarily due to **$9.0 million** higher employee-related expenses[137](index=137&type=chunk) [Income From Operations](index=30&type=section&id=Income%20From%20Operations) This section discusses the drivers of changes in income from operations for both Wood Products and Building Materials Distribution segments, and unallocated corporate costs - Income from operations increased **$358.0 million** to **$409.8 million** for Q2 2021, and **$537.7 million** to **$615.0 million** for the six months ended June 30, 2021[139](index=139&type=chunk) - Wood Products segment income increased **$196.7 million** to **$213.8 million** in Q2 2021, driven by higher sales prices and volumes[139](index=139&type=chunk) - Building Materials Distribution segment income increased **$163.1 million** to **$206.3 million** in Q2 2021, due to a **$187.9 million** gross margin increase from improved sales volumes and gross margins on commodity products[141](index=141&type=chunk) - Unallocated corporate expenses increased **$6.3 million** to **$22.3 million** for the six months ended June 30, 2021, due to higher incentive compensation and **$3.4 million** in estimated insurance losses[143](index=143&type=chunk) [Other (Change in fair value of interest rate swaps)](index=31&type=section&id=Other%20(Change%20in%20fair%20value%20of%20interest%20rate%20swaps)) This section refers to Note 2 for details on the change in fair value of interest rate swaps - For information related to interest rate swaps, refer to Note 2, Summary of Significant Accounting Policies, in Item 1 of this Form 10-Q[144](index=144&type=chunk) [Income Tax Provision](index=31&type=section&id=Income%20Tax%20Provision) This section provides the income tax provision and effective tax rates for the reported periods, highlighting the impact of state taxes Income Tax Provision and Effective Rate (Three and Six Months Ended June 30) | Metric | 3 Months 2021 (millions) | 3 Months 2020 (millions) | 6 Months 2021 (millions) | 6 Months 2020 (millions) | | :----------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Income tax provision | $101.0 | $11.3 | $152.5 | $15.3 | | Effective rate | 25.0% | 25.2% | 25.2% | 25.1% | - The primary reason for the difference between the federal statutory income tax rate of 21% and the effective tax rate was the effect of state taxes[145](index=145&type=chunk) [Industry Mergers and Acquisitions](index=31&type=section&id=Industry%20Mergers%20and%20Acquisitions) This section discusses the impact of the Builders FirstSource and BMC Stock Holdings merger on customer concentration and future operations - The merger of Builders FirstSource, Inc. and BMC Stock Holdings in early 2021 resulted in a combined company that accounted for **18% of total receivables** as of June 30, 2021[146](index=146&type=chunk) - The company does not expect the merger to have a material impact on its future results of operations[146](index=146&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's liquidity, capital resources, and ability to fund operations, investments, and obligations through cash flows and available credit - At June 30, 2021, the company had **$653.8 million** of cash and cash equivalents and **$345.3 million** of undrawn committed bank line availability, totaling **$999.1 million** in available liquidity[147](index=147&type=chunk) - The company believes its cash flows from operations, current cash levels, and available borrowing capacity will be adequate to fund debt service, operations, capital expenditures, lease obligations, working capital, income tax payments, and cash dividends for the next 12 months[148](index=148&type=chunk) - Capital expenditures in 2021 are expected to total approximately **$90 million to $100 million**, focusing on business improvement, replacement, and expansion projects[154](index=154&type=chunk) [Sources and Uses of Cash](index=32&type=section&id=Sources%20and%20Uses%20of%20Cash) This section outlines the primary sources and uses of cash, including sales, borrowings, operating expenses, investments, debt service, and dividends - Cash is primarily generated from sales of products and borrowings, and used for manufacturing/distribution expenses, investments, debt service, dividends, and contractual obligations[149](index=149&type=chunk) Net Cash Provided by (Used for) Activities (Six Months Ended June 30) | Activity | 2021 (thousands) | 2020 (thousands) | | :----------------------- | :--------------- | :--------------- | | Net cash provided by operations | $291,179 | $118,276 | | Net cash used for investment | $(31,002) | $(28,443) | | Net cash used for financing | $(11,792) | $(13,634) | [Operating Activities](index=32&type=section&id=Operating%20Activities) This section details cash generated from operating activities, highlighting the impact of income from operations, working capital changes, and tax payments - Operating activities generated **$291.2 million** of cash for the six months ended June 30, 2021, a **$172.9 million increase** from the prior year, primarily due to improved income from operations[151](index=151&type=chunk) - An increase in working capital of **$203.4 million** in H1 2021 (vs. a **$0.1 million decrease** in H1 2020) partially offset the cash increase[151](index=151&type=chunk) - Cash paid for taxes, net of refunds, increased **$146.6 million** compared to the prior year[151](index=151&type=chunk) - Increases in receivables and inventories, offset by an increase in accounts payable and accrued liabilities, contributed to the working capital changes[152](index=152&type=chunk) [Investment Activities](index=32&type=section&id=Investment%20Activities) This section describes cash used for investment activities, primarily purchases of property and equipment, and outlines expected capital expenditures - Cash used for purchases of property and equipment was **$31.5 million** for the six months ended June 30, 2021, compared to **$28.8 million** in 2020[153](index=153&type=chunk) - Expected capital expenditures for 2021 are **$90 million to $100 million**, including projects like a log utilization center, a new door assembly operation, and distribution expansion[154](index=154&type=chunk) [Financing Activities](index=33&type=section&id=Financing%20Activities) This section explains cash used for financing activities, including dividend payments, tax withholding on stock awards, and revolving credit facility transactions - Financing activities used **$11.8 million** of cash for the six months ended June 30, 2021, primarily for **$8.4 million** in common stock dividend payments and **$2.7 million** in tax withholding payments on stock-based awards[155](index=155&type=chunk) - The company borrowed and subsequently repaid **$28.0 million** under its revolving credit facility during the six months ended June 30, 2021[155](index=155&type=chunk) [Contractual Obligations](index=33&type=section&id=Contractual%20Obligations) This section confirms no material changes to contractual obligations since the prior annual report - As of June 30, 2021, there have been no material changes in contractual obligations outside the ordinary course of business since December 31, 2020[157](index=157&type=chunk) [Off-Balance-Sheet Activities](index=33&type=section&id=Off-Balance-Sheet%20Activities) This section states that the company had no material off-balance-sheet arrangements with unconsolidated entities - At June 30, 2021, and December 31, 2020, the company had no material off-balance-sheet arrangements with unconsolidated entities[158](index=158&type=chunk) [Guarantees](index=33&type=section&id=Guarantees) This section confirms no material changes to guarantees since the prior annual report - As of June 30, 2021, there have been no material changes to the guarantees disclosed in the 2020 Form 10-K[159](index=159&type=chunk) [Seasonal Influences](index=33&type=section&id=Seasonal%20Influences) This section describes the seasonal fluctuations in sales volumes and working capital due to weather and construction activity - The company experiences seasonal fluctuations, with lower sales volumes in the first and fourth quarters due to poor weather affecting construction, and higher sales volumes in the second and third quarters[160](index=160&type=chunk) - Working capital is typically higher in the first and second quarters in preparation for the building season[160](index=160&type=chunk) [Employees](index=34&type=section&id=Employees) This section provides employee numbers, details on collective bargaining agreements, and potential impacts of labor disruptions or increased costs - As of July 25, 2021, Boise Cascade had approximately **6,130 employees**, with about **23%** working under collective bargaining agreements[162](index=162&type=chunk) - Two collective bargaining agreements covering approximately **780 employees** expired on July 15, 2021, with negotiations for new agreements ongoing[162](index=162&type=chunk) - Potential labor disruptions, strikes, or significantly increased labor costs could impact sales and profitability[162](index=162&type=chunk) [Disclosures of Financial Market Risks](index=34&type=section&id=Disclosures%20of%20Financial%20Market%20Risks) This section confirms no material changes to financial market risks since the prior annual report - As of June 30, 2021, there have been no material changes in the company's exposure to market risk from those disclosed in the 2020 Form 10-K[163](index=163&type=chunk) [Environmental](index=34&type=section&id=Environmental) This section confirms no material changes to environmental issues since the prior annual report - As of June 30, 2021, there have been no material changes to environmental issues disclosed in the 2020 Form 10-K[164](index=164&type=chunk) [Critical Accounting Estimates](index=34&type=section&id=Critical%20Accounting%20Estimates) This section confirms no material changes to critical accounting estimates since the prior annual report - As of June 30, 2021, there have been no material changes to critical accounting estimates from those disclosed in the 2020 Form 10-K[165](index=165&type=chunk) [New and Recently Adopted Accounting Standards](index=34&type=section&id=New%20and%20Recently%20Adopted%20Accounting%20Standards) This section refers to Note 2 for information on new and recently adopted accounting standards - For information related to new and recently adopted accounting standards, refer to Note 2, Summary of Significant Accounting Policies, in Item 1 of this Form 10-Q[166](index=166&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=34&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section states that there have been no material changes in the company's exposure to market risk, including commodity prices, interest rates, and foreign currency exchange rates, since the disclosures in the 2020 Form 10-K - As of June 30, 2021, there have been no material changes in the company's exposure to market risk from those disclosed in the 2020 Form 10-K[167](index=167&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=35&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) The company's CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2021. There were no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2021, operating at a reasonable assurance level[169](index=169&type=chunk) - There were no changes in internal control over financial reporting during the three months ended June 30, 2021, that materially affected or are reasonably likely to materially affect internal control over financial reporting[169](index=169&type=chunk) [PART II—OTHER INFORMATION](index=36&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This part contains other information, including legal proceedings, risk factors, sales of equity securities, defaults, mine safety, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=36&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is a party to various legal proceedings arising in the ordinary course of business but does not believe any will individually or in aggregate have a material adverse effect on its financial position, results of operations, or cash flows - The company believes it is not reasonably possible that any legal actions against it will have a material adverse effect on its financial position, results of operations, or cash flows[171](index=171&type=chunk) - The disclosure threshold for environmental proceedings is **$1 million or more**[171](index=171&type=chunk) [ITEM 1A. RISK FACTORS](index=36&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers to the detailed discussion of risk factors in the company's 2020 Form 10-K, emphasizing that actual results may differ materially from forward-looking statements - Readers should review the risk factors listed in 'Item 1A. Risk Factors' in the 2020 Form 10-K[172](index=172&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=36&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of equity securities or use of proceeds to report for the period - None[172](index=172&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=36&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) There were no defaults upon senior securities to report for the period - None[172](index=172&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=36&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company's operations - Not applicable[172](index=172&type=chunk) [ITEM 5. OTHER INFORMATION](index=36&type=section&id=ITEM%205.%20OTHER%20INFORMATION) There is no other information to report under this item - None[172](index=172&type=chunk) [ITEM 6. EXHIBITS](index=37&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and various Inline XBRL documents - Exhibits include CEO and CFO Certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - Includes Inline XBRL Instance Document and Taxonomy Extension Schema, Calculation, Definition, and Presentation Linkbase Documents[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) [Signatures](index=38&type=section&id=Signatures) The report is duly signed on behalf of Boise Cascade Company by Kelly E. Hibbs, Senior Vice President, Chief Financial Officer and Treasurer - The report was signed by Kelly E. Hibbs, Senior Vice President, Chief Financial Officer and Treasurer, on August 2, 2021[183](index=183&type=chunk)

Boise Cascade Company (NYSE:BCC) Q1 2021 Earnings Conference Call May 7, 2021 11:00 AM ET Company Participants Kelly Hibbs - Incoming SVP, CFO and Treasurer of Boise Cascade Nate Jorgensen - CEO Mike Brown - Head, Wood Products Operations Jeff Strom - Head. Building Materials Distribution Operations Wayne Rancourt - CFO Conference Call Participants Jesse Barone - BMO Capital Markets Kurt Yinger - D.A. Davidson Reuben Garner - The Benchmark Jonathan Hall - Portland Engineering John Babcock - Bank of America ...

Boise Cascade Company (NYSE:BCC) Q4 2020 Earnings Conference Call February 23, 2021 11:00 AM ET Company Participants Wayne Rancourt - Executive Vice President, CFO and Treasurer Nate Jorgensen - CEO Mike Brown - Head, Wood Products Operations Nick Stokes - Head, Building Materials Distribution Operations Conference Call Participants George Staphos - Bank of America Mark Wilde - Bank of Montreal Reuben Garner - The Benchmark Kurt Yinger - D.A. Davidson Paul Quinn - RBC Capital Operator Good morning. My name ...

PART I [Business](index=7&type=section&id=Item%201.%20Business) Boise Cascade manufactures engineered wood products and plywood, and distributes building materials, operating a vertically integrated model - Boise Cascade operates through two vertically integrated segments: Wood Products (manufacturing) and Building Materials Distribution (BMD), with BMD being the largest customer of the Wood Products segment, purchasing **61% of its sales in 2020**[21](index=21&type=chunk)[26](index=26&type=chunk)[67](index=67&type=chunk) - Key business strategies include increasing earnings and stability by growing EWP sales and expanding BMD's product lines and geographic reach[30](index=30&type=chunk) - The company leverages its integrated model to capture margin at both manufacturing and distribution levels, with **80% of EWP sales volume going through BMD in 2020**[46](index=46&type=chunk) - Operational excellence is driven through process improvement and logistics optimization to enhance efficiency[47](index=47&type=chunk) - Innovation and technology are accelerated through new product development, particularly in mass timber, and implementation of a central data repository[47](index=47&type=chunk) - The company serves a diverse customer base including retail lumberyards, home improvement centers, wholesalers, and industrial converters, with **Home Depot and Builders FirstSource as the largest customers**[26](index=26&type=chunk)[77](index=77&type=chunk) - As of February 12, 2021, the company had approximately **6,040 associates**, with **23% covered by collective bargaining agreements**[83](index=83&type=chunk)[127](index=127&type=chunk) [Wood Products Segment](index=15&type=section&id=1.1%20Wood%20Products%20Segment) The Wood Products segment manufactures engineered wood products and plywood, with 2020 sales of **$1,323.9 million** driven by higher plywood prices Wood Products Segment Financials (in millions) | Metric | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Segment Sales** | $1,323.9 | $1,275.2 | $1,533.3 | | **Segment Income (Loss)** | $127.7 | $54.2 | $(10.0) | | **Segment EBITDA** | $198.9 | $111.9 | $117.0 | Wood Products Sales & Production Volumes (millions) | Product (unit) | 2020 Sales Volume | 2020 Production Volume | | :--- | :--- | :--- | | LVL (cubic feet) | 17.3 | 26.0 | | I-joists (lineal feet) | 241 | 237 | | Plywood (sq. ft. 3/8") | 1,253 | 1,637 | - Wood fiber is the primary raw material, accounting for approximately **42% of operating expenses in 2020**, with logs making up **73% of wood fiber costs**[61](index=61&type=chunk)[62](index=62&type=chunk) - The Building Materials Distribution (BMD) segment is the largest customer, representing **61% of Wood Products' sales in 2020**, with **80% of EWP and 24% of plywood sales volumes** to BMD[67](index=67&type=chunk) [Building Materials Distribution (BMD) Segment](index=18&type=section&id=1.2%20Building%20Materials%20Distribution%20(BMD)%20Segment) The BMD segment operates 38 distribution facilities, with 2020 sales reaching **$4,952.0 million** and income doubling due to higher prices and volumes BMD Segment Financials (in millions) | Metric | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Segment Sales** | $4,952.0 | $4,137.7 | $4,287.7 | | **Segment Income** | $247.5 | $116.2 | $112.5 | | **Segment EBITDA** | $270.0 | $137.0 | $130.8 | BMD Sales Mix by Product (2020) | Product Line | % of Sales | | :--- | :--- | | Commodity | 46.6% | | General Line | 35.6% | | Engineered Wood Products | 17.8% | - The segment operates a nationwide network of **38 distribution facilities** and has grown through acquisitions in Tennessee, Oregon, Ohio, and Alabama in 2018-2019[71](index=71&type=chunk) - BMD markets products to retail lumberyards, home improvement centers, and specialty distributors, utilizing both warehouse sales and direct-from-manufacturer sales channels[72](index=72&type=chunk)[74](index=74&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, cyclical product demand, intense competition, and supply chain vulnerabilities - **Pandemic & Economic Risks:** The full impact of the COVID-19 pandemic remains unknown and could adversely affect operations, demand, and financial results; demand is closely tied to cyclical U.S. new residential construction, influenced by interest rates, unemployment, and consumer confidence[107](index=107&type=chunk)[108](index=108&type=chunk)[111](index=111&type=chunk) - **Operational & Supply Chain Risks:** The business is exposed to risks from volatile commodity pricing, intense competition, potential cybersecurity breaches, and material disruptions at manufacturing facilities, with **42% of 2020 sales concentrated among the top ten customers**[109](index=109&type=chunk)[114](index=114&type=chunk)[120](index=120&type=chunk)[123](index=123&type=chunk) - **Financial & Strategic Risks:** The company faces risks of non-cash impairment charges on long-lived assets and goodwill, difficulty obtaining wood fiber at favorable prices, environmental compliance costs, challenges in integrating acquisitions, and restrictive debt covenants[131](index=131&type=chunk)[134](index=134&type=chunk)[137](index=137&type=chunk)[150](index=150&type=chunk) [Properties](index=37&type=section&id=Item%202.%20Properties) The company owns all Wood Products manufacturing facilities and operates 38 owned and leased BMD warehouse facilities totaling **5.0 million** square feet Wood Products Facilities (as of Feb 12, 2021) | Facility Type | Number of Facilities | | :--- | :--- | | Plywood and veneer plants | 8 | | LVL/I-joist/laminated beam plants | 5 | | Sawmills | 2 | - The Building Materials Distribution business operates **38 warehouse facilities** across the U.S. with approximately **5.0 million square feet** of space, of which **2.2 million square feet is owned**[166](index=166&type=chunk) [Legal Proceedings](index=37&type=section&id=Item%203.%20Legal%20Proceedings) The company is party to various ordinary course legal proceedings, none of which are expected to have a material adverse financial effect - The company is involved in ordinary course legal proceedings but does not expect them to have a material adverse effect on its financials[167](index=167&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=38&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 **39.2 million** shares outstanding and an active stock repurchase program - Common stock is traded on the NYSE under the symbol **BCC**[170](index=170&type=chunk) - A stock repurchase program allows for the purchase of up to **2 million shares**, with **496,989 shares** still available for purchase as of year-end 2020[175](index=175&type=chunk) [Selected Financial Data](index=39&type=section&id=Item%206.%20Selected%20Financial%20Data) The company's 2020 financial performance improved significantly, with sales increasing to **$5,475 million** and net income more than doubling to **$175 million** Selected Consolidated Financial Data (in millions, except per-share data) | Metric | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Sales | $5,475 | $4,643 | $4,995 | | Net Income | $175 | $81 | $20 | | Net Income per Share – Diluted | $4.44 | $2.06 | $0.52 | | Adjusted EBITDA | $423 | $215 | $193 | | Cash and Cash Equivalents | $405 | $285 | $192 | | Total Long-Term Debt | $444 | $441 | $439 | Reconciliation of Net Income to Adjusted EBITDA (in millions) | Metric | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Net Income** | **$175** | **$81** | **$20** | | Interest Expense | 26 | 26 | 26 | | Interest Income | (1) | (3) | (2) | | Income Tax Provision | 111 | 27 | 2 | | Depreciation and Amortization | 95 | 80 | 147 | | **EBITDA** | **$407** | **$212** | **$193** | | Change in fair value of interest rate swaps | 2 | 3 | (1) | | Loss on extinguishment of debt | 14 | — | — | | **Adjusted EBITDA** | **$423** | **$215** | **$193** | - Net income in 2020 was negatively impacted by a **$14.0 million** loss on debt extinguishment, **$16.7 million** in costs related to the Roxboro facility curtailment, a **$6.2 million** pension settlement charge, and a **$38.8 million** incremental income tax expense from the pension plan elimination[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2020, income from operations surged to **$335.0 million** due to robust construction activity and higher commodity prices, with strong liquidity maintained [Our Operating Results](index=47&type=section&id=7.1%20Our%20Operating%20Results) Total sales increased **18%** to **$5,474.8 million** in 2020, driven by higher prices and volumes, leading to improved gross margins in both segments Year-over-Year Sales Comparison (2020 vs 2019) | Segment | 2020 Sales (B) | 2019 Sales (B) | % Change | | :--- | :--- | :--- | :--- | | Wood Products | $1.32 | $1.28 | +4% | | Building Materials Distribution | $4.95 | $4.14 | +20% | | **Total Company** | **$5.47** | **$4.64** | **+18%** | Wood Products - Average Net Selling Price Changes (2020 vs 2019) | Product | Price Change | | :--- | :--- | | Plywood | +30% | | LVL | -2% | | I-joists | -2% | - BMD's **20% sales growth** was driven by a **13% increase** in sales prices and a **7% increase** in sales volume compared to 2019[220](index=220&type=chunk) - Income from operations rose to **$335.0 million** in 2020 from **$136.5 million** in 2019, with Wood Products income increasing by **$73.5 million** and BMD income by **$131.3 million**[192](index=192&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk) [Liquidity and Capital Resources](index=56&type=section&id=7.2%20Liquidity%20and%20Capital%20Resources) The company ended 2020 with strong liquidity, including **$405.4 million** in cash, primarily from operations, and refinanced debt by issuing **$400 million** in new notes Summary of Cash Flows (in millions) | Activity | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net cash provided by operations | $294.5 | $245.6 | $163.6 | | Net cash used for investment | $(78.7) | $(94.1) | $(89.3) | | Net cash used for financing | $(95.7) | $(58.0) | $(59.8) | - In July 2020, the company refinanced its debt by issuing **$400 million** of **4.875% senior notes** due 2030 and used proceeds to retire **$350 million** of **5.625% notes** due 2024 and a **$45 million** term loan, resulting in a **$14.0 million** pre-tax loss on debt extinguishment[231](index=231&type=chunk)[267](index=267&type=chunk) - Capital expenditures were **$79.4 million** in 2020, with projected capital expenditures of **$80 million to $90 million** for 2021[263](index=263&type=chunk)[264](index=264&type=chunk) - The company paid **$79.2 million** in dividends in 2020, including a regular quarterly dividend of **$0.10 per share** and a supplemental dividend of **$1.60 per share**[267](index=267&type=chunk)[481](index=481&type=chunk) [Critical Accounting Estimates](index=65&type=section&id=7.3%20Critical%20Accounting%20Estimates) Management identifies critical accounting estimates for EWP rebates and long-lived asset impairment, both requiring significant judgment and assumptions - **EWP Rebates and Allowances:** Estimating rebates for EWP is difficult due to program complexity and data time lags; the accrued liability for EWP rebates was **$40.7 million** at December 31, 2020[311](index=311&type=chunk) - **Long-Lived Asset Impairment:** The company reviews assets for impairment upon a triggering event, requiring significant assumptions about future cash flows, pricing, and costs; no triggering event was identified in 2020[312](index=312&type=chunk)[313](index=313&type=chunk) [Financial Statements and Supplementary Data](index=67&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for the three-year period ended December 31, 2020, including detailed notes Consolidated Statement of Operations Highlights (in millions) | Metric | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Sales | $5,474.8 | $4,643.4 | $4,995.3 | | Income from Operations | $335.0 | $136.5 | $72.0 | | **Net Income** | **$175.0** | **$80.9** | **$20.5** | Consolidated Balance Sheet Highlights (in millions) | Metric | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Total Current Assets | $1,308.9 | $1,022.8 | | Total Assets | $1,965.7 | $1,693.4 | | Total Current Liabilities | $524.0 | $385.0 | | Long-Term Debt | $443.8 | $440.5 | | Total Stockholders' Equity | $850.8 | $701.3 | [Notes to Consolidated Financial Statements](index=73&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, segment information, debt refinancing, and the termination of the pension plan - **Note 6:** The company permanently curtailed I-joist production at its Roxboro, NC facility, resulting in **$15.0 million** of accelerated depreciation and **$1.7 million** in other closure costs in 2020[394](index=394&type=chunk) - **Note 10:** The company issued **$400 million** of **4.875% senior notes** due 2030 and used proceeds to retire its **$350 million** **5.625% notes** due 2024, incurring a **$14.0 million** loss on debt extinguishment[418](index=418&type=chunk)[419](index=419&type=chunk) - **Note 12:** The company terminated its qualified defined benefit pension plan in December 2020, resulting in a **$6.2 million** non-cash settlement charge and the release of **$38.8 million** in stranded tax effects into income tax expense[228](index=228&type=chunk)[437](index=437&type=chunk) - **Note 17:** In 2020, one customer accounted for **11% of total sales**; intersegment sales from Wood Products to BMD were **$801.1 million**[496](index=496&type=chunk)[500](index=500&type=chunk) [Controls and Procedures](index=110&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2020 - Management concluded that as of December 31, 2020, the company's disclosure controls and procedures were effective[532](index=532&type=chunk) - Management's assessment concluded that the company's internal control over financial reporting was effective as of December 31, 2020, with an unqualified opinion from KPMG LLP[535](index=535&type=chunk) PART III [Directors, Executive Officers, and Corporate Governance](index=113&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 2021 Proxy Statement - This section incorporates information by reference from the company's Proxy Statement for its 2021 annual meeting of stockholders[540](index=540&type=chunk) [Executive Compensation](index=113&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the 2021 Proxy Statement - This section incorporates information by reference from the company's Proxy Statement for its 2021 annual meeting of stockholders[541](index=541&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=113&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 2021 Proxy Statement - This section incorporates information by reference from the company's Proxy Statement for its 2021 annual meeting of stockholders[542](index=542&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=113&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 2021 Proxy Statement - This section incorporates information by reference from the company's Proxy Statement for its 2021 annual meeting of stockholders[543](index=543&type=chunk) [Principal Accountant Fees and Services](index=113&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the 2021 Proxy Statement - This section incorporates information by reference from the company's Proxy Statement for its 2021 annual meeting of stockholders[544](index=544&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=114&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Form 10-K, including consolidated financial statements and an index of exhibits - This section contains a list of all financial statements and exhibits filed with the Form 10-K[546](index=546&type=chunk)[547](index=547&type=chunk)