Financial Performance - Boise Cascade recorded income from operations of $205.3 million for Q1 2021, a significant increase from $25.5 million in Q1 2020 [108]. - Total sales for Q1 2021 were $1.82 billion, compared to $1.17 billion in Q1 2020, reflecting a 55.5% year-over-year increase [117]. - Income from operations increased by $179.7 million to $205.3 million for the three months ended March 31, 2021, compared to $25.5 million in the same period in 2020 [129]. - Net cash provided by operations was $72.3 million for the three months ended March 31, 2021, compared to a cash used of $42.5 million in the same period in 2020 [138]. - Operating activities generated $72.3 million of cash for the three months ended March 31, 2021, compared to $42.5 million used in the same period in 2020, marking a $114.7 million increase [139]. Segment Performance - The Wood Products segment saw income rise to $97.1 million, up from $3.8 million, driven by higher sales prices and volumes [108]. - The Building Materials Distribution segment's income increased to $120.2 million from $29.3 million, attributed to a gross margin increase of $115.3 million [108]. - Wood Products segment sales increased by $112.3 million, or 35%, to $432.3 million, primarily due to higher plywood prices, which rose by 108% [124]. - Building Materials Distribution segment sales increased by $584.8 million, or 56%, to $1,634.8 million, driven by sales volume and price increases of 34% and 22%, respectively [124]. Costs and Expenses - Costs and expenses for Q1 2021 were $1.62 billion, up from $1.15 billion in Q1 2020, with materials, labor, and other operating expenses rising to $1.45 billion [117]. - Gross margin percentage improved to 15.1% from 12.6% in the prior year, reflecting better sales volumes and pricing [124]. Liquidity and Capital - The company ended Q1 2021 with $457.0 million in cash and cash equivalents and $345.3 million in undrawn committed bank lines, totaling $802.3 million in available liquidity [109]. - The company ended the first quarter of 2021 with $457.0 million in cash and cash equivalents and $444.0 million in debt, resulting in $802.3 million of available liquidity [135]. - Capital expenditures for 2021 are expected to total approximately $90 million to $100 million, focusing on business improvement and expansion projects [142]. Market Conditions - The forecast for U.S. single-family housing starts in 2021 is 1.55 million units, up from 1.38 million in 2020, indicating strong demand [112]. - U.S. housing starts increased by 10%, with single-family starts up 20% from the same period in 2020, driving demand for sales [123]. - The average net selling prices for key products in the Wood Products segment increased significantly due to supply/demand imbalances [113]. - Future commodity product pricing will depend on various factors, including COVID-19 impacts, capacity restoration, and seasonal demand patterns [113]. Operational Challenges - The company experienced supply constraints due to COVID-19 and weather impacts, affecting production rates and inventory levels [111]. - The company expects to continue facing seasonal fluctuations in sales volumes and expenses due to weather conditions affecting the building products industry [149]. Employee and Financing Information - As of March 31, 2021, the company had approximately 6,060 employees, with 23% working under collective bargaining agreements [150]. - Financing activities used $7.5 million of cash during the three months ended March 31, 2021, including $4.4 million for common stock dividends [143]. - The increase in accounts payable provided $125.1 million of cash during the three months ended March 31, 2021, compared to $55.6 million in the same period a year ago [140]. - The company did not borrow under its revolving credit facility during the three months ended March 31, 2021, leaving no outstanding borrowings [143]. Other Notable Events - West Fraser Timber Co. Ltd. acquired Norbord Inc. in a transaction that closed in the first quarter of 2021, which is not expected to materially impact future operations [133]. - There have been no material changes in contractual obligations since December 31, 2020 [145]. - As of March 31, 2021, there were no material changes to financial market risks disclosed in the 2020 Form 10-K [151].

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)

Boise Cascade Company (NYSE:BCC) Q3 2020 Earnings Conference Call November 2, 2020 11:00 AM ET Company Participants Wayne Rancourt - Vice President, Chief Financial Officer & Treasurer Nate Jorgensen - Chief Executive Officer Mike Brown - Head of Wood Products Operations Nick Stokes - Head of Building Materials Distribution Operations Conference Call Participants George Staphos - Bank of America Mark Wilde - Bank of Montreal Reuben Garner - Benchmark Company Kurt Yinger - D.A. Davidson Paul Quinn - RBC Capi ...

PART I—FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2020, and 2019, including statements of operations, comprehensive income, balance sheets, cash flows, and stockholders' equity, along with detailed notes covering significant accounting policies, segment information, debt, and other key financial areas Consolidated Statements of Operations Highlights (unaudited) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Sales** | $1,589.3 M | $1,269.5 M | $4,002.6 M | $3,541.7 M | | **Income from operations** | $158.6 M | $44.9 M | $235.9 M | $111.7 M | | **Net income** | $103.2 M | $27.2 M | $149.0 M | $66.3 M | | **Diluted EPS** | $2.61 | $0.69 | $3.78 | $1.69 | Consolidated Balance Sheet Highlights (unaudited) | Metric | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $503.9 M | $285.2 M | | **Total current assets** | $1,413.5 M | $1,022.8 M | | **Total assets** | $2,059.8 M | $1,693.4 M | | **Total current liabilities** | $676.4 M | $385.0 M | | **Long-term debt** | $443.6 M | $440.5 M | | **Total stockholders' equity** | $778.1 M | $701.3 M | Consolidated Statements of Cash Flows Highlights (unaudited, Nine Months Ended) | Metric | September 30, 2020 | September 30, 2019 | | :--- | :--- | :--- | | **Net cash provided by operations** | $293.8 M | $194.8 M | | **Net cash used for investment** | ($46.4 M) | ($64.8 M) | | **Net cash used for financing** | ($28.6 M) | ($15.2 M) | | **Net increase in cash** | $218.7 M | $114.8 M | [Nature of Operations and Consolidation](index=11&type=section&id=1.%20Nature%20of%20Operations%20and%20Consolidation) Boise Cascade is a major North American producer of engineered wood products (EWP) and plywood, and a leading U.S. wholesale distributor of building products, operating through two reportable segments: Wood Products and Building Materials Distribution (BMD) - The company is one of the **largest producers of EWP and plywood** in North America[20](index=20&type=chunk) - Business is operated through **two segments**: Wood Products (manufacturing) and Building Materials Distribution (wholesale distribution)[21](index=21&type=chunk) [Debt](index=17&type=section&id=6.%20Debt) In Q3 2020, the company undertook significant debt refinancing, issuing $400 million of 4.875% senior notes due 2030 to repurchase its $350 million 5.625% notes due 2024 and pay off a $45 million term loan, resulting in a pre-tax loss on debt extinguishment of $14.0 million, with total long-term debt at $443.6 million as of September 30, 2020 - On July 27, 2020, the company issued **$400 million of 4.875% senior notes due 2030**[70](index=70&type=chunk) - Proceeds were used to retire the **$350 million 5.625% senior notes due 2024** and pay off a **$45.0 million term loan**[68](index=68&type=chunk)[71](index=71&type=chunk) - The refinancing transactions resulted in a **pre-tax loss on the extinguishment of debt of $14.0 million** in Q3 2020, which included **$10.8 million in premium payments** and **$3.2 million in write-offs of deferred financing costs**[68](index=68&type=chunk) [Retirement and Benefit Plans](index=21&type=section&id=8.%20Retirement%20and%20Benefit%20Plans) The company intends to terminate its qualified defined benefit pension plan, having frozen benefit accruals effective August 31, 2020, and purchased a buy-in group annuity contract from Prudential, funded with plan assets, to cover future obligations and fully eliminate the pension plan's liabilities - The company intends to terminate its Pension Plan and froze all benefit accruals effective **August 31, 2020**[82](index=82&type=chunk) - A **buy-in group annuity contract** was purchased from Prudential, funded with plan assets, to manage lump-sum payments and future obligations for remaining participants[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) [Stockholders' Equity](index=23&type=section&id=10.%20Stockholders%27%20Equity) The company maintains a quarterly dividend policy, declaring a significant supplemental dividend of $1.60 per share on September 28, 2020, in addition to the regular quarterly dividend of $0.10 per share, with the supplemental dividend totaling $62.7 million accrued at quarter-end - On September 28, 2020, the board of directors declared a **supplemental dividend of $1.60 per share**[96](index=96&type=chunk) - A **regular quarterly dividend of $0.10 per share** was also declared on October 29, 2020[96](index=96&type=chunk) - Future dividends are at the discretion of the board and depend on financial condition, contractual obligations, and other factors[97](index=97&type=chunk) [Segment Information](index=25&type=section&id=12.%20Segment%20Information) The company's operations are divided into two segments: Wood Products and Building Materials Distribution (BMD), both of which saw significant year-over-year increases in operating income for Q3 2020, with Wood Products reporting $66.0 million on sales of $363.7 million, and BMD reporting $107.9 million on sales of $1,437.7 million Segment Operating Income (Three Months Ended Sep 30) | Segment | 2020 | 2019 | | :--- | :--- | :--- | | Wood Products | $66.0 M | $15.6 M | | Building Materials Distribution | $107.9 M | $38.7 M | | **Total Segment Operating Income** | **$173.9 M** | **$54.3 M** | Segment Net Sales (Three Months Ended Sep 30) | Segment | 2020 | 2019 | | :--- | :--- | :--- | | Wood Products | $363.7 M | $325.1 M | | Building Materials Distribution | $1,437.7 M | $1,145.6 M | - Approximately **80% of the Wood Products segment's EWP sales volumes** for the nine months ended September 30, 2020, were to the company's own Building Materials Distribution segment[105](index=105&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant increase in Q3 2020 operating income to $158.6 million from $44.9 million in Q3 2019, driven by higher plywood prices and strong commodity margins, detailing the impact of COVID-19, which led to initial production cuts followed by robust demand and historically high prices, while maintaining strong liquidity of $849.3 million and refinancing debt to extend maturities - Q3 2020 income from operations surged to **$158.6 million**, compared to **$44.9 million** in Q3 2019[114](index=114&type=chunk) - The performance increase was primarily due to higher plywood sales prices in the Wood Products segment and improved gross margins on commodity products in the Building Materials Distribution segment[114](index=114&type=chunk) - The company ended Q3 2020 with total available liquidity of **$849.3 million**, consisting of **$503.9 million in cash** and **$345.4 million in undrawn credit availability**[115](index=115&type=chunk) - Market conditions were volatile due to COVID-19, with initial production cuts followed by a surge in demand and significant increases in commodity product prices in Q3[115](index=115&type=chunk) [Our Operating Results](index=29&type=section&id=Our%20Operating%20Results) Total sales for Q3 2020 increased 25% year-over-year to $1.59 billion, driven by a 17% rise in single-family housing starts and soaring commodity prices, with Wood Products sales growing 12% due to a 69% increase in plywood prices and BMD sales jumping 25% led by a 54% increase in commodity sales, resulting in income from operations rising sharply to $158.6 million from $44.9 million in the prior-year quarter Sales Performance (Three Months Ended Sep 30, 2020 vs 2019) | Segment/Product | Change Driver | Impact | | :--- | :--- | :--- | | **Total Sales** | Increased 25% to $1,589.3M | Driven by higher prices and volumes | | **Wood Products** | Plywood prices up 69% | Sales increased by $38.6M (12%) | | **BMD** | Commodity sales up 54% | Sales increased by $292.1M (25%) | Income from Operations (Three Months Ended Sep 30) | Segment | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Wood Products | $66.0 M | $15.6 M | +$50.4 M | | Building Materials Distribution | $107.9 M | $38.7 M | +$69.2 M | | **Total Income from Operations** | **$158.6 M** | **$44.9 M** | **+$113.7 M** | - Selling, distribution, and administrative expenses increased primarily due to higher employee incentive compensation tied to strong financial performance[136](index=136&type=chunk)[137](index=137&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity, ending Q3 2020 with $849.3 million available, with operations generating $293.8 million in cash for the first nine months of 2020, a $99.0 million increase from 2019, primarily due to higher operating income, while major financing activities included issuing $400 million in new notes to retire existing debt, extending maturities to 2025 and beyond, and revising capital spending for 2020 down to $60-$75 million due to COVID-19 uncertainty, with plans to increase to $80-$90 million in 2021 - Net cash provided by operations for the nine months ended Sep 30, 2020 was **$293.8 million**, a significant increase from **$194.8 million** in the prior year period, driven by improved income from operations[155](index=155&type=chunk) - In July 2020, the company issued **$400 million of 2030 Notes** and used proceeds to retire **$350 million of 2024 Notes** and a **$45 million term loan**[160](index=160&type=chunk) - Planned capital spending for 2020 was reduced to a range of **$60-to-$75 million** from an initial **$85-to-$95 million** in response to COVID-19 uncertainty[158](index=158&type=chunk) [Employees](index=39&type=section&id=Employees) As of October 2020, Boise Cascade had approximately 5,900 employees, with 23% covered by collective bargaining agreements, and issued a WARN Act notice for its Elgin, Oregon plywood plant, indicating potential production reductions from January 2021 due to new environmental permit constraints from the Oregon Department of Environmental Quality (ODEQ) - The company has approximately **5,900 employees**, with **23% unionized**[175](index=175&type=chunk) - A WARN Act notice was issued for the Elgin, Oregon plant due to the possibility of production reduction starting **January 2021**, caused by new environmental permit constraints from ODEQ, which has created uncertainty about future operations and log supply[175](index=175&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its exposure to market risks, such as commodity prices, interest rates, and foreign currency, since its 2019 Form 10-K, except for the interest rate swap transactions detailed within the MD&A section of this report - There have been no material changes in the company's exposure to market risk from those disclosed in the 2019 Form 10-K, other than changes related to interest rate swaps[188](index=188&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of September 30, 2020, the CEO and CFO concluded that the company's disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the third quarter of 2020 - The CEO and CFO concluded that as of **September 30, 2020**, the company's disclosure controls and procedures were effective[189](index=189&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[189](index=189&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings that arise in the ordinary course of business, none of which management believes are reasonably likely to have a material adverse effect on the company's financial position, results, or cash flows - The company is party to legal proceedings arising in the ordinary course of business, but does not expect them to have a material adverse effect on its financials[191](index=191&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section highlights significant risks to the business, emphasizing that the full impact of the COVID-19 pandemic remains unknown and could adversely affect operations, demand, and customer creditworthiness, alongside other key risks including material disruptions at manufacturing facilities, potential impairment of long-lived assets and goodwill, product shortages from suppliers, and difficulty in obtaining wood fiber at favorable prices - The full effect of the COVID-19 pandemic on the business is unknown and may adversely affect operating results, potentially through new restrictions, reduced demand, or disruptions to facilities[193](index=193&type=chunk) - A material disruption at a manufacturing facility, such as from equipment failure or labor difficulties, could prevent the company from meeting customer demand and negatively impact both the Wood Products and BMD segments[194](index=194&type=chunk)[196](index=196&type=chunk) - The company faces risk of non-cash impairment charges on its long-lived assets and goodwill if future economic benefits do not meet expectations, potentially triggered by sustained negative impacts from COVID-19 or weak commodity prices[199](index=199&type=chunk)[200](index=200&type=chunk) - The availability and price of wood fiber, the principal raw material, are subject to cyclicality and risks from natural causes (fires, hurricanes) and pandemics, which could impair the cost competitiveness of manufacturing facilities[206](index=206&type=chunk)

Financial Data and Key Metrics Changes - The company's Q2 2020 sales were $1.2 billion, up 1% from Q2 2019, with net income of $33.6 million or $0.85 per share, compared to $27.7 million or $0.71 per share in the prior year [7][8] - Wood Products segment income was $17.1 million in Q2 2020, down from $18.9 million in Q2 2019, while Building Materials Distribution (BMD) reported segment income of $43.2 million, up from $33.8 million in the prior year [8][10] - Total U.S. housing starts decreased by 17% year-over-year, with single-family starts down 13% [7] Business Line Data and Key Metrics Changes - Wood Products sales were $282 million in Q2 2020, down from $334 million in Q2 2019, with EBITDA decreasing from $33 million to $31 million [10] - BMD sales were $1.1 billion, up 3% from the previous year, with sales prices increasing by 4% and sales volumes down by 1% [10][14] - The gross margin for BMD increased to 13%, up from 12.4% in Q2 2019, driven by improved margins on commodity products [14] Market Data and Key Metrics Changes - The average plywood net sales price in Q2 2020 was $287, up 6% from the previous year, despite a decrease in sales volume [12] - Commodity wood products pricing saw a sharp rise in July 2020, continuing into the third quarter, with current prices more than 50% of Q2 2020 averages [15][17] - The consensus for U.S. housing starts was expected at 1.19 million for 2020, with demographic trends suggesting potential for higher levels [23] Company Strategy and Development Direction - The company aims to restore production rates to pre-COVID-19 levels in response to strong demand, while managing production levels appropriately in a volatile environment [21][24] - BMD's strategy focuses on executing and responding to market opportunities, with an emphasis on managing commodity price changes [24] - The company plans to freeze accrual of benefits on its pension plan and intends to terminate it, which is expected to have minimal cash flow impact [18][19] Management's Comments on Operating Environment and Future Outlook - Management noted that while there have been strong trends in repair and remodel spending, uncertainties remain due to potential economic impacts from COVID-19 [32][33] - The company has not experienced significant supply chain disruptions, but continues to monitor the situation closely [22] - Management expressed cautious optimism regarding the housing market, anticipating that demand for single-family residential construction may improve as homeowners seek less densely populated areas [23] Other Important Information - The company finished Q2 2020 with $361 million in cash and total available liquidity of approximately $707 million [17] - A $400 million issuance of tenure notes at a 4.875% interest rate was completed to retire existing debt [17] - The company expects to recognize a pre-tax loss on extinguishment of debt of approximately $14 million in Q3 2020 [17] Q&A Session Summary Question: Current supply and demand dynamics in plywood and EWP - Management indicated operating rates are around 5.5 to 6 days a week, with order files extending through August and into early September [29][30] Question: Concerns about pulling forward demand due to stimulus - Management noted strong consistency in repair and remodel spending, with no current signals indicating a change [32][33] Question: Impact of new industry capacity on EWP pricing - Management reported minimal impact from new capacity, with strong order files expected to keep EWP mills running hard [36][37] Question: Managing commodity price risk - The company focuses on being constant buyers and sellers, managing inventory based on customer expectations and market behavior [54][56] Question: Transportation and logistics issues - Management acknowledged challenges in transportation logistics but sees it as an opportunity for BMD due to available product for immediate shipment [59] Question: Decking business performance - The decking business has been strong, driven by conversions from wood and increased project activity [61] Question: Input cost pressures in engineered wood products - Management expects OSB costs to rise due to trailing average contracts, while lumber cost impacts are anticipated to be modest [64][65]