Boise Cascade(BCC) - 2025 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION This section presents the company's unaudited financial statements, management's analysis, market risks, and internal controls for the quarter ITEM 1. FINANCIAL STATEMENTS Presents unaudited consolidated financial statements including operations, balance sheets, cash flows, and notes for Q1 2025 Consolidated Statements of Operations Details the company's sales, income from operations, net income, and earnings per share for the quarter Financial Performance (Three Months Ended March 31) | Metric | 2025 (thousands) | 2024 (thousands) | Change (YoY) | | :------------------------------------------------ | :--------------- | :--------------- | :----------- | | Sales | $1,536,494 | $1,645,420 | -6.6% | | Income from operations | $54,519 | $132,982 | -59.0% | | Net income | $40,348 | $104,124 | -61.2% | | Basic EPS | $1.06 | $2.63 | -59.7% | | Diluted EPS | $1.06 | $2.61 | -59.7% | | Dividends declared per common share | $0.21 | $0.20 | +5.0% | Consolidated Statements of Comprehensive Income Presents net income and other comprehensive income components, leading to total comprehensive income for the period Comprehensive Income (Three Months Ended March 31) | Metric | 2025 (thousands) | 2024 (thousands) | Change (YoY) | | :----------------------- | :--------------- | :--------------- | :----------- | | Net income | $40,348 | $104,124 | -61.2% | | Other comprehensive income, net of tax | $6 | $8 | -25.0% | | Comprehensive income | $40,354 | $104,132 | -61.2% | Consolidated Balance Sheets Outlines the company's financial position, including assets, liabilities, and stockholders' equity at period-end Balance Sheet Highlights (as of) | Metric | March 31, 2025 (thousands) | December 31, 2024 (thousands) | Change | | :-------------------------------- | :------------------------- | :-------------------------- | :------- | | Total assets | $3,481,644 | $3,369,383 | +3.3% | | Total current assets | $1,979,524 | $1,886,068 | +4.9% | | Cash and cash equivalents | $561,781 | $713,260 | -21.3% | | Inventories | $921,434 | $803,296 | +14.7% | | Total liabilities | $1,354,567 | $1,218,109 | +11.2% | | Total stockholders' equity | $2,127,077 | $2,151,274 | -1.1% | Consolidated Statements of Cash Flows Summarizes cash flows from operating, investing, and financing activities, and the net change in cash for the quarter Cash Flow Summary (Three Months Ended March 31) | Metric | 2025 (thousands) | 2024 (thousands) | Change (YoY) | | :------------------------------------ | :--------------- | :--------------- | :----------- | | Net cash provided by (used for) operations | $(28,476) | $27,462 | -203.7% | | Net cash used for investment | $(52,225) | $(37,158) | +40.6% | | Net cash used for financing | $(70,778) | $(49,631) | +42.6% | | Net decrease in cash and cash equivalents | $(151,479) | $(59,327) | +155.3% | | Balance at end of the period | $561,781 | $890,247 | -36.9% | Consolidated Statements of Stockholders' Equity Details changes in stockholders' equity, including net income, treasury stock, and dividends, for the reporting period - Stockholders' equity at March 31, 2025, was $2,127,077 thousand, reflecting net income of $40,348 thousand, offset by treasury stock purchases of $(53,884) thousand and common stock dividends of $(8,060) thousand[23] - For the three months ended March 31, 2024, stockholders' equity was $2,257,202 thousand, with net income of $104,124 thousand, treasury stock purchases of $(26,971) thousand, and common stock dividends of $(8,677) thousand[26] Condensed Notes to Unaudited Quarterly Consolidated Financial Statements Provides detailed disclosures on accounting policies, segment information, and other financial notes supporting the statements 1. Nature of Operations and Consolidation Describes the company's business segments and the basis of presentation for the unaudited financial statements - Boise Cascade operates two reportable segments: Wood Products (manufactures engineered wood products and plywood) and Building Materials Distribution (wholesale distributor of building materials)[29] - The accompanying quarterly consolidated financial statements are unaudited but include all adjustments necessary for fair presentation, with certain information condensed or omitted compared to annual statements[30] 2. Summary of Significant Accounting Policies Outlines key accounting principles, estimates, revenue recognition, inventory valuation, and new accounting standards - Management makes estimates and assumptions for financial statements, including valuation of accounts receivable, inventories, goodwill, intangible assets, and legal contingencies, which are evaluated on an ongoing basis[32] - Revenue is recognized when control of promised goods or services is transferred to customers. Shipping and handling fees charged to customers are included in 'Sales'[33][34] - Customer rebates are estimated and recorded as a decrease in 'Sales', totaling $66.5 million at March 31, 2025. Vendor rebates reduce 'Materials, labor, and other operating expenses'[35][36] Inventories (as of) | Category | March 31, 2025 (thousands) | December 31, 2024 (thousands) | | :-------------------------- | :------------------------- | :-------------------------- | | Finished goods and work in process | $812,218 | $695,901 | | Logs | $49,726 | $50,152 | | Other raw materials and supplies | $59,490 | $57,243 | | Total Inventories | $921,434 | $803,296 | Property and Equipment, Net (as of) | Category | March 31, 2025 (thousands) | December 31, 2024 (thousands) | | :------------------------------------------ | :------------------------- | :-------------------------- | | Land | $94,591 | $94,591 | | Buildings | $364,038 | $360,518 | | Improvements | $88,674 | $87,512 | | Mobile equipment, information technology, and office furniture | $302,529 | $296,604 | | Machinery and equipment | $1,093,056 | $1,089,117 | | Construction in progress | $179,138 | $147,668 | | Less: accumulated depreciation | $(1,046,560) | $(1,028,927) | | Total Property and Equipment, Net | $1,075,466 | $1,047,083 | - The company uses an interest rate swap to mitigate variable interest rate exposure, fixing the rate on $50.0 million of variable rate debt at an annual fixed rate of 0.41%, expiring in June 2025[47] - Receivables from two customers accounted for approximately 17% and 10% of total receivables at March 31, 2025, indicating a concentration of credit risk[48] - The company is evaluating the impact of new accounting standards ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) on its financial statements[49][50] 3. Income Taxes Details the income tax provision and effective tax rates for the reporting period Income Tax Provision (Three Months Ended March 31) | Metric | 2025 (millions) | 2024 (millions) | Effective Rate | | :-------------------- | :-------------- | :-------------- | :------------- | | Income tax provision | $13.8 | $32.8 | 25.5% (2025), 24.0% (2024) | - Cash paid for taxes, net of refunds, decreased to $1.5 million in Q1 2025 from $1.9 million in Q1 2024[53] 4. Net Income Per Common Share Presents the calculation of basic and diluted earnings per common share for the quarter Net Income Per Common Share (Three Months Ended March 31) | Metric | 2025 | 2024 | Change (YoY) | | :------------------------------------------------ | :--- | :--- | :----------- | | Net income | $40,348 | $104,124 | -61.2% | | Weighted average common shares outstanding (basic) | 38,017 | 39,608 | -4.0% | | Weighted average common shares (diluted) | 38,215 | 39,956 | -4.4% | | Basic EPS | $1.06 | $2.63 | -59.7% | | Diluted EPS | $1.06 | $2.61 | -59.7% | 5. Goodwill and Intangible Assets Reports the carrying values and changes in goodwill and other intangible assets - Goodwill remained constant at $171.9 million for both March 31, 2025, and December 31, 2024, allocated between Building Materials Distribution ($45.8 million) and Wood Products ($126.2 million)[57] - Net intangible assets decreased from $173.0 million at December 31, 2024, to $167.9 million at March 31, 2025, with amortization expense of $5.1 million in Q1 2025[57][58] 6. Debt Details the company's long-term debt structure, recent financing activities, and interest payments Long-term Debt (as of) | Category | March 31, 2025 (thousands) | December 31, 2024 (thousands) | | :------------------------------------ | :------------------------- | :-------------------------- | | Asset-based credit facility term loan due 2027 | $50,000 | $50,000 | | 4.875% senior notes due 2030 | $400,000 | $400,000 | | Deferred financing costs | $(3,611) | $(3,833) | | Total Long-term debt | $446,389 | $446,167 | - On April 14, 2025, the company entered into a new $450.0 million revolving facility, maturing April 14, 2030, and used $50.0 million from it to repay the ABL Term Loan, terminating the previous Amended Agreement[70][72][73] - Cash payments for interest were $9.2 million for the three months ended March 31, 2025, a decrease from $10.0 million in the prior year[79] 7. Leases Summarizes total lease costs, cash flows from leases, and future minimum lease payment obligations Total Lease Cost (Three Months Ended March 31) | Metric | 2025 (thousands) | 2024 (thousands) | Change (YoY) | | :---------------- | :--------------- | :--------------- | :----------- | | Total lease cost | $7,651 | $7,627 | +0.3% | - Operating cash flows from operating leases were $3.365 million and from finance leases were $0.502 million for the three months ended March 31, 2025[81] - As of March 31, 2025, total future minimum lease payments are $63.5 million for operating leases and $43.8 million for finance leases[82] 8. Stock-Based Compensation Reports stock-based compensation expense, unit grants, and unrecognized compensation expense Stock-Based Compensation Expense (Three Months Ended March 31) | Metric | 2025 (thousands) | 2024 (thousands) | Change (YoY) | | :---------------- | :--------------- | :--------------- | :----------- | | PSUs | $1,832 | $2,277 | -19.6% | | RSUs | $1,925 | $1,828 | +5.3% | | Total | $3,757 | $4,105 | -8.4% | - During Q1 2025, the company granted 83,616 Performance Stock Units (PSUs) and 98,327 Restricted Stock Units (RSUs)[84][86] - Total unrecognized compensation expense related to nonvested share-based compensation arrangements was $30.9 million as of March 31, 2025, expected to be recognized over a weighted-average period of 2.2 years[87] 9. Stockholders' Equity Details dividend declarations and common stock repurchase activities during the period - On May 1, 2025, the board declared a quarterly dividend of $0.21 per share, payable on June 18, 2025[90] Stock Repurchases (Three Months Ended March 31) | Metric | 2025 | 2024 | Change (YoY) | | :-------------------------------- | :------- | :------- | :----------- | | Shares repurchased | 482,700 | 205,938 | +134.4% | | Cost of repurchases (millions) | $53.9 | $27.0 | +99.6% | | Average price per share | $111.63 | $130.97 | -14.8% | - As of March 31, 2025, 1,325,516 shares of common stock remained authorized for repurchase under the program[93] 10. Transactions With Related Party Reports sales and purchases with a related party, Louisiana Timber Procurement Company, L.L.C - Related-party sales to Louisiana Timber Procurement Company, L.L.C. (LTP) from the Wood Products segment decreased to $1.6 million in Q1 2025 from $2.6 million in Q1 2024[96] - Related-party wood fiber purchases from LTP decreased to $14.8 million in Q1 2025 from $19.8 million in Q1 2024[97] 11. Segment Information Provides financial data broken down by Wood Products and Building Materials Distribution segments Segment Sales to External Customers (Three Months Ended March 31) | Segment | 2025 (millions) | 2024 (millions) | Change (YoY) | | :-------------------------- | :-------------- | :-------------- | :----------- | | Wood Products | $129.4 | $140.4 | -7.8% | | Building Materials Distribution | $1,407.1 | $1,505.0 | -6.6% | | Total | $1,536.5 | $1,645.4 | -6.6% | Segment Income from Operations (Three Months Ended March 31) | Segment | 2025 (thousands) | 2024 (thousands) | Change (YoY) | | :-------------------------- | :--------------- | :--------------- | :----------- | | Wood Products | $17,709 | $71,238 | -75.1% | | Building Materials Distribution | $48,417 | $72,463 | -33.2% | | Total Income from Operations | $54,519 | $132,982 | -59.0% | Capital Expenditures (Three Months Ended March 31) | Segment | 2025 (thousands) | 2024 (thousands) | Change (YoY) | | :-------------------------- | :--------------- | :--------------- | :----------- | | Wood Products | $30,689 | $19,643 | +56.2% | | Building Materials Distribution | $22,431 | $14,672 | +52.9% | | Corporate | $85 | $15 | +466.7% | | Total Capital Expenditures | $53,205 | $34,330 | +55.0% | 12. Commitments, Legal Proceedings and Contingencies, and Guarantees Addresses material changes in commitments, legal actions, and guarantees since the last annual report - There have been no material changes to the company's long-term log supply agreements, purchase obligations, or other commitments since the 2024 Form 10-K[105] - The company does not believe any current legal action could reasonably be expected to have a material adverse effect on its financial position, results of operations, or cash flows[106] - No material changes to the company's guarantees have occurred since the 2024 Form 10-K[108] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses financial performance, condition, and operational results for Q1 2025, highlighting income decline and liquidity Understanding Our Financial Information Introduces the company's business model and the forward-looking nature of the financial discussion - Boise Cascade is an integrated wood products manufacturer and building materials distributor, operating through Wood Products and Building Materials Distribution segments[110] - The discussion includes forward-looking statements based on management's estimates and assumptions, which are inherently uncertain and subject to numerous risks[109] Executive Overview Summarizes key financial results, including income from operations, segment performance, and liquidity position - Income from operations decreased significantly to $54.5 million in Q1 2025 from $133.0 million in Q1 2024, driven by lower sales prices and volumes in both Wood Products and BMD segments[112] - The Wood Products segment's income decreased by $53.5 million due to lower EWP and plywood sales prices, higher per-unit conversion costs from modernization downtime, and lower EWP sales volumes[112] - The BMD segment's income decreased by $24.0 million, primarily due to a $20.4 million gross margin decrease from lower sales volumes and reduced margins on commodity and EWP products[112] - The company ended Q1 2025 with $957.5 million in total available liquidity ($561.8 million cash and $395.7 million undrawn bank line), despite using $151.5 million cash for working capital, capital spending, treasury stock purchases, and dividends[113] - 2025 end market demand expectations are uncertain, with housing starts forecasts ranging from flat to mid-single digit year-over-year declines, influenced by macroeconomic factors like mortgage rates and home affordability[114] Factors That Affect Our Operating Results and Trends Identifies key external and internal factors influencing the company's operational performance and financial trends - Operating results are influenced by commodity product price movements, industry competition, demand declines, disruptions to information systems, and major equipment failures at manufacturing facilities[116] - Other influencing factors include labor disruptions or shortages, dependence on third-party suppliers, cost and availability of raw materials, ability to execute growth strategies, and compliance with government regulations[117] Our Operating Results Analyzes sales, expenses, and income performance across segments, detailing year-over-year changes and drivers Operating Results (Three Months Ended March 31) | Metric | 2025 (millions) | 2024 (millions) | Change (YoY) | | :------------------------------------------------ | :-------------- | :-------------- | :----------- | | Sales | $1,536.5 | $1,645.4 | -6.6% | | Materials, labor, and other operating expenses | $1,276.2 | $1,307.4 | -2.4% | | Income from operations | $54.5 | $133.0 | -59.0% | | Income before income taxes | $54.2 | $137.0 | -60.5% | | Net income | $40.3 | $104.1 | -61.2% | - Total U.S. housing starts decreased 2% in Q1 2025 compared to Q1 2024, with single-family housing starts down 6%[120] - Wood Products sales decreased $53.1 million (11%) due to lower sales prices (9% for LVL and I-joists) and volumes (3% for LVL and I-joists, 2% for plywood)[121] - Building Materials Distribution sales decreased $97.9 million (7%) due to overall sales volume and price decreases of 5% and 2%, respectively, impacting commodity, general line, and EWP products[122] - Wood Products' materials, labor, and other operating expenses (MLO) rate increased by 1,100 basis points, primarily due to lower EWP and plywood sales prices and decreased leveraging of manufacturing costs[123] - BMD's MLO rate increased 40 basis points, driven by lower margin percentages on commodity and EWP products[123] - Segment income for Wood Products decreased by $53.5 million to $17.7 million, while Building Materials Distribution segment income decreased by $24.0 million to $48.4 million[128][129] - Interest income decreased $5.1 million to $5.5 million due to lower average balances of cash equivalents and lower interest rates[131] - The income tax provision decreased to $13.8 million in Q1 2025 from $32.8 million in Q1 2024, with effective rates of 25.5% and 24.0% respectively, primarily due to state taxes[133] Liquidity and Capital Resources Discusses the company's cash position, available liquidity, cash flow activities, and planned capital expenditures - The company maintained strong liquidity with $957.5 million available at March 31, 2025, comprising $561.8 million in cash and cash equivalents and $395.7 million in undrawn committed bank line availability[134] - Cash and cash equivalents decreased by $151.5 million in Q1 2025, used to fund seasonal working capital increases, capital spending, treasury stock purchases, and dividends[134] - Operating activities used $28.5 million of cash in Q1 2025, a $55.9 million decrease compared to cash generated in Q1 2024, primarily due to a decrease in income from operations[139] - Working capital increased by $123.7 million in Q1 2025, mainly driven by higher receivables and inventories in preparation for the spring building season[139][140] - Capital expenditures for property and equipment increased to $53.2 million in Q1 2025 from $34.3 million in Q1 2024[141] - Expected capital expenditures for 2025 are $220 million to $240 million, including multi-year investments at the Thorsby EWP mill, Oakdale veneer and plywood mills, and greenfield distribution centers[142] - Financing activities used $70.8 million of cash in Q1 2025, including $53.9 million for common stock repurchases and $10.5 million for dividend payments[144] - Post-quarter-end, on April 14, 2025, the company entered into a new $450.0 million revolving facility, using $50.0 million to repay the ABL Term Loan and terminating the previous credit agreement[136] Guarantees Confirms no material changes to the company's guarantees since the last annual report - There have been no material changes to the company's guarantees as disclosed in the 2024 Form 10-K[148] Seasonal Influences Explains how seasonal weather patterns impact sales volumes, working capital, and operating costs - The company experiences lower sales volumes in the first and fourth quarters due to poor weather impacting construction, with higher sales volumes typically in the second and third quarters[149] - Working capital is typically higher in the first and second quarters in preparation for the building season, and cold weather increases energy consumption costs at manufacturing facilities[149] Employees Provides employee count and details on collective bargaining agreements and their potential impact - As of April 27, 2025, the company had approximately 7,670 employees, with about 17% working under collective bargaining agreements[150] - Two collective bargaining agreements covering approximately 750 employees at the Oakdale and Florien plywood plants are set to expire on July 15, 2025, posing potential risks of labor disruptions or increased costs[150] Disclosures of Financial Market Risks States no material changes to the company's exposure to financial market risks since the 2024 Form 10-K - There have been no material changes to the company's exposure to financial market risks, including commodity prices, interest rates, and foreign currency exchange rates, since the 2024 Form 10-K[151] Environmental Confirms no material changes to environmental issues previously disclosed in the 2024 Form 10-K - There have been no material changes to environmental issues disclosed in the 2024 Form 10-K[152] Critical Accounting Estimates Reports no material changes to critical accounting estimates from those in the 2024 Form 10-K - There have been no material changes to the company's critical accounting estimates from those disclosed in the 2024 Form 10-K[153] New and Recently Adopted Accounting Standards 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[154] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK No material changes in the company's exposure to market risk have occurred since the 2024 Form 10-K - No material changes in the company's exposure to market risk have occurred since the 2024 Form 10-K[155] ITEM 4. CONTROLS AND PROCEDURES Confirms the effectiveness of disclosure controls and reports no material changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures Confirms the effectiveness of the company's disclosure controls and procedures as of March 31, 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, ensuring timely and accurate reporting of required information[156] Changes in Internal Control Over Financial Reporting Reports no material changes in internal control over financial reporting during the first quarter of 2025 - There were no changes in internal control over financial reporting during the three months ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[157] PART II—OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, and other miscellaneous disclosures ITEM 1. LEGAL PROCEEDINGS The company is involved in routine legal proceedings but does not anticipate any material adverse effects on its financial position, results of operations, or cash flows - The company does not believe any current legal action could reasonably be expected to have a material adverse effect on its financial position, results of operations, or cash flows[159] - A disclosure threshold of $1 million or more is used for proceedings arising under federal, state, or local environmental provisions[160] ITEM 1A. RISK FACTORS This section advises readers that the report contains forward-looking statements and directs them to review the comprehensive risk factors detailed in the company's 2024 Form 10-K - The report contains forward-looking statements, and readers should review the risk factors listed in 'Item 1A. Risk Factors' in the 2024 Form 10-K for potential risks and uncertainties[161] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The company repurchased 482,700 shares of common stock for $53.9 million during Q1 2025 under its authorized repurchase program, with 1,325,516 shares remaining for future repurchases Share Repurchases (Q1 2025) | Period | Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | The Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs | | :--------------------------------- | :--------------- | :--------------------------- | :----------------------------------------------------------------------- | :-------------------------------------------------------------------------------- | | January 1, 2025 - January 31, 2025 | 250,000 | $120.51 | 250,000 | 1,558,216 | | February 1, 2025 - February 28, 2025 | 80,000 | $105.27 | 80,000 | 1,478,216 | | March 1, 2025 - March 31, 2025 | 152,700 | $100.43 | 152,700 | 1,325,516 | | Total | 482,700 | $111.63 | 482,700 | 1,325,516 | - On October 30, 2024, the board authorized the repurchase of an additional 1.4 million shares of common stock under the existing program[162] ITEM 3. DEFAULTS UPON SENIOR SECURITIES The company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[164] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to the company - This item is not applicable[165] ITEM 5. OTHER INFORMATION None of Boise Cascade's directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025 - None of Boise Cascade's directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[166] ITEM 6. EXHIBITS This section lists all exhibits filed with the Form 10-Q, including various stock unit agreements, CEO/CFO certifications, and Inline XBRL documents - Exhibits include forms for 2025 Restricted Stock Unit Agreement, 2025 Performance Stock Unit Agreement, 2025 Director Restricted Stock Unit Agreement, CEO/CFO Certifications (Sarbanes-Oxley Act), and Inline XBRL documents[167] Signatures The report is formally signed by Kelly E. Hibbs, Senior Vice President, Chief Financial Officer and Treasurer, on behalf of Boise Cascade Company - The report is signed by Kelly E. Hibbs, Senior Vice President, Chief Financial Officer and Treasurer, on May 5, 2025[171]