Q2 2021 Boise Cascade Co Earnings Call
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Hi, Good morning, My name is free and that will be your conference facilitator today at this time I would like to welcome everyone to the Boise Cascade second quarter 2021conference call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer period.
If you'd like to ask a question during that time simply press Star then the number 1 on your telephone keypad.
Questions will be taken and the order they are received.
We'd like to withdraw your question press the pound key.
Before we begin I remind you that this call may contain forward looking statements about the company's future business prospects and anticipated financial performance.
These statements are not guarantees of future performance and the company undertakes no duty to update them.
Although these statements reflect management expectations today, they are subject to a number of business risks and uncertainties.
Actual results may differ materially from those expressed or implied in this call.
For a discussion of the factors that may cause actual results to differ from results anticipated. Please report referred to Boise Cascade recent filings with the SEC.
It is now my pleasure to introduce your introduce you to Kelly Hibbs, Senior Vice President and CFO and Treasurer Boise Cascade. Mr. Hips, you may begin your conference.
Thank you Craig Good morning, everyone I would like to welcome you to Boise Cascade second quarter 2021 earnings call and business update joining me on today's call are Nate Jorgensen, our CEO, Mike Brown head of our wood products operations and Jeff strong head of our building materials distribution operations turning to <unk>.
Slide 2 I would point out the information regarding our forward looking statements. The appendix includes reconciliations from our GAAP net income to EBITDA and adjusted EBITDA and segment income to segment EBITDA I will now turn the call over to Nate.
Thanks, Kelly and good morning, everyone. Thank you for joining us for our earnings call today on <unk>.
And number 3 on.
Second quarter sales of $2.4 billion were up 97% from second quarter 2020, our net income was $302.6 million or $7.62 per share compared to net income of $33.6 million or 85 per share and a year ago quarter and.
And second quarter 2021, total U S housing starts increased 43% compared to the same period last year single family housing starts the primary driver of our sales volumes increased 42%.
During the period, our associates and both businesses performed with focus and dedication to capitalize on the strength and residential construction and delivered exceptional operating and financial results.
Our wood products manufacturing business reported segment income of $213.8 million and the second quarter compared to $17.1 million and the year ago quarter.
And what products benefited from historic plywood pricing levels and improved sales realizations AWP sales realizations and volumes compared to last year's second quarter Wood.
Wood products also continue to focus.
Continued efforts to increase manufacturing production rates to align with strong and product demand, particularly for our AWP business.
Our building materials distribution business reported segment income of $206.3 million on sales of $2.2 billion from the second quarter compared to $43.2 million of segment income on sales of $1.1 billion and the comparative prior year quarter.
Bmd's results were favorably impacted by higher commodity wood products pricing driven by continued strength and new home construction activity.
Commodity lumber prices fall sharply in the back half of the quarter and Kelly will speak to the inventory valuation adjustment we recorded momentarily.
As it relates to the general line and AWP product categories supply constraints remain and demand was strong with the exception of notable pause and demand in the back half of the quarter for products that sell through the home Center channel.
Kelly will walk through the financial results in more detail and then I'll come back and provide our outlook before we take your questions Kevin.
Thank you Nate I'm on slide 4 wood product sales and the second quarter, including sales to our distribution segment were $594.6 million compared to $281.5 million and second quarter 2020, as Nate mentioned wood products reported segment income of $213.8 million and the second quarter compare.
To $17.1 million and the prior year quarter.
Reported EBITDA for the business was $227.9 million up from EBITDA of $31 million reported and the year ago quarter.
The increase and segment income was due primarily to higher plywood DWP and lumber sales prices as well as higher AWP sales volumes. These improvements were offset partially by higher wood fiber costs.
BMD sales and the quarter were $2.2 billion up 92% from second quarter 2020 sales prices and sales volumes increased 83% and 9% respectively. The business reported segment income of $206.3 million or EBITDA of $212.3 million and the second quarter.
This compares to segment income of $43.2 million and EBITDA of $48.8 million and the prior year quarter.
The increase and segment income was driven by a gross margin increase of $187.9 million, resulting primarily from improved sales volumes and gross margins on substantially all product lines, particularly commodity products compared with second quarter 2020.
And this margin improvement was offset partially by increased selling and distribution expenses of $25.9 million included and Bmd's Q2 results is a $12 million lower of cost or market adjustment to inventory, resulting from the sharp decline and commodity lumber prices and the back half of the quarter.
And the amounts for unallocated corporate costs and other items impacting our reported adjusted EBITDA can be found and the tables of our earnings release.
And the net of those items was negative $10.3 million and second quarter 2021, compared with negative $8.5 million and second quarter 2020. The increase was due primarily to $3.4 million and estimated losses caused by a fire at our BMD Phoenix location corporate absorbs these losses and the second quarter as part of our.
Self insured risk retention program. These losses were offset partially by lower incentive compensation due to award forfeitures after the departure of and officer.
Turning to slide 5 our second quarter sales volumes for I, joist, and LVL were up 53% and 22% respectively compared with second quarter 2020.
Demand for AWP continues to be strong and 2021 and fueled by increased housing starts and a higher proportion of single family starts pricing.
Pricing and second quarter for I Joist, and LVL were both up 3% compared with first quarter 2021, as previously announced price increases continued to take effect and certain temporary price protection arrangements expire.
We expect DWP prices to continue to increase sequentially during 2021, reflecting pricing actions taken in late 2020, and thus far and 2021.
And now on slide 6.
Our second quarter plywood sales volume and wood products was 338 million feet compared to 314 million fee and second quarter 2020, our veneer and plywood mills operated well during the quarter, allowing us to benefit from unusually strong plywood pricing.
And the 878 per thousand and average plywood net sales price and second quarter was well above historical averages up 206% from second quarter 2020.
July price realizations were modestly above our Q2 average because of the length of our order files. However, plywood pricing has since transitioned meaningfully lower as demand has softened and we plan to take rolling curtailments, as and where necessary to assist and balancing supply and demand at our plywood facilities.
Moving to slide 7 Bmd's second quarter sales were $2.2 billion up 92% from second quarter 2020 by product area Bmd's commodity sales increased 167% General line product sales increased 26% and AWP increased 52%.
And.
Gross margin dollars generated improved by $187.9 million and second quarter compared with the same quarter last year the.
The gross margin percentage for BMD was 15, 6%, including the previously mentioned inventory valuation adjustment of 220 basis points from the 13, 4% reported in second quarter 2020.
The impact of continued escalating commodity prices in April and May is evident and our sales mix and gross margin percentage expansion.
Bmd's EBITDA margin was 9.8% for the quarter up from the 4.3% reported and the year ago quarter due to our gross margin expansion and improved leveraging of selling and distribution costs.
And the trajectory of commodity products pricing will have a meaningful influence on <unk> financial results as we move through the balance of the year.
Given continued sharp declines in commodity lumber and panel prices, we expect Bmd's third quarter 2021 results being well below the comparable year ago quarter.
I'm now on slide 8 this slide shows lumber pricing was very volatile during second quarter 2021 with rapidly rising prices in April and most of May followed by sharp price declines during the remainder of the quarter largely due to declining repair and remodel and do it yourself activity.
Causing hesitancy in the marketplace because of expectations for potential price erosion with COVID-19, vaccines and easing pandemic restrictions indications are that people are spending less time at home on home improvement projects, resulting in reduced demand from our home center customers.
Turning to slide 9.
Although lagging the lumber price declines the random lengths composite panel index reflects sharp price declines beginning early in the third quarter current composite panel and lumber prices have both declined by approximately 50% from levels at the end of second quarter 2021, we expect commodity product pricing will continue to be.
Volatile as we move through the rest of the year pricing movements from current levels will likely be determined by the strength of end market consumption and industry operating rates.
On slide 10, we have set out the key elements of our working capital net working capital excluding cash income tax items accrued interest and dividends payable increased $58.4 million during the second quarter. The increase in accounts receivable was driven by strong sales in June 2021 inventories and.
Kris and both segments, particularly BMD due to the current demand environment and elevated commodity prices.
Seasonally higher purchasing activity and extended terms offered by major vendors led to the increase in accounts payable. In addition, and increase in accrued rebates contributed to the increase in accrued liabilities.
Physical information filed as exhibit 99, 2 to our 8-K has the receivables inventory and accounts payable data broken down by segment for those interested in the detail.
I'm now on Slide 11, we finished second quarter with $654 million of cash our total available liquidity at June 30 was approximately $999 million, which reflects our cash and availability under our committed bank lines, we had $444 million of outstanding debt at June 32.
'twenty 1.
We expect capital expenditures in 2021 to total approximately 90 to 100 million included on our capital spending range is the completion of a log utilization center project at our fluorine plywood and veneer plant and new door Assembly operation in Houston, Texas and expansion of our distribution capabilities and the Nash.
Fill Tennessee market.
Our capital expenditure range could increase or decrease as a result of a number of factors, including acquisitions and efforts to accelerate organic growth exercise of lease purchase options, our financial results and future economic conditions availability of engineering, and construction resources and timing and availability of.
Equipment purchases.
Consistent with last quarter, our effective tax rate is expected to be between 25, and 27% and 2021.
With ongoing federal legislation activity, possibly increasing tax rates in 2022 and beyond.
In light of our higher than targeted cash balance, we recently paid a supplemental dividend of $2 per share to our shareholders. After payment of the supplemental dividend and we remain well positioned with sufficient cash and reserve to support internal growth initiatives and anticipated working capital uses as well as opportunistic acquisitions.
We will take a prudent approach to capital allocation when evaluating organic and M&A opportunities as we have demonstrated in the past if our cash and <unk> opportunities ahead of US we will utilize mechanisms to return cash to our shareholders. Our overarching objective remains to successfully grow our business, while generating appropriate returns on shareholder.
Holder capital.
And we'll now turn it back over to Nate to discuss our business outlook.
Thanks, Kelly I'm on slide number 12, the demand environment for new residential construction continues to be favorable supported by low mortgage rates continuation of work from home practices by many and demographics and the U S. We expect strength and residential construction activity to continue into 2021 and into next year.
The Blue chip consensus for U S housing starts is $1.6 million for 2021.
Although we believe that <unk> current U S demographics support the higher level of forecast at housing starts and many national Homebuilders are reporting strong near term backlogs labor shortages and supply induced constraints on residential construction activity may continue to extend bill times and limit activity in.
In addition, while the age of the U S housing stock and limited home inventory availability, we will continue to provide a favorable backdrop for repair and remodel spending we expect the recent decline and home improvement demand and continue near term as travel restrictions are descended and pent up demand for leisure spending occurs.
Demand for AWP remains strong and pricing efforts on AWP are showing solid traction and will help mitigate impacts from lower plywood pricing.
As always we will continue to focus on innovation to reduce our costs as well as establishing products and services to address market opportunities and the commercial use of mass timber.
And the distribution arena BMD has done a terrific job of executing and responding to market opportunities at the local and national level declines and commodity products product pricing will pressure near term financial results, but I am confident and the bnb team and their ability to effectively manage the impacts of a rapidly changing commodity price environment without sacrificing customer serve.
Our balance sheet also affords us the ability to continue to pursue growth opportunities with BMD.
As we wrap up our formal comments home and express my appreciation for the focus of our associates have maintained on safety as we completed 1 of our safest quarters on record.
Also want to especially recognize our associates at our Bnb branch Phoenix branch and early June fire and adjacent properties spread through to our location and I am inspired by the efforts to minimize disruption and stay dedicated to our customers and suppliers.
Our proven values of integrity safety respect and pursuit of excellence that served us incredibly well as we've navigated through the pandemic and we will continue to be our foundation moving forward. We will continue to make sure we use our operating and financial strength to the benefit of our customers and suppliers communities and shareholders.
Thank you for joining us today and your continued support and interest we would welcome any questions. At this time would you. Please open up the phone line.
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Thanks question, Yes, Okay and Atlas opening the line is from Mark Wilde with.
And with BMO capital markets.
Good morning, Mark.
First question can you just kind of talk more about your EBIT DWP and what Youre seeing order file wise.
And kind of the progress of the price increases rolling through.
And if youre seeing any kind of substitution effects kind of going through as the price increases roll through.
Yes, Hey, Jesse this is Kelly so yes, so in terms of AWP volumes and needed pricing order files and continue to be strong demand outlook consistent with single family starts continues to be strong.
And then the pricing actions that we've that we've seen through the end of 2020 and into 2021, we continue to expect to see sequential.
This increases and AWP were expecting to direct you to Q3 <unk> versus Q2, the guidance, we'd give us high single digits for EWC price increases moving forward Q3 to Q2, and then in terms of substitution.
Back out of AWP, we really really haven't seen or experienced that Jesse if you think about.
And the constraints on labor out at the homebuilder level.
<unk> is just a much higher value proposition in terms of reducing the labor required to install the floors and so we just haven't seen anything there.
Great and then have you seen any kind of loosening and around veneer and those kind of a constraint the last couple of quarters.
Good morning, Jeff It's Mike.
Unfortunately, the answer is no I think thats still 1 of the major bottlenecks as it relates to making AWP for all of the principal manufacturers.
I think as you're already aware and we are.
Fairly much self sufficient and veneer supply, which is 1 of the reasons, we've been able to increase our production quite significantly and Ken.
And the last 12 months, but open.
Open market veneer supply at least in the last little while Hasnt changed at all from where it was during the prior quarter.
Great and then last 1 from me can you just add some color around BMD kind of what you guys are doing to mitigate the margin compression that youre going to see and Q3 over Q2.
Yes. So so yes, we did speak to the $12 million inventory valuation adjustment, we had and thats, principally lumber, which really tipped over and got it.
Late may and into June.
In terms of what we're doing to mitigate.
And we're in the market every day buying and selling but I would tell you. We are we're certainly taking a full review and looking at what's ahead of us to try to not get long, but as Nate mentioned, we're not going to sacrifice customer service and the meantime, so it's kind of that balancing act if you will and make sure we're servicing our customers needs.
And also not not getting too long and so as moving forward is something we're obviously spending a lot of time on.
And we have some exposure still with lumber and panels, given given what given where commodity prices have done and the second quarter.
Hey, Jesse it's Nate maybe just 1 other thing to add to Kelly's comments is that when you think about the <unk>.
Market, Thats and correction like commodities and that kind of the risk reward people will tend to go short and they'll become that much more dependent upon distribution in terms of and market services. So instead of buying trucks railcars, it's maybe units and trucks and so that's still and supports our distribution business incredibly well in terms of kind of moving through the process. So we.
Velocity to be good and.
And part based on customers are managing their risk and again, probably wanted to stay short at least for the time line.
Great. Thanks, I'll turn it over.
Thanks, guys.
Your next question is from Susan <unk> with Goldman Sachs.
Hello, everyone. This is tal.
Hey, Good morning, this is Charles and pursue today. Thanks for taking my question.
I guess first I would like to go.
I'll go back to the outlook on demand we've heard from some industry participants on early sign of stabilization and DIY lumber demand and I was wondering if you can share perspective on the outlook for framing lumber at this point and how do you expect the environment to play out and second half considering at the same time and strength that we've seen and new residential construction.
This is Nate.
Start and and I think overall in terms of the framing side of things. If you think about kind of the trends with single family to start with single family remains strong and I think builder confidence has remained elevated and when you look at single family starts as compared to for example for example, multifamily the consumption and frame it to materials is significantly higher.
So I think we feel good about the single family builder and what is in front of them here through the balance of the year and so that demand environment looks looks steady and stable.
Repair and remodel I think is.
And we've described earlier a bit of a correction as we finished the quarter feels like there is some momentum regaining on the repair and remodel and again I think thats largely based upon.
And then.
They do it yourself or perhaps spending their time and resources elsewhere, we still believe the professional remodelers remains active through through the through the cycle.
So as we look at the.
The overall demand environment for framing material and some of the product and services that we have we feel good about the third quarter and the balance of the year and large part just given the I think the strength and momentum that exists with the single family builder.
And maybe 1 more point I'd add to that Charles has.
On the supply side.
And Western Canada, there has been multiple producers that have had some disruptions of late due to wildfires and western Canada. So that there is there is some supply constraints.
And that our recent and recent events and to <unk> point, the takeaways on <unk> and the and the pro contractors is still pretty strong.
Got it and Thats very helpful color thanks for that.
And my follow up is I was wondering if you could share additional details on the inflationary pressures are predominantly I guess and transportation costs.
On the fiber side and given the overall demand how should we do you expect these needs to impact your business going forward and and what measures can you implement to offset these impacts.
So.
Charles This is Mike.
Ill address the fiber side.
So and yes, youre right there has been some significant pressure on log costs.
It's more geographically based.
If you look at the house southeast and operations.
There really hasnt been much change and log costs and not in the recent past really not really quiet and extended period of time.
There are some isolated circumstances, where I am.
Might be is still on more some disruption which lead to a short term spike.
And tend to settle back to the price levels that we've seen historically.
And the Pacific Northwest.
We certainly have seen a significant increase and log costs, specifically as it relates to some of our operations.
Partly as a general market movement up year over year and.
And also in some cases, the wind, which contracts are put together tend to be linked to product pricing.
And in some cases, I use trailing pricing and as a methodology to to set the future pricing for either a month or a quarter.
So I think and the Pacific northwest log prices and probably going to be at the levels that they currently at 4.
At least a little while longer.
And then it will really depend on what happens and the market is really the lumber limbus on the business tends to to drive more on the log costs.
Transportation side, I mean, I'll, let Jeff speak to that it might be a little bit and alignment as well, yes, we certainly seeing increases in our transportation costs.
I think day worse, maybe 3 months ago and they are today.
On some of the comments night made just a moment ago with.
With the change and the focus and the economy, where people are going on vacation and what have you that's resulting in less demand, which means that less stress and the and the transportation network, specifically I'm talking around trucking.
So we have quite good availability of trucks today compared to 3 months again.
But the pricing is still relatively elevated.
And I would say on the rail side.
Availability of the rail has been really very good.
And now there's been a little bit of price pressure.
And.
Really.
And that's done on a contracted basis from the nice part and as well as on general tariffs.
And now with <unk>, because they get published.
And I know, Jeff do you want to.
Significant transportation component, Charles and Jeff the 1 component that I would add that Mike and speak to is the ocean freight and that is still incredibly difficult and challenging and non always incredibly difficult and challenging is incredibly expensive.
But as Mike spoke on the rail and on the truckers and it's eased up.
I appreciate the color there and I think.
I can squeeze 1 last and I was wondering if you can provide and update on your ongoing investment projects on distribution and Nashville, and also the door Assembly operations Houston and St. Thomas you can comment on your appetite to add capacities given the strength that we've seen the demand these days.
Certainly.
As Jeff and I'll start and Houston would that door shop, we're really excited about that opportunity.
It's about 30 days later, but that door shop should be up and running by the very end of this quarter.
<unk>.
And Nashville that has been a long project and again, it's kind of the same timeframe. We're nearing an end on that we have a few little things to do and we should have our certificate of occupancy and about the next 45 days and then we'll be able to start rolling there. So we're really excited about both opportunities as far as expanding I know, we've said many times we absolutely.
The door business and it's something we like to look and we're looking for areas to expand that and it's a business that we fit well and it's a business and we know we can add value to our customers with and then as far as locations. We're constantly looking across our footprint and are there areas where.
We can serve our customers better or decrease our cost and service we had a facility. There and then in addition that Theres a lot of energy right now about our existing footprint that we have can we expand that can we add products and services to better serve our customers with.
Thank you.
Youre welcome. Thank you.
Yes.
Your next question comes from Reuben Garner with the benchmark.
Thank you and good morning, everybody.
Kevin.
Yes.
So.
I was a little surprised by Bob.
Strength and the BMD margins and the quarter, just given lumber starting to rollover was there.
I know the panels and held in through the end of the quarter or was there anything else or.
The margins just in the first couple of months before that happens. So strong that you guys were able to absorb.
And the pressure in the back half and I guess as a part of that question.
I think low double digit gross margin and something like 2.5%.
EBITDA margins are the lowest we've seen.
And in the environment like.
Well, we haven't seen and environment like we're seeing right now, but in a plummeting lumber price environment. That's as low as it's been is that a good kind of floor for what to expect for the third quarter or any other color you could give for BMD and appreciate it.
Yes, No you you described it pretty well Ruben and I guess to start with your second quarter and the margins we saw from a euro.
We certainly saw some outsized margins if you will on commodities and the first couple of months given that the strength and commodity pricing and then we had some weakness in June specifically to lumber and so but I would also remind you that general line and AWP the strength of that business is good and we continue to and.
And we like the margin profile on those product line. So we so yes. So you described it pretty well ribbon and in terms of how I would've framed it up now in terms of going forward into Q3.
We've signaled that we do not expect to hit third quarter 2020 levels. When we reported third quarter of 2021, just given the strong downdraft in commodity products pricing and so you you referenced back to some history around 2 and half to 3%.
Percent EBITDA margins, when we when we kind of get to a more.
That has historically been what I would say is more of and <unk>.
Moving to 3 and a half is kind of been on a more normalized rate for us. So it's all going to depend upon.
Commodity prices from here and how that influences and <unk> results as we get into the third quarter and.
Theyre more pressure to be had and more and margin squeeze on the commodity side or do we find some level of <unk> point, which may be we're finding and lumber today, we will see where panels go. So it's really hard to predict where we might end up third quarter 2021 until we get more visibility through the quarter on commodity products pricing.
Can I follow up Kelly and ask it. This way is there any I don't know if you can have this data in front of you, but could you tell us maybe what the gross margin look like for the first month of the third quarter I mean I assume.
That is it can get in terms of falling prices.
EPS, we have not closed the books on July yet Ruben.
But yes, I would tell you. There's a line gross margin July gross margins were certainly constrained given given commodity products pricing.
Got it and then longer term that 3 to 3.5% normal EBITDA margin does that.
Is that still the right way to think about it and would hire.
From.
And folks assume that lumber and panel prices may be a bit higher than than they were earlier in the cycle would that change what.
The margin profile of the business looks like at the EBITDA line and in other words, if lumber and state normalizes around $500 instead of <unk>.
300 to 400 would that lead to more leverage on the SG&A line and a higher EBITDA sort of normal margin level.
Yes, so I guess I'd answer that a couple of different ways room and in terms of the gross margin percentage, if we kind of get to a normalized level or a more stable level and.
And composite lumber and panel pricing I would and we get to a more normal mix in terms of commodity general line on AWP I would still direct you towards 12% and 12, 5% in terms of what our normal sort of a normal gross margin percentage profile would be but yes, youre right and if lumber is it 500 compared to 300.
Yes, we would get some operating expense leverage in that environment.
Got it and I'm going to sneak 1 more and.
Given the.
Commodity environment any help on how to think about working capital.
And I guess declining and the back half of the year and just cash flow more broadly.
Yes, so maybe I'll speak predominantly to the distribution business. So.
And it has come into distribution businesses, specifically I'll speak to receivables as business tails off as it has years, we've started and the third quarter, we certainly get some working capital back and receivables come off and.
And then.
Inventory would would come off some as well due to commodity product prices as well as us just trying to be thoughtful to mitigate exposure that we have and then as we get into the back half of the year, you'll typically see the normal seasonal tail down a little bit just to manage manage inventories relative to the seasonal.
Seasonal demand that we'll have as we get later and of the year.
Hey, Reuben it's named maybe just 1 other thing to add is I think Kelly described well I think on the general item AWP as we think about D&B specifically those are areas, we'd like to add inventory and continue to grow that and as we move forward and and prepare for 2022. So I think in terms of the on the refinement as Kelly described largely commodity.
Base, but in terms of our desire to make sure. We've got the right inventory footprint and both general line and AWP really important part of our service proposition to customers. As we finished this year and prepare for next year.
Perfect. Congrats on the strong results guys and good luck.
Moving to the back half of the year.
Thanks Reuben.
Yes.
As a reminder to ask a question. Please press Star then the number 1 on your telephone keypad again that start and a number 1 on your telephone keypad. Your next question is from George Staphos with Bank of America.
Hi, good morning.
Congratulations on the quarter I thought it was a typo when I saw on the press release.
Anyway.
Thanks Kurt.
All good.
I guess, the first thing and extent that you can comment guys can you talk a little bit about.
And the rolling curtailments any way to quantify the operating expense that you currently have and wood products and then.
Trying to establish maybe some guardrails on wood and recognizing it's very difficult and there are no guarantees on any of this we wouldn't hold you to it.
And we look at slide 9 as instructive in terms of where your plywood pricing would be so I don't know.
$5.600 as we sit here today lower than the average and 2 Q or anything.
Anything you gave us some guidance on on DMD anything that you could share with us if prices stayed where they are right now where would might be for <unk>, so that to start.
Yes, George I'll have established the first 1 on its Mike.
So the <unk>, yes.
Thanks for the comment about the type day rate.
And the.
The way we look at the K Thomas is sort of like this usually we would.
And schedule them Eze and.
And outage of a week at a time.
And we really haven't got down to the nitty gritty of which mills mic might need to be taken out when and way yet.
But if you think of it like this if we take 1 of our plywood mills down for a week and.
And it generally means in round numbers, depending on the mill.
About 5 million feet of plywood less that we would produce.
And sort of like very rough average because some are higher and summerlin and Brian.
And if you see and announcements.
And because we haven't yet.
Probably specify them, if we have to do them.
And you can start using that as sort of general guidance I'm.
Sure.
Some of our mills and much larger than that and some are smaller, but thats sort of a general guidance.
That's great Mike Okay.
Okay. Okay.
Yes.
Jacob.
Yes, sure and then the forward question on plywood pricing.
Mike.
So we are moving.
And the script George that July pricing was actually slightly ahead of Q2 averages.
Because of the length of our order files.
And so yes, and then the question becomes okay. What do you think about August and September so you've seen the random prices and certainly they have come a lot from where we were at the end of the second quarter and so I guess directionally, what we would typically steer you towards is kind of on a $50 <unk>.
And the southern composite and the western composite and kind of bump that up against our realizations have compared to those those metrics historically would probably get you and the right ZIP code of how it would come out. It's just it's really hard to predict right now because were kind of right on the or and the middle of the storm right now.
Understood Kelly and I.
And I do now remember you said that about July sorry, I missed that earlier.
With the BMD guidance and thank you for providing that.
What are your assumptions key assumptions in terms of pricing across the commodities. So should we assume net again lumber is holding at these levels going forward, what's built in there.
And obviously AWP youre, assuming goes up but anything else that you could give us to help us adjust as needed perhaps as the quarter goes on.
And George just made let me help hospital.
I think if you maybe start with both general line and AWP I think both volumes and pricing will be strong.
So I think that.
And the framework for those are obviously, 2 very important products I think on on commodities. When you look at lumber I think the view is.
Perhaps have found our near the kind of the bottom and we're not at this point and maybe assuming anything dramatic from here, but I think that it's.
Stabilized on the lumber side.
And on OSB and plywood.
And the tale of 2 different stories, there I think OSB.
So much more.
The single family construction, so maybe that.
That will feel and look maybe a little bit different as compared to lumber and perhaps plywood, but as Kelly described what we're kind of right and the and the middle of that change and it's really kind of hard to provide any additional context on that as I mentioned earlier, George and we still feel good about the takeaway in terms of whats and what's happening and again as customers manage their risk.
On commodities Theyre looking to BMD has a relevant solution to that and so volume continue continues to flow. It's just a matter of kind of give me through this correction again I think we're in the Middle then on panels, Glenn and I think we're largely through it and perhaps on the other side of it relative to lumber.
Last 1 and I'll turn it over to the extent that you obviously have a pretty good window into this.
And where do you think.
Inventories are in the trained right now on commodity products are we.
Below average above average are you getting any sense that.
People are coming in now with a sense that perhaps pricing has stabilized and then from a.
Precautionary standpoint, it might be good time to rebuild and <unk>.
Similarly, our.
You're seeing a little bit more activity and pull through.
At the DIY channel from some of the Big box retailers, Thanks, guys and good luck in the quarter.
Jordan. This is Jeff I'll, just start that with this on the kind of breaking into 2 on the general line and AWP side inventories across the channel. They are theyre very lean and that's a universal thing everywhere on the commodity side, what we've heard from all locations is it really is a mixed bag you have some accounts that are still.
Heavy with inventory they need to move them off and then you have some that are very lean.
And poised to buy once they're on the fundamentals that you hear from everybody, though is that the demand is going to be incredible coming once we find the trading level and then on the do it yourself.
As <unk> mentioned there is 2 different types over there you have the do it yourself person on the homeowner you have the repair and remodel person and the different variety of products that we sell into those markets is very bad so for us that business is still strong, but the do it yourself person. There's we're hearing of more takeaway on the commodity side, but on the on the general and EW.
Product and still very strong.
Thank you Jeff.
Certainly.
And at this time there are no question.
Okay. Thank you. We appreciate we appreciate your interest and we look forward to talking to you next quarter.
Okay.
This concludes today's conference you may now disconnect.
Okay.
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