Q3 2022 Boise Cascade Co Earnings Call
Okay.
Okay.
Good morning, My name is Lisa and I will be your conference.
Cater to that.
At this time I would like to welcome everyone to the Boise Cascades third quarter 2022 conference 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 would like to ask a question. During this time simply press star.
One one on your telephone.
Questions will be taken in the order they are received.
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 guarantee of future performance and the company undertakes no duty to update them.
Although these statements reflect management's expectations today, they are subject to a number of business, whereas and uncertainty.
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 the results anticipated. Please refer to Boise Cascade.
Recent filings with the S E C.
It is now my pleasure to introduce to you Kelly.
Excuse me by senior Vice President CFO , and Treasurer of Boise Cascade.
Mr. <unk> you may begin your conference.
Thank you Lisa good morning, everyone I would like to welcome you to Boise Cascades third quarter 2022 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 Strom head of our building materials distribution operations.
Turning to slide two 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'll now turn the call over to Nate.
Thanks, Kelly and good morning, everyone. Thank you for joining us for our earnings call today I'm on slide number three.
Our consolidated third quarter sales of $2 2 billion were up 15% from third quarter 2021.
Net income was $219 6 million or $5 52 per share compared to net income of $91 7 million or $2 31 per share in the year ago quarter.
Both of our businesses reported strong financial results during the third quarter. Despite the despite the softening economic landscape.
The third quarter of 2022 total U S housing starts decreased 7% driven by a decrease in single family housing starts of 18% compared to the same period last year.
Wood products reported segment EBITA of $177 3 million in the third quarter compared to $136 million in the year ago quarter.
Products benefited from improved AWP sales realization offset partially by lower plywood sales prices and higher manufacturing cost compared to last year's third quarter.
The team and what products did an outstanding job during the quarter at managing the integration efforts of the cost of plywood facilities at both Alabama and Florida.
Im pleased with our progress as we work to expand our AWP capacity and further leverage our integrated business model.
Building materials distribution reported segment EBITDA of $161 2 million on sales of 2 billion for the third quarter compared to $22 6 million of segment EBITDA on sales of $1 7 billion in the comparative prior year quarter.
We'll be the first to admit that BMD is copper prior year with the result wasn't a high bar because of the historic collapse in commodity product pricing during that period, but make no mistake with bnb performance was very good in an environment that continues to present challenges on many fronts.
I'm also pleased that the board of directors recently authorized a quarter quarterly dividend of <unk> 50 per share payable on December 15 2022.
This represents a 25% increase in our quarterly dividend.
In addition, our board also announced a special dividend of one dollar per share our second special dividend of 2022 that is also payable on December 15.
Kelly will now walk through our financial results in more detail and provide a further update on capital allocation after which I'll come back to provide our outlook before we take your questions Kelly. Thank you Nate.
Wood products sales in the third quarter, including sales to our distribution segment were $595 3 million compared to $497 3 million in third quarter 2021, as Nate mentioned wood products reported segment EBITDA of $177 3 million from the EBITDA of $136 million reported in the year ago quarter.
The increase in segment EBITDA was due primarily to higher AWP sales prices offset partially by lower plywood sales prices as well as higher manufacturing costs.
Based on our preliminary purchase price allocation related to the coastal acquisition, we expect depreciation and amortization on the acquired fixed assets and intangibles to be approximately $40 million per year refer to our third quarter Form 10-Q for further information regarding the preliminary purchase price allocation.
BMD sales in the quarter were $2 billion up 14% from third quarter 2021, BMD reported segment EBITDA of 161 point.
$2 million in the third quarter compared to segment EBITDA of $22 6 million in the prior year quarter. The increase in segment EBITDA was driven by a gross margin decrease of $166 1 million.
Resulting primarily from margin improvements on commodity products. In addition, selling and distribution expenses increased $25 7 million.
Turning to slide five our third quarter sales volumes for LVL were up 12%, while sales volumes for I joists were down 15% compared with third quarter 2021, we experienced continued strong demand for LVL, whereas I joist volumes were negatively impacted by the decline in single family housing starts pricing in third quarter for LVL.
Oh, and I joists were up 19% and 18% respectively compared with second quarter 2022, as previously announced price increases continued to take effect and price protection and allowance mechanisms roll off we have experienced pricing pressures for AWP as we move through the fourth quarter, particularly on I joists as the market adjusts to chew.
Ranges of new residential construction activity.
Turning to slide six our third quarter plywood sales volume in wood products was 329 million feet compared to 314 million feet in third quarter 2021.
Sales volumes increased due to the acquisition of coastal plywood, excluding the coastal volumes, our third quarter plywood sales were 272 million feet down 13% from third quarter, 2021, and 3% sequentially.
The 477 per thousand average plywood net sales price in third quarter was down 15% from third quarter, 2021, and down 16% sequentially. Thus far in the fourth quarter plywood price realizations are approximately 13% below our third quarter average.
Moving to slide seven.
Bmd's third quarter sales were $2 billion up 14% from third quarter 2021, driven by our sales price increase of 15% offset partially by sales volume decrease of 1% byproduct line commodity sales increased 1% General line product sales increased 19% and sales of AWP increased 33%.
Gross margin dollars increased by $166 1 million in third quarter compared to the same quarter last year, resulting primarily from margin improvements on commodity products. The gross margin percentage for BMD was 15, 4% up 750 basis points from the seven 9% reported in third quarter two.
'twenty, one bmd's EBITDA margin was eight 2% for the quarter up from the one 3% reported in the year ago quarter.
BMD sales pace, thus far in the fourth quarter is seasonally weaker but it has been a favorable environment for two step distribution as our downstream customers desire mixed loads and look to manage inventory volume and price risk the.
The BMD team continues to provide high service levels, but it is also focused on managing inventories as our channel partners expect weaker demand as winter approaches give.
Given this backdrop.
Dissipate lower EBITDA margins in the fourth quarter, resulting from the potential of gross margin declines from product price erosion and deleveraging of fixed costs as sales declined.
Moving to slides eight and nine.
These slides show the declines in lumber and panel pricing during third quarter, 2022, which appear quite modest when compared to third quarter 2021.
We expect future commodity product pricing will continue to be volatile as the industry attempts to adjust supply to levels needed to support an uncertain near term demand environment.
I'm now on slide 10.
We finished third quarter with $867 1 million of cash our total available liquidity at September 30 was approximately $1 3 billion, which reflects our cash and availability under our committed bank line.
During third quarter, we amended our senior secured asset based revolving credit facility and term loan. The amendment increased the maximum amount available for revolving loans from $350 million to $400 million extended the maturity date of the agreement and transitioned the index rates from LIBOR to sulfur the term loan remains at 50.
Excluding acquisitions, we expect capital expenditures in 2022 to total approximately $100 million to $120 million, which includes BMD organic expansions in Ohio, Kentucky, Minnesota replacement of a dryer at our Chester, South Carolina, veneer, and plywood plant and post acquisition veneer equipment related spending in our Chapman, Alabama.
<unk>.
We expect capital expenditures in 2023 to total approximately $120 million to $140 million, which includes continuation of our multi year capacity expansion projects in AWP and further investment in BMD organic growth projects as we've noted before availability of engineering and construction resources timing and availability.
<unk> of equipment purchases and our financial results are among the factors that are expected to have an influence on these levels of capital expenditures.
Consistent with last quarter, our effective tax rate is expected to be between 25 and 27%.
I'll now move to capital allocation as Nate mentioned earlier, our board recently approved a <unk> <unk> per share or 25% increase in our quarterly dividend effective with our December dividend payments. The board also approved a special dividend of $1 per share our second special dividend of 2022 dividends and opportunistic share repurchase.
The remaining two mechanisms in which we return capital to shareholders under our balanced approach to capital allocation.
After payment of the fourth quarter dividends, our balance sheet will remain very strong providing us ample flexibility to continue to invest in our existing asset base and organic growth projects in both businesses. Our overarching objective remains to successfully grow our business, while generating appropriate returns on shareholder capital I will now turn it back over to Nate.
To discuss our business outlook.
Thanks, Kelly I'm on slide number 11.
Current estimates for 2022 U S housing starts are between one five and $1 6 million units or essentially flat compared to 2021.
However continued actions by the federal reserve to increase interest rates to combat high levels of inflation has significantly increased mortgage rates and accretive created a great deal of uncertainty broadly across the U S economy.
Due to home affordability constraints and a weakening economy the pace of new residential construction has slowed and we expect demand to continue to decline for the remainder of 2022 and into 2023 headset.
Consensus forecast for 2023 housing starts in the U S are estimated to be 15% to 20% below 2022 levels.
As it relates to home improvement spending the age of U S housing stock and elevated levels of homeowner equity provide a favorable backdrop for our repair and remodel spending.
Tempered by an economic slowdown we anticipate these drivers to continue to be supportive of homeowners future investment in their residences.
In wood products, we will be focused on continuing to successfully integrate the costa plywood operations into our system and execution of the targeted investments to expand our AWP capacity.
We will also closely monitor the changing housing market landscape and adjust production rates as appropriate.
BMD continues with its steady execution of organic growth and is progressing well with the build out of expansion projects at Marion, Ohio, Walton, Kentucky, and the recently announced expansion in Albuquerque, New Mexico. The Bnb team also continues to work on additional organic growth opportunities in existing and new markets.
We have proven in our effectiveness in managing market, uncertainties, and volatile commodity product pricing and I am confident in our ability to do so across all of our products and in the future times of uncertainty provide BMD with the opportunity to further demonstrate the value of that two step distribution provides to our supplier and customer partners.
Our company remains incredibly well positioned and we will continue to make sure we use our operating and financial strength to benefit our customers suppliers communities and shareholders. We remain committed to the execution of our key strategic priorities as we navigate market uncertainties and clear signals a weaker near term demand for our new residential construction lastly.
Lastly, I'm very pleased with the early integration efforts related to the newly acquired coastal plywood facilities I want to express my gratitude to all associates throughout the organization, including our newest associates at Savannah, and Chapman or keeping a sharp focus on our customers and working safely and effectively in this changing environment.
Thank you for joining us for joining us for the call today and your continued support and interest in Boise Cascade. We've been open we welcome any questions at this time Lisa would you. Please open the phone lines.
Thank you.
I will go ahead, and we will now prepare for our questions one moment, while I get the roster together.
Okay. Our first question will come from Susan.
Macquarie of GFS. Your line is open. Please go ahead.
Hey, Good morning, guys. This is Charles Brennan for Susan Thanks for taking my questions and congrats on a strong quarter.
Hey, good morning, Charles Thanks, Charles.
Maybe first you mentioned in your outlook the potential for price erosion in AWP over time can you talk about the trajectory you're thinking for that part of the market right now given the current macro but also given the significant advantages that these products have relative to alternatives in the tight labor market at the builder level, how should we think about your ability to hold prices maybe.
Ahead of the cost inflation, you might see on the fiber side and how what is the trajectory of that maybe on the margins.
Over time.
This is Mike Brian . Thank you very much for the question.
Multiple questions I think.
As it relates to <unk>.
Our ability to hold AWP pricing I think that has a lot to do with how we how we see the market evolve going forward.
At night pointed out reminds me, saying, what the market looks like in 2023, but generally speaking AWP.
AWP pricing tends to adjust more slowly than commodity based pricing. So I think where we will end up remains to be seen depending depending on how housing starts to announce.
12 months.
I think you asked a question as it relates to.
Our position relative to alternative products.
AWP as a general general category is a value added product and because of the way in which you guys to market in the way in which it's used in housing I think we have a very good value proposition as it relates to what homebuilders or looking forward. So.
I think from a from that perspective, we're in a good spot.
I think please clarify I think you asked a question around <unk>.
Cost of the products was that correct that you can get all your multiple questions. There, yes, so more about the trajectory of the cost maybe on the fiber side input costs may be getting lower faster than the trajectory you see on the EWC prices that will allow you to maybe expand margins. Despite the top line.
Yes, okay. So.
Fairly clearly one of the biggest biggest input cost is that a fiber.
And as I looked at the numbers recently, we've had some very modest I would call it very modest declines relative to the prior quarter as it relates to fiber costs.
But they are still elevated relative to the same quarter in the prior year.
I think.
Based on what I am saying that the.
Input costs for fiber in particular, while they might.
Slowly decline in some geographies.
Particularly in the Pacific Northwest, we have some headwinds the headwinds there as it relates to the availability of fiber in the general environment that we're operating in from a from a regulatory perspective.
One of our major inputs of course is resin and from that perspective.
Closely tied to what happens in the petrochemical sector.
And as you've seen we had a small decline in petrochemical petrol prices.
But they are again started to increase so im not sure that I see a massive difference, particularly to the downside in our cost structure in the immediate future.
Got you Okay I appreciate the color there.
And then maybe on the BMD side with a weakening macro environment can you talk about the opportunities to develop new partnership.
To expand maybe your product portfolio, which maybe were not available over the past two years, given the supply chain any product category that look appealing to you or anything you would highlight there.
So Charles.
As we look at our our product mix in BMD to your point. It is in markets, where things are pretty tight in terms of supply availability. There is limited options in terms of where we can grow.
Terms of not only expanding maybe our current products, but also new product opportunities.
We see that very much part of our opportunity moving forward to BMD.
And some of our legacy products, but potentially new products and services as well so.
As the market kind of gets better settled in terms of supply and demand, we see our ability to continue to grow and expand our products and services in BMD.
And thats something thats going to be very much part of our thinking as we finish off 22 and 2023.
Yeah, Thanks, Amit and maybe just to follow up on that can you talk about the performance mix that <unk> seen in BMD across maybe categories that are more traditional focused maybe like doors and windows AWP versus other categories like decking and what are you expecting for that going forward and maybe the implication that the mix shift onto new residents.
I will close the contract type, becoming softer could impact your margins.
Maybe.
Yeah. Good question I think when it comes to mix I think probably a more general statement I think the products and services that are that are <unk>.
<unk> may be tethered to multifamily and repair and remodel likely we'll have a <unk>.
<unk> tailwind as we head into next year I guess, the other thing I would describe it is really across all of our products and services in BMD.
It's really clear that the dependency our customers have an auto warehouse services continues to grow.
So maybe in past years, where they would be taking truckloads, our railcar correct on a range of products and services today, it's more units job packs in pieces and thats fits incredibly well with our bnb capabilities in our BMD.
Plan moving forward. So if you think about product mix and service and margin I think that the focus.
Focus will be and the need will be for our customers is more out of warehouse services in support of work again really well positioned for that opportunity.
Perfect. Thanks for your time guys.
Thanks, Rob.
Thank you one moment, while we prepare for the next question.
Okay.
Yes.
Our next question is coming from Mark Wilde of BMO. Please go ahead.
Thanks, Good morning, Nate Kelly.
Morning, Mark.
Just curious going back to AWP I assume most of AWP goes into new housing, but can you just can you help us with a little color on new housing versus how much of that market is is repair and remodel related or multifamily related.
Good morning, Mark It's Mike good to hear you again.
So I think you hit the nail right on the head.
A great majority of the products that we sell today, either AWP products, we sell there I do go into.
Single family.
However, there is a market obviously for repair and remodel but for Boise Cascade at this point in time up until now that has been a relatively small component of our sales.
And then on the multifamily side of things I think thats.
That has been a small component of our mix, but I think it's likely to be a bigger component in the future.
So yes, we are actively working on.
On that particular front to help offset any changes we might see in single family starts as we move into 2023.
Okay Alright.
Just stepping over to your general line business I'm just curious.
What youre seeing there in terms of just market tightness I know earlier in the year things like doors and Windows work quite tight. So are you seeing generally easing there.
Has it had any impact yet on general line pricing.
Hey, Mark. This is Jeff we are we are definitely seeing the easing on that product as is freeing up for sure. There are still a few categories and they are aware theres still an allocation, but overall it has freed up significantly.
Significantly and we're pretty much in versus what you need where you need it.
Okay, any pricing reductions, yet or because I think pricing now with this stuff went up pretty sharply.
We haven't really seen that yet.
There are several items out there on the general line Thats still have price increases announced for the first quarter that we're expecting to go through so.
We will watch that carefully manage it like we always do.
Okay, Alright, and then finally nadir Kelly can you just give us a little bit of color on that 23 step up in Capex and what that's going to be composed of.
Yes, sure Mark happy to do so so.
So as we alluded to in the talking points on wood products Theres, a fair bit in there around continuing our multiyear plan to expand AWP capacity.
Thank you.
For example, in Chapman and we're going to do things that relate to veneer equipment, we're going to do things relate to.
Adding a pov line, which again.
That's a raw material if you will that goes into Alexandria.
And then we're also going to do some things around.
Upgrades as well as landline controls that Alex and so kind of a lot of that.
A good chunk of that and call. It probably 60 to 65 of that range is related to wood products and a lot of that is devoted to the southeast and then in BMD.
The range I would give you there is primary between 70 and 80.
And it's a lot like what we've been doing which is.
Existing.
Increases in existing locations.
Also looking to further scale door shops, and it's also looking at new locations and we're actively working on a number of those fronts. Given you can't give a specific shed on those locations and those those.
Specific spots on the map, but included in that range as some expected organic growth that we expect to be speaking to in the near future.
Okay, Alright, that's helpful I'll turn it over thanks Kelly.
Thanks Mark.
Thank you.
One moment, while we prepare for the next question.
Alright.
Yes.
Our next question will be coming.
Okay.
Rubin of Denmark benchmark excuse me you can go ahead.
Okay.
Yeah.
You there Reuben.
His line dropped I'll go ahead and bring the next purchase of the platform.
Okay. Thanks, Lisa.
One moment.
Our next question will be coming from.
Nathan.
D. A Davidson your line is open.
Hi, Good morning, Nate Mike Denny first off congratulations on a great quarter.
And just a few questions from me I'm, putting in because today by the way.
First question is what would the contribution on EBIT and EBITDA perspective, but of course during the quarter and what they need one time items that impacted that.
Yes. So thanks for the question Adam we don't typically speak to specific performance at a at a location level.
And included in the results in the third quarter would be the purchase price accounting in particular to the inventory step up so that would have mitigated what would have what would've been expectations that are consistent with our consistent with what we had.
When we acquired those assets.
Okay, Okay got it.
And secondly is there any way to quantify the benefit on that stock cost relative to the last quarter given the declines in OSB.
And will that continue to tick when the next one or two quarter OSB.
OSB prices I mean black on GAAP.
Okay.
Sure. This is Mike so the way we manage our web webcast desktop is not really on a spot basis. So as you pointed out the general pricing of OSB has declined in the last number of months, but the way we look at it and the way we structure our cost that's not really.
Not really the way in which costs the webcast slide throughout cost statements.
<unk> excuse me.
Well, they might come down a little bit going forward.
It's not to the same extent as you would say with the.
With the spot prices for OSB.
Okay, Okay that makes sense.
And just lastly, you touched on this in your prepared remarks, but essentially you funded 70% of the cost of acquisition with <unk> and appreciating you just announced another supplemental dividend of $1 per share. So how are we thinking about additional capex with Don to say how long does specific can you can you talk more about are you more inclined.
Saturday purchases more than ever done in the Bob.
Yes, so I'll take that question Natalie so in terms of our approach to capital allocation it really hasnt changed.
Our balance sheet remains very strong and very flexible and that's purposeful.
We have that expanded capital program that we talked about and that allows us to invest in our existing asset base and also.
Due to the organic spending projects, we talked about it in these sorts of environments M&A it could be an opportunity as well and so we will certainly be receptive and open to the inbound calls in that regard and now specific to your question around returning cash to shareholders that playbook is also the same there's two components to that there's the <unk>.
Dividends, which over time, we want to modestly grow that and we demonstrated that again last week and then special dividends is another outlet and share repurchases is always on the table and in the conversation and we do have a 2 million share.
Optimization Thats outstanding nothing to report on share repurchases at this point, but it's very much in the playbook.
And Eddie maybe just add to Kelly's comments is that's.
Ed.
Really an essential conversation we have every quarter with the board. So it's something that we're very deliberate with very consistent with an.
As Kelly described I think our parameters and the approach that we've taken is very similar to what we've done over the past number of quarters.
Right, Okay, and just one last one quick more one quick question with Incrementals beneath the plasma cluster. Jackman then ignoring declined demand backdrop would you be able to have more I think the nice growth.
Across LVL and I joists.
Yes short answer is yes, and we gave some amount of detail on the last last quarter's call around.
2025, we expect 10% to 12% more AWP capacity and that's a function of not just the incremental stress related veneer that we get.
From that acquisition, but also some of the capex projects to put more steel on the ground to have more AWP capacity.
Okay got it and Daniela Thank you.
Thank you. Thank you.
Thank you.
One moment, while we prepare for the next question.
Okay.
Our next question is coming from Rubin Gardner.
Benchmark. Please go ahead your line is open.
Thank you can you guys hear me now.
Got you Robin how are you.
Great sorry about that.
So.
Let's see a couple of follow ups I think two.
Things you've already discussed I, just wanted to kind of get some more color so on the <unk>.
Distribution side it sounds like.
It sounds like pricing and it looks like margins have held in pretty well of late.
You are clearly still well above where you were back in 17 18 19, if we see.
Housing starts to go back to that kind of.
Level.
Or do you think the margins fall out I mean, it seems to be pretty encouraging that youre still putting up an 8% EBITDA margin as the market has turned as quickly as it has.
Yes, so I think you've got a two parter there so in terms of year Youre right and you read that margins, both gross and EBITDA have held up well and I would say that has continued through October .
Sales pace through October was pretty good and again.
Again, the value of two step distribution mixed truckloads out of Weyerhaeuser is a good thing for us and so October has been pretty darn solid November and December only 20 work days in each one of those months.
And.
And certainly the winter does come every November and December So we do expect to see some.
Potentially some declines as we just in terms of sales velocity as we work our way through the winter and then.
And then I would also say as a reminder, you may remember last fourth quarter Ruben that commodities really kind of took off again in November and December and we don't see any but we don't see any rational reason for that to happen.
This quarter. So so strong results in terms of then your next question, which is okay, where do you want to be when you make your way to the other side <unk> get to a more normalized level pace of business.
Our goal is absolutely to expand that EBITDA margin that we've responded reported historically, which was a three to three 5% and we do believe we can be above that over time for several reasons.
One I think the commodity folks have done a great job and you've seen it in our results in terms of managing through tremendous amount of volatility and we're just getting better and better every day at that so shout out to our commodity teams on that and then as we continue to expand general line product offerings and aligned with some great vendors there and also.
Further scale, our door shops, that's all targeted towards expanding our gross and EBITDA margins as we move into the future, but yes, yes.
We are ready to tell you what I just gave you a specific target on what that could be but that is absolutely the objective.
Okay, perfect and then.
We've definitely heard of some.
Destocking.
Across the building product space.
I'm just curious it's a little tough to tell with your inventory and I know theres a lot of moving pieces with price.
Price actions on both the commodity and other products of late but can you kind of tell us where your inventory levels stand at distribution kind of relative to maybe the peak and maybe relative to where they've been historically.
Yes, Reuben this is Jeff I'll tell you.
Our inventory level right now.
On pace with what our sales paces, so I feel really good about where we said it is down from the peak for sure.
But it's exactly where we'd want it to be right now heading into this.
Okay, and then last one for me same kind of a follow up to the first question you got about pricing in EWC.
Sure.
I guess in that same sort of scenario. If we go back to eight 900000 single family starts are dead.
At this point would you think that these prices revert back to the prices that they were at that period or has enough changed.
Structurally that there will be a higher kind of base for pricing for I joist.
Our other products.
Great and then I think.
A bit early to say, what the pricing will be if we drill.
The number is 800 900000 single family.
However, I think it's fair to say that if the macro environment is as we think it might be.
The supply side will we will adjust and that will probably ended up seeing some decline erosion in AWP pricing.
Im not sure that I'd be confident at this stage to say that.
It would be the same as what we saw previously.
Or whether it would be.
Some increment above that I'm not sure we really know that yet given there are a lot of moving parts relative to not only our production, but how does that play in the same.
<unk> sector. Thanks Victor.
Early too.
To hypothesize that Michael.
Hey, Brian it's Dave.
Just another COVID-19.
Just another quick comment on.
If you look at it through the cycle and alternative how the AWP product category.
His position I think the supply demand balance is really a good one so I think as we look at that.
Obviously this can be some short term how we work through an evolving marketplace. Here I think we're again, we're prepared to do that and make the needed adjustments, but I think as you look at through this kind of through the cycle.
Kind of medium to longer term, we feel really good about the supply and demand balance within AWP and how we're going to be positioned to support that.
Thanks for the time guys.
And I guess Ruben while Youre there one other comment I would maybe add is around.
AWP volumes as we move into into four into the fourth quarter.
Certainly if you read the homebuilders commentary they are very focused on.
Finishing the projects underway and getting those closed up and then the price discovery phase. If you will getting them moved they are very prudent in terms of taking that next hole in the ground and making that next start and.
So we alluded to I joist, a little bit in some of our comments and so we are that's why we are seeing.
Some more pressure as well as <unk>.
A pretty meaningful slowdown in I joist volumes as we kind of work through this initial phase and it's and it's very fluid.
So I just wanted to add that color for you.
Very helpful. Thank you.
Beth.
While we prepare for our next question.
And our next question is coming from Jim.
Perfect.
Your line is open Jim.
Okay.
Yes.
We're not picking up anything on our end Lisa.
Yes.
Still there, though but there is no one there so would you like to go ahead for closing remarks, Sir.
Yes, I'd say well, let's go ahead and close it up.
Okay.
The closing of our Q&A I would like to turn the call back over to Nate services for closing remarks.
Alright, great. Thank you Lisa we appreciate everyone joining us this morning for update and thank you for your continued interest and support of Boise Cascade. So with that we'll sign off about please be safe and be well. Thank you.
Yes.
Ladies and gentlemen, thank you Sir.
This conference call. This concludes everyone may disconnect.
Thank you.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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