Q3 2024 Boise Cascade Co Earnings Call
Good morning, my name is Grace and I will be your conference facilitator today. At this time, I would like to welcome everyone to Boise Katzskay's third quarter, 2024 earnings 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. But is now my pleasure to introduce you to Chris Forrey, Vice President, Finance and Investor Relations, Voisee Cascade. Mr. Forrey, you may begin your conference.
Chris Forrey: Thank you Grace and good morning everyone. I would like to welcome you to Boise Cascades 3rd Quarter 2024 earnings column business update Joining me on today's call or Nate Jorgensen or CEO Kelly Hibbs or CFO intredgerer
Troy Little, head of our Wood Products Operations and Jeff Strum, head of our Building Materials Distribution Operations.
Turning this light to, this call will contain forward-looking statements.
Please review the warning statements in our press release on the presentation slides and in our filings with the SEC regarding the risks associated with these forward-looking statements.
Also, please note that the appendix includes reconciliations from our GapNet income to Yibida and adjusted Yibida and segment income to segment Yibida. I will now turn the call over to Nate.
Nate: Thanks, Chris. Good morning, everyone. Thank you for joining us for our earnings call today. I'm on slide number three.
Nate: Total U.S. housing starts and single-family housing starts decreased 3% and 1% respectively compared to the prior year quarter. Our consolidated third quarter sales of $1.7 billion were down 7% from third quarter 2023.
Nate: Our net income was $91 million, or $2.33 per share, compared to a net income of $143.1 million, or $3.58 per share in the year of the quarter.
Both of our businesses perform well and deliver good financial results in a demand environment that continues to be constrained by home affordability challenges and economic uncertainties.
I want to thank our associates across the company who continue to deliver superior value to our customer and vendor partners, no matter the demand environment.
Nate: In addition, we continue to deploy capital through our organic growth projects and additional returns of capital to our shareholders.
Nate: Kelly will now walk through our segment financial results, give some insight on fourth quarter, and then provide an update on our capital allocation in more detail, after which I'll provide an outlook before we take your questions. Kelly? Thank you, Nate.
Kelly: Good morning, everyone. Wood product sales in the third quarter, including sales to our distribution segment, were $453.9 million, down 12% compared to third quarter 2023. Wood product segment EBITDA was $77.4 million, compared to EBITDA of $122.9 million reported in the year-ago quarter.
Kelly: The decrease in segment EBITDA was due primarily to lower EWP and plywood sales prices as well as higher conversion costs.
Kelly: Lower iJoy sales volumes also contributed to the decrease in segment EBITDA.
Kelly: BMD sales in the quarter were $1.6 billion, down 6% from third quarter 2023. BMD reported segment EBITDA of $87.7 million in the third quarter, compared to segment EBITDA of $104.9 million in the prior year quarter.
Kelly: VMD gross margin dollars decreased $7.7 million from third quarter 2023. Selling and distribution expenses increased by $10 million compared to the prior year quarter, mainly due to the Brasco acquisitions.
Kelly: Turning to slide 5, on a year-over-year and sequential basis, third quarter volumes for LVO were flat and down 2% respectively, and iJoyce volumes over the same comparative periods were down 8% and 10%.
Kelly: IJOY sales volumes were influenced by multiple factors, including the level of housing starts, competition from other wood-based products, and an increasing proportion of concrete floor applications that limit wood floor opportunity.
Kelly: Sequential pricing for both LVL and iJoyce was down 2% due to continued pricing pressure in the market.
Kelly: Turning to slide 6, our third quarter plywood sales volume was 391 million feet flat with the year-ago quarter. The $333 per thousand average plywood net sales price in the third quarter was down 13% year over year and 8% sequentially.
Kelly: We experienced lower plywood pricing in July at approximately $320 per thousand before rebounding at the end of the quarter with our September average price realizations around $350 per thousand.
Kelly: Moving to slides 7 and 8.
Kelly: BMD's year-over-year third quarter sales decline of 6% was driven by sales price decreases as sales volumes were flat.
Kelly: Excluding the impact of the Brasco acquisition, BMD sales would have decreased 9% from third quarter 2023. By product line, commodity sales decreased 12%, general line product sales increased 4%, and sales of EWP decreased 14%.
Kelly: As mentioned earlier, gross margin dollars decreased $7.7 million in third quarter compared to the same quarter last year. As expected, lower margins on commodities and EWP were the principal drivers of the decline in margin dollars.
Kelly: However, BMD's gross margin percentage was 15.7%, up 50 basis points year-over-year. This increase is reflective of both BMD's ongoing growth in general line sales, which represented 44% of our sales mix in the third quarter, as well as year-over-year margin improvement in that category.
Kelly: I'm now on slide 9.
Kelly: Looking forward to the fourth quarter, October EWP and plywood volumes were resilient as they were comparable to our third quarter monthly averages.
Kelly: However, we expect seasonally lower volumes as we proceed through the quarter.
Kelly: With regards to BMD sales expectations, seasonal factors and two fewer sales days in Q4 when compared to Q3 will be headwinds for us. Our daily sales pace through October is approximately one percent below third quarter daily sales averages.
Kelly: and is expected to erode further in November and December.
Kelly: I'm now on slide 10.
Kelly: We had capital expenditures of $136 million in the nine months ended September 2024 with $62 million of spending in wood products and $73 million of spending in BMD.
Kelly: Looking forward to 2025, we expect our capital spending to be between $200 and $220 million.
Kelly: Speaking to shareholder returns, we paid $220 million in combined regular and special dividends during the nine months ended September 30, 2024. Our Board of Directors also recently approved a $0.21 per share quarterly dividend on our common stock. Shareholders of record as of December 2 will see payment of this dividend on December 18.
Kelly: During the third quarter, we also funded approximately 70 million of common stock repurchases.
Kelly: Through October, our year-to-date total share repurchases are approximately 165 million, or nearly 1.3 million shares.
Kelly: In addition, our Board of Directors recently authorized the repurchase of an additional 1.4 million shares under our Common Stock Repurchase Program. Today, we have approximately 2 million shares available for repurchase under our Share Repurchase Program.
Kelly: In summary, our capital deployment strategy continues with ongoing investments in our existing asset base, organic growth projects, and returns to our shareholders. We also have the flexibility to execute M&A if opportunities surface that align with our strategy.
Kelly: I will now turn it back over to Nate to discuss our business outlook.
Nate Jorgensen: Thanks, Kelly. I'm on slide number 11. Current industry forecasts for U.S. housing starts are approximately $1.35 million for 2024 and at or modestly above $1.4 million for 2025.
Nate Jorgensen: This compares to actual housing starts of $1.42 million in 2023, as reported by the U.S. Census Bureau.
Kelly: As of September 2024, single-family housing starts are outpacing 2023 levels by 10%, whereas multifamily starts have declined sharply from historic levels due to increased capital costs for developers and historic levels of multifamily unit completions in 2024.
Kelly: Home affordability remains a challenge for many consumers due to home prices and the cost of financing, with mortgage rate levels limiting the supply of existing housing stock available for sale.
Kelly: Large home builders are addressing affordability challenges by reducing home sizes and plan complexity, as well as offering mortgage rate buy-downs. New residential construction will continue to be an important source of housing supply moving forward.
Kelly: We expect 2025 to reflect modest growth in home improvement spending as the age of U.S. housing stock and elevated levels of homeowner equity will continue to provide a favorable backdrop for repair and remodel spending.
Kelly: While near-term growth and demand may prove modest, the value proposition for two-step distribution, particularly our ability to deliver nationwide service across leading brands in the marketplace, is unmistakable, and we will continue to execute in support of our supplier and customer partners each and every day.
Kelly: As we look past the near-term uncertainties, we remain bullish on the medium and longer-term view on housing fundamentals, which affords us the ability to maintain a clear focus on our strategy and the execution of our growth initiatives.
Kelly: Thank you for joining us today and your continued support and interest in Boise Cascade. We welcome any questions at this time. Grace, would you please open the phone lines?
Grace: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Grace: Our first question comes from the line of Michael Roxland with True Securities. Your line is now open.
Michael Roxland: Yeah, thank you Nate, Kelly, Chris for taking my questions and congrats on a very good quarter despite the backdrop.
Speaker Change: Thank you, Mike. Thanks, Mike.
Michael Roxland: First off, on BMD, can you talk about the progression of sales in BMD during the quarter? It seems like September was a softer month across many paper and packaging materials, and I'm wondering if you just had stronger sales earlier in the quarter that may have faded in September?
Speaker Change: Yeah, so, yeah, good question, Mike.
Speaker Change: I would say, you know, our activity was levels on a daily sales pace were actually fairly steady through the quarter. July, August, and September, there really wasn't a whole lot of deviation. Really, just the only impact we saw was in September, we just had two fewer sales days.
Speaker Change: Thank you. Thank you.
Speaker Change: What are you hearing right now from some of your major customers in BMD by product type, commodity, general line, regarding demand and inventory levels?
Michael Roxland: George Staphos, Susan Maklari
Speaker Change: Hey, this is Jeff. I would just say, overall, what we're hearing from our customers is, truly, the dealers are saying, just proceed very cautiously.
Michael Roxland: The commodity market, obviously we've got some nice tailwinds.
Michael Roxland: and it's past month.
Speaker Change: So there's a lot of direct activity there where we moved a fair amount of commodities into that market. But from here going forward with the seasonality coming, I think they're going to lean in hard on distribution. I think it will be very much a distribution-friendly market.
Speaker Change: One last question before turning it over. On EWP, given that up until recently lumber prices have been at cyclical lows, have you seen a share shift to lumber from EWP that may be contributing to some of the volume weakness?
Speaker Change: Hey, Mike, it's Nate. Yeah, I think a good question. I think in terms of, you know, how the builders look at, you know, what products and services they use on floor systems, they're pretty resilient and kind of stay
Speaker Change: you know, kind of true, kind of.
Speaker Change: independent of the pricing environment. So we haven't seen a lot of drift from I-Joyce or EWP systems to dimensional lumber. It's been pretty steady and consistent, despite the fact, obviously, lumber prices have certainly come off. So that would be, I guess, our view going forward as well. And part of that, Mike, as we've talked in the past, that as builders are looking for – their challenges are not only building material costs, but also cycle times. And so if they think about how do they take time out of the construction cycle, add simplicity to the cycle, EWP is a really important part of that equation. So it remains pretty stable, and we expect that going forward.
Speaker Change: Thanks very much. Thanks, Mike.
Michael Roxland: Thank you.
Speaker Change: Thank you. Our next question comes from the line of Susan McClary with Goldman Sachs. Your line is now open.
Susan Mcclary: Thank you. Good morning, everyone.
Speaker Change: Thank you. Thank you.
Susan Mcclary: My question is also on EWP and perhaps taking the other side of that, which is, as lumber does seem to be inflating, especially over the last several weeks, and if that continues through next year, can you talk about what that could mean for EWP pricing, how you're thinking about that flowing through? And then I guess, can you also talk to the EWP margins, just given the pricing decline that you've been seeing sequentially?
Susan Mcclary: Yeah, so this is Kelly. Good morning. I'll take that. In terms of the first part of your question around lumber pricing and increasing, and how could that potentially correlate DWP pricing,
Susan Mcclary: I don't have a model in front of me, but I don't think there's a lot of statistical correlation there. I think really EWP pricing will fundamentally be driven by demand and operating rates, and particularly single family starts. So I wouldn't draw a correlation there.
Michael Roxland: And then the second part of your question around, remind me what it was again, please. Yeah, the EWP margins, as you saw that pricing decelerate on a sequential basis.
Michael Roxland: Yeah, so we don't speak to margins specific to EWP, I would just continue to have you focus on EBITDA margin and what products is in total because of how integrated
Michael Roxland: you know, fairly weak still, and some come off in EPP pricing as well but we feel good about the business' operating posture and how they're operating and executing in a pretty high level.
Speaker Change: Okay, all right. That's helpful, Kelly. And then, you know, thinking about the B&B business, some of your key partners there are doing a lot of work in terms of expanding their product offerings, getting, you know, perhaps a bit deeper vertically in their businesses. As you think about that strategy coming through, what does that mean for Boise? And I guess, you know, as part of that, when we think about General Line being, I think it's about 44, 45% of your sales today. How do you see that helping you to get to perhaps, you know, a higher number? Could it become 50% over time? Or how will that all move through?
Michael Roxland: Hey Sue, it's Nate. I'll start that and I'll have Jeff fill in here as well. I think in terms of your question on our vendor partners and how they're maybe approaching their business model going forward.
Michael Roxland: Clearly, we are seeing
Michael Roxland: a number of new products and SKUs coming into the mix. And so as we look at kind of the SKU intensity, it continues to grow, which is really, to me, really supportive of two-step distribution.
Michael Roxland: Our customers downstream are looking for simplicity in terms of how they fulfill orders, and as new products and services are introduced by our key partners, we are an important part of that equation. So as we think about the new products, new services, we think that puts more responsibility on two-step distribution, and we're looking forward to that.
Michael Roxland: You know, there is, I think, you know...
Michael Roxland: measured optimism in terms of, you know, where the market is on the demand side. So I think they're going to be pretty measured in terms of their working capital footprint.
Michael Roxland: And that dependency on two-step distribution will be there as well. So, as I look at it, too, a combination of new products, new SKUs, along with a demand environment that's pretty tepid, really speaks really well to who we are and I think the importance that we have with our supplier partners and customers, obviously, moving forward.
Michael Roxland: I think to your question on, you know, kind of the mix on 44% today and, you know, what's the upside for that, I think as you continue to look at who we are and the investments that we continue to make, we want to grow the overall franchise in BMD, but general lines are really an important part of that, including our door and millwork segment. So we think that represents continued really good opportunity both for our customers and our suppliers in growing that segment, and we want to continue to kind of grow that as we have here over the last couple of years.
Speaker Change: Okay, that's very helpful, Color. And then if I could just squeeze one more in, which is, you know, you've picked up the share buybacks really nicely this quarter. Can you talk a bit about how you're thinking about capital allocation and shareholder returns from here, and just any thoughts on how that may come through over the next couple quarters?
Speaker Change: Yes, this is Kelly again. So yeah, I'd say the narrative in the script is, you know, very much the same. You know, we got some
Speaker Change: Some big capital spending ahead of us as you know in terms of organic growth as well as
Speaker Change: This session is recorded.
Speaker Change: And then beyond that, you know, we have the flexibility to do M&A if something shows up that makes sense.
Speaker Change: And then as we've demonstrated, you know, we've kind of got the, you know, the quarterly dividend as well as the two special components around either special dividends or share repurchases.
Speaker Change: We did do the special dividend in September, the $5 per share. We did buy some more shares here in the third quarter. Near term, not going to put a share number or a dollar value on it, but I expect we'll look to continue to be opportunistic as it relates to share repurchases.
Speaker Change: Okay, alright. Thank you for all the color, guys, and good luck with everything. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from the line of Kurt Ginger with DA Davidson. Your line is now open.
Speaker Change: Curt, your line is now open.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from the line of Jeffrey Stevenson with Loop Capital. Your line is now open.
Jeffrey Stevenson: Hey, thanks for taking my questions today.
Jeffrey Stevenson: This one and the follow-up one.
Speaker Change: Very good morning
Jeffrey Stevenson: I just wanted to follow up on Susan's question on general line sales. They continue to hold in well and partially offsetting some of the commodity pricing headwinds you're seeing. Is this really being driven by the product and geographic expansion you've had with key suppliers over the last several years, driving the relative outperformance of your general line category?
Speaker Change: I'd say it's a combination of things, Jeff. It's some purposeful things we've done around our door and network strategy.
Speaker Change: to, you know, not just do acquisitions there like we did with Brosco, but also do some start-ups like we've done in Dallas, Houston, Denver, Kansas City, and then the small Boise acquisitions.
Speaker Change: recently. So some of that's very purposeful. And then, in other regards, you know, we benefit from part of the question earlier around suppliers continuing to add SKUs and our ability to get those into the marketplace for them. So I'd say it's a combination of things, Jeff, driving that.
Speaker Change: Okay, now that's that's great to hear
Speaker Change: And then I'm just wondering, you know, how you're approaching inventories in your distribution business over the next six months, given, you know, you continue to face with commodity and EWP pricing headwinds, while at the same time, you know, you'll likely see some improvement on the single family housing starts as we kind of move into next year's spring selling season. So I'm just wondering, you know, how you're balancing, you know, those two things.
Speaker Change: Hey Jeff, this is Jeff. I would tell you, it is...
Speaker Change: It is a balancing act, is what it is right now. It is a distribution-friendly market. We know we need to be there to serve our customers, so we want to have the right amount of inventory. But at the same time, you do have the seasonal slowdowns coming right now, so we're looking after two. If we're going to err on one side, then we're going to err on the side of having inventory to serve our customers.
Speaker Change: Okay, great. Now that makes sense. And if I missed this, I apologize I got on late, but just the timeline for the, you know, Oakdale, Louisiana plant modernization, and, you know, are you expecting to largely offset the, you know, lost plant capacity at other facilities during that time period?
Speaker Change: Yeah, Jeff, good morning. This is Troy Little. Yeah, the timing on the project is actually this week. We'll start demolition.
Speaker Change: on two dryers and then go through the fourth quarter at about a 50% capacity, be down during the first quarter and then starting back up in the second quarter.
Speaker Change: In addition to that, we're also working on our Log Utilization Center, so that work is well underway right now, and it'll parallel that, and then we also have some activity going on at...
Speaker Change: at Thor's beyond just some pre-spending for the EyeLine project next year.
Speaker Change: But in terms of your question around being prepared, yes, we accumulated veneers. We did have, you know, kind of some spending at the other facilities to make sure they were in order. And we don't expect any impact in terms of
Speaker Change: inventory available to our customers during this time, so we're well prepared going into it.
Speaker Change: Great to hear. Thank you.
Speaker Change: Thank you, Jeff.
Speaker Change: Thank you. Our next question comes from the line of Keaton Momtora from BMO Capital Markets. Your line is now open.
Keaton Momtora: Good morning and thanks for taking my question.
Keaton Momtora: Thank you.
Speaker Change: So, you know, as we think about Q4, both on
Keaton Momtora: EWP volumes and just, you know, sort of activity levels and in DMD. Sounds like October has held in quite well, but you are pointing to sort of seasonal, you know, slowdown in demand. How would you have a sort of think about
Keaton Momtora: that piece given there are quite a bit of cross-currents going on in the market and cyclically are you seeing things stabilize, getting better, or taking a step down? What is the right way to think about it?
Speaker Change: Yeah, those are...
Speaker Change: Those are all the right questions, good questions Keaton, so
Speaker Change: So yes, October held up well, you know, I think 20, 23 sales days, good strong month, you know.
Speaker Change: I'm really happy with the results in October.
Speaker Change: Come November and December, you know, certainly fewer sales days.
Speaker Change: could be impacted by weather and then, you know, just kind of the continued kind of uncertainty and narrative around mortgage rates and other factors out there in the environment. So I would suspect
Speaker Change: You know, I think our EWP volumes...
Speaker Change: will, you know, they will trend largely with single-family housing starts and so we'd expect them to trend down like we saw
Speaker Change: last year, last year fourth quarter. And I think in BMD, again, a nice sales pace as I alluded to in October, but we'd expect to see that come off in November and December. And again, there's fewer sales days.
Speaker Change: You know, we're getting a little bit of goodness right now from the margin profiles as it relates to commodities.
Speaker Change: But again, the top line will be a big driver of BMDs.
Speaker Change: And I think what's most important for us is to make sure we've got capability to pivot quickly. And so to respond to the marketplace, whatever that might be. And so as Kelly described, you know, October has been
Speaker Change: pretty resilient in terms of what's happened and some of the supply decisions.
Speaker Change: on commodities in terms of reduced supply has created a reasonable backdrop here short-term. So our commitment and promise both to our customers and suppliers is to be in a position to serve. And so we're in an environment where it's not overly predictable, but we're going to, again, be in a really good spot to make sure we can pivot appropriately.
Speaker Change: Understood, that's helpful. And just a couple of quick ones. I'm curious how the Brasco business is performing.
Speaker Change: Roscoe business so far is it's been rock solid. It's everything we'd hoped to be and a little bit more and it has really performed well.
Speaker Change: Got it. And then, you know, Kelly, maybe your operating rates in EWP in the third quarter?
Kelly Hibbs: Yeah, they were right around 80% in the third quarter. Volumes are pretty consistent-ish with the second quarter, and our operating rates were right around 80%.
Speaker Change: Understood. Very helpful, I'll jump back in the queue. Thank you.
Speaker Change: Thanks, Clay. Thanks, Clay. Thanks, Clay.
Speaker Change: Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.
Speaker Change: Our next question comes from the line of Kurt Jinger with DA Davidson. Your line is now live.
Kurt Jinger: Great, thank you. Can can you hear me? Yeah, you're good Kurt. Go right ahead. Okay. Sorry about that earlier Just wanted to start off on on EWP
Kurt Jinger: You know, clearly just one quarter. But in terms of the stability in year-over-year LVL volumes versus I-Joyst, would you mostly just chalk that up to kind of geographic mix and kind of slab?
Speaker Change: I would say, when you look at mix, IJOYs are probably more influenced by that than LVL headers, as an example. So, to your point, if there's a lot of slab-on-grade construction, it still represents an opportunity for LVL, especially if it's only a single-story construction for slab-on-grade. So, we view it as very much a geographic mix statement, and that's, again, consistent with expectations.
Speaker Change: Got it. And over the last two quarters now, I mean, one of your big customers has kind of talked about, you know, a shift.
Speaker Change: Maybe back towards IJOYST versus...
Kelly Hibbs: floor trusses. I'm curious whether you're hearing that sentiment broadly and whether that's something at this stage that you think could be a relative driver of outperformance potentially next year relative to underlying single-family starts demand.
Kelly Hibbs: Yeah, Kurt, it's Nate again. I would say, you know, when it comes to, you know, competitive floor systems, you know, open web plated floor trusses versus iJoyst, and again, as you made a comment earlier, just in terms of how the builders are thinking about what success has to be for them, they're looking at cycle times.
Kelly Hibbs: And they're looking at how do they create speed and simplicity on the job site and iJoyce EWP represents that. So as we think about the backdrop and competing against plated floor trusses.
Kelly Hibbs: Again, seeing Engineer Wood, we feel good about that environment, in part given what the builder is trying to get accomplished, which is how do they reduce cycle times.
Speaker Change: Got it. Okay. Thanks for that Nate and then appreciate Troy kind of outlining
Speaker Change: the timeline with Oakdale. Kelly, is there any way to think about kind of temporary P&L impacts related to the downtime? Obviously it doesn't sound like it's going to impact volumes, but any discrete cost headwinds we should kind of be aware of over the next couple quarters.
Kelly: Yeah, nothing I'd probably have you build in specifically just yet, Curt. I mean, our fourth quarter is typically, we usually take some maintenance and downtime during that quarter anyway, so wouldn't expect to see a lot of year-over-year impact from that.
Speaker Change: We'll continue to assess as we move into 2025, and if we have anything meaningful to speak of, we'll share that, but at this point, I don't think we'd share anything meaningful. To Troy's point, the team in the Southeast did a great job of...
Speaker Change: Making sure we have plenty of veneer to support EWP in that marketplace because Oakdale is a very important veneer supplier Alexandria, Louisiana, so we've done a good job of building inventory there
Kelly Hibbs: You know, might we have a little bit of volume impact on plywood into the first and second quarter? Yes, we will. But Oakdale, it's a big veneer supplier. It has much more meaningful impact to Alex EWP than it does to our plywood volumes.
Speaker Change: Got it. Okay, that's great. And then finally, just on on BMD gross margins.
Speaker Change: We'll see what November and December bring on the commodity pricing front, but is it fair to say that what you've seen in October would still be a little bit better than even what was a pretty strong Q3 gross margin performance?
Speaker Change: And, thank you for joining us. Thanks, Kelly. Bye, Kelly. Bye. Thank you, Kelly. Bye. Bye. Thank you. Bye. Bye. Bye.
Speaker Change: October was good, the sales pace was good, the margin was solid, a little bit of energy in commodities and as you know we'll see, I think that's
Speaker Change: In my view, the energy and commodities has been much more supply-driven phenomenon in demand, so we'll see what happens here in November and December.
Speaker Change: Okay, perfect. And then just last one in terms of...
Speaker Change: EWP kind of installed capacity, obviously a lot of runway for growth there. I'm curious how you're positioning going into next year, given some of the uncertainty around kind of labor in the facilities and the flexibility to ramp up or ramp down, depending on kind of what ultimately materializes on the demand front.
Troy Little: Yeah, this is Troy.
Kelly Hibbs: I mean that that kind of speaks to our integrated model and so in terms of keeping employees We've got the ability to shift veneer and or you know some production time over to the plywood side
Kelly Hibbs: if we have any need to do that. And so I don't think we have...
Kelly Hibbs: a huge risk there. In terms of expansion, I mean, there's easing on the labor side a little bit. And so it's a matter of, you know, we always have turnover, but
Kelly Hibbs: To the degree that we need to ramp up for that, we're prepared in advance relative to any additional shifts that we would add. So I think we're good.
Speaker Change: Okay, sounds good. I appreciate the color guys. Thank you.
Speaker Change: Thanks, Kurt.
Speaker Change: Thank you for watching!
Speaker Change: I'm showing no further questions at this time. This concludes the question and answer session, and I would now like to turn it back to Nate Jorgensen for closing remarks. Go ahead.
Nate Jorgensen: Great. Thanks, Grace. We appreciate everyone joining us this morning for our update and thank you for continuing interest and support of Boise Cascade. Please be safe and be well. Thank you.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Speaker Change: Thank you for watching.