Q2 2025 Boise Cascade Co Earnings Call
Good morning. My name is Corey and I will be your conference facilitator. Today at this time I would like to welcome everyone to Boise Cascade second quarter 2025 earnings conference call all lines have been placed on you to prevent any background noise. After the speakers are marked, there will be a question and answer session to ask a question during the session. You will need to press star 1, 1 on your telephone. You will then hear an automated message advising you
Get your hand is raised.
Chris Forrey: Thank you, Corey, and good morning, everyone. I'd like to welcome you to Boise Cascade's second quarter 2025 earnings call and business update. Joining me on today's call are Nate Jorgensen, our CEO; Jeff Strum, our COO; Kelly Hibbs, our CFO; Troy Little, head of our wood products operations; and Joe Barney, head of our building material distribution operations. Turning to slide two, 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 GAAP net income to EBITDA and adjusted EBITDA and segment income to segment EBITDA. I will now turn the call over to Nate.
Please be advised that today's conference is being recorded. It is now my pleasure to introduce Chris fory, Vice President of Finance, and investor relations a Boise Cascade Mr. Fory, you may begin your conference
Thank you, Corey and good morning everyone. I'd like to welcome you to voice of cascade. Second quarter 2025 earnings call and business update.
Joining me on today's call or Nate Jorgensen our CEO Jeff. Strum our coo Kelly hibs our CFO.
Troy little head of our wood products operations and Joe Barney head of our building material distribution operations, turning to slide 2. This call will contain forward-looking statements, please review the warning statements in our press release on the presentation slides and then our filings with the SEC regarding the risks associated with these forward-looking statements,
Also, please note that the appendix includes reconciliations from our gaap, net income to ibida and adjusted ibida. And segment income to segment ibida.
Nate Jorgensen: Thanks, Chris. Good morning, everyone. Thank you for joining us for our earnings call today. I'm on slide number three. Total US housing starts and single-family housing starts decreased 1% and 8% respectively compared to the prior year quarter. Our consolidated second quarter sales of 1.7 billion were down 3% from second quarter of 2024. Our net income was 62 million, or $1.64 per share, compared to a net income of 112.3 million, or $2.84 per share in the year-ago quarter. Included in our second quarter results are 7.7 million of pre-tax gain on asset sales, where I'm happy to report we monetized non-operating properties of both wood products and BMD. We experienced sequential volume growth driven by seasonally stronger activity. However, underlying demand continued to be constrained due to affordability challenges, elevated existing home inventory, and consumer uncertainty.
I will now turn the call over to Nate.
Thanks, Chris. Good morning, everyone. Thank you for joining us for our Ernie's call today. I'm on slide number 3.
Total US housing starts and single family housing starts decreased 1% and 8% respectively. Compared to the prior year quarter, our Consolidated, second quarter sales of 1.7 billion were down, 3% from second quarter of 2024,
Arnet income was 62 million or 1.64 cents per share compared to net income of 112.3 million or $2.84 per share in the year ago quarter.
Including our second quarter results are 7.7 million of pre-tax. Gain on asset sales, where I'm happy to report. We monetize non-operating properties of both wood products and bmd.
Nate Jorgensen: I'm pleased to share that the modernization project at our Oakdale mill is substantially complete, which represents a significant milestone for our Southeast manufacturing system. I want to thank our associates across our organization who made this project successful. We will benefit from enhanced operational efficiency and reliability while advancing our distinct competitive advantage to drive incremental value creation through our self-sufficient veneer production. As we navigate a dynamic marketplace, our actions will address near-term challenges without sacrificing the service standards that our customer and supplier partners have come to expect from us. At the same time, we are well-positioned to continue to invest in opportunities that drive enduring, sustainable growth in the years ahead, supported by the strong structural demand drivers we see in residential construction over the long term.
We experienced sequential volume growth driven by seasonally stronger activity. However, underlying demand continued to be constrained due to affordability challenges, elevated existing home inventory, and consumer uncertainty.
Pleased to share that the modernization project at our Oakdale Mill is substantially complete, which represents a significant milestone for our Southeast manufacturing system.
I want to thank our Associates across our organization who made this project successful.
We will benefit from enhanced operational efficiency and reliability. While advancing our distinct competitive advantage to drive incremental value creation through, our self-sufficient veneer production.
Nate Jorgensen: Kelly will now walk through our segments, financial results, capital allocation priorities, and guidance on our third quarter results, after which I'll make closing comments before we take your questions. Kelly?
As we navigate a dynamic Marketplace, our actions will address near-term challenges without sacrificing this service standards that our customer and supplier Partners have come to expect from us. At the same time, we are well, positioned to continue to invest in opportunities that drive enduring sustainable growth in the years ahead, supported by the strong. Structural demand drivers. We see in residential construction over the long term.
Kelly Hibbs: Thank you, Nate. Good morning, everyone. Wood product sales in the second quarter, including sales to our distribution segment, were 447.2 million, down 9% compared to second quarter 2024. Wood product segment EBITDA was 37.3 million compared to EBITDA of 95.1 million reported in the year-ago quarter. The decrease in segment EBITDA was due primarily to lower EWP and plywood sales prices, as well as lower plywood volumes and an unfavorable profit in inventory adjustment. In addition, the scheduled Oakdale outage negatively impacted year-over-year EBITDA comparisons. These decreases in segment EBITDA were offset partially by a $3.9 million gain on the sale of a non-operating property. In BMD, our sales in the quarter were 1.6 billion, down 2% from second quarter 2024. BMD reported segment EBITDA of 91.8 million in the second quarter compared to segment EBITDA of 97.1 million in the prior year quarter.
Kelly will now walk through our segment, Financial results Capital, allocation priorities and guidance on our third quarter results after which I'll make closing comments before we take your questions Kelly,
Thank you, Nate, and good morning. Everyone would product sales in the second quarter, including sales to our distribution segments, were 447.2 million down 9% compared to second quarter 2024, what product segment? Ibaa was 37.3 million compared to ibaa of 95.1 million reported in the year ago quarter.
Hotel. Outage negatively impacted year-over-year. EBA dog comparisons.
These decreases in segments, EBA were offset, partially by 3.9 million gain on the sale of a non-operating property.
in bmd, our sales in the quarter were 1.6 billion down 2% from second quarter, 2024
Kelly Hibbs: The decrease in segment EBITDA was driven primarily by increased selling and distribution expenses of 12.1 million. However, BMD's gross margin dollars increased 3.4 million from second quarter 2024, and our gross margin was 15.4%, a 60 basis point year-over-year improvement. In an environment where demand was stagnant and many product prices were declining, we are pleased with our gross margin performance, a reflection of very good execution by our team and our focus to increase the portion of our sales in best-in-class general line products. In addition, segment income benefited from a 3.8 million gain on the sale of a non-operating property. Turning to slide five, year-over-year and sequentially, second quarter LVO volumes were up 8% and 18% respectively, while iJOYS volumes for the same comparative periods were down 5% and up 14%.
Bmd reported segment. EBA 91.8 million in the second quarter compared to segment. EB 97.1 million in the prior year quarter. The decrease in segments, EBA was driven primarily by increased selling and distribution expenses of 12.1 million. However, bmd gross margin dollars. Increase 3.4 million from second quarter 2024, and our gross margin was 15.4% a 60 basis point year-over-year Improvement
In an environment where demand was stagnant and many product prices were declining, we are pleased with our gross margin performance. Our reflection of very good execution, by our team and our Focus to increase the portion of our sales in best-in-class general Line Products in addition, segment income benefited from a 3.8 million gain on the sale of a non-operating property.
Turning the slide 5.
Kelly Hibbs: As referenced earlier, Wood Products' second quarter income included an adjustment to reverse profits associated with inventory sold to our distribution segment that is yet to be sold into the marketplace. This adjustment resulted in an unfavorable sequential variance of approximately 6 million. As it relates to pricing, competitive pressures drove sequential declines for LVO and iJOYS of 3% and 2% respectively. Turning to slide six, our second quarter plywood sales volume was 356 million feet compared to 383 million feet in second quarter 2024. The decrease was primarily driven by the planned outage at our Oakdale mill, as well as downtime at our Kettle Falls mill to complete a scheduled maintenance project. The 342 per thousand average plywood net sales price in the second quarter was down 6% on a year-over-year basis and flat compared to first quarter 2025.
Year-over-year in sequentially, second quarter, LVL volumes were up 8% and 18%, respectively. While I-joist volumes for the same comparative periods were down 5% and up 14%, as referenced earlier. Wood Products' second quarter income included an adjustment to reverse profits associated with inventory sold to our distribution segment that is yet to be sold into the marketplace. This adjustment resulted in an unfavorable sequential variance of approximately $6 million.
As it relates to pricing competitive pressures. Drove sequential declines for LVL and I joists of 3% and 2% respectively.
Turning to slide 6, our second quarter plywood sales volume was 356 million. Ft compared to 383 million ft in second quarter. 2024, the decrease was primarily driven by the planned outage at our Oakdale Mill, as well as downtime at our Kettle Falls Mill to complete. A scheduled maintenance project.
Kelly Hibbs: Moving to slide seven and eight, BMD's year-over-year second quarter sales decline of 2% was driven by a 2% decrease in prices as sales volumes were flat. By product line, commodity sales decreased 5%, general line product sales increased 4%, and sales of EWP decreased 12%. However, our sequential sales results reflected seasonally stronger activity, with our sales increasing 15% from first quarter. As I mentioned earlier, BMD's second quarter gross margin percentage was 15.4%, up 60 basis points year over year. In particular, gross margin dollars were affected by increased margins on general line products, offset partially by decreased margins on commodity and EWP products. BMD's EBITDA margin was 5.7% for the quarter, down from the 5.9% reported in the year-ago quarter, but up from the 4.5% reported in the first quarter.
The 342 per thousand average plywood, net sales, price in the second quarter was down, 6% on a year-over-year basis and flat compared to first quarter of 2025.
Moving to slide 7 and 8, bmds year-over-year second quarter sales, decline of 2% was driven by a 2% decrease in prices as sales volumes were flat by product line, commodity sales decreased 5%, General line product sales increased 4% and sales of ewp, decreased 12%. However, our sequential sales results, reflected seasonally stronger activity with our sales increasing 15% from first quarter,
As I mentioned earlier bmd, second quarter, gross margin. Percentage was 15.4% up 60 basis points year-over-year in particular. Gross margin dollars were affected by increased margins on General Line. Products offset by partially by decreased margins on commodity and ewt products.
Kelly Hibbs: After market conditions led to a slow start to the year, increased sales activity in the second quarter and good execution by the BMD team allowed our EBITDA margins to rebound nicely. I'm now on slide nine. We had capital expenditures of 132 million in the six months ended June 2025, with 70 million of spending in wood products and 62 million of spending in BMD. We remained committed to the capital plan presented earlier in the year, with our capital spending range for 2025 unchanged at 220 to 240 million. In wood products, that range includes the multi-year investments in support of our EWP production capabilities in the Southeast. As Nate mentioned earlier, the Oakdale modernization is substantially complete, and startup and optimization activities are going well. The Thorsby Eye line is expected to be operational in the first half of 2026.
Em's. Eva margin was 5.7% for the quarter down from the 5.9% reported in the year ago quarter. But up from the 4.5% reported in the first quarter after market conditions led to a slow, start to the year, increase sales, activity in the second quarter and good. Execution by the bmd team allowed our IBA Dom margins to rebound nicely.
I'm now on slide 9. We reported capital expenditures of $132 million in the six months ended June 2025, with $70 million of spending in wood products and $62 million of spending in BMD.
We remain committed to the capital plan presented earlier in the year, with our Capital spending range for 2025 unchanged at 220 to 240 million.
In what products? That range includes the multi-year investments in support of our ewp production capabilities in the Southeast. As Nate mentioned earlier, the Oakdale modernization is substantially complete and startup and optimization activities are going well.
Kelly Hibbs: In BMD, part of our capital deployment strategy is to solidify and expand our market-leading national distribution presence. In the second quarter, we completed two lease buyouts of our highly successful distribution centers in Chicago and Minneapolis. In addition, construction at our Greenfield Distribution Center in Hondo, Texas, is nearly complete, and we expect to begin servicing the San Antonio market from there by the end of the third quarter. Speaking to shareholder returns, we paid 18 million in regular dividends in the first half of 2025. Our board of directors also recently approved a 22 cent per share quarterly dividend on our common stock, which represents a 1 cent per share, or approximately 5% increase, that will be paid in mid-September.
Thorsby eye line is expected to be operational in the first half of 2026 and bmd part of our Capital deployment strategy is to solidify and expand our Market leading National Distribution presence. In the second quarter. We completed 2 lease, buyouts of our highly successful distribution centers in Chicago and Minneapolis in addition construction under Greenfield Distribution Center in Hondo. Texas is nearly complete and we expect to begin to servicing the San Antonio Market from there by the end of the third quarter.
Speaking to shareholder returns, we paid 18 million in regular dividends in the first half of 2025.
Kelly Hibbs: Through the first seven months of 2025, we repurchased approximately 96 million of Boise Cascade common stock, which includes approximately 32 million in the second quarter and another 10 million in July. Today, we have about 850,000 shares available for repurchase under our current share repurchase program. In summary, our balance sheet remains strong, and we continue to be dedicated to a balanced deployment of capital by investing in our existing asset base, pursuing value-enhancing organic and M&A growth opportunities that position the company for sustainable long-term growth and returning capital to our shareholders. We're fortunate that our solid financial foundation and resilient free cash flow allow us to simultaneously advance each of these objectives. I'm now on slide 10. Looking forward to the third quarter, we expect headwinds for residential construction activity will persist.
Dividend on a common stock, which represents a 1 cent per share or approximately 5% increase that will be paid in mid September.
Through the first 7 months of 2025 where we repurchased approximately 96 million of Boyce Cascade common stock, which includes approximately 32 million in the second quarter and another 10 million in July. Today we have about 850,000 shares available for repurchase under our current share repurchase program.
In summary, our balance sheet remains strong, and we continue to be dedicated to a balanced deployment of capital by investing in our existing asset base, pursuing value-enhancing organic and M&A growth opportunities that position the company for sustainable, long-term growth, and returning capital to our shareholders. We're fortunate that our solid financial foundation and resilient free cash flow allow us to simultaneously advance each of these objectives.
I'm now on slide 10.
Kelly Hibbs: With that in mind, and recognizing that even near-term forecasts are difficult to make given the current market dynamics, we have presented a range of potential EBITDA outcomes and related key drivers. For wood products, we currently estimate third quarter EBITDA to be between 20 and 30 million. We expect our EWP volumes will decline high single digits sequentially as home builders moderate their starts pace to align with new home sales and our channel partners reduce inventory levels. On EWP pricing, low to mid-single digit sequential declines are expected as competition for share persists. In plywood, we expect mid-single digit sequential volume increases resulting from the resumption of operations at our Oakdale mill and the avoidance of planned maintenance downtime that we experienced in the second quarter at our Kettle Falls operation. On plywood pricing, July realizations were approximately 5% below our second quarter average.
Looking forward to the third quarter. We expect expect headwinds for residential construction activity. Will persist with that in mind and recognizing, that even near-term forecasts are difficult to make given the current market dynamics. We have presented a range of potential, EBA outcomes and related key drivers for wood products. We currently estimate third quarter, EBA dub to be between 20 and 30 million
We expect our ewp volumes will decline High single digits sequentially as home. Builders moderate, their starts pays to align with new home sales and our Channel Partners. Reduce inventory levels on ewp pricing low to mid single digits. Sequential. Declines are expected as competition per share, persists.
In plywood, we expect mid single digit. Sequential volume increases resulting from the resumption of operations.
Kelly Hibbs: Partially offsetting changes in wood products' top line are somewhat lower expected manufacturing and web stock costs due to improved operating rates at Oakdale and Kettle Falls and weakness in OSB pricing. For BMD, we currently estimate third quarter EBITDA to be between 70 and 80 million. BMD's daily sales pace in July was approximately 3% below the second quarter sales pace of 25.2 million per day. Our daily sales pace for the balance of the third quarter will be dependent upon end market demand, product pricing, and our customer partners' reliance upon us for next day out-of-warehouse service. Lastly, in addition to the limited near-term clarity for end market demand, our uncertainties from trade and tariff policy changes create the potential for meaningful forward pricing volatility for plywood, lumbar, and other commodity products. I'll now turn it back over to Nate to share our business outlook and closing remarks.
at our Oakdale Mill and the avoidance of plan, maintenance downtime that we experience in the second quarter at our Kettle Falls operation on plywood, pricing July realizations were approximately 5% below, our second quarter average,
Partially offsetting changes in Wood Products, Top Line are somewhat lower expected, manufacturing and webstock costs. Due to improved operating rates at Oakdale and Kettle Falls and weakness in OSB pricing.
For bmd, we currently estimate third quarter, EBA to be between 70 and 80 million bmb's daily sales Pace in July was approximately, 3%. Below the second quarter sales pace of 25.2 million per day. Our daily sales pace for the balance of the third quarter, will be dependent upon end, market demand product pricing and our customer Partners. Reliance upon us for next day out of Warehouse service.
Lastly, in addition to the limited near-term clarity for Enmarket, demand, there are uncertainties from trade and tariff policy changes that create the potential for meaningful forward pricing volatility for plywood, lumber, and other commodity products.
Nate Jorgensen: Thanks, Kelly. I'm on slide number 11. No matter the operating conditions, our experienced team remains committed to creating value for our shareholders, as well as our customers and suppliers, by staying resilient, adaptable, and focused on delivering exceptional products and services. Due to our integrated model, we're able to take advantage of increased channel inventory visibility, allowing us to better navigate market uncertainty by aligning production rates and inventory strategies with end market demand. Cross-divisional efficiencies, combined with our robust balance sheet, provide us the ability to stay focused on the execution of our strategy and creation of long-term value for our stakeholders. We remain confident that long-term demand drivers are residential construction, such as the undersupply of housing units, the age of US housing stock, and the high levels of homeowner equity remain robust.
I'll now turn it back over to Nate, to share our business Outlook, and closing remarks.
Thanks Kelly. I'm on slide number 11. No matter the. Operating conditions are experienced team remains committed to creating value for our shareholders, as well as our customers and suppliers by staying resilient adaptable and focused on delivering exceptional products and services.
Due to our integrated model, we're able to take advantage of increased Channel inventory. Visibility allowing us to better navigate Market uncertainty by aligning production rates and inventory strategies with end market demand.
Across divisional efficiencies combined, with our robust balance sheet, we have the ability to stay focused on the execution of our strategy and the creation of long-term value for our stakeholders.
Nate Jorgensen: Additionally, generational tailwinds driven by millennials and Gen Z reaching the peak age for household formation and more seniors opting to age in place continue to support household formation growth. These structural and generational factors underpin the industry's strong core fundamentals. Repair and remodeling activity has been held back by diminished levels of existing home turnover and from homeowners delaying large repair and remodel projects due to the high costs of accessing their equity, combined with economic uncertainty. We expect consumer confidence to improve with lower interest rates and greater clarity on US economic policy. These factors collectively create a long runway for growth in repair and remodel projects.
We remain confident, that long-term demand drivers are residential construction. Such as the undersupply of housing units, the age of US housing, stock and the high levels of homeowner Equity, remained more robust.
Additionally, generational tailwinds driven by Millennials and Gen Z, reaching the peak age for household formation, and more seniors opting to age in place continue to support household formation growth.
These structural a generational factors underpin. The industry's strong core fundamentals.
Nate Jorgensen: In addition, consistent investment in our wood products assets across all phases of the business cycle is critical to driving overall growth, as it enhances efficiency during market downturns and enables greater operating rate flexibility and product availability for our customer base when demand regains momentum. Lastly, markets with limited clarity make for distribution-friendly environments, and we look forward to again demonstrating the value proposition of two-step distribution across a broad mix of products and curious whether there's near-term demand or price uncertainty like we're experiencing today. As always, we stand ready to serve our customers and expect they will place additional reliance on our out-of-warehouse capabilities given the environment. Thank you for joining us today and for your continued support and interest in Boise Cascade. We would welcome any questions at this time. Corey, would you please open the phone lines?
Repair and remodeling activity has been held back by diminished exit levels of existing home turnover and from homeowners delay in large repair, remodel projects due to the high cost of accessing their Equity combined with economic concern Dy. We expect consumer confidence to improve with lower interest rates and greater Clarity on US economic policy. These factors collectively create a long runway for growth in repair and remodel projects.
in addition consistent investment in our wood products assets across All Phases of the business cycle is critical to driving overall growth as it enhances efficiency during market downturns and enables greater operating rate, flexibility and product availability for our customer base when demand regains momentum,
To a can demonstrating the value proposition of 2, Step distribution across a broad mix of products in Period where there's there's near-term demand or Price uncertainty like we're experiencing today.
As always, we stand ready to serve our customers and expect, they will place additional Reliance on our Auto Warehouse capabilities, given the environment.
Corey: Thank you very much. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Kurt Yinger of DA Davidson. Kurt, your line is open.
Thank you for joining us today and for your continued support and interest in Boise Cascade. We would welcome any questions at this time? Corey, would you please open the phone lines?
Thank you very much at this time, we will conduct the question and answer session as a reminder, to ask a question, you need to press star 1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please press star 1 1 1 again.
Stand by while we compile the Q&A roster.
Kurt Yinger: Great. Thank you, and good morning, everyone. Morning, Kurt. Just wanted to start off on EWP. Your date LVL volumes up to even iJOYS down four is nicely outperforming kind of what we're seeing in terms of single-family starts. Can you talk a little bit about what's driven that performance gap and similarly, you know, what we should maybe take from the difference between kind of LVL and iJOYS volume trends?
Our first question comes from Kurt Jinger of Da Davidson Kurt your line is open.
Great. Thank you and good morning everyone.
Just wanted to start off on on ewp.
Nate Jorgensen: Hey, Kurt and Sneedman. Let me start that. I think when it comes to, you know, the LVL market, I think it has probably a little bit better resiliency in terms of just the different application opportunities that exist in the marketplace today. So when you think about, you know, obviously beams and headers, wall framing, those are all, you know, growth, continue to be growth opportunities for, I think, in our LVL category. iJOYS is pretty much, you know, centered on floor systems. And so that can have maybe a more limited opportunity or upside, just given, you know, kind of some of the dynamics of there, including some of the competitive factors on plated floor trusses and dimensional lumber, as well as a slab on gray construction.
Um, your date of LVL volumes up to even high droids down 4 is is nicely outperforming kind of what we're seeing in terms of seeing a family starts. Can you talk a little bit about what's Driven that performance Gap and and similarly, you know what? We should maybe take from the difference between kind of LVL and and iJoy volume trends.
Hey, Curtis Nate. I'll let me start that. I think. Um I think when it comes to um, you know, the LVL Market I think it has some probably a little bit better resiliency in terms of just the, um, the different application opportunities that exist in the marketplace today,
Nate Jorgensen: So I think overall we feel really good about our footprint and representation at both LVL and iJOYS, and iJOYS will have a little bit different cadence in terms of takeaway, in some cases dependent upon where those housing starts are, as well as some of the competitive challenges that might be out there.
Kurt Yinger: Okay. So is it fair then, Nate, to say, you know, in terms of even iJOYS kind of outperforming on the single-family side, maybe that's a, you know, mix of where starts are occurring, maybe a little bit of share shift, kind of back from plated floor trusts, or I guess as you think about, you know, your dealer partnerships and things like that, do you feel like you're kind of gaining wallet share?
So, when you think about, you know, um, obviously beams and headers wall framing. Those are all um, you know, growth continued to be growth opportunities for. I think our LVL category I joist is pretty much, you know, centered on floor systems and and so that can have maybe more limited um opportunity or upside just given, you know, kind of some of the Dynamics of their including some of the competitive factors on plated floor trusses and dimensional Lumber as well as a slab on grade construction. So I think overall we feel really good about our our footprint and representation at both LVL and I joist and I joist will have a little bit different Cadence in terms of takeaway in some cases depending upon where those housing starts are as well as some of the competitive uh challenges that might be out there.
Okay. So so is it fair that Nate to say, you know, in terms of even I joists kind of outperforming on the single family side. Maybe that's uh you know, mix of where it starts or occurring. Maybe a little bit of share shift kind of back from plated floor trusts or I guess as you think about, you know, your dealer Partnerships and and things like that. Do you do you feel like you're kind of gaining wallet, share?
Corey: One moment for a technical difficulty. We'll be right back. Please stand by while we get them back on the line.
1 moment for a technical difficulty. We'll be right back.
Please stand by while we get them back on the line.
Kurt Yinger: I'm just going to click back in from the link.
Corey: Thank you. I can hear you again.
I'm going to click back in from the link. Thank you. I can hear you again.
Kurt Yinger: Corey, can you hear us now?
Corey: Yes, sir. I can hear you again. Thank you very much.
Corey, can you hear us now? Yes, sir. I can hear you again. Thank you very much.
Kurt Yinger: Yeah. Sorry, just following up there, Nate, in terms of, you know, you talked about kind of geographic mix of starts, you know, the competitive dynamics in terms of floor systems. I guess as you kind of look across the customer landscape, whether it's builders or dealers, do you still feel like you're gaining wallet share there, or you know the relative performance is mostly due to those other factors?
Yes sorry just just sign up there. Nate in terms of you know you talked about kind of geographic uh mix of starts. You know the competitive Dynamics in terms of floor systems I guess as as you kind of look across the customer landscape whether it's Builders or dealers, do you still feel like you're you're gaining wallets here there or you know, the the relative
Relative performance is mostly due to those other factors.
Corey: One moment while we work through technical difficulties.
1 moment, while we work through technical difficulties.
Nate Jorgensen: Corey, can you hear us?
Corey: You said say.
Yes.
Kurt Yinger: I'm not hearing you.
I'm not hearing you.
Nate Jorgensen: One moment, please.
1 moment, please.
Volume here.
Test 1, 2.
Okay.
Corey: Test one, two.
Nate Jorgensen: I can't speak.
Kurt Yinger: All right. Now we're getting feedback loop, though.
I can feature this from my phone.
All right, now we're getting feedback loop though.
Nate Jorgensen: We're going to try the link again. One moment.
We're going to try the link again, 1 moment.
Kurt Yinger: So you can hear the room. We just can't hear them. He's muted. We're live.
So you can hear the ram.
We just can't hear that.
He's muted.
we're like,
Corey: Kurt, will you please ask your question one more time?
Kurt will you please ask your question 1 more time?
Kurt Yinger: Yes, sure. Maybe just switching gears on. In terms of the EWP restock kind of referenced in Q3, is there, I guess, a good way to think about the sizing of that and whether that might spill into Q4 as well?
Yes, sure. Um,
maybe just searching gears on in terms of
The ewt stock kind of referenced in in Q3 is there? Um, I guess a good way to think about the sizing of that and and whether that might spill into Q4 as well,
Nate Jorgensen: Yes, I have to say in terms of the.
Kurt Yinger: Question on.
Nate Jorgensen: Maybe the way I would think about that is not just on EWP, but other products as well, is the purchase profile is going to be likely changing. So maybe there's going to be less mill directs, but there's going to be more activity in terms of units and job packs and pieces on a distribution. So that theme has been really clear from our customers in terms of how they're going to manage their working capital as they go through the course of 2025 and probably early into '26 on a range of products. And so even though the inventory may change a little bit or the order patterns may change a little bit out of our mills, again, we think the consumption will be heavy on a distribution out of our warehouse, which, again, we're really well set up to go perform an expertise to that standard.
in terms of,
Maybe the way I would think about that is not just that I need to repeat, but other products as well is the purchase profile. It's going to be likely changing, so maybe there's going to be less bill directs, but there's going to be more activity in terms of units and job hacks and pieces on a distribution. So that theme has been really clear from our customers in terms of how they're going to manage their working capital as they go through the course of 2025 and probably early 2026 on a range of products. And so.
Kurt Yinger: I appreciate the color, Nat. I'll come back and meet you. Thank you.
even though the inventory May uh, change a little bit or the order patterns, may change a little bit out of our Mills again. We we think the concept consumption will be heavy out of distribution out of our warehouse, which again, we're really well. Set up to go perform and execute to that standard.
Appreciate the color. Nice. Thank you.
Corey: Thank you very much. One moment for our next question. Our next question comes from George Staffos of Bank of America. George, your line is open.
Kurt Yinger: Hey, good morning, guys. This is Brad Barton on for George. Thanks for taking the question. You know, just starting off quickly, if you guys could just talk to the operating rates across the business and relatedly, you know, I guess how do you see EWP pricing going forward given the trend downward over the last several quarters? You know, at what point do we see a bottom and what's the catalyst to inflect there?
Our next question comes from George Staf of Bank of America. Georgia line is open.
Troy Little: Yeah, this is Troy. You know, in terms of operating rates in the second quarter, you know, we entered the quarter with the idea that we would run full out to be prepared for the building season. You know, obviously, late in the quarter, that started to play out. But during the quarter, our operating rates were in the low 80s on the EWP side. You know, with the Oakdale out, we just wanted to maintain the inventory to not get caught off guard. Now that we've got Oakdale back up, you know, the plywood side, you know, we finished the quarter in the probably 70-ish percentile. Without Oakdale, we're probably closer to 80%.
Hey, good morning, guys. This is Brad Barton on for, uh, George. Thanks for taking the question. Um, you know, just starting off quickly. Uh, if you guys could just talk to the operating rates across the business, um, and, and relatedly, um, you know, I, I guess how do you see ewp pricing going forward? Uh, given the, um, the trend downward, um, over the last several quarters. Um, you know, at what point do you do we see a bottom and and what's the Catalyst uh to inflect there?
Troy Little: That quarter, you know, to Nate's point, they just made, you know, our operating rates probably are going to be down, you know, 70-ish, 65, 70 percent type range, depending on demand and that destocking and the effects of that.
Yeah, I I, this is Troy, um, you know, in terms of operating rates that in the second quarter. Um, you know, we we entered the quarter with the idea that we would run full out, um, to be prepared for the building season. Um, you know, obviously late in the in the quarter that that started to play out. But during the quarter, our operating rates were in the low 80s on the ewp side. Um, you know, with the oat deal out, um, we just wanted to to maintain the inventory, uh, it's not get caught off guard now that we've got Odell back up, you know the plywood side, um, you know, we finished the quarter, you know, in the in the probably 70% tile without Oak deal, we're probably closer to 80%
um, that
Order. Um, you know, tonight's point they just made um you know, our operating rates probably are going to be down. Um you know, 70ish, 65 70% type range um depending on the band and and that the stocking and the effect of that
Kurt Yinger: Okay. Great. And then one follow-up from me. To the extent that you guys can comment, we saw the news about the strike at the billing facility. Just if you can give any update there and, you know, any color on that facility in terms of the size or potential impact there, that'd be very helpful. Thanks, and good luck in quarter.
Joe Barney: Yeah. Hi, this is Joe. I can comment on that. So on July 29th, we had 19 union-represented employees at our BMD facility in Billings, Montana, that initiated the strike. Now that strike is still ongoing as of today. It's limited to just one of our 38 BMD locations. We have implemented business continuity protocols, and our billings team is doing a very good job of avoiding any disruptions to our customers. And at this time, the situation is really limited in scope, and we don't anticipate that there will be a material impact.
Okay, great. Um, and then 1 1 follow up from me, um, to the extent that you guys can comment. Um, we we, we saw the the news about, the, the strike at the, the billing facility. Um, just so you can give any update there and, um, you know, any color on, uh, on that facility in terms of the size or potential impact there that, that'd be very helpful. Thanks and good luck with the quarter.
Yeah, hi. This is Joe. I can uh comment on that. So
On July 29th. Um, we had 19 union, representative employees that our BMB facility in Billings Montana, that initiated a strike.
And that strike is still ongoing as of today. Um it's limited to just 1 of our 38, DMV locations.
We have implemented business continuity protocols, and our billing team is doing a very good job of avoiding any disruptions to our customers. At this time, the situation is really limited in scope, and we don't anticipate that there will be a material impact.
Kurt Yinger: Great. Thanks, guys.
Corey: Thank you. One moment for our next call. Our next call comes from the line of Sassuan McCaury of Goldman Sachs. Your line is open.
Great. Thanks guys.
Thank you. 1 moment for our next call.
Susan Maklari: Thank you. Good morning, everyone. My first question is on the general line part of the business. You saw some really nice results there despite all the pressures that are coming through. Can you talk a bit about how you're thinking about the next couple of quarters there, given some of your suppliers' focus on getting price and also maintaining inventories on the ground given the conditions?
Our next call comes from the line of Susan, Mari of Goldman Sachs your line is open.
Thank you. Good morning everyone.
My first question.
is on the
general line, part of the business. You saw some really
Clear, despite all the pressures that are coming through, can you talk a bit about how you're thinking about the next couple of quarters there, given some of your suppliers focusing on getting price and also maintaining inventories on the ground, given the conditions?
Kurt Yinger: Corey and Sewerin, next on the call. What the question is.
Oriental for the question.
Corey: One more time, can you ask your question, please, ma'am?
Susan Maklari: Sure. Can you guys hear me okay?
"One more time, can you ask your question, please? Ma'am." "
Corey: Yes.
Susan Maklari: The question is on the.
Can you guys hear me, okay?
Corey: Yes.
Susan Maklari: Okay. Okay. The question is on the general line part of the business. Given the conditions that you're seeing out there, can you talk about how that is performing? And also, as you see some suppliers that are looking to get pricing and control inventory, how that is going to impact results over the next couple of quarters?
Yes.
Okay. Okay. The questions on the general line, part of the business, given the conditions that you're seeing out there, can you talk about how that is performing? And also, as you see some suppliers that are looking to get pricing and control inventory? How that is going to impact results over the next couple quarters?
Joe Barney: Oh, hi, Sue; this is Joe. Yeah. So in Q2, our general line category has actually held up really well. You know, we feel like we're well-positioned there from an inventory perspective. You know, as our customers have leaned out their inventories going into Q2, you know, and there's disruption and uncertainty in the market. You know, our customers have leaned heavier onto our inventories and distribution. You know, so we saw our sales out of warehouse pick up in Q2 pretty significantly. And yeah, our general line categories remain strong. We think that they will remain strong going into the balance of the year. Don't really see any changes happening there.
Oh, hi there. This is Joe.
um yeah, so in Q2 our general line categories actually held up really well, um, you know, we feel like we're well positioned there from an inventory perspective, um, you know, as our as our customers have leaned out their inventories
Susan Maklari: Okay. That's helpful. And then in your prepared remarks, you talked about aligning production to demand. As you think about the operating backdrop across the business, can you talk about some of those efforts, how we should think about the cost structure of the business and the potential benefits to the margins as those efforts come through to results?
In Q2 uh pretty significantly. And um yeah our general line categories remain strong. We think that they will remain strong going into the balance of the year. Um don't see. Really see any changes happening there?
Troy Little: Yeah, to this Troy. In terms of just the operating posture, you know, like I mentioned, we went into the quarter planning on running full. So right now, coming out of Q2, our inventory at the mill level are at the higher end on the EWP side. So we're now, we're positioned to, if the demand is there, which it looks like it may not be what we expected, you know, we would end up just moving veneer over to the plywood side first. If we can do that and continue to move that veneer, we would essentially continue to run our veneer operations somewhat full. And then we did take some time in early July, and we would anticipate some down market-related downtime. And we would anticipate, if we needed to do that, we would line up around, you know, major holidays as necessary.
Okay, that's helpful. In your prepared remarks, you talked about aligning production to demand. As you think about the operating backdrop across the business, can you talk about some of those efforts? How should we think about the cost structure of the business and the potential benefits to the margins as those efforts come through to results?
yeah, so this is
In terms of just the operating posture. Um, you know, like, like I mentioned, we, we went into the corner, um, planning on running polls. So right now coming out of Q2, we, our inventory is at the low level. Um, are at the higher end on the awp side. Um, so we're now we're we're positioned to um, get the demand. Is there which looks like it's. Uh, it may not be what we expected, you know, we would end up just uh, moving veneer over to the plywood side first.
If we can do that, it continues to move that veneer. Um, we would essentially continue to run our veneer operations, somewhat full. Um and then we did take some time in early July and we would anticipate some some down Market related downtime and we would anticipate if we needed to do that, we would line up around, you know, major holidays.
Nate Jorgensen: And then maybe one other comment to add on would be, you know, we don't expect to obviously have the drag on Oakdale being down like it was in the first half of the year. And included in that, the value of self-patient veneer versus having to buy some on the open market, we will get the benefit of that. And then if OSB prices stay where they are, we would expect some tailwinds also for wedge stock costs for edge rates.
as as necessary and then maybe 1 other comment Sue to add addon would be
You know, we, we won't, we don't expect. Obviously have the drag on Oakdale being down like it was in the first half of the year, um, and, and included in that, uh, the value of, um, self-sufficient veneer versus
Susan Maklari: Okay. That's helpful, Color, Kelly. And can I squeeze one more in on EWP? As you think of, as the builders talk to going into 2026 with less inventory on the ground, can you talk about the competitive backdrop and what that could imply for the dynamics within that business as we think about the upcoming quarters?
Having to buy some on the open market. Uh, we will get the benefit of that and then if OSP prices stay where they are, we would expect some, some Tailwinds also, for, um, a websoc cost to address.
Okay, that's helpful caller. Kelly and can I squeeze 1 more in on
Nate Jorgensen: Hey, Sue; it's Nate. Sorry. Yeah. So I think just in terms of the, you know, kind of the competitive dynamics on whether it's EWP or other products, I think it's going to be, you know, the goal remains, it probably challenges as we go through the course of this year and the early next year, just given, again, what we expect in terms of the demand environment. But with that said, I think when you think about EWP and what the builders are still looking to do on the job site, cycle times remain important. And so we know that iJOYS and EWP, you know, create a better deliverable in terms of reduced cycle times at the job site.
Ewp, as you think of as, as a builder's, talk to going into 2026 with less inventory on the ground. Can you talk about the competitive backdrop? And what that could imply for the Dynamics within that business as we think about the upcoming quarters?
Thank you.
Uh, sorry, um, yeah. So I think this in terms of the, you know, kind of the competitive Dynamics on on, whether TWP or other products, I think it's going to be, you know, the, the, the will remain. Um, if I probably challenged as we go through the course of this year, in the early next year, just giving you again. What we expect in terms of the demand environment. But with that said, I think, when you think about pwp, and what the Builder is still looking to do on the job site cycle, time to remain important. And so we know that I
Nate Jorgensen: So I think that in combination with the design flexibility, you know, again, we still feel really good about, you know, how we're set up in terms of EWP going through the balance of the year and early next year. The other thing I would just comment on is when you think about engineered wood products, really the importance of great two-step distribution is part of that product. And we are really well set up as an organization with our Boise Cascade EWP franchise. We've got great distribution in the marketplace. So having not only product on the ground, but the ability for, you know, drawings and services, we feel really good about how we're positioned to serve the marketplace even at a higher level as we close out this year.
Enjoyed. So need to be seen, you know, create a, a better, a deliverable in terms of reduced cycle times of the job site. So, I think that in combination with the design flexibility, you know, again we still feel really good about, um, you know, how we're set up. Um, in terms of ewp, going through the balance of the year in early next year.
Nate Jorgensen: So it's going to be, I think, in terms of the competitive landscape, nothing will change, but that's what we're, I think, we're well positioned to compete and win in that kind of environment as well.
Susan Maklari: Okay. That's great, Color. Thank you all, and good luck with the quarter.
The, the other thing I would just comment on is when you think about engineer Wood Products, um, really the importance of great 2, Step distribution in support of that product. And we are really well set up, um, as an organization, uh, with our, what is it Cascade needed to P franchise? We've got great distribution in the marketplace so having not only product on the ground but the ability for, you know, drawings and services. Um, we feel really good about how we're positioned to serve the marketplace, um, even at a higher level as we close out this year, so it it's going to be I think in terms of the competitive landscape, nothing will change. Um, but that's, um, but we're, I think we're well positioned to compete and win and that kind of environment as well.
Corey: Thank you very much. At this time, I'm showing no further calls. I would like to turn it back to Nate Jorgensen for closing remarks.
Okay, that's great color. Thank you all, and good luck with the quarter.
Nate Jorgensen: Okay. We appreciate everyone joining us today, and our apologies for the technical challenges. So thank you for your patience as well, and your continued interest and support of Boise Cascade. With that, we'll close the call. Please be safe and be well. Thank you. And then fill in, Jason.
Thank you very much at this time. I'm showing no further calls. I would like to turn it back to Nate Jurgensen for closing remarks.
Okay, um, we appreciate everyone that joined us today, and our apologies for the technical challenges. Thank you for your patience as well. Um, and your continued interest and support at Boise Cascade. With that, we'll close with a call. Please be safe, be well. Thank you.
And then still have chance.
Corey: Thank you very much for your participation. This does conclude the conference.
Thank you very much for your participation. This does conclude the conference