Boise Cascade Company
11/02/2026 | Press release | Distributed by Public on 11/02/2026 15:31
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Understanding Our Financial Information
This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and related notes in "Item 1. Financial Statements" of this Form 10-Q, as well as our 2025 Form 10-K. The following discussion includes statements regarding our expectations with respect to our future performance, liquidity, and capital resources. Such statements, along with any other non-historical statements in the discussion, are forward-looking. These forward-looking statements include, without limitation, any statement that may predict, indicate, or imply future results, performance, or achievements and may contain the words "may," "will," "expect," "believe," "should," "plan," "anticipate," and other similar expressions. All of these forward-looking statements are based on estimates and assumptions made by our management that, although believed by us to be reasonable, are inherently uncertain. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in "Item 1A. Risk Factors" in our 2025 Form 10-K, as well as those factors listed in other documents we file with the Securities and Exchange Commission (the SEC). We do not assume an obligation to update any forward-looking statement. Our future actual results may differ materially from those contained in or implied by any of the forward-looking statements in this Form 10-Q.
Background
Boise Cascade Company is a building products company headquartered in Boise, Idaho. As used in this Form 10-Q, the terms "Boise Cascade," "we," and "our" refer to Boise Cascade Company and its consolidated subsidiaries. Boise Cascade is a large, integrated building materials distributor and wood products manufacturer with widespread operations throughout the United States (U.S.) and one manufacturing facility in Canada. We have two reportable segments: (i) Building Materials Distribution (BMD), which is a wholesale distributor of building materials; and (ii) Wood Products, which primarily manufactures engineered wood products (EWP) and plywood. Our products are used in the construction of new residential housing, including single-family, multi-family, and manufactured homes, the repair-and-remodeling of existing housing, the construction of light industrial and commercial buildings, and other industrial applications. For more information, see Note 11, Segment Information, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" of this Form 10-Q.
Executive Overview
We recorded income from operations of $55.8 million during the three months ended September 30, 2026, compared with income from operations of $32.3 million during the three months ended September 30, 2025. In our BMD segment, income decreased $3.0 million to $51.3 million for the three months ended September 30, 2026, from $54.3 million for the three months ended September 30, 2025. The decrease in segment income was driven by increased selling and distribution expenses of $6.9 million, offset partially by a gross margin increase of $3.6 million. The increase in gross margin was driven by higher gross margins on commodity products, offset partially by lower gross margins on general line products. In our Wood Products segment, we recorded income of $16.1 million for the three months ended September 30, 2026, compared with a $12.1 million segment loss for the three months ended September 30, 2025. The increase in segment income was primarily due to higher plywood sales prices and EWP sales volumes, offset partially by higher per-unit conversion costs. These changes are discussed further in "Our Operating Results" below.
We ended third quarter 2026 with $385.1 million of cash and cash equivalents and $395.1 million of undrawn committed bank line availability, for total available liquidity of $780.3 million. We had $452.5 million of outstanding debt at September 30, 2026. We used $92.1 million of cash during the nine months ended September 30, 2026, as cash provided by operations was offset by capital spending, share repurchases, and dividends paid on our common stock. A further description of our cash sources and uses for the nine-month comparative periods are discussed in "Liquidity and Capital Resources" below.
Demand for the products we purchase and distribute, as well as the products we manufacture, is driven primarily by new single-family residential construction, with additional demand generated by new multi-family residential construction, residential repair-and-remodeling, and light commercial activity. During the third quarter, high fuel prices and an inflation-driven increase in benchmark interest rates amplified the affordability challenges that have constrained the new home market throughout 2026. To compensate for a reduced pool of qualified homebuyers, homebuilders have pivoted toward build-to-order construction to better align housing starts with home sales and manage finished-home inventory. Activity levels in the fourth quarter are expected to exhibit typical seasonality and decelerate through the winter. Early industry projections for 2027 indicate that housing starts are expected to decline mid-single digits from 2026 levels. Beyond the near-term uncertainty, long-term residential construction fundamentals remain positive, supported by generational tailwinds and an undersupplied housing market. High homeowner equity, aging U.S. housing stock, and a growing preference among older adults to age in place support sustained growth in repair-and-remodeling spending and reinforce the industry's underlying demand drivers.
Our distribution business, which purchases and resells a diverse range of products, may benefit from rising prices through increased sales and margins, while periods of declining prices may present challenges. Future product pricing, particularly for commodity products we distribute and manufacture, is expected to remain dynamic, influenced by economic and geopolitical conditions, duties and tariffs, input costs, industry operating rates, supply disruptions, transportation costs and availability, inventory levels, and seasonal demand patterns. Our ability to capture market share associated with recent supplier realignment is dependent upon effective execution of inventory load-in, and maintaining inventory positions sufficient to meet customer demand. Customer reliance on our distribution business increases during periods of market uncertainty, as customers respond to slowing sales with more conservative inventory practices, while greater demand certainty typically moderates this effect. We will continue to monitor end-market demand signals and align production rates and inventory stocking positions accordingly.
Factors That Affect Our Operating Results and Trends
Our results of operations and financial performance are influenced by a variety of factors, including the following:
•the commodity nature of a portion of our products and their price movements, which are driven largely by general economic conditions, industry capacity and operating rates, industry cycles that affect supply and demand, and net import and export activity;
•the highly competitive nature of our industry;
•declines in demand for our products due to competing technologies or materials, as well as changes in building code provisions;
•disruptions to information systems used to process and store customer, employee, and vendor information, as well as the technology that manages our operations and other business processes;
•material disruptions and/or major equipment failure at our manufacturing facilities;
•declining demand for residual byproducts, particularly wood chips generated in our manufacturing operations;
•labor disruptions, shortages of skilled and technical labor, or increased labor costs;
•product shortages, loss of key suppliers, and our dependence on third-party suppliers and manufacturers;
•the termination of the distribution relationship with our former composite decking supplier and our ability to execute a successful transition to our new third-party supplier for composite decking;
•the cost and availability of third-party transportation services used to deliver the goods we distribute and manufacture, as well as our raw materials;
•cost and availability of raw materials, particularly wood fiber;
•the need to successfully formulate and implement succession plans for key members of our management team;
•our ability to execute our organic growth and acquisition strategies efficiently and effectively;
•failures or delays with new or existing technology systems and software platforms;
•our ability to successfully pursue our long-term growth strategy related to innovation and digital technology;
•concentration of our sales among a relatively small group of customers, as well as the financial condition and creditworthiness of our customers;
•impairment of our long-lived assets, goodwill, and/or intangible assets;
•substantial ongoing capital investment costs, including those associated with organic growth and acquisitions, and the difficulty in offsetting fixed costs related to those investments;
•our indebtedness, including the possibility that we may not generate sufficient cash flows from operations or that future borrowings may not be available in amounts sufficient to fulfill our debt obligations and fund other liquidity needs;
•restrictive covenants contained in our debt agreements;
•changes in or failure to comply with laws and regulations;
•changes in foreign trade policy, including the imposition of tariffs;
•compliance with data privacy and security laws and regulations;
•the impacts of climate change and related legislative and regulatory responses intended to reduce climate change;
•cost of compliance with government regulations, in particular, environmental regulations;
•exposure to product liability, product warranty, casualty, construction defect, and other claims;
•fluctuations in the market for our equity; and
•the other factors described in "Item 1A. Risk Factors" in our 2025 Form 10-K.
Our Operating Results
The following tables set forth our operating results in dollars and as a percentage of sales for the three and nine months ended September 30, 2026 and 2025:
|
Three Months Ended September 30 |
Nine Months Ended September 30 |
||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (millions) | |||||||||||||||||||||||
| Sales | $ | 1,802.2 | $ | 1,667.8 | $ | 5,132.1 | $ | 4,944.4 | |||||||||||||||
| Costs and expenses | |||||||||||||||||||||||
| Materials, labor, and other operating expenses (excluding depreciation) | 1,506.6 | 1,404.3 | 4,265.1 | 4,122.0 | |||||||||||||||||||
| Depreciation and amortization | 42.7 | 42.4 | 124.5 | 116.9 | |||||||||||||||||||
| Selling and distribution expenses | 172.7 | 165.1 | 497.0 | 470.5 | |||||||||||||||||||
| General and administrative expenses | 24.6 | 25.8 | 78.2 | 77.2 | |||||||||||||||||||
| Other (income) expense, net | (0.3) | (2.0) | (0.2) | (9.6) | |||||||||||||||||||
| 1,746.3 | 1,635.5 | 4,964.5 | 4,777.0 | ||||||||||||||||||||
| Income from operations | $ | 55.8 | $ | 32.3 | $ | 167.6 | $ | 167.4 | |||||||||||||||
| (percentage of sales) | |||||||||||||||||||||||
| Sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
| Costs and expenses | |||||||||||||||||||||||
| Materials, labor, and other operating expenses (excluding depreciation) | 83.6 | % | 84.2 | % | 83.1 | % | 83.4 | % | |||||||||||||||
| Depreciation and amortization | 2.4 | 2.5 | 2.4 | 2.4 | |||||||||||||||||||
| Selling and distribution expenses | 9.6 | 9.9 | 9.7 | 9.5 | |||||||||||||||||||
| General and administrative expenses | 1.4 | 1.5 | 1.5 | 1.6 | |||||||||||||||||||
| Other (income) expense, net | - | (0.1) | - | (0.2) | |||||||||||||||||||
| 96.9 | % | 98.1 | % | 96.7 | % | 96.6 | % | ||||||||||||||||
| Income from operations | 3.1 | % | 1.9 | % | 3.3 | % | 3.4 | % | |||||||||||||||
Sales Volumes and Prices
Set forth below are historical U.S. housing starts data, sales mix and gross margin information for our BMD segment, and segment sales volumes and average net selling prices for the principal products sold by our Wood Products segment for the three and nine months ended September 30, 2026 and 2025:
|
Three Months Ended September 30 |
Nine Months Ended September 30 |
||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (thousands) | |||||||||||||||||||||||
| U.S. Housing Starts (a) | |||||||||||||||||||||||
| Single-family | 231.5 | 235.3 | 699.0 | 728.0 | |||||||||||||||||||
| Multi-family | 109.4 | 120.4 | 337.5 | 320.0 | |||||||||||||||||||
| 340.9 | 355.7 | 1,036.5 | 1,048.0 | ||||||||||||||||||||
| (thousands) | |||||||||||||||||||||||
| Segment Sales | |||||||||||||||||||||||
| Building Materials Distribution | $ | 1,669,465 | $ | 1,556,150 | $ | 4,755,907 | $ | 4,578,181 | |||||||||||||||
| Wood Products | 461,236 | 396,401 | 1,319,043 | 1,259,481 | |||||||||||||||||||
| Intersegment eliminations | (328,527) | (284,745) | (942,827) | (893,248) | |||||||||||||||||||
| Total sales | $ | 1,802,174 | $ | 1,667,806 | $ | 5,132,123 | $ | 4,944,414 | |||||||||||||||
| (percentage of BMD sales) | |||||||||||||||||||||||
| Building Materials Distribution | |||||||||||||||||||||||
| Product Line Sales | |||||||||||||||||||||||
| General line | 45.4 | % | 46.7 | % | 45.8 | % | 45.0 | % | |||||||||||||||
| Commodity | 36.6 | % | 34.2 | % | 35.6 | % | 35.0 | % | |||||||||||||||
| Engineered wood products | 18.0 | % | 19.1 | % | 18.6 | % | 20.0 | % | |||||||||||||||
| Gross margin percentage (b) | 14.3 | % | 15.1 | % | 14.6 | % | 15.1 | % | |||||||||||||||
| Wood Products | (millions) | ||||||||||||||||||||||
| Sales Volumes | |||||||||||||||||||||||
| Laminated veneer lumber (LVL) (cubic feet) | 5.4 | 4.6 | 15.3 | 14.7 | |||||||||||||||||||
| I-joists (equivalent lineal feet) | 59 | 53 | 172 | 170 | |||||||||||||||||||
| Plywood (sq. ft.) (3/8" basis) | 362 | 387 | 1,103 | 1,106 | |||||||||||||||||||
| Wood Products | (dollars per unit) | ||||||||||||||||||||||
| Average Net Selling Prices | |||||||||||||||||||||||
| LVL (cubic foot) | $ | 24.02 | $ | 24.03 | $ | 24.11 | $ | 25.12 | |||||||||||||||
| I-joists (1,000 equivalent lineal feet) | 1,676 | 1,684 | 1,684 | 1,775 | |||||||||||||||||||
| Plywood (1,000 sq. ft.) (3/8" basis) | 425 | 325 | 386 | 335 | |||||||||||||||||||
_______________________________________
(a) Actual U.S. housing starts as reported by the U.S. Census Bureau.
(b) We define gross margin as "Sales" less "Materials, labor, and other operating expenses (excluding depreciation)." Substantially all costs included in "Materials, labor, and other operating expenses (excluding depreciation)" for our BMD segment are for inventory purchased for resale. Gross margin percentage is gross margin as a percentage of segment sales.
Sales
For the three months ended September 30, 2026, total sales increased $134.4 million, or 8%, to $1,802.2 million from $1,667.8 million during the three months ended September 30, 2025. For the nine months ended September 30, 2026, total sales increased $187.7 million, or 4%, to $5,132.1 million from $4,944.4 million for the same period in the prior year. As described below, the increase in sales in both periods was driven by the changes in sales prices and volumes for the products we distribute and manufacture, with single-family residential construction activity being the key demand driver for our sales. In third quarter 2026, total U.S. housing starts and single-family housing starts decreased 4% and 2%, respectively, compared with the same period in 2025. On a year-to-date basis through September 2026, total U.S. housing starts and single-family housing starts decreased 1% and 4%, respectively, compared to the same period in 2025. Average composite panel prices for the three and nine months ended September 30, 2026 were 14% higher and 2% lower, respectively, than in the same periods in the prior year, as reflected by Random Lengths composite panel pricing. Average composite lumber prices for the three and nine months ended September 30, 2026 were 25% and 9% higher, respectively, than in the same periods in the prior year, as reflected by Random Lengths composite lumber pricing.
Building Materials Distribution. Sales increased $113.3 million, or 7%, to $1,669.5 million for the three months ended September 30, 2026, from $1,556.2 million for the three months ended September 30, 2025. The overall increase in sales was driven by net sales price and net sales volume increases of 5% and 2%, respectively. By product line, general line product sales increased 4%, or $31.0 million; commodity sales increased 15%, or $78.8 million; and EWP sales (substantially all of which are sourced through our Wood Products segment) increased 1%, or $3.5 million.
During the nine months ended September 30, 2026, sales increased $177.7 million, or 4%, to $4,755.9 million from $4,578.2 million for the same period in the prior year. The overall increase in sales was driven by increases of 2% for both net sales prices and net sales volumes. By product line, general line product sales increased 6%, or $118.8 million; commodity sales increased 6%, or $93.5 million; and sales of EWP decreased 4%, or $34.6 million.
Wood Products. Sales, including sales to our BMD segment, increased $64.8 million, or 16%, to $461.2 million for the three months ended September 30, 2026, from $396.4 million for the three months ended September 30, 2025. The increase in sales was driven by higher plywood sales prices of 31%, resulting in increased sales of $36.2 million. In addition, higher sales volumes for LVL and I-joists (collectively referred to as EWP) of 18% and 10%, respectively, resulted in increased sales of $19.8 million and $9.2 million, respectively. These increases were offset partially by lower plywood sales volumes of 7%, resulting in decreased sales of $8.2 million. EWP sales prices were consistent with the same period in the prior year.
For the nine months ended September 30, 2026, sales, including sales to our BMD segment, increased $59.6 million, or 5%, to $1,319.0 million from $1,259.5 million for the same period in the prior year. The increase in sales was driven by higher plywood sales prices of 15%, resulting in increased sales of $56.3 million. In addition, sales volumes for LVL and I-joists increased 4% and 1%, respectively, resulting in increased sales of $15.9 million and $2.9 million, respectively. These increases were offset partially by lower I-joist and LVL sales prices of 5% and 4%, respectively, resulting in decreased sales of $31.0 million. Plywood sales volumes were consistent with the same period in the prior year.
Costs and Expenses
Materials, labor, and other operating expenses (excluding depreciation) increased $102.3 million, or 7%, to $1,506.6 million for the three months ended September 30, 2026, compared with $1,404.3 million during the same period in the prior year. In BMD, the increase in materials, labor, and other operating expenses was driven by increased prices for products purchased for resale, as well as higher sales volumes compared with third quarter 2025. Materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our BMD segment increased 80 basis points, driven by lower margin percentages on general line products, offset partially by higher margin percentages on commodity products. Our MLO rate was also impacted by an increased proportion of sales attributed to commodity products, which have lower margins than general line products and EWP. In our Wood Products segment, materials, labor, and other operating expenses increased primarily due to higher labor and other conversion costs, higher EWP sales volumes, and higher costs of glues and resins compared with third quarter 2025. However, the MLO rate in our Wood Products segment decreased by 530 basis points, primarily as the result of higher plywood sales prices and higher EWP sales volumes.
For the nine months ended September 30, 2026, materials, labor, and other operating expenses (excluding depreciation) increased $143.2 million, or 3%, to $4,265.1 million, compared with $4,122.0 million in the same period in the prior year. In BMD, the increase in materials, labor, and other operating expenses was driven by increased prices for products purchased for resale, as well as higher sales volumes compared with the first nine months of 2025. The BMD segment MLO rate increased 50 basis points, driven by lower margin percentages on general line products, offset partially by higher margin percentages on commodity products. In our Wood Products segment, materials, labor, and other operating expenses increased primarily due to higher labor and other conversion costs, as well as higher costs of glues and resins. These increases were offset partially by lower costs of OSB compared with the first nine months of 2025. However, the MLO rate in our Wood Products segment decreased by 260 basis points, primarily as the result of higher plywood sales prices.
Depreciation and amortization expense increased $0.4 million, or 1%, to $42.7 million for the three months ended September 30, 2026, compared with $42.4 million during the same period in the prior year. For the nine months ended September 30, 2026, these expenses increased $7.6 million, or 6%, to $124.5 million, compared with $116.9 million in the same period in the prior year. The increase in both periods was primarily due to recent investments in support of our EWP capabilities in our Wood Products segment, as well as organic growth and a fourth quarter 2025 acquisition in our BMD segment.
Selling and distribution expenses increased $7.6 million, or 5%, to $172.7 million for the three months ended September 30, 2026, compared with $165.1 million during the same period in the prior year. The increase was due primarily to higher shipping and handling costs of $6.9 million, as well as higher employee-related expenses of $2.6 million. For the nine months ended September 30, 2026, selling and distribution expenses increased $26.4 million, or 6%, to $497.0 million, compared with $470.5 million during the same period in 2025. The increase was primarily a result of higher shipping and handling costs of $15.4 million, as well as higher employee-related expenses of $13.1 million.
General and administrative expenses decreased $1.2 million, or 4%, to $24.6 million for the three months ended September 30, 2026, compared with $25.8 million for the same period in the prior year. The decrease was due primarily to lower professional fees, offset partially by higher incentive compensation expense. For the nine months ended September 30, 2026, general and administrative expenses increased $0.9 million, or 1%, to $78.2 million, compared with $77.2 million during the same period in 2025. The increase was due primarily to higher employee-related expenses and incentive compensation expense, offset partially by lower professional fees.
For the three months ended September 30, 2025, other (income) expense, net was $2.0 million of income, primarily resulting from a settlement gain associated with a fire at our BMD Phoenix location in second quarter 2021. For the nine months ended September 30, 2025, other (income) expense, net was $9.6 million of income, primarily related to gains on the sale of non-operating properties in our Wood Products and BMD segments in second quarter 2025, as well as the settlement gain discussed above.
Income From Operations
Income from operations increased $23.5 million to $55.8 million for the three months ended September 30, 2026, compared with $32.3 million for the three months ended September 30, 2025. Income from operations increased $0.2 million to $167.6 million for the nine months ended September 30, 2026, compared with $167.4 million for the nine months ended September 30, 2025.
Building Materials Distribution. Segment income decreased $3.0 million to $51.3 million for the three months ended September 30, 2026, from $54.3 million for the three months ended September 30, 2025. The decrease in segment income was driven by increased selling and distribution expenses of $6.9 million, offset partially by a gross margin increase of $3.6 million. The increase in gross margin was driven by higher gross margins on commodity products, offset partially by lower gross margins on general line products.
For the nine months ended September 30, 2026, segment income decreased $26.4 million to $154.3 million from $180.7 million for the nine months ended September 30, 2025. The decrease in segment income was driven by increased selling and distribution expenses and depreciation and amortization expense of $25.8 million and $2.7 million, respectively. These decreases in segment income were offset partially by a gross margin increase of $6.4 million, resulting from higher gross margins on commodity products, which were offset partially by lower gross margins on EWP and general line products.
Wood Products. For the three months ended September 30, 2026, segment income was $16.1 million, compared with segment loss of $12.1 million for the three months ended September 30, 2025. The increase in segment income was primarily due to higher plywood sales prices and EWP sales volumes, offset partially by higher per-unit conversion costs.
For the nine months ended September 30, 2026, segment income increased $30.6 million to $50.2 million from $19.6 million for the nine months ended September 30, 2025. The increase in segment income was primarily due to higher plywood sales prices and sales volumes, higher EWP sales volumes, and lower per-unit OSB costs. These increases in segment income were offset partially by lower EWP sales prices and higher per-unit conversion costs.
Corporate. Unallocated corporate expenses increased $1.6 million to $11.5 million for the three months ended September 30, 2026, from $9.9 million for the same period in the prior year. The increase was primarily due to a $1.9 million settlement gain recognized in third quarter 2025, which reduced expenses in the prior-year period. For the nine months ended September 30, 2026, unallocated corporate expenses increased $4.0 million to $37.0 million from $33.0 million for the nine months ended September 30, 2025. The increase was primarily due to the absorption of approximately $1.8 million of estimated insurance losses related to a fire at our Florien veneer and plywood facility in first quarter 2026 under our self-insured risk retention program, as well as the $1.9 million settlement gain in 2025, which reduced expenses in the prior-year period.
Other
Interest Income. Interest income decreased $2.1 million to $2.1 million for the three months ended September 30, 2026, from $4.2 million for the same period in the prior year. For the nine months ended September 30, 2026, interest income decreased $7.1 million to $7.2 million from $14.3 million for the nine months ended September 30, 2025. The decrease in both periods was due primarily to lower average balances of cash equivalents, as well as lower interest rates.
Income Tax Provision
For the three and nine months ended September 30, 2026, we recorded $14.4 million and $42.2 million, respectively, of income tax expense and had an effective tax rate of 28.4% and 27.5%, respectively. For the three and nine months ended September 30, 2025, we recorded $9.1 million and $41.5 million, respectively, of income tax expense and had an effective tax rate of 29.5% and 25.1%, respectively. For all periods, the primary reason for the difference between the federal statutory income tax rate of 21% and the effective tax rate was the effect of state taxes. In addition, our effective tax rates during the three months ended September 30, 2026 and 2025 were adversely impacted because permanent tax differences had a greater effect relative to the lower levels of pre-tax book income during those periods.
Liquidity and Capital Resources
We ended third quarter 2026 with $385.1 million of cash and cash equivalents and $452.5 million of debt. At September 30, 2026, we had $780.3 million of available liquidity (cash and cash equivalents and undrawn committed bank line availability). Our cash and cash equivalents decreased by $92.1 million during the nine months ended September 30, 2026, as cash provided by operations was offset by capital spending, share repurchases, and dividends paid on our common stock. Further descriptions of our cash sources and uses for the nine-month comparative periods are noted below.
We believe that our cash flows from operations, combined with our current cash levels and available borrowing capacity, will be adequate to fund debt service requirements and provide cash, as required, to support our ongoing operations, capital expenditures, lease obligations, working capital, income tax payments, and to pay cash dividends to holders of our common stock over the next 12 months. We expect to fund our seasonal and intra-month working capital requirements in the remainder of 2026 from cash on hand and, if necessary, borrowings under our revolving credit facility.
Sources and Uses of Cash
We generate cash primarily from sales of our products, as well as short-term and long-term borrowings. Our primary uses of cash are for expenses related to the distribution and manufacture of building products, including inventory purchased for resale, wood fiber, labor, energy, and glues and resins. In addition to paying for ongoing operating costs, we use cash to invest in our business, service our debt and lease obligations, and return cash to our stockholders through dividends or common stock repurchases. Below is a discussion of our sources and uses of cash for operating activities, investing activities, and financing activities.
|
Nine Months Ended September 30 |
|||||||||||
| 2026 | 2025 | ||||||||||
| (thousands) | |||||||||||
| Net cash provided by operations | $ | 146,321 | $ | 123,132 | |||||||
| Net cash used for investment | (89,596) | (176,396) | |||||||||
| Net cash used for financing | (148,792) | (148,226) | |||||||||
Operating Activities
For the nine months ended September 30, 2026, our operating activities generated $146.3 million of cash, compared with $123.1 million of cash generated during the same period in 2025. The $23.2 million increase in cash provided by operations was due to a lesser year-over-year increase in working capital, as well as a $11.6 million decrease in cash paid for taxes, net of refunds, compared to the same period in 2025. Working capital increased $113.8 million during the nine months ended September 30, 2026, compared with a $122.8 million increase for the same period in the prior year. See "Our Operating Results" in this Management's Discussion and Analysis of Financial Condition and Results of Operations for more information related to factors affecting our operating results.
The increase in working capital during both periods was primarily attributable to higher receivables and inventories, offset by an increase in accounts payable and accrued liabilities. The increase in receivables in both periods primarily reflect increased sales of approximately 26% and 15%, comparing sales for the months of September 2026 and 2025 with sales for the months of December 2025 and 2024, respectively. Inventories increased during the nine months ended September 30, 2026 due to seasonally higher inventory purchases in our BMD segment for the summer building season, increased prices resulting in higher inventory valuations, as well as load-in of inventory related to our previously announced supplier transition. During the nine months ended September 30, 2025, inventories increased due to seasonally higher inventory purchases in our BMD segment for the summer building season, as well as expansions at some of our BMD facilities. During the nine months ended September 30, 2026, the increase in accounts payable and accrued liabilities was related to the increase in inventories, and an increase in accrued employee incentive compensation. During the nine months ended September 30, 2025, the increase in accounts payable and accrued liabilities was primarily related to the increase in inventories and extended terms offered by certain BMD vendors, offset partially by lower accrued employee incentive compensation and employee incentive compensation payouts made during the period.
Investment Activities
During the nine months ended September 30, 2026 and 2025, we used $90.4 million and $187.4 million, respectively, of cash for purchases of property and equipment, including replacement and expansion projects, business improvement and quality/efficiency projects, and ongoing environmental compliance. During the nine months ended September 30, 2025, we received proceeds of $11.1 million from the sale of assets.
Excluding potential acquisitions, we expect capital expenditures in 2026 to total approximately $120 million to $140 million. This level of capital expenditures could increase or decrease as a result of several factors, including availability of engineering and construction resources and timing and availability of equipment purchases.
Financing Activities
During the nine months ended September 30, 2026, our financing activities used $148.8 million of cash, including $112.8 million for the repurchase of 1,466,250 shares of our common stock, $26.1 million in common stock dividend payments, and $6.2 million of tax withholding payments on stock-based awards. During the nine months ended September 30, 2026, non-cash investing and financing activities included the issuance of a $2.5 million promissory note to partially finance a property purchase. During the nine months ended September 30, 2026, we did not borrow under our revolving credit facility. At September 30, 2026, we had $50.0 million of borrowings outstanding under the revolving credit facility.
During the nine months ended September 30, 2025, our financing activities used $148.2 million of cash, including $111.0 million for the repurchase of 1,128,752 shares of our common stock, $26.6 million in common stock dividend payments, and $5.9 million of tax withholding payments on stock-based awards. On April 14, 2025, we entered into a credit agreement for a $450.0 million revolving credit facility which matures on April 12, 2030. At closing, $50.0 million under the facility was borrowed. Proceeds from the facility were used to repay the $50.0 million term loan under the asset-based revolving credit facility.
For more information related to our debt transactions and structure, our dividend policy, and our stock repurchase program, see the discussion in Note 6, Debt, and Note 9, Stockholders' Equity, respectively, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" of this Form 10-Q.
Other Material Cash Requirements
For information about other material cash requirements, see Liquidity and Capital Resources in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Form 10-K. As of September 30, 2026, there have been no material changes in other material cash requirements outside the ordinary course of business since December 31, 2025.
Guarantees
Note 8, Debt, and Note 16, Commitments, Legal Proceedings and Contingencies, and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" in our 2025 Form 10-K describe the nature of our guarantees, including the approximate terms of the guarantees, how the guarantees arose, the events or circumstances that would require us to perform under the guarantees, and the maximum potential undiscounted amounts of future payments we could be required to make. As of September 30, 2026, there have been no material changes to the guarantees disclosed in our 2025 Form 10-K.
Seasonal Influences
We are exposed to fluctuations in quarterly sales volumes and expenses due to seasonal factors impacting the level of construction activity. These seasonal factors are common in the building products industry. Seasonal changes in levels of building activity affect our building products businesses, which are dependent on housing starts, repair-and-remodeling activities, and light commercial construction activities. Demand typically rises in the spring and summer months as favorable weather and increased building and remodeling projects boost sales volumes. In contrast, the winter months during the first and fourth quarters generally bring lower sales due to reduced construction activity and higher operating costs, particularly for energy. We also adjust our working capital ahead of the peak building season to ensure product availability. These seasonal trends impact our sales, expenses and operational planning throughout the year.
Employees
As of October 25, 2026, we had approximately 7,760 employees. Approximately 17% of these employees work pursuant to collective bargaining agreements. As of October 25, 2026, we had nine collective bargaining agreements. One agreement covering approximately 80 employees at our Canadian EWP facility is set to expire on December 31, 2026. The terms and conditions of this agreement will remain in effect after expiration, pending negotiation of a new agreement.
We may not be able to renew this agreement or may renew it on terms that are less favorable to us than the current agreement. If any of these agreements are not renewed or extended upon their termination, or additional collective bargaining agreements are formed, we could experience a material labor disruption, strike, or significantly increased labor costs at one or more of our facilities, either in the course of negotiations of a labor agreement or otherwise. Labor disruptions or shortages could prevent us from meeting customer demands or result in increased costs, thereby reducing our sales and profitability.
Disclosures of Financial Market Risks
In the normal course of business, we are exposed to financial risks such as changes in commodity prices, interest rates, and foreign currency exchange rates. As of September 30, 2026, there have been no material changes to financial market risks disclosed in our 2025 Form 10-K.
Environmental
As of September 30, 2026, there have been no material changes to environmental issues disclosed in our 2025 Form 10-K. For additional information, see Environmental in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Form 10-K.
Critical Accounting Estimates
Critical accounting estimates are those that are most important to the portrayal of our financial condition and results. These estimates require management's most difficult, subjective, or complex judgments, often as a result of the need to estimate matters that are inherently uncertain. We review the development, selection, and disclosure of our critical accounting estimates with the Audit Committee of our board of directors. For information about critical accounting estimates, see Critical Accounting Estimates in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Form 10-K. At September 30, 2026, there have been no material changes to our critical accounting estimates from those disclosed in our 2025 Form 10-K.
New and Recently Adopted Accounting Standards
For information related to new and recently adopted accounting standards, see New and Recently Adopted Accounting Standards in Note 2, Summary of Significant Accounting Policies, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" in this Form 10-Q.
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