Boise Cascade Co. Stock

Good day, and welcome to the Boise Cascade's Third Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Chris Forrey, Senior Vice President of Finance and Investor Relations. Please go ahead.

Good morning, everyone. Welcome to Boise Cascade's Third Quarter 2026 Earnings Call and Business Update. Joining me on today's call are Jeff Strom, our CEO; Kelly Hibbs, our CFO; Joe Barney, Leader of our Building Materials Distribution Operations; and Troy Little, leader of our Wood Products 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 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 segment income to segment EBITDA.

I will now turn the call over to Jeff.

Thanks, Chris. Good morning, everyone, and thank you for joining us for our earnings call. I'm on Slide 3. In the third quarter, total U.S. housing starts and single-family housing starts decreased 4% and 2%, respectively, compared to the prior year quarter. Our consolidated third quarter sales increased 8% year-over-year to $1.8 billion. Our net income and earnings per share were $36.4 million and $1.04 per share, both higher than the prior year quarter. We are proud of the results our team delivered in the quarter.

The operating environment characterized by rising fuel prices, political uncertainty and cautious consumers facing growing affordability challenges persisted, but our focus and execution did not waver. Our divisions work together to unlock the value of our integrated model, the resilience of which was on full display during the quarter.

Last quarter, we announced that we would partner with James Hardie as our exclusive supplier of siding, composite decking and PVC and fiber cement trim. With the World Series having just wrapped up, it feels only appropriate to reference that announcement as the opening pitch, and we are still in the early innings of operationalizing the agreement with the transition unfolding as expected. Our sales teams have done a tremendous job balancing the duties of selling through legacy inventory by actively developing product knowledge and identifying market opportunities across James Hardie's TimberTech and AZEK product lines.

Our sales of Hardie siding and trim products continue to show strong year-over-year growth. I want to recognize the BMD associates across our footprint for attacking a strategic initiative of this scale. I'm pleased that in less than a full quarter, we were able to meaningfully reduce legacy stocking positions and made great strides with the load-in of new products.

Work remains to rebuild revenue in our general line product category, but we have excellent products and exemplary distribution footprint and the right team in place to seize the opportunity. Kelly will now walk through our segment financial results, capital allocation priorities and fourth quarter guidance, after which I'll provide insights on our business outlook and make closing comments before we open the call for questions. Kelly?

Thank you, Jeff. I'm on Slide 4. BMD sales in the quarter were $1.7 billion, up 7% from third quarter 2025. Segment EBITDA of $66.9 million in the third quarter compared to segment EBITDA of $69.8 million in the prior year quarter. Gross margins increased $3.6 million compared to the prior year quarter, resulting from higher gross margins on commodity products, offset partially by lower gross margins on general line products. Selling and distribution expenses were up $6.9 million from third quarter 2025, approximately 80% of which was due to higher outbound delivery and fuel costs.

In Wood Products, our sales in the third quarter, including sales to our Distribution segment, were $461.2 million, up 16% compared to third quarter 2025. Segment EBITDA was $42.7 million compared to EBITDA of $14.5 million reported in the year ago quarter. The increase in segment EBITDA was primarily due to higher plywood prices and EWP sales volumes. These increases were offset partially by higher per unit conversion costs.

Moving to Slides 5 and 6. BMD's year-over-year third quarter sales increase of 7% was driven by net sales price and net sales volume increases of 5% and 2%, respectively. By product line, general line sales increased 4%, commodity sales increased 15% and sales of EWP increased 1%. Sequentially, BMD sales decreased 2%, a solid result when considering market dynamics and disruptions from supplier transition activities and a special shout out to our commodity sales team for delivering year-over-year and sequential sales increases.

Our third quarter gross margin was 14.3%, down 80 basis points year-over-year. Gross margins on general line products were negatively influenced by destocking associated with the transition of our composite decking supplier, offset partially by improved gross margins on commodity products. On a sequential basis, supplier transition activities and a lower proportion of general line sales were the primary drivers of our gross margin decline.

BMD's EBITDA margin was 4% for the quarter, down from 4.5% in the year ago quarter. The 50 basis point decline resulted from lower gross margins and higher selling and distribution expenses, offset partially by improved operating expense leverage from higher sales volumes. On a sequential basis, EBITDA margins contracted from the 5% reported in the second quarter. Seasonal demand deceleration, lower gross margins and reduced operating expense leverage from lower volumes impacted our third quarter results.

Turning to Wood Products on Slide 7. Third quarter I-joist and LVL volumes were up 10% and 18%, respectively, on a year-over-year basis. Sequentially, I-joist volumes decreased 4% and LVL volumes increased 2%. As it relates to third quarter pricing, I-joist and LVL realizations were flat year-over-year and sequentially. Our third quarter realizations marked four quarters of price stability in EWP. Price protection mechanisms on contracted volumes, market-specific competitive adjustments and rebates to support volumes sold into Canada that were subject to tariffs held realizations stable despite the price increase announced last quarter.

Turning to Slide 8. Our third quarter plywood sales volumes was 362 million feet compared to 387 million feet in third quarter 2025 and 368 million feet in second quarter 2026. The year-over-year and sequential decreases in plywood volumes were driven by greater utilization of veneer into EWP. Our average plywood net sales price was $425 per thousand in the third quarter, representing a 31% increase year-over-year and an 8% increase sequentially. We attribute the continued improvement in plywood pricing to supply side influences resulting from trade policy decisions regarding Brazil and Canada.

Brazilian plywood imports have declined by 12% year-over-year through the third quarter of 2026, primarily impacting Southern Yellow Pine plywood markets. In August, the United States imposed 50% tariffs on Canadian veneer plywood and LVL imports that impacted Western plywood markets. We anticipate evolving trade policy will continue to influence plywood market dynamics.

I'm now on Slide 9. We had capital expenditures of $90 million in the first 9 months of 2026, including $27 million in the third quarter. BMD and Wood Products spent $8 million and $19 million, respectively, on capital projects in the third quarter. We are reducing our capital spending range for 2026 to $120 million to $140 million, principally a result of project delays on several BMD organic growth projects.

Speaking to shareholder returns, we paid $26 million in regular dividends during the first nine months of 2026, including $8 million in the third quarter. Our Board of Directors recently approved a quarterly dividend on our common stock of $0.23 per share that will be paid in mid-December. Through the first 10 months of 2026, we repurchased approximately $118 million of Boise Cascade common stock, including approximately $9 million between July and October. At the end of October, approximately $120 million of our outstanding common stock was available for repurchase under our existing share repurchase program. The ongoing strength of our balance sheet and cash generation capability through the cycle leaves us well positioned to continue pursuing our strategic growth objectives while taking a steady, disciplined approach to shareholder returns.

I'm now on Slide 10. We have outlined a range of potential EBITDA outcomes along with the key assumptions underlying these projections. We currently estimate BMD's fourth quarter EBITDA will be between $35 million and $45 million. Our daily sales pace in October decelerated from the third quarter sales pace of $26.1 million per day and is expected to moderate further due to seasonal slowing and supplier transitions in the channel. Specific to composite decking, we have made very good progress on wind-down and ramp-up activities, but expect more pronounced revenue declines in Q4 given the level of inventory that has been placed into the channel through recent supplier and distributor realignments. Gross margins are expected to be between 14% and 14.75%. Included in our James Hardie agreement are provisions for financial assistance to support our sales ramp that may partially mask the impact of temporary moderation in BMD's revenue and lead to elevated gross margin percentages throughout the sales ramp.

Turning to our anticipated results for Wood Products. We estimate fourth quarter EBITDA will be between $10 million and $20 million. In addition to typical seasonal factors, our results will reflect continued weakness in single-family housing, elevated fuel and transportation costs, and higher input costs. We expect sequential volumes to decline high-teens to mid-20%. EWP pricing is expected to increase slightly on a sequential basis.

In plywood, we expect volumes to decline mid- to high single digits sequentially. On plywood pricing, quarter-to-date realizations are approximately 5% above our third quarter average, with the balance of the quarter dependent upon end market demand, seasonality and ongoing import supply volatility. We expect our per unit manufacturing costs will increase primarily due to lower volumes and higher resin and OSB webstock costs. Lastly, we anticipate an effective tax rate for the fourth quarter of approximately 5%, influenced by the purchase of tax credits that decrease our rate and the expected lower level of income before tax in the quarter.

I will turn it over to Jeff to share our business outlook and closing remarks.

Thank you, Kelly. I'm on Slide 11. High fuel prices and an inflation-driven increase in benchmark interest rates have amplified the affordability challenges that have constrained the new home market throughout 2026. These realities and typical seasonal declines will be headwinds on fourth quarter construction activity. Early industry projections for 2027 indicate that housing starts are expected to decline mid-single digits from 2026 levels.

Our consistent performance relative to the muted broader market conditions in 2026 is a testament to Boise Cascade's national scale and regional expertise. In this environment, customers are hesitant to make significant inventory commitments, increasing the reliance on BMD's in-stock product availability and next-day delivery capabilities.

In Wood Products, our vertically integrated veneer production has insulated us from risks associated with the purchase and importation of veneer. Boise Cascade's integrated operating model strengthens our ability to respond to customer needs and changing market conditions. By coordinating manufacturing, inventory and logistics decisions across our Wood Products and Building Materials Distribution segments, we improved channel visibility and more effectively align supply with end market demand.

Beyond the near-term uncertainties, long-term residential construction fundamentals remain positive, and we believe the investments made throughout the business cycle have us well positioned for the eventual recovery in housing starts. Market dynamics aside, our focus will remain on our customers to deliver the products and services they need to be successful.

Regarding our supplier transition activities in BMD, as we begin climbing the sales ramp with our new suite of products, we know the only way to maintain and grow customer base will depend on consistent execution. We look forward to providing more progress updates as we move into 2027.

Thank you for joining us today and for your continued support and interest in Boise Cascade. We welcome any questions at this time.

[Operator Instructions] And our first question will come from Susan Maklari with Goldman Sachs.

My first question is talking a little bit more on the fourth quarter outlook. You mentioned that in BMD, your daily sales are down about 10% sequentially so far. And when we think about the environment out there and the seasonality as we go into year-end, can you just give us a little more color on how we should think about the moves in the back half of the quarter? And maybe what do we need to see for things to get a little better versus perhaps take a slightly -- another step down?

Sue, this is Jeff. I'll start with that a little bit. Just from talking to our customers overall, I would tell you that the word I've used is really, really cautious, and that's obviously having an impact on the demand that we're seeing. And the other thing that we're hearing from them is that they still have a lot of inventory above what they really want. And so they set targets, here's the days we want to have on hand, and then it has moved now since they originally set that. So there's still a little bit of work to go on there.

So what we're hearing, obviously, is there is going to be -- once they get to the position they want a really, really big reliance on 2-step distribution. And I think going forward, the one thing that's a little bit different that we're hearing this time is it's not just, hey, we want to rely on 2-step distribution to get us through the winter. We're hearing loud and clear, it's a lot longer than that and carrying them into the summer and beyond that. So we feel good about that. We think we're set up really, really well to service them whatever comes up.

It's good to hear that the 2-step model is continuing to be of real value in this environment. And then maybe with that, can you talk a little more about the progress on the transition within the composite decking and the siding supplier agreements. Just where you are with that, how we should think about the moves there into year-end, and where you'll be positioned as we think about early '27?

Yes, absolutely. I would just start with this, particularly on the decking side. It is very early, and I want to state that. As far as the product goes, it is beautiful. It's [indiscernible] compliance. They have the complete PVC line and the fire rating and all those we really believe are an advantage for us. Since we've really started to hit the market a little bit, the customer reception has been great. It's really been exactly what we expected and what we're told. We hear over and over that they want to continue to support us and work with us.

We have seen a few conversions. But again, I'd just stress, it is early. The [ block stores ] national accounts, I think they really see the benefit of this full suite of products once we're fully ramped up and ready to go. We've engaged obviously more and more with the Hardie sales force and they're excellent, and we really believe that they will help, along with our sales force, drive some demand together. But right now, we are. We're working on the winter buy. We're out there after. We're still loading in some of the AZEK. I would tell you, as expected, the Hardie siding growth has been really strong so far, but we have a long way to go, and this is a major undertaking. But we are thrilled about our future together and the direction we're heading, but it will take some time.

Yes. Let me just jump in there and echo what Jeff is saying. Our siding sales were up significantly in the third quarter, which we expected, really up more than enough to offset the drawdown on our legacy decking sales in the quarter. We expect that, that siding business is going to just continue to grow. We are seeing a lot of success, to Jeff's point, in driving decking conversions. We are bringing a lot of our customers with us. So we see a lot of -- ton of upside opportunity there. And again, 75% of the decking market still uses traditional wood, right? So the total opportunity that we see in decking is tremendous. So we're excited about that.

That said, I will tell you that fourth quarter is going to be noisy for us. Our legacy decking sales are going to be minimal going forward. We've sold through probably 80% of that now. And our complete strategic focus is turning really to the Hardie TimberTech product categories in the fourth quarter. But we just started selling TimberTech last month, right? So also understand, to Jeff's point, the channel has absorbed a lot of decking over the past couple of months now with multiple distributors changing suppliers. And as all of that has happened, customers are really starting to work to reduce their net working capital, and we're heading into winter. So with that, we'd expect fourth quarter probably becomes our base level of sales on decking, and then we'll start to gain upward momentum as we move into 2027.

And then I just want to squeeze one more in, which is: can you talk about conditions in EWP? And especially given the deceleration that a lot of the builders are talking to into year-end and then likely even into early 2027, how are you thinking about pricing there and the competitive environment and how that could come through relative to volumes in that part of the business?

Yes. Thanks, Sue. This is Troy. Yes, I guess, first, on the price side, we held -- the prices held sequentially. That was primarily due to the price protections that we had in place. We are continuing to see the pressure in the market. And in some cases, we've had to adjust relative to our previously announced increase. And then the impact of the Canadian tariffs in the West in terms of some of that veneer coming down out of Canada, maybe we haven't seen the full impact of that yet, but that is there.

So we still believe that we're going to see some slight improvement in Q4, but really because of that pressure continues on price just because there's a lot of supply available above demand, I would hate to speculate. Even on our previous announced in -- going into, say, Q1, but we do still see some activity or some opportunity in price in Q3. But relative to volumes, we entered the Q3 with a very strong profile. The graph on that was straight down through the quarter. We worked our order file, but then we started to see our production exceed demand. We had some opportunity to move into the inventory side, replenish some depleted inventories. And now we've just got to the point now where it is shifting that veneer over to the plywood side.

And so going into Q4, right now, we're expecting volumes on the EWP side to still be challenged. As Jeff just mentioned, we've got key dealers out there still destocking and relying on the 2-step going into the end of the year. And so right now, the way we're looking at it is comparing to, say, Q4 of last year, both on EWP volumes as well as plywood volumes. In Q4 of last year, we did take some market-related downtime, and we're prepared right now to do that if necessary to match supply to demand.

The next question will come from Michael Roxland with Truist Securities.

This is Nico Piccini on for Mike. I just wanted to revisit the 4Q BMD guide. Is there a way to think about or maybe dimensionalize the sequential decline through like seasonal demand decline, maybe a real less consumption or true demand decline and then the supplier shakeup, and then any financial support you might be receiving from Hardie?

Yes, Nico, this is Kelly. Good to hear from you. Yes. So the sales pace so far in the fourth quarter for BMD, we indicated it's about 10% off of the $26.1 million daily sales average that we had in the third quarter. And so if you think about October, November, December, November and December are always going to be weaker in terms of the daily sales pace, just given weather and there's also fewer sales days in those two months compared to October. And so as we've alluded to, there's going to be a number of headwinds for us beyond just the normal seasonality with weather and holidays and those sorts of things.

Joe hit on it in terms of as we work through the supplier transitions, the channel is fairly full in many cases, and we have dealers looking to wind down their inventory as they get positioned for year-end. So I think all those will be headwinds. And I guess to maybe put the last point on it before I'll open it up for anybody else is, if you look at what our daily sales pace was last year's fourth quarter, it was about $22 million a day. And so I think that's probably not an unreasonable metric that we might expect to see in the fourth quarter, but maybe even a little softer just given the uniqueness of the supplier transition activity.

Following your announcement, we obviously saw a lot of other suppliers shake up. I wonder if that was expected or just in general, since you announced this deal, what has or hasn't proceeded with your expectations?

I think everything has proceeded pretty much exactly as we thought. We knew that there would be a drag on sales as we transitioned. This quarter, in particular, we'll feel it as we just got product in, and we're still moving some product off. So it has happened really like we thought it would. And the positive side to that is we heard from a lot of customers across the country that they would be there to support us and to help us or to work with us, and we're seeing that as well. So I don't think there's really been any large surprises there at all.

And then just maybe one final one. You mentioned the lower CapEx guidance was on project delays and distribution. Can you give a little more color on that? What drove that? Is that intentional or not?

Yes, sure. So we did reduce the range for 2026, Nico, and that was largely just a function of some organic growth projects we had going in BMD that were frankly delayed, whether it's permitting, whether it's getting contractors lined up, whether it's materials, equipment, et cetera. It's really just a function of delays as opposed to a meaningful pullback. And lastly, I would say, in terms of 2027 CapEx, we haven't -- we're not at the point yet where we're prepared to speak to the range. But there will be some of the '26 that we will push over into 2027, but we've still got to have a broader conversation internally in terms of what our base level of 2027 spending will be. So we'll get back to you the next time we talk around the 2027 range.

The next question will come from Ketan Mamtora with BMO Capital Markets.

This is Roshni Athaide for Ketan. I was just wondering if you could maybe talk a little bit more about your Wood Products guide and walk us through the bridge. If plywood is maybe like a $20 million per year-over-year tailwind, like what are the other offsets we should be thinking about there?

Yes. This is Troy again. Yes, I guess I'd just reemphasize that at least the way I'm looking at it is, going into Q4 of last year, and so I'm making that comparison. Our prices are similar in terms of EWP. So it's not EWP price. Like you mentioned, plywood prices are up. But really, for the -- as it relates to the fourth quarter forecast, it's a volume issue and volume relative to some escalated cost, that's really impacting our conversion cost number or manufacturing cost number.

And so like I mentioned, our volumes for EWP have come off. We've shifted over to plywood and then the next shift is to curtail and match the demand. And so in fourth quarter of last year, we did have that around the holidays. We're anticipating some of that. We also have some maintenance-related downtime in some of our mills. And so that volume is really the driver.

And then on the cost side, we've seen cost -- I just looked at like, say, 10 key input drivers for us, and our costs are up anywhere from 5% to 30%. And of the 10 that I looked at, on average, were up about 10%. So increased costs, lower volumes, that's what's really driving that forecast.

Okay. Are you able to also just quantify like the transportation or freight headwinds that you had in Q3? And how much of that is embedded going from Q3 to Q4?

Yes. So what we did speak to, Roshni, in terms of transportation was specific on the distribution side in terms of quantifying the selling and distribution expenses and how much of that related to fuel and delivery costs, which was about 80% of our selling and distribution increase in BMD. As we think forward fourth quarter, no reason for us, I guess, to believe that diesel fuel and other things will come off at this point. The only, I guess, sequential benefit we could see there is just the fact that we expect to have lower volume, so lower outbound actual volume. Anything else we'd add on freight and transportation, guys?

No, I would say, the inbound freight, obviously, we can absorb very easily. The outbound freight is a little bit more challenging. But I would give a shout out to the BMD team, has done a fantastic job of building it into the pricing and really done a nice job of covering where we can.

And just one more for me. I think you mentioned that you've sold about 80% of your old supplier products so far. Do you expect to finish the rest through Q4? Or is there going to be like spillover into Q1?

No, I think given what's in the channel right now and how full it is with all the switches that have taken place, we're pretty comfortable with the 20% we have left. And yes, we will continue to sell some of it if the right opportunity comes along. But decking season is around the corner in the spring, and we just believe that we'll have more success selling it then. And so we'll move what we can, but the plan is when decking season kicks in, we'll move the rest of it.

Yes. And with the early-buy decking opportunity, we really want to make our strategic focus the Hardie TimberTech brands. And so we're intentionally making -- shifting away from that right now in order to put our full strategic focus on the future and the brands that we're going to be partnered with in the future.

Our next question will come from Nicholas Sherwood with Bank of America.

This is Nick Sherwood speaking for George Staphos. Can you talk about some of your operating rate assumptions when thinking about pricing and just how you're going to be managing operating rates through the year and into 2027?

Yes. I'd say right now, relative to Q3, like I mentioned, we were able to run fairly -- if you're looking at the dry veneer side and then whether that dry veneer goes to EWP or to plywood, we ran fairly well through the quarter. Our operating rates through the quarter were 80% range for the plywood side and low 80s for the EWP side. That's where I'd expect going into Q4. We're going to be shifting away more veneer away from EWP. So those operating rates will come off. And then plywood, while we're running, we're going to run fine. It's just a matter of the hours that will be taken out if that comes to pass.

And then for my second question, can you just talk about the James Hardie transition? And what kind of operational milestones should we think about for that partnership in 2027?

I think the way that we look at the James Hardie TimberTech, where we're trying to go, our objective there was never just about replacing our existing sales, right? We've really partnered with James Hardie and TimberTech brand in order to go out and gain share, expand our overall market position, take over the marketplace. So the opportunity isn't just selling decking and siding products for us. We really see an opportunity to go drive the entire market toward adopting an exterior solution. We measure our success by our customers' success, by our customers' growth. So if we can bring them the right solution, if we are aligned with the right suppliers who are long-term market winners, then our customers will begin to grow and that becomes a sustainable model for us. So that is always our focus.

And so we partner with the best-in-class brands in order to do that. The suppliers who are the most innovative, the ones that bring solution-based opportunities to our customers and to the market, and then the rest of it is just based on our execution. And we are really extremely confident in our ability to go execute.

The next question is a follow-up from Ketan Mamtora with BMO Capital Markets.

This is Roshni filling in for Ketan. Just one more question. Could you please provide some perspective on channel inventories in siding, particularly whether they're at normalized levels? And then also on siding growth, could you just break down how much is coming from market versus incremental share gains? Just any perspective there would be helpful.

Yes, I'll start with that and then Joe can fill in. I think the same thing has happened with siding is what happened with decking. When there's a switch, people started trying to move the material into the market. However, I will say we are seeing some gains on our Hardie siding. We are. They're meaningful. We believe we're picking up share. We don't think that the market is so strong as much as it is that we're gaining share, and we're seeing and feel really good about that and think about our opportunity going forward. I really believe in this quarter that the gains we will pick up on siding will really help to cover what we won't get on the decking side as we transition.

Yes, I would agree with Jeff. Our siding sales have picked up significantly. We believe they're going to continue to pick up. We're picking up a lot of that business from the James Hardie exits that they've made in different markets as far as other distributors. So we picked that up. And yet, there was still quite a bit of siding inventory in the market from those exits. So we anticipate that, that's just going to continue to grow as those other distributors wind down and we ramp up.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Jeff Strom for any closing remarks. Please go ahead.

Thank you for your continued interest in Boise Cascade. We look forward to our conversations next quarter. Be safe. Thanks again.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning. My name is Dave, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Boise Cascade's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Chris Forrey, Senior Vice President, Finance and Investor Relations. Mr. Forrey, you may begin your conference.

Good morning, everyone. I would like to welcome you to Boise Cascade's Second Quarter 2026 Earnings Call and Business Update. Joining me on today's call are Jeff Strom, our CEO; Kelly Hibbs, our CFO; Jo Barney, leader of our Building Materials Distribution operations; and Troy Little, leader of our Wood Products 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 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 Jeff.

Thanks, Chris. Good morning, everyone, and thank you for joining us for our earnings call. I'm on Slide 3. In the second quarter, total U.S. housing starts and single-family housing starts decreased 1% and 4%, respectively, compared to prior year quarter. Our consolidated second quarter sales increased 5% year-over-year to $1.8 billion. Our net income and earnings per share were $57.3 million and $1.63 per share, both higher than the prior year quarter when excluding gains on asset sales reflected in prior year results. I'm pleased with the outstanding results we were able to deliver despite continued demand uncertainty resulting from geopolitical events and volatile mortgage rates. The challenges of consumer sentiment and home affordability remain the most significant headwinds for residential construction activity. In this environment, we're continuing to leverage our integrated model, which consistently demonstrates its value and resilience.

Moving to Slide 4. Yesterday, we made the exciting announcement that we're expanding our distribution partnership with James Hardie across a complete portfolio of industry-leading products. including Hardie Siding and Trim, AZEK Exteriors and TimberTech Decking and Railing. As part of the agreement, James Hardie will consolidate its distribution network across all regional markets and has designated Boise Cascade as a sole nationwide distribution partner. We will transition away from distributing competing siding and PVC trim products and bring in James Hardie's full suite of products nationwide. As the sole nationwide distributor, Boise Cascade will be uniquely positioned to provide our customers with a simpler purchasing experience, deeper engagement and support and greater access to James Hardie products.

This agreement is consistent with our focus on delivering the best products and service for our customers, which is at the core of every strategic decision we make at Boise Cascade. With that said, a partnership of this magnitude will take time to implement. We will work down inventory from legacy suppliers throughout the remainder of the year. During that time, we will onboard inventory, train our product teams and begin climbing the sales ramp. We'll provide progress updates as we move through the remainder of 2026 and into 2027.

Kelly will now walk through our segment financial results, capital allocation priorities and third quarter guidance, after which I'll provide insights on our business outlook and make closing comments before we open the call for questions.

Thank you, Jeff. I'm on Slide 5. BMD sales in the quarter were $1.7 billion, up 5% from second quarter 2025. BMD reported segment EBITDA of $85.6 million in the second quarter compared to segment EBITDA of $91.8 million in the prior year quarter. Gross margin increased $9.2 million compared with the prior year quarter, resulting from higher gross margins on commodity and general line products, offset partially by lower gross margins on EWP. Selling and distribution expenses were up $10.8 million from second quarter 2025, approximately 50% of which was due to higher fuel and outbound delivery costs. In addition, prior year results benefited from a $3.8 million gain on the sale of a nonoperating property.

In Wood Products, our sales in the second quarter, including sales to our distribution segment, were $459.6 million, up 3% compared to second quarter 2025. Wood Products segment EBITDA was $52.4 million compared to EBITDA of $37.3 million reported in the year ago quarter. The increase in segment EBITDA was primarily due to higher plywood prices and sales volumes as well as lower per unit OSB costs used in the production of I-joists. These increases were offset partially by lower EWP sales prices as well as higher per unit conversion costs. In addition, prior year results included a $3.9 million gain on the sale of our former Roxboro, North Carolina property.

Moving to Slide 6 and 7. BMD's year-over-year second quarter sales increase of 5% was driven by net sales volume and price increases of 4% and 1%, respectively. By product line, general line product sales increased 9%, commodity sales increased 7% and sales of EWP decreased 6%. Sequentially, BMD sales were up 22%. Our second quarter gross margin was 15.2%, down 20 basis points year-over-year. Competitive pressures drove lower gross margins on general line products and EWP, offset partially by improved gross margins on commodity products due mainly to higher trending lumber prices.

BMD EBITDA margin was 5% for the quarter, down from 5.7% in the year ago quarter. The 70-basis point decline resulted from lower gross margins, higher selling and distribution costs and the asset sale gain that boosted prior year EBITDA margin by 30 basis points. On a sequential basis, EBITDA margin was up sharply from the 3.5% reported in the first quarter. Seasonal demand improvement, higher gross margin dollars and percentages and improved operating expense leverage from increased volumes positively impacted our second quarter results.

Turning to Slide 8. On a year-over-year basis, second quarter I-joist and LVL volumes were each down 2%. Sequential I-joist and LVL volumes were up 18% and 17%, respectively, driven by seasonal demand improvements and the pull forward of some volume. Related to volume pull forward, as expected, some customers ordered more product in the second quarter to get ahead of our announced price increase, and we believe possibly out of concern that transportation constraints could result in product shortages. I will speak to our EWP price increase in more detail when addressing our third quarter outlook. As it relates to second quarter pricing, I-joist and LVL realizations declined 7% and 4%, respectively, versus the prior year quarter and were nearly flat sequentially.

Turning to Slide 9. Our second quarter plywood sales volume was 368 million feet compared to 356 million feet in second quarter 2025. The year-over-year increase in plywood volumes was driven by lower volumes in the prior year quarter due to downtime at our Kettle Falls, Washington mill to complete a scheduled maintenance project as well as the planned outage for capital projects at our Oakdale, Louisiana mill. Sequentially, our plywood sales volumes were down 1% from first quarter 2026 as we diverted more veneer to EWP production to meet stronger-than-anticipated demand across our EWP product lines.

The average plywood net sales price was $393 per thousand in the second quarter, representing a 15% increase year-over-year and sequentially. We attribute the recent improvement in plywood pricing to reduced imports. Notably, Brazilian imports declined by 25% year-over-year through the second quarter of 2026 despite a temporary reduction in tariff rates that accelerated imports in the second quarter. New Section 301 tariffs are now in effect, increasing the effective tariff rate, which may influence market dynamics in the coming months.

I'm now on Slide 10. We had capital expenditures of $63 million in the first 6 months of 2026, including $23 million in the second quarter. BMD and Wood Products spent $8 million and $15 million, respectively, on capital projects in the second quarter. Our capital spending range for 2026 remains at $150 million to $170 million. Speaking to shareholder returns, we paid $18 million in regular dividends during the first 6 months of 2026, including $8 million in the second quarter.

Our Board of Directors also recently approved a 5% increase in the quarterly dividend on our common stock to $0.23 per share that will be paid in mid-September. Through the first 6 months of 2026, we repurchased approximately $108 million of Boise Cascade common stock, including approximately $43 million in the second quarter. At the end of the second quarter, about $130 million of our outstanding common stock was available for repurchase under our existing share repurchase program. The ongoing strength of our balance sheet and cash generation capability through the cycle leaves us well positioned to continue pursuing our strategic objectives.

I'm now on Slide 11, where we have outlined a range of potential EBITDA outcomes for the third quarter, along with the key assumptions underlying these projections. Activities associated with the ramp-up of our expanded partnership with James Hardie, the wind down of our former suppliers' product lines and termination provisions that delay the full implementation of James Hardie's distribution realignment will take time to play out and are expected to affect our near-term results.

Accordingly, we expect revenue pressure in decking, siding and trim as we work through these changes. Decking will be the most notable category given it amounted to approximately 9% of BMD's last 12 months' revenue. Beginning October 1 of this year, our agreement provides elements of financial support as we ramp sales across the full suite of James Hardie products, and we are confident in our ability to mitigate the near-term impacts while positioning the company for stronger long-term growth.

With that said, inclusive of supplier transition activities, we currently estimate BMD's third quarter EBITDA will be between $53 million and $68 million. Our daily sales pace through July was consistent with the second quarter sales pace of $26.5 million per day and is expected to moderate based on forward-looking end market signals and supplier transition activities. Gross margins are expected to be between 14% and 14.75%.

In Wood Products, we announced an EWP price increase in the latter part of the second quarter that we expect to increase our pricing by approximately 3% when fully implemented. Contractual obligations will delay the realization of the full benefits of this action, but we expect to begin seeing the impact of the price increase as we move through the third quarter.

Turning to our anticipated results for Wood Products. We estimate third quarter EBITDA will be between $22 million and $57 million. Our EWP order file is strong, but order intake in recent weeks has moderated to the extent that we expect volumes to decline mid-single digits sequentially. EWP pricing is expected to increase slightly on a sequential basis.

In Plywood, we expect volumes to decline low single digits sequentially. On Plywood pricing, quarter-to-date realizations were 5% above our second quarter average with the balance of the quarter dependent upon end market demand and ongoing import supply volatility. We expect our per unit manufacturing costs will be comparable to second quarter.

With that, I'll turn it over to Jeff to share our business outlook and closing remarks.

Thank you, Kelly. I'm on Slide 12. Looking forward to the third quarter, the path to recovery in homebuilding remains elusive. Ongoing geopolitical uncertainty, volatile treasury yields and mortgage rates and persistent inflation continue to weigh on the macroeconomic outlook. In response, homebuilders have relied on incentives to stimulate demand while maintaining discipline around starts and spec inventory. Repair and remodeling is consistent but unspectacular growth is reflective of cautious consumer behavior, low home turnover and a reluctance to tap homeowner equity at current interest rates.

Our exceptional results in the quarter, despite the backdrop, reflect the strength of our operations and the value Boise Cascade brings to the channel. BMD's high-quality products and world-class service create solutions for customers and vendors in all operating environments. In Wood Products, we are encouraged that the EWP price stability seen in prior quarters has continued and progressed into successful pricing actions. We continue to create value through Boise Cascade's integrated manufacturing and distribution model, which connects real-time customer demand and disciplined production, inventory and logistics decisions.

The daily alignment between our Wood Products and Building Materials Distribution segments enhances channel visibility, allowing us to better match production rates and inventory strategies to end market conditions and leads to improved service levels for customers. Cross-divisional coordination, supported by our strong financial position provides the stability and flexibility to allocate capital efficiently, execute our strategy and respond quickly to changing market dynamics. We remain focused on expanding the benefits of this integrated model by bringing our divisions closer together and stimulating innovation across the organization to support long-term value creation.

As we plan for the future, long-term residential construction fundamentals remain constructive, supported by generational tailwinds and an undersupplied housing market. High homeowner equity and an aging U.S. housing stock supports sustained repair and remodel spending and reinforce the industry's solid underlying demand drivers. Against this backdrop, we believe Boise Cascade's investment made throughout the business cycle will position us to capitalize on these tailwinds and outpace industry growth over time.

Lastly, James Hardie is a trusted long-term partner, and we look forward to working closely with the team in the coming months as we work to unlock the full potential of our expanded distribution agreement. Our team is eager and highly motivated to sell James Hardie's industry-leading portfolio of products. We have a long history of growing supplier product lines through our nationwide footprint and superior service, and I am confident that we will do so again across James Hardie's product portfolio.

During this transition, my #1 priority is ensuring that we continue to take great care of our customers by doing things the Boise way. That means providing customers with high-quality service and support across all of our offerings, earning the respect through our transparency and maintaining their trust through integrity. Lastly, it means pursuing excellence with intense effort, focus and clarity of mission.

Thank you for joining us today and for your continued support and interest in Boise Cascade. We welcome any questions at this time.

[Operator Instructions] Our first question comes from Susan Maklari with Goldman Sachs.

I want to start with the strategic shift in general line to James Hardie. Can you talk a bit more about the long-term path for profitability, the efficiencies that you could see perhaps in terms of working with one supplier versus multiple suppliers for decking and siding? And then just overall, are the terms of this deal consistent with prior deals? Or is there anything that we should be aware of?

Yes, Sue, let me take that a little bit. I'll start with this. This is all about growth. And we really feel strong about that and feel like there's tremendous opportunity for us and how we're going to go about doing that. First, we're picking up the entire portfolio, and we're excited about that. It brings more addressable market to us that we can go after. How are we going to do that? First, I'll talk about some of the things, the exits that Hardie is making. They're significant. There's opportunity there. We have to go out and win that and win our fair share, and I really believe we'll do that, number one. Second thing I talk about is kind of our national account opportunity in the home centers. Having one complete product line that we can go offer across the entire country, we believe is a competitive advantage for us, and we look to take advantage of that.

The next thing is I'm just talking about the conversion of our existing customer base. I'm going to say this, we've been a very strong distributor player in the decking market for a long time. And we have a customer base that has come to rely on us, and they've told us that very clearly and consistently. And so we really believe that we have the opportunity to convert some of that. for how we've performed in the past, the service we provide and the reliance they've had on us.

Next thing I'll talk about is the James Hardie sales force. It's fantastic. We've worked with them in the past. We know about their pull-through ability and what they can do, the relationships with contractors, with builders. They've got an excellent marketing team that we know is going to help us. And then there's a lot of conversion opportunities out there that we know we can go grab on whether it's the products or different products now that we can offer. So we're really, really excited about that. As far as the terms of the deal. . .

Yes. I'd say, Sue, in terms of the general day-to-day terms, not really inconsistent with what we've had with our former decking supplier. And Jeff hit on it a bit ago just in terms of clarity of mission here in terms of how we move forward. Certainly, we're going to move forward with urgency as we transition away from former product lines. We're also going to move with urgency as we work towards our transition to expand our relationship with Hardie, but it's very important that we're -- we do that in a very thoughtful and a new territory fashion, so we make sure that ramp is well orchestrated. And the focus will be on that successful transition and clearly a mission around working to mitigate the financial impacts, the near-term financial impacts ahead of us, including there are certain elements that we have in our arrangement with James Hardie that will help support that transition as we ramp sales.

And Sue, I'll jump in here for a second. As far as the synergies of the strength in aligning with one brand, James Hardie now has the industry's really broadest portfolio of exterior products. They are #1 or #2 across each of their product categories, right? They're #1 in siding, #1 in PVC trim, #1 in fiber-cement trim, #2 in composite decking, although we believe that we have the strength to help them get to #1 there. We believe that aligning with one brand will create customer stickiness for us. If you think about our ability to drive down the transaction cost for our customers when there is 1 PO, receiving delivery truck, dealing with one sales rep, potentially one bundled pricing program, one marketing strategy across multiple products.

When you think about, to Jeff's point, our combined sales forces, Boise Cascade has over 600 salespeople across the country that will be partnered with James Hardie and TimberTech AZEK sales teams. We think that there is strength there. And then for our business, we think about improving things like our truck fill rates, our large average order sizes, better cross-selling opportunities across our footprint and a greater ability to differentiate ourselves from other distributors in the market.

Okay. That is all great color. And I want to shift now to EWP. You talked about some pull forward in the volumes that you saw there in the second quarter. Given that, how are you thinking about the channel inventories as we look in the second half of the year and especially given that a lot of the big public builders have downwardly revised their expectations for 2026 closings? And then also, what does that mean in terms of the realization of the 3% price increase that you've announced?

Yes, this is Troy. Yes, as you mentioned, the commentary we're hearing on the builder side, the uptick on the interest rates, kind of all headwinds heading into the second half of the year. I guess I would say our order file throughout Q2, it did continue to grow, and that's what helped us support a price increase. in terms of how that plays out, we -- the pull forward was some of our arrangements, volumes, the price protection, undoubtedly, we saw some activity prior to the increase going into effect. But right now, as we move into August, our order file is about 3x what it was this time last year. And so we're still feeling pretty good. The intake side has slowed. But I think combined with the existing order file and what we're kind of seeing right now, I feel pretty good about that runway through August at least. But then like you said, going forward, the commentary from builders, plus we had at least one large dealer talk about kind of peeling back their days on hand. So all of that will have some effect.

I'm just going to add 2 things a little bit. The pull forward of orders with the price increase is normal. That happens every time. So I just want to stress that. It's nothing different. And then the reluctance that you've heard a little bit about what's going on with builders and what they're going to carry as far as EWP, that plays in the hands of distribution once again. So when things slow down, people are relying more and more on just-in-time inventory, it's a good thing for us.

And the next question comes from Michael Roxland with Truist.

Congrats on the progress. First question I had, how long do you guys think it will take for the Hardie transition to happen and to replace the prior business? Is that something that occurs fully by year-end? Is it by the end of 1Q '27? And any early estimate on how fast that business could grow relative to the progress that you [ transitioned away ] and any incremental margin benefit as well?

Yes. Good question, Mike. So I would say, in general, it's going to be -- it's too early to provide specifics around some of your questions there. Like I said earlier, we're going to move with urgency, but there are certain things that we're not in control of, in particular, things around Hardie and how the distribution arrangements that they exited from and how long that may take before those distribution arrangements are fully exited. That could be 1 quarter and that could be 2 quarters. And then for us, we're still working down our current inventory and then start to build our new inventory probably September time frame. So it's not going to happen in the fourth or the first quarter in terms of when we get back to normal. I think this will be a journey that will take multiple quarters. And there's a lot of things to play out yet before we can really provide a lot of specifics, but we will absolutely continue to provide updates as we move through the balance of the year and into 2027.

Yes. I'll jump in there, too. So to Kelly's point, we're going to -- we'll start loading in many of our locations in September, right? We're going to be working through our inventories over the next couple of months, our current set of inventory. And we'll probably likely move some inventory around our system if we need to. It's still good inventory that we have on the ground that we can sell, and we're going to work to do that. We'll probably utilize our larger branches to help us move some decking -- have an [ access hub ], allow us to move some decking around our footprint so that we can wind down our smaller locations sooner. As the James Hardie exited distributors wind down their inventory levels, we want to make sure that we are ready to serve in every market that needs James Hardie product. So we'll start loading in, in September. The James Hardie exits have roughly 90 days. So we'll be working closely with James Hardie to monitor the inventory in the channel. But we plan to start selling the full suite of James Hardie products in the fourth quarter, both driving conversions, product conversions as well as capitalizing on the distribution consolidation that will be taking place in the market.

Got it. That's extremely helpful color. Just on that point, do you think based on what you've seen with Hardie and your interactions with Hardie over time, having them as a customer, do you think that the growth potential from Hardie is greater than the business they left? And if so, by how much roughly order of magnitude or range bound, 3%, 5% -- just give us an idea of how much further growth we could expect once Hardie is fully deployed within BMD.

Mike, our opportunity is significant. It truly is. If you think about some of the PVC products and the Class A fire rated products that we have not nationally participated in, I think our growth opportunity there is very, very meaningful. I think the opportunity we have to continue to grow our Siding business is very, very meaningful. And I think we bring along with us a customer base that we have a chance to convert. So the opportunity, when we get there, we really believe is meaningful, and it has us completely excited to go after and go do this.

Yes. I would tell you, we don't see it as a one-for-one offset on revenue. We see it as a strategic shift to owning the full exterior combined portfolio, where we align with one brand in order to gain a larger share of the full exterior envelope of the home. In fact, we are realigning our branded products team. They will become our exterior products team to be fully aligned and engaged with the James Hardie strategy.

Got it. One final question, I'll turn it over. Just in terms of Brazilian imports, obviously, concerns that they would increase in the second half. But it seems like with those new 301 tariffs, maybe there's the potential for that to defer or to discourage increasing imports from Brazil. So thoughts around maybe plywood market holding up rather well given the 301 rollout.

Yes, it's Troy. Yes, as you mentioned, the second quarter did tick up volume-wise year-to-date versus the prior year. It's still down. I think there was a couple of announced competitor capacity coming offline. And then, of course, for us, we ship veneer from our plywood production over to the EWP side. So I think net-net of all that, there's probably less plywood, especially in the Southeast. So that's probably helped with the prices. I mean, specific to Brazil, what we're seeing, we have a heavy 58 mix in the Southeast to support our EWP business.

And it seems a little weird, but I think it's actually, the Brazilian stuff seems to be a little bit complementary to what they supply with the specialty products, maybe some different thicknesses that actually allow our relationship with BMD for them to fill in where we can't supply because of our product mix. So right now, it seems to be, I would say, a nonevent. But the current prices probably allow that even with the Section 301 in effect, some of that volume is still coming, so it will probably be dependent on prices moving forward.

And the next question comes from George Staphos with Bank of America.

I wanted to -- recognizing there are lots of moving parts here, is there a way to quantify what the transitional impact was in terms of third quarter guidance for BMD? And with your -- if you will, your existing product line that you're going to be winding down inventories on, if I understood it correctly, you're going to be moving that to some of your larger locations. What else do you do to ultimately make sure that product is more or less out of your files as the James Hardie product is coming in?

Yes. So let me take the first part of that question, and maybe I'll have Joe help amplify a bit on kind of how we're moving through our existing inventory with our former Boise decking supplier. So in terms of the guide, you're right, George, the supplier transition activities are influenced -- are reflected in that guide. And so how so, certainly from a top line standpoint, I mean, end markets are slowing a bit, so that's reflected. And then also the fact that we're moving through our inventory. And as you might expect, the fast turning the A-grade stuff, that's going to turn out pretty quick. And then the other products will continue to turn, but maybe in a bit of a slower rate.

And so overall -- and we won't be adding new inventory for that brand, obviously. So that's going to be a component of the daily sales decrease we expect to see as we get into August and September. And then on the margin profile, you notice that is a little bit lower also. And that's going to be a function of kind of what Joe hit on a bit ago, which is we have certain geographies where we move a lot of composite decking, some markets a little bit less. And so we're going to, as best we can, kind of do a hub and spoke to move products around to where it can move and where it can turn quickly. And there'll be some costs that we have to bear to make that happen.

Joe, anything else you'd add in terms of how we kind of thread the needle between exiting one and adding another?

Yes. So I would first say that we are still selling through a significant amount of this inventory per day. We have not seen that slow down. So we're still moving through our inventory. We feel pretty good about that and the levels that we'll be able to get it down to. We have a lot of support from our customer base. A lot of our long-term customers who were willing to purchase that inventory who we've been selling to for a very long time. So we've got a lot of avenues where we can push this inventory. The home centers are an avenue for us. We've got a lot of support there. They move through a lot of this material. So we've got some optionality there. And then if we get down to it, some of it can be recycled. So we've got a lot of options that we can push this inventory out to as we wind it down.

George, I'm just going to add 2 little things. There's still a lot of decking season left. We have a solid 2 months left for us that we can move some. And then I just want to stress the customer help that we've been hearing from our customers that will help us out that are, "Okay, what do I need to move for you?" It's been significant. So we feel good about what we can do there.

Jeff, is there maybe a little bit of margin degradation, too because, forgive the elemental question, but or point do you have to market down at all to make sure it's gone so that you have space when the new Hardie product comes in? Or no, not really because you still have 2 months in decking season, et cetera, et cetera?

I'd say not -- on one hand, I'd say not really because we have 2 months and we have people that are willing to help us on that. But I would say when we get towards the end and we have to start moving product around, we'll be incurring some freight charges on things and things that might not be the fastest moving. There could be some of that at the very end.

Okay. Now at the national big box retailers, I can imagine they'd be very happy to get the one full suite of products from you as you're aligned with Hardie. With smaller lumber yards, and places like that, what are you going to do to help them now become more accustomed to your new product line where before they were accustomed to your old decking product line, especially with the contractors that are in that market. Is that a big deal? Or is that not that big of a deal in terms of the sort of the margin that you got to work through the costs that you have to work through?

George, James Hardie's reputation in the industry for the products they produce is fantastic. And if you look at what their growth rate has been over the last several years in the decking category, particularly, it's always hard to move people. There's no doubt about it. But we have a sales force that's very capable. We're working with James Hardie force, which is very capable. We have a reputation for servicing the dealers that they've come to rely on. And some of the work that used to be done at the dealer level that we do for people, they understand the value that we bring. And so converting them [ mildly ]. Nothing is easy, and we're not naive to that, but we believe we can do it.

No, of course. I guess last question for me, and I'll turn it over and recognizing it might be a bit of a sensitive topic. Do you intend to -- and can you carry SKUs from other manufacturers in some of the key categories that Hardie supplies? Or are you more or less going to focus entirely on selling the full suite of Hardie products from decking to siding, et cetera?

So I would tell you that we will be very focused on James Hardie's whole portfolio, obviously. But there are some carve-outs of some products that we hope to maintain, but it's too early to tell how that will go.

And the next question comes from Ketan Mamtora with BMO Capital Markets.

Maybe just coming back to the third quarter distribution EBITDA guidance, and I appreciate that there are quite a few moving pieces here in the short term. But I'm just curious, if quarter-to-date sales pace is sort of consistent with Q2, can you give us some big buckets that is driving the sequential drop in EBITDA from Q2 to Q3? I see that there is some of the transition element there. But is it possible for you all to just quantify for us what is sort of underlying demand versus kind of the transition impact in the short term?

Yes. So if I understand your question, I'll try here, assuming I understand your question, Ketan, which is -- so the majority of what we're seeing in the step down, I would say, is attributable to the supplier transition activities in terms of the daily sales pace and the margin degradation that I spoke to. I think at the same time, you heard us in some of our prepared remarks talk about generally a bit of a slowing environment. We benefited from some tailwinds in commodity, in particular, lumber and plywood in the first half of the year in BMD. And so I don't -- given demand softening, it's hard to envision that we'll continue to see some tailwinds there. So it's a combination of supplier transition, which is the heavier part of it and then also influenced by just generally softer end market in terms of our near-term view, Ketan.

Understood. Kelly, would it be fair to say about 2/3 of this then is the supplier transition or more or less any just rough order of magnitude?

Yes. I think that's probably fair, Ketan.

This is Jo. I don't want to get lost to in the fact that, yes, there's going to be some short-term noise here as far as the transition of inventory and moving in and moving one out and loading the other one in. So there will be some short-term noise, whether that's 1 quarter or 2. But I don't want to lose track of how big we can be with this product category. We were the largest distributor for our previous supplier decking line, and we plan to be the same for the James Hardie and the TimberTech decking line, but it won't end with decking. That's the great thing about this full suite of products and the fact that we will be carrying all of them because as we cross-sell, we'll have the opportunity to become the largest in every category.

And I think we're going to gain wallet share as James Hardie makes their exits and consolidates their distribution network. We'll be able to leverage our national scale and serve every market. Our national footprint will allow us to better align with the home centers and the national dealers, even the multifamily players. It's going to give us a competitive advantage as far as that goes. And we really believe that our service, our value, our reliability with our customers really from East Coast to West Coast now will help us win both wallet and market share in these product categories.

Got it. No, that's helpful context, Jo. And then on EWP, you mentioned there was some pull forward and recognize this is something that happens every time there's a price increase. So I appreciate that. Again, is it possible to sort of quantify how much of an impact that could have had on Q2?

In terms of Q2 volumes, yes, I'm not sure that -- I mean, that was the order file. So in terms of our shipments, generally speaking, we -- the mills ran well. We -- our operating rates were in the 85% to 90% on the EWP side. So I mean it's more of our ability to produce it and get it shipped out. And I think that was fairly consistent. So I don't know that there was really an amount that I would add.

Yes. And I would say, Ketan, it's hard for us to specifically quantify how much volume might have been pulled forward a bit, whether it was a transportation issue or the -- getting ahead of the price increase. But I feel like we've reflected that. If you see the third quarter guide, I think that's largely influencing why we're saying mid-single-digit sequential decline in terms of volumes. That has a bit of pull forward as well as a little bit destocking we're hearing through the channel.

Understood. And then just last question. On the freight and transportation side, any sense of sort of how much of incremental cost that is hitting you in Q3 or H2? I recognize that these things is changing day-to-day, week-to-week. But if it were to stay at this level, how much of a drag for transportation and freight is either Q2 or H2?

Yes. So in our prepared remarks, we did call out in terms of the impact of our increase in our selling and distribution expenses and about 50% of that year-over-year increase in our selling and distribution expenses was a function of higher fuel in our own trucks as well as higher outbound delivery costs we're paying. So it's been pretty meaningful. And I think generally speaking, we're -- I think we're doing a pretty good job of passing that through, not 100% of it. But I think generally speaking, we're doing a pretty good job, and it's something we're going to continue to tightly manage and monitor to make sure we're trying to do our best to kind of break even on all fronts.

And the next question comes from Jeff Stevenson with Loop Capital.

I was wondering if you could provide more color on the EWP competitive environment during the quarter with order files 3x stronger at this time than last year and pricing largely stabilizing. And then what went into the decision to implement third quarter price increases after the 1 to 2 years of deflation headwinds you've seen in the category?

Yes, this is Troy. As we've talked about in the past, I mean, we were seeing prices stabilize for the last few quarters despite the competitive pressures that we were still seeing. And then the cost escalation has been there for a while. We just didn't have the order file necessarily to back a price increase at that time. And then as we did move through the quarter, even prior to what we would call pull forward, we were still seeing pretty decent demand in our order file growing. And so implementing that price increase was a little bit of the desire to address cost inflation, but also the order file and the demand that was there.

And then we have seen that pull forward 3x what it was, like we talked about. But I think that's what helped us implement that. It was the price increase itself. I mean we got what the market would bear in each market. I mean we ran the gamut. We had price increases. We were in markets where we were flat, and we actually had markets where we actually had to go down to match competitive pressures. And so as reported, we had about -- we believe it's going to be about 3% once all said and done. That should play out slight increase maybe in Q3, incremental increase in Q4 and probably playing out fully in Q1.

Got it. That's very helpful, Troy. And then I was wondering if you could update on the M&A pipeline and whether you've seen any improvement in seller expectations for bolt-on strategic acquisition opportunities in key areas such as mill work given ongoing macro uncertainties.

Yes. Good question, Jeff. I would say there is still a reasonable amount of activity that comes our way, things for us to evaluate. Our balance sheet is capable to execute M&A and our interest level remains on that front. So we'll continue our very similar approach to capital allocation and how we want to invest to sustain the company and invest to grow the company if we can find the right opportunity and then obviously not lose track of shareholders. And you can see that our LTM capital allocation is pretty well balanced in terms of how much into the company and how much back to shareholders.

And the next question comes from George Staphos with Bank of America.

Not to be sort of pedantic here, I know at the end of the day, you want to try to guide in a way that is achievable. But I want to make sure your order files, did you say, Jeff, are 3x what they were in August, yet you're seeing some decelerating. So if those are both true statements, help me ultimately understand how that sort of manifests itself in your expectation for a little bit slower outlook and the guide for wood for the third quarter.

Yes, George, this is Troy. It's that carryover from the order -- the growth in the order file prior to the price increase. So we've got that working for us right now. And like I mentioned, believe that it probably has some runway through August. But again, with all the activity or the commentary from the builder side, the interest rate increases, the destocking potential, I think as the quarter plays out, we're just seeing the volume side probably, I think we guided down mid-single digits. So it's probably just playing on that. I mean we might have a little bit more runway with the order file, but that commentary is a big headwind for us.

Okay. So -- and I appreciate you going through that. So if you were in our seat trying to sort of map out the rest of the year and let's say, we're a month from now, what would you, if you were in our seat, be particularly looking at to determine whether, in fact, things did decelerate as you're expecting and would or whether there's a length in season or recovery pickup in activity? What are you most focusing on? What would you -- if you were in our seats, focus on given where we sit on our side of the screen?

Yes. A lot of variables for sure that you and us will be trying to get our head around. I think what will be -- one thing that will be interesting to see, George, is the back half of last year and particularly the fourth quarter, the activity at the builder level was almost near a hard stop. It was very, very abrupt end to the kind of the last half of last year. While we're moderating down a bit here now, it feels like maybe it will be a bit more -- a bit stronger here as we exit 2026 as compared to that hard stop in 2025. So that will be something to be interesting to monitor. In the Wood Products business, always end market demand and supply volatility will influence plywood pricing. That's always a big variable for us that's really hard to predict. And then on the BMD side, it's going to be all about successful supplier transition. And I'm not going to put any finer point on that than what you've already heard today other than that will be a clear focus, and we will have a -- we'll be looking to execute in a successful substance fashion as move forward there.

George, one more thing I would just say in terms of our integrated model and the veneer flow. So the EWP side, yes, we may see some slowing volume-wise, but then we have that flexibility to shift that veneer over to the plywood side. So I just would say whatever your predictions are on future plywood prices, we're able to kind of maintain our capacity at the mill level or production at the mill level by shifting that over there before we got into any real issues around pulling back on production.

That's helpful. And appreciate it. And ultimately, I guess, even if things are slowing, you've got easier comps versus last year. So hopefully, we should be looking at better growth year-on-year, but we'll see how that plays out.

This concludes our question-and-answer session. I would like to turn the conference back over to Jeff Strom for any closing remarks.

Thank you very much. I just want to thank everyone for your continued interest in Boise Cascade. We look forward to talking to you next quarter. Please be well, and please be safe. Thank you, everyone.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning. My name is Jason, and I will be your conference facilitator today. At this time, I would like to welcome everyone to Boise Cascade's First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Chris Forrey, Senior Vice President of Finance and Investor Relations. Mr. Forrey, you may begin your conference.

Thank you, Jason, and good morning, everyone. I'd like to welcome you to Boise Cascade's first quarter 2026 earnings call and business update.

Joining me on today's call are Jeff Strom, our CEO; Kelly Hibbs, our CFO, and Joe Barney, Leader of our Building Materials Distribution Operations; and Troy Little, Leader of our Wood Products 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 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 or loss to segment EBITDA.

I will now turn the call over to Jeff.

Thanks, Chris. Good morning, everyone, and thank you for joining us for our earnings call.

I'm on Slide 3. As I step into the role as CEO, I want to express my deep confidence in our company and talented people on our established direction. We have a strong foundation and a proven strategy that has positioned us well in the marketplace, and I'm committed to building on that momentum. My thanks to our outstanding team, his dedication, expertise and commitment to our customer and supplier partners to what drive our continued success. I'm excited to lead us forward focused on delivering sustained value to all of our stakeholders.

Now let me turn to our first quarter results. Total U.S. housing starts increased 1% compared to the prior year quarter. However, single-family housing starts were off 5% for the same comparative period. Our consolidated first quarter sales of $1.5 billion were down 2% from first quarter of 2025. Our net income was $17.8 million or $0.50 per share compared to net income of $40.3 million or $1.06 per share in the year ago quarter.

Our business has delivered solid results for the quarter despite continued demand uncertainty resulting from geopolitical events, volatile mortgage rates and severe weather. The challenges of consumer sentiment and home affordability remain the most significant headwinds for residential construction activity. In this environment, we're continuing to leverage our integrated model, which consistently demonstrates its value and resilience, particularly in challenging market conditions like these.

As a follow-up to our previously disclosed legal matter that was resolved last week, this was a legacy issue of involving certain hardwood plywood purchases made at a single distribution facility in Pompano, Florida between 2017 and 2021. We bought the wood from a former U.S.-based supplier that improperly imported the products. We were not involved in creating we're operating the supplier scheme, but we did not follow some of our own internal processes that would have prevented us from making these purchases. We've taken responsibility for that and have strengthened our processes to prevent this from happening again.

Kelly will now walk through our segment financial results, capital allocation priorities and second quarter guidance, after which I'll provide insights on our business outlook and make closing comments before we open the call for questions. Kelly?

Thank you, Jeff, and good morning, everyone. BMD sales in the quarter were $1.4 billion, down 1% from the first quarter of 2025. BMD reported segment EBITDA of $48.2 million in the first quarter compared to segment EBITDA of $62.8 million in the prior year quarter. Selling and distribution expenses were up $8.2 million for first quarter 2025. In addition, gross margin dollars decreased $6.5 million compared to the prior year quarter, reflecting lower gross margins on all product lines, particularly in EWP.

In Wood Products, our sales in the first quarter, including sales to our Distribution segment were $398.2 million, down 4% compared to first quarter 2025. Wood Products segment EBITDA was $32 million compared to EBITDA of $40.2 million reported in the year ago quarter. The decrease in segment EBITDA was due primarily to lower EWP sales prices as well as higher per unit EWP conversion costs. These decreases were offset partially by lower per unit OSB costs as well as higher plywood sales volumes and prices.

Moving to Slides 5 and 6. BMD's year-over-year first quarter sales decline of 1% was driven by net sales price decreases of 3%, offset partially by net sales volume increases of 2%. By product line, general line product sales increased 4%. Commodity sales decreased 5%, and sales of EWP decreased 7%. Sequentially, BMD sales were up 2% from the fourth quarter 2025. Weather had a significant impact on first quarter sales activity at our Southeast and Northeast distribution centers as the affected locations were closed for a combined 35 days in January and February. The impacts were evident in BMD's daily sales pace during the quarter, with daily sales of approximately $21 million in both January and February before rebounding nicely in March to $24 million.

Our first quarter gross margin was 14.4%, down 30 basis points year-over-year. The decline was driven by EWP competitive pricing pressures as well as lower margins on general line products. BMD's EBITDA margin was 3.5% for the quarter, down from both the 4.5% reported in the year ago quarter and the 4.1% reported in the fourth quarter. Lower gross margins coupled with the effects on our operating expense leverage from branch closures in the first quarter negatively impacted our EBITDA margin result.

Turning to Slide 7. On a year-over-year basis, first quarter I-joist and LVL volumes were down 5% and 1%, respectively. Sequential I-joist and LVL volumes were up 16% and 8% respectively, driven by seasonal demand improvements and channel restocking ahead of the spring building season. As it relates to pricing, first quarter EWP sales prices declined about 7% year-over-year, but remained flat sequentially.

Turning to Slide 8. Our first quarter plywood sales volume was 373 million feet compared to 363 million feet in first quarter of 2025. The year-over-year increase in plywood volumes was due primarily to the restart of operations at our Oakdale mill in fourth quarter 2025. Sequentially, our plywood sales volumes were up 5% to fourth quarter 2025 as anticipated due to seasonal demand improvement.

The average plywood net sales price was $343 per 1,000 in the first quarter, representing a 1% increase year-over-year and 4% sequentially. We attribute the recent improvement in plywood pricing, primarily to weather-related supply constraints in the south, combined with reduced imports. Notably, Brazilian imports declined by more than 60% year-over-year in the first quarter of 2026.

However, following the late February Supreme Court decision that had validated the use of IEEPA to impose tariffs, higher import volumes are anticipated, which are expected to influence market dynamics in the coming months.

I'm now on Slide 9. We had capital expenditures of $40 million in the first quarter with $23 million of spending in BMD and $17 million of spending in Wood Products. Our capital spending range for 2026 remains at $150 million to $170 million, roughly 1/3 of BMD's 2026 spending relates to growth projects across our system, with the balance of our spending in both segments attributable to business improvement and efficiency projects, replacement projects and ongoing environmental compliance.

Speaking to shareholder returns, we paid $10 million in dividends during the quarter. Our Board of Directors also recently approved a $0.22 per share quarterly dividend on our common stock that will be paid in mid-June.

Through the first 4 months 2026, we repurchased approximately $91 million of our common stock, including approximately $66 million in the first quarter. Since the beginning of 2024, we have repurchased approximately 12% of our outstanding shares. As of today, approximately $148 million of our outstanding common stock is available for repurchase under our existing share repurchase program. As expected, we utilized cash in the first quarter. primarily driven by seasonal working capital needs, along with our planned capital investments and shareholder returns. However, the ongoing strength of our balance sheet remains in place which positions us well to continue the pursuit of our strategic objectives.

I'm now on Slide 10, where we have outlined a range of potential EBITDA outcomes for the second quarter. along with the key assumptions underlying these projections. As we look ahead, end market demand remains uncertain, and certain cost inputs are volatile. For BMD, we currently estimate second quarter EBITDA to be between $65 million and $80 million. BMD's current daily sales pace is approximately 15% above the first quarter sales pace of $22 million per day. Gross margins are expected to be between 14.25% and 15%. Importantly, as our guide suggests if our current sales pace is sustained, we expect BMD to show a healthy sequential improvement in EBITDA margin.

For Wood Products, we estimate second quarter EBITDA to be between $32 million and $47 million. Our EWP order files are showing seasonal strength, and we expect sales volumes to increase mid-single digits sequentially. EWP pricing is expected to range from flat to low single-digit decline sequentially. In plywood, we expect sequential volume increases in the mid-single digits. On plywood pricing, quarter-to-date realizations were 8% above our first quarter average with the balance of the quarter market dependent.

We expect our per unit manufacturing cost will be comparable to first quarter as higher volumes and early results from focused site improvement plans across our manufacturing system are expected to offset recent energy-related cost increases.

I will turn it over to Jeff to share our business outlook and closing remarks.

Thank you, Kelly. I'm on Slide 11. Given the current environment, visibility into end market demand for 2026 is limited. For much of the first quarter, mortgage rates declined to the lowest level in over 3 years.

However, recent geopolitical turmoil has led to volatility in treasury and mortgage rates alike, introducing greater uncertainty on the remainder of the spring selling season. Homebuilders are responding to the cautious demand environment with thoughtful approaches to starts home sizes, location and inventory.

As a result, maintaining our focus and staying agile remains central to Boise Cascade strategy for delivering outstanding service across a broad selection of in-stock, industry-leading building materials in any operating environment. The alignment of our 2 business segments is evident every day is driving -- is a driving force in our world-class operations, enhanced channel visibility and support the alignment of our production rates and inventory strategies with end market demand.

Across the visional coordination and our strong financial position provides the security and flexibility for our teams to execute our strategy and deliver long-term value creation. We are committed to continuously seeking new opportunities to leverage our integrated model by driving greater efficiency, responsiveness and innovation across our organization.

As we consider the future of homebuilding, we remain confident in the structural drivers of U.S. housing demand, which include the persistent undersupply of housing, driven by generational tailwinds, near record levels of homeowner equity, a decade of underbuilding and engaging U.S. housing stock with the average home being more than 40 years old.

The strong fundamentals for both new residential construction and repair and remodeling reinforced the industry's favorable outlook. Boise Cascades investments throughout the business cycle give us confidence that we can outpace industry growth as these market tailwinds materialize.

Thank you for joining us today for your continued support and interest. We welcome any questions at this time. Jason, please open the phone line.

[Operator Instructions] Our first question comes from Mike Roxland from Truist Securities.

Jeff, Kelly, Chris. First question I had, Kelly, just in response to one of your comments regarding Brazilian imports and lower tariffs. You mentioned expecting to see them in coming months. Have you started to see any increased plywood or wood flows from Brazil at this juncture?

Yes. So my understanding, Mike, is that -- the short answer is yes. There's -- we're expecting to see more and more of that show up with the ports, maybe a little bit delayed because there was a phenol disruption at a manufacturing site in Brazil. But we know the wood is coming and we're seeing quotes show up in the coming months. Jeff, do you have some more color on that?

Yes, I would add that. There has been some that have showed up, but not significant enough that would cause any major impact.

Got it. And it also seems like -- my second question, just EWP prices in 1Q sort of stabilized quarter-over-quarter. One of your peers was showing mid-single-digit decline in pricing. Can you provide any more color around what's driving the price stability in your business maybe versus some of your peers. I just -- I remember call over the last couple of years, the -- obviously, pricing was down. I think you had some competitive -- competitiveness in the business as particularly some of your peers were aggressive in trying to drive our business. I'm just wondering how you're able to show stable pricing relative to peers who still had a mid-single-digit price decline?

Yes, this is Troy. I'll take a crack at that. Yes, I mean we're able to hold prices relatively flat since Q3 of last year. but that's definitely not a function of less pressure in the market. It's come back. There's been more chatter. There's regional pricing pressure from our competitors still. We've got the conversations with homebuilders and still a strong concern for home affordability. So right now, it's just a matter of being very strategic.

Look, it's regional conversations, making sure that we are competitive, but we're not leading with price, leading into our model, our service proposition. So fortunately, so far, we've been able to hold prices. But -- and right now, quite honestly, our order file is there's a -- we've got a strong, strong order file and so it allows us to be selective there in how we address our pricing.

The next question comes from Ketan Mamtora from BMO Capital Markets.

Perhaps to start with, can you talk about freight transportation inflation that you're seeing across both good products and distribution. If you can quantify that headwind and kind of how are you mitigating that?

Yes, Ketan, this is Troy. Yes. I mean definitely, in terms of the diesel prices, we're seeing that in various aspects of our business. The biggest one for us is probably in our resin costs. that's the input cost that's affected related to the increase in prices. We just have a recent increase. We really didn't see it in Q1 yet, late Q1 activity, but we did have a price increase, probably ranging the 10% range around our resin.

And then we've got some -- the direct costs that's just -- if you think about just fuel for rolling stock and things like that, which is not a huge spend for us, but that will be an impact moving veneer around the system is -- we'll see that in our wood costs. And then there's that indirect, I guess, if you want to call it, every piece and part that comes into our system has probably got some type of inflationary pressure around freight.

But I'd say, we're working on our cost control on the opposite side of that to help mitigate some of that. So it's hard to quantify all that, but I think we're still comfortable that we should be, say, comparative of manufacturing costs, as Kelly mentioned.

And then I'll jump in on the distribution business. So diesel rose significantly during the quarter. We were paying almost double at the end of the quarter, what we were paying at the beginning of it. Most of it, we are able to pass on through our daily transactions with our customer base. There are some fuel surcharges I'd say our people have done a tremendous job of passing those along, but there's been some short-term impact to our margin on program business where freight was concluded as part of the original program.

So at times, there's delays in what we're able to go out and recoup as far as those costs. And I'd also add that the lack of trucks and drivers, there's been a lack of trucks and drivers due to the tight immigration policies. So that has impacted freight and the availability of trucks as well.

And Ketan, one thing I'm going to add on the BMD side, if you think about it, one way we can kind of help control that is what we do is every load that goes out of our warehouse every single day, we have to make sure that we optimize and then we're setting out a full drug to spread that freight every possible and we've been working really hard on doing that.

Got it. No, that's helpful perspective. And then just when I think about the second quarter EBITDA guidance, I totally appreciate that it's a dynamic environment out there. But as I think about your top end versus the bottom end of the guidance range, can you at a high level talk about what does that contemplate? So should I think about let's say, your current daily pace, what is what you all talked about, that gets to the midpoint of the guidance range, let's say, in distribution. Is that the way to think about it?

Yes. So Ketan, let me take a shot at that. I'll start with BMD first and then give you a little color on wood products also.

So you kind of hit it in your question, which was we still have too much to go in the quarter. End market demand is pretty uncertain, no doubt and how much of the demand we've seen so far is replenishing the channel versus end market demand, that's a little hard to tell. And then certainly, the unknowns and the volatility around the cost input.

So all that being said, that's why we draw a pretty wide range around our EBITDA forecast for both the businesses. But specific to BMD, if you look at the guide and if you assume that the sales base that we spoke to so far this quarter, if it is sustained, and then our margins are kind of the midpoint of the range that we put out that would get us into kind of the midpoint of the range. It gets us into the low 70s and that would get us back to a really good spot, as I commented in terms of the healthy improvement in our EBITDA margins. That will get us into the mid-4s in terms of an EBITDA margin.

In Wood Products, similar theme in terms of the challenges with forecasting there, especially on the cost input side. Troy spoke to good order files in EWP, pretty good order files in plywood. But we know how things particularly in play with how quickly things can flip. And so again, that's why we purposely put a pretty wide range around our results.

Got it. No, that's very helpful. Good Luck.

The next question comes from Susan Maklari from Goldman Sachs.

my first question is around thinking of the environment that we're in and that increase in macro uncertainty that we've seen at the end of the first quarter. Has that had any impact on the mix you're seeing between sales coming out of the warehouse versus direct. What's the overall sort of read would you say, of a lot of your customers? And -- how is that influencing the guide? And how we should think about the flow-through to results?

So this is Jeff. I'll take a stab at that. What we did see in the first quarter when the commodities started to move and the prices were so -- they were down to begin with. We did see people step in and start buying more direct than we've seen in the past few quarters. And there's absolutely a shift to that. There's no doubt about that.

But with -- as we're moving forward with the uncertainty that's out there, what that creates most of the time is more reliant on distribution, and we're absolutely seeing that. Our warehouse business continues to be very strong and it continues to be what people want to use.

Okay. That's helpful. And within general line, can you talk about what you're seeing from your suppliers just in terms of any competitive dynamics there? How they're thinking about pricing given the world that we're in? And how you're thinking about what that could mean as we think of the next couple of quarters?

Yes. So this is Joe. So as far as our suppliers, I guess, and pricing how to thinking about that, we saw somewhere in the neighborhood late in Q1, somewhere in the neighborhood of 25 to 30 price increases. Some of those were surcharge driven. So some of those were based on gas, freight -- but most of them, I would say, were based just product price increasing. So I think what we're seeing for suppliers is broader product offerings and as well as starting to understand that there is some -- there has been some strength in the markets that they're pushing into, and they're starting to move their prices accordingly.

Okay. That's encouraging. Good luck for the quarter.

The next question comes from Kurt Yinger from D.A. Davidson.

I just wanted to go back to BMD. Looking at the volume performance there even if we kind of strip out an assumption on Holden, it looks like pretty flat, which I would say is good in this market. Can you just talk about whether it's product category or customer initiatives that seem to be bearing fruit there?

Yes. This is Joe again. I'll jump in. So I would say it's both. So I think the first thing I want to do it from what we're seeing and trying out a warehouse versus [indiscernible] margin. As a backdrop, we had the margin and return on sale impacts that were either a onetime event or things that we don't expect to be permanent.

So to Kelly's point in his prepared remarks, we had 38 days of closures with weather, that some of that business we recaptured some of it we lost, but our cost remains fixed, right?

So we -- there was an impact there. We have the fuel surcharges that we pass through some of them. But we -- there's some timing that goes on there. So we're -- there's a margin shift there. As far as our general line products and our initiatives go, we are -- we're focused on the growth of our home center special order business, which we grew by double digits, and we continue to build out our door segments, gaining market share there. We're driving top line revenue. We tied to our door initiative, we've pushed in the manufactured housing sector. We saw double-digit growth in Q1, a lot of upside opportunity there. We're making strides with our digital strategy. Our e-commerce business was up 57%.

And then as far as commodities, I think that you are going to continue to see us outperform the market on commodities, because we have -- we built out commodity technical systems really that give us early indicators, real-time views in the trends, inventory levels, market segments so that we can move quickly across the entirety of our system and selling.

And so then you're looking at our commodity volume and footage that was flat to up in Q1, and we actually saw margin expansion in spite of lower pricing. So we feel pretty confident that we are expanding our market share in commodities based on the systems that we built out based on the risks that we take in, putting inventory on the ground, risk that's not. It's not uneducated risk. It's an educated risk, built on years of experience and the expertise of our people, but it has helped us in deflationary pricing environment to hold on to our volume and actually expand our margins.

Okay. That's awesome detail. And it sort of dovetails, I guess, into my next question on the gross margin line. Joe, you alluded to some of the fuel surcharges and timing and some of the fixed cost elements. It seems like as we move into the back half, maybe those things will flip and not be so burdensome. But I also heard EWP competition may be increasing and not driving margins lower. So I guess as we move into the back half of the year, is the competitive environment so challenging that it would be tough to get back to kind of that 15% plus gross margin level? Or is that still kind of an attainable goal?

I think it's an attainable goal. I would say -- I think we'd characterize the current demand environment of uneven, right, and rate sensitive. So there's -- there's still a lot of opportunities out there. They're just uneven depending on the geography and region. They're dependent on product categories. They vary based on the size and the type of the builder.

So it's been sporadic, uneven environment that's likely going to continue unless single-family housing starts to pick up. But I will also say that when we saw interest rates dip below 6%, we saw some strength return to the market pretty quickly. So for an environment where rates pull back, if deal political tensions ease, BMD could see some improvement just from seasonality as commodity price improvements. So we have some opportunity there.

As far as engineered wood, yes, we're still seeing pricing pressure on engineered wood, although it's abating. We're seeing that starting to trail off. There's been some margin impact to us on -- across a wide breadth of general line products. And then we saw year-over-year commodity price deflation. But again, we've offset that price depletion in commodities with margin expansion.

So we still see we still see opportunities out there. If nothing changes in the market as far as interest rates are tensions easing, then we would have a more measured outlook, I think, some seasonal improvement still, but not a broad-based acceleration of the business.

The next question comes from George Staphos from Bank of America.

A lot were already asked and answered. I guess first question I had on costs. Is there a way that you can give us a ballpark figure for the inflation you've seen in your cost of goods on an annualized basis that you have yet to recover in pricing actions already? Question number one.

Question number two, really just on plywood guys, I recognize that you've not yet seen the wood show up from Brazil and South America in a large degree, yet you said there is some that's already shown up. You've seen it in quotes and it has not had a big effect. Why do you expect it might have a bigger effect? What would some of the factors be given your experience.

Yes. So I'll get -- I'll start on the first one, which was trying to put a bit of finer point on some cost input increases and I'll speak to that, I guess, more specifically as it relates to wood products.

In BMD, we're seeing some freight increases. We're largely going to be able to pass those through over time. In Wood Products, the things that Troy hit on resins, I think is a big one. But if you think about kind of the 3 big items that I would call out in wood products cost inputs that are subject to some inflationary increases we are experiencing now that we really didn't see much of all in the first quarter between glue, natural gas and purchased electricity. That is roughly, generally speaking, going to be about 10% of Wood Products cost of sales.

And so to the extent we see -- and we have seen, call it, 10% increases in some of those key inputs that will help you kind of give a sense of what the cost impact could be, assuming volumes remain the same. And then I guess on the second question around plywood, Jeff, do you want to take that on imports?

Yes. I'll take that. A huge impact because there hasn't been a whole lot that has come in so far. So that would answer that. And why do we expect there will be an impact is supply and demand and what -- it depends on where it comes, what board is a big plywood market or not and how much comes in. And obviously, a lot that comes in -- and if there's a big price advantage, then obviously, it'll grab some share. And we've seen that before. But with what's happening down there has been a delay with what's happening with [indiscernible] and freight coming over, it'll be wait and see when it gets here.

What are the -- if I can ask a quick follow-on. What are the spreads between current market pricing and what the quotes are coming in on imports? Can you give us a little bit of what the arbitrage is at this juncture?

Yes, when I first got here, I asked that question. And I -- if I remember right, it was about a 10% difference between the 2 is what the pricing spread was when he first arrived at what they're quoting.

Okay.

The next question comes from Jeff Stevenson from Loop Capital.

Today. How much did restocking ahead of the spring selling season contributed to the improved sequential EWP volumes during the quarter? And then could you provide an update on current EWP channel inventories at this point of the year compared with both last year when they were elevated at historical levels?

Yes, Jeff, this is Troy. Yes, I mean undoubtedly, the better part of Q1 was probably a restocking story, maybe late in the quarter. There was some follow-through. So it's probably some combination of both those 2 things throughout the quarter.

Our order file grew to kind of a 2 solid week order file. And then we've carried that through April and into May. So in terms of our side, the order file is strong. I'd say we're -- there's still a reliance, I'm sure, on the 2-step distribution, EWP specifically, just talking to our channel partners they've increased inventory, but they're not back up to, say, their high end of their target. So they're probably on average, below the high end of their target for this time, so still relying on the 2-step side.

That's very helpful. And then I was wondering if you could provide an update on the new [indiscernible] line and how we should think about the ramp in production at the facility as we move through the first half of the year?

Sure. Yes. Actually, that's not a lot different than what we talked about last quarter as planned. Right now, we're in a phase where we're just testing out and getting our products certified in the various depths and series. That's expected to go through second quarter. And so in terms of sellable product, we wouldn't have sellable product until probably the beginning of the third quarter.

And to a degree that is capacity that we've got. But obviously a demand issue. So to the degree that demand is fair, we'll start producing out of [indiscernible] to the degree that's not, we'll be using that as the throttle. So right now, going into Q3, not sure what volumes look like, but I would not necessarily anticipate that being a huge volume issue right now.

Okay. Very helpful.

[Operator Instructions] And our next question comes from Reuben Garner from Benchmark.

Maybe just a follow-up on EWP price cost dynamics. I think you referenced an expectation of low single-digit sequential pricing declines. Wondering kind of what's driving that? You mentioned a strong order file. You've got some inflationary pressures. Is it still just so competitive or supplied just walk me through the thought there. Is this something that -- I know that there could be a lag in those things. So is it from maybe competitiveness several months ago that's just flowing through now? Why would we see sequential declines when we've got a strong order file and inflationary pressures.

Yes, Reuben, this is Troy. Yes, I mean it's flat to down. So I mean, if there's enough chatter out there that we could see continued erosion just from the standpoint of the competitive environment, trying to retain business and/or looking for new business, but primarily on the retained business side.

And then we do have, from the standpoint of the freight cost, the delivered cost of EWP, there is anything that doesn't flow through or get passed down through the channel. So there's a little bit of an impact to net sales price in the -- on the freight side. And so that combination may lead to a little bit of erosion, but we're not anticipating at this point a lot. So that's why we have the flat to low single digit.

Great. And then on the BMD side, and Susan might have asked this in her second question, so forgive me, it kind of broke up on me I think, Kelly, you mentioned margin pressure in general line products. That's not the first time we've heard something like that this earnings season. Is there something unique going on there and any specific categories driving that?

And then just talk about what the inventory, how you guys are thinking about inventory and specifically in that general line category. There's been some fits and starts the last couple few years leading to adjustments in the channel. Where does inventory stand today? And how are you thinking about it for this year?

So I would tell you that from a margin compression standpoint, the biggest pressure we have seen has been across the cancer wood. But again, that's abating -- the rest of it on general line, we're just seeing small margin impacts across a wide breadth of general line products, mostly market-based really at the distribution level. So nothing normal there.

And then as far as the channel inventories, I would actually tell you that the business starts that we've seen are starting to normalize a little bit. The channel is lean but relatively stable the customer purchases have been more consistent than that start-stop that we saw last year. And we started seeing price increases, right, from multiple suppliers. So while there has been margin pressure, we're also seeing price increases being taken on the general line side by many of our suppliers.

Reuben, I'd just add to this a little bit. If you think about a single family is such a driver for us and single-family demand right now is very much muted. And when it gets like that, everybody is fighting for what's out there. So it is hypercompetitive right now and pretty much everything across.

Got it. Good luck.

[Operator Instructions] And the next question is a follow-up from Kurt Yinger from D.A. Davidson.

Great. Troy, -- have you seen any or heard any kind of derivative impact in terms of kind of the EWP price conversations you've had maybe specifically on floor systems, just given what we've seen in dimensional lumber inflation?

Nothing that I'm aware of.

No. I think -- yes, I haven't really -- typically, we -- as we've talked about before, you really don't, 2.10 pricing can certainly fluctuate a fair bit. But once you get builders to convert to EWP floor systems, you really don't see them convert back. And I think that continues to be the case. Now if you're talking about open web trust, Obviously, we're not a producer there, but that is a competitive product to I-joist, the cost base for those -- the cost inputs for those products certainly have to be quite volatile in recent quarters. But again, I think I-joist is certainly maintaining its share today in a good spot, and we're happy to see the good sequential volume increase we saw in I-joist.

Okay. Got it. And then just looking at the outlook, it sounds like the order book is pretty strong. I know that it sounds like Q1 benefited from some restocking, but it doesn't seem like that much of kind of a sequential seasonal lift in EWP volumes Q2 versus Q1. Is that just related to the restock dynamic or maybe more of an explicit assumption around some softening in single family as we kind of progress into summer?

Yes. Good question, Kurt. It's a little hard for us to exactly sort out what we saw in the first quarter in terms of was it end market or was it channel restocking. The answer is [indiscernible] some of both for sure.

I think as we move into second quarter, I think it's -- if you read a lot of the transcripts from the whole builders, the national homebuilders in particular, they're talking and they're focused as they should be very much on still on the sell side and moving spec inventory and moderating their pace, their starts pace to their sales pace. Some of them are talking about maybe increasing starts, but I would say more of them seem to be talking about increasing starts and transitioning a bit more to the build-to-order because they can because cycle times have improved.

And so I think that all plays into the narrative. So we're really doing our best to try to pick up the demand signal from the homebuilder channel, which would suggest that not going to see a big seasonal increase here into the second quarter.

This concludes our question-and-answer session. I would like to turn the conference back over to Jeff Strom for any closing remarks.

Thank you for your continued interest in Boise Cascade. Please be safe if you will. We look forward to talking to you next quarter. Thank you all.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning. My name is Rocco, and I will be your conference facilitator today. At this time, I would like to welcome everyone to Boise Cascade's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded.

I would now like to turn the conference over to Chris Forrey, Senior Vice President, Finance and Investor Relations. Mr. Forrey, you may begin your conference.

Thank you, Rocco, and good morning, everyone. I'd like to welcome you to Boise Cascade's Fourth Quarter 2025 Earnings Call and Business Update. Joining me on today's call are Nate Jorgensen, our retiring CEO; Jeff Strom, our incoming CEO; Kelly Hibbs, our CFO; Joe Barney, leader of our Building Materials Distribution Operations; and Troy Little, leader of our Wood Products 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 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 or loss to segment EBITDA.

I will now turn the call over to Nate.

Thanks, Chris. Good morning, everyone, and thank you for joining us for our earnings call. Slide #3. As I reflect on 2025, I want to begin by recognizing the dedication and perseverance of every Boise Cascade associate. Our people and shared values continue to be the foundation of our sustained success.

We delivered strong operating results despite ongoing market headwinds with full year net income of $132.8 million or $3.53 per share. We continue to expand our distribution business, the most notable examples being the opening of our greenfield distribution center in Idaho, Texas and the fourth quarter acquisition of Holden Humphrey. Our multiyear investments in support of our EWP production capabilities in the Southeast remain a strategic focus in 2025. We completed the Oakdale modernization project and are substantially complete with the addition of the Thorsby high line. The meaningful investments we have made in the last 3 years positioned us to deliver above-market growth in the years to come. Lastly, we provided meaningful returns to our shareholders again in 2025 through a 5% increase in our quarterly dividend and more than $180 million of share repurchases.

Turning to fourth quarter results. Total U.S. housing starts and single-family housing starts increased 4% and 7%, respectively, compared to the prior year quarter. Our consolidated fourth quarter sales of $1.5 billion were down 7% from the fourth quarter of 2024. Our net income was $8.7 million or $0.24 per share compared to net income of $68.9 million or $1.78 per share in the year ago quarter. Fourth quarter 2025 results were negatively impacted by approximately $6 million or $0.16 per share after tax related to accrual for legal proceedings in our BMD segment that Kelly will address in his comments. As expected, sequential volume declines in both divisions reflected the seasonal softness in demand. In BMD, our team delivered steady gross margin sequentially. In Wood Products, EWP prices stabilized, while plywood markets like commodities, other commodities continue to experience weak pricing due to soft demand. Despite market challenges, we delivered solid earnings for the quarter.

As announced in December, I will retire next week after 10 years with Boise Cascade, including 6 as CEO. It's been an honor and privilege to serve in this role. Jeff's transitioned into the CEO role reflects our deliberate and purposeful succession planning. I have great confidence in Jeff and the entirety of our leadership team to guide Boise Cascade's continued success and look forward to continued service on the company's Board.

Kelly will now walk through our segment financial results, capital allocation priorities and the first quarter guidance. Jeff will then provide highlights on our business outlook and then close the comment before we open the call for questions. Kelly?

Thank you, Nate, and good morning, everyone. BMD sales in the quarter were $1.4 billion, down 5% from fourth quarter 2024. BMD reported segment EBITDA of $56.4 million in the fourth quarter compared to segment EBITDA of $84.5 million in the prior year quarter. Gross margin dollars decreased $21.3 million compared to fourth quarter 2024. In addition, BMD's fourth quarter EBITDA was negatively impacted by the $6 million charge that I will speak to in more detail momentarily.

In Wood Products, our sales in the fourth quarter, including sales to our distribution segment were $354 million, down 16% compared to fourth quarter 2024. Wood Products segment EBITDA was $12.3 million compared to EBITDA of $56.6 million reported in the year ago quarter. The decrease in segment EBITDA was due primarily to lower EWP sales prices and sales volumes as well as lower plywood sales prices and higher per-unit conversion costs that were influenced by decreased production rates.

Moving to Slides 5 and 6. BMD's year-over-year fourth quarter sales decline of 5% was driven by a 4% decrease in sales prices as well as a 1% decrease in sales volumes. By product line, commodity sales decreased 9%, general line product sales increased 3% and sales of EWP decreased 14%. Sequentially, BMD sales were down 12% from third quarter 2025, a result of lower volumes attributable to seasonally weaker demand. Our fourth quarter gross margin was 15.1%, flat sequentially and down 70 basis points year-over-year. The year-over-year decline was driven by commodity price headwinds and EWP competitive pricing pressures. Margins on general line products were stable despite the subdued demand environment.

BMD's EBITDA margin was 4.1% for the quarter, down from both the 5.9% reported in the year ago quarter and the 4.5% reported in the third quarter. Sequentially, our EBITDA margin improved modestly when excluding the negative impact of the previously mentioned charge. BMD's fourth quarter EBITDA margin is below our typical earnings power. However, it represents strong performance considering current market demand and pricing conditions. This outcome demonstrates our team's effective execution across all product lines. In particular, we have prioritized growth in our general line products, leveraging our proven track record and extensive distribution network to offer a leading selection in this category.

Now I want to spend a moment specific to the legal matter related to the $6 million charge recorded in BMD. This relates to a Lacey Act investigation involving plywood purchases at our distribution facility in Pompano, Florida. It's a legacy matter pertaining to certain hardwood plywood purchases made between 2017 and 2021 sourced from a former U.S.-based supplier and that supplier's importation of plywood. That investigation led to Boise Cascade receiving a subpoena for documents in 2024, and we have fully cooperated with federal authorities, specifically the Department of Justice. I wanted to be clear that we take this matter very seriously consistent with our company values. We are committed to maintaining rigorous compliance standards across our businesses. In fact, years prior to being contacted by federal regulators. We had already undertaken steps to comprehensively review, invest in and enhance our compliance programs. Steps taken included a new compliance management and oversight program, implementation of enhanced policies and procedures related to supplier due diligence and monitoring and mandated education programs and trainings for our associates.

In short, we have a comprehensive compliance program in place. The charge we recorded in the matter the DOJ is reviewing relate to transaction at only one distribution facility several years ago, and we are confident that we have implemented effective processes to meet our compliance obligations. We will continue to cooperate with the DOJ to resolve this matter as soon as possible and move forward as a stronger company with an even greater vigilance toward trade policies and procedures. Lastly, I want to emphasize that this does not impact our operations, and we remain focused on delivering exceptional value to our customer and supplier partners.

Turning to Slide 7. Fourth quarter I-joist and LVL volumes were down 16% and 7%, respectively, compared to the year ago quarter. Sequential I-joist and LVL volumes were down 16% and 8%, respectively, as seasonal declines in construction activity and a continued muted demand environment drove lower volumes. On a year-to-date basis, our I-joist and LVL volumes were down 8% and 2%, respectively, a reflection of the decrease in single-family starts. As it relates to pricing, fourth quarter EWP sales prices declined about 10% year-over-year but were flat sequentially.

Turning to Slide 8. Our fourth quarter plywood sales volume was 354 million feet compared to 371 million feet in fourth quarter 2024. Sequentially, our plywood sales volumes were down 9% from third quarter of 2025 as anticipated due to the seasonal slowing in demand. The $329 per 1,000 average plywood net sales price in the fourth quarter was down 6% on a year-over-year basis, but increased modestly compared to third quarter 2025. Tariffs have led to a notable decrease in South American plywood imports to the U.S. with Brazilian shipments falling over 40% year-over-year in the latter half of 2025. This reduction has contributed to recent pricing gains for Southern plywood. However, trade policy remains uncertain following last week's Supreme Court decision, so it will be important to watch how these developments affect market dynamics in the months ahead.

I'm now on Slide 9. With capital expenditures of $241 million in 2025 with $105 million of spending in BMD and $136 million of spending in Wood Products. As Nate previously mentioned, this capital deployment was in alignment with our strategy to solidify and expand our market-leading national distribution presence and support our EWP production capabilities in the Southeast. Looking forward to 2026, we expect our capital spending to be between $150 million and $170 million. Roughly 1/3 of BMD's 2026 spending relates to growth projects across our system, with the balance of our spending in both segments attributable to replacement projects, business improvement and efficiency projects and ongoing environmental compliance.

Speaking to shareholder returns, we paid $35 million in regular dividends in 2025. Our Board also recently approved a $0.22 per share quarterly dividend on our common stock that will be paid in mid-March. In 2025, we repurchased approximately $181 million of Boise Cascade common stock, including approximately $70 million in the fourth quarter. Thus far in the first quarter of 2026, we have repurchased an additional $39 million, leaving approximately $200 million authorized for repurchase under our existing share repurchase program. We remain committed to a balanced approach to capital allocation by investing in our assets, pursuing organic and inorganic growth opportunities and returning capital to our shareholders. Our strong financial position provides flexibility to advance all of these priorities for long-term value creation.

I'm now on Slide 10, where we have presented a range of potential EBITDA outcomes for the first quarter, along with key driver assumptions. Notably, Winter Fern -- Winter Storm Fern had a considerable effect at the beginning of the quarter, causing widespread disruptions throughout our operations in Eastern U.S. Within BMD, nearly 20 branches were closed for at least 1 day, resulting in approximately 30 lost sales days. Additionally, our Southeast manufacturing facilities experienced closures lasting multiple days. And just this week, severe weather in the Northeast is again impacting our distribution operations.

With that as a backdrop, I'll shift to our outlook. For BMD, we currently estimate first quarter EBITDA to be between $45 million and $55 million. BMD's current daily sales pace is approximately 6% below the fourth quarter sales pace of $22 million per day. While we expect our first quarter pace to improve as the quarter progresses, it will likely fall short of the fourth quarter pace. Gross margins are expected to be between 14.25% and 15%. For Wood Products, we estimate first quarter EBITDA to be between $25 million and $35 million. We expect EWP volumes to increase by high single to low double digits sequentially, reflecting seasonal strengthening and channel restocking in advance of spring building season. EWP pricing is expected to range from flat to low single-digit decline sequentially.

In plywood, we expect sequential volume increases in the high single digits. Of plywood pricing, quarter-to-date realizations were 1% above our fourth quarter average with the balance of the quarter market dependent. Increases in EWP and plywood volumes will also drive sequential decreases in our per unit manufacturing costs. Lastly, we expect our first quarter effective tax rate to be between 26% and 27%.

I will now turn it over to Jeff to share our business outlook and closing remarks.

Thank you, Kelly. I want to start by welcoming the talented team from Holden Humphrey to Boise Cascade. We are excited to have completed that acquisition this past December and how it enhances our footprint and product offering in the Northeast region.

Let me turn to Slide 11. As we move into 2026, maintaining focus and adaptability will be crucial to differentiating Boise Cascade and delivering value for our customers and supplier partners. In 2025, single-family starts fell short of 2024 levels by approximately 7% and are expected to be flat or modestly down in 2026. Homebuilders moderated starts in 2025 to avoid further buildup of finished home inventory as affordability remains a persistent challenge for prospective homebuyers. Throughout 2025, builders bridged the supply-demand gap with increased incentives and high single-digit declines in new home prices. Multifamily experienced growth in 2025, but starts are expected to level off in 2026 due to prohibitive capital cost for developers, combined with low rent growth and a decrease in permit activity.

In repair and remodeling, activity has been limited by low home turnover and homeowners delaying major projects due to high borrowing costs and economic uncertainties. However, as economic policy becomes clear, consumer confidence improves and interest rates declined, the project backlog positions repair and remodeling for a long runway of growth. The strong fundamentals for both new residential construction and repair and remodeling continue to support the industry's favorable outlook. Our recent investments position Boise Cascade to capture significant upside as the market turns. BMD once again demonstrated its value to the channel, delivering outstanding service across a broad range of industry-leading building materials. We are prepared for new opportunities and challenges that lie ahead in 2026, but one constant will be BMD's unwavering focus on creating solutions for our customers. In Wood Products, we are pleased that EWP price erosion abated in the fourth quarter, and we aim to improve EWP realizations as the year progresses.

The integration of our 2 business segments has never been closer. Enhanced channel visibility supports the alignment of our production rates and inventory strategies with end market demand. Cross-divisional efficiencies and our solid financial foundation are cornerstones of our ability to execute our strategy and deliver long-term value creation. Looking ahead, we remain confident in the long-term demand drivers for residential construction, including the persistent undersupply of housing and aging U.S. housing stock and high levels of homeowner equity. Generational tailwinds support household formation growth, while declines in mortgage rates should encourage buyers who have been waiting on the sidelines to enter the market.

Finally, I'd like to thank Nate for his steadfast leadership and dedication to Boise Cascade. Nate's tenure as CEO, began shortly before the COVID-19 pandemic and his steady hand and thoughtful leadership guided us through the wild swings in the market that followed. We are a stronger company today because of his leadership, and I'm pleased that Nate will continue to serve on our Board of Directors. The example of Nate has sent for me and many others at Boise Cascade is one of living our values. Nate's embodiment of these values has become a fundamental building block of our culture that has strengthened our relationships with associates, customers, suppliers and shareholders. Nate, I wish you and your family the very best in retirement.

Thank you for joining us today and for your continued support and interest in Boise Cascade. We welcome any questions at this time. Rocco, would you please open the phone lines?

[Operator Instructions] And today's first question comes from Susan Maklari with Goldman Sachs.

Nate, let me add my congrats on a job well done over the -- during your tenure. And Jeff, I look forward to working with you. So my first question is focused on the general line within BMD. Can you talk about the share gains that you're continuing to realize there and the ability to continue to grow even with the housing headwinds that we're seeing?

Yes. This is Joe. So what I would tell you is that we really saw demand held up well across our general line products. In 2025, they were our biggest category. They hit an all-time high as far as our overall mix. So we've done exactly what we set out to do and growing our general line products. We continue to see solid growth with James Hardie, with Trex, with Huber. In fourth quarter, our home center business continued to be strong. We've got a lot of program business for the home centers as well as generalized special order business that we do, and we do really well with that business. We believe that's going to continue to grow. We see a lot of opportunity, upside opportunity with the home centers. And we continue to improve and grow our door and millwork category, both in terms of improving our operational costs as well as growing overall revenue. And we really feel confident that we're going to continue to gain market share in that category.

Okay. That's helpful. And then maybe turning to EWP, the builders -- the public builders really focused on clearing a lot of their spec inventory in the fourth quarter ahead of the spring selling season. I guess as we do look to the upcoming season, can you talk about how the channel is positioned in there with the builders targeting that very low single-digit volume growth, how are you thinking about what that could mean for the business? And any potential upside if we do get more of a lift in activity as we go through the next couple of quarters?

Sue, this is Troy. Yes. I mean, obviously, like you mentioned that we had the kind of destocking effect in Q4, but we're aligned with strong partners on the builder side and the dealer side. And so we did see some, if you want to probably more restocking starting in -- at the beginning of Q1, that's kind of flowed through well into February and feeling pretty good about where we sit year-to-date this month. So I think just those strong partnerships allows us access to the market when it does come back through that channel and with our partnership with BMD, that inventory itself is ready to roll.

Okay. All right. And then I'm going to squeeze one more in, which is just, Jeff, as you do step into the CEO role, can you talk about any areas that you're especially focused on? And maybe within that, any thoughts on capital allocation and priorities there?

Yes. I'll just start with this one. I think when I look at things overall, our strategic priorities that we have that are in place right now. I think they've served us very well. And so maybe you might see a slight refinement there, things that work on a more deeper intentionality. But the initiatives we put in place will be just to support that strategy, what it is. So if you think about what it's been, leverage the integrated model, it has served us incredibly well. We're going to keep doing that and look for more efficiencies there. It increased earnings stability. I love the work that we've done, I think it's showing up very well right now. But there's opportunities there, and there's opportunities to continue to invest and grow our business. And we're going to do that in both businesses, BMD and Wood Products.

We're going to look for innovation for efficiencies to drive some cost out and then accelerate the pace of transformation. Again, that goes to technology. We want to invest in employing technology there to help drive revenue and reduce costs. And then one slight addition that I'd add to that, I think, is we really want to become the employer of choice for our associates. And what do I mean by that? We want to attract the best talent. We want to get them in here to work for a great business with an amazing culture, and we want to keep them there. We want to develop them. We want to invest in them and provide a great future. So I think those will be the changes. On the capital allocation, truly, I think our balanced approach has worked extremely well for us, and I don't see anything different going forward there.

And our next question today comes from Mike Roxland with Truist Securities.

Nate, congrats on your retirement. It's been great working with you. I appreciate all your insights over the last few years. And Jeff, congrats on the new role. Look forward to working with you more closely. First question just on EWP prices. They've obviously begun to stabilize quarter-over-quarter. You guys are guiding to better prices sequentially in 1Q. I realize there may be some seasonality you're embedding within that guide. But is there anything -- any other color you could share as to what in particular is driving the EWP price stability after so many quarters of erosion and particularly in light of persistent single-family weakness, are you starting to see the competitive backdrop become a little bit more rational relative to the way it was? Just anything you could help us with to describe what's happening with EWP pricing.

Yes, Mike, this is Troy. Yes. No, I'm pleasantly surprised in terms of the fourth quarter being flat relative to Q3. I think where we're at in the cycle, definitely, it's pretty competitive out there, but I think that's playing itself out. And as we move into Q1, we're seeing -- quite honestly, we're pretty flat where we sit right now for the second half of last year. And so that remains encouraging. We obviously are out there looking for new business and defending what we have. But right now, we're not anticipating anything substantially on the downside. And like I said, where we sit in Q1, I'd say that's probably going to be fairly flat.

Got it. And Troy, is it just a matter of what the competitive backdrop being -- your peers being more rational in terms of their pricing? I remember you guys highlighted a couple of quarters ago for a number of quarters actually going at this point that in select markets, you were seeing more EWP price erosions and because of peers being more competitive. Has that subsided and that's why now pricing has stabilized?

Well, I wouldn't say it stopped. It's definitely out there. It's an ongoing conversation. But I just think it's kind of where we've ended up. I mean, costs throughout the last number of years as prices have been coming down, our costs have been going up. So I just think maybe that's where we're at in the cycle.

Got it. And Troy, since I have you, just the 1Q guidance and Wood Products assumes a nice increase in margin sequentially. Aside from pricing that we just spoke about and volumes, can you talk about maybe some of the other underlying assumptions in Wood Products that would like to have such a notable increase in EBITDA margin sequentially?

Yes. I mean, obviously, we have the big project work through the second half of 2025. And then we had market-related downtime. So any time you've got volume pulling out, your cost structure is even worse. So I think with the projects being complete, that downtime, we've been running fairly full so far this year with a little bit of market-related. But -- so in terms of sequential guidance, I mean, we've got that baked in or baked out maybe is a better way of putting it. And then plus, just we're very focused on what we call our site improvement plans at each one of our facilities. And I think a real focus on that will have incremental benefit.

Got it. And one last question, I'll turn it over. On BMD, it looks like the EBITDA margin should be around 3.5% to 4% for -- based on your 1Q guidance. What do you guys think could get back -- the business back to 5% margins, which I believe is something you've classified as more normal. What do you need to see from a housing perspective or a mix vantage point or elsewhere to get you back to that 5% bogey?

Yes. Good question, Mike. So certainly, first quarter is going to be a seasonally weaker period. And so the top line is really going to matter in terms of what kind of gross margin dollars we can generate. If we get into the seasonally stronger periods in the second and third quarter, my expectation would be we would be back to that 5% level. But you're right, in the first quarter, it would look softer. And I think it's important to also comment on the gross margins a bit there in terms of the guide 14.25% to 15%.

A couple of things to think about there. There's mix is a bit different. You'll see some less general line on EWP in the first quarter. It will be a little heavier to commodity in terms of our overall mix. And then additionally, within commodity, there's been a little bit of energy in the market of late, but there's been some confidence in the market that our downstream customers have shifted a bit more to direct. And as you know, direct drives a little bit lower margin. So it's kind of a mix overall and a bit of a mix shift within commodity that moves that gross margin percentage down a little bit lower than you might have expected in the first quarter.

Got it. Very helpful, Kelly. Congrats, guys, and good luck in the first quarter.

And our next question today comes from George Staphos with Bank of America Securities.

This is Kyle Benvenuto stepping in for George Staphos. At IBS, we saw increased promotion of engineered I-joist products, including your SawTek offering, positioned as alternatives to open web trusses. How meaningful are these products in helping you regain share from open web systems? And can you update on us on how the competitive dynamics are evolving? Relatedly, given the early year move in lumber prices, how does open web pricing compare to I-joist today?

Yes, you bet. So a few questions in there. I'll try to hit on and maybe we'll spread this around a bit. So in terms of -- it sounds like you were at our booth and then saw our I-joist and there was talk around our soft systems and whatnot. That is absolutely not anything new for us. We've been doing a lot of work for a long time around software design as well as SawTek systems to have that product show up efficiently at the job site so that it can be quickly installed and help cycle time. So that's nothing new for us.

And then I think -- and then in terms of lumber and lumber pricing and how that could shift market, I would tell you, typically, when you get builders to transition to engineered wood, they don't shift back to lumber. On the open web side, certainly a competitive product there and lumber is a key input cost for them. So that could drive some cost pressure for the open web manufacturers.

And then one additional question, I'll turn it over. For BMD margins, could you just walk us through the key factors that would drive results towards the high end versus the low end of your guidance range for this quarter? And what are the major moving pieces that we should be focused on?

You bet. Just to clarify, were you talking gross margins or EBITDA margins?

EBITDA margins.

Yes. So a couple of things there. I would highlight. One, sales velocity really matters. Like I alluded to, we're 6% below our pace so far, our pace in the fourth quarter, we were 6% below. So sales pace really matters to generate more or gross margin dollars for us.

And then also mix shift. Mix shift is going to matter as well in terms of how much general line, how much commodity, how much EWP. And I would expect our mix to maybe rich in a bit as we make our way through the balance of the quarter. And then also, like I alluded to earlier, we've been fairly heavy on directs on the commodity side of the business. And so to get to get maybe towards that top end of the margin that we alluded to there, I would say it's going to be a combination of all those things, sales velocity, mix and then also how much does our product flow out of warehouse versus direct.

I'm going to add one thing to that. I think in BMD, we have added a tremendous amount of projects and growth over the last few years. Some of those, we continue to operationalize and some of those are not additive. And so as we move forward and as we get better, they continue every day to progress and get better, and that will add to it whether housing starts to move or not.

And our next question comes from Ketan Mamtora with BMO Capital Markets.

Let me also extend my congratulations, Nate, best wishes in retirement. And Jeff, I look forward to working with you. Maybe to start with on the distribution side. Can you talk about -- and you mentioned earlier about some restocking there. Can you talk to how your inventories are right now, both on the general line as well as on the commodity side, especially as we start to get ready for the spring season and recognizing that Q4 was quite weak.

Yes, Ketan, this is Jeff. On the inventories out there in general line, third -- fourth quarter were lean out in the field. People ran those down. They absolutely relied on next-day service and exactly what they needed, didn't buy anything extra at all. At the end of the year, there were some price increases that were announced. So people bought into that ahead of the price increase a little bit, not as much as you would think. But I'd say on general line inventories in the channel, they're still overall pretty lean for the most part, and people are relying on next-day distribution.

As you would expect with us, we watch our inventories closely and our -- while we're there to serve and people knew we were ours came down some in the fourth quarter like you expect. And with the early buys and the winter buys that are out there, we're starting to see them build back up. So we're prepared and running for whatever is out there. And we still think first half of the year is going to be very heavy reliance on out of warehouse service.

Got it. Okay. No, that's helpful. And then can you give us a quick update on how the doors in the millwork business is doing and how that is holding up?

Yes, this is Joe. Our door shops are actually doing really well, making big strides, all of them across the country. We're currently even expanding our space in BROSCO. Our build-out should be ready to go in Florida probably by mid-summer. We're improving our capacity. We just improved some capacity in Boise. So we continue to make strides in our door shops. And I said earlier that we really are focused on the growth of our pre-finished business in door shops, reduced lead times, automating where we can. We're working on high-end custom doors so that our customers who are focused on volume production doors that we can subsidize and assist them in their business. But we continue to make strides in our door shops. We continue to improve our operational efficiency as well as our revenue gains.

And our next question today comes from Jeff Stevenson at Loop Capital.

And as others have said, Nate, congrats on your retirement. So I was wondering if you could provide more -- can you provide more color on the Holden Humphrey acquisition and the potential impact on your Northeast distribution business? And also, could there be more potential opportunities to expand existing relationships with key suppliers in the region such as Trex or James Hardie with this acquisition?

Yes, I'll jump in there. So Holden, which is now our Chicopee location, it has gone really well. So it's meeting our expectations. I'll tell you that we're just getting started. January was a tough winter month. So we're really kind of just getting rolling there, but we are already seeing efficiency gains with our people, our products in conjunction with our Westfield location that's over there.

With the addition of Holden, we gained access to the [ 1 stepper ] business in the market, which is a customer segment we really have not serviced in the Northeast region. We also gained access to many general line product categories that we're excited about. These are new to us in that market as well. So now we also have the opportunity with those product categories to leverage those relationships and those products across the entire Northeast region.

Great. No, that's good to hear. And last year, you indicated that there was some slowdown in the M&A pipeline due to macro uncertainties before the Holden Humphrey transaction. I just wondered if there's been any improvement in the M&A pipeline as we came to a close last year for bolt-on strategic acquisitions in key areas you're focused on and how you plan to balance M&A and share repurchases this year?

Yes. Jeff, this is Kelly. So yes, I would say the pipeline is -- it's still somewhat active. And so we will continue to look to be opportunistic in terms of growing inorganically via M&A if we find the right thing to do. And then to your point, at the same time, we'll also have a balanced approach to look to opportunistically buy share repurchases if we -- if the M&A activity is not there and if we think the opportunity is right.

And our next question today comes from Reuben Garner with Benchmark.

Maybe to start, I know you guys are a little newer to given the quarterly guidance. Curious what on your end kind of went better than expected to close the year, especially on the profitability front. Was that just conservatism a few months ago because we were in such an uncertain environment? Or were there things that you were able to kind of do internally that surprised you to the upside? And how should we think about kind of the way you guys are giving guidance going forward, I guess, in that vein, what would lead to a similar sort of outperformance in the start of '26?

Yes, Reuben, this is Kelly. So I guess overarching in terms of guidance, look, we're going to try to put out what we think is reasonable guidance that we think we have a reasonable opportunity of being the midpoint or a little bit above in terms of when we put out guidance. So I don't want to leave you with the impression that we sandbagged fourth quarter. We did not in terms of our guide.

What we did see is we saw a little bit better activity than we thought in the back half of the year. BMD, in particular, I think, was a bit above their guide. So a good amount of activity and good work in terms of cost control as we seasonally -- as we moved into November and December, we saw some really good cost control. So I don't think there's anything I would really specifically point out beyond that, Reuben. Jeff, anything you'd highlight?

No, I think the only thing I'd say is we foreshadowed that it was going to be a warehouse-centric for the quarter. And it was, and it really was. And each month, it got more and more to -- December was the highest percent of sales out of warehouse than we've had in a long time. So people really leaned on that more so than ever before. And they knew that we had the material on the ground, and we did and so we're there to serve and that helped us.

Yes. So that was going to be my next -- or part of my next question, Jeff, and also for Joe here as a follow-up to some comments you made earlier. So the warehousing or the elevated reliance on warehousing, I mean, does that tell you kind of a sense of cautiousness that your customers still have even entering this kind of spring season for even some of the general line products? And then Joe, you mentioned all these -- the outperformance you guys have had, it has been very impressive in general line. What exactly are you guys doing that's leading to outsized growth in some of your channels? You mentioned home centers. Like what exactly are you guys doing that's driving that outsized growth for you?

So as far as driving the growth, I think what I would tell you is, again, I mentioned earlier that we have really focused on our general line mix and what we're doing with our general line product categories to grow there. So that's been a strategic focus for us. And as our mix shift switches and we've been able to grow that product category, we've seen our margins improve. We've done really well there.

That said, I think it's also important to note that we are not moving away from our volume and commodities. In fact, I think our commodity performance also combat margin compression. It's -- we are very good with the expertise of our people. We continue to build out systems and methods that give us early indicators in the market on trends that allow us to move quickly on commodities often ahead of the market. So we continue to outperform there. Our door shops, again, the revenue growth that we're seeing there is helping us perform better, and we're going to continue to grow there. To Jeff's point, from an organic growth perspective, we've made investments across the country that we continue to see grow and perform. And as we improve from an operational standpoint, we're able to grow revenue. We bring our lead times in check. We're able to grow our revenue there. So we're seeing market share gains across the country. And then yes, with the home centers, we are putting a specific focus there on the home centers. We see a lot of opportunity, great partners to us, and we are going to continue to invest and put resources there so that we can continue to grow that opportunity.

I'm going to add on to some of the things that you asked. Every project that we have done over the last few years has been about growing our general line products and adding to the mix and going wider and deeper with them, and that has paid off in a big way. You ask if the customers out there, are they cautious. And I would tell you they are. What we heard at the Builders' Show is, right, it's going to be very similar to last year, only in reverse, slower first half of the year, better second half of the year. So there is some caution out there without a doubt. We have lots more SKUs on the ground that we've added, new SKUs that come in that we've been the supplier of. So we've absolutely had that. And then lastly, I'll tell you the net working capital focus that is out there goes across every dealer that we touch, and it has been really intense. So to get that net working capital down, they're relying on us.

And Reuben, if we see volatility in the commodity market that actually, there's opportunity and volatility for us in the commodity market. That volatility can create spreads that improve margin, give us the opportunity to improve margin and it's actually a better environment than just balancing along the bottom all year, which is a lot of what we saw in 2025.

Great. Congrats, Nate. Good luck in your retirement. And Jeff, looking forward to continuing to work with you in an even bigger way.

That concludes our question-and-answer session. I'd like to turn the conference back over to Jeff Strom for any closing remarks.

Okay. Well, thank you very much for your interest in Boise Cascade. Please stay safe.

Thank you, sir. The conference has now concluded, and we thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.

Good morning. My name is Steve, and I'll be your conference facilitator today. At this time, I would like to welcome everyone to Boise Cascade Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Chris Forrey, Vice President, Finance and Investor Relations. Mr. Forrey, you may begin your conference.

Thank you, Steve, and good morning, everyone. We'd like to welcome you to Boise Cascade's Third Quarter 2025 Earnings Call and Business Update. Joining me on today's call are Nate Jorgensen, our CEO; Jeff Strom, our COO; Kelly Hibbs, our CFO; Troy Little out of our Wood Products operations; and Joe Barney, Head of our Building Materials 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 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 or loss to segment EBITDA. I will now turn the call over to Nate.

Thanks, Chris. Good morning, everyone. Thank you for joining us on our earnings call today. I'm on Slide #3. September 2025 U.S. housing starts data has not been released by the U.S. Census Bureau. However, when comparing July 2025 and August '25 housing starts to the same periods in '24, total U.S. housing starts increased 2%, while single-family housing starts decreased 3%. Our consolidated third quarter sales of $1.7 billion were down 3% from third quarter 2024. Our net income was $21.8 million or $0.58 per share compared to net income of $91 million or $2.33 per share in the year ago quarter. As expected, in Wood Products, we experienced sequentially lower sales volumes and competitive pricing pressure in EWP. Plywood markets like other commodities continue to experience weak pricing given the underlying demand environment. In BMD, our customers' expanded reliance on us for next-day delivery service across a range of products helped to mitigate the otherwise subdued environment.

Given this backdrop, we were still able to post good earnings for the third quarter. We have great clarity in our business model and the strength of our financial position and unwavering commitment to our core values enable us to remain focused on the execution of our strategic priorities. Our 2-step distribution model in tandem with our market-leading EWP and plywood franchises will continue to deliver exceptional value to both our customers and vendor partners, providing reliable access to products, responsive service and operational flexibility that are vital in dynamic markets. Kelly will now walk through our segment financial results, capital allocation priorities and guidance on our fourth quarter results, after which I'll make closing comments before we take your questions. Kelly?

Thank you, Nate, and good morning, everyone. Wood Products sales in the third quarter, including sales for our distribution segment were $396.4 million, down 13% compared to third quarter of 2024. Wood Products segment EBITDA was $14.5 million compared to EBITDA of $77.4 million reported in the year ago quarter. The decrease in segment EBITDA was due primarily to lower EWP and plywood sales prices and sales volumes as well as higher per unit conversion costs that were influenced by decreased production rates in the quarter. In BMD, our sales in the quarter were $1.6 billion, down 1% from third quarter of 2024. BMD reported segment EBITDA of $69.8 million in the third quarter compared to segment EBITDA of $87.7 million in the prior year quarter. Gross margin dollars decreased $10.6 million from the third quarter of 2024. In addition, selling and distribution expenses increased $7.8 million from the year ago quarter, partly due to organic and inorganic growth initiatives we have executed upon in the last 12 months.

Turning to Slide 5. Third quarter I-joist and LVL volumes were down 10% and 7%, respectively, compared to the year ago quarter. As expected, third quarter EWP volumes were down 15% sequentially as distribution and dealer partner inventories were drawn down to targeted levels with seasonal slowing anticipated. On a year-to-date basis, our I-joist and LVL volumes were down 6% and 1%, respectively. As it relates to pricing, competitive pressures drove sequential declines for I-joist and LVL of 6% and 5%, respectively. Turning to Slide 6. Our third quarter plywood sales volume was 387 million feet compared to 391 million feet in the third quarter of 2024. Sequentially, our plywood sales volumes were up 9% from second quarter 2025, driven by diverting less veneer into EWP production given the muted EWP demand environment and higher production rates at our Kettle Falls and Oakdale facilities.

The $325 per thousand average plywood net sales price in the third quarter was down 2% on a year-over-year basis and down 5% compared to second quarter of 2025. We have to look back to second quarter of 2020 to find a lower average quarterly price realization in plywood. The longevity and levels of recent tariff announcements on plywood imports from South America remain in question and have yet to create any meaningful impact on plywood growth. Moving to Slide 7 and 8. BMD's year-over-year third quarter sales decline of 1% was driven by a 1% decrease in price and sales volumes were flat. By product line, commodity sales decreased 3%, general line product sales increased 6% and sales of EWP decreased 11%. Sequentially, BMD sales were down 4% from second quarter 2025, driven by a 2% decline in both sales price and volume. Our third quarter gross margin was 15.1%, a 60 basis point year-over-year decline. Commodity price headwinds and EWP competitive pricing pressures impacted our margins on these product lines. However, margins on general line products remained stable despite the subdued demand environment.

BMD's EBITDA margin was 4.5% for the quarter, down from both the 5.6% reported in the year ago quarter and the 5.7% reported in the second quarter. Sequentially, our EBITDA margin was negatively impacted by a 30 basis point reduction in gross margins and decreased sales volumes had the effect of lowering gross margin dollar opportunity and deleveraging of our cost base. BMD's third quarter EBITDA margin is below our normalized level of earnings power, but a very good result given demand and pricing dynamics in today's marketplace. While these results reflect strong execution across product lines by our team, growth in our general line products has been a focus for us, where our proven performance and nationwide distribution capabilities enable us to provide a leading selection of general line products. The recent announcement with James Hardie is an example where we are happy to be expanding product offerings in several specific markets. At the same time, it's important to note that this announcement does not displace any existing market coverage we have with Trex.

I'm now on Slide 9. We had capital expenditures of $187 million in the 9 months ended September 2025 with $99 million of spending in Wood Products and $88 million of spending in BMD. We remain committed to the capital plan presented earlier in the year with our capital spending range for 2025 at $230 million to $250 million. In Wood Products, that range includes the multiyear investments in support of our EWP production capabilities in the Southeast referenced on prior calls. The Oakdale modernization is complete, and we continue to make progress on optimization activities. Spending on the Thorsby line will largely be complete by year-end, and the line is expected to be operational in the first half of 2026. In BMD, part of our capital deployment strategy is to solidify and expand our market-leading national distribution presence. In August, we opened the doors at our greenfield distribution center in Hondo, Texas and are excited for the opportunity to better serve customers across Austin, San Antonio, Corpus Christi and the Rio Grande Valley.

Looking forward to 2026, we expect our capital spending to be between $150 million and $170 million. Speaking to shareholder returns, we paid $27 million in regular dividends in the 9 months ended September 30, 2025. Our Board of Directors also recently approved a $0.22 per share quarterly dividend on our common stock that will be paid in mid-December. Through the first 10 months of 2025, we repurchased approximately $120 million of Boise Cascade common stock, which includes approximately $25 million in the third quarter and another $9 million in October. In addition, our Board of Directors recently authorized up to $300 million of common stock repurchases under a new share repurchase program. This new authorization replaced our prior share repurchase authorization. In summary, we continue to be dedicated to a balanced deployment of capital by investing in our existing asset base, by pursuing value-enhancing organic and M&A growth opportunities and returning capital to our shareholders.

We are 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 fourth quarter, demand weakness, trade policy uncertainties and the impact of seasonal factors will influence our financial results. Presented in the table are a range of potential EBITDA outcomes and related key driver assumptions. For Wood Products, we currently estimate fourth quarter EBITDA to be between breakeven and $15 million. We expect our EWP volumes to decline in the low double digits to mid-teens sequentially as the pace of starts moderates. EWP prices have recently stabilized, but we do expect low single-digit sequentially declines due to market adjustments previously taken in third quarter. In plywood, we expect sequential volume decreases at or near double digits. On plywood pricing, October realizations were consistent with the third quarter average with the balance of the fourth quarter market dependent.

As is typically the case during the fourth quarter, we will take maintenance and capital project-related downtime across our manufacturing system and may also take market-related downtime to align production rates and inventory positions with end market demand. Important to note that although masked at seasonally weak demand levels, our number of site-specific cost improvement measures in Wood Products that when coupled with our division-wide innovation initiatives will benefit our EWP and plywood franchises into the future. For BMD, we currently estimate fourth quarter EBITDA to be between $40 million and $55 million. BMD's daily sales pace in October was approximately 5% below the third quarter sales pace of $24.3 million per day and is expected to decline further as the quarter progresses.

Our recent volume changes have compared favorably to single-family starts data, a trend we would expect to continue and an indication of the 2-step value proposition and our customer partners' reliance upon us for next-day out-of-warehouse service. In addition to limited near-term clarity for end market demand, pricing volatility for plywood, lumber and other commodity products is likely given ongoing trade policy uncertainty and a number of recent capacity curtailment announcements. Lastly, we expect our fourth quarter effective tax rate to be between 26% and 27%. This is lower than our third quarter rate of 29%, which was adversely impacted by the effect of permanent tax differences on decreased pretax book income for 2025. I will turn it -- now turn it back over to Nate to share our business outlook and closing remarks.

Thanks, Kelly. I'm on Slide #11. Now more than ever, our experienced team remains committed to creating value for our shareholders, customers and suppliers by staying resilient, adaptable and focused on delivering exceptional products and services. Our integrated model provides increased channel inventory visibility, enabling us to better navigate market uncertainty by aligning production rates and inventory strategies with end market demand. Cross-divisional efficiencies supported by our robust balance sheet allow us to maintain our dedication to executing our strategy and creating long-term value for all stakeholders. Early industry projections for 2026 are consistent with 2025 housing start levels. Demand expectations are characterized by a cautious market in the first half of the year with gradual improvement expected later in the year, driven by interest rate cuts and normalized homebuilder inventory levels.

In EWP, our planning assumption is that prices have bottomed, and we will have an opportunity to move prices higher as 2026 progresses. The extended weakness in the residential market has highlighted the resilience of our distribution business. We have seen an increased customer reliance on our auto warehouse business across our full suite of products. As the uncertainty continues headed into 2026, we stand ready to continue to demonstrate the value of 2-step distribution. Looking beyond the near-term environment, we remain confident in the long-term demand drivers of residential construction, including the persistent undersupply of housing, aging U.S. housing stock and high levels of homeowner equity. Generational trends, including millennials and Gen Z reaching peak age for household formation and more seniors choosing to age in place continue to support household formation growth.

Additionally, continued declines in mortgage rates should encourage buyers who have been waiting on the sidelines to enter the market. In the repair and remodeling space, activity has been limited by low levels of home turnover and homeowners delaying major projects due to high borrowing costs and economic uncertainty. However, we anticipate consumer confidence will improve as interest rates decline and economic policy becomes clearer, creating a long runway for growth in repair and remodel projects. Strong fundamentals for both new residential construction and repair and remodeling are the foundation for the industry's robust pathway ahead. And make no mistake, investments we have made in recent years have positioned us well to capture significant upside when the market turns. Thank you for joining us today and your continued support and interest in Boise Cascade. We welcome any questions at this time. Steve, would you please open the phone lines.

[Operator Instructions] First question comes from Susan Maklari with Goldman Sachs.

My first question is on the general line part of the business. Can you talk to the share gains that you are realizing in there? How you're working with the various partners in this kind of an environment? And what that suggests for your ability to continue to see growth next year even if housing and the macro stays more challenging?

Yes. So this is Joe. I'll start with that one. What I'll tell you is that demand held up really well with our general line product categories in the third quarter. Part of the reason, I think, is that we've made significant investments across our footprint in out of capacity, right? We've put really at most of our locations, we've added laydown space, we've added warehouse space. And we've done it intentionally so that we could bring in a broader mix of general line products, carry them on a deeper scale. Our suppliers that we work with, our key partners are consistently adding new products to their -- to what they bring to the market. And we want to make sure that we have the ability and the capacity to support their growth as well as support our own. So we've invested in that. We've also looked at bringing new products in the general line category to market.

We've taken some risks there. We are -- have been focused on and achieved growth with our home center business, the special order business that we do at the home centers. So that's helped us with the general line categories. We focused on and grown our specialty dealer business certainly in third quarter. So that's been a focus for us. We've been successful at that. And we've grown in the multifamily category, and that's been a focus for us. As single-family housing starts have been flat or depressed, we focused significantly into the multifamily arena. We're going to continue to focus on the growth of our multifamily business in the quarters to come. And I would tell you that our -- we believe that our market share growth in certain general line categories that we think we've captured market share.

There have been competitors of ours who have exited different product categories across the country, and they've left a void in the market as they've exited, and our teams have done a really good job of stepping in and filling that void and taking that market share. And so we expect now that we have that capacity, and we will continue to see that growth in the quarters to come. And then lastly, I think I mentioned our door and millwork business and the investments that we've made there, and we do continue to strengthen and improve our operations from a door and millwork standpoint as well as our sales growth and margin opportunities that we see there.

Okay. That's great color. And then maybe moving over to EWP. It's great to hear that you think that price there has bottomed and there's the potential for some growth next year given what we're hearing and seeing from the builders. Can you talk to the competitive dynamics that you're seeing with the EWP? What gives you that confidence on the pricing side? And any thoughts on the upside or downside to that, just given the affordability pressures the builders are facing?

Sue, this is Troy. I'll start with kind of what we're seeing -- what we've seen and what we're seeing this year and then turn it over to see if Nate or Kelly have anything. As we noted, we were down 5% or 6% quarter-over-quarter, and that was primarily due to 2 things. Early in the quarter, it was continued price pressure and matching competitive issues. And then the other one was we had the tariff of product we were shipping from U.S. into Canada. That was a 25% tariff, and we weren't able to fully pass that on. And then starting -- it looked like about August, the prices started to stabilize, and they continued to stabilize since that time, similar to what others have reported. So that's where we're seeing that maybe we've reached the bottom there. And then looking into Q4 and kind of how we started the quarter, prices have remained flat, and we would expect to continue that throughout the quarter as we don't have those other 2 issues as it appears right now.

Yes. I think, Sue, it's Nate. Yes, I think Troy, yes, described that well. And I think as we think about 2026, I think the backdrop is setting up okay in terms of what the demand environment is expected to be. And I think we continue to get builders really insistent in a great way on cycle times. So that's been an area of focus for them over, as you know, over the last couple of years. And as we think about EWP, it's absolutely part of that answer to make sure that cycle times continue to be -- perform at a high level for the builders and they can turn that land into cash that much quicker. So again, I think it's set up well for next year. And to Troy's comments, we feel like we're at a bottom, and we can move higher here at some point in '26.

Okay. Great. Good luck with the quarter.

Thanks, Sue.

The next question comes from Michael Roxland with Truist Securities.

First question I had is, obviously, just following up on the BMD question and the mix up in general line. As you think about margins in BMD, what do you think are the constraints as you see it in terms of generating even higher margins -- EBITDA margin that is, in terms of maybe high single digits or low double-digit type margins as some of your distributor peers currently are?

Yes. Mike, thanks for the question. So I guess I would start with on gross margins for BMD near term here, we feel really good about our ability to maintain the 15-plus percent margins that we've been putting up of late. As you know, in markets like this, the reliance and dependency of customer base on out-of-warehouse service is certainly relevant. And again, we continue to see a good pull-through there. And then to your point, where might we go from here? Again, we continue to look to richen the product mix and that's more general line products, which do give us more gross margin opportunity. And at the same time, I don't want to discount our teams in terms of what we've been doing in terms of EWP sell-through and also commodities where we've been doing a really nice job in a really tough environment, in particular, in commodities.

And with commodities at the very low levels that they are today, certainly, near term here, we -- if we get any energy in the commodity markets, we could see some near-term tailwinds in terms of our margin profile. And then I guess maybe one final point would be, as you know well, but I guess I'll just verbalize the fourth quarter as we see seasonally slower sales, as you'd expect to see, again, feel good about the gross margin percentage, but the gross margin dollar opportunity will come off as a function of just lower sales dollars.

So I'd jump in there as well and just say that as our general line business becomes a larger percent of our overall sales volume, and we have seen that happening quarter-to-quarter, that's room for margin improvement there. As we become better operators in our door and millwork investments and we have -- quarter-to-quarter, we continue to move in that direction. And as we become better operators and as we invest in our pre-finished business that brings higher margin opportunities to our business, as we bring our lead times in check, as we become better operators, we are finding that we are growing in the success in our millwork business, which will add to our margin opportunity.

As we push into multifamily and make a broader push there, we're seeing more margin opportunity. And to Kelly's point, I would reiterate, we are pretty good at our commodity business. And we have a line of sight across the country. We've built systems in that make us really flexible and we are able to move quickly both into a rising market and into a falling market, so we can reduce and mitigate our losses in a falling market, and we can take advantage of opportunities in a rising market, and we do it really quickly. So I wouldn't discount our ability to make margin on commodities as well.

That's very helpful. Appreciate the color there, Joe and Kelly. Second question is realizing that you're beholding to the single-family housing market to some degree. Is there anything that you can do in this environment to further improve mill profitability? You highlighted a number of times how you're basically the mill -- because of the capital investments you made over the last couple of years, the mills themselves are ripe to generate significant profitability when single-family returns. But is there anything you can do now, additional cost takeout, other things that you can do that could situate the company for even greater margin expansion when the cycle turns?

Yes, this is Troy. I'll look at it from the standpoint of the cost improvement activities that we're doing at the mill level, that's something that probably has got muted in the third quarter and may continue to get muted with the lower volumes, market-related downtime volumes. But behind that, the operations have what we call our site improvement plans. And each of the locations are definitely working on a very detailed plan for 2026 to address our site improvement plans. We are making sure that we're filling all our process improvement positions. Those are support type functions, but instrumental in our process improvement to reduce our cost, increase our efficiencies. And then we also have our group working on innovation. And so we do actually have a couple of technology-type projects planned that we're looking at for 2026 and beyond. And all of those should help contribute to improving our cost structure at the mill level as well as just operationalizing the capital projects that we've had over the last couple of years.

So Nate, the only thing I would add to that -- to Troy's comments on cost is as you think about the market, to your point, single-family has been steady, not great. But I think the opportunity for us continues to be how do we continue to grow our presence in multifamily. And that's -- we're very good at that in terms of our EWP Key franchise. That's just, I think, an area of focus for us as we transition out of '25 and in '26, making sure that we create the right opportunities with the multifamily segment, and that goes really in some cases, beyond EWP, but it touches other product categories in BMD as well. So as we think about single-family, that's a big driver for our business, but multifamily is an important engine too, and that has our focus and resources as well. And I guess as Nate...

Got it. And...

Sorry, Mike, maybe one thing I'd add to both Troy and Nate's comments would be we've been trying to be very thoughtful in terms of not making any knee-jerk or quick reaction that we may regret later, right? I mean we feel still good about the medium to long term. And so we really need to be thoughtful about how we manage our capacity, including our crews so that when the market turns, we don't get caught behind the curve. So that always has to be part of our nuclei, our algebra, if you will.

Kelly makes a ton of sense. And just one last one, I'll turn it over. Where you said growing presence in multifamily. Can you just remind us right now where that presence stands currently in multifamily, whether it be maybe through EWP or if you want to talk about the whole portfolio and where you expect it to be, let's say, in 2026 and maybe provide like a 5-year outlook?

Yes. So it's not a large part of either of our businesses today. I don't have a number right at hand, probably, Mike, but we're probably in the -- we're probably -- single-family is still the big driver for us in terms of -- it's probably 75% to 80% of our business. And then we're probably something like 10 and 10 there between home center channel and multifamily.

The next question comes from Kurt Yinger with D.A. Davidson.

Troy, I just wanted to go back to the discussion around competitive dynamics in EWP. And if I heard you right, you kind of talked about a stabilization kind of coming through in August. Can you maybe just put a little bit more color around that? Is that less dealer and builder business being put to bid? Is that maybe a little bit more of a balance in terms of the trade-off between pricing and volume? What do you think was really the catalyst there to kind of reach the stabilization?

Yes. I think as the markets started slowing coming out of Q2 and into Q3, there was capacity available. And so I think there was room to move on price in the industry and people were out there trying to preserve and/or grow share as things came off. We continue to see that for several quarters now. And I think we just got to the point where we addressed the markets where that was necessary for us to maintain our volumes. And we were able to do that by and large. And now we're in a position -- the costs have come up during that time and now prices moved to a point where I think the industry itself is in a position where there's not a lot left there to go. And so now it's just kind of the seasonal impacts as we kind of finish out the year. And so right now, we're just seeing that less of a pressure as people have adjusted production to the demand.

Kurt, it's Nate, maybe just to add to Troy's comments is as you think about the fourth quarter and as we head into the first quarter, working capital is always a focus for our customers. And so in EWP, but all product categories, having world-class distribution and support EWP really matters as that next-day service is important on EWP, and we have seen that we'll continue to see that going forward. So as we think about the competitive dynamics, volume and price, having world-class distribution and support EWP really matters in these moments. And so we feel good about how we're set up there to execute to that standard as we close out 2025 and head into 2026 as well.

Okay. That's super helpful. And it sort of ties into my next question. I think realistically, right, like pricing is difficult to predict, but a lot of it comes back to single-family activity. But it does seem like channel inventories are lean. Is there a scenario where seasonally we get into the spring period next year? And even if structurally housing activity isn't significantly stronger, you feel like there could really be some tension there in the market just based on what you see in terms of your customer inventories at this stage?

Yes, Kurt, it's Nate, I'll start. To me, the channel, I think, is really well balanced in terms of inventory levels and kind of that risk reward, both on demand and anything else. And so I think people are positioning as we close out this year and head into next year, I think the marketplace, if there's demand that shows up that's somewhat unexpected or there's maybe a supply disruption, to your point, Kurt, I think there could be maybe some different urgency in the marketplace that we haven't seen for a period of time, which would include price, I think, as part of that. So I think to me, the backdrop is, I think, set up well because it's -- there's not a lot of excess that needs to get worked out of the system.

And to your point, it all it takes is a maybe a demand event we weren't expecting or a supply event we weren't expecting on the downside to kind of quickly kind of tension things up in the marketplace. So I think it's set up well, not perfectly, but I think we're -- as we think about 2026 and I think about the homebuilders, they've been pretty active in working their new home inventory levels down. That's been an area of focus for them for a period of time. And as we transition into maybe 2026, Kurt, at some point, a new home sale has to equal a new home start. And we haven't been in that kind of math for a period of time. And so I think in '26, that gets a better balance as well. So I think it's just shaping up to have more normalcy than we've frankly experienced for the last year or so.

Yes. That all makes sense. And then lastly, I just wanted to go back to the door and millwork performance. Can you just talk about, I guess, the sales performance thus far in 2025? And as some of these new facilities get up and running, is that something where you would expect even in a tepid demand environment, just given the capacity that you have and the focus there that you could really drive a healthy amount of kind of above-market growth? Or how dependent on that is underlying demand from here?

Kurt, it's Jeff. I'd say overall, it's -- millwork has been challenging this year with the price pressures and everything else. There's no ends about that. However, we have a lot of new facilities, and we have a lot of new locations that we're working into this business. And every day that goes by is the day that we get better and we improve and we get the right people in place and the opportunities that's there. So we're definitely expecting to see more growth regardless of what the market does just because we're going to operate significantly better. Additionally, we have some locations that are constrained space-wise, and we are addressing those. So we're excited for what the upside is for us on the door business for sure.

All right, okay. Appreciate all the color, guys.

Thanks, Kurt.

The next question comes from George Staphos with Bank of America Securities.

This is Brad Barton on for George. Just if we go back to the AZEK announcement, when we think about the genesis of the deal, can you just talk to the puts and takes that you were considering on the move? And then did AZEK come to you? Did you go to them? And then how do you kind of see that impacting your Hardie lineup in those specific markets and maybe even across the whole network as well?

Yes, I will start with that one. So let me just first say that we are very excited about the opportunity to partner with Hardie in the Baltimore market. It's a big decade market. So we see it as a big opportunity. We have not had in a decade in that market before. So this is net new revenue for us. It's not a revenue shift from a different product category. We haven't has it. So this is net new revenue, and it's a big opportunity for us. So we're excited about that. We're excited about the full suite of products that we're going to be able to offer in that market. So we see a lot of upside revenue potential for us, specifically to the Baltimore, Pittsburgh market. Saying that we also have grown our market share with Trex across the country. So we've done really well with that brand. So our plan is to continue to support both partners, continue to grow our market share as we have in all of those markets across the country.

Okay. Great. And then you -- I guess one follow-up, and I think you guys touched on this a little bit, but are there any kind of -- any signs that you're seeing early in the quarter that you can kind of point to as signs of life or green shoots, not just for the remainder of the quarter and into next year, but maybe even for the spring building season?

Yes. It's Jeff. I'd just say one thing that we are seeing and experiencing is that there have been some green shoots in the multifamily space. And we're seeing some activity. We're seeing a lot of quoting that's going on. We have some projects that we know that are going to kick off to get us through the balance of the year and into the beginning of next year. So we feel good about that.

The next question comes from Jeff Stevenson with Loop Capital.

How much of an impact did the operating inefficiencies related to the ramp in production at your Oakdale facility have on Wood Products margins in the third quarter? And will that continue to be a drag on segment margins over the next several quarters?

Yes. This is Troy. Yes, it's a little bit hard to tell because we've had that market-related downtime in there. But that team has been trying to work on all the machine centers, when we essentially touched all the machine centers. And so honestly, working through that, which I would describe as the operational issues coming out of a large project that they've been working through in the third quarter. So we didn't see a huge difference specific to Oakdale, say, Q3 impacts versus the first 2 quarters. But moving forward, we would expect them to continue to improve their operating efficiencies, lower that cost structure. That was a high-cost mill before. Once we get that capital in there or working, we should see the improvements there. I'd hate to put a number on it because I don't know the specifics. And then we have -- you're moving into Q4 seasonal issues. You've got the shorter months in November and December and then any market-related downtime, it's going to be dependent on what that looks like specific to Oakdale.

Got it. Got it. And then over the past year, you've announced multiple expanded partnership agreements to strengthen your distribution relationship with key suppliers and the most recent one, obviously, is James Hardie. And I wondered if you could talk more about how these agreements have better positioned the company's general line distribution business moving forward and whether there could be additional opportunities to expand partnerships with other key suppliers.

Yes, I'll start there. I think we're always looking for opportunities to expand partnerships, but we're also very focused on the partnerships that we've got and the new products that they bring to market. Trex is a great partner for us. We've grown market share with them. We're going to continue to grow market share with them across the country. Hardie has been a great partner for us in siding across the country, and now we're exploring a new opportunity with them in the Baltimore market. Again, I'd just reiterate, it's a significant decking market and that we haven't had that category before there. So looking at that, we're looking at new partnerships as far as doors and millwork go. So we are always absolutely looking to expand. We've added the space and the capacity to do it. So we are going to continue to look into whatever partnerships we have available that we think we can generate sales growth, revenue growth and margin growth.

Makes sense. And then one last one, just on how you're planning to balance M&A with share repurchases moving forward given the market pullback. Would you expect to be aggressive with the new $300 million share repurchase program?

Yes. Jeff, I'll take that one. So I guess just stepping back briefly, our priorities are very much the same in terms of capital allocation in priority order, invest in our existing asset base, look to do organic growth projects and then also M&A if the fit and the price is right. But I would say, absent any meaningful M&A, we would expect to continue to be active with share repurchases here moving forward.

Got it.

[Operator Instructions] The next question comes from Reuben Garner with Benchmark.

Let's see. So if I'm doing the math right, and I know you didn't explicitly give top line guidance, but it looks like the distribution segment's EBITDA margin is going to dip into the 3s for the first time in a while. The third quarter was obviously lower than the second. And I get that there's some seasonality. How should we think about what's going on there? Like has competition picked up? Where do we think that things will stabilize? And how do we think about next year, assuming that the housing market in general is kind of consistent with what we've seen of late?

Yes, good question. And I guess I would start with saying this isn't a market share degradation or anything like that. I feel really good about how we're positioned and how 2-step distribution shows up in these sorts of markets. So really, what's embedded in the guidance really is really truly a function of just seasonal slowing that we expect to see. November and December, you got -- you've only got 18 sales days in November and 21 sales days in December, you got weather. So you've got some seasonal events. So yes, could we dip into the high 3s in terms of EBITDA margin? Yes, sure, we could, just given the seasonal nature of it. But I wouldn't -- I would not pull back from what we view as the -- when we get to a normalized cycle over a normalized year that we can be -- it can start with a 5% in terms of our EBITDA margin. So I feel really good about how we're positioned there, Reuben. It's really just a seasonal event that you're seeing in the fourth quarter.

Okay. Great. That's really helpful. And then how do we think about -- it looks like your inventory, I guess, at the Inc. level, we don't have segments on that, but your inventory as a percentage of revenue ticked up the last couple of years. Is that a function of some of the investments in distribution and growing general line? Is that some kind of signal that you're optimistic about the market coming back as we get closer to '26 and you want to make sure you have the materials? Or is there some other factor driving that delta?

Yes, I think it's a function of the growth that we've done. We've added a handful of locations, including via M&A and via organic growth opportunities. And then it really comes back to our stated goal that we always want to be in stock and be able to serve the marketplace, especially in times like today. And so we feel good about our inventory position. We're not too heavy. I think we're in a good spot. And yes, and then we do feel good, obviously, about the -- here come back half of 2026, we are very well positioned if we start to see some more energy here in the spring building season in 2026.

Okay. Great. Good luck.

Thanks, Reuben.

The next question comes from Ketan Mamtora with BMO Capital Markets.

Maybe to start with on the EWP side, Troy, I mean, your volumes in 2025 are still kind of higher than what it was in 2021, 2022 when housing demand was stronger. Can you talk about kind of what is driving there, whether there's some share gains or things that you are doing differently?

Yes. I'd say throughout 2025, in terms of looking for opportunities, we believe we have some share gains that we're trying to maintain. Our order files throughout Q3 comparatively were lower but consistent throughout the quarter. And as we move into Q4, other than the seasonality around that, it still seems to be fairly consistent in what we've seen so far.

Okay. Got it. And then just switching to the distribution side, really nice to see that growth in general line. You talked earlier about sort of doors still being under some pressure. Can you talk about sort of what is -- where you are seeing sort of growth in the general line business?

The question is where are we seeing growth in the general line business. You guys can take that.

Yes. I think we're seeing growth in the general line, again, market share gains in certain product categories, decking being one of them. So we've seen market share gains as some of our competitors or other distributors have exited different categories across the country, we've stepped in and filled those voids. And so we've seen market share growth that way in multifamily business. And I really think in the door and millwork side, we're starting to see gains, and we're moving forward, moving that capacity and our ability there forward.

Ketan, it's Nate. Maybe just to add to Joe's comments. is that when you think about general line, and Joe mentioned this earlier, the new SKUs that are showing up and the SKU complexity that comes from our suppliers is something that we enjoy, we're really good at. And so we certainly have experienced that in '25, and we're expecting that in '26 as well. So as they bring out new products, that creates, I think, really an important opportunity and responsibility for us to not only serve our customers but serve our suppliers as well. So I think that's the other component on the general line that continues to play in our favor, and we expect that going forward as well.

Got it. No, that's helpful. I'll turn it over. Good luck.

This concludes our question-and-answer session. I would like to turn the conference back over to Nate Jorgensen for any closing remarks.

We appreciate everyone joining us on our call this morning for our update, and thank you for your continued interest in supporting Boise Cascade. Please be safe and be well. Thank you.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.