What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-06 compared with 2020-10-30 · 112 added, 235 removed, 180 unchanged (66% of the section changed)

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Executive Overview

We recorded income from operations of $158.6 million during the three months ended September 30, 2020, compared with income from operations of $44.9 million during the three months ended September 30, 2019.

In our Wood Products segment, income increased $50.4 million to $66.0 million for the three months ended September 30, 2020, from $15.6 million for the three months ended September 30, 2019, due primarily to higher plywood sales prices.

In our Building Materials Distribution segment, income increased $69.2 million to $107.9 million for the three months ended September 30, 2020, from $38.7 million for the three months ended September 30, 2019, driven by a gross margin increase of $86.7 million, resulting primarily from improved gross margins on commodity products compared with third quarter 2019.

We recorded income from operations of $205.3 million during the three months ended March 31, 2021, compared with income from operations of $25.5 million during the three months ended March 31, 2020.

In our Wood Products segment, income increased $93.3 million to $97.1 million for the three months ended March 31, 2021, from $3.8 million for the three months ended March 31, 2020, due primarily to higher plywood, lumber and EWP sales prices, higher I-joists sales volumes, and lower depreciation and amortization expense, offset partially by higher wood fiber and other manufacturing costs.

In our Building Materials Distribution segment, income increased $90.9 million to $120.2 million for the three months ended March 31, 2021, from $29.3 million for the three months ended March 31, 2020, driven by a gross margin increase of $115.3 million, resulting primarily from improved sales volumes and gross margins on substantially all products lines, particularly commodity products, compared with first quarter 2020.

The margin improvement was offset partially by increased selling and distribution expenses and general and administrative expenses of $20.5 million and $3.4 million, respectively.

These changes are discussed further in "Our Operating Results" below.

We ended third quarter 2020 with $503.9 million of cash and cash equivalents and $345.4 million of undrawn committed bank line availability, for total available liquidity of $849.3 million.

We had $443.6 million of outstanding debt at September 30, 2020.

We generated $218.7 million of cash during the nine months ended September 30, 2020, as cash provided by operations and issuances of long-term debt was offset partially by debt payments, capital spending, dividends paid on our common stock, and tax withholding payments on stock-based awards.

A further description of our cash sources and uses for the nine month comparative periods are discussed further in "Liquidity and Capital Resources" below.

In response to rapidly evolving market conditions and economic uncertainties surrounding the impact of COVID-19, and various restrictions that limited residential construction activity, our Wood Products segment and many other producers in our industry reduced production levels early in the second quarter.

In addition, many companies involved in the manufacture and distribution of building materials dramatically reduced inventory levels in late first quarter and early second quarter in response to falling commodity wood products prices and future demand uncertainty.

As restrictions were loosened or rescinded, construction activity resumed mid-second quarter and continued at a robust pace through the third quarter.

Across commodity product lines, product demand in the third quarter exceeded supply, and producers struggled to restore capacity because of COVID-19 related disruptions and natural disasters, causing significant increases in commodity products prices.

warehouse sales were strong throughout the third quarter as our retail lumberyard customers are relying on our broad base of inventory and high service levels to minimize their working capital investment given COVID-19 related uncertainties and historically high commodity product prices.

We ended first quarter 2021 with $457.0 million of cash and cash equivalents and $345.3 million of undrawn committed bank line availability, for total available liquidity of $802.3 million.

We had $444.0 million of outstanding debt at March 31, 2021.

We generated $51.6 million of cash during the three months ended March 31, 2021, as cash provided by operations was offset partially by capital spending, dividends paid on our common stock, and tax withholding payments on stock-based awards.

A further description of our cash sources and uses for the three month comparative periods are discussed in "Liquidity and Capital Resources" below.

As both a manufacturer and a distributor, our first quarter 2021 financial results were favorably impacted by higher commodity wood products pricing compared to pricing in the same period last year.

The momentum of robust construction activity experienced in the latter half of 2020 continued throughout first quarter 2021, with stronger than typical demand during the winter months.

Across commodity product lines, product demand in the first quarter exceeded supply, and certain producers also struggled with production due to raw material constraints or winter storms, causing significant increases in commodity

products prices.

While not subject to the significant price fluctuations of commodity products, demand also exceeded supply for many of the general line and EWP products distributed by BMD.

Our BMD warehouse sales were strong throughout the first quarter as our retail lumberyard customers relied on our broad base of inventory and high service levels to minimize their working capital investment given historically high commodity product prices.

In addition, we have had strong demand from our home center customers in response to elevated repair and remodel and "do-it-yourself" activity as people are spending more time at home during the pandemic.

As we begin the fourth quarter, Wood Products continues to make efforts to restore production rates to pre-COVID-19 levels in response to strong end-product demand, particularly for our EWP.

However, we continue to experience periodic short-term disruptions at many locations due to COVID-19.

In addition, we expect activity levels across our distribution network to continue to vary widely as COVID-19 impacts geographies across the U.S.

to differing degrees, and federal, state, or local restrictions are implemented or rescinded.

To date, we have not experienced significant supply chain disruptions that would limit our ability to meet customer delivery commitments or source the necessary raw materials and finished goods needed by our operations.

Wood Products continues to experience periodic short-term disruptions at many locations due to COVID-19 as we continue efforts to increase production rates in response to strong end-product demand, particularly for our EWP.

In addition, we have experienced COVID-19 related short-term disruptions at our BMD locations, and our activity levels across our distribution network continue to vary widely as COVID-19 or weather impacts geographies across the U.S.

to differing degrees.

Furthermore, supply side constraints across product lines and lean inventories throughout the supply chain have limited the industry's ability to meet underlying demand.

We continue to conduct business with modifications to mill and distribution center housekeeping and cleanliness protocols, employee travel, employee work locations, and virtualization or cancellation of certain sales and marketing events, among other modifications.

In addition, we continue to actively monitor evolving developments and may take actions that alter our business operations as may be required by federal, state, or local authorities, or that we determine are in the best interests of our employees, customers, suppliers, communities, and stockholders.

While there continues to be a heightened level of economic uncertainty given the pandemic, low mortgage rates, continuation of work-from-home practices by many in the economy, and demographics in the U.S.

have created a favorable demand environment for new residential construction, which we expect to continue into next year.

Furthermore, with homeowners spending more time at home, repair and remodel spending may continue to strengthen as homeowners invest in existing homes.

As of October 2020, the Blue Chip Economic Indicators consensus forecast for 2020 and 2021 single- and multi-family housing starts in the U.S.

While there continues to be a heightened level of economic uncertainty due to the pandemic, low mortgage rates, continuation of work-from-home practices by many in the economy, and demographics in the U.S.

have created a favorable demand environment for new residential construction, particularly single-family housing starts, which we expect to continue in 2021 and into next year.

Furthermore, with homeowners spending more time at home, repair and remodel spending may remain elevated as homeowners invest in existing homes.

As of April 2021, the Blue Chip Economic Indicators consensus forecast for 2021 and 2022 single- and multi-family housing starts in the U.S.

were 1.55 million and 1.54 million units, respectively, compared with actual housing starts of 1.38 million in 2020, as reported by the U.S.

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Although we believe that current U.S.

demographics support a higher level of housing starts, and many national home builders are reporting strong near-term backlogs, the impacts of COVID-19 on residential construction are uncertain.

A re-acceleration of COVID-19 cases could prompt state or local officials to reinstitute restrictions that could limit or constrain building activity.

In addition, the economic consequences of COVID-19 may adversely affect the pace of household formation rates and residential repair-and-remodeling activity due to high unemployment rates, lower wages, reduced consumer confidence, prospective home buyers' lack of ability to view homes in person, homebuyers' access to and cost of financing, and housing affordability, as well as other factors.

Strong demand when coupled with capacity constraints in third quarter 2020 created supply/demand imbalances in the marketplace and historically high pricing levels for commodity lumber and panel products.

However, October 2020 composite lumber and panel prices have declined by approximately 35% and 10% from the peaks reached in September 2020 and are at risk for further price erosion that will be dependent on the impact of COVID-19 on residential construction, capacity restoration and industry operating rates, net import and export activity, transportation constraints or disruptions, inventory levels in various distribution channels, and seasonal demand patterns.

As a wholesale distributor of a broad mix of commodity products and a manufacturer of certain commodity products, we have sales and profitability exposure to declines in commodity product prices.

As previously announced, we will also continue to evaluate plywood market conditions, log supply availability, operating costs, environmental permits, and other factors influencing our Elgin plywood operations as we approach 2021.

demographics support the higher level of forecasted housing starts, and many national home builders are reporting strong near-term backlogs, supply induced constraints on residential construction and repair-and-remodeling activity may continue to extend build times and limit activity.

Strong demand when coupled with capacity constraints in first quarter 2021 created supply/demand imbalances in the marketplace and historically high pricing levels for commodity lumber and panel products.

Future commodity product pricing will be dependent on the impact of COVID-19 on residential construction, capacity restoration and industry operating rates, net import and export activity, transportation constraints or disruptions, inventory levels in various distribution channels, and seasonal demand patterns.

As a wholesale distributor of a broad mix of commodity products and a manufacturer of certain commodity products, our sales and profitability are influenced by changes in commodity product prices.

Factors That Affect Our Operating Results and Trends

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• declines in demand for our products due to competing technologies or materials, as well as changes in building code provisions;

• substantial ongoing capital investment costs, including those associated with recent acquisitions, and the difficulty in offsetting fixed costs related to those investments;

• substantial ongoing capital investment costs, including those associated with acquisitions, and the difficulty in offsetting fixed costs related to those investments;

• the cost and availability of third-party transportation services used to deliver the goods we manufacture and distribute, as well as our raw materials;

• exposure to product liability, product warranty, casualty, construction defect, and other claims;

• the impact of actuarial assumptions, investment return on pension assets, and regulatory activity on pension costs and pension funding requirements,

• our indebtedness, including the possibility that we may not generate sufficient cash flows from operations or that future borrowings may not be available in amounts sufficient to fulfill our debt obligations and fund other liquidity needs;

• change in interest rate of our debt;

• restrictive covenants contained in our debt agreements;

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• the other factors described in "Item 1A.

Risk Factors" in our 2019 Form 10-K and in this Form 10-Q.

Risk Factors" in our 2020 Form 10-K.

Our Operating Results

The following tables set forth our operating results in dollars and as a percentage of sales for the three and nine months ended September 30, 2020 and 2019:

The following tables set forth our operating results in dollars and as a percentage of sales for the three months ended March 31, 2021 and 2020:

Three Months Ended

September 30 Nine Months Ended

2020 2019 2020 2019

Sales $ 1,821.3 $ 1,170.5

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Set forth below are historical U.S.

housing starts data, segment sales volumes and average net selling prices for the principal products sold by our Wood Products segment, and sales mix and gross margin information for our Building Materials Distribution segment for the three and nine months ended September 30, 2020 and 2019.

Three Months Ended

September 30 Nine Months Ended

2020 2019 2020 2019

Housing Starts (a)

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Multi-family 106.2 114.8

388.2 348.4 1,016.2 963.5

Segment Sales

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Gross margin percentage is gross margin as a percentage of segment sales.

For the three months ended September 30, 2020, total sales increased $319.8 million, or 25%, to $1,589.3 million from $1,269.5 million during the three months ended September 30, 2019.

For the nine months ended September 30, 2020, total sales increased by $460.9 million, or 13%, to $4,002.6 million from $3,541.7 million for the same period in the prior year.

For the three months ended March 31, 2021, total sales increased $650.8 million, or 56%, to $1,821.3 million from $1,170.5 million during the three months ended March 31, 2020.

As described below, the increase in sales was driven by the changes in sales prices and volumes for the products we manufacture and distribute with single-family residential construction activity being the key demand driver of our sales.

In third quarter 2020, U.S.

In first quarter 2021, U.S.

housing starts increased 10%, with single-family starts up 20% from the same period in 2020.

On a year-to-date basis through September 2020, total and single-family housing starts increased 5% and 6%, respectively, compared with the same period in 2019.

Average composite lumber and average composite panel prices for the three months ended September 30, 2020, were 109% and 100% higher, respectively, than in the same period in the prior year, as reflected by Random Lengths composite lumber and panel pricing.

For the nine months ended September 30, 2020, average composite lumber and average composite panel prices were 47% and 37% higher, respectively, compared with the same period in the prior year.

Average composite panel and average composite lumber prices for the three months ended March 31, 2021, were 151% and 143% higher, respectively, than in the same period in the prior year, as reflected by Random Lengths composite lumber and panel pricing.

Wood Products.

Sales, including sales to our BMD segment, increased $38.6 million, or 12%, to $363.7 million for the three months ended September 30, 2020, from $325.1 million for the three months ended September 30, 2019.

Sales, including sales to our BMD segment, increased $112.3 million, or 35%, to $432.3 million for the three months ended March 31, 2021, from $320.1 million for the three months ended March 31, 2020.

The increase in sales was driven primarily by higher plywood prices of 108%, resulting in increased sales of $87.6 million.

Plywood demand in the third quarter far outpaced industry production levels, driving the sharp increase in pricing.

In addition, higher sales volumes for I-joists of 5% resulted in increased sales of $3.8 million.

These increases were offset partially by lower sales volumes for plywood and LVL of 8% and 2%, respectively, resulting in decreased sales of $7.0 million and $1.4 million, respectively.

The lower volume for plywood sales reflects our continued work to optimize veneer into EWP production, as well as periodic short-term disruptions related to COVID-19.

In addition, net sales prices for LVL and I-joists each decreased 2%, resulting in decreased sales of $2.0 million each.

For the nine months ended September 30, 2020, sales, including sales to our BMD segment, decreased $13.6 million, or 1%, to $965.2 million from $978.9 million for the same period in the prior year.

The decrease in sales was driven primarily by decreases in sales volumes for plywood and LVL of 7% and 4%, respectively, resulting in decreased sales of $20.2 million and $8.9 million, respectively.

In addition, net sales prices for LVL and I-joists decreased 2% and 1%, respectively, resulting in decreased sales of $5.0 million and $2.5 million, respectively.

Lumber sales prices decreased 13%, resulting in decreased sales of $5.3 million.

In addition, decreases in other sales, including by-products, freight, logs, and other EWP, contributed to the decrease in sales.

These decreases were offset partially by higher sales prices for plywood of 21%, resulting in increased sales of $53.6 million.

I-joists sales volumes were relatively flat compared with the prior year period.

Plywood demand in the first quarter far outpaced industry production levels, driving the favorable pricing.

Higher sales volumes for I-joists of 20% resulted in increased sales of $15.4 million and higher sales prices for lumber of 88% resulted in increased sales of $8.8 million.

In addition, sales prices for I-joists and LVL each increased 3%, resulting in increased sales of $3.1 million and $2.2 million, respectively.

These increases were offset partially by lower sales volumes for LVL and plywood of 7% and 5%, respectively, resulting in decreased sales of $5.8 million and $3.9 million, respectively.

The lower volume for plywood sales reflects our continued work to optimize veneer into EWP production, as well as rolling curtailments at our Elgin plywood facility as we manage environmental permits and log supply availability, periodic short-term disruptions related to COVID-19, and a significant winter storm in Louisiana during February 2021.

Building Materials Distribution.

Sales increased $292.1 million, or 25%, to $1,437.7 million for the three months ended September 30, 2020, from $1,145.6 million for the three months ended September 30, 2019.

Compared with the same quarter in the prior year, the overall increase in sales was driven by sales price increases of 25%, with relatively flat sales volumes.

Sales increased $584.8 million, or 56%, to $1,634.8 million for the three months ended March 31, 2021, from $1,050.0 million for the three months ended March 31, 2020.

Compared with the same quarter in the prior year, the overall increase in sales was driven by sales volume and sales price increases of 34% and 22%, respectively.

By product line, commodity sales increased 106%, or $465.9 million;

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and sales of EWP (substantially all of which are sourced through our Wood Products segment) increased 21%, or $43.5 million.

During the nine months ended September 30, 2020, sales increased $471.2 million, or 15%, to $3,621.9 million from $3,150.8 million for the same period in the prior year.

Compared with the same period in the prior year, the overall increase in sales was driven by sales price and sales volume increases of 10% and 5%, respectively.

By product line, commodity sales increased 25%, or $332.4 million;

general line product sales increased 10%, or $120.8 million;

and sales of EWP increased 3%, or $18.0 million.

Costs and Expenses

Materials, labor, and other operating expenses (excluding depreciation) increased $182.8 million, or 17%, to $1,261.7 million for the three months ended September 30, 2020, compared with $1,078.9 million during the same period in the prior year.

In our Wood Products segment, materials, labor, and other operating expenses decreased, due to lower sales volumes, offset partially by higher per-unit costs of OSB (used in the manufacture of I-joists) and logs of approximately 43% and 3%, compared with third quarter 2019.

Materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our Wood Products segment decreased by 1,320 basis points, which was primarily due to higher plywood sales prices, resulting in improved leveraging of other manufacturing costs, labor costs, and wood fiber costs.

In BMD, materials, labor, and other operating expenses increased, driven by higher purchased materials costs as a result of higher commodity prices.

However, the BMD segment MLO rate improved 340 basis points compared with the third quarter 2019 due primarily to improved gross margin percentages for our commodity product sales, driven by an increasing commodity price environment during the third quarter 2020.

For the nine months ended September 30, 2020, materials, labor, and other operating expenses (excluding depreciation), increased $276.5 million or 9%, to $3,302.9 million, compared with $3,026.4 million in the same period in the prior year.

In our Wood Products segment, materials, labor, and other operating expenses decreased, due to lower sales volumes, offset partially by higher per-unit costs of OSB and logs of 26% and 1%, respectively, compared with the first nine months of 2019.

The MLO rate in our Wood Products segment decreased by 640 basis points, which was primarily due to higher plywood sales prices, resulting in improved leveraging of manufacturing costs, including labor costs.

In BMD, the increase in materials, labor, and other operating expenses was driven by higher purchased materials costs as a result of higher commodity prices and higher sales volumes, compared with the first nine months of 2019.

However, the BMD segment MLO rate improved 190 basis points compared with the first nine months of 2019 due primarily to improved gross margin percentages for our commodity product sales, driven by an increasing commodity price environment during most of the first nine months of 2020.

Depreciation and amortization expenses decreased $0.9 million, or 4%, to $20.0 million for the three months ended September 30, 2020, compared with $21.0 million during the same period in the prior year.

For the nine months ended September 30, 2020, these expenses increased $15.6 million, or 26%, to $75.3 million, compared with $59.6 million in the same period in the prior year, due primarily to recording accelerated depreciation of $15.0 million in first quarter 2020 to fully depreciate the curtailed I-joist production assets at our Roxboro, North Carolina facility.

Materials, labor, and other operating expenses (excluding depreciation) increased $458.2 million, or 46%, to $1,450.4 million for the three months ended March 31, 2021, compared with $992.3 million during the same period in the prior year.

In our Wood Products segment, materials, labor, and other operating expenses increased, due to higher per-unit costs of OSB (used in the manufacture of I-joists) and logs of approximately 42% and 11%, compared with first quarter 2020.

However, materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our Wood Products segment decreased by 1,420 basis points, which was primarily due to higher plywood sales prices, resulting in improved leveraging of wood fiber costs, labor costs, and other manufacturing costs.

In BMD, materials, labor, and other operating expenses increased, driven by higher purchased materials costs as a result of higher sales volumes and higher commodity prices, compared with first quarter 2020.

However, the BMD segment MLO rate improved 250 basis points compared with the first quarter 2020 due primarily to improved sales volumes and gross margin percentages for substantially all product lines, particularly commodity product sales, driven by an increasing commodity price environment during first quarter 2021.

Depreciation and amortization expenses decreased $15.8 million, or 45%, to $19.5 million for the three months ended March 31, 2021, compared with $35.3 million during the same period in the prior year, due primarily to recording accelerated depreciation of $15.0 million in first quarter 2020 to fully depreciate the curtailed I-joist production assets at our Roxboro, North Carolina facility.

For additional information, see Note 5, Curtailment of Manufacturing Facility, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1.

Financial Statements" of this Form 10-Q.

Selling and distribution expenses increased $16.3 million, or 15%, to $122.9 million for the three months ended September 30, 2020, compared with $106.6 million during the same period in the prior year, due primarily to higher employee-related expenses, mostly incentive compensation, of $16.3 million, offset partially by lower travel and entertainment expenses of $2.0 million.

For the nine months ended September 30, 2020, selling and distribution expenses increased $33.5 million, or 11%, to $325.9 million, compared with $292.5 million during the same period in 2019, due primarily to higher employee-related expenses, mostly incentive compensation, of $29.7 million, as well as higher shipping and handling costs of $1.6 million.

Selling and distribution expenses increased $21.5 million, or 22%, to $120.9 million for the three months ended March 31, 2021, compared with $99.5 million during the same period in the prior year, due primarily to higher employee-related expenses of $21.6 million, most of which relates to incentive compensation, as well as higher shipping and handling costs of $2.2 million.

These increases were offset partially by lower travel and entertainment expenses of $1.7 million.

General and administrative expenses increased $7.5 million, or 40%, to $26.1 million for the three months ended September 30, 2020, compared with $18.6 million for the same period in the prior year.

For the nine months ended September 30, 2020, general and administrative expenses increased $8.8 million, or 17%, to $60.9 million, compared with $52.1 million during the same period in 2019.

The increases for both periods were primarily a result of higher employee-related expenses, mostly incentive compensation, offset partially by lower discretionary expenses, including travel and entertainment expenses and professional fees.

For the nine months ended September 30, 2020, loss on curtailment of facility was $1.7 million, representing various closure-related costs from the permanent curtailment of I-joist production at our Roxboro, North Carolina facility.

General and administrative expenses increased $9.2 million, or 57%, to $25.3 million for the three months ended March 31, 2021, compared with $16.1 million for the same period in the prior year.

The increase was primarily a result of higher employee-related expenses of $9.8 million, most of which relates to incentive compensation, offset partially by lower travel and entertainment expenses.

For the three months ended March 31, 2020, loss on curtailment of facility was $1.7 million, representing various closure-related costs from the permanent curtailment of I-joist production at our Roxboro, North Carolina facility.

For additional information, see Note 5, Curtailment of Manufacturing Facility, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1.

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Income From Operations

Income from operations increased $113.7 million to $158.6 million for the three months ended September 30, 2020, compared with $44.9 million for the three months ended September 30, 2019.

Income from operations increased $124.2 million to $235.9 million for the nine months ended September 30, 2020, compared with $111.7 million for the nine months ended September 30, 2019.

Income from operations increased $179.7 million to $205.3 million for the three months ended March 31, 2021, compared with $25.5 million for the three months ended March 31, 2020.

Wood Products.

Segment income increased $50.4 million to $66.0 million for the three months ended September 30, 2020, compared with $15.6 million for the three months ended September 30, 2019.

The increase in segment income was due primarily to higher plywood sales prices, offset partially by higher wood fiber costs, as well as lower net sales prices of EWP.

In addition, selling and distribution expenses and general and administrative expenses increased $2.0 million and $1.7 million, respectively.

For the nine months ended September 30, 2020, segment income increased $40.7 million to $86.9 million from $46.1 million for the nine months ended September 30, 2019.

The increase in segment income was due primarily to higher plywood sales prices and lower manufacturing costs.

These improvements were offset partially by accelerated depreciation of $15.0 million and other closure-related costs of $1.7 million at our Roxboro, North Carolina facility, as well as lower EWP and

lumber prices.

Segment income increased $93.3 million to $97.1 million for the three months ended March 31, 2021, compared with $3.8 million for the three months ended March 31, 2020.

The increase in segment income was due primarily to higher plywood, lumber and EWP sales prices, as well as higher I-joists sales volumes.

In addition, first quarter 2020 results included accelerated depreciation and amortization expense and loss on curtailment of facility of $15.0 million and $1.7 million, respectively, related to the permanent curtailment of I-joist production at our Roxboro, North Carolina facility.

These increases in segment income were offset partially by higher wood fiber and other manufacturing costs.

In addition, selling and distribution expenses and general and administrative expenses increased $1.0 million and $1.3 million, respectively.

Building Materials Distribution.

Segment income increased $69.2 million to $107.9 million for the three months ended September 30, 2020, from $38.7 million for the three months ended September 30, 2019.

The increase in segment income was driven by a gross margin increase of $86.7 million, resulting primarily from improved gross margins on commodity products compared with third quarter 2019.

The margin improvement was offset partially by increased selling and distribution expenses and general and administrative expenses of $14.3 million and $2.5 million, respectively.

For the nine months ended September 30, 2020, segment income increased $90.4 million to $180.4 million from $90.0 million for the nine months ended September 30, 2019.

The increase in segment income was driven by a gross margin increase of $127.6 million resulting primarily from improved gross margins on commodity products, as well as higher sales of general line products compared with the first nine months of 2019.

Segment income increased $90.9 million to $120.2 million for the three months ended March 31, 2021, from $29.3 million for the three months ended March 31, 2020.

The increase in segment income was driven by a gross margin increase of $115.3 million, resulting primarily from improved sales volumes and gross margins on substantially all product lines, particularly commodity products, compared with first quarter 2020.

The margin improvement was offset partially by increased selling and distribution expenses and general and administrative expenses of $20.5 million and $3.4 million, respectively.

Unallocated corporate expenses increased $6.0 million to $15.4 million from $9.4 million for the three months ended September 30, 2020, compared with the same period in the prior year.

For the nine months ended September 30, 2020, unallocated corporate expenses increased $7.0 million to $31.4 million from $24.4 million for the nine months ended September 30, 2019.

The increases for both periods were due primarily to higher incentive compensation and business interruption losses.

As part of our self-insured risk retention program, corporate absorbed approximately $3.2 million of estimated business interruption losses at Wood Products facilities in third quarter 2020.

The losses resulted from downtime at our Louisiana manufacturing facilities due to Hurricane Laura and from a fire-related production disruption at our Chester, South Carolina, plywood plant.

Unallocated corporate expenses increased $4.5 million to $12.0 million for the three months ended March 31, 2021, from $7.5 million for the same period in the prior year.

The increase was due primarily to higher employee-related expenses, most of which relates to incentive compensation.

Change in fair value of interest rate swaps.

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Financial Statements" of this Form 10-Q.

Loss on extinguishment of debt.

In connection with the issuance of the $400 million of 4.875% senior notes due July 1, 2030 (2030 Notes), we commenced a tender offer to purchase any and all of our $350 million aggregate principal amount of 5.625% senior notes due September 1, 2024 (2024 Notes) then outstanding.

On July 27, 2020, we accepted for purchase an aggregate principal amount of $212.5 million of the 2024 Notes that were tendered.

On September 1, 2020, we redeemed the remaining $137.5 million in aggregate principal amount of the 2024 Notes outstanding.

In connection with these transactions, we recognized a pre-tax loss on the extinguishment of debt of $14.0 million during third quarter 2020.

The loss includes $10.8 million in debt extinguishment premium payments and $3.2 million for the write-off of unamortized deferred financing costs.

For more information related to our indebtedness, see Note 6, Debt, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1.

Financial Statements" of this Form 10-Q.

Income Tax Provision

For the three and nine months ended September 30, 2020, we recorded $34.6 million and $50.0 million, respectively, of income tax expense and had an effective rate of 25.1% in both periods.

For the three and nine months ended September 30, 2019, we recorded $9.7 million and $22.6 million, respectively, of income tax expense and had an effective rate of 26.2% and 25.4%, respectively.

For all periods, the primary reason for the difference between the federal statutory income tax rate of 21% and the effective tax rate was the effect of state taxes.

For the three months ended March 31, 2021 and 2020, we recorded $51.4 million and $4.0 million, respectively, of income tax expense and had an effective rate of 25.6% and 24.7%, respectively.

During the three months ended March 31, 2021, the primary reason for the difference between the federal statutory income tax rate of 21% and the effective tax rate was the effect of state taxes.

During the three months ended March 31, 2020, the primary reason for the difference between the federal statutory income tax rate of 21% and the effective tax rate was the effect of state taxes, offset by excess tax benefits of vested share-based payment awards and accounting for the tax impact of the CARES Act.

Industry Mergers and Acquisitions

On November 19, 2020, West Fraser Timber Co.

(West Fraser) and Norbord Inc.

(Norbord) announced a definitive agreement pursuant to which West Fraser would acquire all of the shares of Norbord.

The acquisition closed during the first quarter of 2021.

West Fraser supplies product to our BMD segment, and Norbord is a supplier to both our Wood Products and BMD segments.

We believe we have a good relationship with this vendor and we do not expect the transaction to have a material impact on our future results of operations.

On August 27, 2020, Builders FirstSource, Inc.

(BFS) and BMC Stock Holdings (BMC) announced a definitive merger agreement.

The merger is expected to close in late 2020 or early 2021.

BFS and BMC are both customers of ours.

We believe we have good relationships with these customers.

However, until this transaction closes, we cannot assess the impact, if any, this customer combination may have on our future results of operations.

The merger closed in early January 2021.

Prior to the merger, BFS and BMC were both customers of ours.

We believe we have a good relationship with the combined company and we do not expect the transaction to have a material impact on our future results of operations.

The merger resulted in the combined company accounting for 17 % of total receivables as of March 31, 2021.

Liquidity and Capital Resources

We ended third quarter 2020 with $503.9 million of cash and cash equivalents and $443.6 million of debt.

At September 30, 2020, we had $849.3 million of available liquidity (cash and cash equivalents and undrawn committed bank line availability).

We generated $218.7 million of cash during the nine months ended September 30, 2020, as cash provided by

operations and issuances of long-term debt were offset partially by debt payments, capital spending, dividends paid on our common stock, and tax withholding payments on stock-based awards.

Further descriptions of our cash sources and uses for the nine month comparative periods are noted below.

We believe that our cash flows from operations, combined with our current cash levels and available borrowing capacity, will be adequate to fund debt service requirements and provide cash, as required, to support our ongoing operations, capital expenditures, funding of acquisitions, lease obligations, working capital, and to pay cash dividends to holders of our common stock over the next 12 months.

We expect to fund our seasonal and intra-month working capital requirements in the remainder of 2020 from cash on hand and, if necessary, borrowings under our revolving credit facility.

We ended first quarter 2021 with $457.0 million of cash and cash equivalents and $444.0 million of debt.

At March 31, 2021, we had $802.3 million of available liquidity (cash and cash equivalents and undrawn committed bank line availability).

Further descriptions of our cash sources and uses for the three month comparative periods are noted below.

We believe that our cash flows from operations, combined with our current cash levels and available borrowing capacity, will be adequate to fund debt service requirements and provide cash, as required, to support our ongoing operations, capital expenditures, lease obligations, working capital, income tax payments, and to pay cash dividends to holders of our common stock over the next 12 months.

We expect to fund our seasonal and intra-month working capital requirements in 2021 from cash on hand and, if necessary, borrowings under our revolving credit facility.

We also estimate remitting between $130 million and $150 million of income tax payments during second quarter 2021 as we extend 2020 income tax filings and pay estimated payments on 2021 income.

Sources and Uses of Cash

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Our primary uses of cash are for expenses related to the manufacture and distribution of building products, including inventory purchased for resale, wood fiber, labor, energy, and glues and resins.

In addition to paying for ongoing operating costs, we use cash to invest in our business, service our debt and pension obligations, pay dividends, repurchase our common stock, and meet our contractual obligations and commercial commitments.

In addition to paying for ongoing operating costs, we use cash to invest in our business, service our debt, pay dividends, repurchase our common stock, and meet our contractual obligations and commercial commitments.

Below is a discussion of our sources and uses of cash for operating activities, investing activities, and financing activities.

Nine Months Ended

Net cash provided by operations $ 293,771 $ 194,750

Three Months Ended

Net cash provided by (used for) operations $ 72,251 $ (42,467)

Net cash used for investment (13,165) (18,460)

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Operating Activities

For the nine months ended September 30, 2020, our operating activities generated $293.8 million of cash, compared with $194.8 million of cash generated in the same period in 2019.

For the three months ended March 31, 2021, our operating activities generated $72.3 million of cash, compared with $42.5 million of cash used in the same period in 2020.

The $114.7 million increase in cash provided by operations was due primarily to an improvement in income from operations.

See "Our Operating Results" in this Management's Discussion and Analysis of Financial Condition and Results of Operations for more information related to factors affecting our operating results.

In addition, cash provided by operations increased due to a decrease in working capital of $41.2 million during the nine months ended September 30, 2020, compared with a $30.0 million decrease for the same period in the prior year.

These increases were offset partially by cash paid for taxes, net of refunds received, of $35.3 million during the nine months ended September 30, 2020, compared with income tax refunds received, net of taxes paid, of $7.1 million in the same period a year ago.

In addition, pension contributions increased $11.3 million compared to the prior year.

The change in working capital during both periods was primarily attributable to higher accounts payable and decreased inventories, offset by higher receivables.

The increase in accounts payable and accrued liabilities provided $213.9 million of cash during the nine months ended September 30, 2020, compared with $66.1 million in the same period a year ago.

During both periods, extended terms offered by major vendors to our Building Materials Distribution segment and seasonally higher purchasing activity contributed to the increase in accounts payable.

During the nine months ended September 30, 2020, accrued liabilities also increased due to higher incentive compensation accruals for 2020.

The increase in accounts payable during the nine months ended September 30, 2019, was offset partially by decreases in accrued liabilities, most notably annual employee incentive compensation payouts made during the period and lower incentive compensation accruals for 2019.

During the nine months ended September 30, 2020, distribution inventories decreased due to stronger than expected demand and higher inventory turns, while manufacturing inventories decreased due to strong-end product demand, lower log inventory, and reduced production levels in response to periodic short-term disruptions at many locations due to COVID-19 and hurricanes in the Southeastern U.S.

Both businesses have continued to manage their inventory levels in response to the volatility in demand caused by the COVID-19 pandemic.

During the nine months ended September 30, 2019, inventories decreased, as weak commodity pricing in 2019 resulted in lower inventory values in our Building Materials Distribution segment, and as inventory levels at the end of 2018 were seasonally higher than normal with slower sales in the second half of 2018 due to slower housing activity and declining commodity prices.

The increases in receivables in both periods primarily reflect increased sales of approximately 70% and 36%, comparing sales for the months of September 2020 and 2019 with sales for the months of December 2019 and 2018, respectively.

In addition, cash paid for taxes, net of refunds received, decreased $4.2 million, compared to the prior year.

Income taxes payable increased $52.6 million during the three months ended March 31, 2021, compared with a decrease of $2.1 million during the same period last year, resulting from the significant improvement in income from operations in first quarter 2021.

These increases in cash were offset partially by an increase in working capital of $147.4 million during the three months ended March 31, 2021, compared with a $94.9 million increase for the same period in the prior year.

The change in working capital in both periods was primarily attributable to higher receivables and inventories, offset by an increase in accounts payable and accrued liabilities.

The increases in receivables in both periods primarily reflect increased sales of approximately 46% and 29%, comparing sales for the months of March 2021 and 2020 with sales for the months of December 2020 and 2019, respectively.

The increase in accounts payable and accrued liabilities provided $125.1 million of cash during the three months ended March 31, 2021, compared with $55.6 million in the same period a year ago.

During both periods, seasonal increases in inventory in preparation for the spring building season and extended terms offered by major vendors to our Building Materials Distribution segment led to the increase in accounts payable.

This increase in accounts payable was offset partially by decreases in accrued liabilities, most notably annual employee incentive compensation payouts made during both periods.

Investment Activities

During the nine months ended September 30, 2020 and 2019, we used $47.0 million and $53.2 million, respectively, of cash for purchases of property and equipment, including business improvement and quality/efficiency projects, replacement and expansion projects, and ongoing environmental compliance.

In addition, during the nine months ended September 30, 2019, we used $15.7 million for acquisitions, offset partially by asset sale proceeds of $2.5 million from the sale of a hardwood plywood facility located in Moncure, North Carolina.

In response to the uncertainty of the impacts of COVID-19, we reduced our planned capital spending for 2020 from our previously expected range of $85-to-$95 million to $60-to-$75 million.

Included in our 2020 capital spending is the completion of the log utilization center improvement project at our plywood and veneer facility in Florien, Louisiana and BMD's door shop expansion in Dallas, Texas, as well as the purchase and improvement of a BMD property in Gallatin, Tennessee that expands our service capabilities in the Nashville market.

This level of capital expenditures could increase or decrease as a result of a number of factors, including our financial results and future economic conditions.

We expect our capital spending, excluding acquisitions, to be approximately $80-to-$90 million in 2021.

During the three months ended March 31, 2021 and 2020, we used $13.3 million and $18.6 million, respectively, of cash for purchases of property and equipment, including business improvement and quality/efficiency projects, replacement and expansion projects, and ongoing environmental compliance.

We expect capital expenditures in 2021 to total approximately $90 million to $100 million.

We expect our capital spending in 2021 will be for business improvement and quality/efficiency projects, replacement projects, and ongoing environmental compliance.

Included in our capital spending range is the completion of a log utilization center project at our Florien plywood and veneer plant, a new door assembly operation in Houston, and expansion of our distribution capabilities in the Nashville market.

This level of capital expenditures could increase or decrease as a result of a number of factors, including acquisitions, efforts to accelerate organic growth, exercise of lease purchase options, our financial results, future economic conditions, availability of engineering and construction resources, and timing and availability of equipment purchases.

Financing Activities

During the nine months ended September 30, 2020, our financing activities used $28.6 million of cash, compared with $15.2 million of cash used in the same period in 2019, as further discussed below.

On July 27, 2020, we issued $400 million of 2030 Notes.

With proceeds from the 2030 Notes issuance, we retired our $350 million of 2024 Notes and paid-off our American AgCredit term loan of $45.0 million.

In connection with the retirement of the 2024 Notes, we made debt extinguishment premium payments of $10.8 million.

During the nine months ended September 30, 2020, our financing activities also used $12.6 million for common stock dividend payments, $6.2 million for financing costs related to the 2030 Notes, and $3.3 million of tax withholding payments on stock-based awards.

During the nine months ended September 30, 2020, we did not borrow under our revolving credit facility, and therefore have no borrowings outstanding on the facility as of September 30, 2020.

On March 13, 2020, we negotiated an extension of our $350 million revolving credit agreement and our related $50 million term loan.

As of September 30, 2020, we have no debt maturities prior to 2025.

During the nine months ended September 30, 2019, our financing activities used $15.2 million of cash, including $11.1 million for common stock dividend payments and $3.6 million of tax withholding payments on stock-based awards.

During the nine months ended September 30, 2019, we also borrowed $5.5 million under our revolving credit facility to fund intra-month working capital needs, which were subsequently repaid during the same period with cash on hand.

Future quarterly dividend declarations, including amount per share, record date and payment date, will be made at the discretion of our board of directors and will depend upon, among other things, legal capital requirements and surplus, our future operations and earnings, general financial condition, contractual obligations, restrictions imposed by our asset-based credit facility, term loan, and the indenture governing our senior notes, applicable laws, and other factors that our board of directors may deem relevant.

During the three months ended March 31, 2021, our financing activities used $7.5 million of cash, including $4.4 million for common stock dividend payments and $2.7 million of tax withholding payments on stock-based awards.

During the three months ended March 31, 2021, we did not borrow under our revolving credit facility, and therefore have no borrowings outstanding on the facility as of March 31, 2021.

During the three months ended March 31, 2020, our financing activities used $9.3 million of cash, including $4.6 million for common stock dividend payments and $3.3 million of tax withholding payments on stock-based awards.

During the three months ended March 31, 2020, we did not borrow under our revolving credit facility.

Future dividend declarations, including amount per share, record date and payment date, will be made at the discretion of our board of directors and will depend upon, among other things, legal capital requirements and surplus, our future operations and earnings, general financial condition, contractual obligations, restrictions imposed by our asset-based credit facility and the indenture governing our senior notes, applicable laws, and other factors that our board of directors may deem relevant.

For more information related to our debt transactions and structure, and our dividend policy, see the discussion in Note 6, Debt, and Note 10, Stockholders' Equity, respectively, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1.

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Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2020 Form 10-K.

As of September 30, 2020, there have been no material changes in contractual obligations outside the ordinary course of business since December 31, 2019, except for the items noted in the table below.

Payments Due by Period

2020 2021-2022 2023-2024 Thereafter Total

Long-term debt (a) $ — $ — $ — $ 450.0 $ 450.0

Interest (b) 0.1 38.5 39.9 117.2 195.7

$ 0.1 $ 38.5 $ 39.9 $ 567.2 $ 645.7

_______________________________________

(a) These borrowings are further explained in Note 6, Debt, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1.

Financial Statements" of this Form 10-Q.

The table assumes our long-term debt is held to maturity.

In addition, on March 13, 2020, we decreased the maximum amount available under our revolving credit facility from $370 million to $350 million.

(b) Amounts represent estimated interest payments on the 2030 Notes and ABL Term Loan as of September 30, 2020, assuming these instruments are held to maturity.

Unused commitment fees and letter of credit fees payable under the Revolving Credit Facility are excluded from the table above.

In addition, we have excluded our interest rate swaps from interest in the table above.

For information regarding average pay rates and average receive rates on our interest rate swaps, see "Financial Instruments" included in this "Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-Q.

We have also announced to plan participants our intention to terminate the Pension Plan (Plan Termination).

In conjunction with the Plan Termination, we froze accrual of all benefits on our Pension Plan effective August 31, 2020.

We do not expect the Plan Termination to result in a meaningful amount of additional cash contributions to the Pension Plan.

For more information, see Note 6, Debt and Note 8, Retirement and Benefit Plans, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1.

Financial Statements" of this Form 10-Q.

As of March 31, 2021, there have been no material changes in contractual obligations outside the ordinary course of business since December 31, 2020.

Off-Balance-Sheet Activities

At September 30, 2020, and December 31, 2019, we had no material off-balance-sheet arrangements with unconsolidated entities.

At March 31, 2021, and December 31, 2020, we had no material off-balance-sheet arrangements with unconsolidated entities.

Note 10, Debt, and Note 18, Commitments, Legal Proceedings and Contingencies, and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" in our 2020 Form 10-K describe the nature of our guarantees, including the approximate terms of the guarantees, how the guarantees arose, the events or circumstances that would require us to perform under the guarantees, and the maximum potential undiscounted amounts of future payments we could be required to make.

As of September 30, 2020, there have been no material changes to the guarantees disclosed in our 2019 Form 10-K, except for debt transactions disclosed in Note 6, Debt, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1.

Financial Statements" of this Form 10-Q.

As of March 31, 2021, there have been no material changes to the guarantees disclosed in our 2020 Form 10-K.

Seasonal Influences

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Seasonal changes in levels of building activity affect our building products businesses, which are dependent on housing starts, repair-and-remodeling activities, and light commercial construction activities.

We typically report lower sales in the first and fourth quarters due to the impact of poor weather on the construction market, and we generally have higher sales in the second and third quarters, reflecting an increase in construction due to more favorable weather conditions.

We typically report lower sales volumes in the first and fourth quarters due to the impact of poor weather on the construction market, and we generally have higher sales volumes in the second and third quarters, reflecting an increase in construction due to more favorable weather conditions.

We typically have higher working capital in the first and second quarters in preparation and response to the building season.

Seasonally cold weather increases costs, especially energy consumption costs, at most of our manufacturing facilities.

As of October 18, 2020, we had approximately 5,900 employees.

As of May 2, 2021, we had approximately 6,060 employees.

Approximately 23% of these employees work pursuant to collective bargaining agreements.

As of October 18, 2020, we had ten collective bargaining agreements.

Four agreements, covering approximately 400 employees at our Elgin plywood plant and Kettle Falls plywood plant, expired on May 31, 2020, but the terms and conditions of those agreements remain in effect pending negotiation of new agreements.

We may not be able to renew these agreements or may renew them on terms that are less favorable to us than the current agreements.

In addition, an agreement covering approximately 20 employees at our Billings BMD facility is set to expire on March 31, 2021, and two agreements covering approximately 740 employees at our Oakdale and Florien plywood plants are set to expire on July 15, 2021.

As of May 2, 2021, we had ten collective bargaining agreements.

Two agreements covering approximately 760 employees at our Oakdale and Florien plywood plants are set to expire on July 15, 2021.

If any of these agreements are not renewed or extended upon their termination, we could experience a material labor disruption, strike, or significantly increased labor costs at one or more of our facilities, either in the course of negotiations of a labor agreement or otherwise.

Labor disruptions or shortages could prevent us from meeting customer demands or result in increased costs, thereby reducing our sales and profitability.

On October 16, 2020, we issued a WARN Act notice to our Elgin, Oregon employees in order to ensure that all employees are aware it is possible the mill will have to reduce production levels beginning on or about January 1, 2021.

Our ongoing ability to use waste and storm water has been modified by the Oregon Department of Environmental Quality (ODEQ).

The new permit constraints create uncertainty around the future operations at the site.

We have significantly reduced our purchases of logs for the Elgin operation considering the uncertainty created by the change in environmental constraints and possible curtailment.

At the current time, we do not expect to have enough logs available to operate throughout the entire winter even if the open concerns with ODEQ are favorably resolved before the end of the year.

Disclosures of Financial Market Risks

In the normal course of business, we are exposed to financial risks such as changes in commodity prices, interest rates, and foreign currency exchange rates.

As of September 30, 2020, there have been no material changes to financial market risks disclosed in our 2019 Form 10-K, except for interest rate swap transactions disclosed in Interest Rate Risk and Interest Rate Swaps of Note 2, Summary of Significant Accounting Policies, of the Condensed Notes to Unaudited Quarterly Financial Statements in "Item 1.

Financial Statements" of this Form 10-Q.

Financial Instruments

The table below provides information as of September 30, 2020, about our financial instruments that are sensitive to changes in interest rates.

The table presents principal cash flows and related weighted average interest rates by expected maturity dates.

For obligations with variable interest rate sensitivity, the table sets forth payout amounts based on September 30, 2020 rates and does not attempt to project future rates.

Other instruments subject to market risk, such as obligations for pension plans and other postretirement benefits, are not reflected in the table.

September 30, 2020

2020 2021 2022 2023 2024 There-

after Total Fair

(millions, other than percentages)

Long-term debt

Fixed-rate debt payments (a)

Senior Notes $ — $ — $ — $ — $ — $400.0 $ 400.0 $ 430.0

Average interest rates — — — — — 4.875 % 4.875 % —

Variable-rate debt payments (a)

Term Loan $ — $ — $ — $ — $ — $ 50.0 $ 50.0 $ 50.0

Average interest rates — — — — — 0.9 % 0.9 % —

_______________________________________

(a) These obligations are further explained in Note 6, Debt, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1.

Financial Statements" of this Form 10-Q.

The table assumes our long-term debt is held to maturity.

(b) We estimated the fair value using quoted market prices of our debt in inactive markets.

The table below provides information as of September 30, 2020, about our interest rate swaps.

For information on interest rate swaps, see Interest Rate Risk and Interest Rate Swaps of Note 2, Summary of Significant Accounting Policies, of the Condensed Notes to Unaudited Quarterly Financial Statements in "Item 1.

Financial Statements" of this Form 10-Q.

The following is information about the notional amount and interest rate by contractual maturity date for our interest rate swap agreements, as well as the fair value of the liability at September 30, 2020:

September 30, 2020

2020 2021 2022 2023 2024 There-

after Total Fair

(millions, other than percentages)

Interest rate swaps

Variable to fixed notional amount $ — $ — $50.0 $ — $ — $50.0 $ 100.0 $ ( 0.8 )

Average pay rate (a) — — 1.0 % — — 0.4 % 0.7 % —

Average receive rate (b) — — 0.2 % — — 0.2 % 0.2 % —

_______________________________________

(a) Represents the weighted average actual fixed interest rate payable on our interest rate swaps.

(b) Represents the weighted average variable interest rate receivable on our interest rate swaps at September 30, 2020.

As of March 31, 2021, there have been no material changes to financial market risks disclosed in our 2020 Form 10-K.

Environmental

As of September 30, 2020, there have been no material changes to environmental issues disclosed in our 2019 Form 10-K, except as disclosed in “Employees” in this “Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-Q.

As of March 31, 2021, there have been no material changes to environmental issues disclosed in our 2020 Form 10-K.

For additional information, see Environmental in "Item 7.

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Critical accounting estimates are those that are most important to the portrayal of our financial condition and results.

These estimates require management's most difficult, subjective, or complex judgments, often as a result of the need to estimate

matters that are inherently uncertain.

These estimates require management's most difficult, subjective, or complex judgments, often as a result of the need to estimate matters that are inherently uncertain.

We review the development, selection, and disclosure of our critical accounting estimates with the Audit Committee of our board of directors.

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Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2020 Form 10-K.

At September 30, 2020, there have been no material changes to our critical accounting estimates from those disclosed in our 2019 Form 10-K.

At March 31, 2021, there have been no material changes to our critical accounting estimates from those disclosed in our 2020 Form 10-K.

New and Recently Adopted Accounting Standards

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis