What changed in this filing

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Item 1A. Risk Factors

2022-02-22 compared with 2021-02-22 · 126 added, 102 removed, 159 unchanged (59% of the section changed)

You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes, before making an investment decision.

If any of the events or circumstances described in the following risk factors actually occurs, our business, operating results, financial condition, cash flows, and prospects could be materially and adversely affected.

Risks Relating to Our Business

The full effect of the COVID-19 pandemic on our business is currently unknown but it may adversely affect our business and operating results.

The full impacts of the global emergence of COVID-19 on our business and financial results remain unknown.

We continue to conduct business with modifications to our manufacturing production levels, 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.

Companies and various governmental agencies have taken precautionary and preemptive actions to address COVID-19, and further actions may yet be taken that alter our normal business operations as well as those in our industry.

Department of Homeland Security (DHS) has continued to designate the forest products industry, and thereby wood products manufacturing and building materials distribution, as part of the Essential Critical Infrastructure Workforce.

However, state and local agencies are not mandated to follow the DHS designations, and in certain geographies across the U.S., additional restrictions have been imposed that further limit or preclude residential construction activity.

Furthermore, a re-acceleration of COVID-19 cases, or delays in vaccine distribution or effectiveness, could prompt state or local officials to reinstitute restrictions that could limit or constrain building activity.

All of our manufacturing and distribution facilities are operating, but we have experienced periodic disruptions at many locations due to COVID-19.

We may be required to implement temporary curtailments and to operate both manufacturing and distribution facilities at reduced levels, which would result in negative impacts on our business, financial condition, results of operations, and cash flows.

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, availability of construction labor, materials, and building lots, homebuyers' access to and cost of financing, and housing affordability, as well as other factors.

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 associates, customers, suppliers, and stockholders.

Many of the products we manufacture or purchase and resell are commodities whose price is determined by the market's supply and demand for such products, and the markets in which we operate are cyclical and competitive.

Many of the building products we produce or distribute, including OSB, plywood, and lumber, are commodities that are widely available from other manufacturers or distributors with prices and volumes determined frequently in an auction market based on participants' perceptions of short-term supply and demand factors.

Competitive Risks

A portion of the products we manufacture or purchase and resell are commodities whose price is determined by the market's supply and demand for such products, and the markets in which we operate are cyclical and competitive.

A portion of the building products we produce or distribute, including OSB, plywood, and lumber, are commodities that are widely available from other manufacturers or distributors with prices and volumes determined frequently in an auction market based on participants' perceptions of short-term supply and demand factors.

At times, the price for any one or more of the products we produce or distribute may fall below our cash production or purchase costs, requiring us to either incur short-term losses on product sales or cease production at one or more of our manufacturing facilities.

Therefore, our profitability with respect to these commodity products depends, in significant part, on effective facilities maintenance programs, and on managing our cost structure, particularly raw materials and labor, which represent the largest components of our operating costs.

Commodity wood product prices have historically been volatile in response to industry operating rates, net import and export activity, inventory levels in various distribution channels, and seasonal demand patterns.

Commodity price volatility also affects our distribution business, with falling price environments generally causing reduced revenues and margins, resulting in declines in profitability.

Commodity wood product prices have historically been volatile in response to industry operating rates, the impact of COVID-19 on residential construction, net import and export activity, transportation constraints or disruptions, inventory levels in various distribution channels, and seasonal demand patterns.

Demand for the products we manufacture, as well as the products we purchase and distribute, is closely correlated with new residential construction in the U.S.

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is also heavily influenced by imported products, principally from Canada and South America.

New LVL capacity in the southeastern United States came online in late 2019, which we expect will add competitive volume and pricing pressure to the LVL marketplace.

In addition, we sell wood chips that are a byproduct of processing logs at our manufacturing operations, or created through the chipping of small diameter logs that we are unable to process at our manufacturing operations.

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Certain mills operated by our competitors may be lower-cost manufacturers than the mills operated by us.

Our Wood Products segment provides financial incentives, including temporary price protection, to various parties along the supply chain (including wholesale distributors, retail lumberyards, and homebuilders) to increase sales of and loyalty to our EWP products.

Our Wood Products segment provides financial incentives, including temporary price protection, to various parties along the supply chain (including wholesale distributors, dealers, and homebuilders) to increase sales of and loyalty to our EWP

As a result of these commercial arrangements, the full effects of announced price increases may be delayed or reduced, impacting our financial results.

The building products distribution industry that our Building Materials Distribution segment competes in is highly fragmented and competitive, and the barriers to entry for local competitors are relatively low.

The building products distribution industry that our BMD segment competes in is highly fragmented and competitive, and the barriers to entry for local competitors are relatively low.

Competitive factors in our industry include pricing and availability of product, service and delivery capabilities, ability to assist customers with problem solving, extension of credit terms, customer relationships, geographic coverage, and breadth of product offerings.

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If we are unable to compete effectively, our net sales and net income will be reduced.

Some of our products are vulnerable to declines in demand due to competing technologies or materials, as well as changes in building code provisions.

Our products may compete with alternative products in certain market segments.

For example, plastic, concrete, steel, wood/plastic or composite materials may be used by builders as alternatives to the products produced by our Wood Products segment such as EWP and plywood.

Changes in prices for oil, chemicals, and wood-based fiber can change the competitive position of our products relative to available alternatives and could increase substitution of those products for our products.

As the use of these alternatives grows, demand for our products may decline.

Our principal manufactured products are also subject to substitution from other wood-based products, such as EWP facing competition from numerous dimension lumber producers and other strand based EWP that we don't produce or plywood losing further market share to OSB in residential and non-residential applications.

In addition, building code provisions have been implemented in certain jurisdictions to address concerns for firefighter safety related to the collapse of floors during residential fires.

The I-joists that we manufacture are subject to this code change.

As local jurisdictions adopt the new code, we may be competitively disadvantaged in houses that are built with ground floors over unfinished basements and could be subject to substitution by dimension lumber or other products.

Operational Risks

The ongoing COVID-19 pandemic, restrictions intended to prevent its spread, resulting economic conditions, and potential new regulations concerning mandatory COVID-19 vaccination continue to evolve and may adversely affect our business and results of operations.

The ongoing impacts of the global emergence of COVID-19 on our business and financial results continue to remain unknown.

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, including the impact of COVID-19 variants, 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.

All of our manufacturing and distribution facilities are operating, but we have experienced periodic short-term disruptions at many locations due to COVID-19.

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 employment levels, lower wages, reduced consumer confidence, availability of construction labor, materials, building lots, transportation resources, homebuyers' access to and cost of financing, and housing affordability, as well as other factors.

As a large national employer, we are subject to potential new regulations and mandates that may require employees to be fully vaccinated from COVID-19 or require frequent testing of unvaccinated workers.

While we educate our associates on the effectiveness of vaccines and strongly encourage vaccination for its long-term health benefits, new regulations and mandates may have the near-term effect of increasing costs, straining company resources, interrupting operations, reducing employee morale, or increasing employee turnover, which could adversely affect our business, results of operations, or financial condition.

Cyber security risks related to the technology used in our operations and other business processes, as well as security breaches of company, customer, employee, and vendor information, could adversely affect our business.

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Any of our manufacturing facilities, or any of our machines within an otherwise operational facility, could cease operations unexpectedly due to a number of events, including but not limited to:

• labor difficulties, including the inability to staff our facilities due to the COVID-19 outbreak;

• labor difficulties, including the inability to staff our facilities due to a COVID-19 outbreak;

• equipment failure, particularly a press at one of our major EWP production facilities;

• fires, floods, earthquakes, hurricanes, or other catastrophes;

• fires, floods, earthquakes, hurricanes, or other catastrophes, which may increase in frequency, severity and duration due to the physical impacts of climate change;

• unscheduled maintenance outages;

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If our machines or facilities were to incur significant downtime, our ability to satisfy customer requirements would be impaired, resulting in lower sales and net income.

Because approximately 61% of our Wood Products sales in 2020 were to our Building Materials Distribution business, a material disruption at our Wood Products facilities would also negatively affect our Building Materials Distribution business.

We are therefore exposed to a larger extent to the risk of disruption to our Wood Products manufacturing facilities due to our vertical integration and the resulting impact on our Building Materials Distribution business.

Because approximately 62% of our Wood Products sales in 2021 were to our BMD business, a material disruption at our Wood Products facilities would also negatively affect our BMD business.

We are therefore exposed to a larger extent to the risk of disruption to our Wood Products manufacturing facilities due to our vertical integration and the resulting impact on our BMD business.

In addition, a number of our suppliers are subject to the manufacturing facility disruption risks noted above.

Our suppliers' inability to produce the necessary raw materials for our manufacturing processes or supply the finished goods that we distribute through our Building Materials Distribution segment may adversely affect our results of operations, cash flows, and financial position.

A significant portion of our sales are concentrated with a small number of customers.

For the year ended December 31, 2020, our top ten customers represented approximately 42% of our sales, with one customer accounting for approximately 11% of total sales.

At December 31, 2020, receivables from two customers accounted for approximately 12% and 13% of total receivables.

Although we believe that our relationships with our customers are strong, the loss of one or more of these customers could have a material adverse effect on our operating results, cash flow, and liquidity.

Adverse market conditions, including the inability of our customers to conduct operations due to the COVID-19 pandemic, may increase the credit risk from our customers.

Our Building Materials Distribution and Wood Products segments extend credit to numerous customers who are generally susceptible to the same economic business risks as we are, including the COVID-19 pandemic outbreak.

Unfavorable market conditions or the inability of our customers to conduct operations due to the COVID-19 pandemic could result in financial failures of one or more of our significant customers.

Furthermore, we may not necessarily be aware of any deterioration in our customers' financial position.

In addition, as customers merge and consolidate, credit risk may become concentrated among fewer customers.

If our customers' financial positions become impaired, our ability to fully collect receivables from such customers could be impaired and negatively affect our operating results, cash flow, and liquidity.

Product shortages, loss of key suppliers, and our dependence on third-party suppliers and manufacturers could affect our financial health.

Our ability to offer a wide variety of products to our Building Materials Distribution customers is dependent upon our ability to obtain adequate product supply from manufacturers and other suppliers.

Our customers' purchasing decisions for commodity products we sell are primarily based on price and availability, and these commodities may be sourced from various manufacturers.

In the case of the general line and EWP products that we distribute, brand preference and product performance

characteristics can have a high degree of influence on our customers purchasing decision.

Supply chains, including key products purchased from our suppliers, may be disrupted during a pandemic outbreak such as COVID-19.

In addition, although we have agreements in place with many of our suppliers, such agreements are generally terminable by either party on relatively short notice.

The loss of, or a substantial decrease in the availability of, products from our suppliers or the loss of key supplier arrangements could adversely impact our financial condition, operating results, and cash flows.

Our suppliers' inability to produce the necessary raw materials for our manufacturing processes or supply the finished goods that we distribute through our BMD segment may adversely affect our results of operations, cash flows, and financial position.

Labor disruptions, shortages of skilled and technical labor, or increased labor costs could adversely affect our business.

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As of February 11, 2022, 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.

Two agreements covering approximately 750 employees at our Oakdale and Florien plywood plants expired on July 15, 2021, but the terms and conditions of these agreements remain in effect pending negotiation of new agreements.

One agreement covering approximately 110 employees at our Canadian EWP facility is set to expire on December 31, 2022.

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.

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.

In addition, our ability to attract and retain talent is challenging due to a shortage of both hourly and technically skilled workers for our manufacturing and distribution facilities, as well as changing workforce expectations.

The pandemic adds challenges recruiting associates unwilling to work in a ‘dense’ work environment.

Despite increases in unemployment rates due to the pandemic, those unemployed may not reside in the same areas as our manufacturing facilities, or may be unwilling to accept shift work or the physical nature of our positions.

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

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In addition, certain of our employees have assumed key roles in recent years and may not have the experience of retiring key managers.

The failure to successfully formulate and implement succession plans for retiring employees, and training plans for new key managers, could result in inadequate depth of institutional knowledge or inadequate skill sets, which could adversely affect our business.

Our long-lived assets, goodwill, and/or intangible assets may become impaired, which may require us to record non-cash impairment charges that could have a material impact on our results of operations.

We review the carrying value of long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

We also test goodwill in each of our reporting units and intangible assets with indefinite lives for impairment annually in the fourth quarter or sooner if events or changes in circumstances indicate that the carrying value of the asset may exceed fair value.

To the extent that long-lived assets, goodwill, and/or intangible assets do not provide the future economic benefit we expect, it may result in non-cash impairment or accelerated depreciation charges.

These non-cash impairments or accelerated depreciation charges could have a material impact on our results of operations in the period in which these charges are recognized.

Future events or circumstances such as sustained negative economic impact of the COVID-19 pandemic, declines in single-family housing starts, environmental regulations or restrictions, sustained periods of weak commodity prices, loss of key customers, capacity additions by competitors, changes in the competitive position of our products, or changes in raw materials or manufacturing costs that lead us to believe the long-lived asset will no longer provide a sufficient return on investment, could prompt decisions to invest capital differently than expected, sell facilities, or to curtail operations.

Any of these factors, among others, could result in non-cash impairment or accelerated depreciation charges in the future with respect to the book value of certain assets and past investments we have made.

For additional information and a discussion regarding the impact of impairment of long-lived assets and accelerated depreciation charges on our results of operations and financial condition, see Note 6, Curtailment of Manufacturing Facilities, and Note 7, Sale of Manufacturing Facilities, of the Notes to the Consolidated Financial Statements in "Item 8, Financial Statements and Supplementary Data" and "Long-Lived Asset Impairment" included in "Critical Accounting Estimates" in "Item 7.

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

The failure to successfully formulate and implement succession plans for retiring employees, implement training plans for new key managers, or our inability to attract new talent to our Company, could result in inadequate depth of institutional knowledge or inadequate skill sets, which could adversely affect our business.

Product shortages, loss of key suppliers, and our dependence on third-party suppliers and manufacturers could affect our financial health.

Our ability to offer a wide variety of products to our BMD customers is dependent upon our ability to obtain adequate product supply from manufacturers and other suppliers.

Our customers' purchasing decisions for commodity products we sell are primarily based on price and availability, and these commodities may be sourced from various manufacturers.

In the case of the general line and EWP products that we distribute, brand preference and product performance characteristics can have a high degree of influence on our customers purchasing decision.

Supply chains, including key products purchased from our suppliers, may be disrupted during a pandemic outbreak such as COVID-19.

In addition, although we have agreements in place with many of our suppliers, such agreements are generally terminable by either party on relatively short notice.

We depend on third parties for transportation services and limited availability or increases in costs of transportation could adversely affect our business and operations.

Our business depends on the transportation of a large number of products, via rail or truck.

In Wood Products, we rely on third parties for inbound receipt of raw materials and outbound movements of finished goods.

In BMD, we rely primarily on third parties for inbound receipt of the products we resell and manage the outbound movement of products to our customers with a combination of internal and external resources.

In addition, we are subject to seasonal capacity constraints and weather-related delays for both rail and truck transportation.

If any of these providers were to fail to deliver raw materials or finished goods for resale to us in a timely manner, we may be unable to meet our customer demands.

In addition, if any of our third-party transportation providers were to fail to deliver the goods we manufacture or distribute in a timely manner, we may be unable to sell those products at full value.

In addition, if any of these third parties were to cease operations or cease doing business with us, we may be unable to replace them at a reasonable cost.

Any failure of a third-party transportation provider to deliver raw materials or finished products in a timely manner could harm our reputation, negatively affect our customer relationships, and have a material adverse effect on our operating results, cash flows, and financial condition.

In addition, an increase in transportation rates or fuel surcharges could adversely affect our sales, profitability, and cash flows.

Our manufacturing operations may have difficulty obtaining wood fiber at favorable prices or at all.

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Future domestic or foreign legislation and litigation concerning the use of timberlands, timber harvest methodologies, forest road construction and maintenance, the protection of endangered species, forest-based carbon sequestration, the promotion of forest health, and the response to and prevention of catastrophic wildfires can affect log and fiber supply from both government and private lands.

Availability of harvested logs and fiber may be further limited by pandemics, fire, insect infestation, disease, ice storms, windstorms, hurricanes, flooding, and other natural and man-made causes, thereby reducing supply and increasing prices.

Availability of harvested logs and fiber may be further limited by pandemics, fire, insect infestation, disease, ice storms, windstorms, hurricanes, flooding, changing temperature and precipitation patterns, and other natural and man-made causes, thereby reducing supply and increasing prices.

Changes in global climate conditions could amplify one or more of these factors.

If we are unable to negotiate purchases for our log requirements in a particular region to satisfy our log needs at satisfactory prices or at all, which could include private purchases, open-market purchases, and purchases from governmental sources, it could have an adverse effect on our results of operations.

We also purchase OSB, which is used as the vertical web to assemble I-joists, from a supplier with multiple locations throughout North America.

We also purchase OSB, which is used as the vertical web to assemble I-joists.

OSB accounted for approximately 9% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2021.

OSB is a commodity, and prices have been historically volatile in response to industry capacity restarts and operating rates, inventory levels in various distribution channels, and seasonal demand patterns.

Sustained periods of high OSB costs lead to higher costs of our I-joist production.

Wood fiber also includes, to a lesser extent than OSB, lumber purchased from third parties for I-joist production at our Canadian EWP facility and for production at our laminated beam plant in Idaho.

Lumber input costs are subject to similar commodity-based volatility characteristics noted above for OSB.

We are subject to environmental regulation and environmental compliance expenditures, as well as other potential environmental liabilities.

Our businesses are subject to a wide range of general and industry-specific environmental laws and regulations, particularly with respect to air emissions, wastewater discharges, solid and hazardous waste management, and site remediation.

Compliance with these laws and regulations is a significant factor in the operation of our businesses.

Enactment of new environmental laws or regulations, including those aimed at addressing greenhouse gas emissions and climate change, or changes in existing laws or regulations might require us to make significant expenditures or restrict operations.

As an owner and operator of real estate, we may be liable under environmental laws for the cleanup of past and present spills and releases of hazardous or toxic substances on or from our properties and operations.

We may also be contractually obligated to indemnify third parties under environmental laws for the cleanup of past spills and releases of hazardous or toxic substances for properties which we no longer own and operate.

We could be found liable under these laws whether or not we knew of, or were responsible for, the presence of such substances.

In some cases, this liability may exceed the value of the property itself.

We may be unable to generate funds or other sources of liquidity and capital to fund unforeseen environmental liabilities or expenditures to the extent we are not indemnified by third parties.

For example, in connection with prior transactions, certain third parties are generally obligated to indemnify us for hazardous substance releases and other environmental violations that occurred prior to such transactions.

However, these third parties may not have sufficient funds to fully satisfy their indemnification obligations when required, and in some cases, we may not be contractually entitled to indemnification by them.

For additional information on how environmental regulation and compliance affects our business, see "Environmental" in "Item 7.

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

Our strategy includes pursuing acquisitions.

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Our failure to integrate future acquired businesses effectively, realize expected benefits, or to manage other consequences of our acquisitions could adversely affect our financial condition, operating results, and cash flows.

Some of our products are vulnerable to declines in demand due to competing technologies or materials, as well as changes in building code provisions.

Our products may compete with alternative products in certain market segments.

For example, plastic, concrete, steel, wood/plastic or composite materials may be used by builders as alternatives to the products produced by our Wood Products segment such as EWP and plywood.

As the use of these alternatives grows, demand for our products may decline.

In addition, building code provisions have been implemented in certain jurisdictions to address concerns for firefighter safety related to the collapse of floors during residential fires.

The I-joists that we manufacture are subject to this code change.

Financial Risks

A significant portion of our sales are concentrated with a small number of customers.

For the year ended December 31, 2021, our top ten customers represented approximately 42% of our sales, with one customer accounting for approximately 12% of total sales.

At December 31, 2021, receivables from two customers accounted for approximately 20% and 12% of total receivables.

Adverse market conditions, including the inability of our customers to conduct operations due to the ongoing COVID-19 pandemic, may increase the credit risk from our customers.

Our BMD and Wood Products segments extend credit to numerous customers who are generally susceptible to the same economic business risks as we are, including the ongoing COVID-19 pandemic outbreak.

Unfavorable market conditions or the inability of our customers to conduct operations due to the COVID-19 pandemic could result in financial failures of one or more of our significant customers.

Furthermore, we may not necessarily be aware of any deterioration in our customers' financial position.

In addition, as customers merge and consolidate, credit risk may become concentrated among fewer customers.

We review the carrying value of long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

These non-cash impairments or accelerated depreciation charges could have a material impact on our results of operations in the period in which these charges are recognized.

Future events or circumstances such as sustained negative economic impact of the ongoing COVID-19 pandemic, declines in single-family housing starts, environmental regulations or restrictions, sustained periods of weak commodity prices, loss of key customers, capacity additions by competitors, changes in the competitive position of our products, or changes in raw materials or manufacturing costs that lead us to believe the long-lived asset will no longer provide a sufficient return on investment, could prompt decisions to invest capital differently than expected, sell facilities, or to curtail operations.

For additional information and a discussion regarding the impact of impairment of long-lived assets and accelerated depreciation charges on our results of operations and financial condition, see Note 6, Curtailment of Manufacturing Facility, of the Notes to the Consolidated Financial Statements in "Item 8, Financial Statements and Supplementary Data" and "Long-Lived Asset Impairment" included in "Critical Accounting Estimates" in "Item 7.

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

Our operations require substantial capital, and recent significant capital investments and acquisitions have increased fixed costs, which could negatively affect our profitability.

In recent years, we have completed a number of capital investments;

including the replacement or rebuild of veneer dryers and log utilization centers (or improvements to other manufacturing equipment), increasing our outdoor storage acreage, and leasing additional warehouse space.

including the replacement or rebuild of veneer dryers and log utilization centers (or improvements to other manufacturing equipment), purchasing and leasing new or additional land and warehouse space for expansion, and increasing our outdoor storage acreage.

These capital investments, along with acquisitions, have resulted in increased fixed costs, which could negatively affect our profitability if our revenue and operating results do not offset our incremental fixed costs.

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Although we maintain our production equipment with regular periodic and scheduled maintenance, we cannot guarantee that key pieces of equipment in our various manufacturing facilities will not need to be repaired or replaced or that we will not incur significant additional costs associated with environmental compliance.

The costs of repairing or replacing such equipment and the associated downtime of the affected production line could have a material adverse effect on our financial condition, results of operations and cash flow.

The costs of repairing or replacing such equipment and the associated downtime of the affected production line could have a material adverse effect on our financial condition, results of

operations and cash flow.

If for any reason we are unable to provide for our operating needs, capital expenditures, and other cash requirements on economic terms, we could experience a material adverse effect on our business, financial condition, results of operations, and cash flows.

We depend on third parties for transportation services and limited availability or increases in costs of transportation could adversely affect our business and operations.

Our business depends on the transportation of a large number of products, via railroad or truck.

We rely primarily on third parties for transportation of the products we manufacture or distribute and for the delivery of our raw materials.

In addition, we are subject to seasonal capacity constraints and weather-related delays for both rail and truck transportation.

If any of our third-party transportation providers were to fail to deliver the goods we manufacture or distribute in a timely manner, we may be unable to sell those products at full value.

Similarly, if any of these providers were to fail to deliver raw materials to us in a timely manner, we may be unable to manufacture our products in response to customer demand.

In addition, if any of these third parties were to cease operations or cease doing business with us, we may be unable to replace them at reasonable cost.

In addition, an increase in transportation rates or fuel surcharges could adversely affect our sales, profitability, and cash flows.

The nature of our business exposes us to product liability, product warranty, casualty, manufacturing and construction defects, and other claims.

We may be involved in product liability, product warranty, casualty, manufacturing and construction defects, and other claims relating to the products we manufacture and distribute, and services we provide.

We also rely on manufacturers and other suppliers to provide us with many of the products we sell and distribute.

Because we do not have direct control over the quality of such products manufactured or supplied by such third-party suppliers, we are exposed to risks relating to the quality of such products.

In addition, we are exposed to potential claims arising from the conduct of our employees, and homebuilders and their subcontractors, for which we may be contractually liable.

Although we currently maintain what we believe to be suitable and adequate insurance in excess of our self-insured amounts, there can be no assurance that we will be able to maintain such insurance on acceptable terms or that such insurance will provide adequate protection against potential liabilities.

Product liability, product warranty, casualty, construction defect, and other claims can be expensive to defend and can divert the attention of management and other personnel for significant periods, regardless of the ultimate outcome.

Claims of this nature could also have a negative impact on our reputation and customer confidence in our products and our company.

We cannot assure that any current or future claims will not adversely affect our financial condition, operating results, and cash flows.

Our ability to service our indebtedness or to fund our other liquidity needs is subject to various risks.

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Our failure to comply with any of these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness.

Risks Relating to Laws and Regulations

Compliance with data privacy and security laws and regulations could adversely affect our business.

states have enacted data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of sensitive personal information.

In the ordinary course of business we capture, process, store, and transmit confidential business information and certain personal information relating to our associates, customers and vendors that are subject to these laws and regulations.

The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues.

Ongoing efforts to comply with evolving laws and regulations may require subsequent modifications to our policies, procedures

We will continue to monitor and assess the impact of these state laws, which may impose substantial penalties for violations, increased costs for investigations, monitoring and compliance, potential litigation, and possible damage to our reputation, all of which could have a material adverse effect on our operations, financial condition, or cash flows.

The impacts of climate change, and related legislative and regulatory responses intended to reduce climate change, may adversely impact our business.

There is increasing concern that climate change will cause significant changes in temperatures and weather patterns around the globe, an increase in the frequency, severity, and duration of extreme weather conditions and natural disasters, and water scarcity and poor water quality.

These events could adversely impact both the availability of raw materials required for manufacture of our products and the delivery of products to our distribution facilities.

They could disrupt the operation of our supply chain and the productivity of our suppliers, increase our production and transportation costs, impose capacity restraints, and impact the purchases of our products.

These events could also compound adverse economic conditions and impact consumer confidence.

As a result, the effects of climate change could have a long-term adverse impact on our business and results of operations.

In the United States, it is possible that some form of new or additional legislation and regulations will be enacted at the federal level to reduce or mitigate the impact of climate change.

If we, or our suppliers, are required to comply with these laws and regulations, or if we choose to take voluntary steps to reduce or mitigate our impact on climate change, we may experience increased costs for energy, production, transportation, and raw materials, increased costs related to environmental monitoring and reporting, increased capital expenditures, or increased insurance premiums and deductibles, which could adversely impact our operations.

Inconsistency of legislation and regulations among jurisdictions may also affect the costs of compliance with such laws and regulations.

Any assessment of the potential impact or timing of future climate change legislation, regulations, or industry standards is uncertain given the evolving nature of the heightened focus on climate change.

For additional information on how climate change regulation and compliance affects our business, see "Environmental" in "Item 7.

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

We are subject to environmental regulation and environmental compliance expenditures, as well as other potential environmental liabilities.

Compliance with these laws and regulations is a significant factor in the operation of our businesses.

Enactment of new environmental laws or regulations, or changes in existing laws or regulations might require us to make significant expenditures or restrict operations.

We could be found liable under these laws whether or not we knew of, or were responsible for, the presence of such substances.

In some cases, this liability may exceed the value of the property itself.

We may be unable to generate funds or other sources of liquidity and capital to fund unforeseen environmental liabilities or expenditures to the extent we are not indemnified by third parties.

For additional information on how environmental regulation and compliance affects our business, see "Environmental" in "Item 7.

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

The enactment of tax reform legislation could adversely impact our financial position and results of operations.

Various levels of government are increasingly focused on tax reform and other legislative actions to increase tax revenue.

Such proposed changes, as well as regulations and legal decisions interpreting and applying these changes, may have significant impacts on our effective tax rate, cash tax expense, and net deferred tax attributes in future periods.

The nature of our business exposes us to product liability, product warranty, casualty, manufacturing and construction defects, and other claims.

We also rely on manufacturers and other suppliers to provide us with many of the products we sell and distribute.

Because we do not have direct control over the quality of such products manufactured or supplied by such third-party suppliers, we are exposed to risks relating to the quality of such products.

In addition, we are exposed to potential claims arising from the conduct of our employees, and homebuilders and their subcontractors, for which we may be contractually liable.

Claims of this nature could also have a negative impact on our reputation and customer confidence in our products and our company.

We cannot assure that any current or future claims will not adversely affect our financial condition, operating results, and cash flows.

Risks Relating to Ownership of Our Common Stock

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• new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

• investors' perception of our commitment to sustainability and corporate responsibility;

• material litigation or government investigations;

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In November 2017, our board of directors approved a dividend policy pursuant to which we have paid quarterly cash dividends to holders of our common stock.

In addition to these quarterly dividends, we also paid supplemental dividends in each of the last three years.

In addition to these quarterly dividends, we also paid supplemental dividends in each of the last four years.

However, the future declaration and payment of dividends will continue to be at the discretion of our board of directors and the dividend policy may be suspended or canceled at its discretion at any time.

Declaration of future dividends will depend upon legal capital requirements and surplus, our future operations and earnings, general financial condition, contractual obligations, restrictions imposed by our asset-based credit facility, the indenture governing our senior notes, applicable laws, and other factors that our board of directors may deem relevant.

Declaration of future dividends will depend upon legal capital requirements and surplus, our future operations and earnings, general financial condition, material cash requirements, restrictions imposed by our asset-based credit facility, the indenture governing our senior notes, applicable laws, and other factors that our board of directors may deem relevant.

Unless we continue to pay cash dividends on our common stock in the future, the success of an investment in our common stock will depend entirely upon its appreciation.

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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-K

Item 1A. Risk Factors