What changed in this filing

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Item 1. Financial Statements

2022-10-31 compared with 2022-08-01 · 172 added, 73 removed, 527 unchanged (32% of the section changed)

3 unchanged sentences

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

9 unchanged sentences

Income from operations 299,370 129,386 1,002,073 744,422

Foreign currency exchange gain (loss) ( 499 ) 147 ( 367 ) 301

Foreign currency exchange loss ( 1,674 ) ( 353 ) ( 2,041 ) ( 52 )

Pension expense (excluding service costs) ( 41 ) ( 19 ) ( 253 ) ( 57 )

17 unchanged sentences

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

10 unchanged sentences

Consolidated Balance Sheets

September 30,

2022 December 31,

19 unchanged sentences

Consolidated Balance Sheets (continued)

September 30,

2022 December 31,

6 unchanged sentences

Compensation and benefits 147,548 128,518

Income taxes payable 12,365 —

Interest payable 5,081 9,886

24 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

Cash provided by (used for) operations

7 unchanged sentences

Other ( 830 ) 928

Decrease (increase) in working capital

Decrease (increase) in working capital, net of acquisitions

Receivables ( 51,027 ) ( 99,881 )

8 unchanged sentences

Expenditures for property and equipment ( 61,835 ) ( 51,460 )

Acquisitions of businesses and facilities ( 516,881 ) —

Proceeds from sales of assets and other 3,094 636

3 unchanged sentences

Payments of long-term debt, including revolving credit facility — ( 28,000 )

Payments of deferred financing costs ( 1,170 ) —

Dividends paid on common stock ( 114,025 ) ( 90,969 )

27 unchanged sentences

Balance at June 30, 2022 44,815 $ 448 5,367 $ ( 138,909 ) $ 544,748 $ ( 917 ) $ 1,359,615 $ 1,764,985

Net income 219,587 219,587

Other comprehensive income 15 15

Stock-based compensation 3,287 3,287

Common stock dividends ($ 0.12 per share)

( 4,802 ) ( 4,802 )

Balance at September 30, 2022 44,815 $ 448 5,367 $ ( 138,909 ) $ 548,035 $ ( 902 ) $ 1,574,400 $ 1,983,072

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

21 unchanged sentences

Balance at June 30, 2021 44,698 $ 447 5,367 $ ( 138,909 ) $ 538,841 $ ( 1,085 ) $ 816,416 $ 1,215,710

Net income 91,699 91,699

Other comprehensive loss ( 3 ) ( 3 )

Stock-based compensation 2,181 2,181

Common stock dividends ($ 0.10 per share)

( 3,982 ) ( 3,982 )

Balance at September 30, 2021 44,698 $ 447 5,367 $ ( 138,909 ) $ 541,022 $ ( 1,088 ) $ 904,133 $ 1,305,605

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

20 unchanged sentences

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions about future events.

The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions about future events.

These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses.

21 unchanged sentences

In our Wood Products segment, we view our shipping and handling costs as a cost of the manufacturing process and the movement of product to our end customers.

For our BMD segment, costs related to shipping and handling of $ 56.0 million and $ 49.7 million, for the three months ended June 30, 2022 and 2021, respectively, and $ 112.3 million and $ 96.2 million for the six months ended June 30, 2022 and 2021, respectively, are included in "Selling and distribution expenses" in our Consolidated Statements of Operations.

For our BMD segment, costs related to shipping and handling of $ 59.5 million and $ 48.3 million, for the three months ended September 30, 2022 and 2021, respectively, and $ 171.9 million and $ 144.5 million for the nine months ended September 30, 2022 and 2021, respectively, are included in "Selling and distribution expenses" in our Consolidated Statements of Operations.

In our BMD segment, our activities relate to the purchase and resale of finished product, and excluding shipping and handling costs from "Materials, labor, and other operating expenses (excluding depreciation)" provides us a clearer view of our operating performance and the effectiveness of our sales and purchasing functions.

2 unchanged sentences

We provide the rebates to increase the sell-through of our products.

Rebates are generally estimated based on the expected amount to be paid and recorded as a decrease in "Sales." At June 30, 2022 and December 31, 2021, we had $ 165.4 million and $ 138.1 million, respectively, of rebates payable to our customers recorded in "Accrued liabilities, Other" on our Consolidated Balance Sheets.

Rebates are generally estimated based on the expected amount to be paid and recorded as a decrease in "Sales." At September 30, 2022 and December 31, 2021, we had $ 136.1 million and $ 138.1 million, respectively, of rebates payable to our customers recorded in "Accrued liabilities, Other" on our Consolidated Balance Sheets.

We adjust our estimate of revenue at the earlier of when the probability of rebates paid changes or when the amounts become fixed.

2 unchanged sentences

We receive rebates and allowances from our vendors under a number of different programs, including vendor marketing programs.

At June 30, 2022 and December 31, 2021, we had $ 11.8 million and $ 13.0 million, respectively, of vendor rebates and allowances recorded in "Receivables, Other" on our Consolidated Balance Sheets.

At September 30, 2022 and December 31, 2021, we had $ 12.8 million and $ 13.0 million, respectively, of vendor rebates and allowances recorded in "Receivables, Other" on our Consolidated Balance Sheets.

Rebates and allowances received from our vendors are recognized as a reduction of "Materials, labor, and other operating expenses (excluding depreciation)" when the product is sold, unless the rebates and allowances are linked to a specific incremental cost to sell a vendor's product.

22 unchanged sentences

Inventories included the following (work in process is not material):

September 30,

2022 December 31,

5 unchanged sentences

Property and equipment consisted of the following asset classes:

September 30,

2022 December 31,

8 unchanged sentences

$ 744,547 $ 495,240

As of September 30, 2022, $ 251.3 million of property and equipment relates to two plywood facilities acquired by us on July 25, 2022.

For more information, see Note 5, Acquisition.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

6 unchanged sentences

Our cash is recorded at cost, which approximates fair value, and our cash equivalents are money market funds.

As of June 30, 2022 and December 31, 2021, we held $ 963.7 million and $ 701.6 million, respectively, in money market funds that are measured at fair value on a recurring basis using Level 1 inputs.

As of September 30, 2022 and December 31, 2021, we held $ 804.3 million and $ 701.6 million, respectively, in money market funds that are measured at fair value on a recurring basis using Level 1 inputs.

The recorded values of accounts receivable and accounts payable approximate fair values based on their short-term nature.

At June 30, 2022 and December 31, 2021, the book value of our fixed-rate debt for each period was $ 400.0 million, and the fair value was estimated to be $ 350.0 million and $ 420.0 million, respectively.

At September 30, 2022 and December 31, 2021, the book value of our fixed-rate debt for each period was $ 400.0 million, and the fair value was estimated to be $ 332.5 million and $ 420.0 million, respectively.

The difference between the book value and the fair value is derived from the difference between the period-end market interest rate and the stated rate of our fixed-rate, long-term debt.

We estimated the fair value of our fixed-rate debt using quoted market prices of our debt in inactive markets (Level 2 inputs).

The interest rate on our variable-rate debt is based on market conditions such as the London Interbank Offered Rate (LIBOR) or a base rate.

The interest rate on our variable-rate debt is based on market conditions such as the Secured Overnight Financing Rate (SOFR) or a base rate.

Because the interest rate on the variable-rate debt is based on current market conditions, we believe that the estimated fair value of the outstanding balance on our variable-rate debt approximates book value.

1 unchanged sentence

Interest Rate Risk and Interest Rate Swaps

We are exposed to interest rate risk arising from fluctuations in variable-rate LIBOR on our term loan and when we have loan amounts outstanding on our Revolving Credit Facility.

At June 30, 2022, we had $ 50.0 million of variable-rate debt outstanding based on one-month LIBOR .

We are exposed to interest rate risk arising from fluctuations in variable-rate SOFR on our term loan and when we have loan amounts outstanding on our Revolving Credit Facility.

At September 30, 2022, we had $ 50.0 million of variable-rate debt outstanding based on one-month term SOFR .

Our objective is to limit the variability of interest payments on our debt.

4 unchanged sentences

Under the interest rate swaps, we receive one-month LIBOR -based variable interest rate payments and make fixed interest rate payments, thereby fixing the interest rate on $ 50.0 million of variable rate debt exposure.

Payments on one interest rate swap, entered into in 2016, with a notional principal amount of $ 50.0 million were due on a monthly basis at an annual fixed rate of 1.007 %, and this swap expired in February 2022 (Initial Swap).

During 2020, we entered into another forward interest rate swap agreement which commenced on the expiration date of the Initial Swap.

Payments on this interest rate swap with a notional principal amount of $ 50.0 million are due on a monthly basis at an annual fixed rate of 0.39 %, and this swap expires in June 2025.

In September 2022, we amended our interest rate swap to receive variable interest rate payments based on one-month SOFR plus a spread adjustment of 0.10 % and make fixed interest rate payments.

Payments on this interest rate swap with a notional principal amount of $ 50.0 million are due on a monthly basis at an annual fixed rate.

The interest rate swap amendment increased the annual fixed rate from 0.39 % to 0.41 %, and this swap expires in June 2025 .

The interest rate swap agreements were not designated as cash flow hedges, and as a result, all changes in the fair value are recognized in "Change in fair value of interest rate swaps" in our Consolidated Statements of Operations rather than through other comprehensive income.

At June 30, 2022, we recorded a long-term asset of $ 3.7 million in "Other assets" on our Consolidated Balance Sheets, representing the fair value of the interest rate swap agreement.

At September 30, 2022, we recorded a long-term asset of $ 4.8 million in "Other assets" on our Consolidated Balance Sheets, representing the fair value of the interest rate swap agreement.

At December 31, 2021, we recorded a long-term asset of $ 1.2 million in "Other assets" on our Consolidated Balance Sheets, and we also recorded a long-term liability of $ 0.1 million in "Other long-term liabilities" on our Consolidated Balance Sheets, representing the fair value of the interest rate swap agreements.

3 unchanged sentences

In order to manage credit risk, we consider customer concentrations and current economic trends and monitor the creditworthiness of significant customers based on ongoing credit evaluations.

At June 30, 2022, receivables from two customers accounted for approximately 20 % and 13 % of total receivables.

At September 30, 2022, receivables from two customers accounted for approximately 18 % and 12 % of total receivables.

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

7 unchanged sentences

There were no other accounting standards recently issued that had or are expected to have a material impact on our consolidated financial statements and associated disclosures.

For the three and six months ended June 30, 2022, we recorded $ 73.9 million and $ 172.8 million, respectively, of income tax expense and had an effective rate of 25.3 % and 24.9 %, respectively.

During the three and six months ended June 30, 2022, 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 and six months ended June 30, 2021, we recorded $ 101.0 million and $ 152.5 million, respectively, of income tax expense and had an effective rate of 25.0 % and 25.2 %, respectively.

During the three and six months ended June 30, 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 six months ended June 30, 2022 and 2021, cash paid for taxes, net of refunds received, were $ 149.1 million and $ 155.5 million, respectively.

For the three and nine months ended September 30, 2022, we recorded $ 76.0 million and $ 248.8 million, respectively, of income tax expense and had an effective rate of 25.7 % and 25.2 %, respectively.

For the three and nine months ended September 30, 2021, we recorded $ 31.2 million and $ 183.6 million, respectively, of income tax expense and had an effective rate of 25.4 % and 25.3 %, 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.

During the nine months ended September 30, 2022 and 2021, cash paid for taxes, net of refunds received, were $ 189.0 million and $ 203.5 million, respectively.

Net Income Per Common Share

6 unchanged sentences

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

6 unchanged sentences

Net income per common share - Diluted $ 5.52 $ 2.31 $ 18.62 $ 13.71

The computation of the dilutive effect of other potential common shares excludes stock awards representing 0.1 million and no shares of common stock, respectively, in the three months ended June 30, 2022 and 2021, and 0.1 million and 0.2 million shares of common stock, respectively, in the six months ended June 30, 2022 and 2021.

The computation of the dilutive effect of other potential common shares excludes stock awards representing 0.1 million and no shares of common stock, respectively, in the three months ended September 30, 2022 and 2021, and 0.1 million shares of common stock for both the nine months ended September 30, 2022 and 2021.

Under the treasury stock method, the inclusion of these stock awards would have been antidilutive.

On June 10, 2022, we announced that we and our wholly-owned subsidiary, Boise Cascade Wood Products, L.L.C., had entered into a Securities Purchase Agreement, dated June 9, 2022, with Coastal Forest Resources Company (“CFRC”) to purchase 100% of the equity interest of CFRC's wholly-owned subsidiary, Coastal Plywood Company, and its plywood manufacturing operations located in Havana, Florida, and Chapman, Alabama (the "Acquisition").

The Acquisition was completed on July 25, 2022, for a purchase price of $ 517 million, inclusive of estimated working capital at closing of $ 27 million, which is subject to post-closing adjustments.

We account for acquisition transactions in accordance with ASC 805, Business Combinations .

Accordingly, the results of operations of the acquiree are included in our consolidated financial statements from the acquisition date.

The consideration transferred is allocated to the identifiable assets acquired and liabilities assumed based on estimated fair values at the acquisition date, with any excess recorded as goodwill.

Transaction-related costs are expensed in the period the costs are incurred.

During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding adjustment to goodwill.

On July 25, 2022, our wholly-owned subsidiary, Boise Cascade Wood Products, L.L.C., completed the acquisition of 100 % of the equity interest in Coastal Plywood Company (Coastal Plywood), and its plywood manufacturing operations located in Havana, Florida, and Chapman, Alabama for a purchase price of $ 516.9 million, inclusive of estimated working capital at closing of approximately $ 27 million, which is subject to post-closing adjustments (the Acquisition).

We funded the Acquisition and related costs with cash on hand.

Acquisition-related costs of $ 0.1 million and $ 1.3 million are recorded in "General and administrative expenses" in our Consolidated Statements of Operations for the three and nine months ended September 30, 2022.

These facilities will provide incremental stress-rated veneer needed to optimize and expand our southeastern U.S.

1 unchanged sentence

In addition, the Havana plywood operation will improve our mix of specialty plywood products and is well positioned geographically to support plywood demand in the southeastern U.S.

As a result of the limited time since the acquisition date and the ongoing status of the valuation, the initial accounting for the business combination is incomplete at the time of this filing.

As a result, we are unable to provide the amounts recognized as of the acquisition date for the major classes of assets acquired, liabilities assumed, and goodwill.

This information will be included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022.

Sales, including sales to our BMD segment, from these facilities of $ 43.0 million was reported as part of the Wood Products segment for the third quarter 2022.

In addition, the Wood Products segment reported an operating loss of $ 0.8 million from these facilities for the third quarter 2022, which included $ 9.4 million of expense related to the sell-through of inventory recorded at fair market value in connection with the Acquisition.

Goodwill represents the excess of the purchase price and related costs over the fair value of the net tangible and intangible assets of businesses acquired.

The primary qualitative factor that contributed to the recognition of goodwill relates to the incremental stress-rated veneer and assembled workforce the facilities provide to allow us to expand our EWP capacity and improve our mix of plywood offerings to serve future and existing customers.

The facilities are geographically located in an area that allows us to optimize our mill system and realize freight and other cost synergies.

All of the goodwill was assigned to the Wood Products reporting unit and is deductible for U.S.

income tax purposes.

The Acquisition purchase price allocations are preliminary and subject to post-closing adjustments.

Our estimates and assumptions are subject to change as more information becomes available.

The primary areas of the purchase price allocation that are not yet finalized relate to the valuation of fixed assets, working capital, customer relationships, and residual goodwill.

The following table summarizes the allocations of the purchase price to the assets acquired and liabilities assumed, based on our current estimates of the fair value at the date of the Acquisition:

Acquisition Date Fair Value

Accounts receivable $ 18,216

Inventories 22,300

Property and equipment 251,329

Other assets 1,874

Intangible assets:

Trade name 1,200

Customer relationships 156,700

Goodwill 73,974

Assets acquired 525,593

Accounts payable and accrued liabilities 6,134

Other long-term liabilities 2,578

Liabilities assumed 8,712

Net assets acquired $ 516,881

Pro Forma Financial Information

The following pro forma financial information presents the combined results of operations as if the two Coastal Plywood facilities had been combined with us on January 1, 2021.

The pro forma results are intended for information purposes only and do not purport to represent what the combined companies' results of operations would actually have been had the related transaction in fact occurred on January 1, 2021.

They also do not reflect any cost savings, operating synergies, or revenue enhancements that we may achieve or the costs necessary to achieve these cost savings, operating synergies, revenue enhancements, or integration efforts.

Three Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

(unaudited, thousands, except per share data)

Sales $ 2,175,930 $ 1,950,267 $ 6,989,799 $ 6,449,695

Net income (a) $ 229,125 $ 100,109 $ 809,334 $ 638,834

___________________________________

(a) The pro forma financial information for the three and nine months ended September 30, 2022 was adjusted to exclude $ 0.1 million and $ 1.3 million, respectively, of acquisition-related costs for legal, accounting, and other advisory-related services.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price and related costs over the fair value of the net tangible and intangible assets of businesses acquired.

The carrying amount of our goodwill by segment is as follows:

Balance at December 31, 2021 $ 11,792 $ 48,590 $ 60,382

Additions (a) — 73,974 73,974

Balance at September 30, 2022 $ 11,792 $ 122,564 $ 134,356

___________________________________

(a) Represents the acquisition of two Coastal Plywood facilities.

For additional information, see Note 5, Acquisition.

At September 30, 2022 and December 31, 2021, intangible assets represented the values assigned to trade names, trademarks and customer relationships.

We maintain trademarks for our manufactured wood products, particularly EWP.

Our key registered trademarks are perpetual in duration as long as we continue to timely file all post registration maintenance documents related thereto.

These trade names and trademarks have indefinite lives and are not amortized.

In addition, we recently acquired a trade name and customer relationships as discussed in Note 5, Acquisition.

This acquired trade name has a useful life of one year .

The weighted-average useful life for customer relationships from the date of purchase is approximately 10 years.

Amortization expense is expected to be approximately $ 16.8 million per year for the next five years.

Intangible assets consisted of the following:

September 30, 2022

Gross Carrying

Amount Accumulated

Amortization Net Carrying

Trade names and trademarks $ 10,100 $ ( 200 ) $ 9,900

Customer relationships 169,150 ( 9,512 ) 159,638

$ 179,250 $ ( 9,712 ) $ 169,538

December 31, 2021

Gross Carrying

Amount Accumulated

Amortization Net Carrying

Trade names and trademarks $ 8,900 $ — $ 8,900

Customer relationships 12,450 ( 5,999 ) 6,451

$ 21,350 $ ( 5,999 ) $ 15,351

Long-term debt consisted of the following:

September 30,

2022 December 31,

5 unchanged sentences

Asset-Based Credit Facility

On May 15, 2015, Boise Cascade and its principal operating subsidiaries, Boise Cascade Wood Products, L.L.C., and Boise Cascade Building Materials Distribution, L.L.C., as borrowers, and Boise Cascade Wood Products Holdings Corp., as guarantor, entered into an Amended and Restated Credit Agreement, as amended, (Amended Agreement) with Wells Fargo

Capital Finance, LLC, as administrative agent, and the banks named therein as lenders.

The Amended Agreement includes a $ 350 million senior secured asset-based revolving credit facility (Revolving Credit Facility) and a $ 50.0 million term loan (ABL Term Loan) maturing on March 13, 2025.

On September 9, 2022, we entered into the Eighth Amendment to the Amended Agreement (the Amendment) to increase the maximum amount available for revolving loans from $ 350 million to $ 400 million (the Revolving Credit Facility) and to extend the maturity date of the Amended Agreement to the earlier of (a) September 9, 2027 and (b) 90 days prior to the maturity of our $ 400 million of 4.875 % senior notes due July 1, 2030 (or the maturity date of any permitted refinancing indebtedness or permitted upsized refinancing indebtedness in respect thereof).

The term loan within the Amended Agreement remains at $ 50.0 million (ABL Term Loan).

The Amendment also replaced the LIBOR rate with SOFR.

In addition, the Amendment reduced the unused commitment fee and modified certain financial covenants.

Interest on borrowings under our Revolving Credit Facility and ABL Term Loan are payable monthly.

3 unchanged sentences

The Amended Agreement contains customary nonfinancial covenants, including a negative pledge covenant and restrictions on new indebtedness, investments, distributions to equity holders, asset sales, and affiliate transactions, the scope of which are dependent on the Availability existing from time to time.

The Amended Agreement also contains a requirement that we meet a 1 :1 fixed-charge coverage ratio (FCCR), applicable only if Availability falls below 10 % of the aggregate revolving lending commitments (or $ 35 million).

Availability exceeded the minimum threshold amounts required for testing of the FCCR at all times since entering into the Amended Agreement, and Availability at June 30, 2022 was $ 346.0 million.

The Amended Agreement permits us to pay dividends only if at the time of payment (i) no default has occurred or is continuing (or would result from such payment) under the Amended Agreement, and (ii) pro forma Excess Availability (as defined in the Amended Agreement) is equal to or exceeds 25 % of the aggregate Revolver Commitments (as defined in the Amended Agreement) or (iii) (x) pro forma Excess Availability is equal to or exceeds 15 % of the aggregate Revolver Commitment and (y) our fixed-charge coverage ratio is greater than or equal to 1 :1 on a pro forma basis.

The Amended Agreement also contains a requirement that we meet a 1 :1 fixed-charge coverage ratio (FCCR), applicable only if Availability falls below the greater of (a) 10 % of the Line Cap (as defined in the Amended Agreement) and (b) $ 35 million.

Availability exceeded the minimum threshold amounts required for testing of the FCCR at all times since entering into the Amended Agreement, and Availability at September 30, 2022 was $ 396.2 million.

The Amended Agreement permits us to pay dividends only if at the time of payment (a) no default has occurred or is continuing (or would result from such payment) under the Amended Agreement, and (b) either (i) pro forma Excess Availability (as defined in the Amended Agreement) is equal to or exceeds the greater of (a) 20 % of the Line Cap and (b) $ 75 million or (ii) (x) pro forma Excess Availability is equal to or exceeds the greater of (a) 15 % of Line Cap and (b) $ 55 million and (y) our fixed-charge coverage ratio is greater than or equal to 1 :1 on a pro forma basis.

Revolving Credit Facility

Interest rates under the Revolving Credit Facility are based, at our election, on either LIBOR or a base rate, as defined in the Amended Agreement, plus a spread over the index elected that ranges from 1.25 % to 1.50 % for loans based on LIBOR and from 0.25 % to 0.50 % for loans based on the base rate.

Interest rates under the Revolving Credit Facility are based, at our election, on either Daily Simple SOFR, Term SOFR, or a base rate, as defined in the Amended Agreement, plus a spread over the index elected that ranges from 1.25 % to 1.50 % for loans based on SOFR and from 0.25 % to 0.50 % for loans based on the base rate.

The spread is determined on the basis of a pricing grid that results in a higher spread as average quarterly Availability declines.

Letters of credit are subject to a fronting fee payable to the issuing bank and a fee payable to the lenders equal to the LIBOR margin rate.

Both SOFR options include an additional credit spread adjustment of 0.10 %.

Letters of credit are subject to a fronting fee payable to the issuing bank and a fee payable to the lenders equal to the Term SOFR margin rate.

In addition, we are required to pay an unused commitment fee at a rate of 0.20 % per annum of the average unused portion of the lending commitments.

At both June 30, 2022 and December 31, 2021, we had no borrowings outstanding under the Revolving Credit Facility and $ 4.0 million of letters of credit outstanding.

At both September 30, 2022 and December 31, 2021, we had no borrowings outstanding under the Revolving Credit Facility.

At September 30, 2022 and December 31, 2021, we had $ 3.8 million and $ 4.0 million, respectively, of letters of credit outstanding.

These letters of credit and borrowings, if any, reduce availability under the Revolving Credit Facility by an equivalent amount.

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However, any principal amount of ABL Term Loan repaid may not be subsequently re-borrowed.

Interest rates under the ABL Term Loan are based, at our election, on either LIBOR or a base rate, as defined in the Amended Agreement, plus a spread over the index elected that ranges from 1.75 % to 2.00 % for LIBOR rate loans and from 0.75 % to 1.00 % for base rate loans, both dependent on the amount of Average Excess Availability (as defined in the Amended Agreement).

During the six months ended June 30, 2022, the average interest rate on the ABL Term Loan was approximately 2.23 %.

Interest rates under the ABL Term Loan are based, at our election, on either Daily Simple SOFR, Term SOFR, or a base rate, as defined in the Amended Agreement, plus a spread over the index elected that ranges from 1.75 % to 2.00 % for SOFR rate loans and from 0.75 % to 1.00 % for base rate loans, both dependent on the amount of Average Excess Availability (as defined in the Amended Agreement).

Both SOFR options include an additional credit spread adjustment of 0.10 %.

During the nine months ended September 30, 2022, the average interest rate on the ABL Term Loan was approximately 2.83 %.

We have received and expect to continue receiving patronage credits under the ABL Term Loan.

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Patronage credits are recorded as a reduction to interest expense in the year earned.

After giving effect to expected patronage distributions, the effective average net interest rate on the ABL Term Loan was approximately 1.2 % during the six months ended June 30, 2022.

After giving effect to expected patronage distributions, the effective average net interest rate on the ABL Term Loan was approximately 1.8 % during the nine months ended September 30, 2022.

On July 27, 2020, we issued $ 400 million of 4.875 % senior notes due July 1, 2030 (2030 Notes) through a private placement that was exempt from the registration requirements of the Securities Act.

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Cash Paid for Interest

For the six months ended June 30, 2022 and 2021, cash payments for interest were $ 11.3 million and $ 9.6 million, respectively.

For the nine months ended September 30, 2022 and 2021, cash payments for interest were $ 22.1 million and $ 20.4 million, respectively.

The components of lease expense were as follows:

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

9 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Six Months Ended

Nine Months Ended

Cash paid for amounts included in the measurement of lease liabilities

6 unchanged sentences

Other information related to leases was as follows:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Weighted-average remaining lease term (years)

4 unchanged sentences

Finance leases 7.5 % 7.5 %

As of June 30, 2022, our minimum lease payment requirements for noncancelable operating and finance leases are as follows:

As of September 30, 2022, our minimum lease payment requirements for noncancelable operating and finance leases are as follows:

Operating Leases Finance Leases

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PSU and RSU Awards

During the six months ended June 30, 2022, we granted 66,180 PSUs to our officers and other employees, subject to performance and service conditions.

For the officers, the number of shares actually awarded will range from 0 % and 200 % of the target amount, depending upon Boise Cascade's 2022 return on invested capital (ROIC), as approved by our Compensation Committee in accordance with the related grant agreement.

During the nine months ended September 30, 2022, we granted 66,180 PSUs to our officers and other employees, subject to performance and service conditions.

For the officers, the number of shares actually awarded will range from 0 % to 200 % of the target amount, depending upon Boise Cascade's 2022 return on invested capital (ROIC), as approved by our Compensation Committee in accordance with the related grant agreement.

We define ROIC as net operating profit after taxes (NOPAT) divided by average invested capital (based on a rolling thirteen-month average).

3 unchanged sentences

Because the PSUs contain a performance condition, we record compensation expense over the requisite service period based on the most probable number of shares expected to vest.

During the six months ended June 30, 2021, we granted 73,265 PSUs to our officers and other employees, subject to performance and service conditions.

During the nine months ended September 30, 2021, we granted 73,265 PSUs to our officers and other employees, subject to performance and service conditions.

During the 2021 performance period, officers and other employees both earned 200 % of the target based on Boise Cascade's 2021 ROIC and EBITDA, as applicable, determined by our Compensation Committee and executive management in accordance with the related grant agreements.

The PSUs granted to officers generally vest in a single installment three years from the date of grant, while the PSUs granted to other employees vest in three equal tranches each year after the grant date.

During the six months ended June 30, 2022 and 2021, we granted an aggregate of 86,164 and 99,588 RSUs, respectively, to our officers, other employees, and nonemployee directors with only service conditions.

During the nine months ended September 30, 2022 and 2021, we granted an aggregate of 86,869 and 101,059 RSUs, respectively, to our officers, other employees, and nonemployee directors with only service conditions.

The RSUs granted to officers and other employees vest in three equal tranches each year after the grant date.

The RSUs granted to nonemployee directors vest over a one year period.

The RSUs granted to nonemployee directors vest in a single installment after a one year period.

We based the fair value of PSU and RSU awards on the closing market price of our common stock on the grant date.

During the six months ended June 30, 2022 and 2021, the total fair value of PSUs and RSUs vested was $ 12.0 million and $ 9.2 million, respectively.

The following summarizes the activity of our PSUs and RSUs awarded under our incentive plan for the six months ended June 30, 2022:

During the nine months ended September 30, 2022 and 2021, the total fair value of PSUs and RSUs vested was $ 12.0 million and $ 9.2 million, respectively.

The following summarizes the activity of our PSUs and RSUs awarded under our incentive plan for the nine months ended September 30, 2022:

Number of shares Weighted Average Grant-Date Fair Value Number of shares Weighted Average Grant-Date Fair Value

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Forfeited — — ( 1,236 ) 79.83

Outstanding, June 30, 2022 317,854 $ 51.46 154,634 $ 65.15

Outstanding, September 30, 2022 317,854 $ 51.46 155,339 $ 65.17

_______________________________

(a) Represents additional PSUs granted during the six months ended June 30, 2022, related to the 2021 performance condition

adjustment described above.

(a) Represents additional PSUs granted during the nine months ended September 30, 2022, related to above-target achievement of the 2021 performance condition described above.

Compensation Expense

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Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

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Total $ 3,287 $ 2,181 $ 8,690 $ 5,684

The related tax benefit for the six months ended June 30, 2022 and 2021, was $ 1.3 million and $ 0.9 million respectively.

As of June 30, 2022, total unrecognized compensation expense related to nonvested share-based compensation arrangements was $ 18.8 million.

The related tax benefit for the nine months ended September 30, 2022 and 2021, was $ 2.2 million and $ 1.4 million respectively.

As of September 30, 2022, total unrecognized compensation expense related to nonvested share-based compensation arrangements was $ 16.9 million.

This expense is expected to be recognized over a weighted-average period of 1.9 years.

1 unchanged sentence

On November 14, 2017, we announced that our board of directors approved a dividend policy to pay quarterly cash dividends to holders of our common stock.

For more information regarding our dividend declarations and payments made during each of the six months ended June 30, 2022 and 2021, see "Common stock dividends" on our Consolidated Statements of Stockholders' Equity.

On July 28, 2022 , our board of directors declared a quarterly dividend of $ 0.12 per share on our common stock, payable on September 15, 2022 , to stockholders of record on September 1, 2022 .

For more information regarding our dividend declarations and payments made during each of the nine months ended September 30, 2022 and 2021, see "Common stock dividends" on our Consolidated Statements of Stockholders' Equity.

On October 27, 2022 , our board of directors declared a quarterly dividend of $ 0.15 per share on our common stock, as well as a special dividend of $ 1.00 per share on our common stock, both payable on December 15, 2022 , to stockholders of record on December 1, 2022 .

For a description of the restrictions in our asset-based credit facility and the indenture governing our senior notes on our ability to pay dividends, see Note 7, Debt.

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On July 28, 2022, our board of directors authorized the repurchase of an additional 1.5 million shares of our common stock.

This increase is in addition to the remaining authorized shares under our prior common stock repurchase program.

This increase is in addition to the remaining authorized shares under our prior common stock repurchase program (the Program).

The total combined authorization is approximately 2.0 million shares.

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Our board of directors, at its discretion, may increase or decrease the number of authorized shares or terminate the program at any time.

During the nine months ended September 30, 2022, we did not purchase any shares under the Program.

Accumulated Other Comprehensive Loss

The following table details the changes in accumulated other comprehensive loss for the three and six months ended June 30, 2022 and 2021:

The following table details the changes in accumulated other comprehensive loss for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

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Accordingly, we do not consolidate LTP's results in our financial statements.

Related-party sales to LTP from our Wood Products segment in our Consolidated Statements of Operations were $ 3.5 million and $ 3.4 million, respectively, during the three months ended June 30, 2022 and 2021, and $ 7.2 million and $ 6.7 million, respectively, during the six months ended June 30, 2022 and 2021.

Related-party sales to LTP from our Wood Products segment in our Consolidated Statements of Operations were $ 3.4 million and $ 3.6 million, respectively, during the three months ended September 30, 2022 and 2021, and $ 10.6 million and $ 10.2 million, respectively, during the nine months ended September 30, 2022 and 2021.

These sales are recorded in "Sales" in our Consolidated Statements of Operations.

Costs and Expenses

Related-party wood fiber purchases from LTP were $ 23.5 million and $ 20.7 million, respectively, during the three months ended June 30, 2022 and 2021, and $ 44.3 million and $ 41.0 million, respectively, during the six months ended June 30, 2022 and 2021.

Related-party wood fiber purchases from LTP were $ 23.1 million and $ 22.3 million, respectively, during the three months ended September 30, 2022 and 2021, and $ 67.4 million and $ 63.3 million, respectively, during the nine months ended September 30, 2022 and 2021.

These costs are recorded in "Materials, labor, and other operating expenses (excluding depreciation)" in our Consolidated Statements of Operations.

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Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

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(b) Sales of EWP to external customers are net of the cost of all EWP rebates and sales allowances provided at various stages of the supply chain (including distributors, dealers, and homebuilders).

For both the six months ended June 30, 2022 and 2021, approximately 78 % of Wood Products' EWP sales volumes were to our BMD segment.

For both the nine months ended September 30, 2022 and 2021, approximately 78 % of Wood Products' EWP sales volumes were to our BMD segment.

An analysis of our operations by segment is as follows:

Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2022 2021 2022 2021

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In addition, we have purchase obligations for goods and services, capital expenditures, and raw materials entered into in the normal course of business.

As of June 30, 2022, there have been no material changes to the above commitments disclosed in the 2021 Form 10-K.

As of September 30, 2022, there have been no material changes to the above commitments disclosed in the 2021 Form 10-K.

Legal Proceedings and Contingencies

We are a party to legal proceedings that arise in the ordinary course of our business, including commercial liability claims, premises claims, environmental claims, and employment-related claims, among others.

As of the date of this filing, we believe it is not reasonably possible that any of the legal actions against us will, individually or in the aggregate, have a material adverse effect on our financial position, results of operations, or cash flows.

As of the date of this filing, we do not believe that we are party to any legal action that could reasonably be expected to have, individually or in the aggregate, a material adverse effect on our financial position, results of operations, or cash flows.

We provide guarantees, indemnifications, and assurances to others.

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Financial Statements and Supplementary Data" in our 2021 Form 10-K describes 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 June 30, 2022, there have been no material changes to the guarantees disclosed in the 2021 Form 10-K.

As of September 30, 2022, there have been no material changes to the guarantees disclosed in the 2021 Form 10-K.

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 1. Financial Statements