BOISE CASCADE Co 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Boise Cascade Company Consolidated Statements of Operations Year Ended December 31 2023 2022 2021 (thousands, except per-share data) Sales $ 6,838,245 $ 8,387,307 $ 7,926,111 Costs and expenses Materials, labor, and other operating expenses (excluding depreciation) 5,409,311 6,472,540 6,300,076 Depreciation and amortization 132,467 101,593 80,753 Selling and distribution expenses 559,503 553,251 491,016 General and administrative expenses 114,434 103,750 83,228 Other (income) expense, net ( 1,856 ) ( 1,676 ) ( 765 ) 6,213,859 7,229,458 6,954,308 Income from operations 624,386 1,157,849 971,803 Foreign currency exchange gain (loss) 7 ( 1,584 ) ( 10 ) Pension expense (excluding service costs) ( 163 ) ( 294 ) ( 76 ) Interest expense ( 25,496 ) ( 25,412 ) ( 24,806 ) Interest income 48,106 12,263 195 Change in fair value of interest rate swaps ( 1,791 ) 3,559 1,745 20,663 ( 11,468 ) ( 22,952 ) Income before income taxes 645,049 1,146,381 948,851 Income tax provision ( 161,393 ) ( 288,723 ) ( 236,365 ) Net income $ 483,656 $ 857,658 $ 712,486 Weighted average common shares outstanding: Basic 39,649 39,526 39,420 Diluted 39,901 39,772 39,646 Net income per common share: Basic $ 12.20 $ 21.70 $ 18.07 Diluted $ 12.12 $ 21.56 $ 17.97 Dividends declared per common share $ 8.70 $ 4.01 $ 5.42 See accompanying notes to consolidated financial statements. 53 Table of Contents Boise Cascade Company Consolidated Statements of Comprehensive Income Year Ended December 31 2023 2022 2021 (thousands) Net income $ 483,656 $ 857,658 $ 712,486 Other comprehensive income, net of tax Defined benefit pension plans Actuarial gain (loss), net of tax of $( 7 ), $ 122 , and $ 15 , respectively ( 22 ) 367 46 Amortization of actuarial (gain) loss, net of tax of $ 8 , $ 21 , and $( 4 ), respectively 25 62 ( 15 ) Effects of settlements, net of tax of $ — , $ 32 , and $ — , respectively — 98 — Other comprehensive income, net of tax 3 527 31 Comprehensive income $ 483,659 $ 858,185 $ 712,517 See accompanying notes to consolidated financial statements. 54 Table of Contents Boise Cascade Company Consolidated Balance Sheets December 31 2023 2022 (thousands) ASSETS Current Cash and cash equivalents $ 949,574 $ 998,344 Receivables Trade, less allowances of $ 3,278 and $ 3,264 352,780 297,237 Related parties 181 19 Other 20,740 23,023 Inventories 712,369 697,551 Prepaid expenses and other 21,170 47,878 Total current assets 2,056,814 2,064,052 Property and equipment, net 932,633 770,023 Operating lease right-of-use assets 62,868 55,582 Finance lease right-of-use assets 24,003 26,501 Timber deposits 7,208 7,519 Goodwill 170,254 137,958 Intangible assets, net 190,743 161,433 Deferred income taxes 4,854 6,116 Other assets 9,269 11,330 Total assets $ 3,458,646 $ 3,240,514 See accompanying notes to consolidated financial statements. 55 Table of Contents Boise Cascade Company Consolidated Balance Sheets (continued) December 31 2023 2022 (thousands, except per-share data) LIABILITIES AND STOCKHOLDERS' EQUITY Current Accounts payable Trade $ 310,175 $ 269,785 Related parties 1,501 1,019 Accrued liabilities Compensation and benefits 149,561 142,463 Interest payable 9,958 9,955 Other 122,921 122,606 Total current liabilities 594,116 545,828 Debt Long-term debt 445,280 444,392 Other Compensation and benefits 40,189 33,226 Operating lease liabilities, net of current portion 56,425 48,668 Finance lease liabilities, net of current portion 28,084 30,022 Deferred income taxes 82,014 63,454 Other long-term liabilities 16,874 16,949 223,586 192,319 Commitments and contingent liabilities Stockholders' equity Preferred stock, $ 0.01 par value per share; 50,000 shares authorized, no shares issued and outstanding — — Common stock, $ 0.01 par value per share; 300,000 shares authorized, 44,983 and 44,827 shares issued, respectively 450 448 Treasury stock, 5,443 and 5,367 shares at cost, respectively ( 145,335 ) ( 138,909 ) Additional paid-in capital 560,697 551,215 Accumulated other comprehensive loss ( 517 ) ( 520 ) Retained earnings 1,780,369 1,645,741 Total stockholders' equity 2,195,664 2,057,975 Total liabilities and stockholders' equity $ 3,458,646 $ 3,240,514 See accompanying notes to consolidated financial statements. 56 Table of Contents Boise Cascade Company Consolidated Statements of Cash Flows Year Ended December 31 2023 2022 2021 (thousands) Cash provided by (used for) operations Net income $ 483,656 $ 857,658 $ 712,486 Items in net income not using (providing) cash Depreciation and amortization, including deferred financing costs and other 135,414 103,879 82,489 Stock-based compensation 15,410 11,870 7,911 Pension expense 163 294 76 Deferred income taxes ( 180 ) 59,666 ( 13,704 ) Change in fair value of interest rate swaps 1,791 ( 3,559 ) ( 1,745 ) Other ( 1,898 ) ( 1,043 ) 712 Decrease (increase) in working capital, net of acquisitions Receivables ( 35,024 ) 158,073 ( 71,190 ) Inventories 22,286 ( 13,903 ) ( 158,472 ) Prepaid expenses and other ( 824 ) ( 2,834 ) ( 3,238 ) Accounts payable and accrued liabilities 37,146 ( 100,354 ) 123,670 Pension contributions ( 553 ) ( 1,058 ) ( 470 ) Income taxes payable 28,590 ( 30,561 ) ( 10,057 ) Other 1,481 3,091 ( 1,484 ) Net cash provided by operations 687,458 1,041,219 666,984 Cash provided by (used for) investment Expenditures for property and equipment ( 215,438 ) ( 114,117 ) ( 106,518 ) Acquisitions of businesses and facilities, net of cash acquired ( 162,774 ) ( 515,237 ) — Proceeds from sales of assets and other 2,660 3,898 932 Net cash used for investment ( 375,552 ) ( 625,456 ) ( 105,586 ) Cash provided by (used for) financing Borrowings of long-term debt, including revolving credit facility — — 28,000 Payments of long-term debt, including revolving credit facility — — ( 28,000 ) Dividends paid on common stock ( 346,493 ) ( 159,564 ) ( 213,681 ) Tax withholding payments on stock-based awards ( 5,926 ) ( 3,930 ) ( 2,729 ) Treasury stock purchased ( 6,426 ) — — Payments of deferred financing costs — ( 1,174 ) — Other ( 1,831 ) ( 1,658 ) ( 1,463 ) Net cash used for financing ( 360,676 ) ( 166,326 ) ( 217,873 ) Net increase (decrease) in cash and cash equivalents ( 48,770 ) 249,437 343,525 Balance at beginning of the period 998,344 748,907 405,382 Balance at end of the period $ 949,574 $ 998,344 $ 748,907 See accompanying notes to consolidated financial statements. 57 Table of Contents Boise Cascade Company Consolidated Statements of Stockholders' Equity Common Stock Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Shares Amount Shares Amount (thousands) Balance at December 31, 2020 44,568 $ 446 5,367 $ ( 138,909 ) $ 538,006 $ ( 1,078 ) $ 452,334 $ 850,799 Net income 712,486 712,486 Other comprehensive income 31 31 Common stock issued 130 1 1 Stock-based compensation 7,911 7,911 Common stock dividends ($ 5.42 per share) ( 215,941 ) ( 215,941 ) Tax withholding payments on stock-based awards ( 2,729 ) ( 2,729 ) Proceeds from exercise of stock options 63 63 Other ( 2 ) ( 2 ) Balance at December 31, 2021 44,698 $ 447 5,367 $ ( 138,909 ) $ 543,249 $ ( 1,047 ) $ 948,879 $ 1,352,619 Net income 857,658 857,658 Other comprehensive income 527 527 Common stock issued 129 1 1 Stock-based compensation 11,870 11,870 Common stock dividends ($ 4.01 per share) ( 160,796 ) ( 160,796 ) Tax withholding payments on stock-based awards ( 3,930 ) ( 3,930 ) Proceeds from exercise of stock options 27 27 Other ( 1 ) ( 1 ) Balance at December 31, 2022 44,827 $ 448 5,367 $ ( 138,909 ) $ 551,215 $ ( 520 ) $ 1,645,741 $ 2,057,975 Net income 483,656 483,656 Other comprehensive income 3 3 Common stock issued 156 2 2 Treasury stock purchased 76 ( 6,426 ) ( 6,426 ) Stock-based compensation 15,410 15,410 Common stock dividends ($ 8.70 per share) ( 349,028 ) ( 349,028 ) Tax withholding payments on stock-based awards ( 5,926 ) ( 5,926 ) Other ( 2 ) ( 2 ) Balance at December 31, 2023 44,983 $ 450 5,443 $ ( 145,335 ) $ 560,697 $ ( 517 ) $ 1,780,369 $ 2,195,664 See accompanying notes to consolidated financial statements. 58 Table of Contents Notes to Consolidated Financial Statements 1. Nature of Operations and Basis of Presentation Boise Cascade Company is a building products company headquartered in Boise, Idaho. Our operations began on October 29, 2004 (inception), when we acquired the forest products assets of OfficeMax, Incorporated. As used in these consolidated financial statements, the terms "Boise Cascade," "we," and "our" refer to Boise Cascade Company and its consolidated subsidiaries. We are one of the largest producers of engineered wood products (EWP) and plywood in North America and a leading United States wholesale distributor of building products. We operate our business using two reportable segments: (1) Wood Products, which primarily manufactures EWP and plywood, and (2) Building Materials Distribution (BMD), which is a wholesale distributor of building materials. For more information, see Note 15, Segment Information. 2. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of Boise Cascade and its subsidiaries. Intercompany balances and transactions have been eliminated. Use of Estimates 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. Such estimates include the valuation of accounts receivable, inventories, goodwill, intangible assets, and other long-lived assets; legal contingencies; guarantee obligations; indemnifications; assumptions used in retirement, medical, and workers' compensation benefits; assumptions used in the determination of right-of-use (ROU) assets and related lease liabilities; stock-based compensation; fair value measurements; income taxes; and vendor and customer rebates, among others. These estimates and assumptions are based on management's best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. For additional information regarding our revenue recognition policies, see Note 3, Revenues. Cash and Cash Equivalents Cash equivalents consist of short-term investments that have an original maturity of three months or less at the date of purchase. At December 31, 2023 and 2022, the majority of our cash and cash equivalents were comprised of money market funds that are broadly diversified and invested in high-quality, short-duration securities, including commercial paper, certificates of deposit, U.S. government agency securities, and similar instruments. We have significant amounts of cash and cash equivalents that are in excess of federally insured limits. Though we have not experienced any losses on our cash and cash equivalents to date and we do not anticipate incurring any losses, we cannot be assured that we will not experience losses on our cash and cash equivalents. 59 Table of Contents Trade Accounts Receivables and Allowance for Doubtful Accounts Trade accounts receivable are stated at the amount we expect to collect. Trade accounts receivable do not bear interest. We make ongoing estimates relating to the collectability of our accounts receivable and maintain a reserve for estimated losses resulting from the inability of our customers to meet their financial obligations to us. At December 31, 2023 and 2022, we had $ 3.3 million recorded in each period as allowances for doubtful accounts. In determining the amount of the reserve and in order to manage credit risk, we consider our historical level of credit losses, customer concentrations, and current economic trends and monitor the creditworthiness of significant customers based on ongoing credit evaluations. Our sales are principally to customers in the building products industry located in the U.S. and Canada. A significant portion of our sales are concentrated with a relatively small number of customers. In 2023, our top ten customers represented approximately 47 % of sales, with one customer accounting for approximately 12 % of total sales. At December 31, 2023, receivables from two customers accounted for approximately 19 % and 13 % of total receivables. At December 31, 2022, receivables from these two customers accounted for approximately 17 % and 14 % of total receivables. No other customer accounted for 10% or more of total receivables. Adjustments to allowances are charged to income. Trade accounts receivable balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. Although we have not experienced material credit losses in recent years, our actual future losses from uncollectable accounts may differ materially from our current estimates. As additional information becomes known, we may change our estimates. In the event we determine that a change in the reserve is appropriate, we will record a charge to "Selling and distribution expenses" in our Consolidated Statements of Operations in the period we make such a determination. Fair Value 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. The fair value hierarchy under GAAP gives the highest priority to quoted market prices (Level 1) and the lowest priority to unobservable inputs (Level 3). In general, and where applicable, we use quoted prices in active markets for identical assets or liabilities to determine fair value (Level 1). If quoted prices in active markets for identical assets or liabilities are not available to determine fair value, we use quoted prices for similar assets and liabilities or inputs that are observable either directly or indirectly (Level 2). If quoted prices for identical or similar assets are not available or are unobservable, we may use internally developed valuation models, whose inputs include bid prices, and third-party valuations utilizing underlying asset assumptions (Level 3). Financial Instruments Our financial instruments are cash and cash equivalents, accounts receivable, accounts payable, long-term debt, and an interest rate swap. Our cash is recorded at cost, which approximates fair value, and our cash equivalents are money market funds. As of December 31, 2023 and 2022, we held $ 899.4 million and $ 954.4 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 December 31, 2023 and 2022, the book value of our fixed-rate debt for each period was $ 400.0 million, and the fair value was estimated to be $ 374.5 million and $ 348.5 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 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. We are exposed to financial risks such as changes in commodity prices, interest rates, and foreign currency exchange rates. We employ a variety of practices to manage these risks, including operating and financing activities and, where deemed appropriate, the use of derivative instruments. As discussed in Note 14, Financial Instrument Risk, we use interest rate swaps to mitigate our variable interest rate exposure, the fair value of which is measured based on Level 2 inputs. Vendor Rebates and Allowances We receive rebates and allowances from our vendors under a number of different programs, including vendor marketing programs. At December 31, 2023 and 2022, we had $ 17.4 million and $ 17.8 million, respectively, of vendor rebates and allowances recorded in "Receivables, Other" on the 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. Amounts 60 Table of Contents received from vendors that are linked to specific selling and distribution expenses are recognized as a reduction of "Selling and distribution expenses" in the period the expense is incurred. Foreign Currency The functional currency for our operations outside the United States is the U.S. dollar. Nonmonetary assets and liabilities and related depreciation and amortization for these foreign operations are remeasured into U.S. dollars using historical exchange rates. Monetary assets and liabilities are remeasured into U.S. dollars using the exchange rates as of the Consolidated Balance Sheet date. Revenue and expense items are remeasured into U.S. dollars using an average exchange rate prevailing during the year. Leases We primarily lease land, building, and equipment under operating and finance leases. We determine if an arrangement is a lease at inception and assess lease classification as either operating or finance at lease inception or upon modification. Substantially all of our leases with initial terms greater than one year are for real estate, including distribution centers, corporate headquarters, land, and other office space. Substantially all of these lease agreements have fixed payment terms based on the passage of time and are recorded in our BMD segment. Many of our leases include fixed escalation clauses, renewal options and/or termination options that are factored into our determination of lease term and lease payments when appropriate. Renewal options generally range from one to ten years with fixed payment terms similar to those in the original lease agreements. Some lease agreements provide us with the option to purchase the leased property at market value. Our lease agreements do not contain any residual value guarantees. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of fixed lease payments over the lease term. The current portion of our operating and finance lease liabilities are recorded in "Accrued liabilities, Other" on our Consolidated Balance Sheets. We use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. In determining our incremental borrowing rates, we give consideration to publicly available interest rates for instruments with similar characteristics, including credit rating, term, and collateralization. For purposes of determining straight-line rent expense, the lease term is calculated from the date we first take possession of the facility, including any periods of free rent and any renewal option periods we are reasonably certain of exercising. Variable lease expense generally includes reimbursement of actual costs for common area maintenance, property taxes, and insurance on leased real estate and are recorded as incurred. Most of our operating lease expense is recorded in "Selling and distribution expenses" in our Consolidated Statements of Operations. In addition, we do not separate lease and non-lease components for all of our leases. Our short-term leases primarily include equipment rentals with lease terms on a month-to-month basis, which provide for our seasonal needs and flexibility in the use of equipment. Our short-term leases also include certain real estate for which either party has the right to cancel upon providing notice of 30 to 90 days. We do not recognize ROU assets or lease liabilities for short-term leases. Income Taxes We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and respective tax bases and operating loss and tax credit carryforwards, as measured using enacted tax rates expected to be in effect in the periods where temporary differences are expected to be realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be unable to realize our deferred tax assets in the future, we would make an adjustment to the deferred tax asset valuation allowance, which would increase the provision for income taxes. 61 Table of Contents We review and update our tax positions as necessary to add any new uncertain tax positions taken, or to remove previously identified uncertain positions that have been adequately resolved. Additionally, uncertain positions may be remeasured as warranted by changes in facts or law. Accounting for uncertain tax positions requires estimating the amount, timing and likelihood of ultimate settlement. Although we believe that these estimates are reasonable, actual results could differ from these estimates. Inventory Valuation Inventories are valued at the lower of cost or net realizable value. Cost is based on the first-in, first-out (FIFO) method of inventory valuation or average cost. Wholesale distribution inventories include costs incurred in bringing inventory to its existing location. Manufactured inventories include costs for materials, labor, and factory overhead. Log inventories include costs to harvest and deliver the logs. Inventories included the following (work in process is not material): December 31, 2023 December 31, 2022 (thousands) Finished goods and work in process $ 604,624 $ 596,328 Logs 56,270 54,921 Other raw materials and supplies 51,475 46,302 $ 712,369 $ 697,551 Property and Equipment Property and equipment are recorded at cost. Cost includes expenditures for major improvements and replacements and the amount of interest cost associated with significant capital additions. For the years ended December 31, 2023, 2022, and 2021, an insignificant amount of interest was capitalized. We expense all repair and maintenance costs as incurred. When property and equipment are retired, sold, or otherwise disposed of, the asset's carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in operating income (loss). We use the straight-line method of depreciation. Property and equipment consisted of the following asset classes with the following general range of estimated useful lives: December 31, 2023 December 31, 2022 General Range of Estimated Useful Lives in Years (thousands) Land $ 85,572 $ 60,211 Buildings 338,230 231,087 20 - 40 Improvements 79,308 69,832 10 - 15 Mobile equipment, information technology, and office furniture 254,783 210,666 3 - 7 Machinery and equipment 1,037,135 989,338 7 - 12 Construction in progress 64,619 41,899 1,859,647 1,603,033 Less accumulated depreciation ( 927,014 ) ( 833,010 ) $ 932,633 $ 770,023 As of December 31, 2023, property and equipment includes two door and millwork facilities acquired by us on October 2, 2023. For more information, see Note 6, Acquisitions. 62 Table of Contents Long-Lived Asset Impairment We review long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of assets may not be recoverable (triggering event). An impairment of long-lived assets exists when the carrying value is not recoverable through future undiscounted cash flows from operations and when the carrying value of an asset or asset group exceeds its fair value. No triggering event was identified during the years ended December 31, 2023, 2022, and 2021. Goodwill and Intangible Assets Impairment We maintain two reporting units for purposes of our goodwill impairment testing, Wood Products and BMD, which are the same as our operating segments discussed in Note 15, Segment Information. We 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. We also evaluate the remaining useful lives of our finite-lived purchased intangible assets to determine whether any adjustments to the useful lives are necessary. We completed our annual assessment of goodwill in fourth quarter 2023 using a qualitative approach. The qualitative goodwill impairment assessment requires evaluating factors, based on the weight of evidence, to determine whether a reporting unit's carrying value would more likely than not exceed its fair value. As part of our goodwill qualitative testing process for each reporting unit, we evaluate various factors that are specific to the reporting unit as well as industry and macroeconomic factors in order to determine whether they are reasonably likely to have a material impact on the fair value of our reporting units. Based on the qualitative analysis performed in 2023, we concluded that there were no changes that were reasonably likely to cause the fair value of the reporting units to be less than the reporting units' carrying value and determined that there was no impairment of our goodwill. In the event we were to determine that a reporting unit's carrying value would more likely than not exceed its fair value, quantitative testing would be performed comparing carrying values to estimated fair values. See Note 7, Goodwill and Intangible Assets, for additional information. Asset Retirement Obligations We recognize our asset retirement obligations in the period in which they are incurred if sufficient information is available to reasonably estimate the fair value of the obligation. Fair value estimates are determined using Level 3 inputs in the fair value hierarchy. The fair values of our asset retirement obligations are measured using expected future cash outflows discounted using the company's credit-adjusted risk-free interest rate. When we record the liability, we capitalize the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its settlement value, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, we will recognize a gain or loss for any difference between the settlement amount and the liability recorded. At December 31, 2023 and 2022, we had $ 6.0 million and $ 5.6 million, respectively, of asset retirement obligations recorded in "Other long-term liabilities" on our Consolidated Balance Sheets. These liabilities related primarily to landfill closure costs. The liabilities are based on the best estimate of current costs and are updated periodically to reflect current technology, laws and regulations, inflation, and other economic factors. We do not have any assets legally restricted for purposes of settling asset retirement obligations. We have additional asset retirement obligations with indeterminate settlement dates. The fair value of these asset retirement obligations cannot be estimated due to the lack of sufficient information to estimate the settlement dates of the obligations. These asset retirement obligations include, for example, (i) removal and disposal of potentially hazardous materials on equipment and/or an operating facility if the equipment and/or facility were to undergo major maintenance, renovation, or demolition; (ii) retention ponds that may be required to be drained and/or cleaned if the related operating facility is closed; and (iii) storage sites or owned facilities for which removal and/or disposal of chemicals and other related materials are required if the operating facility is closed. We will recognize a liability in the period in which sufficient information becomes available to reasonably estimate the fair value of these obligations. Deferred Software Costs We defer internal-use software costs that benefit future years. These costs are amortized using the straight-line method over the expected life of the software, typically three to five years . "Other assets" in the Consolidated Balance Sheets includes $ 4.4 million and $ 5.1 million, respectively, of deferred software costs at December 31, 2023 and 2022. We amortized $ 2.1 million, $ 2.2 million, and $ 1.7 million of deferred software costs for the years ended December 31, 2023, 2022, and 2021, respectively. 63 Table of Contents Labor Concentration and Unions As of December 31, 2023, we had approximately 7,350 employees. Approximately 18 % of these employees work pursuant to collective bargaining agreements. As of December 31, 2023, we had ten collective bargaining agreements. Five agreements covering approximately 460 employees at our Elgin plywood plant, Kettle Falls plywood plant, and Woodinville BMD facility are set to expire on May 31, 2024, but the terms and conditions of these agreements will remain in effect after expiration pending negotiation of new agreements. One agreement covering approximately 40 employees at our Vancouver BMD facility is set to expire on December 31, 2024, but the terms and conditions of this agreement will remain in effect after expiration pending negotiation of a new agreement. We may not be able to renew 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. Labor disruptions or shortages could prevent us from meeting customer demands or result in increased costs, thereby reducing our sales and profitability. Self-Insurance We are self-insured for certain losses related to workers' compensation and medical claims, general and auto liability, as well as property and business interruption losses. The expected ultimate costs for claims incurred are recognized as liabilities in the Consolidated Balance Sheets and are estimated based principally on an analysis of historical claims data and estimates of claims incurred but not reported. Losses are accrued and charged to operations when it is probable that a loss has been incurred and the amount can be reasonably estimated. We maintain third-party stop-loss insurance policies to cover these liability costs in excess of predetermined retained amounts. Costs related to the administration of the plans and related claims are expensed as incurred. At December 31, 2023 and 2022, self-insurance related liabilities of $ 13.1 million and $ 13.4 million, respectively, were classified within "Accrued liabilities," and $ 9.9 million and $ 9.6 million, respectively, were classified within "Other long-term liabilities" on our Consolidated Balance Sheets. New and Recently Adopted Accounting Standards In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements and associated disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid. The amendments in this ASU are effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements and associated disclosures. 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. 3. Revenues Wood Products Segment Our Wood Products segment manufactures EWP, consisting of laminated veneer lumber (LVL), I-joists, and laminated beams, which are structural products used in applications where extra strength and consistent quality are required, such as headers and beams. LVL is also used in the manufacture of I-joists, which are assembled by combining a vertical web of OSB with top and bottom LVL or solid wood flanges. In addition, we manufacture structural, appearance, and industrial plywood panels, and ponderosa pine lumber. Our wood products are used primarily in new residential construction, residential repair-and-remodeling markets, and light commercial construction. The majority of our wood products are sold to leading wholesalers (including our BMD segment), home improvement centers, dealers, and industrial converters. For EWP, plywood and veneer, byproducts, and other products, we transfer control and recognize a sale when we ship the product from our manufacturing facility to our customer. Control transfers when product is shipped because the customer 64 Table of Contents has legal title, a present obligation to pay, and risk and rewards of ownership. The amount of consideration we receive and revenue we recognize varies with changes in rebates and cash discounts we offer to our customers. See "Rebates and Cash Discounts" below. Building Materials Distribution Segment Our BMD segment is a leading national stocking wholesale distributor of building materials. We distribute a broad line of building materials, including OSB, plywood, and lumber (collectively referred to as commodities); general line items such as siding, composite decking, doors and millwork, metal products, roofing, and insulation; and EWP. Except for EWP, we purchase most of these building materials from third-party suppliers and market them primarily to dealers, home improvement centers, and specialty distributors that then sell the products to the end customers, who are typically homebuilders, independent contractors, and homeowners engaged in residential construction projects. Substantially all of BMD's EWP is sourced from our Wood Products segment. We sell products using two primary distribution methods: warehouse sales and direct sales. Warehouse sales are distributed from our warehouses to our customers. Direct sales are shipped from the manufacturer to the customer without us taking physical possession of inventory. We report direct sales on a gross basis, that is, the amounts billed to our customers are recorded as "Sales," and inventory purchased from manufacturers are recorded as "Materials, labor, and other operating expenses (excluding depreciation)." We are the principal of direct sales because we control the inventory, as we have the ability to direct its use before it is transferred to our customers. For warehouse sales, we transfer control and recognize a sale when the customer takes physical possession of the product. Control transfers when the customer takes physical possession of the product because the customer has legal title, a present obligation to pay, and risk and rewards of ownership. For direct sales, we transfer control and recognize a sale when the product is shipped from the manufacturer to the customer. Control transfers when product is shipped because the customer has legal title, a present obligation to pay, and risk and rewards of ownership. The amount of consideration we receive and revenue we recognize varies with changes in customer rebates and cash discounts we offer to our customers. See "Rebates and Cash Discounts" below. Rebates an d Cash Discounts Rebates are provided to our customers and our customers' customers based on the volume of their purchases, among other factors such as customer loyalty, conversion, and commitment, as well as temporary protection from price increases. 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 December 31, 2023 and 2022, we had $ 87.9 million and $ 92.9 million, respectively, of rebates payable to our customers recorded in "Accrued liabilities, Other" on our Consolidated Balance Sheets . We also estimate expected cash discounts on trade accounts receivable based on an analysis of historical experience and record cash discounts as a decrease in "Sales." We adjust our estimate of revenue at the earlier of when the probability of rebates paid and cash discounts provided ch anges or when the amounts become fixed. There have not been significant changes to our estimates of rebates, although it is reasonably possible that a change in the estimate may occur. Shipping and Handling Fees for shipping and handling charged to customers for sales transactions are included in "Sales" in our Consolidated Statements of Operations. When control over products has transferred to the customer, we have elected to recognize costs related to shipping and handling as fulfillment costs. For our Wood Products segment, costs related to shipping and handling are included in "Materials, labor, and other operating expenses (excluding depreciation)" in our Consolidated Statements of Operations. 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 $ 238.8 million, $ 226.1 million, and $ 195.7 million for the years ended December 31, 2023, 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 products, 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. Other Our payment terms vary by the type of customer and the products offered. The term between invoicing and when payment is due is not significant. 65 Table of Contents Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. We expense sales commissions when incurred as they are earned. These costs are recorded within "Selling and distribution expenses." For revenue disaggregated by major product line for each reportable segment, see Note 15, Segment Information. 4. Income Taxes Income Tax Provision Income before income taxes includes the following components: Year Ended December 31 2023 2022 2021 (thousands) Domestic $ 643,060 $ 1,144,790 $ 945,562 Foreign 1,989 1,591 3,289 Income before income taxes $ 645,049 $ 1,146,381 $ 948,851 The income tax provision shown in the Consolidated Statements of Operations includes the following: Year Ended December 31 2023 2022 2021 (thousands) Current income tax provision Federal $ 133,323 $ 177,023 $ 201,725 State 28,250 52,046 48,332 Foreign — ( 12 ) 12 Total current 161,573 229,057 250,069 Deferred income tax provision (benefit) Federal ( 629 ) 54,852 ( 12,149 ) State ( 68 ) 3,921 ( 2,484 ) Foreign 517 893 929 Total deferred ( 180 ) 59,666 ( 13,704 ) Income tax provision $ 161,393 $ 288,723 $ 236,365 66 Table of Contents The effective tax rate varies from the U.S. Federal statutory income tax rate principally due to the following: Year Ended December 31 2023 2022 2021 (thousands, except percentages) Income before income taxes $ 645,049 $ 1,146,381 $ 948,851 Statutory U.S. income tax rate 21.0 % 21.0 % 21.0 % Statutory tax provision $ 135,460 $ 240,740 $ 199,259 State taxes 22,249 45,037 35,705 Unrecognized tax benefits ( 154 ) 6 2 Tax credits ( 226 ) ( 570 ) ( 620 ) Foreign rate differential 111 370 236 Stock-based compensation ( 1,113 ) ( 1,529 ) ( 563 ) Nondeductible executive compensation 3,174 2,433 1,664 Meals and entertainment 1,239 911 336 Other 653 1,325 346 Total $ 161,393 $ 288,723 $ 236,365 Effective income tax rate 25.0 % 25.2 % 24.9 % During the years ended December 31, 2023, 2022, and 2021, cash paid for taxes, net of refunds received, was $ 133.0 million, $ 260.0 million, and $ 260.1 million, respectively. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. The components of our net deferred tax assets and liabilities at December 31, 2023 and 2022, are summarized as follows: December 31, 2023 December 31, 2022 (thousands) Deferred tax assets Employee benefits $ 35,445 $ 31,688 Lease liabilities 24,576 22,739 Inventories 5,849 8,999 Foreign net operating loss carryforward 130 503 Other 10,276 10,320 Deferred tax assets $ 76,276 $ 74,249 Deferred tax liabilities Property and equipment $ ( 108,832 ) $ ( 100,781 ) Right-of-use assets ( 22,256 ) ( 20,511 ) Intangible assets and other ( 19,523 ) ( 7,491 ) Other ( 2,825 ) ( 2,804 ) Deferred tax liabilities $ ( 153,436 ) $ ( 131,587 ) Total deferred tax assets (liabilities), net $ ( 77,160 ) $ ( 57,338 ) As of December 31, 2023, we have foreign net operating loss carryforwards of $ 5.4 million, which if unused, will expire in years 2033 through 2041. We have state income tax credits totaling $ 1.0 million as of December 31, 2023, which if unused, will expire in years 2031 through 2033. The foreign net operating loss and state credit carryforwards in the income tax 67 Table of Contents returns filed included unrecognized tax benefits. The deferred tax assets recognized for those net operating losses and state credit carryforwards are presented net of these unrecognized tax benefits. Income Tax Uncertainties The following table summarizes the changes related to our gross unrecognized tax benefits excluding interest and penalties: 2023 2022 2021 (thousands) Balance as of January 1 $ 1,734 $ 1,782 $ 1,780 Increases related to prior years' tax positions 4 — — Increases related to current years' tax positions — 13 28 Decreases related to prior years' tax positions — ( 14 ) ( 19 ) Lapse of statute of limitations ( 179 ) ( 47 ) ( 7 ) Balance as of December 31 $ 1,559 $ 1,734 $ 1,782 As of December 31, 2023, 2022, and 2021, we had $ 1.6 million, $ 1.7 million, and $ 1.8 million, respectively, of unrecognized tax benefits recorded on our Consolidated Balance Sheets, excluding interest and penalties. Of the total unrecognized tax benefits recorded, $ 1.5 million, $ 1.7 million, and $ 1.8 million (net of the federal benefit for state taxes), respectively, would impact the effective tax rate if recognized. We recognize interest and penalties related to uncertain tax positions as income tax expense in our Consolidated Statements of Operations. For the years ended December 31, 2023, 2022, and 2021, we recognized an insignificant amount of interest and penalties related to taxes. We recognize tax liabilities and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available or as new uncertainties occur. We do not expect the unrecognized tax benefits to change significantly over the next twelve months. We file income tax returns in the U.S. and various state and foreign jurisdictions. Tax years 2020 to present remain open to examination in the U.S. and tax years 2019 to present remain open to examination in Canada and various states. We recorded net operating losses in Canada beginning in 2006 that are subject to examinations and adjustments up to four years following the year in which they are utilized. 5. Net Income Per Common Share Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Weighted average common shares outstanding for the basic net income per common share calculation includes certain vested restricted stock units (RSUs) and performance stock units (PSUs) as there are no conditions under which those shares will not be issued. For more information about common share activity during the period, see Note 12, Stockholders' Equity. Diluted net income per common share is computed by dividing net income by the combination of the weighted average number of common shares outstanding during the period and other potentially dilutive weighted average common shares. Other potentially dilutive weighted average common shares include the dilutive effect of stock options, RSUs, and PSUs for each period using the treasury stock method. Under the treasury stock method, the exercise price of a share and the amount of compensation expense, if any, for future service that has not yet been recognized are assumed to be used to repurchase shares in the current period. 68 Table of Contents The following table sets forth the computation of basic and diluted net income per common share: Year Ended December 31 2023 2022 2021 (thousands, except per-share data) Net income $ 483,656 $ 857,658 $ 712,486 Weighted average common shares outstanding during the period (for basic calculation) 39,649 39,526 39,420 Dilutive effect of other potential common shares 252 246 226 Weighted average common shares and potential common shares (for diluted calculation) 39,901 39,772 39,646 Net income per common share - Basic $ 12.20 $ 21.70 $ 18.07 Net income per common share - Diluted $ 12.12 $ 21.56 $ 17.97 The computation of the dilutive effect of other potential common shares excludes stock awards representing an insignificant number of shares of common stock in the year ended December 31, 2023, 0.1 million shares of common stock in the year ended December 31, 2022, and no shares of common stock in the year ended December 31, 2021. Under the treasury stock method, the inclusion of these stock awards would have been antidilutive. 6. Acquisitions 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. Brockway-Smith Company (BROSCO) Acquisition On October 2, 2023, our wholly-owned subsidiary, Boise Cascade Building Materials Distribution, L.L.C. (BMD) completed the previously announced acquisition of BROSCO, a wholesale distributor specializing in doors and millwork, pursuant to the Agreement and Plan of Merger, dated August 22, 2023 (Merger Agreement), by and among BMD, Firepit Merger Sub, Inc., a wholly-owned subsidiary of BMD (the Merger Sub), BROSCO and the representative of the BROSCO stockholders. On the terms and subject to the conditions set forth in the Merger Agreement, on October 2, 2023, Merger Sub merged with and into BROSCO, with BROSCO surviving the merger as a wholly-owned subsidiary of BMD (the BROSCO Acquisition). The purchase price of the BROSCO Acquisition was $ 162.8 million, net of cash acquired, and inclusive of estimated working capital at closing of approximately $ 51 million, which is subject to post-closing adjustments. We funded the BROSCO Acquisition and related costs with cash on hand. Acquisition-related costs of $ 5.1 million are recorded in "General and administrative expenses" in our Consolidated Statements of Operations for the year ended December 31, 2023. The facilities acquired in the BROSCO Acquisition expanded our door and millwork business into the Northeast U.S. markets and enhance BMD's general line product mix. Sales and operating income of $ 43.3 million and $ 2.3 million, respectively, were reported for these facilities as part of the BMD segment for the year ended December 31, 2023. 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 expected future market synergies and opportunities in distribution of doors and millwork products, as well as the assembled workforce. All of the goodwill was assigned to the BMD reporting unit, and approximately $ 20.1 million of the $ 32.3 million of goodwill will not be tax deductible. The remaining goodwill balance is deductible for U.S. income tax purposes. 69 Table of Contents The BROSCO 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 working capital adjustments, income taxes and other tax-related adjustments, accrued liabilities, 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 BROSCO Acquisition: Acquisition Date Fair Value (thousands) Cash and cash equivalents $ 4,009 Accounts receivable 18,249 Inventories 37,104 Other current assets 1,503 Property and equipment 57,331 Other assets 533 Intangible assets: Trade name 18,000 Customer relationships 29,000 Goodwill 32,296 Assets acquired 198,025 Accounts payable 2,688 Accrued liabilities 7,955 Deferred tax liabilities 20,121 Other long-term liabilities 478 Liabilities assumed 31,242 Net assets acquired $ 166,783 Consideration paid, net of cash acquired $ 162,774 70 Table of Contents Pro Forma Financial Information The following pro forma financial information presents the combined results of operations as if the BROSCO facilities had been combined with us on January 1, 2022. 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, 2022. 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. Pro Forma Year Ended December 31 2023 2022 (unaudited, thousands) Sales $ 6,985,464 $ 8,582,674 Net income (a) $ 498,065 $ 864,708 ___________________________________ (a) The pro forma financial information for the year ended December 31, 2023 was adjusted to exclude $ 5.1 million of pre-tax acquisition-related costs for legal, accounting, and other advisory-related services. Coastal Plywood Acquisition 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 and its plywood manufacturing operations located in Havana, Florida, and Chapman, Alabama for a purchase price of $ 515.2 million, including a post-closing adjustment of $ 1.6 million based upon a working capital target (the Coastal Plywood Acquisition). We funded the Coastal Plywood Acquisition and related costs with cash on hand. Acquisition-related costs of $ 1.3 million are recorded in "General and administrative expenses" in our Consolidated Statements of Operations for the year ended December 31, 2022. We finalized the purchase price accounting as of March 31, 2023. The following table summarizes the final allocations of the purchase price to the assets acquired and liabilities assumed, based on our estimates of the fair value at the date of the Coastal Plywood Acquisition: Acquisition Date Fair Value (thousands) Accounts receivable $ 16,123 Inventories 22,977 Property and equipment 251,329 Other assets 1,809 Intangible assets: Trade name 700 Customer relationships 153,600 Goodwill 77,576 Assets acquired 524,114 Accounts payable and accrued liabilities 6,299 Other long-term liabilities 2,578 Liabilities assumed 8,877 Net assets acquired $ 515,237 71 Table of Contents 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. Pro Forma Year Ended December 31 2022 2021 (unaudited, thousands) Sales $ 8,618,105 $ 8,303,754 Net income (a) $ 932,352 $ 818,476 ___________________________________ (a) The pro forma financial information for the year ended December 31, 2022 was adjusted to exclude $ 1.3 million of pre-tax acquisition-related costs for legal, accounting, and other advisory-related services. 7. 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: Building Materials Distribution Wood Products Total (thousands) Balance at December 31, 2022 $ 11,792 $ 126,166 $ 137,958 Additions (a) 32,296 — 32,296 Balance at December 31, 2023 $ 44,088 $ 126,166 $ 170,254 ___________________________________ (a) Represents the acquisition of BROSCO. For additional information, see Note 6, Acquisitions. At December 31, 2023 and 2022, intangible assets represented the values assigned to trade names and 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, are not amortized, and have a carrying amount of $ 8.9 million. In addition, in 2023 and 2022, we acquired trade names and customer relationships as discussed in Note 6, Acquisitions. The trade name acquired in the BROSCO Acquisition has a useful life of 15 years and the trade name acquired in the Coastal Plywood Acquisition had a useful life of one year . The weighted-average useful life for customer relationships from the date of purchase is approximately 11 years. During the years ended December 31, 2023 and 2022, we recognized $ 17.7 million and $ 8.2 million, respectively, of amortization expense for intangible assets. Amortization expense for trade names and customer relationships is expected to be approximately $ 19 million per year for the next five years. 72 Table of Contents Intangible assets consisted of the following: December 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount (thousands) Trade names and trademarks $ 27,600 $ ( 1,000 ) $ 26,600 Customer relationships 195,050 ( 30,907 ) 164,143 $ 222,650 $ ( 31,907 ) $ 190,743 December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount (thousands) Trade names and trademarks $ 9,600 $ ( 292 ) $ 9,308 Customer relationships 166,050 ( 13,925 ) 152,125 $ 175,650 $ ( 14,217 ) $ 161,433 8. Debt Long-term debt consisted of the following: December 31, 2023 December 31, 2022 (thousands) Asset-based revolving credit facility due 2027 $ — $ — Asset-based credit facility term loan due 2027 50,000 50,000 4.875 % senior notes due 2030 400,000 400,000 Deferred financing costs ( 4,720 ) ( 5,608 ) Long-term debt $ 445,280 $ 444,392 At December 31, 2023, the maturities for the aggregate amount of long-term debt outstanding were as follows (in thousands): 2024 $ — 2025 — 2026 — 2027 50,000 2028 — Thereafter 400,000 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, (the Amended Agreement) with Wells Fargo Capital Finance, LLC, as administrative agent, and the banks named therein as lenders. The Amended Agreement includes a $ 400 million senior secured asset-based revolving credit facility (Revolving Credit Facility) and a $ 50.0 million term loan (ABL Term Loan) maturing on 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). Interest on borrowings under our Revolving Credit Facility and ABL Term Loan are payable monthly. Borrowings under the Amended Agreement are constrained by a borrowing base formula dependent upon 73 Table of Contents levels of eligible receivables and inventory reduced by outstanding borrowings and letters of credit (Availability). The Amended Agreement is secured by a first-priority security interest in substantially all of our assets, except for property and equipment. The proceeds of borrowings under the agreement are available for working capital and other general corporate purposes. 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 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 December 31, 2023, was $ 395.9 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 (x) 20 % of the Line Cap and (y) $ 75 million or (ii) (x) pro forma Excess Availability is equal to or exceeds the greater of (1) 15 % of the Line Cap and (2) $ 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 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. 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 December 31, 2023 and 2022, we had no borrowings outstanding under the Revolving Credit Facility and $ 4.1 million and $ 3.8 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. ABL Term Loan The ABL Term Loan was provided by institutions within the Farm Credit system. Borrowings under the ABL Term Loan may be repaid from time to time at the discretion of the borrowers without premium or penalty. 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 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 year ended December 31, 2023, the average interest rate on the ABL Term Loan was approximately 6.86 %. We have received and expect to continue receiving patronage credits under the ABL Term Loan. Patronage credits are distributions of profits from banks in the Farm Credit system, which are cooperatives that are required to distribute profits to their members. Patronage distributions, which are generally made in cash, are received in the year after they are earned. 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 5.9 % during the year ended December 31, 2023. 74 Table of Contents 2030 Notes 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. Interest on our 2030 Notes is payable semiannually in arrears on January 1 and July 1. The 2030 Notes are guaranteed by each of our existing and future direct or indirect domestic subsidiaries that is a guarantor under our Amended Agreement. The 2030 Notes are senior unsecured obligations and rank equally with all of the existing and future senior indebtedness of Boise Cascade Company and of the guarantors, senior to all of their existing and future subordinated indebtedness, effectively subordinated to all of their present and future senior secured indebtedness (including all borrowings with respect to our Amended Agreement to the extent of the value of the assets securing such indebtedness), and structurally subordinated to the indebtedness of any subsidiaries that do not guarantee the 2030 Notes. The terms of the indenture governing the 2030 Notes, among other things, limit the ability of Boise Cascade and our restricted subsidiaries to: incur additional debt; declare or pay dividends; redeem stock or make other distributions to stockholders; make investments; create liens on assets; consolidate, merge or transfer substantially all of their assets; enter into transactions with affiliates; and sell or transfer certain assets. The indenture governing the 2030 Notes 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 indenture, and (ii) our consolidated leverage ratio is no greater than 3.5 :1, or (iii) the dividend, together with other dividends since the issue date, would not exceed our "builder" basket under the indenture. In addition, the indenture includes certain specific baskets for the payment of dividends. The indenture governing the 2030 Notes provides for customary events of default and remedies. Interest Rate Swap For information on our interest rate swap, see Interest Rate Risk of Note 14, Financial Instrument Risk. Cash Paid for Interest For the years ended December 31, 2023, 2022, and 2021, cash payments for interest were $ 22.6 million, $ 23.1 million, and $ 21.5 million, respectively. 9. Leases Lease Costs The components of lease expense were as follows: Year Ended December 31 2023 2022 2021 (thousands) Operating lease cost $ 13,227 $ 14,212 $ 13,817 Finance lease cost Amortization of right-of-use assets 2,470 2,482 2,403 Interest on lease liabilities 2,229 2,327 2,363 Variable lease cost 5,429 4,406 3,733 Short-term lease cost 6,149 5,662 5,159 Sublease income ( 330 ) ( 439 ) ( 288 ) Total lease cost $ 29,174 $ 28,650 $ 27,187 75 Table of Contents Other Information Supplemental cash flow information related to leases was as follows: Year Ended December 31 2023 2022 2021 (thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 13,472 $ 14,203 $ 13,630 Operating cash flows from finance leases 2,226 2,338 2,355 Financing cash flows from finance leases 1,831 1,685 1,525 Right-of-use assets obtained in exchange for lease obligations Operating leases 18,147 5,096 10,160 Finance leases — — 2,108 Other information related to leases was as follows: December 31, 2023 December 31, 2022 Weighted-average remaining lease term (years) Operating leases 8 7 Finance leases 13 14 Weighted-average discount rate Operating leases 6.2 % 6.0 % Finance leases 7.6 % 7.6 % As of December 31, 2023, our minimum lease payment requirements for noncancelable operating and finance leases are as follows: Operating Leases Finance Leases (thousands) 2024 $ 13,078 $ 4,053 2025 13,034 3,735 2026 9,920 3,581 2027 9,200 3,649 2028 7,426 3,397 Thereafter 33,833 29,689 Total future minimum lease payments 86,491 48,104 Less: interest ( 20,311 ) ( 18,077 ) Total lease obligations 66,180 30,027 Less: current obligations ( 9,755 ) ( 1,943 ) Long-term lease obligations $ 56,425 $ 28,084 76 Table of Contents 10. Retirement and Benefit Plans Our retirement plans consist of noncontributory defined benefit pension plans, contributory defined contribution savings plans, and deferred compensation plans. Defined Benefit Plans Some of our current or former employees are covered by noncontributory defined benefit pension plans. These plans are nonqualified salaried pension plans, which were frozen so that no future benefits have accrued since December 31, 2009. We recognize and record the underfunded status of our defined benefit pension plans in "Accrued liabilities, Compensation and benefits" and "Other, Compensation and benefits" on our Consolidated Balance Sheets. The total accumulated benefit obligation for all unfunded nonqualified defined benefit pension plans was $ 2.6 million and $ 3.0 million at December 31, 2023 and 2022, respectively. In addition, we recognize changes in funded status in the year the changes occur through other comprehensive income (loss). For both the years ended December 31, 2023 and 2022, amounts recognized in accumulated other comprehensive loss related to our nonqualified defined benefit pension plans were immaterial. Furthermore, the components of net periodic benefit cost and other amounts recognized in other comprehensive income related to our nonqualified defined pension plans for the years ended December 31, 2023 and 2022 were immaterial. Defined Contribution Plans We sponsor contributory defined contribution savings plans for most of our salaried and hourly employees, and we generally provide company contributions to the savings plans. We contribute 4 % of each salaried participant's eligible compensation to the plan as a nondiscretionary company contribution. In addition, for the years that a performance target is met, we contribute an additional amount of the employee's eligible compensation, depending on company performance and the employee's years of service. During the years ended December 31, 2023, 2022, and 2021, company performance resulted in additional contributions in the range of 2 % to 4 % of eligible compensation. The company contributions for union and nonunion hourly employees vary by location. Company contributions paid, or to be paid, to our defined contribution savings plans for the years ended December 31, 2023, 2022, and 2021, were $ 33.5 million, $ 31.3 million, and $ 28.7 million, respectively. Defined Contributory Trust We participate in a multiemployer defined contributory trust plan for certain union hourly employees. As of December 31, 2023, 2022, and 2021 approximately 730 , 740 , and 760 , respectively, of our employees participated in this plan. Per the terms of the representative collective bargaining agreements, we were required to contribute 4.5 % of the employee's earnings during 2023, 2022, and 2021. Company contributions to the multiemployer defined contributory trust plan were $ 1.8 million, $ 2.0 million, and $ 1.9 million, respectively, for each of the years ended December 31, 2023, 2022, and 2021. After required contributions, we have no further obligation to the plan. The plan and its assets are managed by a joint board of trustees. Deferred Compensation Plans We sponsor deferred compensation plans. Under the plans, participating employees and directors irrevocably elect each year to defer receipt of a portion of their compensation. A participant's account is credited with imputed interest at a rate equal to 130 % of Moody's Composite Average of Yields on Corporate Bonds. Participants may receive payment of their deferred compensation plan balance in a lump sum or in monthly installments over a specified period of years following the termination of their employment with the company. In addition, subject to plan revisions that became effective January 1, 2019, employee participants may also receive distributions of their deferred compensation accounts while still employed by the company. The deferred compensation plans are unfunded; therefore, benefits are paid from our general assets. For the years ended December 31, 2023, 2022, and 2021, we recognized $ 2.1 million, $ 1.4 million, and $ 0.9 million, respectively, of interest expense related to the plans. At December 31, 2023 and 2022, we had liabilities related to the plans of $ 2.2 million and $ 1.7 million, respectively, recorded in "Accrued liabilities, Compensation and benefits" and $ 30.5 million and $ 25.7 million, respectively, recorded in "Other, Compensation and benefits" on our Consolidated Balance Sheets. 77 Table of Contents 11. Long-Term Incentive Compensation Plans Stock-Based Compensation In April 2016, we adopted the 2016 Boise Cascade Omnibus Incentive Plan (2016 Incentive Plan), which superseded the 2013 Incentive Compensation Plan (2013 Incentive Plan). After the effective date of the 2016 Incentive Plan, no awards may be granted under the 2013 Incentive Plan. The 2016 Incentive Plan provides for grants of stock options, stock appreciation rights, restricted stock, other stock-based awards, cash-based compensation, and performance awards. Directors, officers, and other employees, as well as consultants and advisors, are eligible for grants under the 2016 Incentive Plan. These awards are at the discretion of the compensation committee of our board of directors, and they vest and expire in accordance with terms established at the time of grant. All awards under the 2016 Incentive Plan, other than stock options or stock appreciation rights, are eligible to participate in dividend or dividend equivalent payments, if any, which we accrue to be paid if and when the awards vest. Shares issued pursuant to awards under the incentive plans are from our authorized, but unissued shares. The maximum number of shares approved for grant under the 2016 Incentive Plan is 3.7 million shares. In 2023, 2022, and 2021, we granted two types of stock-based awards under the 2016 Incentive Plan: performance stock units (PSUs) and restricted stock units (RSUs). As of December 31, 2023, 2.0 million shares remained available for future issuance under the 2016 Incentive Plan. PSU and RSU Awards In 2023, we granted 93,282 PSUs to our officers and other employees, subject to performance and service conditions, at a weighted average grant date fair value of $ 69.33 . For the officers, the number of shares actually awarded will range from 0 % to 200 % of the target amount, depending upon Boise Cascade's 2023 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). We define NOPAT as net income plus after-tax financing expense. Invested capital is defined as total assets plus capitalized lease expense, less cash, cash equivalents, and current liabilities, excluding short-term debt. For the other employees, the number of shares actually awarded will range from 0 % to 200 % of the target amount, depending upon Boise Cascade's 2023 EBITDA, defined as income before interest (interest expense and interest income), income taxes, and depreciation and amortization, as approved by executive management, determined in accordance with the related grant agreement. 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. In 2022 and 2021, we granted 66,180 and 73,265 PSUs, at a weighted average grant date fair value of $ 79.81 and $ 52.45 , respectively, to our officers and other employees, subject to performance and service conditions. During the 2022 performance period, officers and other employees earned 152 % and 200 %, respectively, of the target based on Boise Cascade's 2022 ROIC and EBITDA results, as applicable, determined by our compensation committee and executive management, as applicable, in accordance with the related grant agreements. During the 2021 performance period, officers and other employees both earned 200 % of the target based on Boise Cascade’s 2021 ROIC and EBITDA results, as applicable, determined by our compensation committee and executive management, as applicable, 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. In 2023, 2022, and 2021, we granted an aggregate of 116,454 , 86,869 , and 101,059 RSUs, at a weighted average grant date fair value of $ 69.58 , $ 79.92 , and $ 52.95 , 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 in a single installment after a one year period. We based the fair value of the PSU and RSU awards on the closing market price of our common stock on the grant date. During the years ended December 31, 2023, 2022, and 2021, the total fair value of PSUs and RSUs vested was $ 16.8 million, $ 12.0 million, and $ 9.2 million, respectively. 78 Table of Contents The following summarizes the activity of our PSUs and RSUs awarded under our incentive plan for the year ended December 31, 2023: PSUs RSUs Number of shares Weighted Average Grant-Date Fair Value Number of shares Weighted Average Grant-Date Fair Value Outstanding, December 31, 2022 317,854 $ 51.46 155,339 $ 65.17 Granted 93,282 69.33 116,454 69.58 Performance condition adjustment (a) 39,873 79.80 — — Vested ( 154,794 ) 40.61 ( 87,632 ) 60.64 Forfeited ( 9,109 ) 68.72 ( 5,650 ) 69.77 Outstanding, December 31, 2023 287,106 $ 66.51 178,511 $ 70.13 __________________ (a) Represents additional PSUs granted during the year ended December 31, 2023, related to above-target achievement of the 2022 performance condition described above. Compensation Expense We record compensation expense over the awards' vesting period and account for share-based award forfeitures as they occur, rather than making estimates of future forfeitures. Any shares not vested are forfeited. We recognize compensation expense for stock awards with only service conditions on a straight-line basis over the requisite service period. Most of our stock-based compensation expense was recorded in "General and administrative expenses" in our Consolidated Statements of Operations. Total stock-based compensation recognized from PSUs and RSUs, net of forfeitures, was as follows: Year Ended December 31 2023 2022 2021 (thousands) PSUs $ 9,056 $ 6,757 $ 4,240 RSUs 6,354 5,113 3,671 Total $ 15,410 $ 11,870 $ 7,911 For the years ended December 31, 2023, 2022, and 2021, the related tax benefit was $ 3.9 million, $ 3.0 million, and $ 2.0 million, respectively. As of December 31, 2023, total unrecognized compensation expense related to nonvested share-based compensation arrangements was $ 18.4 million. This expense is expected to be recognized over a weighted-average period of 1.8 years. Long-Term Incentive Cash Plan In 2023, 2022, and 2021, certain non-executive employees participated in a long-term incentive plan that pays awards in cash (LTI Cash Plan). The LTI Cash Plan provides participants with the opportunity to earn a cash award, half of which is subject to service conditions only, with the other half subject to performance and service conditions. For the performance based cash award, the amount of cash actually awarded will range from 0 % to 200 % of the target amount, depending upon Boise Cascade's EBITDA, determined by executive management in accordance with the related grant agreement. Under the LTI Cash Plan, the award is paid in three equal installments each year after the grant date, with continued employment as a precondition for receipt of each award installment. We recognize compensation expense for cash awards with only service conditions on a straight-line basis over the requisite service period. Cash awards subject to performance conditions are also recognized on a straight-line basis over the requisite service period, based on the most probable amount of cash to be paid subject to achievement of the performance condition. 79 Table of Contents In 2023, 2022, and 2021, we recognized $ 6.0 million, $ 5.9 million, and $ 5.3 million, respectively, of LTI Cash Plan expense, which is recorded in "Materials, labor, and other operating expenses (excluding depreciation)," "Selling and distribution expenses," or "General and administrative expenses" in our Consolidated Statements of Operations. During the 2022 and 2021 performance periods, cash awards earned 200 % of the target based on Boise Cascade’s 2022 and 2021 EBITDA, respectively, determined by executive management in accordance with the related grant agreements. 12. Stockholders' Equity Our certificate of incorporation has authorized 300,000,000 shares of common stock and 50,000,000 shares of preferred stock. No preferred stock was issued or outstanding as of December 31, 2023 and 2022. We had 44,982,576 and 44,827,091 shares of common stock issued and 39,539,825 and 39,460,018 shares of common stock outstanding as of December 31, 2023 and 2022, respectively. Each share of common stock entitles the holder to one vote on matters to be voted on by the stockholders of Boise Cascade. 80 Table of Contents Dividends 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. Our board of directors declared and paid the following dividends during each of the respective quarters for the years ended December 31, 2023, 2022, and 2021: Dividends Per Share Amount Paid 2023 (in thousands) First Quarter (a) $ 0.15 $ 8,258 Second Quarter (b) 3.15 124,709 Third Quarter 0.20 7,918 Fourth Quarter (b) 5.20 205,608 Total $ 8.70 $ 346,493 2022 First Quarter (a) $ 0.12 $ 5,939 Second Quarter (c) 2.62 103,352 Third Quarter 0.12 4,734 Fourth Quarter (c) 1.15 45,539 Total $ 4.01 $ 159,564 2021 First Quarter (a) $ 0.10 $ 4,440 Second Quarter (d) 2.10 3,933 Third Quarter (d) 0.10 82,596 Fourth Quarter (d) 3.12 122,712 Total $ 5.42 $ 213,681 __________________ (a) Includes payments of dividend equivalents on RSUs and PSUs which vested in first quarter of each year. (b) During second quarter 2023, our board of directors declared and paid a special dividend of $ 3.00 per share on our common stock. During fourth quarter 2023, our board of directors declared and paid a special dividend of $ 5.00 per share on our common stock. (c) During second quarter 2022, our board of directors declared and paid a special dividend of $ 2.50 per share on our common stock. During fourth quarter 2022, our board of directors declared and paid a special dividend of $ 1.00 per share on our common stock. (d) During second quarter 2021, our board of directors declared a special dividend of $ 2.00 per share on our common stock, which was paid in the third quarter 2021. During fourth quarter 2021, our board of directors declared and paid a special dividend of $ 3.00 per share on our common stock. On February 6, 2024, our board of directors declared a dividend of $ 0.20 per share of our common stock, payable on March 15, 2024, to stockholders of record on February 23, 2024. 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 8, Debt. 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, material cash requirements, 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. 81 Table of Contents Stock Repurchase On July 28, 2022, our board of directors authorized the repurchase of an additional 1.5 million shares of our common stock. This increase was in addition to the remaining authorized shares under our prior common stock repurchase program that was authorized on February 25, 2015 (the Program). Share repurchases may be made on an opportunistic basis, through open market transactions, privately negotiated transactions, or by other means in accordance with applicable federal securities laws. We are not obligated to purchase any shares and there is no set date that the Program will expire. Our board of directors may increase or decrease the number of shares under the Program or terminate the Program in its discretion at any time. During the year ended December 31, 2023, we repurchased 75,678 shares under the Program at a cost of $ 6.4 million, or an average of $ 84.91 per share. The shares were repurchased with cash on hand and are recorded as "Treasury stock" on our Consolidated Balance Sheets. As of December 31, 2023, there were 1,921,311 shares of common stock that may yet be purchased under the Program. During the years ended December 31, 2022 and 2021, we did not purchase any shares under the Program. 13. Transactions With Related Party Louisiana Timber Procurement Company, L.L.C. (LTP) is an unconsolidated variable-interest entity that is 50 % owned by us and 50 % owned by Packaging Corporation of America (PCA). LTP procures sawtimber, pulpwood, residual chips, and other residual wood fiber to meet the wood and fiber requirements of us and PCA in Louisiana. We are not the primary beneficiary of LTP as we do not have power to direct the activities that most significantly affect the economic performance of LTP. Accordingly, we do not consolidate LTP's results in our financial statements. Sales Related-party sales to LTP from our Wood Products segment in our Consolidated Statements of Operations were $ 11.6 million, $ 13.4 million, and $ 13.4 million, respectively, during the years ended December 31, 2023, 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 $ 80.2 million, $ 85.5 million, and $ 84.4 million, respectively, during the years ended December 31, 2023, 2022, and 2021. These costs are recorded in "Materials, labor, and other operating expenses (excluding depreciation)" in our Consolidated Statements of Operations. 14. Financial Instrument Risk 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. In 2023, 2022, and 2021, we did not use derivative instruments to manage these risks, except for interest rate swaps as discussed below. Commodity Price Risk A portion of the products we manufacture or purchase and resell and some of our key production inputs are commodities whose price is determined by the market's supply and demand for such products. Price fluctuations in our selling prices and key costs have a significant effect on our financial performance. The markets for most of these commodities are cyclical and are primarily affected by economic uncertainties, industry operating rates, supply-related disruptions, transportation constraints or disruptions, net import and export activity, inventory levels in various distribution channels, and seasonal demand patterns. Interest Rate Risk 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 December 31, 2023, 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. To meet this objective, we enter into receive-variable, pay-fixed interest rate swaps to mitigate the variable-rate cash flow exposure with fixed-rate cash flows. In accordance with our risk management strategy, we actively monitor our interest rate exposure and use derivative instruments from time to time to manage the related risk. We do not speculate using derivative instruments. 82 Table of Contents At December 31, 2023, we had one interest rate swap agreement. Under the interest rate swap, we receive one-month SOFR plus a spread adjustment of 0.10 % 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 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 0.41 %, and this swap expires in June 2025. The interest rate swap agreement was not designated as a cash flow hedge, 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 December 31, 2023 and 2022, we recorded a long-term asset of $ 3.0 million and $ 4.8 million, respectively, in "Other assets" on our Consolidated Balance Sheets, representing the fair value of the interest rate swap agreement. The swap was valued based on observable inputs for similar assets and liabilities and other observable inputs for interest rates and yield curves (Level 2 inputs). Foreign Currency Risk We have sales in countries outside the U.S. As a result, we are exposed to movements in foreign currency exchange rates, primarily in Canada, but we do not believe our exposure to currency fluctuations is significant. 15. Segment Information We operate our business using two reportable segments: Wood Products and BMD. These segments represent distinct businesses that are managed separately because of differing products and services. Each of these businesses requires distinct operating and marketing strategies. For a description of the products sold by our segments, see Note 3, Revenues. We measure and evaluate our reportable segments based on net sales and segment operating income (loss). Accordingly, our chief operating decision maker reviews the performance of the company and allocates resources based primarily on net sales and segment operating income (loss) for our business segments. Unallocated corporate costs are presented as reconciling items to arrive at operating income. Unallocated corporate costs include corporate support staff services, related assets and liabilities, and nonqualified pension plan activity. Support services include, but are not limited to, information technology, human resources, finance, accounting, and legal functions. Specified expenses are allocated to the segments. For many of these allocated expenses, the related assets and liabilities remain in corporate. The segments follow the accounting principles described in Note 2, Summary of Significant Accounting Policies. For each of the years ended December 31, 2023, 2022, and 2021, one customer accounted for 12 % of total sales when combining sales from Wood Products and BMD to those customers. Sales to foreign unaffiliated customers were approximately $ 99 million, $ 142 million, and $ 128 million, respectively, for the years ended December 31, 2023, 2022, and 2021. At December 31, 2023, 2022, and 2021, and for the years then ended, long-lived assets located in foreign countries and net sales originating in foreign countries were not material. 83 Table of Contents Wood Products and BMD segment sales to external customers, including related parties, by product line are as follows: Year Ended December 31 2023 2022 2021 (millions) Wood Products (a) LVL (b) $ 46.7 $ 21.2 $ 4.3 I-joists (b) 29.6 ( 2.3 ) ( 6.8 ) Other engineered wood products (b) 33.4 43.9 43.0 Plywood and veneer 353.2 493.2 539.3 Lumber 86.0 78.9 81.8 Byproducts 85.9 84.3 71.2 Other 25.0 24.4 19.3 659.7 743.7 752.0 Building Materials Distribution Commodity 2,335.7 3,432.3 3,704.7 General line 2,443.2 2,542.7 2,164.8 Engineered wood products 1,399.6 1,668.6 1,304.6 6,178.5 7,643.6 7,174.1 $ 6,838.2 $ 8,387.3 $ 7,926.1 ___________________________________ (a) Amounts represent sales to external customers. Sales are calculated after intersegment sales eliminations to our BMD segment. (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 the years ended December 31, 2023, 2022, and 2021, approximately 78 %, 77 %, and 78 %, respectively, of Wood Products' EWP sales volumes were to our BMD segment. 84 Table of Contents An analysis of our operations by segment is as follows: Year Ended December 31 2023 2022 2021 (thousands) Net sales by segment Wood Products $ 1,932,602 $ 2,115,896 $ 1,970,804 Building Materials Distribution 6,178,690 7,643,615 7,174,278 Intersegment eliminations (a) ( 1,273,047 ) ( 1,372,204 ) ( 1,218,971 ) Total net sales $ 6,838,245 $ 8,387,307 $ 7,926,111 Segment operating income Wood Products $ 337,132 $ 575,167 $ 531,235 Building Materials Distribution 335,808 627,091 481,085 Total segment operating income 672,940 1,202,258 1,012,320 Unallocated corporate costs ( 48,554 ) ( 44,409 ) ( 40,517 ) Income from operations $ 624,386 $ 1,157,849 $ 971,803 Depreciation and amortization Wood Products $ 98,710 $ 73,308 $ 55,249 Building Materials Distribution 32,353 27,005 24,007 Corporate 1,404 1,280 1,497 Total depreciation and amortization $ 132,467 $ 101,593 $ 80,753 Capital expenditures Wood Products (b) $ 59,360 $ 51,934 $ 48,280 Building Materials Distribution (b)(c) 155,724 60,463 57,557 Corporate 354 1,720 681 Total capital expenditures $ 215,438 $ 114,117 $ 106,518 __________________ (a) Primarily represents intersegment sales from our Wood Products segment to our BMD segment. During 2023, 2022, and 2021, approximately 66 %, 65 %, and 62 %, respectively, of Wood Products' overall sales were to our BMD segment. (b) Capital spending in 2023 for BMD excludes $ 162.8 million of consideration paid, net of cash acquired, for the acquisition of BROSCO. Capital spending in 2022 for Wood Products excludes $ 515.2 million for the acquisition of two plywood facilities. For more information, see Note 6, Acquisitions. (c) Capital spending in 2023 for BMD includes approximately $ 74 million to purchase a facility in Kansas City, Missouri, to house a new door and millwork location, as well as the purchase of facilities in West Palm Beach, Florida, and Modesto, California to expand or relocate existing distribution centers. Capital spending in 2022 for BMD includes approximately $ 13 million to purchase a previously leased BMD property in Milton, Florida. Capital spending in 2021 for BMD includes approximately $ 15 million to purchase a BMD property in Walton, Kentucky, to expand our service capabilities in Cincinnati and the surrounding markets. 85 Table of Contents December 31 2023 2022 (thousands) Assets Wood Products $ 1,083,517 $ 1,120,188 Building Materials Distribution 1,440,123 1,075,628 Corporate 935,006 1,044,698 Total assets $ 3,458,646 $ 3,240,514 16. Commitments, Legal Proceedings and Contingencies, and Guarantees Commitments We have commitments for leases and long-term debt that are discussed further in Note 8, Debt, and Note 9, Leases. In addition, we have purchase obligations for goods and services, capital expenditures, and raw materials entered into in the normal course of business. We are a party to a number of long-term log supply agreements. At December 31, 2023, our total obligation for log purchases under contracts with third parties was approximately $ 175 million based on fixed contract pricing or estimated current contractual index pricing for variable contracts. Under certain log supply agreements, we have the right to cancel or reduce our commitments in the event of a mill curtailment or shutdown. Future purchase prices under most of the variable-price agreements will be set quarterly or semiannually based on regional market prices. Our log requirements and our access to supply, as well as the cost of obtaining logs, are subject to change based on, among other things, the effect of governmental laws and regulations, our manufacturing operations not operating in the normal course of business, log availability, and the status of environmental appeals. Except for deposits required pursuant to log supply contracts, these obligations are not recorded in our consolidated financial statements until contract payment terms take effect. 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 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. Guarantees We provide guarantees, indemnifications, and assurances to others. Boise Cascade Company and its subsidiaries (Boise Cascade Building Materials Distribution, L.L.C., and Boise Cascade Wood Products, L.L.C.) act as co-borrowers under our Revolving Credit Facility and ABL Term Loan, described in Note 8, Debt. Their obligations are guaranteed by each of our remaining domestic subsidiaries. Boise Cascade has issued $ 400.0 million of 4.875 % senior notes due in 2030. At December 31, 2023, $ 400.0 million of the 2030 Notes were outstanding. The 2030 Notes are guaranteed by each of Boise Cascade Company's existing and future direct or indirect domestic subsidiaries that is a guarantor or co-borrower under our Revolving Credit Facility. See Note 8, Debt, for more information. Boise Cascade issued guarantees to a limited number of trade creditors of one or more of its principal operating subsidiaries, Boise Cascade Building Materials Distribution, L.L.C., and Boise Cascade Wood Products, L.L.C., for trade credit obligations arising in the ordinary course of the business of such operating subsidiaries. These included guarantees of obligations with respect to present and future log agreements of Boise Cascade Wood Products, L.L.C. and several facility leases entered into by Boise Cascade Building Materials Distribution, L.L.C. Boise Cascade's exposure under these agreements is limited to future log purchases and the minimum lease payment requirements under the agreements. We enter into a wide range of indemnification arrangements in the ordinary course of business. At December 31, 2023, we are not aware of any material liabilities arising from these indemnifications. 86 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Boise Cascade Company: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Boise Cascade Company and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 20, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 87 Table of Contents Customer rebates payable for engineered wood products As discussed in Note 3 to the consolidated financial statements, the Company records an accrual for estimated rebates payable to third parties. The Company provides engineered wood products (EWP) rebates at various stages of the supply chain (including dealers and homebuilders) as a means to increase sales. EWP rebates are based on the volume of purchases (measured in dollars or units), among other factors such as customer loyalty, conversion, and commitment incentives, as well as temporary protection from price increases. As of December 31, 2023, the Company has recorded $87.9 million of rebates payable to third parties of which $63.0 million represents payables related to EWP rebates. We identified the rebates payable for EWP as a critical audit matter. Evaluating the Company's estimate of the year-end rebates payable for EWP, which is based on a sell-through model as EWP products transition through the supply chain, required a high degree of subjective auditor judgment. Specifically, the estimate required significant auditor judgment because it is challenging, due to the time lag of information, to estimate sales subject to rebate as the products transition through the supply chain from the Company's wholesale distribution customers to dealers and homebuilders. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the customer rebates payable process. This included controls related to the Company's process to evaluate the information used to estimate sales subject to rebate related to the products as they transition through the supply chain. We evaluated the Company’s ability to accurately estimate its year-end EWP rebate payable in the aggregate by comparing the prior year estimate to the actual rebate payments made. In addition, subsequent to year end, we tested a sample of EWP rebates at the individual entity level by developing an independent estimate of the payable utilizing key contract terms, current year reported sales and usage metrics, current year payment detail, and historic sales and usage metrics to compare to the Company’s estimate of the EWP payable required. /s/ KPMG LLP We have served as the Company’s auditor since 2005. Boise, Idaho February 20, 2024 88 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Boise Cascade Company: Opinion on Internal Control Over Financial Reporting We have audited Boise Cascade Company and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 20, 2024 expressed an unqualified opinion on those consolidated financial statements. The Company acquired Brockway-Smith Company (BROSCO) during 2023, and management excluded from its assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2023, Brockway-Smith Company (BROSCO)'s internal control over financial reporting associated with approximately 6% of Boise Cascade Company's consolidated total assets and approximately 1% of Boise Cascade Company's total revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2023. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Brockway-Smith Company (BROSCO). Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 89 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Boise, Idaho February 20, 2024 90 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.