What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-05 compared with 2024-05-06 · 130 added, 90 removed, 186 unchanged (54% of the section changed)

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Executive Overview

We recorded income from operations of $133.0 million during the three months ended March 31, 2024, compared with income from operations of $127.6 million during the three months ended March 31, 2023.

In our Wood Products segment, income increased $1.8 million to $71.2 million for the three months ended March 31, 2024, from $69.4 million for the three months ended March 31, 2023, due primarily to higher EWP sales volumes and higher plywood sales prices, offset partially by lower EWP sales prices and higher wood fiber costs.

In our BMD segment, income increased $2.8 million to $72.5 million for the three months ended March 31, 2024, from $69.7 million for the three months ended March 31, 2023, driven by a gross margin increase of $22.9 million, resulting primarily from higher sales volumes and improved margins on general line and commodity products, offset partially by increased selling and distribution expenses and depreciation and amortization expense of $16.5 million and $4.0 million, respectively.

We recorded income from operations of $147.0 million during the three months ended June 30, 2024, compared with income from operations of $190.0 million during the three months ended June 30, 2023.

In our Wood Products segment, income decreased $31.3 million to $72.8 million for the three months ended June 30, 2024, from $104.0 million for the three months ended June 30, 2023, due primarily to lower EWP sales prices, as well as higher wood fiber and conversion costs.

These decreases in segment income were offset partially by higher EWP sales volumes.

In our BMD segment, income decreased $13.2 million to $85.4 million for the three months ended June 30, 2024, from $98.6 million for the three months ended June 30, 2023, driven by increased selling and distribution expenses and depreciation and amortization expense of $10.9 million and $4.4 million, respectively.

These decreases were offset partially by decreased general and administrative expenses of $2.0 million.

Gross margins were flat when compared with the same quarter in the prior year.

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

We ended first quarter 2024 with $890.2 million of cash and cash equivalents and $395.7 million of undrawn committed bank line availability, for total available liquidity of $1,286.0 million.

We had $445.5 million of outstanding debt at March 31, 2024.

We used $59.3 million of cash during the three months ended March 31, 2024, as cash provided by operations was offset by capital spending, treasury stock purchases, dividends paid on our common stock, and tax withholding payments on stock-based awards.

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

We ended second quarter 2024 with $922.1 million of cash and cash equivalents and $395.7 million of undrawn committed bank line availability, for total available liquidity of $1,317.8 million.

We had $445.7 million of outstanding debt at June 30, 2024.

We used $27.5 million of cash during the six months ended June 30, 2024, principally to fund seasonal working capital increases and capital spending, treasury stock purchases, dividends paid on our common stock, and tax withholding payments on stock-based awards.

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

Demand for the products we manufacture, as well as the products we purchase and distribute, is correlated with new residential construction, residential repair-and-remodeling activity and light commercial construction.

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Current industry forecasts for 2024 U.S.

housing starts are generally consistent with actual housing starts of 1.42 million in 2023, as reported by the U.S.

housing starts are slightly below actual housing starts of 1.42 million in 2023, as reported by the U.S.

Census Bureau.

Home affordability remains a challenge for many consumers due to the cost of housing combined with elevated mortgage rates.

However, with low unemployment and an undersupply of existing housing stock available for sale, new residential construction is expected to remain an important source of supply for homebuyers.

Recent pressures on multi-family starts are expected to continue due to increased capital costs for developers combined with cooling rents and elevated supply.

Home affordability remains a challenge for many consumers due to the cost of housing, as well as persistent elevated mortgage rates.

However, with low unemployment, an undersupply of existing housing stock available for sale, and favorable demographic trends, new residential construction is expected to remain an important source of supply for homebuyers.

Multi-family starts have declined sharply from historic levels due to increased capital costs for developers, combined with elevated supply.

Regarding home improvement spending, the age of U.S.

housing stock and elevated levels of homeowner equity have provided a favorable backdrop for repair-and-remodel spending.

In 2023, year-over-year growth rates in renovation spending moderated due to economic uncertainty and higher borrowing costs.

While home improvement spending is expected to remain healthy compared to history, recent industry forecasts project mid-single-digit declines in 2024.

Ultimately, macroeconomic factors, the level and expectations for mortgage rates, home affordability, home equity levels, and other factors will likely influence the near-term demand environment for the products we manufacture and distribute.

housing stock and elevated levels of homeowner equity will continue to provide a favorable backdrop for repair-and-remodel spending.

However, while home improvement spending is expected to remain healthy compared to history, renovation spending has softened due to consumer uncertainty, labor availability, higher borrowing costs, and building material inflation.

Ultimately, macroeconomic factors, the level and expectations for mortgage rates, home affordability, home equity levels, home size, and other factors will likely influence the near-term demand environment for the products we manufacture and distribute.

As a manufacturer of certain commodity products, we have sales and profitability exposure to declines in commodity product prices and rising input costs.

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Our Operating Results

The following tables set forth our operating results in dollars and as a percentage of sales for the three months ended March 31, 2024 and 2023:

The following tables set forth our operating results in dollars and as a percentage of sales for the three and six months ended June 30, 2024 and 2023:

Three Months Ended

June 30 Six Months Ended

2024 2023 2024 2023

Sales $ 1,797.7 $ 1,815.2 $ 3,443.1 $ 3,359.5

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Set forth below are historical U.S.

housing starts data, segment sales volumes and average net selling prices for the principal products sold by our Wood Products segment, and sales mix and gross margin information for our BMD segment for the three months ended March 31, 2024 and 2023:

Three Months Ended

June 30 Six Months Ended

2024 2023 2024 2023

Housing Starts (a)

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Multi-family 91.5 139.2 171.5 265.8

372.0 400.4 693.3 715.2

Segment Sales

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

For the three months ended March 31, 2024, total sales increased $101.1 million, or 7%, to $1,645.4 million from $1,544.3 million during the three months ended March 31, 2023.

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

In first quarter 2024, total U.S.

housing starts and single-family housing starts increased 1% and 27%, respectively, compared with the same period in 2023.

Average composite panel prices for the three months ended March 31, 2024 were 23% higher than in the same period in the prior year, as reflected by Random Lengths composite panel pricing.

Average composite lumber prices for the three months ended March 31, 2024 were 2% lower than in the same period in the prior year, as reflected by Random Lengths composite lumber pricing.

For the three months ended June 30, 2024, total sales decreased $17.5 million, or 1%, to $1,797.7 million from $1,815.2 million during the three months ended June 30, 2023.

For the six months ended June 30, 2024, total sales increased $83.5 million, or 2%, to $3,443.1 million from $3,359.5 million for the same period in the prior year.

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

In second quarter 2024, total U.S.

housing starts decreased 7%, while single-family housing starts increased 7%, compared with the same period in 2023.

On a year-to-date basis through June 2024, total housing starts decreased 3%, while single-family housing starts increased 16%, compared with the same period in 2023.

Average composite panel prices for the three and six months ended June 30, 2024 were 14% and 18% higher, respectively, than in the same period in the prior year, as reflected by Random Lengths composite panel pricing.

Average composite lumber prices for the three and six months ended June 30, 2024 were 6% and 4% lower, respectively, than in the same period in the prior year, as reflected by Random Lengths composite lumber pricing.

Wood Products.

Sales, including sales to our BMD segment, increased $31.5 million, or 7%, to $468.9 million for the three months ended March 31, 2024, from $437.4 million for the three months ended March 31, 2023.

The increase in sales was driven by higher sales volumes for I-joists and LVL (collectively referred to as EWP) of 46% and 31%, respectively, resulting in increased sales of $38.8 million and $35.5 million, respectively.

EWP sales volumes increased due to an increase in housing starts.

In addition, higher plywood sales prices of 3% resulted in increased sales of $3.8 million.

These increases were offset partially by decreased sales prices for LVL and I-joists of 8% and 7%, respectively, resulting in decreased sales of $11.6 million and $8.5 million, respectively, as well as decreased plywood sales volumes of 8% resulting in decreased sales of $12.6 million.

Sales, including sales to our BMD segment, decreased $40.5 million, or 8%, to $489.8 million for the three months ended June 30, 2024, from $530.3 million for the three months ended June 30, 2023.

The decrease in sales was driven by lower plywood sales volumes of 13% resulting in decreased sales of $20.7 million.

Plywood sales volumes decreased as we shifted a higher proportion of our internally produced veneer into EWP production, given the change in demand for EWP.

In addition, other sales, including residual byproducts and lumber, decreased $14.5 million.

Lower sales prices for LVL and I-joists (collectively referred to as EWP) of 7% and 6%, respectively, resulted in decreased sales of $10.3 million and $8.3 million, respectively.

In addition, other sales, including lumber and residual byproducts, decreased $14.3 million.

These decreases were offset partially by increased sales volumes for LVL and I-joists of 8% and 5%, respectively, resulting in increased sales of $11.8 million and $5.9 million, respectively.

For the six months ended June 30, 2024, sales, including sales to our BMD segment, decreased $9.0 million, or 1%, to $958.8 million from $967.7 million for the same period in the prior year.

The decrease in sales was driven by lower sales prices for LVL and I-joists (collectively referred to as EWP) of 7% and 6%, respectively, resulting in decreased sales of $21.4 million and $16.1 million, respectively.

Plywood sales volumes decreased 11% resulting in decreased sales of $33.3 million.

Plywood sales volumes decreased as we shifted a higher proportion of our internally produced veneer into EWP production, given the change in demand for EWP.

In addition, other sales, including lumber and residual byproducts, decreased $28.8 million.

These decreases were offset partially by higher sales volumes for LVL and I-joists of 18% and 20%, respectively, resulting in increased sales of $46.8 million and $43.9 million, respectively.

EWP sales volumes increased due to an increase in single-family housing starts.

Building Materials Distribution.

Sales increased $125.8 million, or 9%, to $1,505.0 million for the three months ended March 31, 2024, from $1,379.2 million for the three months ended March 31, 2023.

Sales increased $18.7 million, or 1%, to $1,655.2 million for the three months ended June 30, 2024, from $1,636.5 million for the three months ended June 30, 2023.

Compared with the same quarter in the prior year, the overall increase in sales was driven by a sales volume increase of 2%, offset partially by a sales price decrease of 1%.

By product line, commodity sales increased 1%, or $5.5 million;

Excluding the impact of the BROSCO acquisition on October 2, 2023, sales would have decreased by 2%.

By product line, commodity sales decreased 6%, or $34.8 million;

general line product sales increased 8%, or $55.0 million;

and EWP sales (substantially all of which are sourced through our Wood Products segment) increased 12%, or $37.0 million.

and EWP sales (substantially all of which are sourced through our Wood Products segment) decreased less than 1%, or $1.5 million.

During the six months ended June 30, 2024, sales increased $144.5 million, or 5%, to $3,160.2 million from $3,015.8 million for the same period in the prior year.

The overall increase in sales was driven by a sales volume increase of 6%, offset partially by a sales price decrease of 1%.

Excluding the impact of the BROSCO acquisition, sales would have increased by 2%.

By product line, commodity sales decreased 3%, or $29.4 million;

general line product sales increased 12%, or $138.4 million;

and sales of EWP (substantially all of which are sourced through our Wood Products segment) increased 5%, or $35.5 million.

Costs and Expenses

Materials, labor, and other operating expenses (excluding depreciation) increased $76.8 million, or 6%, to $1,307.4 million for the three months ended March 31, 2024, compared with $1,230.6 million during the same period in the prior year.

In our Wood Products segment, materials, labor, and other operating expenses increased due to higher EWP sales volumes and higher per-unit costs of OSB (used in the manufacture of I-joists) of approximately 24%, compared with first quarter 2023, as well as increased other manufacturing and labor costs.

Materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our Wood Products segment increased by 140 basis points.

The increase in the MLO rate was primarily the result of lower EWP sales prices, resulting in decreased leveraging of other manufacturing costs.

In BMD, the increase in materials, labor, and other operating expenses was driven by higher purchased materials costs as a result of an increase in sales volumes compared with first quarter 2023.

However, the BMD segment MLO rate improved 30 basis points compared with first quarter 2023, driven by a greater mix of general line and EWP sales, which have higher margins than commodity products.

In addition, margin percentages for our commodity and general line product sales improved, offset partially by lower margin percentages on our EWP sales.

Depreciation and amortization expense increased $4.7 million, or 15%, to $35.9 million for the three months ended March 31, 2024, compared with $31.2 million during the same period in the prior year.

The increase was due primarily to the BROSCO acquisition on October 2, 2023, accelerated depreciation of $2.2 million in first quarter 2024 for the indefinite curtailment of lumber production at our Chapman, Alabama facility, as well as other capital expenditures.

These increases were offset partially be decreases in depreciation related to fully depreciated assets.

Selling and distribution expenses increased $15.3 million, or 12%, to $144.1 million for the three months ended March 31, 2024, compared with $128.8 million during the same period in the prior year.

The increase was due primarily to higher employee-related expenses of $6.6 million and increased shipping and handling and occupancy costs of $2.2 million and $1.0 million, respectively.

In addition, expenses related to advertising and professional services increased $1.5 million.

General and administrative expenses decreased $1.4 million, or 5%, to $25.1 million for the three months ended March 31, 2024, compared with $26.5 million for the same period in the prior year, primarily due to a decrease in professional fees and incentive compensation, offset partially by an increase in employee-related expenses.

Materials, labor, and other operating expenses (excluding depreciation) increased $14.2 million, or 1%, to $1,440.7 million for the three months ended June 30, 2024, compared with $1,426.4 million during the same period in the prior year.

In our Wood Products segment, materials, labor, and other operating expenses decreased as higher costs of OSB (used in the manufacture of I-joists), were offset by improved cost leveraging from higher EWP sales volumes and lower plywood sales volumes, compared with second quarter 2023.

However, materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our Wood Products segment increased by 430 basis points, primarily as the result of lower EWP sales prices.

In BMD, the increase in materials, labor, and other operating expenses compared with second quarter 2023 was driven by higher purchased materials costs as a result of the BROSCO acquisition.

The BMD segment MLO rate increased 20 basis points , driven by lower margin percentages for our commodity and EWP sales, offset partially by higher margin percentages on our general line sales.

For the six months ended June 30, 2024, materials, labor, and other operating expenses (excluding depreciation) increased $91.0 million, or 3%, to $2,748.1 million, compared with $2,657.1 million in the same period in the prior year.

In our Wood Products segment, materials, labor, and other operating expenses increased due to higher EWP sales volumes and higher costs of OSB (used in the manufacture of I-joists), compared with the first six months of 2023.

Labor and other manufacturing costs were also higher compared with the same period in the prior year.

The MLO rate in our Wood Products segment increased by 290 basis points, due primarily to lower EWP sales prices.

In BMD, the increase in materials, labor, and other operating expenses compared with the first six months of 2023 was driven by higher purchased materials costs as a result of an increase in sales volumes, as well as the BROSCO acquisition.

However, the BMD segment MLO rate was flat primarily due to higher margin percentages on our general line sales, offset by lower margins on our EWP sales compared with the first six months of 2023.

Depreciation and amortization expense increased $3.6 million, or 12%, to $34.4 million for the three months ended June 30, 2024, compared with $30.7 million during the same period in the prior year.

For the six months ended June 30, 2024, these expenses increased $8.3 million, or 13%, to $70.2 million, compared with $61.9 million in the same period in the prior year.

The increase in both periods was due primarily to the BROSCO acquisition, as well as other capital expenditures.

For the six months ended June 30, 2024, the increase was also due to $2.2 million of accelerated depreciation recorded in first quarter 2024 for the indefinite curtailment of lumber production at our Chapman, Alabama facility.

Selling and distribution expenses, inclusive of the BROSCO acquisition, increased $10.6 million, or 8%, to $149.8 million for the three months ended June 30, 2024, compared with $139.2 million during the same period in the prior year.

The increase was due primarily to higher employee-related expense of $6.1 million, offset partially by decreased incentive compensation expense of $1.4 million.

In addition, costs related to professional fees, travel and entertainment, and advertising increased $1.6 million and occupancy costs increased $1.5 million.

For the six months ended June 30, 2024, selling and distribution expenses increased $25.9 million, or 10%, to $293.9 million, compared with $268.0 million during the same period in 2023, primarily as a result of higher employee-related expenses of $12.7 million.

Occupancy and shipping and handling costs increased $2.5 million and $2.3 million, respectively.

In addition, costs related to professional fees, travel and entertainment, and advertising increased $3.4 million.

General and administrative expenses decreased $4.2 million, or 14%, to $25.9 million for the three months ended June 30, 2024, compared with $30.1 million for the same period in the prior year.

For the six months ended June 30, 2024, general and administrative expenses decreased $5.6 million, or 10%, to $51.1 million, compared with $56.6 million during the same period in 2023.

The decrease in both periods was primarily the result of lower incentive compensation and professional fees, offset partially by an increase in employee-related expenses.

Income From Operations

Income from operations increased $5.4 million to $133.0 million for the three months ended March 31, 2024, compared with $127.6 million for the three months ended March 31, 2023.

Income from operations decreased $43.0 million to $147.0 million for the three months ended June 30, 2024, compared with $190.0 million for the three months ended June 30, 2023.

Income from operations decreased $37.6 million to $280.0 million for the six months ended June 30, 2024, compared with $317.6 million for the six months ended June 30, 2023.

Wood Products.

Segment income increased $1.8 million to $71.2 million for the three months ended March 31, 2024, compared with $69.4 million for the three months ended March 31, 2023.

The increase in segment income was due primarily to higher EWP sales volumes, as well as higher plywood sales prices.

These increases in segment income were offset partially by lower EWP sales prices and higher wood fiber costs.

Segment income decreased $31.3 million to $72.8 million for the three months ended June 30, 2024, compared with $104.0 million for the three months ended June 30, 2023.

The decrease in segment income was due primarily to lower EWP sales prices, as well as higher wood fiber and conversion costs.

These decreases in segment income were offset partially by higher EWP sales volumes.

For the six months ended June 30, 2024, segment income decreased $29.4 million to $144.0 million from $173.4 million for the six months ended June 30, 2023.

The decrease in segment income was due primarily to lower EWP sales prices, as well as higher wood fiber and conversion costs.

In addition, segment income was negatively impacted by accelerated depreciation of $2.2 million in first quarter 2024 for the indefinite curtailment of lumber production at our Chapman, Alabama facility.

These decreases in segment income were offset partially by higher EWP sales volumes.

Building Materials Distribution.

Segment income increased $2.8 million to $72.5 million for the three months ended March 31, 2024, from $69.7 million for the three months ended March 31, 2023.

The increase in segment income was driven by a gross margin increase of $22.9 million, resulting primarily from higher sales volumes and improved margins on general line and commodity products.

The gross margin improvement was offset partially by increased selling and distribution expenses and depreciation and amortization expense of $16.5 million and $4.0 million, respectively.

Unallocated corporate expenses decreased $0.8 million to $10.7 million for the three months ended March 31, 2024, from $11.5 million for the same period in the prior year.

The decrease was due primarily to a decrease in professional fees.

Interest Income.

Interest income increased $0.9 million to $10.6 million for the three months ended March 31, 2024, from $9.7 million for the three months ended March 31, 2023.

The increase was due primarily to higher interest rates on cash equivalents.

Segment income decreased $13.2 million to $85.4 million for the three months ended June 30, 2024, from $98.6 million for the three months ended June 30, 2023.

The decrease in segment income was driven by increased selling and distribution expenses and depreciation and amortization expense of $10.9 million and $4.4 million, respectively.

These decreases were offset partially by decreased general and administrative expenses of $2.0 million.

Gross margins were flat when compared with the same quarter in the prior year.

For the six months ended June 30, 2024, segment income decreased $10.4 million to $157.9 million from $168.2 million for the six months ended June 30, 2023.

The decline in segment income was driven by increased selling and distribution

expenses and depreciation and amortization expense of $27.4 million and $8.4 million, respectively.

These decreases in segment income were offset partially by a gross margin increase of $23.1 million, resulting primarily from improved gross margins on general line products, offset partially by lower gross margins on EWP.

Unallocated corporate expenses decreased $1.4 million to $11.2 million for the three months ended June 30, 2024, from $12.6 million for the same period in the prior year.

For the six months ended June 30, 2024, unallocated corporate expenses decreased $2.2 million to $21.9 million from $24.1 million for the six months ended June 30, 2023.

The decrease in both periods was due primarily to lower incentive compensation.

Change in fair value of interest rate swaps.

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Income Tax Provision

For the three months ended March 31, 2024 and 2023, we recorded $32.8 million and $33.3 million, respectively, of income tax expense and had an effective rate of 24.0% and 25.6%, respectively.

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

For the three and six months ended June 30, 2024, we recorded $38.5 million and $71.3 million, respectively, of income tax expense and had an effective rate of 25.5% and 24.8%, respectively.

For the three and six months ended June 30, 2023, we recorded $49.4 million and $82.7 million, respectively, of income tax expense and had an effective rate of 25.3% and 25.4%, respectively.

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

Liquidity and Capital Resources

We ended first quarter 2024 with $890.2 million of cash and cash equivalents and $445.5 million of debt.

At March 31, 2024, we had $1,286.0 million of available liquidity (cash and cash equivalents and undrawn committed bank line availability).

Our cash and cash equivalents decreased by $59.3 million during the three months ended March 31, 2024, as cash provided by operations was offset by capital spending, treasury stock purchases, dividends paid on our common stock, and tax withholding payments on stock-based awards.

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

We ended second quarter 2024 with $922.1 million of cash and cash equivalents and $445.7 million of debt.

At June 30, 2024, we had $1,317.8 million of available liquidity (cash and cash equivalents and undrawn committed bank line availability).

Our cash and cash equivalents decreased by $27.5 million during the six months ended June 30, 2024, principally to fund seasonal working capital increases and capital spending, treasury stock purchases, dividends paid on our common stock, and tax withholding payments on stock-based awards.

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

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

We expect to fund our seasonal and intra-month working capital requirements in 2024 from cash on hand and, if necessary, borrowings under our revolving credit facility.

We expect to fund our seasonal and intra-month working capital requirements in the remainder of 2024 from cash on hand and, if necessary, borrowings under our revolving credit facility.

Sources and Uses of Cash

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

Three Months Ended

Six Months Ended

Net cash provided by operations $ 169,165 $ 290,218

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Operating Activities

For the three months ended March 31, 2024, our operating activities generated $27.5 million of cash, compared with $48.0 million of cash generated in the same period in 2023.

The $20.5 million decrease in cash provided by operations was due primarily to a greater year-over-year increase in working capital.

Working capital increased $149.2 million during the three months ended March 31, 2024, compared with a $117.7 million increase for the same period in the prior year.

For the six months ended June 30, 2024, our operating activities generated $169.2 million of cash, compared with $290.2 million of cash generated in the same period in 2023.

The $121.1 million decrease in cash provided by operations was due primarily to a greater year-over-year increase in working capital, as well as a decrease in income from operations.

Working capital increased $131.6 million during the six months ended June 30, 2024, compared with a $60.2 million increase for the same period in the prior year.

In addition, cash paid for taxes, net of refunds, increased $19.9 million compared to the same period in 2023 .

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

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

The increase in receivables in both periods primarily reflect increased sales of approximately 19% and 26%, comparing sales for the months of March 2024 and 2023 with sales for the months of December 2023 and 2022, respectively.

Inventories increased during the three months ended March 31, 2024 and March 31, 2023 in preparation for the spring building season.

The increase in accounts payable and accrued liabilities as of March 31, 2024 was related to the increase in inventories and extended terms offered by certain BMD vendors, offset partially by employee incentive compensation payouts made during the quarter.

The increase in accounts payable and accrued liabilities as of March 31, 2023 was related to the increase in inventories, offset partially by employee incentive compensation payouts made during the quarter and lower accrued rebates.

The increase in receivables in both periods primarily reflect increased sales of approximately 16% and 41%, comparing sales for the months of June 2024 and 2023 with sales for the months of December 2023 and 2022, respectively.

During both the six months ended June 30, 2024 and June 30, 2023, inventories increased due to seasonally higher inventory purchases in our BMD segment for the summer building season.

The increase in accounts payable and accrued liabilities in both periods was related to the increase in inventories and extended terms offered by certain BMD vendors, offset partially by employee incentive compensation payouts made during the periods.

Investment Activities

During the three months ended March 31, 2024 and 2023, we used $34.3 million and $30.1 million, respectively, of cash for purchases of property and equipment, including business improvement and quality/efficiency projects, replacement and expansion projects, and ongoing environmental compliance.

During the three months ended March 31, 2024, we also used $3.4 million of cash for post-transaction closing adjustments related to the BROSCO acquisition.

During the six months ended June 30, 2024 and 2023, we used $74.1 million and $68.3 million, respectively, of cash for purchases of property and equipment, including business improvement and quality/efficiency projects, replacement and expansion projects, and ongoing environmental compliance.

During the six months ended June 30, 2024, we also used $3.4 million of cash for post-transaction closing adjustments related to the BROSCO acquisition.

For further discussion on the BROSCO acquisition, see Note 5, Acquisition, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1.

Financial Statements" of this Form 10-Q.

During the six months ended June 30, 2023, we received $1.0 million of earn-out income related to a previous asset sale in our Wood Products segment.

Excluding potential acquisitions, we expect capital expenditures in 2024 to total approximately $250 million to $270 million.

We expect our capital spending in 2024 will be for business improvement and quality/efficiency projects, replacement and expansion projects, and ongoing environmental compliance.

Our 2024 capital expenditures range includes spending on previously announced projects to add I-joist production capabilities at our Thorsby EWP mill and converting a plywood layup line to a parallel laminated veneer line at our Chapman, Alabama plywood facility.

Our 2024 capital expenditures range includes spending on previously announced projects to add I-joist production capabilities at our Thorsby, Alabama EWP mill and converting a plywood layup line to a parallel laminated veneer line at our Chapman, Alabama plywood facility.

At our Oakdale, Louisiana facility, multiple investment projects are planned over the next two years which include upgrade and redesign of the log utilization center, a new veneer dryer and press, and modification of an existing veneer dryer.

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Financing Activities

During the three months ended March 31, 2024, our financing activities used $49.6 million of cash, including $27.0 million for the repurchase of 205,938 shares of our common stock, $11.2 million for common stock dividend payments, and $11.0 million of tax withholding payments on stock-based awards.

During the three months ended March 31, 2024, we did not borrow under our revolving credit facility and therefore have no borrowings outstanding on the facility as of March 31, 2024.

During the three months ended March 31, 2023, our financing activities used $16.1 million of cash, including $8.3 million for common stock dividend payments, $5.9 million of tax withholding payments on stock-based awards, and $1.5 million for the repurchase of 24,727 shares of our common stock.

During the three months ended March 31, 2023, we did not borrow under our revolving credit facility.

During the six months ended June 30, 2024, our financing activities used $120.0 million of cash, including $88.9 million for the repurchase of 677,845 shares of our common stock, $19.1 million for common stock dividend payments, and $11.1 million of tax withholding payments on stock-based awards.

During the six months ended June 30, 2024, we did not borrow under our revolving credit facility and therefore have no borrowings outstanding on the facility as of June 30, 2024.

During the six months ended June 30, 2023, our financing activities used $141.3 million of cash, including $133.0 million for common stock dividend payments, $5.9 million of tax withholding payments on stock-based awards, and $1.5 million for the repurchase of 25,678 shares of our common stock.

During the six months ended June 30, 2023, we did not borrow under our revolving credit facility.

Future dividend declarations, including amount per share, record date and payment date, will be made at the discretion of our board of directors and will depend upon, among other things, legal capital requirements and surplus, our future operations and earnings, general financial condition, 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.

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Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2023 Form 10-K.

As of March 31, 2024, there have been no material changes in other material cash requirements outside the ordinary course of business since December 31, 2023.

As of June 30, 2024, there have been no material changes in other material cash requirements outside the ordinary course of business since December 31, 2023.

Note 8, Debt, and Note 16, Commitments, Legal Proceedings and Contingencies, and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" in our 2023 Form 10-K describe the nature of our guarantees, including the approximate terms of the guarantees, how the guarantees arose, the events or circumstances that would require us to perform under the guarantees, and the maximum potential undiscounted amounts of future payments we could be required to make.

As of March 31, 2024, there have been no material changes to the guarantees disclosed in our 2023 Form 10-K.

As of June 30, 2024, there have been no material changes to the guarantees disclosed in our 2023 Form 10-K.

Seasonal Influences

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

As of April 28, 2024, we had approximately 7,310 employees.

As of July 21, 2024, we had approximately 7,400 employees.

Approximately 18% of these employees work pursuant to collective bargaining agreements.

As of April 28, 2024, 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.

One agreement covering approximately 40 employees at our Vancouver BMD facility is set to expire on December 31, 2024.

One agreement covering approximately 20 employees at our Billings BMD facility is set to expire on March 31, 2025.

As of July 21, 2024, we had ten collective bargaining agreements.

Five agreements covering approximately 470 employees at our Elgin plywood plant, Kettle Falls plywood plant, and Woodinville BMD facility expired on May 31, 2024, but the terms and conditions of these agreements remain in effect pending negotiation of new agreements.

One agreement covering approximately 40 employees at our Vancouver BMD facility is set to expire on December 31, 2024, one agreement covering approximately 20 employees at our Billings BMD facility is set to expire on March 31, 2025, and two agreements covering approximately 730 employees at our Oakdale and Florien plywood plants are set to expire on July 15, 2025.

The terms and conditions of these agreements will remain in effect after expiration pending negotiation of new agreements.

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

As of March 31, 2024, there have been no material changes to financial market risks disclosed in our 2023 Form 10-K.

As of June 30, 2024, there have been no material changes to financial market risks disclosed in our 2023 Form 10-K.

Environmental

As of March 31, 2024, there have been no material changes to environmental issues disclosed in our 2023 Form 10-K.

As of June 30, 2024, there have been no material changes to environmental issues disclosed in our 2023 Form 10-K.

For additional information, see Environmental in "Item 7.

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Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2023 Form 10-K.

At March 31, 2024, there have been no material changes to our critical accounting estimates from those disclosed in our 2023 Form 10-K.

At June 30, 2024, there have been no material changes to our critical accounting estimates from those disclosed in our 2023 Form 10-K.

New and Recently Adopted Accounting Standards

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis