What changed in this filing

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Item 1A. Risk Factors

2025-02-20 compared with 2024-02-20 · 46 added, 29 removed, 268 unchanged (22% of the section changed)

6 unchanged sentences

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

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

Commodity wood product prices have historically been volatile in response to 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.

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

Commodity wood product prices have historically been volatile in response to economic uncertainties, industry operating rates, supply-related disruptions, transportation constraints or disruptions, net import and export activity, trade policies, inventory levels in various distribution channels, and seasonal demand patterns.

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

New residential construction activity has historically been volatile with demand for new residential construction influenced by seasonal weather factors, mortgage availability and rates, housing affordability constraints, unemployment levels, wage growth, household formation rates, domestic population growth, immigration rates, residential vacancy and foreclosure rates, demand for second homes, consumer confidence, and other general economic factors.

Furthermore, changing demographics could impact product consumption and demand, including urbanization compounding issues around affordability, increasing importance of multi-family housing, declining size of single-family entry-level housing, increasing proportion of homes in warmer and/or coastal areas using slab-on-grade construction, reduced birthing statistics, and changing baby boomer needs freeing up housing capacity.

New residential construction activity has historically been volatile with demand for new residential construction influenced by seasonal weather factors, mortgage availability and rates, housing affordability constraints, home equity levels, unemployment levels, wage growth, household formation rates, domestic population growth, immigration rates, residential vacancy and foreclosure rates, demand for second homes, consumer confidence, and other general economic factors.

Furthermore, changing demographics could impact product consumption and demand, including urbanization compounding issues around affordability, increasing importance of multi-family housing, declining size of single-family entry-level housing, increasing proportion of homes using slab-on-grade construction, reduced birthing statistics, and changing baby boomer needs freeing up housing capacity.

Industry supply for the products we produce and distribute is influenced primarily by price-induced changes in the operating rates of existing facilities, but is also influenced over time by the introduction of new product technologies, capacity additions and closures, the restart of idled capacity, and log availability.

10 unchanged sentences

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

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

Furthermore, customer consolidation has been ongoing.

This consolidation could increase buying power which would create demand pressure on our financial incentives and compress our margins.

In addition, if financial incentives provided are not sufficient, there is a risk we could lose business at the regional or national level.

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

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

Also, financial stability is important to suppliers and customers in choosing distributors and allows for more favorable terms to obtain products from suppliers and sell products to customers.

Also, financial stability is important to suppliers and customers when choosing distributors.

Having a sound financial position is important to our suppliers and allows for favorable terms on which to procure products.

In addition, our financial condition is also important to customers who rely on us for timely delivery across a broad range of products that are consistently in stock.

If our financial condition deteriorates in the future, our relationships with suppliers and customers may be negatively affected.

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

Our principal manufactured products are also subject to substitution from other wood-based products, such as EWP facing competition from numerous dimension lumber producers and other strand-based EWP that we do not produce, or

plywood losing further market share to OSB in residential and non-residential applications.

In addition, we have seen an increase in floor truss capacity by some of our dealer customers, partially due to the limited supply of I-joists over the last few years.

The expansion of truss manufacturing could negatively impact our I-joist market share and net sales prices.

The expansion of truss manufacturing, along with the increased use of slab-on-grade construction, could negatively impact our I-joist market share and net sales prices.

Building code provisions have also been implemented in certain jurisdictions to address concerns for firefighter safety related to the collapse of floors during residential fires.

7 unchanged sentences

In the future, network, system, and data breaches could result in the misappropriation of sensitive data or operational disruptions, including interruption to systems availability and denial of access to and misuse of applications required by our customers to conduct business with us.

In addition, sophisticated hardware and operating system software and applications that we procure from third parties may contain defects in design or manufacture, including "bugs" and other problems that could unexpectedly interfere with the operation of the systems.

In addition, sophisticated hardware and operating system software and applications that we procure from third parties may contain defects in design or manufacture,

including "bugs" and other problems that could unexpectedly interfere with the operation of the systems.

Misuse of internal applications;

29 unchanged sentences

As of February 2, 2025, 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.

One agreement covering approximately 50 employees at our Woodinville BMD facility expired on May 31, 2024 and one agreement covering approximately 40 employees at our Vancouver BMD facility expired on December 31, 2024, but the terms and conditions of these agreements remain in effect pending negotiation of new agreements.

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

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

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.

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

In addition, our ability to attract and retain talent is challenging due to a shortage of both hourly and technically skilled workers for our manufacturing and distribution facilities, as well as changing workforce expectations, including flexible or remote work arrangements that we may be unable to provide.

Furthermore, changes in immigration laws and/or their enforcement, could result in tighter overall labor conditions and a shortage of skilled tradespeople.

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

36 unchanged sentences

OSB accounted for approximately 6% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2024.

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

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

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

3 unchanged sentences

Subsequent to making the investment, the performance of the new assets is subject to economic uncertainties, as described in our other risk factors, as well as difficulties obtaining labor, customers, or suppliers.

In addition, organic growth investments may divert management's attention and

resources from existing operations.

Our failure to effectively expand our product and service offerings in our recently announced greenfield distribution centers in Texas and South Carolina or future projects, realize expected benefits, or manage other consequences of our organic growth could adversely affect our financial condition, operating results, and cash flows.

In addition, we may not be able to integrate the operations of our recently acquired businesses, which include Brockway-Smith Company (BROSCO) and Coastal Plywood, in an efficient and cost-effective manner or without disruption to our existing operations or may not be able to realize expected benefits.

Acquisitions involve significant risks and uncertainties, including some that may not be identifiable or resolvable in due diligence.

Subsequent to making the investment, the performance of the acquired assets is subject to economic uncertainties, as described in our other risk factors, as well as difficulties integrating acquired personnel into our business, the potential loss of key employees, customers, or suppliers, difficulties in integrating different computer and accounting systems, exposure to unknown or unforeseen liabilities of acquired companies, and the diversion of management attention and resources from existing operations.

In addition, organic growth investments may divert management's attention and resources from existing operations.

Our failure to effectively expand our product and service offerings in our previously announced greenfield distribution centers in Texas and South Carolina or future projects, realize expected benefits, or manage other consequences of our organic growth could adversely affect our financial condition, operating results, and cash flows.

We evaluate potential acquisitions from time to time and have, in the past, grown through acquisitions.

1 unchanged sentence

We may also be required to incur additional debt in order to consummate acquisitions, which debt may be substantial and may limit our flexibility in using our cash flow from operations.

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

In addition, we may not be able to integrate the operations of previously acquired businesses in an efficient and cost-effective manner or without disruption to our existing operations or may not be able to realize expected benefits.

Acquisitions involve significant risks and uncertainties, including some that may not be identifiable or resolvable in due diligence.

Subsequent to making the investment, the performance of the acquired assets is subject to economic uncertainties, as described

in our other risk factors, uncertainties related to the achievement of expected synergies, as well as difficulties integrating acquired personnel into our business, the potential loss of key employees, customers, or suppliers, difficulties in integrating different computer and accounting systems, exposure to unknown or unforeseen liabilities of acquired companies, and the diversion of management attention and resources from existing operations.

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

We invest resources to update and improve our information technology systems and software platforms.

16 unchanged sentences

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

For the year ended December 31, 2023, our top ten customers represented approximately 47% of our sales, with one customer accounting for approximately 12% of total sales.

For the year ended December 31, 2024, our top ten customers represented approximately 48% of our sales, with two customers accounting for approximately 12% and 10% of total sales.

At December 31, 2024, receivables from two customers accounted for approximately 19% and 11% of total receivables.

7 unchanged sentences

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

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

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

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

34 unchanged sentences

Risks Relating to Laws and Regulations

Changes in foreign trade policy, including the imposition of tariffs, could impact our product pricing and input costs.

Our Wood Products and BMD segments could be negatively impacted by changes in tariffs, duties, taxes, or customs resulting from changes in U.S.

and foreign trade policy.

We export finished wood products and other building materials to foreign markets, primarily to Canada.

In addition, we purchase raw materials to be used as inputs in our manufacturing business and inventory purchased for resale in our distribution business from suppliers and manufacturers that are located outside of the United States.

Given the nature of our business operations, actions taken by the U.S.

government regarding trade policy, such as renegotiating or terminating existing trade agreements or leveraging tariffs, could adversely impact our product pricing and input costs, the supply of products available to us, as well as the demand for the products we manufacture and distribute.

Further, if we experience increases in input costs, we may be unable to pass these cost increases along to our customers, thereby reducing our margins.

We cannot predict future U.S.

or foreign trade policy, however, the impacts of changes in trade policy discussed above could have a material adverse effect on our results of operations, cash flows, and financial condition.

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

3 unchanged sentences

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

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

We will continue to monitor and assess the impact of regulatory legislation, which may impose substantial

penalties for violations, increased costs for investigations, monitoring and compliance, potential litigation, and possible damage to our reputation, all of which could have a material adverse effect on our operations, financial condition, or cash flows.

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

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

We may also be contractually obligated to indemnify third parties under environmental laws for the cleanup of past spills and releases of hazardous or toxic

substances for properties which we no longer own and operate.

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

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

8 unchanged sentences

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

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

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

of such products.

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

11 unchanged sentences

• changes in key personnel;

• strategic actions by us, our customers, or our competitors, such as acquisitions or restructurings;

• strategic actions by us, our customers, or our competitors, such as acquisitions, consolidations, or restructurings;

• changes in, or failure to meet, earnings estimates or recommendations by research analysts who track our common stock or the stock of other companies in our industry;

6 unchanged sentences

and global economies or financial markets, including those resulting from war, incidents of terrorism, pandemics, or responses to such events;

• sales of common stock by us or members of our management team;

• sales of common stock by our management team or board of directors;

• the granting of equity or equity-based incentives;

29 unchanged sentences

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

What changed 10-K

Item 1A. Risk Factors