What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-04 compared with 2025-05-05 · 161 added, 102 removed, 172 unchanged (60% of the section changed)

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Executive Overview

We recorded income from operations of $54.5 million during the three months ended March 31, 2025, compared with income from operations of $133.0 million during the three months ended March 31, 2024.

In our Wood Products segment, income decreased $53.5 million to $17.7 million for the three months ended March 31, 2025, from $71.2 million for the three months ended March 31, 2024, due primarily to lower EWP and plywood sales prices, as well as higher per-unit conversion costs as a result of downtime to complete the modernization projects at our Oakdale, Louisiana veneer and plywood mill.

In addition, lower EWP sales volumes and higher lumber input costs for solid-sawn I-joist and laminated beam production also contributed to the decrease in segment income.

In our BMD segment, income decreased $24.0 million to $48.4 million for the three months ended March 31, 2025, from $72.5 million for the three months ended March 31, 2024, driven by a gross margin decrease of $20.4 million, resulting primarily from lower sales volumes and decreased margins on commodity and EWP products.

In addition, depreciation and amortization expense increased $3.3 million.

We recorded income from operations of $80.5 million during the three months ended June 30, 2025, compared with income from operations of $147.0 million during the three months ended June 30, 2024.

In our Wood Products segment, income decreased $58.8 million to $14.0 million for the three months ended June 30, 2025, from $72.8 million for the three months ended June 30, 2024, due to lower EWP and plywood sales prices, as well as higher per-unit conversion costs primarily as a result of downtime to complete the modernization projects at our Oakdale, Louisiana veneer and plywood mill.

In addition, lower plywood sales volumes and an unfavorable profit in inventory adjustment contributed to the decrease in segment income.

These decreases in segment income were offset partially by a $3.9 million gain on the sale of a non-operating property.

In our BMD segment, income decreased $7.4 million to $78.0 million for the three months ended June 30, 2025, from $85.4 million for the three months ended June 30, 2024, driven by increased selling and distribution expenses and depreciation and amortization expense of $12.1 million and $2.1 million, respectively.

These decreases to segment income were offset partially by a gross margin increase of $3.4 million, resulting primarily from increased margins on general line products, which were offset partially by decreased margins on commodity and EWP products.

Segment income also benefited from a $3.8 million gain on the sale of a non-operating property.

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

We ended first quarter 2025 with $561.8 million of cash and cash equivalents and $395.7 million of undrawn committed bank line availability, for total available liquidity of $957.5 million.

We had $450.0 million of outstanding debt at March 31, 2025.

We used $151.5 million of cash during the three months ended March 31, 2025, to fund seasonal working capital increases, capital spending, treasury stock purchases, and dividends paid on our common stock.

A further description of our cash sources and uses for the three-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.

Residential construction, particularly new single-family construction, is the key demand driver for the products we manufacture and distribute.

Over the past quarter, the operating environment was challenged.

In addition to seasonally slower activity, consumer and homebuilder sentiment was dampened due to significant macroeconomic uncertainties and elevated mortgage rates.

Given the current environment, 2025 end market demand expectations are difficult to predict, with most forecasts for housing starts ranging between flat to mid-single digit year-over-year declines.

Ultimately, the level and expectations for mortgage rates, home affordability, home equity levels, home size, levels of new and existing home inventory for sale, unemployment levels, consumer confidence, and other factors will influence the near-term demand environment.

Long term demand drivers for residential construction, characterized by an undersupply in housing units, aging U.S.

housing stock, and elevated levels of homeowner equity remain in place.

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

Our distribution business purchases and resells a broad mix of products with periods of increasing prices providing the opportunity for higher sales and increased margins, while declining price environments expose us to declines in sales and profitability.

Future product pricing, particularly commodity products pricing and input costs, may be volatile in response to economic uncertainties, industry operating rates, supply-related disruptions, imposition of tariffs, transportation constraints or disruptions, net import and export activity, inventory levels in various distribution channels, and seasonal demand patterns.

In addition, EWP volumes will continue to be influenced by changes in new single-family housing starts and we expect modest EWP price erosion in the second quarter.

We ended second quarter 2025 with $481.0 million of cash and cash equivalents and $395.2 million of undrawn committed bank line availability, for total available liquidity of $876.2 million.

We had $450.0 million of outstanding debt at June 30, 2025.

We used $232.2 million of cash during the six months ended June 30, 2025, to fund seasonal working capital increases, capital spending, treasury stock purchases, and dividends paid on our common stock.

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 closely tied to new residential construction, residential repair-and-remodeling activity, and light commercial construction.

Residential construction, particularly new single-family construction, remains a key driver of demand for the products we manufacture and distribute.

During the past quarter, the operating environment reflected adjustments by large public homebuilders, who moderated their building pace to align with a demand environment shaped by affordability considerations, cautious consumer sentiment, and broader economic conditions.

Evolving market conditions have led to reduced home turnover and households delaying big projects impacting repair-and-remodeling spending.

Near-term end market demand has eased and will continue to be influenced by factors such as mortgage rates, home affordability, home equity levels, home sizes, new and existing home inventory levels, unemployment rates, and consumer confidence.

However, long-term demand drivers for residential construction, including an undersupply of housing units, aging U.S.

housing stock, and elevated levels of homeowner equity, remain strong and continue to support the industry’s fundamentals.

As a manufacturer of plywood, a commodity product, we remain subject to fluctuations in product pricing and input costs.

Our distribution business, which purchases and resells a diverse range of products, experiences opportunities for increased sales and margins during periods of rising prices, while periods of declining prices may present challenges.

Future product pricing, particularly for commodity products, is expected to remain dynamic, influenced by economic conditions, industry operating rates, supply disruptions, duties, tariffs, transportation constraints, inventory levels, and seasonal demand patterns.

For the balance of 2025, our rates of production and inventory stocking positions, will be influenced by end market demand signals and channel inventory decisions of our customer base.

Factors That Affect Our Operating Results and Trends

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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, 2025 and 2024:

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, 2025 and 2024:

Three Months Ended

June 30 Six Months Ended

2025 2024 2025 2024

Sales $ 1,740.1 $ 1,797.7 $ 3,276.6 $ 3,443.1

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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, 2025 and 2024:

Three Months Ended

June 30 Six Months Ended

2025 2024 2025 2024

Housing Starts (a)

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Multi-family 109.3 89.3 198.3 169.4

366.7 370.3 684.6 691.6

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, 2025, total sales decreased $108.9 million, or 7%, to $1,536.5 million from $1,645.4 million during the three months ended March 31, 2024.

As described below, the decrease 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 2025, total U.S.

For the three months ended June 30, 2025, total sales decreased $57.6 million, or 3%, to $1,740.1 million from $1,797.7 million during the three months ended June 30, 2024.

For the six months ended June 30, 2025, total sales decreased $166.5 million, or 5%, to $3,276.6 million from $3,443.1 million for the same period in the prior year.

As described below, the decrease in sales in both periods 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 2025, total U.S.

housing starts and single-family housing starts decreased 1% and 8%, respectively, compared with the same period in 2024.

Average composite panel prices for the three months ended March 31, 2025 were 13% lower 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, 2025 were 13% higher than in the same period in the prior year, as reflected by Random Lengths composite lumber pricing.

On a year-to-date basis through June 2025, total and single-family housing starts decreased 1% and 7%, respectively, compared with the same period in 2024.

Average composite panel prices for the three and six months ended June 30, 2025 were 19% and 16% lower, respectively, than in the same periods 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, 2025 were 18% and 15% higher, respectively, than in the same periods in the prior year, as reflected by Random Lengths composite lumber pricing.

Wood Products.

Sales, including sales to our BMD segment, decreased $53.1 million, or 11%, to $415.8 million for the three months ended March 31, 2025, from $468.9 million for the three months ended March 31, 2024.

The decrease in sales was driven by lower sales prices of 9% for both LVL and I-joists (collectively referred to as EWP), resulting in decreased sales of $12.2 million and $10.1 million, respectively.

Additionally, sales volumes decreased 3% for both LVL and I-joists, resulting in decreased sales of $4.6 million and $3.8 million, respectively.

EWP sales volumes decreased due to a decrease in housing starts.

In addition, plywood sales prices and sales volumes decreased 10% and 2%, respectively, resulting in decreased sales of $13.3 million and $3.4 million, respectively.

Sales, including sales to our BMD segment, decreased $42.6 million, or 9%, to $447.2 million for the three months ended June 30, 2025, from $489.8 million for the three months ended June 30, 2024.

The decrease in sales was driven by lower sales prices for LVL and I-joists (collectively referred to as EWP) of 10% and 8%, respectively, resulting in decreased sales of $15.8 million and $10.0 million, respectively.

Plywood sales volumes and sales prices decreased 7% and 6%, respectively, resulting in decreased sales of $9.9 million and $7.1 million, respectively.

In addition, sales volumes for I-joists decreased 5%, resulting in decreased sales of $6.5 million.

These decreases were offset partially by increased sales volumes for LVL of 8%, resulting in increased sales of $10.8 million.

For the six months ended June 30, 2025, sales, including sales to our BMD segment, decreased $95.7 million, or 10%, to $863.1 million from $958.8 million for the same period in the prior year.

The decrease in sales was driven by lower sales prices for LVL and I-joists of 10% and 9%, respectively, resulting in decreased sales of $28.2 million and $20.1 million, respectively.

Plywood sales prices and sales volumes decreased 8% and 5%, respectively, resulting in decreased sales of $20.3 million and $13.4 million, respectively.

In addition, sales volumes for I-joists decreased 4%, resulting in decreased sales of $10.3 million.

These decreases were offset partially by increased sales volumes for LVL of 2%, resulting in increased sales of $6.3 million.

For both periods described above, I-joist sales volumes were influenced by multiple factors, including the level of housing starts, competition from other wood-based products, and concrete floor applications that limit wood floor opportunity.

LVL sales volumes expanded their presence in the marketplace through growth with dealers and homebuilders when compared to the same periods in 2024.

In addition, plywood sales volumes in both periods were impacted by planned downtime to complete projects at our Oakdale and Kettle Falls plywood mills.

Building Materials Distribution.

Sales decreased $97.9 million, or 7%, to $1,407.1 million for the three months ended March 31, 2025, from $1,505.0 million for the three months ended March 31, 2024.

Compared with the same quarter in the prior year, the overall decrease in sales was driven by sales volume and sales price decreases of 5% and 2%, respectively.

Sales decreased $40.3 million, or 2%, to $1,614.9 million for the three months ended June 30, 2025, from $1,655.2 million for the three months ended June 30, 2024.

Compared with the same quarter in the prior year, the overall decrease in sales was driven by a sales price decrease of 2%, as sales volumes were flat.

By product line, commodity sales decreased 5%, or $27.0 million;

general line product sales decreased 3%, or $17.2 million;

general line product sales increased 4%, or $31.2 million;

and EWP sales (substantially all of which are sourced through our Wood Products segment) decreased 12%, or $44.5 million.

During the six months ended June 30, 2025, sales decreased $138.2 million, or 4%, to $3,022.0 million from $3,160.2 million for the same period in the prior year.

The overall decrease in sales was driven by decreases of 2% for both sales prices and sales volumes.

By product line, commodity sales decreased 6%, or $63.1 million;

general line product sales increased 1%, or $14.0 million;

and sales of EWP decreased 13%, or $89.1 million.

Costs and Expenses

Materials, labor, and other operating expenses (excluding depreciation) decreased $31.3 million, or 2%, to $1,276.2 million for the three months ended March 31, 2025, compared with $1,307.4 million during the same period in the prior year.

Materials, labor, and other operating expenses (excluding depreciation) increased $0.8 million, or less than 1%, to $1,441.5 million for the three months ended June 30, 2025, compared with $1,440.7 million during the same period in the prior year.

In our Wood Products segment, materials, labor, and other operating expenses increased due to purchases of externally produced veneer for our Alexandria EWP mill as a result of downtime to complete the modernization projects at our Oakdale veneer and plywood mill.

In addition, lumber input costs for solid-sawn I-joist and laminated beam production also increased.

These increases were offset by lower sales volumes compared with first quarter 2024.

Materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our Wood Products segment increased by 1,100 basis points, primarily as the result of lower EWP and plywood sales prices, as well as lower sales volumes which resulted in decreased leveraging of manufacturing costs.

In BMD, the decrease in materials, labor, and other operating expenses was driven by lower purchased materials costs as a result of a decrease in sales volumes compared with first quarter 2024.

However, the BMD segment MLO rate increased 40 basis points, driven by lower margin percentages on commodity and EWP products.

Depreciation and amortization expense increased $1.3 million, or 4%, to $37.1 million for the three months ended March 31, 2025, compared with $35.9 million during the same period in the prior year.

The increase was primarily due to purchases of property and equipment, offset partially by $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 decreased $0.5 million, or less than 1%, to $143.6 million for the three months ended March 31, 2025, compared with $144.1 million during the same period in the prior year.

The decrease was due primarily to lower incentive compensation expense, as well as decreased shipping and handling costs.

These decreases were offset by higher employee-related expenses.

General and administrative expenses decreased $0.1 million, or less than 1%, to $25.0 million for the three months ended March 31, 2025, compared with $25.1 million for the same period in the prior year.

The decrease was primarily the result of lower incentive compensation offset partially by an increase in professional fees.

In addition, labor and other manufacturing costs increased, offset partially by decreased sales volumes for plywood compared with second quarter 2024.

Materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our Wood Products segment increased by 1,170 basis points, primarily as the result of lower EWP and plywood sales prices, as well as lower sales volumes for I-joists and plywood which resulted in decreased leveraging of manufacturing costs.

In BMD, the decrease in materials, labor, and other operating expenses was driven by lower purchased materials costs as a result of a decline in sales, as well as increased vendor rebates and allowances, compared with second

quarter 2024.

The BMD segment MLO rate decreased 60 basis points, driven by higher margin percentages on general line products, offset partially by lower margins on commodity products.

For the six months ended June 30, 2025, materials, labor, and other operating expenses (excluding depreciation) decreased $30.5 million, or 1%, to $2,717.6 million, compared with $2,748.1 million in the same period in the prior year.

Lumber input costs for solid-sawn I-joist and laminated beam production also increased.

In addition, labor and other manufacturing costs increased, offset partially by decreased sales volumes for plywood and I-joists compared with the same period in the prior year.

The MLO rate in our Wood Products segment increased by 1,130 basis points, due primarily to lower sales prices for EWP and plywood, as well as lower sales volumes for I-joists and plywood, which resulted in decreased leveraging of manufacturing costs.

The BMD segment MLO rate decreased 20 basis points, primarily due to higher margin percentages on our general line sales, offset partially by lower margins on our commodity sales compared with the first six months of 2024.

Depreciation and amortization expense increased $3.0 million, or 9%, to $37.4 million for the three months ended June 30, 2025, compared with $34.4 million during the same period in the prior year.

For the six months ended June 30, 2025, these expenses increased $4.3 million, or 6%, to $74.5 million, compared with $70.2 million in the same period in the prior year.

The increase in both periods was primarily due to purchases of property and equipment.

For the six months ended June 30, 2025, the increase was offset partially by $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 increased $12.0 million, or 8%, to $161.8 million for the three months ended June 30, 2025, compared with $149.8 million during the same period in the prior year.

The increase was due primarily to higher employee-related expenses of $6.9 million, offset partially by lower incentive compensation expense of $1.3 million.

Additionally, costs related to shipping, handling, and professional fees increased by $2.5 million.

For the six months ended June 30, 2025, selling and distribution expenses increased $11.6 million, or 4%, to $305.5 million, compared with $293.9 million during the same period in 2024.

The increase was primarily a result of higher employee-related expenses of $10.0 million, offset partially by lower incentive compensation expense of $3.3 million.

In addition, costs related to professional fees increased $1.9 million.

General and administrative expenses increased $0.5 million, or 2%, to $26.5 million for the three months ended June 30, 2025, compared with $25.9 million for the same period in the prior year.

For the six months ended June 30, 2025, general and administrative expenses increased $0.4 million, or 1%, to $51.5 million, compared with $51.1 million during the same period in 2024.

The increase in both periods was due primarily to higher other employee-related expenses and professional fees, offset partially by lower incentive compensation expense.

For the three and six months ended June 30, 2025, other (income) expense, net was $7.6 million and $7.5 million of income, respectively.

For both periods, the income primarily relates to gains on the sale of non-operating properties in our Wood Products and BMD segments.

Income From Operations

Income from operations decreased $78.5 million to $54.5 million for the three months ended March 31, 2025, compared with $133.0 million for the three months ended March 31, 2024.

Income from operations decreased $66.5 million to $80.5 million for the three months ended June 30, 2025, compared with $147.0 million for the three months ended June 30, 2024.

Income from operations decreased $144.9 million to $135.0 million for the six months ended June 30, 2025, compared with $280.0 million for the six months ended June 30, 2024.

Wood Products.

Segment income decreased $53.5 million to $17.7 million for the three months ended March 31, 2025, compared with $71.2 million for the three months ended March 31, 2024.

The decrease in segment income was due primarily to lower EWP and plywood sales prices, as well as higher per-unit conversion costs as a result of downtime to complete the modernization projects at our Oakdale, Louisiana veneer and plywood mill.

In addition, lower EWP sales volumes and higher lumber input costs for solid-sawn I-joist and laminated beam production also contributed to the decrease in segment income.

Segment income decreased $58.8 million to $14.0 million for the three months ended June 30, 2025, compared with $72.8 million for the three months ended June 30, 2024.

The decrease in segment income was due to lower EWP and plywood sales prices, as well as higher per-unit conversion costs primarily as a result of downtime to complete the modernization projects at our Oakdale, Louisiana veneer and plywood mill.

In addition, lower plywood sales volumes and an unfavorable profit in inventory adjustment contributed to the decrease in segment inco me.

These decreases in segment income were offset partially by a $3.9 million gain on the sale of a non-operating property.

For the six months ended June 30, 2025, segment income decreased $112.3 million to $31.7 million from $144.0 million for the six months ended June 30, 2024.

The decrease in segment income was due to lower EWP and plywood sales prices, as well as higher per-unit conversion costs primarily as a result of downtime to complete the modernization projects at

our Oakdale, Louisiana veneer and plywood mill.

In addition, higher lumber input costs for solid-sawn I-joist and laminated beam production, as well as lower plywood and EWP sales volumes, contributed to the decrease in segment income.

These decreases in segment income were offset partially by a $3.9 million gain on the sale of a non-operating property.

Building Materials Distribution.

Segment income decreased $24.0 million to $48.4 million for the three months ended March 31, 2025, from $72.5 million for the three months ended March 31, 2024.

Segment income decreased $7.4 million to $78.0 million for the three months ended June 30, 2025, from $85.4 million for the three months ended June 30, 2024.

The decrease in segment income was driven by increased selling and distribution expenses and depreciation and amortization expense of $12.1 million and $2.1 million, respectively.

Additionally, segment income benefited from a $3.8 million gain on the sale of a non-operating property.

For the six months ended June 30, 2025, segment income decreased $31.4 million to $126.5 million from $157.9 million for the six months ended June 30, 2024.

The decrease in segment income was driven by a gross margin decrease of $17.0 million, resulting primarily from lower sales volumes and decreased margins on commodity and EWP products.

In addition, depreciation and amortization expense increased $3.3 million.

Unallocated corporate expenses increased $0.9 million to $11.6 million for the three months ended March 31, 2025, from $10.7 million for the same period in the prior year.

The increase was due primarily to an increase in employee-related expenses and professional fees.

In addition, selling and distribution expenses and depreciation and amortization expense increased $11.6 million and $5.3 million, respectively.

These decreases to segment income were offset partially by increased margins on general line products.

Segment income also benefited from a $3.8 million gain on the sale of a non-operating property.

Unallocated corporate expenses increased $0.3 million to $11.5 million for the three months ended June 30, 2025, from $11.2 million for the same period in the prior year.

For the six months ended June 30, 2025, unallocated corporate expenses increased $1.2 million to $23.1 million from $21.9 million for the six months ended June 30, 2024.

The increase in both periods was due primarily to an increase in employee-related expenses and professional fees.

Interest Income.

Interest income decreased $5.1 million to $5.5 million for the three months ended March 31, 2025, from $10.6 million for the same period in the prior year.

The decrease was due primarily to lower average balances of cash equivalents, as well as lower interest rates.

Interest income decreased $5.9 million to $4.6 million for the three months ended June 30, 2025, from $10.5 million for the same period in the prior year.

For the six months ended June 30, 2025, interest income decreased $11.0 million to $10.1 million from $21.1 million for the six months ended June 30, 2024.

The decrease in both periods was due primarily to lower average balances of cash equivalents, as well as lower interest rates.

Change in fair value of interest rate swaps.

For information related to our interest rate swap, see the discussion under "Interest Rate Risk and Interest Rate Swap" of Note 2, Summary of Significant Accounting Policies, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1.

For information related to our interest rate swap, which expired in June 2025, see the discussion under "Interest Rate Risk and Interest Rate Swap" of Note 2, Summary of Significant Accounting Policies, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1.

Financial Statements" of this Form 10-Q.

Income Tax Provision

For the three months ended March 31, 2025 and 2024, we recorded $13.8 million and $32.8 million, respectively, of income tax expense and had an effective rate of 25.5% and 24.0%, 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, 2025, we recorded $18.6 million and $32.5 million, respectively, of income tax expense and had an effective rate of 23.1% and 24.1%, respectively.

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 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.

Industry Mergers and Acquisitions

On July 1, 2025, James Hardie Industries plc (James Hardie) completed the acquisition of The AZEK Company Inc.

James Hardie is a significant supplier to our BMD segment.

In addition, AZEK produces products that compete with another significant supplier to us, Trex.

We have good relationships with both James Hardie and Trex, but it is uncertain what impact, if any, this transaction may have on distribution arrangements with both companies.

As such, we cannot assess the potential impact of this transaction to our future results of operations.

Liquidity and Capital Resources

We ended first quarter 2025 with $561.8 million of cash and cash equivalents and $450.0 million of debt.

At March 31, 2025, we had $957.5 million of available liquidity (cash and cash equivalents and undrawn committed bank line availability).

Our cash and cash equivalents decreased by $151.5 million during the three months ended March 31, 2025, as we used cash to fund seasonal working capital increases, capital spending, treasury stock purchases, and dividends paid on our common stock.

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

We ended second quarter 2025 with $481.0 million of cash and cash equivalents and $450.0 million of debt.

At June 30, 2025, we had $876.2 million of available liquidity (cash and cash equivalents and undrawn committed bank line availability).

Our cash and cash equivalents decreased by $232.2 million during the six months ended June 30, 2025, as we used cash to fund seasonal working capital increases, capital spending, treasury stock purchases, and dividends paid on our common stock.

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 2025 from cash on hand and, if necessary, borrowings under our revolving credit facility.

On April 14, 2025, we entered into a credit agreement for a $450.0 million revolving facility which matures on April 14, 2030.

At closing, $50.0 million under the facility was borrowed, and we had approximately $4.3 million of letters of credit outstanding that reduced availability under the credit agreement.

Proceeds from the facility were used to repay the $50.0 million term loan under the asset-based revolving credit facility.

In connection with the entry into the credit agreement described above, we terminated the $400.0 million asset-based revolving credit facility and $50.0 million term loan facility.

For more information related to our credit agreements, see the discussion in Note 6, Debt, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1.

Financial Statements" of this Form 10-Q.

We expect to fund our seasonal and intra-month working capital requirements in the remainder of 2025 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

Net cash provided by (used for) operations $ (28,476) $ 27,462

Six Months Ended

Net cash provided by operations $ 4,694 $ 169,165

Net cash used for investment (122,105) (76,667)

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Operating Activities

For the three months ended March 31, 2025, our operating activities used $28.5 million of cash, compared with $27.5 million of cash generated in the same period in 2024.

The $55.9 million decrease in cash provided by operations was due primarily to a decrease in income from operations, offset partially by a lesser year-over-year increase in working capital.

Working capital increased $123.7 million during the three months ended March 31, 2025, compared with a $149.2 million increase for the same period in the prior year.

For the six months ended June 30, 2025, our operating activities generated $4.7 million of cash, compared with $169.2 million of cash generated in the same period in 2024.

The $164.5 million decrease in cash provided by operations was due primarily to a decrease in income from operations, as well as a greater year-over-year increase in working capital, offset partially by a $34.4 million decrease in cash paid for taxes, net of refunds, compared to the same period in 2024.

Working capital increased $170.3 million during the six months ended June 30, 2025, compared with a $131.6 million increase for the same period in the prior year.

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 18% and 19%, comparing sales for the months of March 2025 and 2024 with sales for the months of December 2024 and 2023, respectively.

Inventories increased during the three months ended March 31, 2025 in preparation for the spring building season, as well as participation in certain BMD vendors' early-buy programs.

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

The increase in accounts payable and accrued liabilities as of March 31, 2025 was related to the increase in inventories and extended terms offered by certain BMD vendors, offset partially by employee compensation payouts made during the quarter and lower accrued rebates.

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 receivables in both periods primarily reflect increased sales of approximately 22% and 16%, comparing sales for the months of June 2025 and 2024 with sales for the months of December 2024 and 2023, respectively.

Inventories increased during the six months ended June 30, 2025 due to seasonally higher inventory purchases in our BMD segment for the summer building season, as well as participation in certain BMD vendors' early-buy programs.

In addition, inventories for both segments were impacted by a weaker demand environment.

Inventories increased during the six months ended June 30, 2024 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, 2025 and 2024, we used $53.2 million and $34.3 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 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, 2025 and 2024, we used $132.3 million and $74.1 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 six months ended June 30, 2025, we received proceeds of $10.2 million from the sale of assets.

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.

Excluding potential acquisitions, we expect capital expenditures in 2025 to total approximately $220 million to $240 million.

We expect our capital spending in 2025 will be for business improvement and quality/efficiency projects, replacement and expansion projects, and ongoing environmental compliance.

Our 2025 capital expenditures range includes additional spending on the multi-year investments at our Thorsby EWP mill and Oakdale veneer and plywood mills, as well as our greenfield distribution centers in Texas and South Carolina.

This level of capital expenditures could increase or decrease as

a result of several factors, including acquisitions, efforts to further accelerate organic growth, exercise of lease purchase options, our financial results, future economic conditions, availability of engineering and construction resources, and timing and availability of equipment purchases.

Our 2025 capital expenditures range includes additional spending on the multi-year investments at our Thorsby EWP mill and Oakdale veneer and plywood mill, as well as our greenfield distribution center in Texas.

In addition, it includes the purchase of previously leased distribution centers in Chicago, Illinois and Minneapolis, Minnesota.

This level of capital expenditures could increase or decrease as a result of several factors, including acquisitions, efforts to further accelerate organic growth, exercise of lease purchase options, our financial

results, future economic conditions, availability of engineering and construction resources, and timing and availability of equipment purchases.

Financing Activities

During the three months ended March 31, 2025, our financing activities used $70.8 million of cash, including $53.9 million for the repurchase of 482,700 shares of our common stock, $10.5 million in common stock dividend payments, and $5.9 million of tax withholding payments on stock-based awards.

During the three months ended March 31, 2025, we did not borrow under our revolving credit facility and therefore have no borrowings outstanding on the facility as of March 31, 2025.

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 in 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.

During the six months ended June 30, 2025, our financing activities used $114.8 million of cash, including $86.0 million for the repurchase of 837,352 shares of our common stock, $18.4 million in common stock dividend payments, and $5.9 million of tax withholding payments on stock-based awards.

On April 14, 2025, we entered into a credit agreement for a $450.0 million revolving credit facility which matures on April 12, 2030.

At closing, $50.0 million under the facility was borrowed.

Proceeds from the facility were used to repay the $50.0 million term loan under the asset-based revolving credit facility.

At June 30, 2025, we had $50.0 million of borrowings outstanding under the 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 in 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 asset-based revolving credit facility.

For more information related to our debt transactions and structure, our dividend policy, and our stock repurchase program, see the discussion in Note 6, Debt, and Note 9, Stockholders' Equity, respectively, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1.

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Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Form 10-K.

As of March 31, 2025, there have been no material changes in other material cash requirements outside the ordinary course of business since December 31, 2024.

As of June 30, 2025, there have been no material changes in other material cash requirements outside the ordinary course of business since December 31, 2024.

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 2024 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, 2025, there have been no material changes to the guarantees disclosed in our 2024 Form 10-K.

As of June 30, 2025, there have been no material changes to the guarantees disclosed in our 2024 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 27, 2025, we had approximately 7,670 employees.

As of July 20, 2025, we had approximately 7,710 employees.

Approximately 17% of these employees work pursuant to collective bargaining agreements.

As of April 27, 2025, we had ten collective bargaining agreements.

One agreement covering approximately 40 employees at our Vancouver BMD facility expired on December 31, 2024 and one agreement covering approximately 20 employees at our Billings BMD facility expired on March 31, 2025.

As of July 20, 2025, we had ten collective bargaining agreements.

One agreement covering approximately 20 employees at our Billings BMD facility expired on March 31, 2025.

In late July, the union commenced a work stoppage;

however, the terms and conditions of this agreement generally remain in effect pending negotiation of a new agreement.

The company continues to engage in good faith efforts to reach an agreement on a new contract.

Two agreements covering approximately 730 employees at our Oakdale and Florien plywood plants expired on July 15, 2025.

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

In addition, two agreements covering approximately 750 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.

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.

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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, 2025, there have been no material changes to financial market risks disclosed in our 2024 Form 10-K.

As of June 30, 2025, there have been no material changes to financial market risks disclosed in our 2024 Form 10-K.

Environmental

As of March 31, 2025, there have been no material changes to environmental issues disclosed in our 2024 Form 10-K.

As of June 30, 2025, there have been no material changes to environmental issues disclosed in our 2024 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 2024 Form 10-K.

At March 31, 2025, there have been no material changes to our critical accounting estimates from those disclosed in our 2024 Form 10-K.

At June 30, 2025, there have been no material changes to our critical accounting estimates from those disclosed in our 2024 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