What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-03 compared with 2026-05-04 · 141 added, 89 removed, 173 unchanged (57% of the section changed)

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Executive Overview

We recorded income from operations of $27.8 million during the three months ended March 31, 2026, compared with income from operations of $54.5 million during the three months ended March 31, 2025.

In our BMD segment, income decreased $15.5 million to $32.9 million for the three months ended March 31, 2026, from $48.4 million for the three months ended March 31, 2025.

The decrease in segment income was driven by increased selling and distribution expenses of $8.2 million, as well as a $6.5 million gross margin decrease, resulting primarily from lower gross margins on all product lines, particularly EWP.

In our Wood Products segment, income decreased $9.2 million to $8.5 million for the three months ended March 31, 2026, from $17.7 million for the three months ended March 31, 2025.

The decrease in segment income was primarily due to lower EWP sales prices, as well as higher per-unit EWP conversion costs.

These decreases in segment income were offset partially by lower per-unit OSB costs, as well as higher plywood sales volumes and sales prices.

We recorded income from operations of $84.0 million during the three months ended June 30, 2026, compared with income from operations of $80.5 million during the three months ended June 30, 2025.

In our BMD segment, income decreased $7.9 million to $70.1 million for the three months ended June 30, 2026, from $78.0 million for the three months ended June 30, 2025.

The decrease in segment income was driven by increased selling and distribution expenses and depreciation and amortization expense of $10.8 million and $1.7 million, respectively.

Additionally, segment income in second quarter 2025 benefited from a $3.8 million gain on the sale of a non-operating property.

These decreases in segment income were offset partially by a gross margin increase of $9.2 million, resulting from higher gross margins on commodity and general line products, which were offset partially by lower gross margins on EWP.

In our Wood Products segment, income increased $11.7 million to $25.7 million for the three months ended June 30, 2026, from $14.0 million for the three months ended June 30, 2025.

The increase in segment income was primarily due to higher plywood sales prices and sales volumes, as well as lower per-unit OSB costs.

These increases in segment income were offset partially by lower EWP sales prices and higher per-unit conversion costs.

Additionally, segment income in second quarter 2025 benefited from a $3.9 million gain on the sale of a non-operating property.

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

We ended first quarter 2026 with $338.7 million of cash and cash equivalents and $395.1 million of undrawn committed bank line availability, for total available liquidity of $733.8 million.

We had $452.5 million of outstanding debt at March 31, 2026.

We used $138.5 million of cash during the three months ended March 31, 2026, to fund seasonal working capital increases, capital spending, share repurchases, 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 purchase and distribute, as well as the products we manufacture, 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 demand driver for the products we distribute and manufacture.

The operating environment during the first quarter of 2026 presented a mix of opportunities and challenges.

For much of the quarter, mortgage rates declined to their lowest levels in over three years.

However, recent geopolitical turmoil has led to volatility in treasury and mortgage rates alike, casting unpredictability on the remainder of the spring selling season.

Consumer sentiment and home affordability challenges persist as the most prominent headwinds to residential construction activity.

In addition, home builders are responding to the cautious demand environment with thoughtful approaches to starts, home sizes, location, and inventory.

Long-term demand drivers for residential construction, including generational tailwinds and an undersupply of housing units, remain strong, while elevated levels of homeowner equity and an aging U.S.

housing stock support robust repair-and-remodel spending and reinforce the industry’s solid fundamentals.

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.

We ended second quarter 2026 with $304.8 million of cash and cash equivalents and $395.1 million of undrawn committed bank line availability, for total available liquidity of $699.9 million.

We had $452.5 million of outstanding debt at June 30, 2026.

We used $172.4 million of cash during the six months ended June 30, 2026, to fund seasonal working capital increases, capital spending, share repurchases, 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 purchase and distribute, as well as the products we manufacture, depends primarily on new single-family residential construction, with additional demand driven by new multi-family residential construction, residential repair-and-remodeling, and light commercial activity.

During the second quarter, the operating environment remained uneven and competitive.

Ongoing geopolitical uncertainty, volatile Treasury yields and mortgage rates, and persistent inflation continue to weigh on the macroeconomic outlook.

Against this backdrop, residential construction remains subdued, as affordability constraints and low consumer sentiment pressure market conditions.

In response, homebuilders have relied on incentives to stimulate demand while maintaining discipline around starts and spec inventory.

Beyond near-term volatility, long-term residential construction fundamentals remain constructive, supported by generational tailwinds and an undersupplied housing market.

High homeowner equity and an aging U.S.

housing stock support sustained repair-and-remodel spending and reinforce the industry’s solid underlying demand drivers.

Our distribution business, which purchases and resells a diverse range of products, may benefit from rising prices through increased sales and margins, while periods of declining prices may present challenges.

Future product pricing, particularly for commodity products we distribute and manufacture, is expected to remain dynamic, influenced by economic and geopolitical conditions, input costs, industry operating rates, supply disruptions, duties, tariffs, cost and availability of transportation, inventory levels, and seasonal demand patterns.

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• product shortages, loss of key suppliers, and our dependence on third-party suppliers and manufacturers;

• the termination of the distribution relationship with our former composite decking supplier and our ability to execute a successful transition to our new third-party supplier for composite decking;

• the cost and availability of third-party transportation services used to deliver the goods we distribute and manufacture, as well as our raw materials;

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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, 2026 and 2025:

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, 2026 and 2025:

Three Months Ended

June 30 Six Months Ended

2026 2025 2026 2025

Sales $ 1,831.3 $ 1,740.1 $ 3,329.9 $ 3,276.6

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Set forth below are historical U.S.

housing starts data, sales mix and gross margin information for our BMD segment, and segment sales volumes and average net selling prices for the principal products sold by our Wood Products segment for the three months ended March 31, 2026 and 2025:

Three Months Ended

June 30 Six Months Ended

2026 2025 2026 2025

Housing Starts (a)

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Multi-family 119.1 110.6 229.0 199.6

371.8 374.5 695.7 692.3

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, 2026, total sales decreased $37.9 million, or 2%, to $1,498.6 million from $1,536.5 million during the three months ended March 31, 2025.

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

In first quarter 2026, total U.S.

housing starts increased 1% while single-family housing starts decreased 5%, compared with the same period in 2025.

Average composite panel and average composite lumber prices for the three months ended March 31, 2026 were 15% and 5% lower, respectively, than in the same period in the prior year, as reflected by Random Lengths composite panel and composite lumber pricing.

For the three months ended June 30, 2026, total sales increased $91.2 million, or 5%, to $1,831.3 million from $1,740.1 million during the three months ended June 30, 2025.

For the six months ended June 30, 2026, total sales increased $53.3 million, or 2%, to $3,329.9 million from $3,276.6 million for the same period in the prior year.

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

In second quarter 2026, total U.S.

housing starts and single-family housing starts decreased 1% and 4%, respectively, compared with the same period in 2025.

On a year-to-date basis through June 2026, total U.S.

housing starts were flat, while single-family housing starts decreased 5% compared to the same period in 2025.

Average composite lumber prices for the three and six months ended June 30, 2026 were 8% and 2% higher, respectively, than in the same periods in the prior year, as reflected by Random Lengths composite lumber pricing.

Average composite panel prices for the three and six months ended June 30, 2026 were 1% and 8% lower, respectively, than in the same periods in the prior year, as reflected by Random Lengths composite panel pricing.

Building Materials Distribution.

Sales decreased $18.2 million, or 1%, to $1,388.9 million for the three months ended March 31, 2026, from $1,407.1 million for the three months ended March 31, 2025.

Compared with the same quarter in the prior year, the overall decrease in sales was driven by net sales price decreases of 3%, offset partially by net sales volume increases of 2%.

Sales increased $82.6 million, or 5%, to $1,697.5 million for the three months ended June 30, 2026, from $1,614.9 million for the three months ended June 30, 2025.

The overall increase in sales was driven by net sales volume and net sales price increases of 4% and 1%, respectively.

By product line, general line product sales increased 9%, or $62.7 million;

commodity sales decreased 5%, or $24.1 million;

commodity sales increased 7%, or $38.6 million;

and EWP sales (substantially all of which are sourced through our Wood Products segment) decreased 6%, or $18.7 million.

During the six months ended June 30, 2026, sales increased $64.4 million, or 2%, to $3,086.4 million from $3,022.0 million for the same period in the prior year.

The overall increase in sales was driven by net sales volume increases of 3%, offset partially by net sales price decreases of 1%.

By product line, general line product sales increased 7%, or $87.9 million;

commodity sales increased 1%, or $14.6 million;

and sales of EWP decreased 6%, or $38.1 million.

Wood Products.

Sales, including sales to our BMD segment, decreased $17.6 million, or 4%, to $398.2 million for the three months ended March 31, 2026, from $415.8 million for the three months ended March 31, 2025.

The decrease in sales was driven by lower sales prices of 7% for both LVL and I-joists (collectively referred to as EWP), resulting in decreased sales of $8.5 million and $6.9 million, respectively.

Sales, including sales to our BMD segment, increased $12.4 million, or 3%, to $459.6 million for the three months ended June 30, 2026, from $447.2 million for the three months ended June 30, 2025.

The increase in sales was driven by higher plywood sales prices and sales volumes of 15% and 3%, respectively, resulting in increased sales of $18.8 million and $4.1 million, respectively.

These increases were offset partially by lower sales prices for I-joists and LVL (collectively referred to as EWP) of 7% and 4%, respectively, resulting in decreased sales of $7.5 million and $5.9 million, respectively.

Additionally, EWP sales volumes decreased by 2%, resulting in decreased sales of $5.3 million.

For the six months ended June 30, 2026, sales, including sales to our BMD segment, decreased $5.3 million, or 1%, to $857.8 million from $863.1 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 6% and 7%, respectively, resulting in decreased sales of $14.5 million and $14.4 million, respectively.

Additionally, sales volumes for I-joists and LVL decreased by 3% and 2%, respectively, resulting in decreased sales of $6.9 million and $4.9 million, respectively.

These decreases were offset partially by higher plywood sales volumes and sales prices of 3% and 1%, respectively, resulting in increased sales of $4.5 million.

These decreases were offset partially by higher plywood sales prices and sales volumes of 8% and 3%, respectively, resulting in increased sales of $19.7 million and $7.7 million, respectively.

Costs and Expenses

Materials, labor, and other operating expenses (excluding depreciation) decreased $21.1 million, or 2%, to $1,255.1 million for the three months ended March 31, 2026, compared with $1,276.2 million during the same period in the prior year.

In BMD, the decrease in materials, labor, and other operating expenses was driven by lower purchased materials costs as a result of lower prices, offset partially by increased sales volumes, compared with first quarter 2025.

However, materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our BMD segment increased 30 basis points, driven by lower margin percentages on general line and EWP products.

In our Wood Products segment, materials, labor, and other operating expenses decreased due to reduced purchases of external veneer for our Alexandria EWP mill, as operations resumed at our Oakdale veneer and plywood mill following planned downtime to complete significant mill modernization projects in 2025.

Additionally, lower per-unit costs of OSB (used in the manufacture of I-joists), lower other manufacturing costs, and decreased EWP sales volumes contributed to the decrease in MLO.

These decreases were offset partially by higher labor costs compared with first quarter 2025.

However, the MLO rate in our Wood Products segment increased by 150 basis points, primarily as the result of lower EWP sales prices and volumes, which resulted in decreased leveraging of costs.

Depreciation and amortization expense increased $1.9 million, or 5%, to $39.1 million for the three months ended March 31, 2026, compared with $37.1 million during the same period in the prior year.

The increase was primarily due to acquisition and organic growth in our BMD segment and the recent investments at our Oakdale veneer and plywood mill.

Selling and distribution expenses increased $6.8 million, or 5%, to $150.4 million for the three months ended March 31, 2026, compared with $143.6 million during the same period in the prior year.

The increase was due to higher employee-related expenses of $4.9 million, as well as higher shipping and handling costs of $2.3 million.

General and administrative expenses increased $1.3 million, or 5%, to $26.3 million for the three months ended March 31, 2026, compared with $25.0 million for the same period in the prior year.

The increase was due primarily to higher employee-related expenses.

Materials, labor, and other operating expenses (excluding depreciation) increased $62.0 million, or 4%, to $1,503.5 million for the three months ended June 30, 2026, compared with $1,441.5 million during the same period in the prior year.

In BMD, the increase in materials, labor, and other operating expenses was driven by increased sales volumes compared with second quarter 2025.

Materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our BMD segment increased 20 basis points, driven by lower margin percentages on general line products and EWP, offset partially by higher margin percentages on commodity products.

In our Wood Products segment, materials, labor, and other operating expenses decreased primarily due to lower per-unit costs of OSB (used in the manufacture of I-joists) and decreased EWP sales volumes.

These decreases were offset partially by higher labor costs compared with second quarter 2025.

The MLO rate in our Wood Products segment decreased by 410 basis points, primarily as the result of higher plywood sales prices and sales volumes.

For the six months ended June 30, 2026, materials, labor, and other operating expenses (excluding depreciation) increased $40.9 million, or 2%, to $2,758.5 million, compared with $2,717.6 million in the same period in the prior year.

In BMD, the increase in materials, labor, and other operating expenses was driven by increased sales volumes, compared with the first six months of 2025.

The BMD segment MLO rate increased 30 basis points, driven by lower margin percentages on general line products and EWP, offset partially by higher margin percentages on commodity products.

In our Wood Products segment, materials, labor, and other operating expenses decreased primarily due to lower per-unit costs of OSB and decreased EWP sales volumes.

Additionally, reduced purchases of external veneer for our Alexandria EWP mill contributed to the decrease in MLO, as operations resumed at our Oakdale veneer and plywood mill following planned downtime to complete significant mill modernization projects in 2025.

These decreases were offset partially by higher labor costs compared with the

first six months of 2025.

The MLO rate in our Wood Products segment decreased by 140 basis points, primarily as the result of higher plywood sales prices and sales volumes.

Depreciation and amortization expense increased $5.3 million, or 14%, to $42.7 million for the three months ended June 30, 2026, compared with $37.4 million during the same period in the prior year.

For the six months ended June 30, 2026, these expenses increased $7.2 million, or 10%, to $81.8 million, compared with $74.5 million in the same period in the prior year.

The increase in both periods was primarily due to recent investments in support of our EWP capabilities in our Wood Products segment, as well as organic growth and a fourth quarter 2025 acquisition in our BMD segment.

Selling and distribution expenses increased $12.0 million, or 7%, to $173.8 million for the three months ended June 30, 2026, compared with $161.8 million during the same period in the prior year.

The increase was due primarily to higher shipping and handling costs of $6.2 million, as well as higher employee-related expenses of $5.6 million.

For the six months ended June 30, 2026, selling and distribution expenses increased $18.8 million, or 6%, to $324.2 million, compared with $305.5 million during the same period in 2025.

The increase was primarily a result of higher employee-related expenses of $10.5 million, as well as higher shipping and handling costs of $8.5 million.

General and administrative expenses increased $0.8 million, or 3%, to $27.3 million for the three months ended June 30, 2026, compared with $26.5 million for the same period in the prior year.

For the six months ended June 30, 2026, general and administrative expenses increased $2.1 million, or 4%, to $53.6 million, compared with $51.5 million during the same period in 2025.

The increase in both periods was due primarily to higher employee-related expenses and 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 $26.7 million to $27.8 million for the three months ended March 31, 2026, compared with $54.5 million for the three months ended March 31, 2025.

Income from operations increased $3.4 million to $84.0 million for the three months ended June 30, 2026, compared with $80.5 million for the three months ended June 30, 2025.

Income from operations decreased $23.3 million to $111.8 million for the six months ended June 30, 2026, compared with $135.0 million for the six months ended June 30, 2025.

Building Materials Distribution.

Segment income decreased $15.5 million to $32.9 million for the three months ended March 31, 2026, from $48.4 million for the three months ended March 31, 2025.

The decrease in segment income was driven by increased selling and distribution expenses of $8.2 million, as well as a $6.5 million gross margin decrease, resulting from lower gross margins on all product lines, particularly EWP .

Segment income decreased $7.9 million to $70.1 million for the three months ended June 30, 2026, from $78.0 million for the three months ended June 30, 2025.

The decrease in segment income was driven by increased selling and distribution expenses and depreciation and amortization expense of $10.8 million and $1.7 million, respectively.

Additionally, segment income in second quarter 2025 benefited from a $3.8 million gain on the sale of a non-operating property.

For the six months ended June 30, 2026, segment income decreased $23.4 million to $103.1 million from $126.5 million for the six months ended June 30, 2025.

The decrease in segment income was driven by increased selling and distribution expenses and depreciation and amortization expense of $19.0 million and $2.6 million, respectively.

Additionally, segment income in the six months ended June 30, 2025 benefited from a $3.8 million gain on the sale of a non-operating property.

These decreases in segment income were offset partially by a gross margin increase of $2.8 million, resulting from higher gross margins on commodity and general line products, which were offset partially by lower gross margins on EWP.

Wood Products.

Segment income decreased $9.2 million to $8.5 million for the three months ended March 31, 2026, from $17.7 million for the three months ended March 31, 2025.

The decrease in segment income was primarily due to lower EWP sales prices, as well as higher per-unit EWP conversion costs.

These decreases in segment income were offset partially by lower per-unit OSB costs, as well as higher plywood sales volumes and sales prices.

Additionally, operations resumed at our Oakdale veneer and plywood mill following planned downtime in 2025 to complete significant mill modernization projects, which provided a favorable impact on per-unit conversion costs.

Unallocated corporate expenses increased $2.0 million to $13.6 million for the three months ended March 31, 2026, from $11.6 million for the same period in the prior year.

The increase was primarily due to the absorption of approximately $1.8 million of estimated insurance losses related to a fire at our Florien plywood facility in first quarter 2026, in accordance with our self-insured risk retention program.

Segment income increased $11.7 million to $25.7 million for the three months ended June 30, 2026, from $14.0 million for the three months ended June 30, 2025.

The increase in segment income was primarily due to higher plywood sales prices and sales volumes, as well as lower per-unit OSB costs.

These increases in segment income were offset partially by lower EWP sales prices and higher per-unit conversion costs.

Additionally, segment income in second quarter 2025 benefited from a $3.9 million gain on the sale of a non-operating property.

For the six months ended June 30, 2026, segment income increased $2.5 million to $34.1 million from $31.7 million for the six months ended June 30, 2025.

The increase in segment income was primarily due to higher plywood sales prices and sales volumes, as well as lower per-unit OSB costs.

These increases in segment income were offset partially by lower EWP sales prices and higher per-unit conversion costs.

Additionally, segment income in the six months ended June 30, 2025 benefited from a $3.9 million gain on the sale of a non-operating property.

Unallocated corporate expenses increased $0.3 million to $11.8 million for the three months ended June 30, 2026, from $11.5 million for the same period in the prior year.

The increase was primarily due to higher incentive compensation expense and other employee-related expenses.

For the six months ended June 30, 2026, unallocated corporate expenses increased $2.4 million to $25.4 million from $23.1 million for the six months ended June 30, 2025.

The increase was primarily due to the absorption of approximately $1.8 million of estimated insurance losses related to a fire at our Florien veneer and plywood facility in first quarter 2026, in accordance with our self-insured risk retention program.

Interest Income.

Interest income decreased $2.6 million to $2.9 million for the three months ended March 31, 2026, from $5.5 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 $2.5 million to $2.2 million for the three months ended June 30, 2026, from $4.6 million for the same period in the prior year.

For the six months ended June 30, 2026, interest income decreased $5.0 million to $5.1 million from $10.1 million for the six months ended June 30, 2025.

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

Income Tax Provision

For the three months ended March 31, 2026 and 2025, we recorded $6.6 million and $13.8 million, respectively, of income tax expense and had an effective tax rate of 27.0% and 25.5%, 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, 2026, we recorded $21.2 million and $27.8 million, respectively, of income tax expense and had an effective tax rate of 27.0% in both periods.

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 tax rate of 23.1% and 24.1%, 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 2026 with $338.7 million of cash and cash equivalents and $452.5 million of debt.

At March 31, 2026, we had $733.8 million of available liquidity (cash and cash equivalents and undrawn committed bank line availability).

Our cash and cash equivalents decreased by $138.5 million during the three months ended March 31, 2026, as we used cash to fund seasonal working capital increases, capital spending, share repurchases, 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 2026 with $304.8 million of cash and cash equivalents and $452.5 million of debt.

At June 30, 2026, we had $699.9 million of available liquidity (cash and cash equivalents and undrawn committed bank line availability).

Our cash and cash equivalents decreased by $172.4 million during the six months ended June 30, 2026, as we used cash to fund seasonal working capital increases, capital spending, share repurchases, 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 2026 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 2026 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 used for operations $ (15,982) $ (28,476)

Six Months Ended

Net cash provided by operations $ 26,341 $ 4,694

Net cash used for investment (62,996) (122,105)

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Operating Activities

For the three months ended March 31, 2026, our operating activities used $16.0 million of cash, compared with $28.5 million of cash used in the same period in 2025.

The $12.5 million decrease in cash used for operations was due primarily to a lesser year-over-year increase in working capital, offset partially by a decrease in income from operations.

Working capital increased $80.5 million during the three months ended March 31, 2026, compared with a $123.7 million increase for the same period in the prior year.

For the six months ended June 30, 2026, our operating activities generated $26.3 million of cash, compared with $4.7 million of cash generated in the same period in 2025.

The $21.6 million increase in cash provided by operations was due primarily to a lesser year-over-year increase in working capital and a $13.6 million decrease in cash paid for taxes, net of refunds, offset partially by a decrease in income from operations, compared to the same period in 2025.

Working capital increased $142.4 million during the six months ended June 30, 2026, compared with a $170.3 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 26% and 18%, comparing sales for the months of March 2026 and 2025 with sales for the months of December 2025 and 2024, respectively.

Inventories increased during the three months ended March 31, 2026 in preparation for the spring building season, as well as participation in certain BMD vendors' early-buy programs.

These higher inventory levels were offset partially by the use of log inventory to support manufacturing activity in our Wood Products segment.

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.

During both the three months ended March 31, 2026 and 2025, the increase in accounts payable and accrued liabilities was primarily 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 and lower accrued rebates.

The increase in receivables in both periods primarily reflect increased sales of approximately 44% and 22%, comparing sales for the months of June 2026 and 2025 with sales for the months of December 2025 and 2024, respectively.

Inventories increased during both periods 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.

During the six months ended June 30, 2026, the increase in accounts payable and accrued liabilities was related to the increase in inventories and extended terms offered by certain BMD vendors.

During the six months ended June 30, 2025, the increase in accounts payable and accrued liabilities was related to the increase in inventories and extended terms offered by certain BMD vendors, offset partially by employee compensation payouts made during the period.

Investment Activities

During the three months ended March 31, 2026 and 2025, we used $39.8 million and $53.2 million, respectively, of cash for purchases of property and equipment, including business improvement and efficiency projects, replacement projects, and ongoing environmental compliance.

During the six months ended June 30, 2026 and 2025, we used $63.3 million and $132.3 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, 2025, we received proceeds of $10.2 million from the sale of assets.

Excluding potential acquisitions, we expect capital expenditures in 2026 to total approximately $150 million to $170 million.

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Financing Activities

During the three months ended March 31, 2026, our financing activities used $83.1 million of cash, including $65.5 million for the repurchase of 830,751 shares of our common stock, $10.4 million in common stock dividend payments, and $6.2 million of tax withholding payments on stock-based awards.

During the three months ended March 31, 2026, non-cash investing and financing activities included the issuance of a $2.5 million promissory note to partially finance a property purchase.

During the three months ended March 31, 2026, we did not borrow under our revolving credit facility.

At March 31, 2026, we had $50.0 million of borrowings outstanding under the revolving credit facility.

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 asset-based revolving credit facility.

During the six months ended June 30, 2026, our financing activities used $135.7 million of cash, including $108.3 million for the repurchase of 1,404,815 shares of our common stock, $18.1 million in common stock dividend payments, and $6.2 million of tax withholding payments on stock-based awards.

During the six months ended June 30, 2026, non-cash investing and financing activities included the issuance of a $2.5 million promissory note to partially finance a property purchase.

During the six months ended June 30, 2026, we did not borrow under our revolving credit facility.

At June 30, 2026, we had $50.0 million of borrowings outstanding under the 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.

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 2025 Form 10-K.

As of March 31, 2026, there have been no material changes in other material cash requirements outside the ordinary course of business since December 31, 2025.

As of June 30, 2026, there have been no material changes in other material cash requirements outside the ordinary course of business since December 31, 2025.

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 2025 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, 2026, there have been no material changes to the guarantees disclosed in our 2025 Form 10-K.

As of June 30, 2026, there have been no material changes to the guarantees disclosed in our 2025 Form 10-K.

Seasonal Influences

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These seasonal trends impact our sales, expenses and operational planning throughout the year.

As of April 26, 2026, we had approximately 7,660 employees.

As of July 19, 2026, we had approximately 7,740 employees.

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

As of April 26, 2026, we had ten collective bargaining agreements.

As of July 19, 2026, we had nine collective bargaining agreements.

One agreement covering approximately 80 employees at our Canadian EWP facility is set to expire on December 31, 2026.

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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, 2026, there have been no material changes to financial market risks disclosed in our 2025 Form 10-K.

As of June 30, 2026, there have been no material changes to financial market risks disclosed in our 2025 Form 10-K.

Environmental

As of March 31, 2026, there have been no material changes to environmental issues disclosed in our 2025 Form 10-K.

As of June 30, 2026, there have been no material changes to environmental issues disclosed in our 2025 Form 10-K.

For additional information, see Environmental in "Item 7.

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We review the development, selection, and disclosure of our critical accounting estimates with the Audit Committee of our board of directors.

For information about critical accounting estimates, see Critical Accounting Estimates in "Item 7.

For information about critical accounting estimates, see Critical

Accounting Estimates in "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Form 10-K.

At March 31, 2026, there have been no material changes to our critical accounting estimates from those disclosed in our 2025 Form 10-K.

At June 30, 2026, there have been no material changes to our critical accounting estimates from those disclosed in our 2025 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