BOISE CASCADE Co Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Housing Market: Total U.S. housing starts and single-family housing starts decreased 1% and 8%, respectively, compared to the prior-year quarter. Consolidated second quarter sales were $1.7 billion, down 3% from Q2 2024. Net income was $62 million or $1.64 per share, down from $112.3 million or $2.84 per share in the year-ago quarter.
• Operational Milestones: The modernization project at the Oakdale mill is substantially complete, enhancing operational efficiency and reliability. Capital expenditures in the 6 months ended June 2025 were $132 million, with $70 million in Wood Products and $62 million in BMD.
• Shareholder Returns: Paid $18 million in regular dividends in the first half of 2025. Board approved a $0.22 per share quarterly dividend, a 5% increase. Repurchased approximately $96 million of Boise Cascade common stock through July 2025.

Segment Performance

• Wood Products: Second quarter sales were $447.2 million, down 9% compared to Q2 2024. Segment EBITDA was $37.3 million, down from $95.1 million in the prior-year quarter. This decrease was due to lower EWP and plywood sales prices, lower plywood volumes, and an Oakdale outage. A $3.9 million gain on the sale of a nonoperating property partially offset the decrease.
• BMD: Second quarter sales were $1.6 billion, down 2% compared to Q2 2024. Segment EBITDA was $91.8 million, down from $97.1 million in the prior-year quarter. The decrease was driven by increased selling and distribution expenses, but gross margin was 15.4%, a 60 basis point year-over-year improvement. A $3.8 million gain on the sale of a nonoperating property benefited segment income.

Guidance

• Third Quarter Outlook: For Wood Products, expected EBITDA between $20 million and $30 million. EWP volumes expected to decline high single digits sequentially, with low to mid-single-digit sequential price declines. Plywood volumes expected to increase mid-single digits, partially offset by lower manufacturing and web stock costs. For BMD, expected EBITDA between $70 million and $80 million. Daily sales pace dependent on end-market demand, product pricing, and customer reliance. Uncertainties from trade and tariff policy changes create potential forward pricing volatility for plywood, lumber, and other commodity products.

Risks

• Market Uncertainties: Persistent headwinds for residential construction activity. Uncertainties from trade and tariff policy changes affecting plywood, lumber, and other commodity products.
• Strike Impact: Strike at BMD's Billings, Montana facility as of July 29, but limited to one location and no material impact anticipated.

Question and Answer

Q: Just wanted to start off on EWP, year-to-date LVL volumes up [2], even I-joist down 4 is nicely outperforming kind of what we're seeing in terms of seeing the family starts. Can you talk a little bit about what's driven that performance gap?

A: Nate Jorgensen noted LVL has better resiliency due to application opportunities like beams, headers, wall framing. I-joists are centered on floor systems, facing more limited opportunities and competitive challenges like plated floor trusses and dimensional lumber.

Q: In terms of the EWP destock kind of referenced in Q3, is there, I guess, a good way to think about the sizing of that and whether that might spill into Q4 as well?

A: Nate Jorgensen mentioned purchase profiles changing, with less mill direct and more activity in distribution. The destock may not be limited to EWP but other products, with purchase patterns likely to change.

Q: This is Brad Barton, on for George. Just starting off quickly, if you guys could just talk to the operating rates across the business? And relatedly, I guess, how do you see EWP pricing going forward, given the trend downward over the last several quarters? At what point do we see a bottom? And what's the catalyst to inflect there?

A: Troy Little discussed operating rates, with EWP inventory at higher levels, and potential to move veneer to plywood if demand exists. Kelly Hibbs mentioned no drag from Oakdale being down like in the first half and benefit from self-sufficient veneer.

Q: My first question is on the general line part of the business. You saw some really nice results there despite all the pressures that are coming through. Can you talk a bit about how you're thinking about the next couple of quarters there, given some of your suppliers focused on getting price and also maintaining inventories on the ground, given the conditions?

A: Joe Barney stated general line category held up well in Q2, with customers leaning on inventories and distribution. Anticipates general line to remain strong going into the balance of the year.

Q: As you think about the operating backdrop across the business, can you talk about some of those efforts? How we should think about the cost structure of the business and the potential benefits to the margins as those efforts come through to results?

A: Troy Little discussed operating posture, planning to run full and positioning to move veneer. Kelly Hibbs mentioned benefit from self-sufficient veneer and potential tailwinds from OSB prices on web stock costs.

Q: As the builders talk to going into 2026 with less inventory on the ground, can you talk about the competitive backdrop and what that could imply for the dynamics within that business as we think about the upcoming quarters?

A: Nate Jorgensen noted EWP competitive dynamics will continue, but Boise Cascade is well-positioned with gray two-step distribution, great marketplace distribution, and design flexibility to serve the marketplace.