BCC

Consolidated Financial Results

• Total consolidated Q2 2026 sales increased 5% YoY to $1.8 billion. Net income was $57.3 million, or $1.63 per diluted share, both higher than the prior-year quarter when excluding prior-year asset sale gains.
• The company remains resilient amid ongoing headwinds: demand uncertainty from geopolitical events, volatile mortgage rates, weak consumer sentiment, and persistent home affordability challenges that limit residential construction activity. The integrated manufacturing-distribution model continues to deliver value in this environment.

Strategic Announcement: Expanded Distribution Partnership with James Hardie

• Boise Cascade has been named the sole nationwide distribution partner for James Hardie's full product portfolio, including Hardie Siding and Trim, AWAZE Exteriors, and TimberTech Decking and Railing. James Hardie will consolidate its regional distribution networks under this agreement.
• Boise Cascade will phase out distribution of competing siding and PVC trim products to focus on the James Hardie full suite. Management expects the partnership to deliver long-term growth by creating a simpler purchasing experience for customers, expanding addressable market, and leveraging combined sales and marketing capabilities.
• The transition will take place through the remainder of 2026: the company will wind down legacy supplier inventory, onboard James Hardie inventory, train teams, and ramp sales. Progress updates will be provided through late 2026 and 2027. Financial support from James Hardie for the transition will begin October 1, 2026.

Capital Allocation and Shareholder Returns

• Capital expenditures for the first half of 2026 totaled $63 million, with $23 million spent in Q2 2026 ($8 million for BMD, $15 million for Wood Products). The full-year 2026 capital expenditure budget remains unchanged at $150 to $170 million.
• The company paid $18 million in regular dividends in the first half of 2026, including $8 million in Q2. The board approved a 5% increase in the quarterly common dividend to $0.23 per share, payable mid-September 2026.
• Through the first half of 2026, the company repurchased $108 million of common stock, including $43 million in Q2. Approximately $130 million remains available for repurchase under the existing program. The company maintains a strong balance sheet and consistent cash generation to support strategic priorities.

Operational Strength of the Integrated Model

• The integrated model aligns real-time customer demand data with production, inventory, and logistics decisions. Cross-segment coordination improves channel visibility, enabling better matching of output and inventory to end-market conditions and higher service levels for customers.
• The company's strong financial position provides flexibility to allocate capital efficiently, execute strategy, and adapt quickly to changing market dynamics. Long-term fundamentals for residential construction remain constructive.

• Full-Year 2026 Capital Expenditures: Guidance maintained at $150 to $170 million, unchanged from prior outlooks.
• BMD Third Quarter 2026: EBITDA is expected to be between $53 million and $68 million, with gross margins between 14% and 14.75%. Near-term revenue pressure is expected in the decking, siding, and trim categories due to the James Hardie supplier transition. July daily sales pace matched Q2's $26.5 million per day, but sales are expected to moderate due to softer end-market signals and transition activities.
• Wood Products Third Quarter 2026: EBITDA is expected to be between $42 million and $57 million. A previously announced 3% EWP price increase will be phased, with initial impacts beginning in Q3 and full realization delayed by contractual obligations; EWP pricing is expected to increase slightly sequentially, while EWP volumes are expected to decline mid-single digits sequentially. Plywood volumes are expected to decline low single digits sequentially; plywood pricing quarter-to-date is 5% above Q2 averages, with final prices dependent on end-market demand and import supply volatility. Per-unit manufacturing costs are expected to be comparable to Q2 levels.

Boise Cascade has two reporting product segments: Building Materials Distribution (BMD) and Wood Products.

• Building Materials Distribution (BMD): Q2 2026 sales were $1.7 billion, a 5% year-over-year (YoY) increase. 4% of the sales growth came from net volume increases, and 1% from price increases. By product line, general line product sales rose 9% YoY, commodity sales rose 7% YoY, and engineered wood products (EWP) sales fell 6% YoY. Segment EBITDA was $85.6 million in Q2 2026, down from $91.8 million in Q2 2025. The 2025 quarter included a $3.8 million gain from a non-operating property sale that boosted prior-year results. Gross margin was 15.2%, down 20 basis points YoY, and EBITDA margin was 5%, down 70 basis points YoY. Sequentially from Q1 2026, BMD sales rose 22% and EBITDA margin increased sharply from 3.5% to 5%. BMD contributed 78.7% of total consolidated Q2 2026 revenue.

• Wood Products: Q2 2026 sales (including intersegment sales to BMD) were $459.6 million, a 3% YoY increase. Segment EBITDA was $52.4 million, up from $37.3 million in Q2 2025. The 2025 quarter included a $3.9 million gain from a property sale that boosted prior-year results. The EBITDA increase was driven by higher plywood prices and sales volumes, as well as lower per-unit OSB costs for I-JOIST production, partially offset by lower EWP sales prices and higher per-unit conversion costs. I-JOIST and LVL volumes each fell 2% YoY but rose 18% and 17% sequentially from Q1 2026, with some volume pulled forward ahead of an announced EWP price increase. Plywood sales volume was 368 million feet, up 3% YoY (the prior year had lower volumes due to scheduled maintenance outages at two mills), but down 1% sequentially. Average plywood net sales price rose 15% YoY to $393 per thousand feet. Wood Products contributed 21.3% of total consolidated Q2 2026 revenue.

• Ongoing geopolitical uncertainty, persistent volatile mortgage rates, low consumer sentiment, and poor home affordability continue to act as significant headwinds for residential construction, creating broad demand uncertainty.
• The James Hardie distribution transition creates near-term financial and operational risk, including potential revenue pressure, incremental freight and inventory repositioning costs, and margin pressure during the multi-quarter ramp-up period. Timeline for full transition is uncertain, as it depends on James Hardie's exit timing from existing regional distribution arrangements which could take 1 to 2 quarters.
• Higher fuel and outbound delivery costs have increased selling and distribution expenses, with 50% of Q2 2026's YoY increase in selling and distribution costs attributable to these higher costs, and not all cost increases can be passed through to customers.
• Plywood pricing and margins remain exposed to supply volatility from imports, particularly from Brazil, even with new Section 301 tariffs in effect. The impact of new tariffs on import volumes remains uncertain.
• EWP demand faces headwinds from public builders' downward revisions to 2026 closing expectations and potential dealer destocking, which could lead to faster-than-expected volume declines in the second half of 2026.

Q: What are the long-term profitability and efficiency benefits of becoming James Hardie's exclusive nationwide distributor, and are the deal terms unusual?

A: Management states the partnership is primarily focused on driving long-term growth, expanding Boise Cascade's addressable market by adding James Hardie's full product portfolio. The exclusive national product line creates a competitive advantage with national home center customers, and management expects to convert its existing loyal customer base to the new brand. James Hardie's strong existing sales and marketing capabilities will drive pull-through demand for the products. Aligning with one leading brand will reduce customer transaction costs, improve truck fill rates and average order sizes, increase cross-selling opportunities, and help differentiate Boise Cascade from competing distributors. Core deal terms are consistent with prior distribution agreements, and the arrangement includes transition financial support.

Q: How long will the James Hardie transition take, and is the long-term growth opportunity larger than the revenue from the exiting product lines?

A: The full transition will take multiple quarters. Legacy product inventory will be worked down through the end of 2026, with James Hardie inventory starting to be added to locations in September 2026, and full sales of the entire product suite starting in Q4 2026. James Hardie's exit from existing third-party distribution arrangements could take 1 to 2 quarters. The opportunity is not just a 1:1 revenue replacement: it is a strategic shift to own the full exterior product portfolio, with meaningful growth opportunities in product categories Boise Cascade previously did not offer nationally, including PVC and Class A fire-rated products. Management expects the long-term revenue and profit opportunity to be meaningfully larger than the legacy business it is replacing.

Q: What drives the sequential decline in BMD EBITDA guidance for Q3, and what share of the decline comes from transition versus underlying demand?

A: Approximately two-thirds of the expected sequential EBITDA decline is attributable to the James Hardie supplier transition, including temporary inventory wind-down impacts and incremental transition costs. The remaining one-third reflects broader softening in end-market demand and fading of commodity price tailwinds that benefited BMD in the first half of 2026. Management emphasizes that any short-term EBITDA noise during the transition is outweighed by the large long-term growth opportunity of the partnership, which positions Boise Cascade to gain market share across multiple exterior product categories.

Q: Why did Boise Cascade implement a 3% EWP price increase after several years of deflation, and what is the current competitive environment for EWP?

A: EWP prices had stabilized over the prior several quarters even amid competitive pressure, and persistent cost inflation created a need to adjust prices. The company only moved forward with the increase once its order file strengthened enough to support the adjustment, which occurred in Q2 2026. Price increases were not uniform across all markets: some markets saw larger increases, some saw flat pricing, and some saw minor price cuts to match competition, resulting in a net 3% increase overall. Full realization of the price increase will be phased, with slight gains in Q3, incremental gains in Q4, and full impact in Q1 2027.