Boise Cascade Company 2026 Q2 Earnings Call

Thank you, Jeff. I'm on slide five. BMD sales in the quarter were $1.7 billion, up 5% from second quarter 2025. BMD reported segment EBITDA of $85.6 million in the second quarter compared to segment EBITDA of $91.8 million in the prior year quarter. Gross margins increased to $9.2 million compared with prior year quarter, resulting from higher gross margins on commodity and general line products, offset partially by lower gross margins on EWP. Selling and distribution expenses were up $10.8 million from second quarter 2025, approximately 50% of which was due to higher fuel and outbound delivery costs. In addition, prior year results benefited from a $3.8 million gain on the sale of a non-operating property. In Wood Products, our sales in the second quarter, including sales for our distribution segment, were $459.6 million, up 3% compared to second quarter 2025.

Wood Products segment EBITDA was $52.4 million compared to EBITDA of $37.3 million reported in the year-ago quarter. The increase in segment EBITDA was primarily due to higher plywood prices and sales volumes, as well as lower per-unit OSB costs used in the production of I-joists. These increases were offset partially by lower EWP sales prices as well as higher per-unit conversion costs. In addition, prior year results included a $3.9 million gain on the sale of our former Roxboro, North Carolina, property. Moving to slides six and seven. BMD's year-over-year second quarter sales increase of 5% was driven by net sales volume and price increases of 4% and 1%, respectively. By product line, general line product sales increased 9%, commodity sales increased 7%, and sales of EWP decreased 6%. Sequentially, BMD sales were up 22%. Our second quarter gross margin was 15.2%, down 20 basis points year over year.

Competitive pressures drove lower gross margins on general line products and EWP, offset partially by improved gross margins on commodity products, due mainly to higher trending lumber prices. BMD's EBITDA margin was 5% for the quarter, down from 5.7% in the year-ago quarter. The 70-basis point decline resulted from lower gross margins, higher selling and distribution costs, and the asset sale gain that boosted prior EBITDA margin by 30 basis points. On a sequential basis, EBITDA margin was up sharply from the 3.5% reported in the first quarter. Seasonal demand improvement, higher gross margin dollars and percentages, and improved operating expense leverage from increased volumes positively impacted our second quarter results. Turning to slide eight. On a year-over-year basis, second quarter I-joist and LVL volumes were each down 2%.

Sequential I-joist and LVL volumes were up 18% and 17% respectively, driven by seasonal demand improvements and the pull forward of some volume. Related to volume pull forward, as expected, some customers ordered more product in the second quarter to get ahead of our announced price increase, and we believe possibly out of concern that transportation constraints could result in product shortages. I will speak to our EWP price increase in more detail when addressing our third quarter outlook. As it relates to second quarter pricing, I-joist and LVL realization declined 7% and 4% respectively versus the prior year quarter and were nearly flat sequentially. Turning to slide nine. Our second quarter plywood sales volume was 368 million feet, compared to 356 million feet in second quarter 2025.

The year-over-year increase in plywood volumes was driven by lower volumes in the prior year quarter due to downtime at our Kettle Falls, Washington mill to complete a scheduled maintenance project, as well as the planned outage for capital projects at our Oakdale, Louisiana mill. Sequentially, our plywood sales volumes were down 1% from first quarter 2026 as we diverted more veneer to EWP production to meet stronger than anticipated demand across our EWP product lines. The average plywood net sales price was $393 per thousand in the second quarter, representing a 15% increase year-over-year and sequentially. We attribute the recent improvement in plywood pricing to reduced imports. Notably, Brazilian imports declined by 25% year-over-year through the second quarter of 2026, despite a temporary reduction in tariff rates that accelerated imports in the second quarter.

New Section 301 tariffs are now in effect, increasing the effective tariff rate, which may influence market dynamics in the coming months. I'm now on slide 10. We had capital expenditures of $63 million in the first six months of 2026, including $23 million in the second quarter. BMD and Wood Products spent $8 million and $15 million respectively on capital projects in the second quarter. Our capital spending range for 2026 remains at $150 million-$170 million. Speaking to shareholder returns, we paid $18 million in regular dividends during the first six months of 2026, including $8 million in the second quarter. Our board of directors also recently approved a 5% increase in the quarterly dividend on our common stock to $0.23 per share that will be paid in mid-September.

Through the first six months of 2026, we repurchased approximately $108 million of Boise Cascade common stock, including approximately $43 million in the second quarter. At the end of the second quarter, about $130 million of our outstanding common stock was available for repurchase under our existing share repurchase program. The ongoing strength of our balance sheet and cash generation capability through the cycle leaves us well-positioned to continue pursuing our strategic objectives. I'm now on slide 11, where we have outlined a range of potential EBITDA outcomes for the third quarter, along with the key assumptions underlying these projections. Activities associated with the ramp-up of our expanded partnership with James Hardie, the wind down of our former suppliers product lines, and termination provisions that delay the full implementation of James Hardie's distribution realignment will take time to play out and are expected to affect our near-term results.

Accordingly, we expect revenue pressure in decking, siding, and trim as we work through these changes. Decking will be the most notable category, given it amounted to approximately 90% of BMD's last 12 months revenue. Beginning October 1st of this year, our agreement provides elements of financial support as we ramp sales across the full suite of James Hardie products. We are confident in our ability to mitigate the near-term impacts while positioning the company for stronger long-term growth. With that said, inclusive of supplier transition activities, we currently estimate BMD's third quarter EBITDA will be between $53 million and $68 million. Our daily sales pace through July was consistent with the second quarter sales pace of $26.5 million per day. It is expected to moderate based on forward-looking end market signals and supplier transition activities. Gross margins are expected to be between 14% and 14.75%.

In Wood Products, we announced an EWP price increase in the latter part of the second quarter that we expect to increase our pricing by approximately 3% when fully implemented. Contractual obligations will delay the realization of the full benefits of this action. We expect to begin seeing the impact of the price increase as we move through the third quarter. Turning to our anticipated results for Wood Products. We estimate third quarter EBITDA will be between $22 million and $57 million. Our EWP order file was strong. Order intake in recent weeks has moderated to the extent that we expect volumes to decline mid-single digits sequentially. EWP pricing is expected to increase slightly on a sequential basis. In plywood, we expect volumes to decline low single digits sequentially.