BOISE CASCADE Co

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:

Sales Volumes and Prices

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:

(a) Actual U.S. housing starts data as reported by the U.S. Census Bureau.

(b) We define gross margin as "Sales" less "Materials, labor, and other operating expenses (excluding depreciation)." Substantially all costs included in "Materials, labor, and other operating expenses (excluding depreciation)" for our BMD segment are for inventory purchased for resale. Gross margin percentage is gross margin as a percentage of segment sales.

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. housing starts and single-family housing starts decreased 2% and 6%, 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.

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.

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. By product line, commodity sales decreased 7%, or $36.1 million; general line product sales decreased 3%, or $17.2 million; and EWP sales (substantially all of which are sourced through our Wood Products segment) decreased 13%, or $44.6 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. 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.

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.

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.

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. The decrease in segment income was 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.

Corporate. 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.

Other

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.

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. 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.