BOISE CASCADE Co

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, 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 and six months ended June 30, 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 June 30, 2025, total sales decreased $57.6 million, or 3%, to $1,740.1 million from $1,797.7 million during the three months ended June 30, 2024. For the six months ended June 30, 2025, total sales decreased $166.5 million, or 5%, to $3,276.6 million from $3,443.1 million for the same period in the prior year. As described below, the decrease in sales in both periods 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 second quarter 2025, total U.S. housing starts and single-family housing starts decreased 1% and 8%, respectively, compared with the same period in 2024. On a year-to-date basis through June 2025, total and single-family housing starts decreased 1% and 7%, respectively, compared with the same period in 2024. Average composite panel prices for the three and six months ended June 30, 2025 were 19% and 16% lower, respectively, than in the same periods in the prior year, as reflected by Random Lengths composite panel pricing. Average composite lumber prices for the three and six months ended June 30, 2025 were 18% and 15% higher, respectively, than in the same periods in the prior year, as reflected by Random Lengths composite lumber pricing.

Wood Products. Sales, including sales to our BMD segment, decreased $42.6 million, or 9%, to $447.2 million for the three months ended June 30, 2025, from $489.8 million for the three months ended June 30, 2024. The decrease in sales was driven by lower sales prices for LVL and I-joists (collectively referred to as EWP) of 10% and 8%, respectively, resulting in decreased sales of $15.8 million and $10.0 million, respectively. Plywood sales volumes and sales prices decreased 7% and 6%, respectively, resulting in decreased sales of $9.9 million and $7.1 million, respectively. In addition, sales volumes for I-joists decreased 5%, resulting in decreased sales of $6.5 million. These decreases were offset partially by increased sales volumes for LVL of 8%, resulting in increased sales of $10.8 million.

For the six months ended June 30, 2025, sales, including sales to our BMD segment, decreased $95.7 million, or 10%, to $863.1 million from $958.8 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 10% and 9%, respectively, resulting in decreased sales of $28.2 million and $20.1 million, respectively. Plywood sales prices and sales volumes decreased 8% and 5%, respectively, resulting in decreased sales of $20.3 million and $13.4 million, respectively. In addition, sales volumes for I-joists decreased 4%, resulting in decreased sales of $10.3 million. These decreases were offset partially by increased sales volumes for LVL of 2%, resulting in increased sales of $6.3 million.

For both periods described above, I-joist sales volumes were influenced by multiple factors, including the level of housing starts, competition from other wood-based products, and concrete floor applications that limit wood floor opportunity. LVL sales volumes expanded their presence in the marketplace through growth with dealers and homebuilders when compared to the same periods in 2024. In addition, plywood sales volumes in both periods were impacted by planned downtime to complete projects at our Oakdale and Kettle Falls plywood mills.

Building Materials Distribution. Sales decreased $40.3 million, or 2%, to $1,614.9 million for the three months ended June 30, 2025, from $1,655.2 million for the three months ended June 30, 2024. Compared with the same quarter in the prior year, the overall decrease in sales was driven by a sales price decrease of 2%, as sales volumes were flat. By product line, commodity sales decreased 5%, or $27.0 million; general line product sales increased 4%, or $31.2 million; and EWP sales (substantially all of which are sourced through our Wood Products segment) decreased 12%, or $44.5 million.

During the six months ended June 30, 2025, sales decreased $138.2 million, or 4%, to $3,022.0 million from $3,160.2 million for the same period in the prior year. The overall decrease in sales was driven by decreases of 2% for both sales prices and sales volumes. By product line, commodity sales decreased 6%, or $63.1 million; general line product sales increased 1%, or $14.0 million; and sales of EWP decreased 13%, or $89.1 million.

Costs and Expenses

Materials, labor, and other operating expenses (excluding depreciation) increased $0.8 million, or less than 1%, to $1,441.5 million for the three months ended June 30, 2025, compared with $1,440.7 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, labor and other manufacturing costs increased, offset partially by decreased sales volumes for plywood compared with second quarter 2024. Materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our Wood Products segment increased by 1,170 basis points, primarily as the result of lower EWP and plywood sales prices, as well as lower sales volumes for I-joists and plywood 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 decline in sales, as well as increased vendor rebates and allowances, compared with second quarter 2024. The BMD segment MLO rate decreased 60 basis points, driven by higher margin percentages on general line products, offset partially by lower margins on commodity products.

For the six months ended June 30, 2025, materials, labor, and other operating expenses (excluding depreciation) decreased $30.5 million, or 1%, to $2,717.6 million, compared with $2,748.1 million in 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. Lumber input costs for solid-sawn I-joist and laminated beam production also increased. In addition, labor and other manufacturing costs increased, offset partially by decreased sales volumes for plywood and I-joists compared with the same period in the prior year. The MLO rate in our Wood Products segment increased by 1,130 basis points, due primarily to lower sales prices for EWP and plywood, as well as lower sales volumes for I-joists and plywood, 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 decline in sales, as well as increased vendor rebates and allowances, compared with the first six months of 2024. The BMD segment MLO rate decreased 20 basis points, primarily due to higher margin percentages on our general line sales, offset partially by lower margins on our commodity sales compared with the first six months of 2024.

Depreciation and amortization expense increased $3.0 million, or 9%, to $37.4 million for the three months ended June 30, 2025, compared with $34.4 million during the same period in the prior year. For the six months ended June 30, 2025, these expenses increased $4.3 million, or 6%, to $74.5 million, compared with $70.2 million in the same period in the prior year. The increase in both periods was primarily due to purchases of property and equipment. For the six months ended June 30, 2025, the increase was 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 increased $12.0 million, or 8%, to $161.8 million for the three months ended June 30, 2025, compared with $149.8 million during the same period in the prior year. The increase was due primarily to higher employee-related expenses of $6.9 million, offset partially by lower incentive compensation expense of $1.3 million. Additionally, costs related to shipping, handling, and professional fees increased by $2.5 million. For the six months ended June 30, 2025, selling and distribution expenses increased $11.6 million, or 4%, to $305.5 million, compared with $293.9 million during the same period in 2024. The increase was primarily a result of higher employee-related expenses of $10.0 million, offset partially by lower incentive compensation expense of $3.3 million. In addition, costs related to professional fees increased $1.9 million.

General and administrative expenses increased $0.5 million, or 2%, to $26.5 million for the three months ended June 30, 2025, compared with $25.9 million for the same period in the prior year. For the six months ended June 30, 2025, general and administrative expenses increased $0.4 million, or 1%, to $51.5 million, compared with $51.1 million during the same period in 2024. The increase in both periods was due primarily to higher other employee-related expenses and professional fees, offset partially by lower 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 $66.5 million to $80.5 million for the three months ended June 30, 2025, compared with $147.0 million for the three months ended June 30, 2024. Income from operations decreased $144.9 million to $135.0 million for the six months ended June 30, 2025, compared with $280.0 million for the six months ended June 30, 2024.

Wood Products. Segment income decreased $58.8 million to $14.0 million for the three months ended June 30, 2025, compared with $72.8 million for the three months ended June 30, 2024. The decrease in segment income was due to lower EWP and plywood sales prices, as well as higher per-unit conversion costs primarily as a result of downtime to complete the modernization projects at our Oakdale, Louisiana veneer and plywood mill. In addition, lower plywood sales volumes and an unfavorable profit in inventory adjustment contributed to the decrease in segment income. These decreases in segment income were offset partially by a $3.9 million gain on the sale of a non-operating property.

For the six months ended June 30, 2025, segment income decreased $112.3 million to $31.7 million from $144.0 million for the six months ended June 30, 2024. The decrease in segment income was due to lower EWP and plywood sales prices, as well as higher per-unit conversion costs primarily as a result of downtime to complete the modernization projects at our Oakdale, Louisiana veneer and plywood mill. In addition, higher lumber input costs for solid-sawn I-joist and laminated beam production, as well as lower plywood and EWP sales volumes, contributed to the decrease in segment income. These decreases in segment income were offset partially by a $3.9 million gain on the sale of a non-operating property.

Building Materials Distribution. Segment income decreased $7.4 million to $78.0 million for the three months ended June 30, 2025, from $85.4 million for the three months ended June 30, 2024. The decrease in segment income was driven by increased selling and distribution expenses and depreciation and amortization expense of $12.1 million and $2.1 million, respectively. These decreases to segment income were offset partially by a gross margin increase of $3.4 million, resulting primarily from increased margins on general line products, which were offset partially by decreased margins on commodity and EWP products. Additionally, segment income benefited from a $3.8 million gain on the sale of a non-operating property.

For the six months ended June 30, 2025, segment income decreased $31.4 million to $126.5 million from $157.9 million for the six months ended June 30, 2024. The decrease in segment income was driven by a gross margin decrease of $17.0 million, resulting primarily from lower sales volumes and decreased margins on commodity and EWP products. In addition, selling and distribution expenses and depreciation and amortization expense increased $11.6 million and $5.3 million, respectively. These decreases to segment income were offset partially by increased margins on general line products. Segment income also benefited from a $3.8 million gain on the sale of a non-operating property.

Corporate. Unallocated corporate expenses increased $0.3 million to $11.5 million for the three months ended June 30, 2025, from $11.2 million for the same period in the prior year. For the six months ended June 30, 2025, unallocated corporate expenses increased $1.2 million to $23.1 million from $21.9 million for the six months ended June 30, 2024. The increase in both periods was due primarily to an increase in employee-related expenses and professional fees.

Other

Interest Income. Interest income decreased $5.9 million to $4.6 million for the three months ended June 30, 2025, from $10.5 million for the same period in the prior year. For the six months ended June 30, 2025, interest income decreased $11.0 million to $10.1 million from $21.1 million for the six months ended June 30, 2024. The decrease in both periods 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, which expired in June 2025, 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 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 rate of 23.1% and 24.1%, respectively. For the three and six months ended June 30, 2024, we recorded $38.5 million and $71.3 million, respectively, of income tax expense and had an effective rate of 25.5% and 24.8%, 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.