Good morning. My name is Grace and I will be your conference facilitator today. At this time, I would like to welcome everyone to Boise Cascade's Third Quarter 2024 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. It is now my pleasure to introduce you to Chris Forrey, Vice President, Finance and Investor Relations, Boise Cascade. Mr. Forrey, you may begin your conference.

Thank you, Grace, and good morning, everyone. I would like to welcome you to Boise Cascade's third quarter 2024 earnings call and business update. Joining me on today's call are Nate Jorgensen, our CEO; Kelly Hibbs, our CFO and Treasurer; Troy Little, Head of our Wood Products Operations; and Jeff Strom, Head of our Building Materials Distribution Operations. Turning to Slide 2. This call will contain forward-looking statements. Please review the warning statements in our press release, on the presentation slides, and in our filings with the SEC regarding the risks associated with these forward-looking statements. Also, please note that the appendix includes reconciliations from our GAAP net income to EBITDA and adjusted EBITDA and segment income to segment EBITDA. I will now turn the call over to Nate.

Thanks, Chris. Good morning, everyone. Thank you for joining us for our earnings call today. I'm on Slide Number 3. Total US housing starts and single-family housing starts decreased 3% and 1% respectively compared to the prior year quarter. Our consolidated third quarter sales of $1.7 billion were down 7% from third quarter 2023. Our net income was $91 million or $2.33 per share compared to net income of $143.1 million or $3.58 per share in the year ago quarter. Both of our businesses performed well and delivered good financial results in a demand environment that continues to be constrained by home affordability challenges and economic uncertainties. I want to thank our associates across the company who continue to deliver superior value to our customer and vendor partners no matter the demand environment. In addition, we continue to deploy capital through our organic growth projects and additional returns of capital to our shareholders. Kelly will now walk through our segment financial results, give some insight on the fourth quarter, and then provide an update on our capital allocation in more detail, after which I'll provide an outlook before we take your questions. Kelly?

Thank you, Nate. Good morning, everyone. Wood Products sales in the third quarter, including sales to our distribution segment, were $453.9 million, down 12% compared to third quarter 2023. Wood Products segment EBITDA was $77.4 million compared to EBITDA of $122.9 million reported in the year ago quarter. The decrease in segment EBITDA was due primarily to lower Engineered Wood Product (EWP) and plywood sales prices as well as higher conversion costs. Lower I-joists sales volumes also contributed to the decrease in segment EBITDA. Building Materials Distribution (BMD) sales in the quarter were $1.6 billion, down 6% from third quarter 2023. BMD reported segment EBITDA of $87.7 million in the third quarter compared to segment EBITDA of $104.9 million in the prior year quarter. BMD gross margin dollars decreased $7.7 million from third quarter 2023. Selling and distribution expenses increased by $10 million compared to the prior year quarter, mainly due to the BROSCO acquisition. Turning to Slide 5. On a year-over-year and sequential basis, third quarter volumes for LVL were flat and down 2% respectively and I-joists volumes over the same comparative periods were down 8% and 10%. I-joists sales volumes were influenced by multiple factors, including the level of housing starts, competition from other wood-based products, and an increasing proportion of concrete floor applications that limit wood floor opportunity. Sequential pricing for both LVL and I-joists was down 2% due to continued pricing pressure in the market. Turning to Slide 6. Our third quarter plywood sales volume was 391 million feet, flat with the year ago quarter. The average plywood net sales price in the third quarter was $333 per 1,000, down 13% year-over-year and 8% sequentially. We experienced lower plywood pricing in July at approximately $320 per 1,000 before rebounding at the end of the quarter with our September average price realizations around $350 per 1,000. Moving to Slides 7 and 8. BMD's year-over-year third quarter sales decline of 6% was driven by sales price decreases as sales volumes were flat. Excluding the impact of the BROSCO acquisition, BMD sales would have decreased 9% from third quarter 2023. By product line, commodity sales decreased 12%, general line product sales increased 4%, and sales of EWP decreased 14%. As mentioned earlier, gross margin dollars decreased $7.7 million in the third quarter compared to the same quarter last year. As expected, lower margins on commodities and EWP were the principal drivers of the decline in margin dollars. However, BMD's gross margin percentage was 15.7%, up 50 basis points year-over-year. This increase is reflective of both BMD's ongoing growth in general line sales, which represented 44% of our sales mix in the third quarter, as well as year-over-year margin improvement in that category. BMD's EBITDA margin was 5.6% for the quarter, down from the 6.3% reported in the year-ago quarter and down 30 basis points sequentially. We are pleased with BMD's performance in the third quarter given the market landscape. I'm now on Slide 9. Looking forward to the fourth quarter, October EWP and plywood volumes were resilient as they were comparable to our third quarter monthly averages. However, we expect seasonally lower volumes as we proceed through the quarter. On EWP pricing, we currently expect low-single-digit sequential price declines in the fourth quarter. On plywood pricing, October realizations were approximately 5% above third quarter averages, but we expect seasonal price erosion as the quarter progresses. Regarding BMD sales expectations, seasonal factors and two fewer sales days in Q4 compared to Q3 will be headwinds for us. Our daily sales pace through October is approximately 1% below third quarter daily sales averages and is expected to erode further in November and December. I'm now on Slide 10. We had capital expenditures of $136 million in the nine months ended September 2024, with $62 million of spending in Wood Products and $73 million of spending in BMD. Some equipment delays related to our previously disclosed multi-year projects in the Southeast US have reduced our full year 2024 capital spending range. However, we anticipate these projects will still be completed on schedule, and our spending pace in the fourth quarter will accelerate meaningfully as expected. Looking forward to 2025, we expect our capital spending to be between $200 million and $220 million. Speaking to shareholder returns, we paid $220 million in combined regular and special dividends during the nine months ended September 30th, 2024. Our Board of Directors also recently approved a $0.21 per share quarterly dividend on our common stock. Shareholders of record as of December 2nd will see payment of this dividend on December 18th. During the third quarter, we also funded approximately $70 million of common stock repurchases. Through October, our year-to-date total share repurchases are approximately $165 million or nearly 1.3 million shares. In addition, our Board of Directors recently authorized the repurchase of an additional 1.4 million shares under our common stock repurchase program. Today, we have approximately 2 million shares available for repurchase under our share repurchase program. In summary, our capital deployment strategy continues with ongoing investments in our existing asset base, organic growth projects, and returns to our shareholders. We also have the flexibility to execute M&A if opportunities arise that align with our strategy. I will now turn it back over to Nate to discuss our business outlook.

Thanks, Kelly. I'm on Slide number 11. The current industry forecast for US housing starts is approximately 1.35 million for 2024 and at or modestly above 1.4 million for 2025. This compares to actual housing starts of 1.42 million in 2023 as reported by the US Census Bureau. As of September 2024, single-family housing starts are outpacing 2023 levels by 10%, whereas multifamily starts have declined sharply from historic levels due to increased capital costs for developers and historic levels of multifamily unit completions in 2024. Home affordability remains a challenge for many consumers due to home prices and the cost of financing, with mortgage rate levels limiting the supply of existing housing stock available for sale. Large homebuilders are addressing affordability challenges by reducing home sizes and plan complexity, as well as offering mortgage rate buydowns. New residential construction will continue to be an important source of housing supply moving forward. We expect 2025 to reflect modest growth in home improvement spending, as the age of US housing stock and elevated levels of homeowner equity will continue to provide a favorable backdrop for repair and remodel spending. While near-term growth and demand may prove modest, the value proposition for two-step distribution, particularly our ability to deliver nationwide service across leading brands in the marketplace, is unmistakable, and we will continue to execute in support of our supplier and customer partners each and every day. As we look past the near-term uncertainties, we remain bullish on the medium and longer-term view on housing fundamentals, which affords us the ability to maintain a clear focus on our strategy and the execution of our growth initiatives. Thank you for joining us today and your continued support and interest in Boise Cascade. We welcome any questions at this time. Grace, would you please open the phone lines?

Thank you. We will now begin the question-and-answer session. Our first question comes from Michael Roxland with Truist Securities. Your line is open.

Yes. Thank you, Nate, Kelly, Chris for taking my questions and congrats on a very good quarter despite the backdrop.

Thank you, Mike. Good morning.

Thanks, Mike.

Just first off on BMD, can you talk about the progression of sales in BMD during the quarter? It seems like September was a softer month across many paper and packaging materials. And I'm wondering if you just had stronger sales earlier in the quarter that may have faded in September?

So, yeah, good question, Mike. Our activity levels on a daily sales pace were actually fairly steady through the quarter. July, August, and September there really wasn't a whole lot of deviation; really just the only impact we saw was in September, we just had two fewer sales days.

Perfect. Got it. And what are you hearing right now from some of your major customers in BMD by product type, like commodity, general line, and EWP regarding demand and inventory levels?

Hey, this is Jeff. I would just say overall, what we're hearing from our customers is truly it's the dealers are saying just proceed very cautiously. The commodity market, obviously, we've got some nice tailwinds in this past month. So there's a lot of direct activity there where we moved a fair amount of commodities into that market. But from here going forward with the seasonality coming, I think they're going to lean in hard on distribution. I think it will be very much a distribution-friendly market.

Got it, Jeff. And one last question before turning it over. Just on EWP, given that up until recently, lumber prices have been at cyclical lows, have you seen any shift or share shift to lumber from EWP that may be contributing to some of the volume weakness?

Hey, Mike, it's Nate. Yeah, I think a good question. In terms of how the builders look at what products and services they use on floor systems, they're pretty resilient and kind of stay true independent of the pricing environment. So we haven't seen a lot of drift from I-joists or EWP systems to dimensional lumber. That's been pretty steady and consistent despite the fact that, obviously, lumber prices have certainly come off. So that would be, I guess, our view going forward as well. And part of that, Mike, as we've talked in the past, is that as builders are looking for, their challenges are not only building material costs, but also cycle times. And so as they think about how do they take time out of the construction cycle, add simplicity to the cycle, EWPs are really an important part of that equation. So it remains pretty stable and we expect that going forward.

Got it. Thanks very much.

Thanks, Mike.

Thank you. Our next question comes from the line of Susan Maklari with Goldman Sachs. Your line is now open.

Thank you. Good morning, everyone.

Good morning, Sue.

My question is also on EWP and perhaps taking the other side of that, which is as lumber does seem to be inflating, especially over the last several weeks and if that continues through next year, can you talk about what that could mean for EWP pricing? How you're thinking about that flowing through? And then I guess, can you also talk to the EWP margins just given the pricing decline that you've been seeing sequentially?

Good morning, Susan. This is Kelly. Regarding the first part of your question about the increase in lumber pricing and its potential relationship to EWP pricing, I don't have a model with me, but I don't believe there is a significant statistical connection. EWP pricing will mainly be influenced by demand, operating rates, and especially single-family starts, so I wouldn't link them. Could you remind me of the second part of your question?

Yeah, the EWP margins, as you saw that pricing decelerate on a sequential basis?

Yeah. So we don't speak to margin-specific EWP. I would just continue to have you focus on EBITDA margin in Wood Products in total because of how integrated we are. We've seen a little bit of degradation there because of plywood pricing remaining fairly weak still and some coming off in EWP pricing as well, but we feel good about the business's operating posture and how they're operating and executing at a pretty high level.

Okay. All right. That's helpful, Kelly. And then thinking about the BMD business, some of your key partners there are doing a lot of work in terms of expanding their product offerings, getting perhaps a bit deeper vertically in their businesses. As you think about that strategy coming through, what does that mean for Boise? And I guess as part of that, when we think about general line being about 44%, 45% of your sales today, how do you see that helping you to get to perhaps a higher number? Could it become 50% over time or how will that all move through?

Hey, Sue, it's Nate. I'll begin and then have Jeff provide some additional insights. Regarding your question about our vendor partners and their evolving business models, we're clearly seeing an increase in new products and SKUs. The intensity of SKUs continues to rise, which is beneficial for two-step distribution. Our downstream customers are seeking simplicity in order fulfillment, and as our key partners introduce new products and services, we play an essential role in that process. Therefore, with the introduction of new products and services, there is more responsibility on two-step distribution, and we're excited about that. Additionally, both our customers and suppliers exhibit a measured optimism regarding market demand. Consequently, they will likely be cautious with their working capital and will continue relying on two-step distribution. In summary, the mix of new products and SKUs, combined with a muted demand environment, highlights our significance to our supplier partners and customers moving forward. As for your question regarding the current mix being around 44% and the potential for growth, as we continue to invest in our business, we aim to expand our overall franchise in BMD. General lines, including door and millwork, are vital to that strategy. We see a promising opportunity for growth in that segment, and we intend to keep expanding as we have in recent years.

Okay. That's very helpful color. And then if I could just squeeze one more in, which is you've picked up the share buybacks really nicely this quarter. Can you talk a bit about how you're thinking about capital allocation and shareholder returns from here? And just any thoughts on how that may come through over the next couple of quarters?

Yeah. Sue, this is Kelly again. So, yeah, I'd say the narrative in the script is very much the same. We've got some big capital spending ahead of us, as you know, in terms of organic growth as well as some needed replacement in certain facilities across the Southeast. So big spending ahead there that we're excited to continue to execute upon, and we're a little behind in some regards just because of timing in terms of equipment availability, but still very much staying the course there. And then beyond that, we have the flexibility to do M&A if something shows up that makes sense. And then as we've demonstrated, we've kind of got the quarterly dividend as well as the two special components around either special dividends or share repurchases. We did do the special dividend in September, the $5 per share, we did buy some more shares here in the third quarter. Near-term, not going to put a share number or a dollar value on it, but I expect we'll look to continue to be opportunistic as it relates to share repurchases.

Okay. All right. Thank you for all the color, guys, and good luck with everything.

Thanks, Sue.

Thank you, Sue.

Thank you. Our next question comes from the line of Kurt Yinger with D.A. Davidson. Your line is now open.

Great. Thank you. Can you hear me?

Yeah, you're good, Kurt. Go right ahead.

Okay. Sorry about that earlier. Just wanted to start off on EWP; in terms of the stability in year-over-year LVL volumes versus I-joists, would you mostly just chalk that up to kind of geographic mix and kind of slab?

Yeah, sorry, Kurt, it's Nate. I would say when you look at the mix on I-joists, they're probably more influenced by that than LVL headers, as an example. So to your point, if there's a lot of slab-on-grade construction, it still represents an opportunity for LVL, especially if it's only single-story construction for slab-on-grade. So we view it as very much a geographic mix statement, and that's again consistent with expectations.

Got it. And over the last two quarters now, one of your big customers has kind of talked about a shift maybe back towards I-joists versus floor trusses. I'm curious whether you're hearing that sentiment broadly and whether that's something at this stage that you think could be a relative driver of outperformance potentially next year relative to underlying single-family starts demand?

Yeah, Kurt, it's Nate again. I would say when it comes to competitive floor systems, open web plated floor trusses versus I-joists, and again as I made a comment earlier, just in terms of how the builders are thinking about what success has to be for them, they're looking at cycle times. And they're looking at how do they create speed and simplicity on the job site, and I-joists and EWP represents that. So as we think about the backdrop in competing against plated floor trusses against engineered wood, we feel good about that environment in part given what the builder is trying to get accomplished, which is how do they reduce cycle times?

Got it. Okay. Thanks for that, Nate. And then I appreciate Troy kind of outlining the timeline with Oakdale. Kelly, is there any way to think about kind of temporary P&L impacts related to the downtime? Obviously, it doesn't sound like it's going to impact volumes, but any discrete cost headwinds we should be aware of over the next couple of quarters?

Yeah. Nothing I'd probably have you build in specifically just yet, Kurt. I mean, our fourth quarter is typically a period where we usually take some maintenance and downtime anyway, so I wouldn't expect to see a lot of year-over-year impact from that. We'll continue to assess as we move into 2025, and if we have anything meaningful to speak of, we'll share that. But at this point, I don't think we'd share anything meaningful. To Troy's point, the team in the Southeast did a great job of making sure we have plenty of veneer to support EWP in that marketplace because Oakdale is a very important veneer supplier to Alexandria, Louisiana. So we've done a good job of building inventory there. Might we have a little bit of volume impact on plywood into the first and second quarter, yes, we will. But Oakdale, it's a big veneer supplier. It has a much more meaningful impact on Alex EWP than it does to our plywood volumes.

Got it. Okay. That's great. And then finally, just on BMD gross margins, we'll see what November and December bring on the commodity pricing front. But is it fair to say that what you've seen in October would still be a little bit better than even what was a pretty strong Q3 gross margin performance?

Yeah, I mean, October was good. Again, the sales pace was good. The margin was solid, a little bit of upward momentum in commodities. And as you know, we'll see, I think, that's in my view, the energy in commodities has been much more a supply-driven phenomenon than demand. So we'll see what happens here in November and December.

Okay, perfect. And then just last one, in terms of EWP kind of installed capacity, obviously, a lot of runway for growth there. I'm curious how you're positioning going into next year given some of the uncertainty around labor in the facilities and the flexibility to ramp up or ramp down depending on what ultimately materializes on the demand front.

Yeah, this is Troy. I mean, that kind of speaks to our integrated model. And so in terms of keeping employees, we've got the ability to shift veneer and/or some production time over to the plywood side if we have any need to do that. And so I don't think we have a huge risk there. In terms of expansion, there's easing on the labor side a little bit. It's a matter of, we always have turnover, but to the degree that we need to ramp up for that, we're prepared in advance relative to any additional shifts that we would add. So I think we're good.

Okay. Sounds good. Appreciate the color, guys. Thank you.

Thanks, Kurt.

I'm showing no further questions at this time. This concludes the question-and-answer session and I would now like to turn it back to Nate Jorgensen for closing remarks. Go ahead.

Great. Thanks, Grace. We appreciate everyone joining us this morning for our update, and thank you for your continued interest and support of Boise Cascade. Please be safe and be well. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.