Earnings Call Transcript - BCC Q3 2025

Operator, Operator

Good morning. My name is Steve, and I'll be your conference facilitator today. At this time, I would like to welcome everyone to Boise Cascade Third Quarter 2025 Earnings Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Chris Forrey, Vice President, Finance and Investor Relations. Mr. Forrey, you may begin your conference.

Chris Forrey, VP, Finance and Investor Relations

Thank you, Steve, and good morning, everyone. We'd like to welcome you to Boise Cascade's Third Quarter 2025 Earnings Call and Business Update. Joining me on today's call are Nate Jorgensen, our CEO; Jeff Strom, our COO; Kelly Hibbs, our CFO; Troy Little out of our Wood Products operations; and Joe Barney, 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 or loss to segment EBITDA. I will now turn the call over to Nate.

Nathan Jorgensen, CEO

Thanks, Chris. Good morning, everyone. Thank you for joining us on our earnings call today. I'm on Slide #3. September 2025 U.S. housing starts data has not been released by the U.S. Census Bureau. However, when comparing July 2025 and August '25 housing starts to the same periods in '24, total U.S. housing starts increased 2%, while single-family housing starts decreased 3%. Our consolidated third quarter sales of $1.7 billion were down 3% from third quarter 2024. Our net income was $21.8 million or $0.58 per share compared to net income of $91 million or $2.33 per share in the year-ago quarter. As expected, in Wood Products, we experienced sequentially lower sales volumes and competitive pricing pressure in EWP. Plywood markets, like other commodities, continue to experience weak pricing given the underlying demand environment. In BMD, our customers' expanded reliance on us for next-day delivery service across a range of products helped to mitigate the otherwise subdued environment. Given this backdrop, we were still able to post good earnings for the third quarter. We have great clarity in our business model, and the strength of our financial position and unwavering commitment to our core values enable us to remain focused on the execution of our strategic priorities. Our 2-step distribution model in tandem with our market-leading EWP and plywood franchises will continue to deliver exceptional value to both our customers and vendor partners, providing reliable access to products, responsive service and operational flexibility that are vital in dynamic markets. Kelly will now walk through our segment financial results, capital allocation priorities and guidance on our fourth quarter results, after which I'll make closing comments before we take your questions. Kelly?

Kelly Hibbs, CFO

Thank you, Nate, and good morning, everyone. Wood Products sales in the third quarter were $396.4 million, a decrease of 13% compared to the same quarter in 2024. The Wood Products segment EBITDA was $14.5 million, down from $77.4 million in the previous year. This decline in segment EBITDA was mainly due to lower prices and sales volumes of EWP and plywood, as well as increased per unit conversion costs driven by reduced production rates during the quarter. In BMD, sales for the quarter reached $1.6 billion, down 1% from the third quarter of 2024. BMD's segment EBITDA for the third quarter was $69.8 million, compared to $87.7 million in the same quarter last year. Gross margin dollars fell by $10.6 million year-over-year. Additionally, selling and distribution expenses rose by $7.8 million compared to the previous year, partly due to organic and inorganic growth initiatives executed over the last year. In the third quarter, volumes for I-joists and LVL were down 10% and 7%, respectively, compared to the previous year. As anticipated, EWP volumes decreased sequentially by 15% as inventories with distribution and dealer partners were reduced to targeted levels in light of expected seasonal slowdowns. Year-to-date, I-joist and LVL volumes fell by 6% and 1%, respectively. Competitive pressures led to price declines of 6% for I-joists and 5% for LVL. For plywood, the sales volume was 387 million feet, compared to 391 million feet in the third quarter of 2024. However, plywood sales volumes increased by 9% from the second quarter of 2025 because we redirected less veneer into EWP production due to weak demand for EWP and achieved higher production rates at our Kettle Falls and Oakdale facilities. The average plywood net sales price in the third quarter was $325 per thousand, down 2% year-over-year and down 5% from the second quarter of 2025. The impact of recent tariffs on plywood imports from South America remains uncertain and has yet to significantly influence plywood growth. BMD's slight decline in sales was due to a 1% decrease in prices, with sales volumes remaining flat. By product line, commodity sales fell by 3%, general line product sales rose by 6%, and EWP sales decreased by 11%. Sequentially, BMD sales dropped by 4% from the second quarter, attributed to a 2% decrease in both sales prices and volumes. Our third-quarter gross margin was 15.1%, reflecting a 60 basis point decrease year-over-year. Margins in commodity prices and competitive pressures on EWP impacted our margins, though general line product margins stayed stable despite lower demand. The EBITDA margin for BMD was 4.5% this quarter, down from 5.6% last year and 5.7% in the second quarter. The sequential decline was affected by a 30 basis point reduction in gross margins, and lower sales volumes resulted in less gross margin dollar opportunity and pressure on our cost base. While BMD's EBITDA margin is lower than our typical earnings potential, it represents a solid performance given the current demand and pricing conditions. Our team has demonstrated strong execution across product lines, with a focus on growing our general line products, backed by our proven performance and national distribution capabilities. Our recent partnership with James Hardie exemplifies our expansion in specific markets while maintaining existing relationships with Trex. In the nine months ending September 2025, we had capital expenditures of $187 million, with $99 million spent in Wood Products and $88 million in BMD. We remain committed to our capital spending plan for 2025, projected between $230 million and $250 million. This spending will support multi-year investments in EWP production capabilities in the Southeast. The modernization of Oakdale is complete, and we are making progress on optimization activities. Spending related to the Thorsby line will mostly conclude by year-end, with the line expected to be operational in the first half of 2026. In BMD, our capital strategy focuses on enhancing our national distribution presence. We've opened a new distribution center in Hondo, Texas, to better serve customers across the region. Looking ahead to 2026, we anticipate capital spending between $150 million and $170 million. Regarding shareholder returns, we paid $27 million in dividends in the first nine months of 2025. Our Board recently approved a quarterly dividend of $0.22 per share that will be paid in mid-December. In the first ten months of 2025, we repurchased around $120 million of our common stock, including about $25 million in the third quarter and another $9 million in October. Our Board also authorized up to $300 million for common stock repurchases under a new program, which replaces the previous authorization. In conclusion, we are committed to a balanced capital allocation strategy, investing in our existing asset base, pursuing organic and M&A growth opportunities, and returning capital to our shareholders. Our strong financial position and resilient free cash flow enable us to support all these objectives. Looking toward the fourth quarter, we anticipate demand weaknesses, trade policy uncertainties, and seasonal factors will influence our financial results. We estimate fourth quarter EBITDA for Wood Products will be between breakeven and $15 million, expecting EWP volumes to decline in the low double digits to mid-teens as starts moderate. EWP prices have recently stabilized, but we foresee low single-digit declines due to market adjustments from the third quarter. For plywood, we expect volume decreases near double digits and pricing realizations in October to be consistent with the third quarter average, dependent on market conditions for the remainder of the quarter. As is typical in the fourth quarter, we will have maintenance and capital-related downtimes across our manufacturing system and may take market-related downtime to adjust production rates and inventory to align with demand. Although demand is seasonally weak, our site-specific cost improvement initiatives in Wood Products, combined with division-wide innovation efforts, will benefit our EWP and plywood franchises in the future. For BMD, we estimate fourth quarter EBITDA to be between $40 million and $55 million. BMD's daily sales in October were about 5% lower than the third quarter's daily sales rate of $24.3 million and are expected to decline further during the quarter. Recent volume changes have aligned well with data on single-family starts, a trend we expect to continue, showcasing the value we provide our partners. With limited clarity on end market demand, we also anticipate pricing volatility in plywood, lumber, and other commodity products due to trade policy uncertainties and recent capacity cut announcements. Finally, we expect our effective tax rate for the fourth quarter to be between 26% and 27%, lower than the third quarter's rate of 29%, which was affected by permanent tax differences due to decreased pretax book income for 2025. I'll now pass it back to Nate for the business outlook and closing remarks.

Nathan Jorgensen, CEO

Thanks, Kelly. I'm on Slide #11. Now more than ever, our experienced team remains committed to creating value for our shareholders, customers and suppliers by staying resilient, adaptable and focused on delivering exceptional products and services. Our integrated model provides increased channel inventory visibility, enabling us to better navigate market uncertainty by aligning production rates and inventory strategies with end market demand. Cross-divisional efficiencies supported by our robust balance sheet allow us to maintain our dedication to executing our strategy and creating long-term value for all stakeholders. Early industry projections for 2026 are consistent with 2025 housing start levels. Demand expectations are characterized by a cautious market in the first half of the year with gradual improvement expected later in the year, driven by interest rate cuts and normalized homebuilder inventory levels. In EWP, our planning assumption is that prices have bottomed, and we will have an opportunity to move prices higher as 2026 progresses. The extended weakness in the residential market has highlighted the resilience of our distribution business. We have seen an increased customer reliance on our auto warehouse business across our full suite of products. As the uncertainty continues headed into 2026, we stand ready to continue to demonstrate the value of 2-step distribution. Looking beyond the near-term environment, we remain confident in the long-term demand drivers of residential construction, including the persistent undersupply of housing, aging U.S. housing stock and high levels of homeowner equity. Generational trends, including millennials and Gen Z reaching peak age for household formation and more seniors choosing to age in place continue to support household formation growth. Additionally, continued declines in mortgage rates should encourage buyers who have been waiting on the sidelines to enter the market. In the repair and remodeling space, activity has been limited by low levels of home turnover and homeowners delaying major projects due to high borrowing costs and economic uncertainty. However, we anticipate consumer confidence will improve as interest rates decline and economic policy becomes clearer, creating a long runway for growth in repair and remodel projects. Strong fundamentals for both new residential construction and repair and remodeling are the foundation for the industry's robust pathway ahead. And make no mistake, the investments we have made in recent years have positioned us well to capture significant upside when the market turns. Thank you for joining us today and your continued support and interest in Boise Cascade. We welcome any questions at this time. Steve, would you please open the phone lines.

Operator, Operator

The first question comes from Susan Maklari with Goldman Sachs.

Susan Maklari, Analyst

My first question is on the general line part of the business. Can you talk to the share gains that you are realizing in there? How you're working with the various partners in this kind of an environment? And what that suggests for your ability to continue to see growth next year even if housing and the macro stays more challenging?

Joe Barney, Head of Building Materials Distribution Operations

Yes. So this is Joe. I'll start with that one. What I'll tell you is that demand held up really well with our general line product categories in the third quarter. Part of the reason, I think, is that we've made significant investments across our footprint in capacity, right? We've put really at most of our locations, we've added laydown space, we've added warehouse space. And we've done it intentionally so that we could bring in a broader mix of general line products, carry them on a deeper scale. Our suppliers that we work with, our key partners are consistently adding new products to what they bring to the market. And we want to make sure that we have the ability and the capacity to support their growth as well as support our own. So we've invested in that. We've also looked at bringing new products in the general line category to market. We've taken some risks there. We have been focused on and achieved growth with our home center business, the special order business that we do at the home centers. So that's helped us with the general line categories. We focused on and grown our specialty dealer business certainly in the third quarter. So that's been a focus for us. We've been successful at that. And we've grown in the multifamily category, and that's been a focus for us. As single-family housing starts have been flat or depressed, we've focused significantly into the multifamily arena. We're going to continue to focus on the growth of our multifamily business in the quarters to come. And I would tell you that we believe that our market share growth in certain general line categories that we think we've captured market share. There have been competitors of ours who have exited different product categories across the country, and they've left a void in the market as they've exited, and our teams have done a really good job of stepping in and filling that void and taking that market share. And so we expect now that we have that capacity, and we will continue to see that growth in the quarters to come. And then lastly, I think I mentioned our door and millwork business and the investments that we've made there, and we do continue to strengthen and improve our operations from a door and millwork standpoint as well as our sales growth and margin opportunities that we see there.

Susan Maklari, Analyst

Okay. That's great color. And then maybe moving over to EWP. It's great to hear that you think that price there has bottomed and there's the potential for some growth next year given what we're hearing and seeing from the builders. Can you talk to the competitive dynamics that you're seeing with the EWP? What gives you that confidence on the pricing side? And any thoughts on the upside or downside to that, just given the affordability pressures the builders are facing?

Troy Little, Wood Products Operations

Sue, this is Troy. I'll begin by discussing what we've observed this year and then turn it over to see if Nate or Kelly have anything to add. As we mentioned, we experienced a decline of 5% to 6% from the previous quarter, primarily due to two factors. Early in the quarter, we faced ongoing price pressure and competitive challenges. Additionally, we encountered a 25% tariff on products shipped from the U.S. to Canada, which we could not fully pass on to customers. Starting around August, prices began to stabilize, and they have continued to do so since then, aligning with reports from others in the industry. This suggests that we may have reached the bottom. Looking into Q4, we’ve noticed that prices have remained flat at the beginning of the quarter, and we expect this trend to continue, as the two earlier issues appear to have subsided.

Nathan Jorgensen, CEO

Yes. I think, Sue, it's Nate. Yes, I think Troy described that well. And I think as we think about 2026, I think the backdrop is setting up okay in terms of what the demand environment is expected to be. And I think we continue to get builders really insistent in a great way on cycle times. So that's been an area of focus for them over the last couple of years. And as we think about EWP, it's absolutely part of that answer to make sure that cycle times continue to perform at a high level for the builders and they can turn that land into cash that much quicker. So again, I think it's set up well for next year. And to Troy's comments, we feel like we're at a bottom, and we can move higher here at some point in '26.

Susan Maklari, Analyst

Okay. Great. Good luck with the quarter.

Nathan Jorgensen, CEO

Thanks, Sue.

Operator, Operator

The next question comes from Michael Roxland with Truist Securities.

Michael Roxland, Analyst

My first question is a follow-up on the BMD topic and the overall mix. What do you see as the constraints on margins in BMD when it comes to achieving higher EBITDA margins, perhaps in the high single digits or low double digits, like some of your distributor peers?

Nathan Jorgensen, CEO

Yes. Mike, thanks for the question. So I guess I would start with gross margins for BMD near term here, we feel really good about our ability to maintain the 15-plus percent margins that we've been putting up of late. As you know, in markets like this, the reliance and dependency of our customer base on out-of-warehouse service is certainly relevant. And again, we continue to see a good pull-through there. And then to your point, where might we go from here? Again, we continue to look to richen the product mix, and that's more general line products, which do give us more gross margin opportunity. And at the same time, I don't want to discount our teams in terms of what we've been doing in terms of EWP sell-through and also commodities where we've been doing a really nice job in a really tough environment, in particular, in commodities. And with commodities at the very low levels that they are today, certainly, near term here, if we get any energy in the commodity markets, we could see some near-term tailwinds in terms of our margin profile. And then I guess maybe one final point would be, as you know well, but I guess I'll just verbalize the fourth quarter as we see seasonally slower sales, as you'd expect to see, again, feel good about the gross margin percentage, but the gross margin dollar opportunity will come off as a function of just lower sales dollars.

Joanna Barney, Head of Building Materials Distribution Operations

So I'd jump in there as well and just say that as our general line business becomes a larger percent of our overall sales volume, and we have seen that happening quarter-to-quarter, that's room for margin improvement there. As we become better operators in our door and millwork investments and we quarter-to-quarter, we continue to move in that direction. As we become better operators and as we invest in our pre-finished business that brings higher margin opportunities to our business, as we bring our lead times in check, as we become better operators, we are finding that we are growing in the success in our millwork business, which will add to our margin opportunity. As we push into multifamily and make a broader push there, we're seeing more margin opportunity. And to Kelly's point, I would reiterate, we are pretty good at our commodity business. And we have a line of sight across the country. We've built systems in that make us really flexible and we are able to move quickly both into a rising market and into a falling market, so we can reduce and mitigate our losses in a falling market, and we can take advantage of opportunities in a rising market, and we do it really quickly. So I wouldn't discount our ability to make margin on commodities as well.

Michael Roxland, Analyst

That's very helpful. I appreciate the insights, Joe and Kelly. For my second question, understanding that you're somewhat dependent on the single-family housing market, is there anything you can do in this environment to further enhance mill profitability? You've mentioned several times that your mills are well-positioned to generate substantial profits once the single-family market improves due to the capital investments made in recent years. Is there anything you can do now, such as additional cost reductions, that could better prepare the company for greater margin expansion when the market cycle changes?

Troy Little, Wood Products Operations

Yes, this is Troy. I'll look at it from the standpoint of the cost improvement activities that we're doing at the mill level, that's something that probably has got muted in the third quarter and may continue to get muted with the lower volumes, market-related downtime volumes. But behind that, the operations have what we call our site improvement plans. And each of the locations are definitely working on a very detailed plan for 2026 to address our site improvement plans. We are making sure that we're filling all our process improvement positions. Those are support type functions, but instrumental in our process improvement to reduce our cost, increase our efficiencies. And then we also have our group working on innovation. And so we do actually have a couple of technology-type projects planned that we're looking at for 2026 and beyond. And all of those should help contribute to improving our cost structure at the mill level as well as just operationalizing the capital projects that we've had over the last couple of years.

Kelly Hibbs, CFO

So Nate, I would add to Troy's comments on cost that in considering the market, single-family has been steady but not great. However, our opportunity lies in expanding our presence in multifamily. We excel in this area with our EWP Key franchise, and it's a key focus for us as we move from 2025 to 2026. We need to ensure that we create the right opportunities in the multifamily segment, which also extends beyond EWP to other product categories in BMD. While single-family is a significant driver for our business, multifamily is also an important engine that will receive our attention and resources.

Michael Roxland, Analyst

Got it. And...

Kelly Hibbs, CFO

Sorry, Mike, maybe one thing I'd add to both Troy and Nate's comments would be we've been trying to be very thoughtful in terms of not making any knee-jerk or quick reaction that we may regret later, right? I mean we feel still good about the medium to long term. And so we really need to be thoughtful about how we manage our capacity, including our crews so that when the market turns, we don't get caught behind the curve. So that always has to be part of our nuclei, our algebra, if you will.

Michael Roxland, Analyst

Kelly makes a ton of sense. And just one last one, I'll turn it over. Where you said growing presence in multifamily. Can you just remind us right now where that presence stands currently in multifamily, whether it be maybe through EWP or if you want to talk about the whole portfolio and where you expect it to be, let's say, in 2026 and maybe provide like a 5-year outlook?

Kelly Hibbs, CFO

Yes. It's not a significant part of either of our businesses at the moment. I don't have an exact figure, but single-family continues to be our main focus, accounting for about 75% to 80% of our business. The home center channel and multifamily are roughly equal, each making up about 10%.

Operator, Operator

The next question comes from Kurt Yinger with D.A. Davidson.

Kurt Yinger, Analyst

Troy, I just wanted to go back to the discussion around competitive dynamics in EWP. And if I heard you right, you kind of talked about a stabilization coming through in August. Can you maybe just put a little bit more color around that? Is that less dealer and builder business being put to bid? Is that maybe a little bit more of a balance in terms of the trade-off between pricing and volume? What do you think was really the catalyst there to kind of reach the stabilization?

Troy Little, Wood Products Operations

Yes. As the markets began to slow down from Q2 to Q3, there was available capacity. This created an opportunity for price adjustments in the industry, as companies aimed to maintain or increase their market share amidst changes. We've observed this trend for several quarters. We reached a point where we needed to address market conditions to sustain our volumes, and we largely succeeded in doing so. Currently, costs have risen, and prices have adjusted to a level where the industry appears to have limited room for further increases. Right now, we're experiencing seasonal effects as we close out the year, and there seems to be less pressure as companies have adapted their production to meet demand.

Nathan Jorgensen, CEO

Kurt, it's Nate, maybe just to add to Troy's comments is as you think about the fourth quarter and as we head into the first quarter, working capital is always a focus for our customers. And so in EWP, but all product categories, having world-class distribution and support EWP really matters as that next-day service is important on EWP, and we have seen that we'll continue to see that going forward. So as we think about the competitive dynamics, volume and price, having world-class distribution and support EWP really matters in these moments. And so we feel good about how we're set up there to execute to that standard as we close out 2025 and head into 2026 as well.

Kurt Yinger, Analyst

Okay. That's super helpful. And it sort of ties into my next question. I think realistically, right, like pricing is difficult to predict, but a lot of it comes back to single-family activity. But it does seem like channel inventories are lean. Is there a scenario where seasonally we get into the spring period next year? And even if structurally housing activity isn't significantly stronger, you feel like there could really be some tension there in the market just based on what you see in terms of your customer inventories at this stage?

Nathan Jorgensen, CEO

Yes, Kurt, it's Nate. I believe the channel is well balanced regarding inventory levels and the associated risk and reward concerning demand and other factors. As we approach the end of this year and move into next year, I see the marketplace potentially reacting with urgency if unexpected demand arises or if there's a supply disruption, which may influence pricing. From my perspective, the backdrop appears favorable since there's not a significant excess inventory to clear out. It only takes an unanticipated demand or supply event to create tension in the marketplace quickly. While the situation is not perfect, I feel optimistic as we look toward 2026. Homebuilders have been actively reducing their new home inventory levels, which has been a priority for some time. Transitioning into 2026, there's a need for new home sales to align with new home starts, a balance we haven't seen for a while. I believe 2026 will show improvement in this regard, leading to a return to more normal conditions compared to the past year or so.

Kurt Yinger, Analyst

Yes. That all makes sense. And then lastly, I just wanted to go back to the door and millwork performance. Can you just talk about, I guess, the sales performance thus far in 2025? And as some of these new facilities get up and running, is that something where you would expect even in a tepid demand environment, just given the capacity that you have and the focus there that you could really drive a healthy amount of above-market growth? Or how dependent on that is underlying demand from here?

Jeff Strom, COO

Kurt, it's Jeff. Overall, the millwork sector has faced challenges this year due to price pressures and other factors. There’s no way around that. However, we are establishing several new facilities and expanding into new locations within this business. Each day that passes allows us to improve, get the right personnel in place, and seize the available opportunities. As a result, we anticipate growth, independent of market conditions, because we will operate much more efficiently. Additionally, we are addressing some space constraints at certain locations. Therefore, we are excited about the potential for growth in our door business.

Kurt Yinger, Analyst

All right, okay. Appreciate all the color, guys.

Jeff Strom, COO

Thanks, Kurt.

Operator, Operator

The next question comes from George Staphos with Bank of America Securities.

Bradley Barton, Analyst

This is Brad Barton on for George. Just if we go back to the AZEK announcement, when we think about the genesis of the deal, can you just talk to the puts and takes that you were considering on the move? And then did AZEK come to you? Did you go to them? And then how do you kind of see that impacting your Hardie lineup in those specific markets and maybe even across the whole network as well?

Joanna Barney, Head of Building Materials Distribution Operations

Yes, I will start with that one. So let me just first say that we are very excited about the opportunity to partner with Hardie in the Baltimore market. It's a big deck market. So we see it as a big opportunity. We have not had in a deck in that market before. So this is net new revenue for us. It's not a revenue shift from a different product category. We haven't had it. So this is net new revenue, and it's a big opportunity for us. So we're excited about that. We're excited about the full suite of products that we're going to be able to offer in that market. So we see a lot of upside revenue potential for us, specifically to the Baltimore and Pittsburgh market. Saying that we also have grown our market share with Trex across the country. So we've done really well with that brand. So our plan is to continue to support both partners, continue to grow our market share as we have in all of those markets across the country.

Bradley Barton, Analyst

Okay. Great. I have a follow-up question. Are there any early indicators you're noticing this quarter that suggest positive trends, not just for the rest of this quarter and into next year, but possibly for the spring building season as well?

Jeff Strom, COO

Yes, it's Jeff. I'd just say one thing that we are seeing and experiencing is that there have been some green shoots in the multifamily space. And we're seeing some activity. We're seeing a lot of quoting that's going on. We have some projects that we know that are going to kick off to get us through the balance of the year and into the beginning of next year. So we feel good about that.

Operator, Operator

The next question comes from Jeff Stevenson with Loop Capital.

Jeffrey Stevenson, Analyst

How much of an impact did the operating inefficiencies related to the ramp in production at your Oakdale facility have on Wood Products margins in the third quarter? And will that continue to be a drag on segment margins over the next several quarters?

Troy Little, Wood Products Operations

Yes, this is Troy. It's a bit challenging to assess due to the market-related downtime we've experienced. The team has been focused on all the machine centers, and we've made adjustments across the board. Essentially, we're working through operational challenges stemming from a significant project they've been tackling in the third quarter. We didn’t notice a major difference in Oakdale's performance in Q3 compared to the first two quarters. However, we anticipate ongoing improvements in their operating efficiencies and a reduction in the cost structure since it was a high-cost mill. Once we implement the necessary capital, we should see positive changes. I prefer not to speculate on a specific number as I lack the details. Additionally, we are entering Q4, which brings seasonal challenges with shorter months in November and December, along with any market-related downtime, influencing Oakdale's situation.

Jeffrey Stevenson, Analyst

Got it. Got it. And then over the past year, you've announced multiple expanded partnership agreements to strengthen your distribution relationship with key suppliers and the most recent one, obviously, is James Hardie. And I wondered if you could talk more about how these agreements have better positioned the company's general line distribution business moving forward and whether there could be additional opportunities to expand partnerships with other key suppliers.

Joanna Barney, Head of Building Materials Distribution Operations

Yes, I'll start there. I think we're always looking for opportunities to expand partnerships, but we're also very focused on the partnerships that we've got and the new products that they bring to market. Trex is a great partner for us. We've grown market share with them. We're going to continue to grow market share with them across the country. Hardie has been a great partner for us in siding across the country, and now we're exploring a new opportunity with them in the Baltimore market. Again, I'd just reiterate, it's a significant decking market that we haven't had that category before there. So looking at that, we're looking at new partnerships as far as doors and millwork go. So we are always absolutely looking to expand. We've added the space and the capacity to do it. So we are going to continue to look into whatever partnerships we have available that we think we can generate sales growth, revenue growth, and margin growth.

Jeffrey Stevenson, Analyst

Makes sense. And then one last one, just on how you're planning to balance M&A with share repurchases moving forward given the market pullback. Would you expect to be aggressive with the new $300 million share repurchase program?

Kelly Hibbs, CFO

Yes. Jeff, I'll take that one. So I guess just stepping back briefly, our priorities are very much the same in terms of capital allocation in priority order, invest in our existing asset base, look to do organic growth projects and then also M&A if the fit and the price is right. But I would say, absent any meaningful M&A, we would expect to continue to be active with share repurchases here moving forward.

Operator, Operator

The next question comes from Reuben Garner with Benchmark.

Reuben Garner, Analyst

Let's see. So if I'm doing the math right, and I know you didn't explicitly give top line guidance, but it looks like the distribution segment's EBITDA margin is going to dip into the 3s for the first time in a while. The third quarter was obviously lower than the second. And I get that there's some seasonality. How should we think about what's going on there? Like has competition picked up? Where do we think that things will stabilize? And how do we think about next year, assuming that the housing market in general is kind of consistent with what we've seen of late?

Kelly Hibbs, CFO

That's a great question. First, I want to clarify that this isn't a sign of losing market share. I am quite confident in our position and the effectiveness of our 2-step distribution in these markets. The guidance reflects expected seasonal slowdowns. In November, there are just 18 sales days, and in December, there are 21, plus we have weather to consider and other seasonal factors. It's possible that our EBITDA margin could drop into the high 3s, but that's due to these seasonal trends. I still believe that in a normalized cycle over a full year, we can aim for a 5% EBITDA margin. Overall, I feel positive about our positioning; this is primarily a seasonal fluctuation you're observing in the fourth quarter.

Reuben Garner, Analyst

Okay. Great. That's really helpful. How should we think about your inventory at the corporate level? It seems that your inventory as a percentage of revenue has increased over the past couple of years. Is this due to your investments in distribution and a growing general line? Are you signaling optimism about the market improving as we approach 2026 and ensuring you have the necessary materials? Or is there another reason for this change?

Kelly Hibbs, CFO

Yes, I believe it reflects the growth we’ve achieved. We’ve expanded by adding some locations through mergers and acquisitions as well as organic growth opportunities. Our main objective is to ensure we have stock available to meet market demand, especially in current times. Therefore, we are comfortable with our inventory levels; we’re not overstocked and feel we are in a solid position. Looking ahead to the latter half of 2026, we are well prepared if we see increased activity during the spring building season.

Ketan Mamtora, Analyst

Maybe to start with on the EWP side, Troy, I mean, your volumes in 2025 are still kind of higher than what it was in 2021, 2022 when housing demand was stronger. Can you talk about kind of what is driving there, whether there's some share gains or things that you are doing differently?

Troy Little, Wood Products Operations

Yes. I'd say throughout 2025, in terms of looking for opportunities, we believe we have some share gains that we're trying to maintain. Our order files throughout Q3 comparatively were lower but consistent throughout the quarter. And as we move into Q4, other than the seasonality around that, it still seems to be fairly consistent in what we've seen so far.

Ketan Mamtora, Analyst

Okay. Understood. Now, regarding the distribution aspect, it's encouraging to observe growth in the general line. You mentioned earlier that the number of doors is still facing some challenges. Could you elaborate on where you're seeing growth in the general line business?

Kelly Hibbs, CFO

The question is where are we seeing growth in the general line business. You guys can take that.

Joanna Barney, Head of Building Materials Distribution Operations

Yes. I think we're seeing growth in the general line, again, market share gains in certain product categories, decking being one of them. So we've seen market share gains as some of our competitors or other distributors have exited different categories across the country, and we've stepped in and filled those voids. And so we've seen market share growth that way in the multifamily business. And I really think in the door and millwork side, we're starting to see gains, and we're moving forward, moving that capacity and our ability there forward.

Nathan Jorgensen, CEO

Ketan, it's Nate. Maybe just to add to Joe's comments. When you think about general line, and Joe mentioned this earlier, the new SKUs that are showing up and the SKU complexity that comes from our suppliers is something that we enjoy, we're really good at. And so we certainly have experienced that in '25, and we're expecting that in '26 as well. So as they bring out new products, that creates, I think, really an important opportunity and responsibility for us to not only serve our customers but serve our suppliers as well. So I think that's the other component on the general line that continues to play in our favor, and we expect that going forward as well.

Ketan Mamtora, Analyst

Got it. No, that's helpful. I'll turn it over. Good luck.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Nate Jorgensen for any closing remarks.

Nathan Jorgensen, CEO

We appreciate everyone joining us on our call this morning for our update, and thank you for your continued interest in supporting Boise Cascade. Please be safe and be well. Thank you.

Operator, Operator

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.