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What changed in BOISE CASCADE Co's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of BOISE CASCADE Co's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+353 added−333 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-21)

Top changes in BOISE CASCADE Co's 2023 10-K

353 paragraphs added · 333 removed · 272 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

73 edited+21 added−21 removed50 unchanged
Biggest changeName Age Position Executive Officers: Nate Jorgensen 58 Chief Executive Officer Kelly Hibbs 56 Senior Vice President, Chief Financial Officer, and Treasurer Mike Brown 61 Executive Vice President, Wood Products Jeff Strom 55 Executive Vice President, Building Materials Distribution Jill Twedt 43 Senior Vice President, General Counsel and Secretary Key Management: Tom Hoffmann 64 Senior Vice President of Purchasing, Building Materials Distribution Robert Johnson 58 Senior Vice President, Engineered Wood Products Sales and Marketing, Wood Products Erin Nuxoll 62 Senior Vice President, Human Resources Chris Seymour 51 Senior Vice President, Manufacturing Operations, Wood Products Rich Viola 65 Senior Vice President of Sales and Marketing, Building Materials Distribution (retiring March 1, 2023) Joanna Barney 49 Vice President, Western Operations, Building Materials Distribution Troy Little 55 Vice President, Finance and Commodity Sales, Wood Products Jim Wickham 57 Vice President, Eastern Operations, Building Materials Distribution Nate Jorgensen, Chief Executive Officer Mr.
Biggest changeName Age Position Executive Officers: Nate Jorgensen 59 Chief Executive Officer Kelly Hibbs 57 Senior Vice President, Chief Financial Officer, and Treasurer Mike Brown 62 Executive Vice President, Wood Products (retiring effective May 3, 2024) Jeff Strom 56 Executive Vice President, Building Materials Distribution Jill Twedt 44 Senior Vice President, General Counsel and Secretary Key Management: Joanna Barney 50 Senior Vice President, Western Operations, Building Materials Distribution Tom Hoffmann 65 Senior Vice President of Purchasing, Building Materials Distribution (retiring effective March 1, 2024) Robert Johnson 59 Senior Vice President, Engineered Wood Products Sales and Marketing, Wood Products Troy Little 56 Senior Vice President, Finance and Commodity Sales, Wood Products (Executive Vice President, Wood Products, effective February 19, 2024) Erin Nuxoll 64 Senior Vice President, Human Resources (retiring effective May 3, 2024) Chris Seymour 52 Senior Vice President, Manufacturing Operations, Wood Products Jim Wickham 58 Senior Vice President, Eastern Operations, Building Materials Distribution Nathan Sikes 43 Vice President, Sales and Marketing, Building Materials Distribution Nate Jorgensen, Chief Executive Officer Mr.
Our Building Materials Distribution segment (BMD) is the largest customer of our Wood Products segment and operates a nationwide network of distribution facilities that sell a broad line of building materials, including oriented strand board (OSB), plywood, and lumber (collectively referred to as commodities); general line items such as siding, composite decking, doors, metal products, insulation, and roofing; and EWP.
Our Building Materials Distribution segment (BMD) is the largest customer of our Wood Products segment and operates a nationwide network of distribution facilities that sell a broad line of building materials, including oriented strand board (OSB), plywood, and lumber (collectively referred to as commodities); general line items such as siding, composite decking, doors and millwork, metal products, roofing, and insulation; and EWP.
Brown received a bachelor's degree of science in Forestry from Australian National University in Canberra and a master's degree in Business Administration from Cranfield University, England. Jeff Strom, Executive Vice President, Building Materials Distribution Mr. Strom was elected the company's executive vice president, Building Materials Distribution, in March 2021.
Brown received a bachelor's degree of science in Forestry from Australian National University in Canberra and a master's degree in Business Administration from Cranfield University, England. Jeff Strom, Executive Vice President, Building Materials Distribution Mr. Strom was appointed the company's executive vice president, Building Materials Distribution, in March 2021.
Hoffmann received a bachelor's degree in Business from the University of Idaho, Moscow, ID, with a dual major in marketing and management. Robert Johnson, Senior Vice President, Engineered Wood Products Sales & Marketing, Wood Products Mr. Johnson was elected the company's senior vice president of engineered wood products sales and marketing, Wood Products, in February 2022.
Hoffmann received a bachelor's degree in Business from the University of Idaho, Moscow, ID, with a dual major in marketing and management. Robert Johnson, Senior Vice President, Engineered Wood Products Sales & Marketing, Wood Products Mr. Johnson was appointed the company's senior vice president of engineered wood products sales and marketing, Wood Products, in February 2022.
We also present information pertaining to our segments, including product sales and customer concentration, in Note 16, Segment Information, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.
We also present information pertaining to our segments, including product sales and customer concentration, in Note 15, Segment Information, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.
Strom received a bachelor’s degree in Management from the Georgia Institute of Technology, Atlanta, GA. Jill Twedt, Senior Vice President, General Counsel, and Secretary Ms. Twedt was elected the company's senior vice president, general counsel, and secretary in October 2020.
Strom received a bachelor’s degree in Management from the Georgia Institute of Technology, Atlanta, GA. Jill Twedt, Senior Vice President, General Counsel, and Secretary Ms. Twedt was appointed the company's senior vice president, general counsel, and secretary in October 2020.
Our log requirements and our access to supply, as well as the cost of obtaining logs, are subject to change based on, among other things, the availability of logs in each of our operating areas, our operating schedules, competition from other manufacturers, the effect of governmental laws and regulations, impacts of weather or fire on log availability, and the status of environmental appeals.
Our log requirements and our access to supply, as well as the cost of obtaining logs, are subject to change based on, among other things, the availability of logs in each of our operating areas, our operating schedules, competition from other manufacturers, the effect of governmental laws and regulations, impacts of weather or fire on log availability, and the status of 10 Table of Contents environmental appeals.
Available Information Our filings under the Exchange Act, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and all amendments to these filings, are available free of charge on the investor relations portion of our website at www.bc.com.
Available Information Our filings under the Exchange Act, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and all amendments to these filings, are available free of charge on the investors portion of our website at www.bc.com.
Approximately 88% of our log supply in 2022 was supplied through purchases from private landowners or through dealers. We also bid in auctions conducted by federal, state, and local authorities for the purchase of logs, generally at fixed prices, under contracts with terms of generally one to three years.
Approximately 90% of our log supply in 2023 was supplied through purchases from private landowners or through dealers. We also bid in auctions conducted by federal, state, and local authorities for the purchase of logs, generally at fixed prices, under contracts with terms of generally one to three years.
OSB accounted for approximately 6% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2022. OSB is a commodity, and prices have been historically volatile in response to industry capacity and operating rates, inventory levels in various distribution channels, and seasonal demand patterns.
OSB accounted for approximately 5% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2023. OSB is a commodity, and prices have been historically volatile in response to industry capacity and operating rates, inventory levels in various distribution channels, and seasonal demand patterns.
In BMD, our growth strategy includes adding products and services, expanding our market penetration via acquisition or the opening or expansion of locations in under-served markets, and identifying and executing upon adjacent distribution platforms that can be scaled. Doors provide a recent example of product line expansion in BMD.
In BMD, our growth strategy includes adding products and services, expanding our market penetration via acquisition or the opening or expansion of locations in underserved markets, and identifying and executing upon adjacent distribution platforms that can be scaled. Doors and millwork provide a recent example of product line expansion in BMD.
We all 2 Table of Contents have the autonomy to apply our knowledge and experience to solve problems, make decisions, and implement new ideas to drive sustainable results. Segment Overview Our two reportable segments, Wood Products and Building Materials Distribution, operate with a high degree of vertical integration.
We all have the autonomy to apply our knowledge and experience to solve problems, make decisions, and implement new ideas to drive sustainable results. Segment Overview Our two reportable segments, Wood Products and Building Materials Distribution, operate with a high degree of integration.
Together, we strive to create an injury-free environment by identifying risks, eliminating hazards, and requiring safe behaviors. • Respect - We cultivate a climate of mutual respect, camaraderie, and teamwork.
Together, we strive to create an injury-free environment by identifying risks, eliminating hazards, and requiring safe behaviors. 2 Table of Contents • Respect - We cultivate a climate of mutual respect, camaraderie, and teamwork.
His previous positions with the company include: • Vice President of Manufacturing Operations, Wood Products, January 2020 - February 2022 • Director of Operations, Wood Products, February 2019 - January 2020 • Operations Manager, Wood Products, November 2017 - February 2019 • Area Manager, Wood Products, February 2015 - November 2017 Mr.
His previous positions with the company include: 17 Table of Contents • Vice President of Manufacturing Operations, Wood Products, January 2020 - February 2022 • Director of Operations, Wood Products, February 2019 - January 2020 • Operations Manager, Wood Products, November 2017 - February 2019 • Area Manager, Wood Products, February 2015 - November 2017 Mr.
His previous positions with the company include: • Director of Finance & Commodity Sales, Wood Products, May 2020 – May 2022 • Financial Manager, Wood Products, May 2018 - May 2020 • Division Controller, Wood Products, October 2016 – May 2018 Mr.
His previous positions with the company include: • Vice President, Finance & Commodity Sales, Wood Products, May 2022 - October 2023 • Director of Finance & Commodity Sales, Wood Products, May 2020 - May 2022 • Financial Manager, Wood Products, May 2018 - May 2020 • Division Controller, Wood Products, October 2016 - May 2018 Mr.
His previous positions with the company include: • Senior Vice President of Operations, Wood Products, November 2017 - January 2019 16 Table of Contents • Vice President of Operations, Wood Products, February 2016 - November 2017 • Manufacturing Operations Manager, Wood Products, November 2014 - February 2016 Mr.
His previous positions with the company include: • Senior Vice President of Operations, Wood Products, November 2017 - January 2019 • Vice President of Operations, Wood Products, February 2016 - November 2017 • Manufacturing Operations Manager, Wood Products, November 2014 - February 2016 Mr.
Wood fiber is the primary raw material used in our Wood Products operations, and our primary source of wood fiber is logs. For the year ended December 31, 2022, wood fiber accounted for approximately 43% of materials, labor, and other operating expenses (excluding depreciation) in our Wood Products segment.
Wood fiber is the primary raw material used in our Wood Products operations, and our primary source of wood fiber is logs. For the year ended December 31, 2023, wood fiber accounted for approximately 40% of materials, labor, and other operating expenses (excluding depreciation) in our Wood Products segment.
Seymour was elected the company's senior vice president of manufacturing operations, Wood Products, in February 2022.
Seymour was appointed the company's senior vice president of manufacturing operations, Wood Products, in February 2022.
Most of our competitors are located in the U.S. and Canada, although we also compete with manufacturers in other countries, particularly when the U.S. dollar and economy are stronger relative to other countries, encouraging foreign producers to sell more of their plywood into the U.S. 13 Table of Contents Building Materials Distribution.
Most of our competitors are located in the U.S. and Canada, although we also compete with manufacturers in other countries, particularly when the U.S. dollar and economy are stronger relative to other countries, encouraging foreign producers to sell more of their products into the U.S. Building Materials Distribution.
We have grown our EWP sales and thereby diverted more of our internally produced veneer away from plywood, which is a product line exposed to oriented strand board substitution and significant price volatility. In 2022, we acquired Coastal Plywood Company (Coastal Plywood) and its plywood manufacturing locations in Havana, Florida, and Chapman, Alabama, to provide avenues for further EWP growth.
We expect to grow our EWP sales and thereby divert more of our internally produced veneer away from plywood, which is a product line exposed to oriented strand board substitution and significant price volatility. In 2022, we acquired Coastal Plywood and its plywood manufacturing locations in Havana, Florida, and Chapman, Alabama, to provide avenues for further EWP growth.
Our manufacturing facilities are located in close proximity to active wood fiber markets. 10 Table of Contents Logs comprised approximately 72% of our wood fiber costs during 2022, and we satisfy our log requirements through a combination of purchases under supply agreements, open-market purchases, and purchases pursuant to contracts awarded under public auctions.
Our manufacturing facilities are located in close proximity to active wood fiber markets. Logs comprised approximately 80% of our wood fiber costs during 2023, and we satisfy our log requirements through a combination of purchases under supply agreements, open-market purchases, and purchases pursuant to contracts awarded under public auctions.
Except for EWP, we purchase most of these building materials from a broad base of third-party suppliers ranging from large manufacturers, such as Huber Engineered Woods, James Hardie Building Products, Louisiana-Pacific Corporation, Trex Company, and Therma-Tru Corporation, to small regional producers. Substantially all of our EWP is sourced from our Wood Products segment.
Except for EWP, we purchase most of these building materials from a broad base of third-party suppliers ranging from large manufacturers, such as Canfor, Commercial Metals Company, Hampton Lumber, Huber Engineered Woods, James Hardie Building Products, Louisiana-Pacific, Therma-Tru Doors, Trex Company and West Fraser, to small regional producers. Substantially all of our EWP is sourced from our Wood Products segment.
Jorgensen was elected the company's chief executive officer in March 2020.
Jorgensen was appointed the company's chief executive officer in March 2020.
Trademarks We maintain many trademarks for our manufactured wood products, particularly EWP. Our key registered trademarks include BOISE CASCADE® and the TREE-IN-A-CIRCLE® logo, which are perpetual in duration as long as we continue to timely file all post registration maintenance documents related thereto. We believe these key trademarks to be of significant importance to our business.
Our key registered trademarks include BOISE CASCADE® and the TREE-IN-A-CIRCLE® logo, which are perpetual in duration as long as we continue to timely file all post registration maintenance documents related thereto. We believe these key trademarks to be of significant importance to our business.
The following table sets forth segment sales, segment income (loss), depreciation and amortization, and EBITDA (a non-GAAP measure) for the periods indicated: Year Ended December 31 2022 2021 2020 2019 2018 (millions) Segment sales (a) $ 2,115.9 $ 1,970.8 $ 1,323.9 $ 1,275.2 $ 1,533.3 Segment income (loss) (b) (c) $ 575.2 $ 531.2 $ 127.7 $ 54.2 $ (10.0) Segment depreciation and amortization (c) 73.3 55.2 71.1 57.7 127.0 Segment EBITDA (b) (d) $ 648.5 $ 586.5 $ 198.9 $ 111.9 $ 117.0 _______________________________________ (a) Segment sales are calculated before elimination of sales to our BMD segment.
The following table sets forth segment sales, segment income, depreciation and amortization, and EBITDA (a non-GAAP measure) for the periods indicated: Year Ended December 31 2023 2022 2021 2020 2019 (millions) Segment sales (a) $ 1,932.6 $ 2,115.9 $ 1,970.8 $ 1,323.9 $ 1,275.2 Segment income (b) $ 337.1 $ 575.2 $ 531.2 $ 127.7 $ 54.2 Segment depreciation and amortization (b) 98.7 73.3 55.2 71.1 57.7 Segment EBITDA (c) $ 435.8 $ 648.5 $ 586.5 $ 198.9 $ 111.9 _______________________________________ (a) Segment sales are calculated before elimination of sales to our BMD segment.
Jorgensen received a bachelor's degree in Civil and Environmental Engineering from the University of Wisconsin and also attended the Tuck School of Business Executive Education Program, Dartmouth College, Hanover, NH. Kelly Hibbs, Senior Vice President, Chief Financial Officer, and Treasurer Mr. Hibbs was elected the company's senior vice president, chief financial officer, and treasurer in May 2021.
Jorgensen received a bachelor's degree in Civil and Environmental Engineering from the University of Wisconsin and also attended the Tuck School of Business Executive Education Program, Dartmouth College, Hanover, NH. 15 Table of Contents Kelly Hibbs, Senior Vice President, Chief Financial Officer, and Treasurer Mr.
Over time, BMD intends to increase the proportion of its sales attributable to general line and EWP as those products carry a higher margin profile than commodities. The chart below reflects BMD's sales mix by product for the year ended December 31, 2022.
BMD continues to increase the proportion of its sales attributable to general line and EWP as those products carry a higher and more stable margin profile than commodities. The chart below reflects BMD's sales mix by product for the year ended December 31, 2023.
These opportunities include the development of new products for new residential construction or commercial construction applications. The commercial construction segment is a particular area of focus for us given we have limited penetration in that space today, and recent changes in building codes that allow for the use of mass timber in tall wood structures provide further opportunity.
The commercial construction segment is a particular area of focus for us, given we have limited penetration in that space today, and recent changes in building codes that allow for the use of mass timber in tall wood structures provide further opportunity.
The map below presents our network of manufacturing and distribution facilities. 3 Table of Contents Our Business Strategies Increase Both Our Earnings and Earnings Stability We intend to increase both our earnings and earnings stability by growing our EWP sales and expanding our distribution capabilities. In Wood Products, we are principally focused on the production of veneer-based products.
Our Business Strategies Increase Both Our Earnings and Earnings Stability We intend to increase both our earnings and earnings stability by growing our EWP sales and expanding our distribution capabilities. In Wood Products, we are principally focused on the production of veneer-based products.
The following table sets forth the annual capacity, production volumes, and sales volumes of our principal products for the periods indicated: Year Ended December 31 2022 2021 2020 2019 2018 (millions) Capacity (a) LVL (cubic feet) (b) 34.6 34.0 34.0 34.0 33.5 Plywood and Parallel Laminated Veneer (PLV) (sq. ft.) (3/8" basis) (c)(d) 2,735 2,230 2,230 2,230 2,440 Production Volumes LVL (cubic feet) (b) 26.7 29.3 26.0 25.6 27.6 I‑joists (equivalent lineal feet) (b) 233 295 237 215 253 Plywood and PLV (sq. ft.) (3/8" basis) (c) 1,753 1,727 1,637 1,668 1,822 Sales Volumes LVL (cubic feet) (e) 17.6 18.2 17.3 17.9 17.7 I-joists (equivalent lineal feet) 229 290 241 227 237 Plywood (sq. ft.) (3/8" basis) (f) 1,319 1,259 1,253 1,337 1,423 _______________________________________ (a) Estimated annual capacity at the end of each year based on machinery capabilities.
The following table sets forth the annual capacity, production volumes, and sales volumes of our principal products for the periods indicated: Year Ended December 31 2023 2022 2021 2020 2019 (millions) Capacity (a) LVL (cubic feet) (b) 34.6 34.6 34.0 34.0 34.0 Plywood and Parallel Laminated Veneer (PLV) (sq. ft.) (3/8" basis) (c)(d) 2,735 2,735 2,230 2,230 2,230 Production Volumes LVL (cubic feet) (b) 25.2 26.7 29.3 26.0 25.6 I‑joists (equivalent lineal feet) (b) 215 233 295 237 215 Plywood and PLV (sq. ft.) (3/8" basis) (c) 1,945 1,753 1,727 1,637 1,668 Sales Volumes LVL (cubic feet) (e) 17.4 17.6 18.2 17.3 17.9 I-joists (equivalent lineal feet) 220 229 290 241 227 Plywood (sq. ft.) (3/8" basis) (f) 1,599 1,319 1,259 1,253 1,337 _______________________________________ (a) Estimated annual capacity at the end of each year based on machinery capabilities. 9 Table of Contents (b) During the years presented above, approximately one-third of the LVL we produced was utilized internally to produce I-joists.
Drivers of new residential construction, residential repair-and-remodeling activity, and light commercial construction include new household formation, the age of the housing stock, availability of credit and other macroeconomic factors, such as GDP growth, population growth and migration, interest rates, employment, and consumer sentiment.
Drivers of new residential construction, residential repair-and-remodeling activity, and light commercial construction include new household formation, the age of the housing stock, availability of credit and other macroeconomic factors, such as GDP growth, population growth and migration, interest rates, employment, and consumer sentiment. 3 Table of Contents The map below presents our network of manufacturing and distribution facilities.
Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K for a description of our reasons for using EBITDA and for a discussion of the limitations of such a non-GAAP measure. Facilities Our Wood Products segment operates five EWP facilities.
(c) Segment EBITDA is calculated as segment income before depreciation and amortization. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K for a description of our reasons for using EBITDA and for a discussion of the limitations of such a non-GAAP measure. Facilities Our Wood Products segment operates five EWP facilities.
Barney was elected the company’s vice president of western operations, Building Materials Distribution, in May 2022. Her previous positions with the company include: • General Manager, Western Operations, Building Materials Distribution, September 2021 – May 2022 • Branch Manager, Building Materials Distribution, September 2015 – September 2021 Ms.
Her previous positions with the company include: • Vice President, Western Operations, Building Materials Distribution, May 2022 - October 2023 • General Manager, Western Operations, Building Materials Distribution, September 2021 - May 2022 • Branch Manager, Building Materials Distribution, September 2015 - September 2021 Ms.
The following table lists our product line sales mix for the periods indicated: Year Ended December 31 2022 2021 2020 2019 2018 (percentage of Building Materials Distribution sales) Commodity 44.9 % 51.6 % 46.6 % 41.7 % 48.3 % General line 33.3 % 30.2 % 35.6 % 38.2 % 33.1 % Engineered wood products 21.8 % 18.2 % 17.8 % 20.1 % 18.6 % The following table sets forth segment sales, income, depreciation and amortization, and EBITDA (a non-GAAP measure) for the periods indicated: Year Ended December 31 2022 2021 2020 2019 2018 (millions) Segment sales $ 7,643.6 $ 7,174.3 $ 4,952.0 $ 4,137.7 $ 4,287.7 Segment income $ 627.1 $ 481.1 $ 247.5 $ 116.2 $ 112.5 Segment depreciation and amortization 27.0 24.0 22.5 20.8 18.3 Segment EBITDA (a) $ 654.1 $ 505.1 $ 270.0 $ 137.0 $ 130.8 _______________________________________ (a) Segment EBITDA is calculated as segment income before depreciation and amortization.
Our products are used in the construction of new residential housing, including single-family, multi-family, and manufactured homes, the repair-and-remodeling of existing housing, the construction of light industrial and commercial buildings, and other industrial applications. 11 Table of Contents The following table lists our product line sales mix for the periods indicated: Year Ended December 31 2023 2022 2021 2020 2019 (percentage of Building Materials Distribution sales) Commodity 37.8 % 44.9 % 51.6 % 46.6 % 41.7 % General line 39.5 % 33.3 % 30.2 % 35.6 % 38.2 % Engineered wood products 22.7 % 21.8 % 18.2 % 17.8 % 20.1 % The following table sets forth segment sales, income, depreciation and amortization, and EBITDA (a non-GAAP measure) for the periods indicated: Year Ended December 31 2023 2022 2021 2020 2019 (millions) Segment sales $ 6,178.7 $ 7,643.6 $ 7,174.3 $ 4,952.0 $ 4,137.7 Segment income $ 335.8 $ 627.1 $ 481.1 $ 247.5 $ 116.2 Segment depreciation and amortization 32.4 27.0 24.0 22.5 20.8 Segment EBITDA (a) $ 368.2 $ 654.1 $ 505.1 $ 270.0 $ 137.0 _______________________________________ (a) Segment EBITDA is calculated as segment income before depreciation and amortization.
The year ended December 31, 2020 includes $15.0 million of accelerated depreciation and $1.7 million of other closure costs related to the Roxboro I-joist curtailment in March 2020.
(b) The year ended December 31, 2023 includes $6.2 million of accelerated depreciation related to the indefinite curtailment of lumber production at our Chapman, Alabama facility. The year ended December 31, 2020 includes $15.0 million of accelerated depreciation and $1.7 million of other closure costs related to the Roxboro I-joist curtailment in March 2020.
Our sales force spends a significant amount of time working with end customers who purchase our EWP. Our sales force provides a variety of technical support services, including integrated design, engineering, product specification software, distributor inventory management software, and job-pack preparation systems. Sales of plywood are handled in multiple locations, with management located centrally at headquarters.
Our sales force provides a variety of technical support services, including integrated design, engineering, product specification software, distributor inventory management software, and job-pack preparation systems. Sales of plywood are handled in multiple locations, with management located centrally at headquarters. In 2023, EWP and plywood accounted for 58% and 32%, respectively, of our Wood Products sales.
Additional modules are planned for 2023, which includes a Learning Management System. 14 Table of Contents Environmental Boise Cascade recognizes the weight of scientific evidence indicates a changing climate associated with increasing carbon dioxide in the atmosphere, and uses the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) for guidance in tracking and communicating our position and performance relative to climate.
Environmental Boise Cascade recognizes that the weight of scientific evidence indicates a changing climate associated with increasing carbon dioxide in the atmosphere, and uses the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) for guidance in tracking and communicating our position and performance on climate-related matters.
His previous positions with the company include: • Vice President and Controller, February 2011 - May 2021 • Director of Strategic Planning and Internal Audit, February 2008 - February 2011 Mr. Hibbs received a bachelor's degree in Accounting from Boise State University, Boise, ID. He is a certified public accountant. Mike Brown, Executive Vice President, Wood Products Mr.
Hibbs was appointed the company's senior vice president, chief financial officer, and treasurer in May 2021. His previous positions with the company include: • Vice President and Controller, February 2011 - May 2021 • Director of Strategic Planning and Internal Audit, February 2008 - February 2011 Mr. Hibbs received a bachelor's degree in Accounting from Boise State University, Boise, ID.
Building Materials Distribution Products We sell a broad line of building materials; including OSB, plywood, and lumber (collectively commodities), general line items such as siding, composite decking, doors, metal products, insulation, and roofing, and EWP.
In 2023, 78% and 42% of our Wood Products segment's EWP and plywood sales volumes, respectively, were to our BMD segment. Building Materials Distribution Products We sell a broad line of building materials, including OSB, plywood, and lumber (collectively commodities); general line items such as siding, composite decking, doors and millwork, metal products, roofing, and insulation; and EWP.
Human Capital Management Human capital management and our ability to attract, develop and retain talent that embraces our shared values of integrity, safety, respect, and pursuit of excellence have been and will continue to be critical to executing our previously described strategic objectives.
Human Capital Management Human capital management and our ability to attract, develop and retain talent that embraces our shared values of integrity, safety, respect, and pursuit of excellence have been and will continue to be critical to executing our previously described strategic objectives. 13 Table of Contents At Boise Cascade, the health and safety of our 7,300 employees is core to how we do business.
Our highly efficient logistics system allows us to deliver superior customer service and assist our customers in optimizing their working capital. We have a large, decentralized sales force to support our suppliers and customers. Our sales force and product managers have local product knowledge and decision-making authority, which we believe enables them to optimize stocking, pricing, and product assortment decisions.
Our highly efficient logistics system allows us to deliver superior customer service and assist our customers in optimizing their working capital. We have a large, decentralized sales force to support our suppliers and customers.
Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Item 3. Legal Proceedings" of this Form 10-K. Capital Investment Information concerning our capital expenditures is presented in "Investment Activities" under "Liquidity and Capital Resources" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K.
Capital Investment Information concerning our capital expenditures is presented in "Investment Activities" under "Liquidity and Capital Resources" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K. Seasonal Influences We are exposed to fluctuations in quarterly sales volumes and expenses due to seasonal factors.
Twedt received a bachelor's degree in Political Science from the College of Idaho, Caldwell, ID and a law degree from the University of Idaho, Moscow, ID. Tom Hoffmann, Senior Vice President of Purchasing, Buildings Materials Distribution Mr. Hoffmann was elected the company's senior vice president of purchasing, Building Materials Distribution, in July 2021.
Twedt received a bachelor's degree in Political Science from the College of Idaho, Caldwell, ID and a law degree from the University of Idaho, Moscow, ID. Joanna Barney, Senior Vice President, Western Operations, Building Materials Distribution Ms. Barney was appointed the company’s senior vice president of western operations, Building Materials Distribution, in October 2023.
Facilities Our BMD segment operates a nationwide network of 38 building materials distribution facilities throughout the U.S. and also operates a single component manufacturing plant. Our broad geographic presence reduces our exposure to market factors in any single region.
Facilities Our BMD segment operates a nationwide network of 40 building materials distribution facilities throughout the U.S., including door and millwork facilities in 13 markets, as well as one component manufacturing plant. Our broad geographic presence reduces our exposure to market factors in any single region. In 2023, we acquired BROSCO, a wholesale distributor specializing in doors and millwork.
(b) During the years presented above, approximately one-third of the LVL we produced was utilized internally to produce I-joists. Capacity is based on LVL production only. 9 Table of Contents (c) Approximately 25%, 29%, 27%, 23%, and 24%, respectively, of production in 2022, 2021, 2020, 2019, and 2018 was for PLV panels that are utilized internally to produce LVL.
Capacity is based on LVL production only. (c) Approximately 20%, 25%, 29%, 27%, and 23%, respectively, of production in 2023, 2022, 2021, 2020, and 2019 was for PLV panels that are utilized internally to produce LVL.
Seasonal Influences We are exposed to fluctuations in quarterly sales volumes and expenses due to seasonal factors. These seasonal factors are common in the building products industry. For further information, see "Seasonal Influences" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K.
These seasonal factors are common in the building products industry. For further information, see "Seasonal Influences" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K. 14 Table of Contents Trademarks We maintain many trademarks for our manufactured wood products, particularly EWP.
These reports are available as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC).
These reports are available as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC). The reference to our website address does not constitute incorporation by reference of the information contained on the website, and the information contained on the website is not part of this document.
In 2022, EWP and plywood accounted for 57% and 34%, respectively, of our Wood Products sales. The majority of our wood products are sold to leading wholesalers (including our BMD segment), home improvement centers, dealers, and industrial converters in North America.
The majority of our wood products are sold to leading wholesalers (including our BMD segment), home improvement centers, dealers, and industrial converters in North America. Our BMD segment is our Wood Products segment's largest customer, representing approximately 66% of our Wood Products segment's overall sales in 2023.
His previous positions with the company include: • General Manager, Eastern Operations, Building Materials Distribution, February 2021 - February 2022 • Northeastern Region Manager, Building Materials Distribution, May 2016 - February 2021 • Branch Manager, Building Materials Distribution, March 2008 - May 2016 Mr. Wickham received a bachelor’s degree in Business from Missouri State University, Springfield, MO.
His previous positions with the company include: • Vice President, Eastern Operations, Building Materials Distribution, February 2022 - October 2023 • General Manager, Eastern Operations, Building Materials Distribution, February 2021 - February 2022 • Northeastern Region Manager, Building Materials Distribution, May 2016 - February 2021 • Branch Manager, Building Materials Distribution, March 2008 - May 2016 Mr.
At Boise Cascade, the health and safety of our 6,780 employees is core to how we do business. We collect and report common lagging indicators of safety performance, and our safety programs include tools, training, and resources that allow us to collect, analyze, and share leading indicators of safety-related hazards broadly across our organization.
We collect and report common lagging indicators of safety performance, and our safety programs include tools, training, and resources that allow us to collect, analyze, and share leading indicators of safety-related hazards broadly across our organization. We believe that our focus on leading indicators helps to prevent future incidents and injuries.
Seymour received a bachelor’s degree in Business Administration and a master’s degree in Wood Science from West Virginia University, Morgantown, WV. Rich Viola, Senior Vice President of Sales and Marketing, Building Materials Distribution Mr. Viola, our senior vice president of sales and marketing, Building Materials Distribution, has elected to retire from the company effective March 1, 2023.
Seymour received a bachelor’s degree in Business Administration and a master’s degree in Wood Science from West Virginia University, Morgantown, WV. Jim Wickham, Senior Vice President, Eastern Operations, Building Materials Distribution Mr. Wickham was appointed the company's senior vice president of eastern operations, Building Materials Distribution, in October 2023.
The contracts are generally with regional suppliers who agree to supply all of our needs for a certain raw material or energy within the applicable region.
The contracts are generally with regional suppliers who agree to supply all of our needs for a certain raw material or energy within the applicable region. These contracts have terms of various lengths and typically contain price adjustment mechanisms that take into account changes in market prices.
The reference to our website address does not constitute incorporation by reference of the information contained on the website, and the information contained on the website is not part of this document. 15 Table of Contents Information About Our Executive Officers and Key Management Below is a list of names, ages, and a brief description of the business experience of our executive officers and key members of management, each as of February 10, 2023.
Information About Our Executive Officers and Key Management Below is a list of names, ages, and a brief description of the business experience of our executive officers and key members of management, each as of February 15, 2024.
Accelerate Pace of Innovation, Digital Technology, and Diversity, Equity & Inclusion The Company is actively pursuing additional initiatives that we believe will provide further avenues for revenue and earnings growth: Innovation - We are actively engaged in product development opportunities in our Wood Products segment.
Accelerate Pace of Innovation & Digital Technology, and Diversity, Equity & Inclusion The Company is actively pursuing additional initiatives that we believe will provide further avenues for revenue and earnings growth: Innovation & Digital Technology - Like many companies, we continue to innovate with technology to search out revenue-generating, cost-reducing, and risk-mitigating opportunities.
The chart below illustrates our growth in EWP. 5 Table of Contents BMD carries a broad line of building materials used in residential construction, repair and remodel, and industrial applications.
We have made and intend to continue to make investments in our mills in the Southeast U.S., allowing us to grow our EWP sales. 5 Table of Contents BMD carries a broad line of building materials used in residential construction, repair and remodel, and industrial applications.
(d) 2022 includes 505 million square feet of plywood capacity related to the two plywood manufacturing facilities in Chapman, Alabama, and Havana, Florida, that were purchased in July 2022. 2018 includes 135 million square feet of plywood capacity related to the Moncure, North Carolina, facility that was sold in March 2019.
(d) 2022 includes 505 million square feet of plywood capacity related to the two plywood manufacturing facilities in Chapman, Alabama, and Havana, Florida, that were purchased in July 2022. (e) Excludes LVL produced and used as flange stock in the manufacture of I-joists. (f) Excludes PLV produced and used in the manufacture of LVL.
The change in our sales mix by segment over time from reducing our product mix in Wood Products and expanding our BMD distribution capabilities is illustrated below. 4 Table of Contents Wood Products' change in sales mix by product line over time is illustrated below.
These organic growth projects allow us to further expand our product and service offerings in those markets. 4 Table of Contents The increase in our sales by segment over time from investing in our EWP growth strategy in Wood Products and expanding our BMD distribution capabilities is illustrated below.
Wood Products enjoys superior access to the market through a committed distributor, BMD benefits from a committed manufacturing partnership, and we capture margin at both levels of the supply chain. From 2018 to 2022, Wood Products' sales volumes of EWP to BMD grew from 74% to 77%, and plywood sales volumes to BMD declined slightly from 36% to 32%.
Wood Products enjoys superior access to the market through a committed distributor, BMD benefits from a committed manufacturing partnership, and we capture margin at both levels of the supply chain. In addition, Wood Products and BMD are collectively motivated to make the investments necessary to support our growth in the marketplace.
Barney received a bachelor’s degree in Business Finance from the University of Utah, Salt Lake City, UT. Troy Little, Vice President, Finance and Commodity Sales, Wood Products Mr. Little was elected the company’s vice president, finance and commodity sales, Wood Products, in May 2022.
Johnson received a bachelor’s degree in Finance from the University of Oregon, Eugene, OR. Troy Little, Senior Vice President, Finance and Commodity Sales, Wood Products Mr. Little will become the company's executive vice president, Wood Products, effective February 19, 2024.
Innovation efforts within our Wood Products segment are also focused on identifying process and cost efficiency improvement opportunities, some of which will include further automation within our manufacturing operations.
Innovation efforts within our Wood Products segment are also focused on identifying process and cost efficiency improvement opportunities, some of which include automated packaging, asset monitoring applications for predictive 8 Table of Contents maintenance, and the use of artificial intelligence to classify and identify opportunities in safety.
We believe there are opportunities to further apply these process improvement programs in our manufacturing operations and apply similar techniques and methods to different functional areas to realize efficiencies in those areas. In BMD, we believe our highly efficient logistics system allows us to deliver superior customer service and assist our customers in optimizing their working capital.
Drive Operational Excellence In Wood Products, we use process improvement and machine reliability methodologies to continuously refine and improve our operations and processes. We believe there are opportunities to further apply these process improvement programs in our manufacturing operations and apply similar techniques and methods to different functional areas to realize efficiencies in those areas.
We are committed to fostering an inclusive culture that values diversity and creates connection where everyone feels seen, heard, and valued. We recognize both the compelling business case for DEI to drive business impact and the role this work plays in living our core values of integrity, safety, respect, and the pursuit of excellence.
We recognize both the compelling business case for DEI to drive business impact and the role this work plays in living our core values. Consistent with our values, we are invested in our work to welcome diversity, build community, and grow our people and our business.
Our sales force has access to centralized information technology systems, an extensive vendor base, and corporate-level working capital support, which we believe complements our localized sales model. We regularly evaluate opportunities to introduce new products. Broadening our product offering helps us serve as a one-stop resource for building materials, which we believe improves our customers' purchasing and operating efficiencies.
Our national presence allows us to act as a vehicle for our suppliers' new innovative products and the ability to introduce new building products to our customers. Broadening our product offering helps us serve as a one-stop resource for building materials, which we believe improves our customers' purchasing and operating efficiencies.
In order to assess the effectiveness and efficiency of our operations, we regularly capture and report upon a wide variety of investment, operational, and customer service metrics. Key learnings and best practices are then leveraged across our distribution locations.
In BMD, we believe our highly efficient logistics system allows us to deliver superior customer service and assist our customers in optimizing their working capital. To assess the effectiveness and efficiency of our operations, we regularly capture and report on a wide variety of investment, operational, and customer service metrics.
We believe that our focus on leading indicators helps to prevent future incidents and injuries. Living our values means driving the expectation that each of our employees has ownership in safety and the authority to stop work if there is a safety concern. Our safety commitment extends to minimizing the spread and reducing the severity of COVID-19.
Living our values means driving the expectation that each of our employees has ownership of safety and the authority to stop work if there is a safety concern. Our Code of Ethics guides the actions and behaviors of anyone working for, representing, or partnering with Boise Cascade.
Johnson received a bachelor’s degree in Finance from the University of Oregon, Eugene, OR. 17 Table of Contents Erin Nuxoll, Senior Vice President, Human Resources Ms. Nuxoll was elected the company's senior vice president, human resources in January 2019.
Little received a bachelor’s degree in Business Administration from the College of Idaho, Caldwell, ID. Erin Nuxoll, Senior Vice President, Human Resources Ms. Nuxoll, our senior vice president of human resources, has elected to retire from the company effective May 3, 2024. She was appointed to the position in January 2019.
The chart below reflects the progress we have made in distributing internally produced products through our distribution network. Drive Operational Excellence In Wood Products, we use process improvement and machine reliability methodologies to continuously refine and improve our operations and processes.
From 2019 to 2023, Wood Products' sales volumes of EWP to BMD increased slightly from 77% to 78%, and plywood sales volumes to BMD increased from 32% to 42%. The chart below reflects the progress we have made in distributing internally produced products through our distribution network.
Little received a bachelor’s degree in Business Administration from the College of Idaho, Caldwell, ID. 18 Table of Contents Jim Wickham, Vice President, Eastern Operations, Building Materials Distribution Mr. Wickham was elected the company's vice president of eastern operations, Building Materials Distribution, in February 2022.
Wickham received a bachelor’s degree in Business from Missouri State University, Springfield, MO. Nathan Sikes, Vice President, Sales and Marketing, Building Materials Distribution Mr. Sikes was appointed the company's vice president of sales and marketing, Building Materials Distribution, in October 2023.
These facilities will allow us to better serve customers in Charleston, South Carolina, San Antonio, Texas, and surrounding markets. 7 Table of Contents Leverage our Integrated Model We believe our vertically-integrated business model provides us with advantages over less integrated competitors and provides unique and significant value to our customers.
In addition, BMD's growth in sales dollars and sales per U.S. housing start, as well as our focus on increasing sales attributable to general line and EWP, are reflected in the charts below. 6 Table of Contents 7 Table of Contents Leverage our Integrated Model We believe our integrated business model provides us with advantages over less integrated competitors and provides unique and significant value to our customers.
These contracts have terms of various lengths and typically contain price adjustment mechanisms that take into account changes in market prices. 11 Table of Contents Sales, Marketing, and Distribution Our EWP sales force is managed centrally through a main office that oversees regional sales teams.
Sales, Marketing, and Distribution Our EWP sales force is managed centrally through a main office that oversees regional sales teams. Our sales force spends a significant amount of time working with end customers who purchase our EWP.
The working group evaluated material sources of Scope 1 and 2 greenhouse gas (GHG) emissions and undertook a review and selection of technology tools that will allow us to begin tracking GHG emissions and energy metrics. A discussion of general and industry-specific environmental laws and regulations, climate change, and energy uses are presented under the caption "Environmental" in "Item 7.
A discussion of general and industry-specific environmental laws and regulations, climate change, and energy uses are presented under the caption "Environmental" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Item 3. Legal Proceedings" of this Form 10-K.
Brown was elected the company's executive vice president, Wood Products, in January 2019.
He is a certified public accountant. Mike Brown, Executive Vice President, Wood Products Mr. Brown, our executive vice president, Wood Products, has elected to retire from the company effective May 3, 2024. He was appointed to the position in January 2019.
In 2020 and 2021, we expanded our door shop assembly operations with the addition of properties and related assembly equipment in Dallas and Houston, Texas. In addition, we recently announced the purchase of a new facility in Kansas City, Missouri, to house an additional door shop assembly operation.
In the last three years, we have also expanded our door and millwork business with new locations in Dallas and Houston, Texas; Kansas City, Missouri; and Denver, Colorado. In addition to our investment in our door and millwork business, we continue to expand the capacity of our distribution centers.
Removed
These facilities will provide incremental stress-rated veneer needed to optimize and expand our southeastern U.S. EWP production capacity. In addition, we have divested of assets that we considered to be non-strategic or where we believed we were unlikely to generate a sufficient return on invested capital in the future.
Added
In 2023, we acquired Brockway-Smith Company (BROSCO), a wholesale distributor specializing in doors and millwork. These facilities expanded our door and millwork business into the Northeast U.S. markets and enhance BMD's general line product mix.
Removed
In 2022, we completed or announced capacity expansion projects in Albuquerque, New Mexico; Marion, Ohio; Cincinnati, Ohio; and Minneapolis, Minnesota. Furthermore, we recently purchased properties in South Carolina and Texas to build two new distribution facilities over the next two years. These organic growth projects allow us to further expand our product and service offerings in those markets.
Added
In 2023, we announced or completed capacity expansion projects in West Palm Beach, Florida; Marion, Ohio; and Medford, Oregon and we announced the relocation of our Lathrop, California BMD distribution center to Modesto, California. We also made progress on greenfield distribution centers in Texas and South Carolina, which we expect will be complete in 2025 and 2026, respectively.
Removed
BMD's growth in sales dollars and sales per U.S. housing start are reflected in the chart below. 6 Table of Contents A map of BMD's distribution locations is shown below.
Added
In 2022, we completed capacity expansion projects in Minneapolis, Minnesota and Cincinnati, Ohio.
Removed
The red stars are BMD's locations, the size of the circles indicate the level of residential construction activity in that trade area (Core-Based Statistical Area or CBSA), and the color of the circles indicate how close our distribution centers are to each major trade area.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, our revolving credit facility provides that if an event of default occurs or excess availability under our revolving credit facility drops below a threshold amount equal to the greater of 10% of the Line Cap (as defined in the Amended Agreement) and $35 million (and until such time as excess availability for two consecutive fiscal months exceeds that threshold amount and no event of default has occurred and is continuing), we will be required to maintain a monthly minimum fixed charge coverage ratio of 1.0:1.0, determined on a trailing twelve-month basis.
Biggest changeOur debt agreements limit our ability and the ability of our restricted subsidiaries, among other things, to: • incur additional debt; • declare or pay dividends, redeem stock, or make other distributions to stockholders; • make investments; • create liens or use assets in security in other transactions; • merge or consolidate, or sell, transfer, lease, or dispose of substantially all of our assets; • enter into transactions with affiliates; • sell or transfer certain assets; and • in the case of our revolving credit facility, make prepayments on our senior notes and subordinated indebtedness. 25 Table of Contents In addition, our revolving credit facility provides that if an event of default occurs or excess availability under our revolving credit facility drops below a threshold amount equal to the greater of 10% of the Line Cap (as defined in the Amended Agreement) and $35 million (and until such time as excess availability for two consecutive fiscal months exceeds that threshold amount and no event of default has occurred and is continuing), we will be required to maintain a monthly minimum fixed charge coverage ratio of 1.0:1.0, determined on a trailing twelve-month basis.
The building products distribution industry in which our BMD segment competes in is highly fragmented and competitive, and the barriers to entry for local competitors are relatively low.
The building products distribution industry in which our BMD segment competes is highly fragmented and competitive, and the barriers to entry for local competitors are relatively low.
Subsequent to making the investment, performance of the acquired assets is subject to economic uncertainties, as described in our other risk factors, as well as difficulties integrating acquired personnel into our business, the potential loss of key employees, customers, or suppliers, difficulties in integrating different computer and accounting systems, exposure to unknown or unforeseen liabilities of acquired companies, and the diversion of management attention and resources from existing operations.
Subsequent to making the investment, the performance of the acquired assets is subject to economic uncertainties, as described in our other risk factors, as well as difficulties integrating acquired personnel into our business, the potential loss of key employees, customers, or suppliers, difficulties in integrating different computer and accounting systems, exposure to unknown or unforeseen liabilities of acquired companies, and the diversion of management attention and resources from existing operations.
If we are unable to service our debt obligations or to fund our other liquidity needs, we could be forced to curtail our operations, reorganize our capital structure, or liquidate some or all of our assets.
If we are unable to service our debt obligations or fund our other liquidity needs, we could be forced to curtail our operations, reorganize our capital structure, or liquidate some or all of our assets.
Our customers' purchasing decisions for commodity products we sell are primarily based on price and availability, and these commodities may be sourced from various manufacturers. In the case of the general line and EWP products that we distribute, brand preference and product performance characteristics can have a high degree of influence on our customers' purchasing decision.
Our customers' purchasing decisions for commodity products we sell are primarily based on price and availability, and these commodities may be sourced from various manufacturers. In the case of the general line and EWP products that we distribute, brand preference and product performance characteristics can have a high degree of influence on our customers' purchasing decisions.
The market price for our common stock could fluctuate significantly for various reasons, including: • our operating and financial performance and prospects; • our quarterly or annual earnings or those of other companies in our industry; • the public's reaction to our press releases, our other public announcements, and our filings with the SEC; • changes in key personnel; • strategic actions by us, our customers, or our competitors, such as acquisitions or restructurings; • changes in, or failure to meet, earnings estimates or recommendations by research analysts who track our common stock or the stock of other companies in our industry; • the failure of research analysts to cover our common stock; • general economic, industry, and market conditions; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • investors' perception of our commitment to sustainability and corporate responsibility; • material litigation or government investigations; • changes in general conditions in the U.S. and global economies or financial markets, including those resulting from war, incidents of terrorism, pandemics, or responses to such events; • sales of common stock by us or members of our management team; • the granting of equity or equity-based incentives; • volume of trading in our common stock (which may be impacted by future sales or repurchases of our common stock); • changes in accounting standards, policies, guidance, interpretations, or principles; and • the impact of the factors described elsewhere in "Item 1A.
The market price for our common stock could fluctuate significantly for various reasons, including: • our operating and financial performance and prospects; • our quarterly or annual earnings or those of other companies in our industry; • the public's reaction to our press releases, our other public announcements, and our filings with the SEC; • changes in key personnel; • strategic actions by us, our customers, or our competitors, such as acquisitions or restructurings; • changes in, or failure to meet, earnings estimates or recommendations by research analysts who track our common stock or the stock of other companies in our industry; • the failure of research analysts to cover our common stock; • general economic, industry, and market conditions; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • investors' perception of our commitment to sustainability and corporate responsibility; • material litigation or government investigations; 27 Table of Contents • changes in general conditions in the U.S. and global economies or financial markets, including those resulting from war, incidents of terrorism, pandemics, or responses to such events; • sales of common stock by us or members of our management team; • the granting of equity or equity-based incentives; • volume of trading in our common stock (which may be impacted by future sales or repurchases of our common stock); • changes in accounting standards, policies, guidance, interpretations, or principles; and • the impact of the factors described elsewhere in "Item 1A.
In addition, certain suppliers to our distribution business also sell and distribute their products directly to our customers. Additional manufacturers of products distributed by us may elect to sell and distribute directly to our retail customers in the future or enter into exclusive supply arrangements with other distributors.
In addition, certain suppliers to our distribution business also sell and distribute their products directly to our customers. Additional manufacturers of products distributed by us may elect to sell and distribute directly to our dealer or retail customers in the future or enter into exclusive supply arrangements with other distributors.
However, in the future, network, system, and data breaches could result in the misappropriation of sensitive data or operational disruptions, including interruption to systems availability and denial of access to and misuse of applications required by our customers to conduct business with us.
In the future, network, system, and data breaches could result in the misappropriation of sensitive data or operational disruptions, including interruption to systems availability and denial of access to and misuse of applications required by our customers to conduct business with us.
Our business depends on the transportation of a large number of products, via rail or truck. In Wood Products, we rely on third parties for inbound receipt of raw materials and outbound movements of finished goods.
Our business depends on the transportation of a large number of products via rail or truck. In Wood Products, we rely on third parties for inbound receipt of raw materials and outbound movement of finished goods.
Wood fiber also includes, to a lesser extent than OSB, lumber purchased from third parties for I-joist production at our Canadian EWP facility and for production at our laminated beam plant in Idaho. Lumber input costs are subject to similar commodity-based volatility characteristics noted above for OSB. Our strategy includes pursuing acquisitions.
Wood fiber also includes, to a lesser extent than OSB, lumber purchased from third parties for I-joist production at our Canadian EWP facility and for production at our laminated beam plant in Idaho. Lumber input costs are subject to similar commodity-based volatility characteristics noted above for OSB.
The loss of, or a substantial decrease in the availability of, products from our suppliers or the loss of key supplier arrangements could adversely impact our financial condition, operating results, and cash flows. We depend on third parties for transportation services and limited availability or increases in costs of transportation could adversely affect our business and operations.
The loss of, or a substantial decrease in the availability of, products from our suppliers or the loss of key supplier arrangements could adversely impact our financial condition, operating results, and cash flows. 21 Table of Contents We depend on third parties for transportation services and limited availability or increases in costs of transportation could adversely affect our business and operations.
Although we believe that our relationships with our customers are strong, the loss of one or more of these customers could have a material adverse effect on our operating results, cash flow, and liquidity. 23 Table of Contents Adverse market conditions may increase the credit risk from our customers.
Although we believe that our relationships with our customers are strong, the loss of one or more of these customers could have a material adverse effect on our operating results, cash flow, and liquidity. Adverse market conditions may increase the credit risk from our customers.
Although we currently maintain what we believe to be 26 Table of Contents suitable and adequate insurance in excess of our self-insured amounts, there can be no assurance that we will be able to maintain such insurance on acceptable terms or that such insurance will provide adequate protection against potential liabilities.
Although we currently maintain what we believe to be suitable and adequate insurance in excess of our self-insured amounts, there can be no assurance that we will be able to maintain such insurance on acceptable terms or that such insurance will provide adequate protection against potential liabilities.
Our principal manufactured products are also subject to substitution from other wood-based products, such as EWP facing competition from numerous dimension lumber producers and other strand-based EWP that we do not produce, or plywood losing further market share to OSB in residential and non-residential applications.
Our principal manufactured products are also subject to substitution from other wood-based products, such as EWP facing competition from numerous dimension lumber producers and other strand-based EWP that we do not produce, or 19 Table of Contents plywood losing further market share to OSB in residential and non-residential applications.
Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K. Our operations require substantial capital, and recent significant capital investments and acquisitions have increased fixed costs, which could negatively affect our profitability.
Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K. 24 Table of Contents Our operations require substantial capital, and recent significant capital investments and acquisitions have increased fixed costs, which could negatively affect our profitability.
We are therefore exposed to a larger extent to the risk of disruption to our Wood Products manufacturing facilities due to our vertical integration and the resulting impact on our BMD business. In addition, a number of our suppliers are subject to the manufacturing facility disruption risks noted above.
We are, therefore, exposed to a larger extent to the risk of disruption to our Wood Products manufacturing facilities due to our integration and the resulting impact on our BMD business. 20 Table of Contents In addition, a number of our suppliers are subject to the manufacturing facility disruption risks noted above.
We also purchase OSB, which is used as the vertical web to assemble I-joists. OSB accounted for approximately 6% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2022.
We also purchase OSB, which is used as the vertical web to assemble I-joists. OSB accounted for approximately 5% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2023.
In addition, we have seen an increase in floor truss capacity by a number of our dealer customers, partially due to the limited supply of I-joists over the last two years. The expansion of truss manufacturing could negatively impact our I-joist market share and net sales prices.
In addition, we have seen an increase in floor truss capacity by some of our dealer customers, partially due to the limited supply of I-joists over the last few years. The expansion of truss manufacturing could negatively impact our I-joist market share and net sales prices.
Hence, the price of our common stock could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce our share price. 27 Table of Contents We may not pay cash dividends in the future.
Hence, the price of our common stock could fluctuate based on factors that have little or nothing to do with us, and these fluctuations could materially reduce our share price. We may not pay cash dividends in the future.
Any of our manufacturing facilities, or any of our machines within an otherwise operational facility, could cease operations unexpectedly due to a number of events, including but not limited to: • labor difficulties, including the inability to staff our facilities due to a global health pandemic; • equipment failure, particularly a press at one of our major EWP production facilities; • fires, floods, earthquakes, hurricanes, or other catastrophes, which may increase in frequency, severity and duration due to the physical impacts of climate change; • unscheduled maintenance outages; • utility, information technology, telephonic, and transportation infrastructure disruptions; • other operational problems; or • ecoterrorism or threats of ecoterrorism.
Any of our manufacturing facilities, or any of our machines within an otherwise operational facility, could cease operations unexpectedly due to a number of events, including but not limited to: • labor difficulties, including the inability to staff our facilities due to a global health pandemic; • equipment failure, particularly a press at one of our major EWP production facilities; • fires, floods, earthquakes, hurricanes, extreme weather, or other catastrophes, which may increase in frequency, severity and duration due to the physical impacts of climate change; • unscheduled maintenance outages, including the inability to obtain equipment, parts, and supplies necessary to complete repairs; • utility, information technology, telephonic, and transportation infrastructure disruptions; • other operational problems; or • internal or external security threats.
Because approximately 65% of our Wood Products sales in 2022 were to our BMD business, a material disruption at our Wood Products facilities would also negatively affect our BMD business.
Because approximately 66% of our Wood Products sales in 2023 were to our BMD business, a material disruption at our Wood Products facilities would also negatively affect our BMD business.
In recent years, we have completed a number of capital investments; including the replacement or rebuild of veneer dryers and log utilization centers (or improvements to other manufacturing equipment), purchasing and leasing new or additional land and warehouse space for expansion, and increasing our outdoor storage acreage.
In recent years, we have completed a number of capital investments; including the expansion of our EWP capacity, the replacement or rebuild of veneer dryers and log utilization centers (or improvements to other manufacturing equipment), purchasing and leasing new or additional land and warehouse space for expansions related to our distribution centers and door and millwork facilities, and increasing our outdoor storage acreage.
The provisions in our certificate of incorporation and bylaws include, among other things, the following: • the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms, including preferences and voting rights, of those shares without stockholder approval; • stockholder action can only be taken at a special or regular meeting and not by written consent; • advance notice procedures for nominating candidates to our board of directors or presenting matters at stockholder meetings; • removal of directors only for cause; • allowing only our board of directors the ability to create additional director seats and fill vacancies on our board of directors; and • super-majority voting requirements to amend our bylaws and certain provisions of our certificate of incorporation.
The provisions in our certificate of incorporation and bylaws include, among other things, the following: • the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms, including preferences and voting rights, of those shares without stockholder approval; • stockholder action can only be taken at a special or regular meeting and not by written consent; • advance notice procedures for nominating candidates to our board of directors or presenting matters at stockholder meetings; • removal of directors only for cause; • allowing only our board of directors the ability to create additional director seats and fill vacancies on our board of directors; and • super-majority voting requirements to amend our bylaws and certain provisions of our certificate of incorporation. 28 Table of Contents We have elected in our certificate of incorporation not to be subject to Section 203 of the General Corporation Law of the State of Delaware (DGCL), an antitakeover law.
If we, or our suppliers, are required to comply with these laws and regulations, or if we choose to take voluntary steps to reduce or mitigate our impact on climate change, we may experience increased costs for energy, production, transportation, and raw materials, increased costs related to environmental monitoring and reporting, increased capital expenditures, or increased insurance premiums and deductibles, which could adversely impact our operations.
If we, or our suppliers, are required to comply with these laws and regulations, we may experience increased costs for energy, production, transportation, and raw materials, increased costs related to environmental monitoring and reporting, increased capital expenditures, or increased insurance premiums and deductibles, which could adversely impact our operations.
Supply chains, including key products purchased from our suppliers, may be disrupted during a global health pandemic. In addition, although we have agreements in place with many of our suppliers, such agreements are generally terminable by either party on relatively short notice.
Supply chains, including key products purchased from our suppliers, may be disrupted due to labor shortages during elevated housing demand or a global health pandemic. In addition, although we have agreements with many of our suppliers, such agreements are generally terminable by either party on relatively short notice.
These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. ITEM 1B.
These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. ITEM 1B. UNRESOLVED STAFF COMMENTS We have no unresolved comments from the SEC staff.
We work to install new, and upgrade existing, information technology systems and provide employee awareness training around phishing, malware, and other cyber risks to ensure that we are protected, to the greatest extent possible, against cyber risks and security breaches.
We also rely on information technology systems that automate aspects of our manufacturing processes. We work to install new and upgrade existing information technology systems and provide employee awareness training around phishing, malware, and other cyber risks to ensure that we are protected, to the greatest extent possible, against cyber risks and security breaches.
In some cases, this liability may exceed the property's value. We may be unable to generate funds or other sources of liquidity and capital to fund unforeseen environmental liabilities or expenditures to the extent we are not indemnified by third parties.
We may be unable to generate funds or other sources of liquidity and capital to fund unforeseen environmental liabilities or expenditures to the extent we are not indemnified by third parties.
These capital investments, along with acquisitions, have resulted in increased fixed costs, which could negatively affect our profitability if our revenue and operating results do not offset our incremental fixed costs. Capital expenditures for the expansion or replacement of existing facilities or equipment or to comply with future changes in environmental laws and regulations may be substantial.
Ineffective deployment of increased capital and not maintaining our cost leverage could negatively affect our profitability if our revenue and operating results do not offset our incremental fixed costs. Capital expenditures for the expansion or replacement of existing facilities or equipment or to comply with future changes in environmental laws and regulations may be substantial.
For the year ended December 31, 2022, our top ten customers represented approximately 46% of our sales, with one customer accounting for approximately 12% of total sales. At December 31, 2022, receivables from two customers accounted for approximately 17% and 14% of total receivables.
For the year ended December 31, 2023, our top ten customers represented approximately 47% of our sales, with one customer accounting for approximately 12% of total sales. At December 31, 2023, receivables from two customers accounted for approximately 19% and 13% of total receivables.
We may not be able to renew this agreement or may renew it on terms that are less favorable to us than the current agreement.
We may not be able to renew these agreements or may renew them on terms that are less favorable to us than the current agreements.
For additional information and a discussion regarding the impact of impairment of long-lived assets and accelerated depreciation charges on our results of operations and financial condition, see Note 6, Curtailment of Manufacturing Facility, of the Notes to Consolidated Financial Statements in "Item 8, Financial Statements and Supplementary Data" and "Long-Lived Asset Impairment" included in "Critical Accounting Estimates" in "Item 7.
For additional information and a discussion regarding the impact of impairment of long-lived assets and accelerated depreciation charges on our results of operations and financial condition, see "Long-Lived Asset Impairment" included in "Critical Accounting Estimates" in "Item 7.
Our suppliers' inability to produce the necessary raw materials for our manufacturing processes or supply the finished goods that we distribute through our BMD segment may adversely affect our results of operations, cash flows, and financial position. Labor disruptions, shortages of skilled and technical labor, or increased labor costs could adversely affect our business.
Our suppliers' inability to produce the necessary raw materials for our manufacturing processes or supply the finished goods that we distribute through our BMD segment may adversely affect our results of operations, cash flows, and financial position. Declining demand for residual byproducts could negatively affect our financial results and operations.
We may also be contractually obligated to indemnify third parties under environmental laws for the cleanup of past spills and releases of hazardous or toxic substances for properties which we no longer own and operate. We could be found liable under these laws whether or not we knew of, or were responsible for, the presence of such substances.
We may also be contractually obligated to indemnify third parties under environmental laws for the cleanup of past spills and releases of hazardous or toxic 26 Table of Contents substances for properties which we no longer own and operate.
We may not be able to integrate the operations of acquired businesses, including those of Coastal Plywood, which we acquired in July 2022 and which include mill operations in Havana, Florida, and Chapman, Alabama, in an efficient and cost-effective manner or without disruption to our existing operations or may not be able to realize expected benefits.
In addition, we may not be able to integrate the operations of our recently acquired businesses, which include Brockway-Smith Company (BROSCO) and Coastal Plywood, in an efficient and cost-effective manner or without disruption to our existing operations or may not be able to realize expected benefits.
Delayed sales, slowed production, or other repercussions resulting from these disruptions could result in lost sales, business delays, and negative publicity and could have a material adverse effect on our operations, financial condition, or cash flows.
Delayed sales, slowed production, or other repercussions resulting from these disruptions could result in lost sales, business delays, and negative publicity and could have a material adverse effect on our operations, financial condition, or cash flows. For additional information on our cybersecurity risk management, strategy, and governance, see "Item 1C. Cybersecurity" of this Form 10-K.
As a result, the effects of climate change could have a long-term adverse impact on our business and results of operations. In the United States, it is possible that some form of new or additional legislation and regulations will be enacted at the federal level to reduce or mitigate the impact of climate change.
In the United States, it is possible that some form of new or additional legislation and regulations will be enacted at the federal or state level to reduce or mitigate the impact of climate change.
Wood fiber is our principal raw material, which accounted for approximately 43% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2022. Our primary source of wood fiber is logs.
Wood fiber is our principal raw material, which accounted for approximately 40% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2023. Our primary source of wood fiber is logs. Log prices have been historically cyclical in response to changes in domestic and foreign demand and supply.
We also compete less directly with firms that manufacture substitutes for wood building products. Certain mills operated by our competitors may be lower-cost manufacturers than the mills operated by us.
Our competitors range from very large, fully integrated forest and building products firms to smaller firms that may manufacture only one or a few types of products. We also compete less directly with firms that manufacture substitutes for wood building products. Certain mills operated by our competitors may be lower-cost manufacturers than the mills operated by us.
Our failure to integrate the Coastal Plywood operations or future acquired businesses effectively, realize expected benefits, or manage other consequences of our acquisitions could adversely affect our financial condition, operating results, and cash flows. Financial Risks A significant portion of our sales are concentrated with a small number of customers.
Our failure to integrate the BROSCO and Coastal Plywood operations or future acquired businesses effectively, realize expected benefits, or manage other consequences of our acquisitions could adversely affect our financial condition, operating results, and cash flows. We invest resources to update and improve our information technology systems and software platforms.
As local jurisdictions adopt the new code, we may be competitively disadvantaged in houses built with ground floors over unfinished basements and could be subject to substitution by dimension lumber or other products. 20 Table of Contents Operational Risks Cyber security risks related to the technology used in our operations and other business processes, as well as security breaches of company, customer, employee, and vendor information, could adversely affect our business.
As local jurisdictions adopt the new code, we may be competitively disadvantaged in houses built with ground floors over unfinished basements and could be subject to substitution by dimension lumber or other products.
In particular, demand for our products correlates to a significant degree to the level of residential construction activity in North America, which historically has been characterized by significant cyclicality. 24 Table of Contents We cannot guarantee that our business will generate sufficient cash flows from operations or that future borrowings will be available to us at a cost or in an amount sufficient to enable us to service our debt or to fund our other liquidity needs.
We cannot guarantee that our business will generate sufficient cash flows from operations or that future borrowings will be available to us at a cost or in an amount sufficient to enable us to service our debt or to fund our other liquidity needs.
One agreement covering approximately 90 employees at our Canadian EWP facility expired on December 31, 2022, but the terms 21 Table of Contents and conditions of this agreement remain in effect pending negotiation of a new agreement.
One agreement covering approximately 40 employees at our Vancouver BMD facility is set to expire on December 31, 2024, but the terms and conditions of this agreement will remain in effect after expiration, pending negotiation of a new agreement.
If we are unable to compete effectively, our sales, operating results, and growth strategies could be negatively affected. The markets for the products we manufacture in our Wood Products segment are highly competitive. Our competitors range from very large, fully integrated forest and building products firms to smaller firms that may manufacture only one or a few types of products.
Our industry is highly competitive. If we are unable to compete effectively, our sales, operating results, and growth strategies could be negatively affected. The markets for the products we manufacture in our Wood Products segment are highly competitive.
They could disrupt the operation of our supply chain and the productivity of our suppliers, increase our production and transportation costs, impose capacity restraints, and impact the purchases of our products. These events could also compound adverse economic conditions and impact consumer confidence.
These events could adversely impact both the availability of raw materials required for the manufacture of our products and the delivery of products to our distribution facilities. They could disrupt the operation of our supply chain and the productivity of our suppliers, increase our production and transportation costs, impose capacity restraints, and impact the purchases of our products.
Commodity wood product prices have historically been volatile in response to economic uncertainties, industry operating rates, transportation constraints or disruptions, net import and export activity, inventory levels in various distribution channels, and seasonal demand patterns.
Commodity wood product prices have historically been volatile in response to economic uncertainties, industry operating rates, supply-related disruptions, transportation constraints or disruptions, net import and export activity, inventory levels in various distribution channels, and seasonal demand patterns. 18 Table of Contents Demand for the products we manufacture, as well as the products we purchase and distribute, is correlated with new residential construction, residential repair-and-remodeling activity and light commercial construction in the U.S.
Our wood chips are primarily sold to paper mills in close proximity to our operations which convert the chips into wood pulp.
We sell wood chips that are a byproduct of processing logs at our manufacturing operations, or created through the chipping of small-diameter logs that we are unable to process at our manufacturing operations. Our wood chips are primarily sold to paper mills in close proximity to our operations which convert the chips into wood pulp.
We have elected in our certificate of incorporation not to be subject to Section 203 of the General Corporation Law of the State of Delaware (DGCL), an antitakeover law. However, our certificate of incorporation contains provisions that have the same effect as Section 203.
However, our certificate of incorporation contains provisions that have the same effect as Section 203.
An oversupply of chips has a negative impact on our chip price realizations and profitability. 19 Table of Contents We have very limited control of the foregoing, and as a result, our profitability and cash flow may fluctuate materially in response to changes in the supply and demand balance for our primary products. Our industry is highly competitive.
The balance of supply and demand in the U.S. is also heavily influenced by imported products, principally from Canada and South America. We have very limited control of the preceding, and as a result, our profitability and cash flow may fluctuate materially in response to changes in the supply and demand balance for our primary products.
We rely on various information technology systems to capture, process, store, and report data and interact with customers, vendors, and employees. We also rely on information technology systems that automate aspects of our manufacturing processes.
Operational Risks Cybersecurity risks related to the technology used in our operations and other business processes, as well as security breaches of company, customer, employee, and vendor information, could adversely affect our business. We rely on various information technology systems to capture, process, store, and report data and interact with customers, vendors, and employees.
As of February 10, 2023, we had approximately 6,780 employees. Approximately 19% of these employees work pursuant to collective bargaining agreements. As of February 10, 2023, we had ten collective bargaining agreements.
Labor disruptions, shortages of skilled and technical labor, or increased labor costs could adversely affect our business. As of February 4, 2024, we had approximately 7,300 employees. Approximately 18% of these employees work pursuant to collective bargaining agreements. As of February 4, 2024, we had ten collective bargaining agreements.
Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K. The enactment of tax reform legislation could adversely impact our financial position and results of operations. Various levels of government are increasingly focused on tax reform and other legislative actions to increase tax revenue.
Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K. The nature of our business exposes us to product liability, product warranty, casualty, manufacturing and construction defects, and other claims.
Removed
Demand for the products we manufacture, as well as the products we purchase and distribute, is correlated with new residential construction, residential repair-and-remodeling activity and light commercial construction in the U.S.
Added
An oversupply of chips has a negative impact on our chip price realizations and profitability, which impacts the financial results of our mills. In addition, if declines in demand for our chips continue and we cannot find alternative consumers for our chips, we may be forced to curtail any impacted mills.
Removed
The balance of supply and demand in the U.S. is also heavily influenced by imported products, principally from Canada and South America. In addition, we sell wood chips that are a byproduct of processing logs at our manufacturing operations, or created through the chipping of small-diameter logs that we are unable to process at our manufacturing operations.
Added
Five agreements covering approximately 460 employees at our Elgin plywood plant, Kettle Falls plywood plant, and Woodinville BMD facility are set to expire on May 31, 2024, but the terms and conditions of these agreements will remain in effect after expiration pending negotiation of new agreements.
Removed
Despite careful security and controls design, including independent third-party assessments, our information technology systems, and those of our third-party providers, have been subject to security breaches and cyber-attacks. To date, none of the known security breaches or cyber-attacks have had material adverse effects on our operations.
Added
Our strategy includes both organic growth and pursuing acquisitions, which we may be unable to execute efficiently and effectively. Organic growth, such as greenfield investments, involves higher fixed costs and significant risks and uncertainties, including some that may not be identifiable or resolvable in due diligence.
Removed
Log prices have been historically cyclical in response to changes in domestic and foreign demand 22 Table of Contents and supply.
Added
Subsequent to making the investment, the performance of the new assets is subject to economic uncertainties, as described in our other risk factors, as well as difficulties obtaining labor, customers, or suppliers. In addition, organic growth investments may divert management's attention and 22 Table of Contents resources from existing operations.
Removed
We may be unable to efficiently integrate acquired operations or realize expected benefits from such acquisitions.
Added
Our failure to effectively expand our product and service offerings in our recently announced greenfield distribution centers in Texas and South Carolina or future projects, realize expected benefits, or manage other consequences of our organic growth could adversely affect our financial condition, operating results, and cash flows.
Removed
Our debt agreements limit our ability and the ability of our restricted subsidiaries, among other things, to: • incur additional debt; • declare or pay dividends, redeem stock, or make other distributions to stockholders; • make investments; • create liens or use assets in security in other transactions; • merge or consolidate, or sell, transfer, lease, or dispose of substantially all of our assets; • enter into transactions with affiliates; • sell or transfer certain assets; and • in the case of our revolving credit facility, make prepayments on our senior notes and subordinated indebtedness.
Added
Should our investments not succeed, or if delays or other issues with new or existing technology systems and software platforms disrupt our operations, our business could be harmed.
Removed
These events could adversely impact both the availability of raw materials required for 25 Table of Contents manufacture of our products and the delivery of products to our distribution facilities.
Added
We rely on our network infrastructure, enterprise resource planning (ERP) system, data hosting, public cloud and software-as-a-service providers, and technology systems for many of our development, marketing, operational, support, sales, accounting and financial reporting activities.
Removed
Such proposed changes, as well as regulations and legal decisions interpreting and applying these changes, may have significant impacts on our effective tax rate, cash tax expense, and net deferred tax attributes in future periods. The nature of our business exposes us to product liability, product warranty, casualty, manufacturing and construction defects, and other claims.
Added
We are continually investing resources to update and improve these systems and environments in order to meet existing needs, as well as the growing and changing requirements of our business and customers.
Removed
UNRESOLVED STAFF COMMENTS We have no unresolved comments from the SEC staff. 28 Table of Contents
Added
If we experience prolonged delays or unforeseen difficulties in updating and upgrading our systems and architecture, we may experience outages and may not be able to deliver certain offerings or develop new offerings and enhancements that we need to remain competitive. Improvements, upgrades, and, to a greater extent, system conversions, are often complex, costly and time-consuming.
Added
In addition, such improvements can be challenging to integrate with our existing technology systems or may uncover problems with our existing technology systems. Unsuccessful implementation of hardware or software updates and improvements could result in outages, disruption in our business operations, loss of revenue or damage to our reputation.
Added
We may be unable to successfully pursue our long-term growth strategy related to innovation and digital technology. We are committed to pursuing innovation with technology to search out revenue-generating, cost-reducing, and risk-mitigating opportunities. New technological developments, including the development of artificial intelligence, are rapidly evolving.
Added
Our long-term strategy depends, in part, on our ability to identify and adapt to evolving technological trends in order to leverage potential benefits for us and our vendor and customer partners. Slow-moving initiatives may cause us to fall behind competitors in identifying value in new markets, creating relevant business insights, and identifying cost-cutting capabilities.
Added
There is also a risk that changes in our business model due to a push into innovative products, new business markets, and digitalization are not sufficiently understood and managed, leaving us exposed to unknown risks.
Added
In addition, we may not be successful in implementing evolving technologies and may spend resources on projects that ultimately are unsuccessful or yield a low return on the amount invested.
Added
Without effective implementation, there may be credibility loss with both internal and external audiences, as well as lost market opportunities, which could adversely affect our financial condition, operating results, and cash flows. 23 Table of Contents Financial Risks A significant portion of our sales are concentrated with a small number of customers.
Added
These organic growth investments, along with recent acquisitions, have increased our base level of capital expenditures needed for the replacement and maintenance of our asset base. In addition, the recent inflationary environment has increased the cost of machinery and equipment needed for our operations.
Added
In particular, demand for our products correlates to a significant degree to the level of residential construction activity in North America, which historically has been characterized by significant cyclicality.
Added
These events could also compound adverse economic conditions and impact consumer confidence. As a result, the effects of climate change could have a long-term adverse impact on our business and results of operations.
Added
We could be found liable under these laws whether or not we knew of, or were responsible for, the presence of such substances. In some cases, this liability may exceed the property's value.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
Biggest changeThe following table summarizes our Wood Products facilities as of February 10, 2023: Facility Type Number of Facilities Locations Plywood and veneer plants 11 Alabama, Florida, Louisiana (2), Oregon (5), South Carolina, and Washington LVL/I-joist/laminated beam plants 5 Alabama, Louisiana, Oregon, Idaho, and Canada Sawmills 2 Washington Building Materials Distribution Our BMD business operates a nationwide network of 38 owned and leased warehouse facilities across the U.S.
Biggest changeThe following table summarizes our Wood Products facilities as of February 9, 2024: Facility Type Number of Facilities Locations Plywood and veneer plants 11 Alabama, Florida, Louisiana (2), Oregon (5), South Carolina, and Washington LVL/I-joist/laminated beam plants 5 Alabama, Louisiana, Oregon, Idaho, and Canada Sawmills 2 Washington Building Materials Distribution Our BMD business operates a nationwide network of 40 owned and leased distribution facilities across the U.S., including door and millwork facilities in 13 markets.
ITEM 2. PROPERTIES Our properties are well-maintained and are suitable for the operations for which they are used. Information concerning production capacity and the utilization of our manufacturing facilities is presented in "Item 1. Business" of this Form 10-K. The following is a list of our facilities by segment as of February 10, 2023.
ITEM 2. PROPERTIES Our properties are well-maintained and are suitable for the operations for which they are used. Information concerning production capacity and the utilization of our manufacturing facilities is presented in "Item 1. Business" of this Form 10-K. The following is a list of our facilities by segment as of February 9, 2024.
The total approximate square footage of our warehouse space is 5.4 million, of which 2.5 million square feet is owned. Substantially all of our leases are noncancelable and the majority are accounted for as operating leases. These leases are not subject to early termination except for standard nonperformance clauses. In addition, BMD operates a single component manufacturing plant.
The total approximate square footage of our warehouse space is 6.1 million, of which 3.2 million square feet are owned. Substantially all of our leases are noncancelable and the majority are accounted for as operating leases. These leases are not subject to early termination except for standard nonperformance clauses. In addition, BMD operates a single component manufacturing plant.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+1 added−1 removed2 unchanged
Biggest changeSEC regulations require us to disclose certain information about proceedings arising under federal, state or local environmental provisions if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. Pursuant to the SEC regulations, we use a threshold of $1 million or more for purposes of determining whether disclosure of any such proceedings is required.
Biggest changeSEC regulations require us to disclose certain information about proceedings arising under federal, state or local environmental provisions if we reasonably believe that such proceedings may result in monetary sanctions above a stated 31 Table of Contents threshold.
Removed
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Added
Pursuant to the SEC regulations, we use a threshold of $1 million or more for purposes of determining whether disclosure of any such proceedings is required. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+6 added−2 removed2 unchanged
Biggest changeOn February 10, 2023, there were 39,460,018 shares of our common stock outstanding, held by four stockholders of record, one of which was Cede & Co., which is the nominee of The Depository Trust Company. 29 Table of Contents Performance Graph The following graph compares the return on a $100 investment in our common stock on December 31, 2017, with a $100 investment also made on December 31, 2017, in the S&P SmallCap 600 Index and in our peer group.
Biggest changePerformance Graph The following graph compares the return on a $100 investment in our common stock on December 31, 2018, with a $100 investment also made on December 31, 2018: (i) in the S&P SmallCap 600 Index; (ii) in our current peer group, which is comprised of companies within the S&P 600 Building Products Index; and (iii) in our previous peer group comprised of Louisiana-Pacific Corporation, BlueLinx Holdings Inc., UFP Industries, Inc., and Builders FirstSource, Inc.
The stock performance shown below is not necessarily indicative of future performance. ___________________________________ (a) $100 invested in stock or index on December 31, 2017, including reinvestment of dividends in additional shares of the same class of equity securities. Unregistered Sales of Equity Securities We did not sell any unregistered securities from January 1, 2022, through December 31, 2022.
The stock performance shown below is not necessarily indicative of future performance. 32 Table of Contents ___________________________________ (a) $100 invested in stock or index on December 31, 2018, including reinvestment of dividends in additional shares of the same class of equity securities.
Share repurchases may be made on an opportunistic basis, through open market transactions, privately negotiated transactions, or by other means in accordance with applicable federal securities laws. As of December 31, 2022, there were 1,996,989 shares of common stock that may yet be purchased under the Program.
This increase was in addition to the remaining authorized shares under our prior common stock repurchase program that was authorized on February 25, 2015 (the Program). Share repurchases may be made on an opportunistic basis, through open market transactions, privately negotiated transactions, or by other means in accordance with applicable federal securities laws.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers On July 28, 2022, our board of directors authorized the repurchase of an additional 1.5 million shares of our common stock. This increase was in addition to the remaining authorized shares under our prior common stock repurchase program that was authorized on February 25, 2015 (the Program).
Unregistered Sales of Equity Securities We did not sell any unregistered securities from January 1, 2023, through December 31, 2023. Purchases of Equity Securities by the Issuer and Affiliated Purchasers On July 28, 2022, our board of directors authorized the repurchase of an additional 1.5 million shares of our common stock.
Removed
The companies included in our peer group are Louisiana-Pacific Corporation, BlueLinx Holdings Inc., UFP Industries, Inc., and Builders FirstSource, Inc.
Added
On February 9, 2024, there were 39,539,825 shares of our common stock outstanding, held by six stockholders of record, one of which was Cede & Co., which is the nominee of The Depository Trust Company. Dividends Information regarding the payment of dividends is discussed in more detail under “Financing Activities—Dividends on Common Stock” in Item 7.
Removed
We did not repurchase any shares of our common stock during the three months ended December 31, 2022. ITEM 6. [RESERVED] 30 Table of Contents
Added
Management’s Discussion and Analysis of this Form 10-K.
Added
(collectively, the "Previous Peer Group"). The change in peer group was to better reflect a broader view of the industry in which we compete, as the S&P 600 Building Products Index represents small capitalization building products industry performance.
Added
As of December 31, 2023, there were 1,921,311 shares of common stock that may yet be purchased under the Program. During fourth quarter 2023, we repurchased 50,000 shares under the Program at a cost of $4.9 million, or an average of $97.75 per share.
Added
Set forth below is information regarding the Company's share repurchases under the Program during the fourth quarter ended December 31, 2023.
Added
Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs October 1, 2023 - October 31, 2023 — — — 1,971,311 November 1, 2023 - November 30, 2023 50,000 $ 97.75 50,000 1,921,311 December 1, 2023 - December 31, 2023 — — — 1,921,311 Total 50,000 $ 97.75 50,000 1,921,311 ITEM 6. [RESERVED] 33 Table of Contents

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

4 edited+0 added−0 removed0 unchanged
Biggest changeAcquisition 67 8. Goodwill and Intangible Assets 68 9. Debt 69 10. Leases 72 ii Table of Contents 11. Retirement and Benefit Plans 73 12. Long-Term Incentive Compensation Plans 75 13. Stockholders' Equity 77 14. Transactions with Related Party 79 15. Financial Instrument Risk 80 16. Segment Information 80 17.
Biggest changeGoodwill and Intangible Assets 72 8. Debt 73 ii Table of Contents 9. Leases 75 10. Retirement and Benefit Plans 77 11. Long-Term Incentive Compensation Plans 78 12. Stockholders' Equity 80 13. Transactions with Related Party 82 14. Financial Instrument Risk 82 15. Segment Information 83 16.
Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Understanding Our Financial Information 31 Overview 31 Factors That Affect Our Operating Results and Trends 32 Our Operating Results 35 Income Tax Provision 38 Liquidity and Capital Resources 38 Guarantees 42 Seasonal Influences 42 Disclosures of Financial Market Risks 42 Financial Instruments 43 Environmental 44 Critical Accounting Estimates 46 Non-GAAP Financial Measures 47 New and Recently Adopted Accounting Standards 49 Item 7A.
Management's Discussion and Analysis of Financial Condition and Results of Operations 34 Understanding Our Financial Information 34 Overview 34 Factors That Affect Our Operating Results and Trends 35 Our Operating Results 38 Income Tax Provision 41 Liquidity and Capital Resources 42 Guarantees 45 Seasonal Influences 45 Disclosures of Financial Market Risks 46 Financial Instruments 47 Environmental 47 Critical Accounting Estimates 50 Non-GAAP Financial Measures 51 New and Recently Adopted Accounting Standards 52 Item 7A.
Commitments, Legal Proceedings and Contingencies, and Guarantees 83 Reports of Independent Registered Public Accounting Firm 85
Commitments, Legal Proceedings and Contingencies, and Guarantees 86 Reports of Independent Registered Public Accounting Firm 87
Quantitative and Qualitative Disclosures About Market Risk 49 Item 8. Financial Statements and Supplementary Data 50 Notes to Consolidated Financial Statements 56 1. Nature of Operations and Basis of Presentation 56 2. Summary of Significant Accounting Policies 56 3. Revenues 61 4. Income Taxes 63 5. Net Income Per Common Share 66 6. Curtailment of Manufacturing Facility 66 7.
Quantitative and Qualitative Disclosures About Market Risk 52 Item 8. Financial Statements and Supplementary Data 53 Notes to Consolidated Financial Statements 59 1. Nature of Operations and Basis of Presentation 59 2. Summary of Significant Accounting Policies 59 3. Revenues 64 4. Income Taxes 66 5. Net Income Per Common Share 68 6. Acquisitions 69 7.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

134 edited+34 added−28 removed62 unchanged
Biggest changeThe following table reconciles net income to EBITDA and Adjusted EBITDA for the year ended December 31, 2022, 2021 and 2020: Year Ended December 31 2022 2021 2020 Net income $ 857,658 $ 712,486 $ 174,979 Interest expense 25,412 24,806 26,223 Interest income (12,263) (195) (999) Income tax provision 288,723 236,365 111,332 Depreciation and amortization 101,593 80,753 95,169 EBITDA 1,261,123 1,054,215 406,704 Change in fair value of interest rate swaps (3,559) (1,745) 2,426 Loss on extinguishment of debt — — 13,968 Adjusted EBITDA $ 1,257,564 $ 1,052,470 $ 423,098 48 Table of Contents The following table reconciles segment income and unallocated corporate costs to Segment EBITDA, EBITDA and Adjusted EBITDA for the year ended December 31, 2022, 2021, and 2020: Year Ended December 31 2022 2021 2020 Wood Products Segment income $ 575,167 $ 531,235 $ 127,720 Depreciation and amortization 73,308 55,249 71,141 Segment EBITDA $ 648,475 $ 586,484 $ 198,861 Building Materials Distribution Segment income $ 627,091 $ 481,085 $ 247,494 Depreciation and amortization 27,005 24,007 22,460 Segment EBITDA $ 654,096 $ 505,092 $ 269,954 Corporate Unallocated corporate costs $ (44,409) $ (40,517) $ (40,185) Foreign currency exchange gain (loss) (1,584) (10) 357 Pension expense (excluding service costs) (294) (76) (7,457) Change in fair value of interest rate swaps 3,559 1,745 (2,426) Loss on extinguishment of debt — — (13,968) Depreciation and amortization 1,280 1,497 1,568 EBITDA (41,448) (37,361) (62,111) Change in fair value of interest rate swaps (3,559) (1,745) 2,426 Loss on extinguishment of debt — — 13,968 Corporate Adjusted EBITDA $ (45,007) $ (39,106) $ (45,717) Total Company Adjusted EBITDA $ 1,257,564 $ 1,052,470 $ 423,098 New and Recently Adopted Accounting Standards For information related to new and recently adopted accounting standards, see "New and Recently Adopted Accounting Standards" in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in "Item 8.
Biggest changeThe following table reconciles net income to EBITDA and Adjusted EBITDA for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31 2023 2022 2021 Net income $ 483,656 $ 857,658 $ 712,486 Interest expense 25,496 25,412 24,806 Interest income (48,106) (12,263) (195) Income tax provision 161,393 288,723 236,365 Depreciation and amortization 132,467 101,593 80,753 EBITDA 754,906 1,261,123 1,054,215 Change in fair value of interest rate swaps 1,791 (3,559) (1,745) Adjusted EBITDA $ 756,697 $ 1,257,564 $ 1,052,470 51 Table of Contents The following table reconciles segment income and unallocated corporate costs to Segment EBITDA, EBITDA and Adjusted EBITDA for the years ended December 31, 2023, 2022, and 2021: Year Ended December 31 2023 2022 2021 Wood Products Segment income $ 337,132 $ 575,167 $ 531,235 Depreciation and amortization 98,710 73,308 55,249 Segment EBITDA $ 435,842 $ 648,475 $ 586,484 Building Materials Distribution Segment income $ 335,808 $ 627,091 $ 481,085 Depreciation and amortization 32,353 27,005 24,007 Segment EBITDA $ 368,161 $ 654,096 $ 505,092 Corporate Unallocated corporate costs $ (48,554) $ (44,409) $ (40,517) Foreign currency exchange gain (loss) 7 (1,584) (10) Pension expense (excluding service costs) (163) (294) (76) Change in fair value of interest rate swaps (1,791) 3,559 1,745 Depreciation and amortization 1,404 1,280 1,497 EBITDA (49,097) (41,448) (37,361) Change in fair value of interest rate swaps 1,791 (3,559) (1,745) Corporate Adjusted EBITDA $ (47,306) $ (45,007) $ (39,106) Total Company Adjusted EBITDA $ 756,697 $ 1,257,564 $ 1,052,470 New and Recently Adopted Accounting Standards For information related to new and recently adopted accounting standards, see "New and Recently Adopted Accounting Standards" in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in "Item 8.
Overview Company Background Boise Cascade is a large, vertically-integrated wood products manufacturer and building materials distributor with widespread operations throughout the United States (U.S.) and one manufacturing facility in Canada. We completed an initial public offering of our common stock on February 11, 2013.
Overview Company Background Boise Cascade is a large, integrated wood products manufacturer and building materials distributor with widespread operations throughout the United States (U.S.) and one manufacturing facility in Canada. We completed an initial public offering of our common stock on February 11, 2013.
Factors That Affect Our Operating Results and Trends Our results of operations and financial performance are influenced by a variety of factors, including: (i) the commodity nature of the products we manufacture and distribute; (ii) general economic and industry conditions affecting demand; and (iii) cost and availability of raw materials, including wood fiber and glues and resins.
Factors That Affect Our Operating Results and Trends Our results of operations and financial performance are influenced by a variety of factors, including: (i) the commodity nature of a portion of the products we manufacture and distribute; (ii) general economic and industry conditions affecting demand; and (iii) cost and availability of raw materials, including wood fiber and glues and resins.
For a description of the restrictions in our asset-based credit facility and the indenture governing our senior notes on our ability to pay dividends, see Note 9, Debt, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.
For a description of the restrictions in our asset-based credit facility and the indenture governing our senior notes on our ability to pay dividends, see Note 8, Debt, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.
We have a broad base of customers, which includes a diverse mix of dealers, home improvement centers, leading wholesalers, specialty distributors, and industrial converters. Our Wood Products and BMD segments are vertically-integrated from wood fiber procurement through distribution.
We have a broad base of customers, which includes a diverse mix of dealers, home improvement centers, leading wholesalers, specialty distributors, and industrial converters. Our Wood Products and BMD segments are integrated from wood fiber procurement through distribution.
Our distribution business purchases and resells a broad mix of commodity products with periods of increasing prices providing the opportunity for higher sales and increased margins, while declining price environments expose us to declines in sales and profitability.
Our distribution business purchases and resells a broad mix of products with periods of increasing prices providing the opportunity for higher sales and increased margins, while declining price environments expose us to declines in sales and profitability.
Under the interest rate swap, we receive one-month term SOFR plus a spread adjustment of 0.10% variable interest rate payments and make fixed interest rate payments, thereby fixing the interest rate on $50.0 million of variable rate debt exposure.
Under the interest rate swap, we receive one-month SOFR plus a spread adjustment of 0.10% variable interest rate payments and make fixed interest rate payments, thereby fixing the interest rate on $50.0 million of variable rate debt exposure.
These proposals have included regulations to reduce GHG emissions from new and existing electric utilities, which may result in increased electricity and natural gas costs to our businesses. This impact may be partially mitigated, as the majority of the energy used to manufacture our products is generated from biomass fuel, which reduces our reliance on fossil fuels.
These proposals have included regulations to reduce GHG emissions from new and existing electric utilities, which may result in increased electricity costs to our businesses. This impact may be partially mitigated, as the majority of the energy used to manufacture our products is generated from biomass fuel, which reduces our reliance on fossil fuels.
(b) Represents the weighted average variable interest rate receivable on our interest rate swap at December 31, 2022. Environmental We are subject to a wide range of general and industry-specific environmental laws and regulations. In particular, we are affected by laws and regulations covering air emissions, wastewater discharges, solid and hazardous waste management, and site remediation.
(b) Represents the weighted average variable interest rate receivable on our interest rate swap at December 31, 2023. Environmental We are subject to a wide range of general and industry-specific environmental laws and regulations. In particular, we are affected by laws and regulations covering air emissions, wastewater discharges, solid and hazardous waste management, and site remediation.
When logs arrive at our facilities, they are processed into products that store carbon such as plywood, lumber and EWP. Bark and manufacturing residuals are used as biomass fuel, which allows us to generate the majority of the energy needed to manufacture our products. All manufacturing energy not derived from biomass is sourced from natural gas.
When logs arrive at our facilities, they are processed into products that store carbon such as plywood, lumber and EWP. Bark and manufacturing residuals are used as biomass fuel, which allows us to generate the majority of the energy needed to manufacture our products. All manufacturing energy not derived from biomass is sourced from natural gas or electricity.
These regulations have not directly affected our facilities; however, they are expected to impact our operations by increasing future costs related to natural gas, transportation fuel, and/or electricity. Our manufacturing operations in these states derive a significant amount of their energy from biomass fuel, a carbon neutral emission, which may not be directly regulated.
These regulations have not directly affected our manufacturing facilities; however, they are expected to impact our operations by increasing future costs related to natural gas, transportation fuel, and/or electricity. Our manufacturing operations derive a significant amount of their energy from biomass fuel, a carbon neutral emission, which may not be directly regulated.
We have two reportable segments: (i) Wood Products, which primarily manufactures engineered wood products (EWP) and plywood; and (ii) Building Materials Distribution (BMD), which is a wholesale distributor of building materials. For more information, see Note 3, Revenues, and Note 16, Segment Information, of the Notes to Consolidated Financial Statements in "Item 8.
We have two reportable segments: (i) Wood Products, which primarily manufactures engineered wood products (EWP) and plywood; and (ii) Building Materials Distribution (BMD), which is a wholesale distributor of building materials. For more information, see Note 3, Revenues, and Note 15, Segment Information, of the Notes to Consolidated Financial Statements in "Item 8.
The table presents principal cash flows and related weighted average interest rates by expected maturity dates. For obligations with variable interest rate sensitivity, the table sets forth payout amounts based on December 31, 2022 rates and does not attempt to project future rates.
The table presents principal cash flows and related weighted average interest rates by expected maturity dates. For obligations with variable interest rate sensitivity, the table sets forth payout amounts based on December 31, 2023 rates and does not attempt to project future rates.
However, we cannot guarantee that we will be in compliance with environmental requirements at all times, and we cannot guarantee that we will not incur fines and penalties in the future. In 2022, we paid an insignificant amount in environmental fines and penalties. We incur capital and operating expenditures to comply with federal, state, and local environmental laws and regulations.
However, we cannot guarantee that we will be in compliance with environmental requirements at all times, and we cannot guarantee that we will not incur fines and penalties in the future. In 2023, we paid an insignificant amount in environmental fines and penalties. We incur capital and operating expenditures to comply with federal, state, and local environmental laws and regulations.
At times, the price for any one or more of the products we produce or distribute may fall below our cash production or purchase costs, requiring us to either incur short-term losses on product sales or cease production at one or more of our manufacturing facilities.
At times, the price for any one or more of the products we produce or distribute may fall below our cash production or purchase costs, requiring us to either incur short-term losses on product sales or curtail production at one or more of our manufacturing facilities.
Composite structural panel and lumber prices have been volatile historically. 32 Table of Contents The following table provides changes in the average composite panel, including certain panel subcategories, and average composite lumber prices as reflected by Random Lengths, an industry publication, for the period noted below.
Composite structural panel and lumber prices have been volatile historically. 35 Table of Contents The following table provides changes in the average composite panel, including certain panel subcategories, and average composite lumber prices as reflected by Random Lengths, an industry publication, for the period noted below.
OSB is a commodity, and prices have been historically volatile in response to economic uncertainties, industry operating rates, transportation constraints or disruptions, net import and export activity, inventory levels in various distribution channels, and seasonal demand patterns.
OSB is a commodity, and prices have been historically volatile in response to economic uncertainties, industry operating rates, supply-related disruptions, transportation constraints or disruptions, net import and export activity, inventory levels in various distribution channels, and seasonal demand patterns.
We expect to fund our seasonal and intra-month working capital requirements in 2023 from cash on hand and, if necessary, borrowings under our revolving credit facility. Consistent with our historical patterns, we expect working capital increases to use cash in the first quarter of 2023.
We expect to fund our seasonal and intra-month working capital requirements in 2024 from cash on hand and, if necessary, borrowings under our revolving credit facility. Consistent with our historical patterns, we expect working capital increases to use cash in the first quarter of 2024.
For a discussion of the year ended December 31, 2021 compared to the year ended December 31, 2020, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021.
For a discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022.
For information related to our interest rate swaps, see the discussion under "Disclosures of Financial Market Risks" and "Financial Instruments" included in this "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K.
For information related to our interest rate swap, see the discussion under "Disclosures of Financial Market Risks" and "Financial Instruments" included in this "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K.
"Risk Factors." References to "fiscal year" or "fiscal" refer to our fiscal year ending on December 31 in each calendar year. The following sections discuss our financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021.
"Risk Factors." References to "fiscal year" or "fiscal" refer to our fiscal year ending on December 31 in each calendar year. The following sections discuss our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Commodity Nature of Our Products Many of the building products we manufacture or distribute, including OSB, plywood, and lumber, are commodities that are widely available from other manufacturers or distributors with prices and volumes determined frequently in an auction market based on participants' perceptions of short-term supply and demand factors.
Commodity Nature of a Portion of Our Products A portion of the building products we manufacture or distribute, including OSB, plywood, and lumber, are commodities that are widely available from other manufacturers or distributors, with prices and volumes determined frequently in an auction market based on participants' perceptions of short-term supply and demand factors.
For more information related to our stock repurchases, see Note 13, Stockholders' Equity, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.
For more information related to our stock repurchases, see Note 12, Stockholders' Equity, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.
Our Medford plywood mill was identified in the second tier group. To date the ODEQ has not completed the program for the first tier risk group. We currently anticipate Medford Plywood will be selected into the program in 2023.
Our Medford plywood mill was identified in the second tier group. To date the ODEQ has not completed the program for the first tier risk group. We currently anticipate Medford Plywood will be selected into the program in 2024.
The following is information about the notional amount and interest rate by contractual maturity date for our interest rate swap agreement, as well as the fair value at December 31, 2022: December 31, 2022 2023 2024 2025 2026 2027 There- after Total Fair Value (millions, other than percentages) Interest rate swap Variable to fixed notional amount $ — $ — $ 50.0 $ — $ — $ — $ 50.0 $ 4.8 Average pay rate (a) — — 0.4 % — — — 0.4 % — Average receive rate (b) — — 4.3 % — — — 4.3 % — _______________________________________ (a) Represents the weighted average actual fixed interest rate payable on our interest rate swap.
The following is information about the notional amount and interest rate by contractual maturity date for our interest rate swap agreement, as well as the fair value at December 31, 2023: December 31, 2023 2024 2025 2026 2027 2028 There- after Total Fair Value (millions, other than percentages) Interest rate swap Variable to fixed notional amount $ — $ 50.0 $ — $ — $ — $ — $ 50.0 $ 3.0 Average pay rate (a) — 0.4 % — — — — 0.4 % — Average receive rate (b) — 5.5 % — — — — 5.5 % — _______________________________________ (a) Represents the weighted average actual fixed interest rate payable on our interest rate swap.
The rules are risk-based, and the ODEQ released their prioritization list establishing which facilities within the state likely pose the greatest risk to their communities based on emissions inventories that facilities submitted to the ODEQ. The ODEQ established four risk groups. None of our mills were identified in 45 Table of Contents the first tier risk group.
The rules are risk-based, and the ODEQ released their prioritization list establishing which facilities within the state likely pose the greatest risk to their communities based on emissions inventories that facilities submitted to the ODEQ. The ODEQ established four risk groups. None of our mills were identified in the first tier risk group.
Except for deposits required pursuant to log supply contracts, these obligations are not recorded in our consolidated financial statements until contract payment terms take effect. Guarantees Note 9, Debt, and Note 17, Commitments, Legal Proceedings and Contingencies, and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8.
Except for deposits required pursuant to log supply contracts, these obligations are not recorded in our consolidated financial statements until contract payment terms take effect. Guarantees Note 8, Debt, and Note 16, Commitments, Legal Proceedings and Contingencies, and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8.
Other Regulatory Initiatives From time to time, legislative bodies and environmental regulatory agencies may promulgate new or revised regulatory programs imposing significant incremental operating costs or capital costs on us. In January 2023, the EPA signed a proposal to lower the primary annual National Ambient Air Quality Standard (NAAQS) for fine particulate matter (PM-2.5).
Other Regulatory Initiatives From time to time, legislative bodies and environmental regulatory agencies may promulgate new or revised regulatory programs imposing significant incremental operating costs or capital costs on us. 48 Table of Contents In January 2023, the EPA signed a proposal to lower the primary annual National Ambient Air Quality Standard (NAAQS) for fine particulate matter (PM-2.5).
The dividend policy may be suspended or canceled at the discretion of the board of directors at any time. For more information regarding our dividend declarations and payments made during 2022 and 2021, see Note 13, Stockholders' Equity, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.
The dividend policy may be suspended or canceled at the discretion of the board of directors at any time. For more information regarding our dividend declarations and payments made during 2023 and 2022, see Note 12, Stockholders' Equity, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.
The $116 million is estimated using current contractual index pricing, but actual prices depend on future market prices. We are required to purchase approximately $35 million of logs within 12 months. Under certain log agreements, we have the right to cancel or reduce our commitments in the event of a mill curtailment or shutdown.
The $120 million is estimated using current contractual index pricing, but actual prices depend on future market prices. We are required to purchase approximately $36 million of logs within 12 months. Under certain log agreements, we have the right to cancel or reduce our commitments in the event of a mill curtailment or shutdown.
Financial Statements and Supplementary Data" of this Form 10-K. The table assumes our long-term debt is held to maturity. (b) We estimated the fair value using quoted market prices of our debt in inactive markets. 43 Table of Contents The table below provides information as of December 31, 2022, about our interest rate swap.
Financial Statements and Supplementary Data" of this Form 10-K. The table assumes our long-term debt is held to maturity. (b) We estimated the fair value using quoted market prices of our debt in inactive markets. The table below provides information as of December 31, 2023, about our interest rate swap.
The following table provides the change in our average per-unit log costs for the period noted below: Year Ended December 31 2022 versus 2021 Increase (decrease) in per-unit log costs 6% 33 Table of Contents Our log requirements and our access to supply, as well as the cost of obtaining logs, are subject to change based on, among other things, the availability of logs in each of our operating areas, our operating schedules, competition from other manufacturers, the effect of governmental laws and regulations, impacts of weather or fire on log availability, and the status of environmental appeals.
The following table provides the change in our average per-unit log costs for the period noted below: Year Ended December 31 2023 versus 2022 Increase (decrease) in per-unit log costs (4)% 36 Table of Contents Our log requirements and our access to supply, as well as the cost of obtaining logs, are subject to change based on, among other things, the availability of logs in each of our operating areas, our operating schedules, competition from other manufacturers, the effect of governmental laws and regulations, impacts of weather or fire on log availability, and the status of environmental appeals.
We also use various resins and glues in our manufacturing processes, which accounted for approximately 5% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2022. The costs of resins and glues are influenced by changes in the prices of raw material input costs, primarily fossil fuel products.
We also use various resins and glues in our manufacturing processes, which accounted for approximately 6% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2023. The costs of resins and glues are influenced by changes in the prices of raw material input costs, primarily fossil fuel products.
As a result, we are exposed to movements in foreign currency exchange rates, primarily in Canada, but we do not believe our exposure to currency fluctuations is significant. Financial Instruments The table below provides information as of December 31, 2022, about our financial instruments that are sensitive to changes in interest rates.
As a result, we are exposed to movements in foreign currency exchange rates, primarily in Canada, but we do not believe our exposure to currency fluctuations is significant. 46 Table of Contents Financial Instruments The table below provides information as of December 31, 2023, about our financial instruments that are sensitive to changes in interest rates.
Failure to comply with these laws and regulations could result in civil or criminal fines or penalties or in enforcement actions. Our failure to comply could also result in governmental or judicial orders that stop or interrupt our operations or require us to take corrective measures, install additional pollution control equipment, or take other remedial actions.
Failure to comply with these laws and regulations could result in civil or criminal fines or penalties or in enforcement actions. Our failure to comply could also result in governmental or judicial orders that stop or interrupt our 47 Table of Contents operations or require us to take corrective measures, install additional pollution control equipment, or take other remedial actions.
For information on our interest rate swap, see Interest Rate Risk and Interest Rate Swaps of Note 15, Financial Instrument Risk, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.
For information on our interest rate swap, see Interest Rate Risk of Note 14, Financial Instrument Risk, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this Form 10-K.
December 31, 2022 2023 2024 2025 2026 2027 There- after Total Fair Value (b) (millions, other than percentages) Long-term debt Fixed-rate debt payments (a) Senior Notes $ — $ — $ — $ — $ — $ 400.0 $ 400.0 $ 348.5 Average interest rates — — — — — 4.875 % 4.875 % — Variable-rate debt payments (a) Term Loan $ — $ — $ — $ — $ 50.0 $ — $ 50.0 $ 50.0 Average interest rates — — — — 5.2 % — 5.2 % — _______________________________________ (a) These obligations are further explained in Note 9, Debt, of the Notes to Consolidated Financial Statements in "Item 8.
December 31, 2023 2024 2025 2026 2027 2028 There- after Total Fair Value (b) (millions, other than percentages) Long-term debt Fixed-rate debt payments (a) Senior Notes $ — $ — $ — $ — $ — $ 400.0 $ 400.0 $ 374.5 Average interest rates — — — — — 4.875 % 4.875 % — Variable-rate debt payments (a) Term Loan $ — $ — $ — $ 50.0 $ — $ — $ 50.0 $ 50.0 Average interest rates — — — 6.2 % — — 6.2 % — _______________________________________ (a) These obligations are further explained in Note 8, Debt, of the Notes to Consolidated Financial Statements in "Item 8.
During 2022 and 2021, we spent approximately $4 million and $3 million, respectively, on capital expenditures to comply with environmental requirements. We expect to spend approximately $4 million in 2023 for this purpose.
During 2023 and 2022, we spent approximately $3 million and $4 million, respectively, on capital expenditures to comply with environmental requirements. We expect to spend approximately $10 million in 2024 for this purpose.
Logs comprised approximately 72% of our wood fiber costs during 2022, and we satisfy our log requirements through a combination of purchases under supply agreements, open-market purchases, and purchases pursuant to contracts awarded under public auctions.
Logs comprised approximately 80% of our wood fiber costs during 2023, and we satisfy our log requirements through a combination of purchases under supply agreements, open-market purchases, and purchases pursuant to contracts awarded under public auctions.
The swaps were valued based on observable inputs for similar assets and liabilities and other observable inputs for interest rates and yield curves (Level 2 inputs). Foreign Currency Risk We have sales in countries outside the U.S.
The swap was valued based on observable inputs for similar assets and liabilities and other observable inputs for interest rates and yield curves (Level 2 inputs). Foreign Currency Risk We have sales in countries outside the U.S.
Cost and Availability of Raw Materials Our principal raw material is wood fiber, which accounted for approximately 43% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation), for our Wood Products segment in 2022.
Cost and Availability of Raw Materials Our principal raw material is wood fiber, which accounted for approximately 40% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation), for our Wood Products segment in 2023.
For the year ended December 31, 2022, average composite panel and average composite lumber prices were 18% and 9% lower, respectively, compared with the same period in the prior year, as reflected by Random Lengths composite panel and lumber pricing. These decreases in composite commodity pricing impacted our sales prices in both of our segments, as noted below. Wood Products.
For the year ended December 31, 2023, average composite lumber and average composite panel prices were 47% and 32% lower, respectively, compared with the same period in the prior year, as reflected by Random Lengths composite lumber and panel pricing. These decreases in composite commodity pricing impacted our sales prices in both of our segments, as noted below. Wood Products.
At December 31, 2022, we recorded a long-term asset of $4.8 million in "Other assets" on our Consolidated Balance Sheets, representing the fair value of the interest rate swap agreement.
At December 31, 2023 and 2022, we recorded a long-term asset of $3.0 million and $4.8 million, respectively, in "Other assets" on our Consolidated Balance Sheets, representing the fair value of the interest rate swap agreement.
In accordance with our risk management strategy, we actively monitor our interest rate exposure and use derivative instruments from time to time to manage the related risk. We do not speculate using derivative instruments. 42 Table of Contents At December 31, 2022, we had one interest rate swap agreement.
In accordance with our risk management strategy, we actively monitor our interest rate exposure and use derivative instruments from time to time to manage the related risk. We do not speculate using derivative instruments. At December 31, 2023, we had one interest rate swap agreement.
The interest rate swap agreements were not designated as cash flow hedges, and as a result, all changes in the fair value are recognized in "Change in fair value of interest rate swaps" in our Consolidated Statements of Operations rather than through other comprehensive income.
The interest rate swap agreement was not designated as a cash flow hedge, and as a result, all changes in the fair value are recognized in "Change in fair value of interest rate swaps" in our Consolidated Statements of Operations rather than through other comprehensive income.
OSB accounted for approximately 6% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2022.
OSB accounted for approximately 5% of the aggregate amount of materials, labor, and other operating expenses (excluding depreciation) for our Wood Products segment in 2023.
We expect future commodity product pricing and commodity input costs to be volatile in response to economic uncertainties, industry operating rates, transportation constraints or disruptions, net import and export activity, inventory levels in various distribution channels, and seasonal demand patterns.
Future product pricing, particularly commodity products pricing and input costs, may be volatile in response to economic uncertainties, industry operating rates, supply-related disruptions, transportation constraints or disruptions, net import and export activity, inventory levels in various distribution channels, and seasonal demand patterns.
Excluding potential acquisitions, we expect capital expenditures in 2023 to total approximately $120 million to $140 million. We expect our capital spending in 2023 will be for business improvement and quality/efficiency projects, replacement and expansion projects, and ongoing environmental compliance.
Excluding potential acquisitions, we expect capital expenditures in 2024 to total approximately $250 million to $270 million. We expect our capital spending in 2024 will be for business improvement and quality/efficiency projects, replacement and expansion projects, and ongoing environmental compliance.
Other Material Cash Requirements Long-term Debt and Interest As of December 31, 2022, we had long-term debt with varying maturities totaling an aggregate principal of $450.0 million, with no principal payments required within 12 months. Future interest payments associated with the long-term debt total $168.3 million, with $22.1 million payable within 12 months.
Other Material Cash Requirements Long-term Debt and Interest As of December 31, 2023, we had long-term debt with varying maturities totaling an aggregate principal of $450.0 million, with no principal payments required within 12 months. Future interest payments associated with the long-term debt total $147.9 million, with $22.6 million payable within 12 months.
Interest income increased $12.1 million to $12.3 million for the year ended December 31, 2022, from $0.2 million for the year ended December 31, 2021. The increase was due primarily to higher interest rates on cash equivalents and increases in the average balances of cash equivalents. Change in fair value of interest rate swaps.
Other Interest Income. Interest income increased $35.8 million to $48.1 million for the year ended December 31, 2023, from $12.3 million for the year ended December 31, 2022. The increase was due primarily to higher interest rates on cash equivalents and increases in the average balances of cash equivalents. Change in fair value of interest rate swaps.
Therefore, although our long-term contracts provide us with supplies of raw materials and energy that are more stable than open-market purchases, in many cases, they may not alleviate fluctuations in market prices. 34 Table of Contents Our Operating Results The following tables set forth our operating results in dollars and as a percentage of sales for the years ended December 31, 2022 and 2021: Year Ended December 31 2022 2021 (millions) Sales $ 8,387.3 $ 7,926.1 Costs and expenses Materials, labor, and other operating expenses (excluding depreciation) 6,472.5 6,300.1 Depreciation and amortization 101.6 80.8 Selling and distribution expenses 553.3 491.0 General and administrative expenses 103.8 83.2 Other (income) expense, net (1.7) (0.8) 7,229.5 6,954.3 Income from operations $ 1,157.8 $ 971.8 (percentage of sales) Sales 100.0 % 100.0 % Costs and expenses Materials, labor, and other operating expenses (excluding depreciation) 77.2 % 79.5 % Depreciation and amortization 1.2 1.0 Selling and distribution expenses 6.6 6.2 General and administrative expenses 1.2 1.1 Other (income) expense, net — — 86.2 % 87.7 % Income from operations 13.8 % 12.3 % 35 Table of Contents 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 years ended December 31, 2022 and 2021.
Therefore, although our long-term contracts provide us with supplies of raw materials and energy that are more stable than open-market purchases, in many cases, they may not alleviate fluctuations in market prices. 37 Table of Contents Our Operating Results The following tables set forth our operating results in dollars and as a percentage of sales for the years ended December 31, 2023 and 2022: Year Ended December 31 2023 2022 (millions) Sales $ 6,838.2 $ 8,387.3 Costs and expenses Materials, labor, and other operating expenses (excluding depreciation) 5,409.3 6,472.5 Depreciation and amortization 132.5 101.6 Selling and distribution expenses 559.5 553.3 General and administrative expenses 114.4 103.8 Other (income) expense, net (1.9) (1.7) 6,213.9 7,229.5 Income from operations $ 624.4 $ 1,157.8 (percentage of sales) Sales 100.0 % 100.0 % Costs and expenses Materials, labor, and other operating expenses (excluding depreciation) 79.1 % 77.2 % Depreciation and amortization 1.9 1.2 Selling and distribution expenses 8.2 6.6 General and administrative expenses 1.7 1.2 Other (income) expense, net — — 90.9 % 86.2 % Income from operations 9.1 % 13.8 % 38 Table of Contents 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 years ended December 31, 2023 and 2022.
Year Ended December 31 2022 2021 (thousands) U.S.
Year Ended December 31 2023 2022 (thousands) U.S.
See "Dividends on Common Stock" below for further discussion of common stock dividend payments. During 2022, we did not borrow under our revolving credit facility and therefore had no borrowings outstanding on the facility as of December 31, 2022.
See "Dividends on Common Stock" below for further discussion of common stock dividend 43 Table of Contents payments and "Stock Repurchase Program" below for further discussion of stock repurchases. During 2023, we did not borrow under our revolving credit facility and therefore had no borrowings outstanding on the facility as of December 31, 2023.
During 2022, approximately 65% of our Wood Products segment sales, or approximately 77% and 32% of our Wood Product segment's EWP and plywood sales volumes, respectively, were to our BMD segment. Executive Summary We recorded income from operations of $1,157.8 million during the year ended December 31, 2022, compared with $971.8 million during the same period in the prior year.
During 2023, approximately 66% of our Wood Products segment sales, or approximately 78% and 42% of our Wood Product segment's EWP and plywood sales volumes, respectively, were to our BMD segment. Executive Summary We recorded income from operations of $624.4 million during the year ended December 31, 2023, compared with $1,157.8 million during the same period in the prior year.
Income Tax Provision For the years ended December 31, 2022 and 2021, we recorded $288.7 million and $236.4 million, respectively, of income tax expense and had an effective rate of 25.2% and 24.9%, respectively.
Income Tax Provision For the years ended December 31, 2023 and 2022, we recorded $161.4 million and $288.7 million, respectively, of income tax expense and had an effective rate of 25.0% and 25.2%, respectively.
As described below, the increase 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 for our sales. During 2022, U.S. housing starts decreased 3%, driven by a decrease in single-family starts of 11%, compared with 2021.
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 for our sales. During 2023, total U.S. housing starts and single-family housing starts decreased 9% and 6%, respectively, compared with 2022.
Due to the numerous variables associated with our judgments and assumptions relating to the valuation of assets and the effects of changes on these valuations, the timing, precision, and reliability of our estimates are subject to uncertainty. As additional information becomes known, we may change our estimates.
Due to the numerous variables associated with our judgments and assumptions relating to the valuation of assets and the effects of changes on these valuations, the timing, precision, and reliability of our estimates are subject to uncertainty.
Industry supply for the products we produce and distribute is influenced primarily by price-induced changes in the operating rates of existing facilities, but is also influenced over time by the introduction of new product technologies and substitutes, capacity additions and closures, the restart of idled capacity, and log availability.
In addition, EWP demand will be highly influenced by single-family housing starts. Industry supply for the products we produce and distribute is influenced primarily by price-induced changes in the operating rates of existing facilities, but is also influenced over time by the introduction of new product technologies, capacity additions and closures, the restart of idled capacity, and log availability.
However, materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our Wood Products segment decreased by 120 basis points, which was primarily due to higher EWP sales prices, resulting in improved leveraging of wood fiber costs.
Materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our Wood Products segment increased by 770 basis points, which was due primarily to lower plywood and EWP sales prices, resulting in decreased leveraging of labor and other manufacturing costs .
The use of EBITDA and Adjusted EBITDA instead of net income or segment income (loss) have limitations as analytical tools, including the inability to determine profitability; the exclusion of interest expense, interest income, and associated significant cash requirements; and the exclusion of depreciation and amortization, which represent unavoidable operating costs.
The use of EBITDA and Adjusted EBITDA instead of net income or segment income have limitations as analytical tools, including the inability to determine profitability; the exclusion of interest expense, interest income, and associated significant cash requirements; and the exclusion of depreciation and amortization, which represent unavoidable operating costs. Management compensates for these limitations by relying on our GAAP results.
Following litigation of the standards, in September 2022, the EPA adopted more stringent Boiler MACT emission standards for several types of boilers, including boilers common to our facilities. Boilers must be in compliance with the revised standards by September 2025. At this time, we believe the majority of our boilers will be able to comply with the new standards.
Following litigation of the standards, in September 2022, the EPA adopted more stringent Boiler MACT emission standards for several types of boilers, including boilers common to our facilities. Boilers must be in compliance with the revised standards by September 2025.
Year Ended December 31 2022 versus 2021 Increase (decrease) in composite panel prices (18)% Increase (decrease) in Western Fir plywood prices (12)% Increase (decrease) in Southern Pine plywood prices (10)% Increase (decrease) in OSB prices (25)% Increase (decrease) in composite lumber prices (9)% In our Wood Products segment, we manufacture plywood, but not OSB, and therefore our reported prices may not trend with the overall composite panel price index.
Year Ended December 31 2023 versus 2022 Increase (decrease) in composite panel prices (32)% Increase (decrease) in Western Fir plywood prices (20)% Increase (decrease) in Southern Pine plywood prices (23)% Increase (decrease) in OSB prices (42)% Increase (decrease) in composite lumber prices (47)% In our Wood Products segment, we manufacture plywood, but not OSB, and therefore our reported prices may not trend with the overall composite panel price index.
Payments on this interest rate swap, with a notional principal amount of $50.0 million, are due on a monthly basis at an annual fixed rate of 0.41%, and this swap expires in June 2025. We entered into this forward interest rate swap in 2020 (the 2020 Swap) and it was amended in 2022.
Payments on this interest rate swap, with a notional principal amount of $50.0 million, are due on a monthly basis at an annual fixed rate of 0.41%, and this swap expires in June 2025.
See "Operating Results" above for a discussion on our results for 2022. • A $41.0 million decrease in working capital during 2022, compared with a $109.2 million increase in working capital during 2021.
See "Operating Results" above for a discussion on our results for 2023. • A $23.6 million decrease in working capital during 2023, compared with a $41.0 million decrease in working capital during 2022.
In addition to the year-over-year average price changes, 2022 and 2021 were years of exceptional price volatility when compared to historical results.
In addition to the year-over-year average price changes, 2022 was a year of exceptional price volatility when compared to historical results.
Gross margin percentage is gross margin as a percentage of segment sales. 36 Table of Contents 2022 Compared With 2021 Sales For the year ended December 31, 2022, total sales increased $461.2 million, or 6%, to $8,387.3 million from $7,926.1 million during the year ended December 31, 2021.
Gross margin percentage is gross margin as a percentage of segment sales. 39 Table of Contents 2023 Compared With 2022 Sales For the year ended December 31, 2023, total sales decreased $1,549.1 million, or 18%, to $6,838.2 million from $8,387.3 million during the year ended December 31, 2022.
No triggering event was identified during the year ended December 31, 2022. An impairment of a long-lived asset exists when the carrying value is not recoverable through future undiscounted cash flows from operations and when the carrying value of an asset or asset group exceeds its fair value.
An impairment of a long-lived asset exists when the carrying value is not recoverable through future undiscounted cash flows from operations and when the carrying value of an asset or asset group exceeds its fair value.
Our board of directors, at its discretion, may increase or decrease the number of authorized shares or terminate the Program at any time. As of December 31, 2022, there were approximately 2.0 million shares of common stock that may yet be purchased under the program. During 2022, we did not purchase any shares under the Program.
Our board of directors, at its discretion, may increase or decrease the number of authorized shares or terminate the Program at any time. During the year ended December 31, 2023, we repurchased 75,678 shares under the Program. As of December 31, 2023, there were approximately 1.9 million shares of common stock that may yet be purchased under the program.
We also disclose Segment EBITDA, which is segment income before depreciation and amortization. 47 Table of Contents We believe EBITDA and Adjusted EBITDA are meaningful measures because they present a transparent view of our recurring operating performance and allow management to readily view operating trends, perform analytical comparisons, and identify strategies to improve operating performance.
We believe EBITDA and Adjusted EBITDA are meaningful measures because they present a transparent view of our recurring operating performance and allow management to readily view operating trends, perform analytical comparisons, and identify strategies to improve operating performance.
Costs and Expenses Materials, labor, and other operating expenses (excluding depreciation) increased $172.4 million, or 3%, to $6,472.5 million for the year ended December 31, 2022, compared with $6,300.1 million during the prior year.
Costs and Expenses Materials, labor, and other operating expenses (excluding depreciation) decreased $1,063.2 million, or 16%, to $5,409.3 million for the year ended December 31, 2023, compared with $6,472.5 million during the prior year.
Inventories increased in 2022 primarily due to higher production costs for our manufactured products, the acquisition of two plywood facilities, and decreased housing demand related to economic uncertainties.
The decrease in receivables in 2022 primarily reflects decreased sales of approximately 24%, comparing sales for the month of December 2022 with sales for the month of December 2021. Inventories increased in 2022 primarily due to higher production costs for our manufactured products, the acquisition of two plywood facilities, and decreased housing demand related to economic uncertainties.
The decrease in accounts payable and accrued liabilities in 2022 was related to the decrease in inventories in our BMD segment and lower accrued rebates as of December 31, 2022 as housing activity slowed at the end of 2022.
The decrease in accounts payable and accrued liabilities in 2022 was related to the decrease in inventories in our BMD segment and lower accrued rebates as of December 31, 2022 as housing activity slowed at the end of 2022. • A $127.0 million decrease in cash paid for income taxes, net of refunds.
Management compensates for these limitations by relying on our GAAP results. Our measures of EBITDA and Adjusted EBITDA are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.
Our measures of EBITDA and Adjusted EBITDA are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.
None of our manufacturing facilities use coal or fuel oil as primary energy sources to manufacture products. 44 Table of Contents The use of our products is an energy efficient building choice, and when used in place of fossil fuel-intensive materials avoids greenhouse gases (GHG) that would have been emitted during manufacturing.
None of our manufacturing facilities use coal or fuel oil as primary energy sources to manufacture products. The use of our products is an energy efficient building choice, and results in lower greenhouse gas (GHG) emissions during manufacturing, when used in place of more fossil fuel-intensive materials.
Non-GAAP Financial Measures In evaluating our business, we utilize non-GAAP financial measures that fall within the meaning of SEC Regulation G and Regulation S-K Item 10(e), which we believe provide users of the financial information with additional meaningful comparison to prior reported results. Non-GAAP financial measures do not have standardized definitions and are not defined by GAAP.
As additional information becomes known, we may change our estimates. 50 Table of Contents Non-GAAP Financial Measures In evaluating our business, we utilize non-GAAP financial measures that fall within the meaning of SEC Regulation G and Regulation S-K Item 10(e), which we believe provide users of the financial information with additional meaningful comparison to prior reported results.
This level of capital expenditures could increase or decrease as a result of several factors, including acquisitions, efforts to further accelerate organic growth, exercise of lease purchase options, our financial results, future economic conditions, availability of engineering and construction resources, and timing and availability of equipment purchases. 2021 During the year ended December 31, 2021, we used approximately $106.5 million of cash for purchases of property and equipment, which included business improvement and quality/efficiency projects, replacement and expansion projects, and ongoing environmental compliance.
This level of capital expenditures could increase or decrease as a result of several factors, including acquisitions, efforts to further accelerate organic growth, exercise of lease purchase options, our financial results, future economic conditions, availability of engineering and construction resources, and timing and availability of equipment purchases. 2022 During the year ended December 31, 2022, we used $515.2 million of cash for the acquisition of Coastal Plywood.
Housing Starts (a) Single-family 1,004.9 1,127.2 Multi-family 549.6 473.8 1,554.5 1,601.0 (millions) Segment Sales Wood Products $ 2,115.9 $ 1,970.8 Building Materials Distribution 7,643.6 7,174.3 Intersegment eliminations (1,372.2) (1,219.0) $ 8,387.3 $ 7,926.1 (millions) Wood Products Sales Volumes Laminated veneer lumber (LVL) (cubic feet) 17.6 18.2 I-joists (equivalent lineal feet) 229 290 Plywood (sq. ft.) (3/8" basis) 1,319 1,259 Lumber (board feet) 83 77 (dollars per unit) Wood Products Average Net Selling Prices LVL (cubic foot) $ 30.56 $ 21.73 I-joists (1,000 equivalent lineal feet) 2,178 1,514 Plywood (1,000 sq. ft.) (3/8" basis) 523 606 Lumber (1,000 board feet) 927 1,043 (percentage of BMD sales) Building Materials Distribution Product Line Sales Commodity 44.9 % 51.6 % General line 33.3 % 30.2 % Engineered wood products 21.8 % 18.2 % Gross margin percentage (b) 15.8 % 13.8 % _______________________________________ (a) Actual U.S. housing starts as reported by the U.S.
Housing Starts (a) Single-family 947.2 1,005.2 Multi-family 472.7 547.4 1,419.9 1,552.6 (millions) Segment Sales Wood Products $ 1,932.6 $ 2,115.9 Building Materials Distribution 6,178.7 7,643.6 Intersegment eliminations (1,273.0) (1,372.2) $ 6,838.2 $ 8,387.3 (millions) Wood Products Sales Volumes Laminated veneer lumber (LVL) (cubic feet) 17.4 17.6 I-joists (equivalent lineal feet) 220 229 Plywood (sq. ft.) (3/8" basis) 1,599 1,319 Lumber (board feet) 125 83 (dollars per unit) Wood Products Average Net Selling Prices LVL (cubic foot) $ 30.01 $ 30.56 I-joists (1,000 equivalent lineal feet) 2,088 2,178 Plywood (1,000 sq. ft.) (3/8" basis) 372 523 Lumber (1,000 board feet) 667 927 (percentage of BMD sales) Building Materials Distribution Product Line Sales Commodity 37.8 % 44.9 % General line 39.5 % 33.3 % Engineered wood products 22.7 % 21.8 % Gross margin percentage (b) 15.0 % 15.8 % _______________________________________ (a) Actual U.S. housing starts as reported by the U.S.
At December 31, 2022, we had $50.0 million of variable-rate debt outstanding based on one-month term SOFR. Our objective is to limit the variability of interest payments on our debt. To meet this objective, we enter into receive-variable, pay-fixed interest rate swaps to mitigate the variable-rate cash flow exposure with fixed-rate cash flows.
Our objective is to limit the variability of interest payments on our debt. To meet this objective, we enter into receive-variable, pay-fixed interest rate swaps to mitigate the variable-rate cash flow exposure with fixed-rate cash flows.
However, changes in biomass fuel regulations may increase our costs for fuel and electricity. We are not aware of any plans to regulate GHG emissions by other states in which we have manufacturing operations. There are ongoing efforts by various organizations to encourage and/or require companies to calculate, report, and reduce their carbon footprint.
However, changes in biomass fuel regulations may increase our costs for fuel and electricity. We are not aware of any plans to regulate GHG emissions by other states in which we have manufacturing operations.
Year Ended December 31 2022 2021 (thousands) Net cash provided by operations $ 1,041,219 $ 666,984 Net cash used for investment (625,456) (105,586) Net cash used for financing (166,326) (217,873) Operating Activities 2022 Compared With 2021 In 2022, our operating activities generated $1,041.2 million of cash, compared with $667.0 million in 2021.
Year Ended December 31 2023 2022 (thousands) Net cash provided by operations $ 687,458 $ 1,041,219 Net cash used for investment (375,552) (625,456) Net cash used for financing (360,676) (166,326) Operating Activities 2023 Compared With 2022 In 2023, our operating activities generated $687.5 million of cash, compared with $1,041.2 million in 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Information concerning quantitative and qualitative disclosures about market risk is included under the captions "Disclosures of Financial Market Risks" and "Financial Instruments" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K. 49 Table of Contents
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Information concerning quantitative and qualitative disclosures about market risk is included under the captions "Disclosures of Financial Market Risks" and "Financial Instruments" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K. 52 Table of Contents

Other BCC 10-K year-over-year comparisons