BCC

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How BCC rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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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, 2025 compared to the year ended December 31, 2024.
For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, 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, 2024.
Overview Company Background Boise Cascade is a large, integrated building materials distributor and wood products manufacturer 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.
We have two reportable segments: (i) Building Materials Distribution (BMD), which is a wholesale distributor of building materials; and (ii) Wood Products, which primarily manufactures engineered wood products (EWP) and plywood.
For more information, see Note 3, Revenues, and Note 15, Segment Information, of the Notes to Consolidated Financial Statements in "Item 8.
Financial Statements and Supplementary Data" and "Item 1.
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.
We have a broad base of customers, which includes a diverse mix of dealers, home improvement centers, leading wholesalers, specialty distributors, and industrial converters.
During 2025, approximately 71% of our Wood Products segment sales, or approximately 75% and 51% of our Wood Products segment's EWP and plywood sales volumes, respectively, were to our BMD segment.
Executive Summary We recorded income from operations of $183.3 million during the year ended December 31, 2025, compared with $490.0 million during the same period in the prior year.
In our BMD segment, income decreased $81.2 million to $222.2 million for the year ended December 31, 2025, from $303.4 million for the year ended December 31, 2024.
The decline in segment income was driven by a gross margin decrease of $48.8 million, resulting primarily from lower gross margins on commodity and EWP products, offset partially by improved gross margins on general line products.
In addition, selling and distribution expenses and depreciation and amortization expense increased $21.8 million and $9.2 million, respectively.
In our Wood Products segment, income decreased by $225.6 million to $5.8 million for the year ended December 31, 2025, from $231.5 million for the year ended December 31, 2024.
The decrease in segment income was due primarily to lower EWP and plywood sales prices and sales volumes, as well as higher per-unit conversion costs, which were impacted, in part, by planned downtime to complete significant mill modernization capital projects at our Oakdale plywood mill.
These decreases in segment income were offset partially by a $3.9 million gain on the sale of a non-operating property.
These changes are discussed further in "Our Operating Results" below.
We ended 2025 with $477.2 million of cash and cash equivalents and $450.0 million of debt.
At December 31, 2025, we had $395.1 million of unused committed bank line availability.
We used $236.0 million of cash during the year ended December 31, 2025, as cash provided by operations was offset by capital spending, treasury stock purchases, dividends paid on our common stock, and funding of an acquisition.
A further description of our cash sources and uses for the comparative periods are discussed in "Liquidity and Capital Resources" below.
Demand for the products we purchase and distribute, as well as the products we manufacture, is closely tied to new residential construction, residential repair-and-remodeling activity, and light commercial construction.
Residential construction, particularly new single-family construction, remains a key demand driver for the products we distribute and manufacture.
In 2025, single-family starts fell short of 2024 levels by approximately 7% and are expected to be flat or modestly down in 2026.
Home builders moderated their starts in 2025 to avoid further buildup of finished home inventory as affordability remains a persistent challenge for prospective homebuyers.
Throughout 2025 builders bridged the supply-demand gap with increased incentives and high single-digit declines in new home prices.
Multi-family experienced growth in 2025 but starts are expected to level off in 2026 due to prohibitive capital costs for developers combined with low rent growth and a decrease in permit activity.
Industry experts expect flat home improvement spending in 2026 as high costs of borrowing and historically low home turnover continue to constrain demand.
Near term demand will continue to be influenced by factors such as mortgage rates, home affordability, home equity levels, home sizes, new and existing home inventory levels, unemployment rates, and consumer confidence.
Long-term demand drivers for residential construction, including generational tailwinds and an undersupply of housing units, remain strong, while elevated levels of homeowner equity and an aging U.S. housing stock support robust repair-and-remodel spending and reinforce the industry’s solid fundamentals.
Our distribution business, which purchases and resells a diverse range of products, experiences opportunities for increased sales and margins during periods of rising prices, while periods of declining prices may present challenges.
Future product pricing, particularly for commodity products we distribute and manufacture, is expected to remain dynamic, influenced by economic conditions, industry operating rates, supply disruptions, duties, tariffs, transportation constraints, inventory levels, and seasonal demand patterns.
We will continue to monitor end market demand signals and align production rates and inventory stocking positions accordingly.
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 distribute and manufacture; (ii) general economic and industry conditions affecting demand; and (iii) cost and availability of raw materials, including wood fiber and glues and resins.
These factors have historically produced cyclicality in our results of operations, and we expect this cyclicality to continue in future periods.
Commodity Nature of a Portion of Our Products A portion of the building products we distribute and manufacture, including OSB, plywood, and lumber, are commodities that are widely available from multiple sources, with prices and volumes determined frequently in an auction market based on participants' perceptions of short-term supply and demand factors.
At times, the price for any one or more of the products we distribute or produce may fall below our purchase or cash production costs, requiring us to either incur short-term losses on product sales or curtail production at one or more of our manufacturing facilities.
Therefore, our profitability with respect to these commodity products depends, in significant part, on effective procurement and facilities maintenance programs, and on managing our cost structure, particularly raw materials and labor, which represent the largest components of our operating costs.

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Interest Rate Risk We are exposed to interest rate risk arising from fluctuations in variable-rate Secured Overnight Financing Rate (SOFR) on our term loan and when we have loan amounts outstanding on our Revolving Credit Facility.
At December 31, 2024, 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.
At December 31, 2024, we had one interest rate swap agreement.
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.
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.
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.
At December 31, 2024, we recorded a current asset of $ 0.9 million in "Prepaid expenses and other" on our Consolidated Balance Sheet.
At December 31, 2023, we recorded a long-term asset of $ 3.0 million in "Other assets" on our Consolidated Balance Sheet.
These assets represent the fair value of the interest rate swap agreement.
Financial Instruments The table below provides information as of December 31, 2024, about our financial instruments that are sensitive to changes in interest rates.
For obligations with variable interest rate sensitivity, the table sets forth payout amounts based on December 31, 2024 rates and does not attempt to project future rates.
December 31, 2024 2025 2026 2027 2028 2029 There- after Total Fair Value (b) (millions, other than percentages) Long-term debt Fixed-rate debt payments (a) Senior Notes $ — $ — $ — $ — $ — $ 400.0 $ 400.0 $ 377.0 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 8, Debt, of the Notes to Consolidated Financial Statements in "Item 8.
The table below provides information as of December 31, 2024, about our interest rate swap.
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.
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, 2024: December 31, 2024 2025 2026 2027 2028 2029 There- after Total Fair Value (millions, other than percentages) Interest rate swap Variable to fixed notional amount $ 50.0 $ — $ — $ — $ — $ — $ 50.0 $ 0.9 Average pay rate (a) 0.4 % — — — — — 0.4 % — Average receive rate (b) 4.5 % — — — — — 4.5 % — _______________________________________ (a) Represents the weighted average actual fixed interest rate payable on our interest rate swap.
(b) Represents the weighted average variable interest rate receivable on our interest rate swap at December 31, 2024.
In 2024, we paid an insignificant amount in environmental fines and penalties.
During 2024 and 2023, we spent approximately $5 million and $3 million, respectively, on capital expenditures to comply with environmental requirements.
We expect to spend approximately $4 million in 2025 for this purpose.
There are several states that have implemented, or have proposed to implement, regulations that will require sale of zero-emission heavy duty trucks and phase out existing diesel fueled trucks.
Our manufacturing and distribution operations rely on diesel fueled trucks to transport materials from suppliers and deliver products to customers.
These new zero-emission vehicles are expected to be more expensive than traditional diesel trucks.
In addition, there are concerns that the availability of compliant trucks may not be sufficient to meet demand at the time of scheduled replacement, the charging or hydrogen fuel infrastructure may not be adequate, and available early model zero-emission trucks may not be able to travel the distance or carry the load of existing trucks.
In addition, there are ongoing efforts by some states and various organizations to encourage and/or require companies to calculate, report, and reduce their carbon footprint.
In 2016, our facilities began complying with the Boiler Maximum Achievable Control Technology (Boiler MACT) regulations, which regulate emissions of hazardous air pollutants from industrial boilers and process heaters.
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.
We determined boiler improvement projects were necessary to meet the revised standards at three of our facilities and we substantially completed these projects in 2024.
As we were recently selected into the program, we are unable to estimate the specific impact to our business at this time.
Our Elgin plywood mill is required to conduct a study to determine what levels of emission reduction can be achieved by installation of improved boiler controls.
We began installation of boiler combustion improvements in May 2023, are monitoring emissions, and are required to propose new emission limits by December 2025.
We are then required to be fully compliant with those new emission limits by August 2026.
EWP rebate estimates are based on the expected amount to be paid and are recorded as a decrease in "Sales" as revenue is recognized.
At both December 31, 2024 and 2023, we had $63.0 million of EWP rebates payable recorded in "Accrued liabilities, Other" on our Consolidated Balance Sheets.
No triggering event was identified during the year ended December 31, 2024.
The following table reconciles net income to EBITDA and Adjusted EBITDA for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31 2024 2023 2022 Net income $ 376,354 $ 483,656 $ 857,658 Interest expense 24,067 25,496 25,412 Interest income (39,139) (48,106) (12,263) Income tax provision 125,405 161,393 288,723 Depreciation and amortization 144,113 132,467 101,593 EBITDA 630,800 754,906 1,261,123 Change in fair value of interest rate swaps 2,038 1,791 (3,559) Adjusted EBITDA $ 632,838 $ 756,697 $ 1,257,564 The following table reconciles segment income and unallocated corporate costs to Segment EBITDA, EBITDA and Adjusted EBITDA for the years ended December 31, 2024, 2023, and 2022: Year Ended December 31 2024 2023 2022 Wood Products Segment income $ 231,454 $ 337,132 $ 575,167 Depreciation and amortization 93,203 98,710 73,308 Segment EBITDA $ 324,657 $ 435,842 $ 648,475 Building Materials Distribution Segment income $ 303,385 $ 335,808 $ 627,091 Depreciation and amortization 49,534 32,353 27,005 Segment EBITDA $ 352,919 $ 368,161 $ 654,096 Corporate Unallocated corporate costs $ (44,801) $ (48,554) $ (44,409) Foreign currency exchange gain (loss) (1,164) 7 (1,584) Pension expense (excluding service costs) (149) (163) (294) Change in fair value of interest rate swaps (2,038) (1,791) 3,559 Depreciation and amortization 1,376 1,404 1,280 EBITDA (46,776) (49,097) (41,448) Change in fair value of interest rate swaps 2,038 1,791 (3,559) Corporate Adjusted EBITDA $ (44,738) $ (47,306) $ (45,007) Total Company Adjusted EBITDA $ 632,838 $ 756,697 $ 1,257,564 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.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Boise Cascade Company Consolidated Statements of Operations Year Ended December 31 2024 2023 2022 (thousands, except per-share data) Sales $ 6,724,294 $ 6,838,245 $ 8,387,307 Costs and expenses Materials, labor, and other operating expenses (excluding depreciation) 5,393,607 5,409,311 6,472,540 Depreciation and amortization 144,113 132,467 101,593 Selling and distribution expenses 594,927 559,503 553,251 General and administrative expenses 102,317 114,434 103,750 Other (income) expense, net ( 708 ) ( 1,856 ) ( 1,676 ) 6,234,256 6,213,859 7,229,458 Income from operations 490,038 624,386 1,157,849 Foreign currency exchange gain (loss) ( 1,164 ) 7 ( 1,584 ) Pension expense (excluding service costs) ( 149 ) ( 163 ) ( 294 ) Interest expense ( 24,067 ) ( 25,496 ) ( 25,412 ) Interest income 39,139 48,106 12,263 Change in fair value of interest rate swaps ( 2,038 ) ( 1,791 ) 3,559 11,721 20,663 ( 11,468 ) Income before income taxes 501,759 645,049 1,146,381 Income tax provision ( 125,405 ) ( 161,393 ) ( 288,723 ) Net income $ 376,354 $ 483,656 $ 857,658 Weighted average common shares outstanding: Basic 39,086 39,649 39,526 Diluted 39,318 39,901 39,772 Net income per common share: Basic $ 9.63 $ 12.20 $ 21.70 Diluted $ 9.57 $ 12.12 $ 21.56 Dividends declared per common share $ 5.82 $ 8.70 $ 4.01 See accompanying notes to consolidated financial statements.
Boise Cascade Company Consolidated Statements of Comprehensive Income Year Ended December 31 2024 2023 2022 (thousands) Net income $ 376,354 $ 483,656 $ 857,658 Other comprehensive income, net of tax Defined benefit pension plans Actuarial gain (loss), net of tax of $ 10 , $( 7 ), and $ 122 , respectively 28 ( 22 ) 367 Amortization of actuarial loss, net of tax of $ 9 , $ 8 , and $ 21 , respectively 29 25 62 Effects of settlements, net of tax of $ — , $ — , and $ 32 , respectively — — 98 Other comprehensive income, net of tax 57 3 527 Comprehensive income $ 376,411 $ 483,659 $ 858,185 See accompanying notes to consolidated financial statements.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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