BOISE CASCADE Co (BCC)

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Understanding Our Financial Information

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and related notes in "Item 1. Financial Statements" of this Form 10-Q, as well as our 2025 Form 10-K. The following discussion includes statements regarding our expectations with respect to our future performance, liquidity, and capital resources. Such statements, along with any other non-historical statements in the discussion, are forward-looking. These forward-looking statements include, without limitation, any statement that may predict, indicate, or imply future results, performance, or achievements and may contain the words "may," "will," "expect," "believe," "should," "plan," "anticipate," and other similar expressions. All of these forward-looking statements are based on estimates and assumptions made by our management that, although believed by us to be reasonable, are inherently uncertain. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in "Item 1A. Risk Factors" in our 2025 Form 10-K, as well as those factors listed in other documents we file with the Securities and Exchange Commission (the SEC). We do not assume an obligation to update any forward-looking statement. Our future actual results may differ materially from those contained in or implied by any of the forward-looking statements in this Form 10-Q.

Background

Boise Cascade Company is a building products company headquartered in Boise, Idaho. As used in this Form 10-Q, the terms "Boise Cascade," "we," and "our" refer to Boise Cascade Company and its consolidated subsidiaries. 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 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. 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. For more information, see Note 11, Segment Information, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" of this Form 10-Q.

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Executive Overview

We recorded income from operations of $84.0 million during the three months ended June 30, 2026, compared with income from operations of $80.5 million during the three months ended June 30, 2025. In our BMD segment, income decreased $7.9 million to $70.1 million for the three months ended June 30, 2026, from $78.0 million for the three months ended June 30, 2025. The decrease in segment income was driven by increased selling and distribution expenses and depreciation and amortization expense of $10.8 million and $1.7 million, respectively. Additionally, segment income in second quarter 2025 benefited from a $3.8 million gain on the sale of a non-operating property. These decreases in segment income were offset partially by a gross margin increase of $9.2 million, resulting from higher gross margins on commodity and general line products, which were offset partially by lower gross margins on EWP. In our Wood Products segment, income increased $11.7 million to $25.7 million for the three months ended June 30, 2026, from $14.0 million for the three months ended June 30, 2025. The increase in segment income was primarily due to higher plywood sales prices and sales volumes, as well as lower per-unit OSB costs. These increases in segment income were offset partially by lower EWP sales prices and higher per-unit conversion costs. Additionally, segment income in second quarter 2025 benefited from 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 second quarter 2026 with $304.8 million of cash and cash equivalents and $395.1 million of undrawn committed bank line availability, for total available liquidity of $699.9 million. We had $452.5 million of outstanding debt at June 30, 2026. We used $172.4 million of cash during the six months ended June 30, 2026, to fund seasonal working capital increases, capital spending, share repurchases, and dividends paid on our common stock. A further description of our cash sources and uses for the six-month 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, depends primarily on new single-family residential construction, with additional demand driven by new multi-family residential construction, residential repair-and-remodeling, and light commercial activity. During the second quarter, the operating environment remained uneven and competitive. Ongoing geopolitical uncertainty, volatile Treasury yields and mortgage rates, and persistent inflation continue to weigh on the macroeconomic outlook. Against this backdrop, residential construction remains subdued, as affordability constraints and low consumer sentiment pressure market conditions. In response, homebuilders have relied on incentives to stimulate demand while maintaining discipline around starts and spec inventory. Beyond near-term volatility, long-term residential construction fundamentals remain constructive, supported by generational tailwinds and an undersupplied housing market. High homeowner equity and an aging U.S. housing stock support sustained repair-and-remodel spending and reinforce the industry’s solid underlying demand drivers.

Our distribution business, which purchases and resells a diverse range of products, may benefit from rising prices through increased sales and margins, 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 and geopolitical conditions, input costs, industry operating rates, supply disruptions, duties, tariffs, cost and availability of transportation, 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 the following:

•the commodity nature of a portion of our products and their price movements, which are driven largely by general economic conditions, industry capacity and operating rates, industry cycles that affect supply and demand, and net import and export activity;

•the highly competitive nature of our industry;

•declines in demand for our products due to competing technologies or materials, as well as changes in building code provisions;

•disruptions to information systems used to process and store customer, employee, and vendor information, as well as the technology that manages our operations and other business processes;

•material disruptions and/or major equipment failure at our manufacturing facilities;

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•declining demand for residual byproducts, particularly wood chips generated in our manufacturing operations;

•labor disruptions, shortages of skilled and technical labor, or increased labor costs;

•product shortages, loss of key suppliers, and our dependence on third-party suppliers and manufacturers;

•the termination of the distribution relationship with our former composite decking supplier and our ability to execute a successful transition to our new third-party supplier for composite decking;

•the cost and availability of third-party transportation services used to deliver the goods we distribute and manufacture, as well as our raw materials;

•cost and availability of raw materials, particularly wood fiber;

•the need to successfully formulate and implement succession plans for key members of our management team;

•our ability to execute our organic growth and acquisition strategies efficiently and effectively;

•failures or delays with new or existing technology systems and software platforms;

•our ability to successfully pursue our long-term growth strategy related to innovation and digital technology;

•concentration of our sales among a relatively small group of customers, as well as the financial condition and creditworthiness of our customers;

•impairment of our long-lived assets, goodwill, and/or intangible assets;

•substantial ongoing capital investment costs, including those associated with organic growth and acquisitions, and the difficulty in offsetting fixed costs related to those investments;

•our indebtedness, including the possibility that we may not generate sufficient cash flows from operations or that future borrowings may not be available in amounts sufficient to fulfill our debt obligations and fund other liquidity needs;

•restrictive covenants contained in our debt agreements;

•changes in or failure to comply with laws and regulations;

•changes in foreign trade policy, including the imposition of tariffs;

•compliance with data privacy and security laws and regulations;

•the impacts of climate change and related legislative and regulatory responses intended to reduce climate change;

•cost of compliance with government regulations, in particular, environmental regulations;

•exposure to product liability, product warranty, casualty, construction defect, and other claims;

•fluctuations in the market for our equity; and

•the other factors described in "Item 1A. Risk Factors" in our 2025 Form 10-K.

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Our Operating Results

The following tables set forth our operating results in dollars and as a percentage of sales for the three and six months ended June 30, 2026 and 2025:

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Understanding Our Financial Information

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Form 10-K. The following discussion includes statements that are forward-looking statements and are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in the section entitled "Cautionary Statement Concerning Forward-Looking Statements" and in "Item 1A. 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

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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. Business" of this Form 10-K. 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.

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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. Composite structural panel and lumber prices have been volatile historically.

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.

Our BMD segment 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 may result in declines in sales and profitability. However, we mitigate risk by utilizing rich data sets to effectively manage our inventory, which enables us to better navigate these market fluctuations and optimize our financial outcomes. 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. For further discussion of the impact of commodity prices, see "Our Operating Results" in this Management's Discussion and Analysis of Financial Condition and Results of Operations.

General Economic and Industry Conditions Affecting Demand

The level of housing starts is especially important to our results of operations. New residential construction activity has historically been volatile with demand for new residential construction influenced by seasonal weather factors, mortgage availability and rates, housing affordability constraints, home equity levels, unemployment levels, wage growth, household formation rates, domestic population growth, immigration rates, residential vacancy and foreclosure rates, demand for second homes, consumer confidence, and other general economic factors. Furthermore, changing demographics could impact product consumption and demand, including urbanization compounding issues around affordability, increasing importance of multi-family housing, declining size of single-family entry-level housing, increasing proportion of homes using slab-on-grade construction, reduced birthing statistics, and changing baby boomer needs freeing up housing capacity. In addition, EWP demand will be highly influenced by single-family housing starts.

Industry supply for the products we distribute and produce 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. The balance of supply and demand in the U.S. is also heavily influenced by imported products, principally from Canada and South America. The level of imported products is influenced by fluctuations in foreign currency exchange rates, duties, and tariffs.

We believe that our product line diversification provid

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