Boise Cascade's Q3 2025 Earnings Call Contradictions Emerge on EWP Pricing, Inventory Management, BMD EBITDA Margins, and Multifamily Growth Outlooks

Date of Call: November 4, 2025

Financials Results

• Revenue: $1.7B, down 3% YOY
• EPS: $0.58 per share, down from $2.33 prior year (net income $21.8M vs $91M)
• Gross Margin: 15.1% (BMD), down 60 basis points YOY

Guidance:

• Wood Products Q4 EBITDA expected between breakeven and $15M.
• EWP volumes expected to decline low-double digits to mid-teens sequentially; EWP prices expected to be flat to low-single-digit sequential decline.
• Plywood volumes expected to fall near double digits; October plywood realizations consistent with Q3.
• BMD Q4 EBITDA expected between $40M and $55M; October daily sales ~5% below Q3 pace and likely to decline further.
• Q4 effective tax rate expected 26%–27%.
• 2026 capex expected $150M–$170M; 2025 capex guidance $230M–$250M.
• Board authorized up to $300M share repurchase; $0.22 quarterly dividend declared.

Business Commentary:

• Sales and Financial Performance:
• Boise Cascade's third-quarter sales were $1.7 billion, down 3% from the previous year, with net income of $21.8 million versus $91 million in the year ago quarter.

• The decrease was primarily due to lower sales volumes and competitive pricing pressures in EWP and plywood markets.

• Wood Products Segment Challenges:

• Wood Products sales were $396.4 million, down 13% year-over-year, with a segment EBITDA of $14.5 million, down from $77.4 million.

• This decline was attributed to lower EWP and plywood sales prices and volumes, as well as higher per unit conversion costs.

• Building Materials Distribution Growth:

• Sales in BMD were $1.6 billion, down 1% from the previous year, with a segment EBITDA of $69.8 million.

• Despite challenges in commodity and EWP sales, growth was driven by strong demand for general line products and next-day delivery services.

• Capital Expenditures and Shareholder Returns:

• Boise Cascade spent $187 million on capital expenditures in the first nine months of 2025, with plans to spend between $150 million to $170 million in 2026.

• Shareholder returns included $27 million in dividends and a new share repurchase authorization of up to $300 million.

• Strategic Outlook and Market Dynamics:

• Boise Cascade's strategic focus remains on its two-step distribution model and market-leading EWP and plywood franchises to deliver value and reliable access to products.
• The company anticipates a cautious market in the first half of 2026, with gradual improvement later in the year driven by interest rate cuts and normalized homebuilder inventory levels.

  Sentiment Analysis:

  Overall Tone: Neutral

  • Management disclosed Q3 sales $1.7B (down 3% YOY) and EPS $0.58 vs $2.33 prior year but repeatedly emphasized execution, balance-sheet strength and strategic investments: “we were still able to post good earnings” and expressed confidence in long-term demand drivers while providing cautious Q4 ranges (Wood EBITDA breakeven–$15M; BMD $40–$55M).

Q&A:

• Question from Susan Maklari (Goldman Sachs): Can you talk to the share gains that you are realizing in the general line business, how you're working with partners in this environment, and what that suggests for your ability to continue to see growth next year even if housing and the macro stays more challenging?
  Response: Invested in expanded laydown/warehouse capacity and new SKUs; stepped into categories where competitors exited to capture share across home centers, specialty dealers and multifamily, driving general-line growth.

• Question from Susan Maklari (Goldman Sachs): On EWP, what competitive dynamics give you confidence that pricing has bottomed and what are upside/downside risks given builder affordability pressures?
  Response: Prices stabilized starting in August after competitive pressure and a Canada tariff; expect flat Q4 pricing (possible low-single-digit declines) and view prices as near a bottom with upside into 2026 if demand improves.

• Question from Michael Roxland (Truist): As you think about margins in BMD, what are the constraints to generating higher EBITDA margins (e.g., high single digits) like some peers?
  Response: Near-term we can defend ~15% gross margins; margin expansion depends on richer general-line mix, millwork/door investments and commodity market recovery providing upside.

• Question from Michael Roxland (Truist): Is there anything you can do now to further improve mill profitability—additional cost takeout or other actions to position for greater margin expansion when cycle turns?
  Response: Executing site-level improvement plans, adding process-improvement roles, and pursuing technology/innovation projects to reduce mill costs and operationalize recent capital; also focusing on multifamily as a revenue lever.

• Question from Michael Roxland (Truist): Remind us where your multifamily presence stands today and where you expect it to be in 2026 (and longer term)?
  Response: Multifamily today is modest (~10% of business; single-family ~75–80%); management intends to grow multifamily share into 2026.

• Question from Kurt Yinger (D.A. Davidson): Can you provide more color on the EWP stabilization observed in August—what catalyzed it (less bidding, production adjustments, pricing/volume trade-offs)?
  Response: Stabilization resulted from industry production adjustments and rising costs that reduced room to cut prices; reduced pricing pressure and adjusted production have eased competition, with distribution/service advantages helping retain volume.

• Question from Kurt Yinger (D.A. Davidson): Channel inventories appear lean—could spring 2026 see market tension (price/availability) even if structural demand isn't much stronger?
  Response: Channel is balanced and lean; a modest unexpected demand uptick or supply disruption could quickly tighten the market and lift prices.

• Question from Kurt Yinger (D.A. Davidson): How has door and millwork performed in 2025 and can new facilities drive above-market growth even in tepid demand?
  Response: Millwork faced price pressure in 2025, but new facilities, operational improvements and capacity fixes are expected to drive stronger, potentially above-market growth.

• Question from Bradley Barton (BofA) (for George Staphos): On the James Hardie (AZEK mention) announcement—did AZEK/Hardie approach you or vice versa, what were the considerations, and how will this impact your Hardie lineup in those markets and across the network?
  Response: Hardie partnership in Baltimore/Pittsburgh is net-new decking revenue (not a shift); it expands product offerings in that market and is complementary to continued national support for Trex.

• Question from Bradley Barton (BofA): Any early signs of life or green shoots for the remainder of the quarter, into next year, or spring season?
  Response: Seeing green shoots in multifamily—increased quoting activity and projects slated to kick off into year-end and early next year.

• Question from Jeffrey Stevenson (Loop Capital): How much did Oakdale ramp-related operating inefficiencies impact Wood Products margins in Q3 and will that continue to be a drag?
  Response: Oakdale experienced operational issues tied to a large project that increased costs, but as machines stabilize and capital is operationalized efficiency should improve over coming quarters; seasonality may obscure near-term progress.

• Question from Jeffrey Stevenson (Loop Capital): How have expanded supplier partnerships positioned general-line distribution and could you expand partnerships further?
  Response: Partnerships with Trex and Hardie enhance SKU breadth and market share; management will pursue additional supplier partnerships, supported by added capacity.

• Question from Jeffrey Stevenson (Loop Capital): How will you balance M&A with share repurchases given the $300M repurchase authorization—will you be aggressive with buybacks?
  Response: Capital priorities remain: invest in assets, pursue organic/M&A if the fit and price are right; otherwise continue active share repurchases.

• Question from Reuben Garner (The Benchmark Company): It appears BMD EBITDA margin could dip into the high 3s—how should we think about this (competition, stabilization, next year) assuming current housing trends?
  Response: The Q4 margin dip is seasonal (fewer selling days, weather) not market-share loss; normalized BMD EBITDA is around 5% over a full cycle.

• Question from Reuben Garner (The Benchmark Company): Inventories as a percent of revenue ticked up—does this reflect distribution investments, optimism on 2026, or other factors?
  Response: Inventory increase reflects added locations (organic and M&A) and a deliberate strategy to stay in-stock to serve customers; management views levels as appropriate heading into 2026.

• Question from Ketan Mamtora (BMO): EWP volumes in 2025 remain higher than 2021–22—what's driving that (share gains, other actions)?
  Response: EWP volumes reflect some share gains and consistent order files through Q3, with seasonality expected in Q4.

• Question from Ketan Mamtora (BMO): Where specifically is growth in the general-line business coming from?
  Response: Growth is coming from decking (market-share gains where competitors exited), multifamily, and improving door/millwork capacity and execution.

Contradiction Point 1

EWP Pricing and Market Dynamics

It highlights differing perspectives on the stability and improvement of EWP pricing and competitive dynamics, which are crucial for revenue and market positioning.

What is the competitive dynamics and pricing outlook for EWP? - Susan Maklari (Goldman Sachs)

2025Q3: In Q3, pricing stabilized in August with competitive pressures lessening. Production costs and capacity adjustments led to stabilization. EWP volumes remain consistent, suggesting no major market shifts. - Troy Little(Executive Vice President of Wood Products)

Can you discuss the operating rates across the business? How do you see EWP pricing evolving, given the recent downward trend? When do you expect pricing to reach a bottom? What catalysts could drive a turnaround in pricing? - Brad Barton (Bank of America)

2025Q2: We feel like the pricing environment will weaken further into Q3 as we get into the July and August time frame. - Troy Little(Executive Vice President of Wood Products)

Contradiction Point 2

Inventory Management and Order Patterns

This contradiction relates to changes in inventory management and order patterns, which could impact operational efficiency and demand forecasting.

What are the constraints on improving BMD's EBITDA margins? - Michael Roxland (Truist Securities)

2025Q3: We have seen more order activity in smaller packages and an increase in pieces, which actually helps us to be able to react a little quicker in managing our inventory levels. - Kelly E. Hibbs(Senior VP, CFO)

How should we assess the cost structure and potential margin benefits from ongoing operating efficiency initiatives? - Susan Marie Maklari (Goldman Sachs)

2025Q2: The inventory purchase profile will likely change, with less mill direct and more activity in units, job packs, and pieces out of distribution. - Nathan R. Jorgensen(CEO & Director)

Contradiction Point 3

BMD EBITDA Margin Expectations

It involves changes in financial forecasts, specifically regarding EBITDA margin expectations for BMD, which are critical indicators for investors.

Can you discuss the share gains in the general line business and how you plan to ensure growth next year despite challenging housing market and macroeconomic conditions? - Susan Maklari (Goldman Sachs)

2025Q3: We expect that 2025 will be another challenging year for the Building Materials Distribution segment. We are maintaining our 15% gross margin target for 2025. - Kelly Hibbs(CFO)

Can you expect sequential improvement in EBITDA margins for BMD? - Zakk Pacheco (Loop Capital Markets)

2025Q1: Yes, 15% gross margin is attainable. The current quarter was below this threshold due to competitive pressures, but we expect improvement in the second and third quarters. - Kelly Hibbs(CFO)

Contradiction Point 4

Multifamily Market Growth

It highlights differing perspectives on the growth potential and current status of the multifamily market, which is a strategic focus for the company.

Can you discuss your growing presence in multifamily housing and its current status? - Michael Roxland (Truist Securities)

2025Q3: Multifamily is a small segment, with single-family accounting for 75-80% of business. Multifamily constitutes 10% of home center channel and 10% of general line distribution. Multifamily will remain a focus for growth. - Kelly Hibbs(CFO)

What drove the increase in LVL volumes despite lower single-family starts? - Mike Roxland (Truist Securities)

2024Q4: We are seeing some potential in multifamily. As we published already in the 10-K, we see the multifamily, single-family starts, which is the core business for our EWP products, that's showing some softness as well. But we're seeing slightly better-than-expected performance in multifamily. - Kelly Hibbs(CFO)

Contradiction Point 5

Pricing Stability and Market Dynamics

It highlights differing views on pricing stability and market dynamics, which are critical for understanding the company's competitive positioning and revenue outlook.

What drives the share gains in the general business line? How will you ensure growth next year despite housing and macroeconomic challenges? - Susan Maklari (Goldman Sachs)

2025Q3: In Q3, pricing stabilized in August with competitive pressures lessening. Production costs and capacity adjustments led to stabilization. EWP volumes remain consistent, suggesting no major market shifts. The next year is expected to see price bottoming and potential increases as demand stabilizes. - Troy Little(Executive Vice President of Wood Products)

What are the benefits and resilience of the general line business? - Susan Maklari (Goldman Sachs)

2024Q4: Demand remains stable, but competition for EWP share persists, leading to modest price erosion in some periods. - Kelly Hibbs(CFO)