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 2021 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
nonhistorical 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 2021 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, vertically-integrated wood products manufacturer and
building materials distributor. 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. 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 industrial applications. For more
information, see Note 12, 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 $299.4 million during the three months
ended September 30, 2022, compared with income from operations of $129.4 million
during the three months ended September 30, 2021. In our Wood Products segment,
income increased $33.9 million to $156.0 million for the three months ended
September 30, 2022, from $122.1 million for the three months ended September 30,
2021, due primarily to higher EWP sales prices, offset partially by lower sales
prices of plywood, as well as higher manufacturing costs. In addition,
depreciation and amortization expense increased $7.0 million due to the
acquisition of two plywood facilities on July 25, 2022. In our BMD segment,
income increased $137.8 million to $154.4 million for the three months ended
September 30, 2022, from $16.6 million for the three months ended September 30,
2021, driven by a gross margin increase of $166.1 million, resulting primarily
from margin improvements on commodity products, offset partially by increased
selling and distribution expenses of $25.7 million. These changes are discussed
further in "Our Operating Results" below.

  On July 25, 2022, our wholly-owned subsidiary, Boise Cascade Wood Products,
L.L.C., completed the acquisition of 100% of the equity interest in Coastal
Plywood Company (Coastal Plywood), and its plywood manufacturing operations
located in Havana, Florida, and Chapman, Alabama, (the Acquisition) for a
purchase price of $516.9 million, inclusive of estimated working capital at
closing of approximately $27 million, which is subject to post-closing
adjustments. We funded the Acquisition and related costs with cash on hand.
These facilities will provide incremental stress-rated veneer needed to optimize
and expand our southeastern U.S. EWP production capacity. In addition, the
Havana plywood operation improves our mix of specialty plywood products and is
well positioned geographically to support plywood demand in the southeastern
U.S.

  We ended third quarter 2022 with $867.1 million of cash and cash equivalents
and $396.2 million of undrawn committed bank line availability, for total
available liquidity of $1,263.2 million. We had $444.2 million of outstanding
debt at September 30, 2022. We generated $118.2 million of cash during the nine
months ended September 30, 2022, as cash provided by operations was offset
partially by funding the Acquisition, capital spending, and dividends paid on
our common stock. A further description of our cash sources and uses for the
nine month comparative periods are discussed in "Liquidity and Capital
Resources" below.

  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. Consensus
forecasts for 2022 single- and multi-family housing starts in the U.S are
between 1.5 million and 1.6 million units, or essentially flat compared to 2021.
In addition, the age of U.S. housing stock and elevated levels of homeowner
equity provide a favorable backdrop for repair-and-remodel spending. However,
continued actions by the Federal Reserve to increase interest rates to combat
high levels of inflation have significantly increased mortgage rates and created
a great deal of uncertainty broadly across the U.S. economy. As such, due to
home affordability constraints and a weakening economy, the pace of new
residential construction has slowed and we expect demand to continue to decline
for the remainder of 2022 and into 2023. Consensus forecasts for 2023 single-
and multi-family housing starts in the U.S. are estimated to be 15% to 20% below
2022 levels. While likely tempered by an economic slowdown, we anticipate the
primary drivers of repair-and-remodeling activity to continue to be supportive
of homeowners' further investment in their residences.

  As a manufacturer of certain commodity products, we have sales and
profitability exposure to declines in commodity product prices and rising input
costs. 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. 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. In addition, we expect future price erosion on our EWP
and general line products as economic activity slows and demand weakens for new
residential construction.

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 industry capacity and operating rates, industry cycles that affect supply and demand, and net import and export activity;



•general economic conditions, including but not limited to housing starts,
repair-and-remodeling activity, light commercial construction, inventory levels
of new and existing homes for sale, foreclosure rates, interest rates,
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unemployment rates, household formation rates, prospective home buyers' access
to and cost of financing, and housing affordability, that ultimately affect
demand for our products;

•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;



•the duration and magnitude of impacts of the ongoing COVID-19 pandemic and
related variants, including the impact of any government mandates relating to
vaccines and testing;

•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;

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

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

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

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

•cost and availability of raw materials, including wood fiber and glues and resins;

•our ability to successfully and efficiently complete and integrate acquisitions;

•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 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;

•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;

•the enactment of tax reform legislation;

•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 2021 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 nine months ended September 30, 2022 and
2021:


                                                        Three Months Ended                     Nine Months Ended
                                                           September 30                          September 30
                                                      2022               2021               2022               2021
                                                                               (millions)
Sales                                             $ 2,154.6          $ 1,879.5          $ 6,759.0          $ 6,143.9

Costs and expenses
Materials, labor, and other operating expenses
(excluding depreciation)                            1,656.0            1,594.4            5,183.8            4,909.4
Depreciation and amortization                          28.4               20.3               69.6               60.3
Selling and distribution expenses                     142.2              114.5              423.1              366.1
General and administrative expenses                    27.6               21.0               81.4               64.3

Other (income) expense, net                             1.1               (0.1)              (1.0)              (0.5)
                                                    1,855.3            1,750.1            5,756.9            5,399.5

Income from operations                            $   299.4          $   129.4          $ 1,002.1          $   744.4

                                                                          (percentage of sales)
Sales                                                 100.0  %           100.0  %           100.0  %           100.0  %

Costs and expenses
Materials, labor, and other operating expenses
(excluding depreciation)                               76.9  %            84.8  %            76.7  %            79.9  %
Depreciation and amortization                           1.3                1.1                1.0                1.0
Selling and distribution expenses                       6.6                6.1                6.3                6.0
General and administrative expenses                     1.3                1.1                1.2                1.0

Other (income) expense, net                             0.1                  -                  -                  -
                                                       86.1  %            93.1  %            85.2  %            87.9  %

Income from operations                                 13.9  %             6.9  %            14.8  %            12.1  %



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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 three and nine months ended September 30, 2022 and 2021.

                                                            Three Months Ended                             Nine Months Ended
                                                               September 30                                  September 30
                                                       2022                       2021                 2022                 2021
                                                                                     (thousands)
U.S. Housing Starts (a)
Single-family                                            242.2                     296.1                812.3                860.9
Multi-family                                             146.0                     123.0                415.4                351.5
                                                         388.2                     419.1              1,227.7              1,212.4

                                                                                     (thousands)
Segment Sales
Wood Products                                   $      595,320

$ 497,316 $ 1,690,294 $ 1,524,220 Building Materials Distribution

                      1,956,802                 1,721,244            6,199,835            5,528,765

Intersegment eliminations                             (397,475)                 (339,109)          (1,131,128)            (909,057)
Total sales                                     $    2,154,647               $ 1,879,451          $ 6,759,001          $ 6,143,928

Wood Products                                                                        (millions)
Sales Volumes
Laminated veneer lumber (LVL) (cubic feet)                 5.2                       4.6                 14.4                 13.7
I-joists (equivalent lineal feet)                           64                        76                  199                  224
Plywood (sq. ft.) (3/8" basis)                             329                       314                  926                  955

Wood Products                                                                    (dollars per unit)
Average Net Selling Prices
Laminated veneer lumber (LVL) (cubic foot)      $        33.82

$ 22.30 $ 29.73 $ 20.33 I-joists (1,000 equivalent lineal feet)

                  2,429                     1,575                2,121                1,421
Plywood (1,000 sq. ft.) (3/8" basis)                       477                       561                  577                  672

                                                                (percentage of Building Materials Distribution sales)
Building Materials Distribution
Product Line Sales
Commodity                                                 39.6   %                  44.8  %              45.7  %              54.0  %
General line                                              35.3   %                  33.7  %              32.4  %              29.3  %
Engineered wood                                           25.1   %                  21.5  %              21.9  %              16.7  %

Gross margin percentage (b)                               15.4   %                   7.9  %              15.8  %              13.1  %

_______________________________________

(a) Actual U.S. housing starts data reported by the U.S. Census Bureau.



(b)  We define gross margin as "Sales" less "Materials, labor, and other
operating expenses (excluding depreciation)." Substantially all costs included
in "Materials, labor, and other operating expenses (excluding depreciation)" for
our BMD segment are for inventory purchased for resale. Gross margin percentage
is gross margin as a percentage of segment sales.

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Sales

  For the three months ended September 30, 2022, total sales increased $275.1
million, or 15%, to $2,154.6 million from $1,879.5 million during the three
months ended September 30, 2021. For the nine months ended September 30, 2022,
total sales increased $615.1 million, or 10%, to $6,759.0 million from $6,143.9
million for the same period in the prior year. As described below, the change 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 of our sales. In third quarter 2022, total U.S.
housing starts decreased 7%, driven by a decrease in single-family housing
starts of 18% compared with the same period in 2021. On a year-to-date basis
through September 2022, total housing starts increased 1%, driven by an increase
in multi-family housing starts compared to the same period in 2021. However,
single-family housing starts decreased 6% when compared with the same period in
2021. Average composite lumber prices were 25% higher, while average composite
panel prices were 15% lower for the three months ended September 30, 2022
compared to the same period in the prior year, as reflected by Random Lengths
composite lumber and panel pricing. For the nine months ended September 30,
2022, average composite panel and average composite lumber prices were 17% and
2% lower, respectively, compared with the same period in the prior year.

  Wood Products.  Sales, including sales to our BMD segment, increased $98.0
million, or 20%, to $595.3 million for the three months ended September 30,
2022, from $497.3 million for the three months ended September 30, 2021. The
increase in sales was driven by higher sales prices for I-joists and LVL
(collectively referred to as EWP) of 54% and 52%, respectively, resulting in
increased sales of $55.0 million and $59.8 million, respectively. The increase
in EWP pricing was due to realizations of previously announced price increases
and the expiration of certain temporary price protection arrangements. In
addition, higher sales volumes for LVL and plywood of 12% and 5%, respectively,
resulted in increased sales of $12.1 million and $8.3 million, respectively.
Plywood sales volumes increased due to the Acquisition. These increases were
offset partially by lower plywood sales prices of 15%, resulting in decreased
sales of $27.6 million. In addition, I-joist sales volumes decreased 15%,
resulting in decreased sales of $18.6 million, due to a decline in housing
starts and continued strong demand for LVL.

  For the nine months ended September 30, 2022, sales, including sales to our
BMD segment, increased $166.1 million, or 11%, to $1,690.3 million from $1,524.2
million for the same period in the prior year. The increase in sales was driven
by higher sales prices for I-joists and LVL of 49% and 46%, respectively,
resulting in increased sales of $139.4 million and $135.4 million, respectively.
The increase in EWP pricing was due to realizations of previously announced
price increases and the expiration of certain temporary price protection
arrangements. Higher sales volumes for LVL of 5% resulted in increased sales of
$14.3 million. In addition, price increases for laminated beam and OSB rimboard
combined increased sales by $24.7 million. These increases were offset partially
by lower sales prices and sales volumes for plywood of 14% and 3%, respectively,
resulting in decreased sales of $87.4 million and $19.2 million, respectively.
In addition, lower sales volumes for I-joists of 11% resulted in decreased sales
of $34.5 million.

  Building Materials Distribution.  Sales increased $235.6 million, or 14%, to
$1,956.8 million for the three months ended September 30, 2022, from $1,721.2
million for the three months ended September 30, 2021. Compared with the same
quarter in the prior year, the overall increase in sales was driven by a sales
price increase of 15%, offset partially by a sales volume decrease of 1%. By
product line, commodity sales increased 1%, or $4.2 million; general line
product sales increased 19%, or $110.2 million; and sales of EWP (substantially
all of which are sourced through our Wood Products segment) increased 33%, or
$121.2 million.

  During the nine months ended September 30, 2022, sales increased $671.0
million, or 12%, to $6,199.8 million from $5,528.8 million for the same period
in the prior year. Compared with the same period in the prior year, the overall
increase in sales was driven by a sales price increase of 13%, offset partially
by a sales volume decrease of 1%. By product line, commodity sales decreased 5%,
or $152.1 million; general line product sales increased 24%, or $386.4 million;
and sales of EWP increased 47%, or $436.7 million.

Costs and Expenses


  Materials, labor, and other operating expenses (excluding depreciation)
increased $61.6 million, or 4%, to $1,656.0 million for the three months ended
September 30, 2022, compared with $1,594.4 million during the same period in the
prior year. In our Wood Products segment, materials, labor, and other operating
expenses increased due to higher per-unit costs of logs of approximately 4%,
compared with third quarter 2021, as well as increased labor and other
manufacturing costs. However, materials, labor, and other operating expenses as
a percentage of sales (MLO rate) in our Wood Products segment decreased by 315
basis points. The decrease in MLO rate was primarily the result of higher EWP
sales prices, resulting in improved leveraging of wood fiber costs and other
manufacturing costs. In BMD, the increase in materials, labor, and other
operating expenses was driven by higher purchased materials costs as a result of
higher product prices for the majority of the
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period, compared with third quarter 2021. The BMD segment MLO rate improved by
755 basis points compared with third quarter 2021, driven primarily by higher
commodity prices in the current year compared to sharp declines in third quarter
2021. In our BMD Segment, periods of increasing prices provide the opportunity
for higher sales and increased margins, while declining price environments
generally result in declines in sales and profitability.

  For the nine months ended September 30, 2022, materials, labor, and other
operating expenses (excluding depreciation) increased $274.4 million or 6%, to
$5,183.8 million, compared with $4,909.4 million in the same period in the prior
year. In our Wood Products segment, materials, labor, and other operating
expenses increased due to higher per-unit costs of logs of approximately 6%
compared with the first nine months of 2021, as well as increased labor and
other manufacturing costs. However, the MLO rate in our Wood Products segment
decreased by 165 basis points, which was primarily due to higher EWP sales
prices, resulting in improved leveraging of wood fiber costs. In BMD, the
increase in materials, labor, and other operating expenses was driven by higher
purchased materials costs as a result of higher product prices, compared with
the first nine months of 2021. However, the BMD segment MLO rate improved 270
basis points due to improved margins on all product lines compared with the
first nine months of 2021.

  Depreciation and amortization expenses increased $8.1 million, or 40%, to
$28.4 million for the three months ended September 30, 2022, compared with $20.3
million during the same period in the prior year. For the nine months ended
September 30, 2022, these expenses increased $9.3 million, or 15%, to $69.6
million, compared with $60.3 million in the same period in the prior year. The
increases in both periods were due primarily to the Acquisition and other
capital expenditures.

  Selling and distribution expenses increased $27.7 million, or 24%, to $142.2
million for the three months ended September 30, 2022, compared with $114.5
million during the same period in the prior year, due primarily to higher
employee-related expenses of $13.9 million, most of which relates to sales and
incentive compensation, as well as higher shipping and handling costs of $8.3
million. In addition, discretionary expenses related to travel and entertainment
and professional fees increased $1.8 million. For the nine months ended
September 30, 2022, selling and distribution expenses increased $57.0 million,
or 16%, to $423.1 million, compared with $366.1 million during the same period
in 2021, due primarily to higher employee-related expenses, including base pay
increases, special bonuses, and sales and incentive compensation of $26.6
million, as well as higher shipping and handling costs of $19.2 million. In
addition, travel and entertainment expenses and occupancy expenses increased
$4.1 million and $3.9 million, respectively.

  General and administrative expenses increased $6.6 million, or 31%, to $27.6
million for the three months ended September 30, 2022, compared with $21.0
million for the same period in the prior year, due to higher employee-related
expenses of $4.0 million, including base pay increases and incentive
compensation. In addition, we purchased acquisition-related insurance for $1.8
million. Discretionary expenses related to professional fees and travel and
entertainment also increased during the three months ended September 30, 2022
compared with the same period in the prior year. For the nine months ended
September 30, 2022, general and administrative expenses increased $17.1 million,
or 27%, to $81.4 million, compared with $64.3 million during the same period in
2021. The increase was primarily the result of higher employee-related expenses,
including base pay increases, special bonuses, and incentive compensation of
$11.2 million, as well as a $3.0 million increase in discretionary expenses
related to professional fees and travel and entertainment. In addition, in our
Wood Products segment, we purchased $1.8 million of insurance related to the
Acquisition and incurred $1.3 million of acquisition-related expenses.

Income From Operations

Income from operations increased $170.0 million to $299.4 million for the three months ended September 30, 2022, compared with $129.4 million for the three months ended September 30, 2021. Income from operations increased $257.7 million to $1,002.1 million for the nine months ended September 30, 2022, compared with $744.4 million for the nine months ended September 30, 2021.



  Wood Products.  Segment income increased $33.9 million to $156.0 million for
the three months ended September 30, 2022, compared with $122.1 million for the
three months ended September 30, 2021. The increase in segment income was due
primarily to higher EWP sales prices. This increase in segment income was offset
partially by lower plywood sales prices, as well as higher manufacturing costs.
In addition, depreciation and amortization expense increased $7.0 million
related to the Acquisition, and we purchased acquisition-related insurance for
$1.8 million.

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  For the nine months ended September 30, 2022, segment income increased $67.3
million to $500.2 million from $432.9 million for the nine months ended
September 30, 2021. The increase in segment income was due primarily to higher
EWP sales prices. This increase in segment income was offset partially by lower
plywood sales prices, lower plywood and EWP sales volumes, and higher wood fiber
costs and other manufacturing costs. In addition, depreciation and amortization
expense increased $7.0 million related to the Acquisition, we purchased $1.8
million of acquisition-related insurance, and incurred $1.3 million of
acquisition-related expenses.

  Building Materials Distribution.  Segment income increased $137.8 million to
$154.4 million for the three months ended September 30, 2022, from $16.6 million
for the three months ended September 30, 2021. The increase in segment income
was driven primarily by a gross margin increase of $166.1 million, resulting
primarily from margin improvements on commodity products. In addition, selling
and distribution expenses increased $25.7 million.

  For the nine months ended September 30, 2022, segment income increased $191.5
million to $534.6 million from $343.1 million for the nine months ended
September 30, 2021. The increase in segment income was driven by a gross margin
increase of $255.2 million, resulting from improved gross margins across all
product lines. The margin improvement was offset partially by increased selling
and distribution expenses and general and administrative expenses of $53.2
million and $6.6 million, respectively.

  Corporate.  Unallocated corporate expenses increased $1.8 million to $11.0
million for the three months ended September 30, 2022, from $9.2 million for the
same period in the prior year. The increase was primarily due to higher
employee-related expenses.

  For the nine months ended September 30, 2022, unallocated corporate expenses
increased $1.2 million to $32.8 million from $31.6 million for the nine months
ended September 30, 2021. The increase was primarily due to higher
employee-related expenses offset partially by lower self-insurance losses during
the first nine months of 2022.

Other



  Change in fair value of interest rate swaps. For information related to our
interest rate swaps, see the discussion under "Interest Rate Risk and Interest
Rate Swaps" of Note 2, Summary of Significant Accounting Policies, of
the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in
"Item 1. Financial Statements" of this Form 10-Q.

Income Tax Provision



  For the three and nine months ended September 30, 2022, we recorded $76.0
million and $248.8 million, respectively, of income tax expense and had an
effective rate of 25.7% and 25.2%, respectively. For the three and nine months
ended September 30, 2021, we recorded $31.2 million and $183.6 million,
respectively, of income tax expense and had an effective rate of 25.4% and
25.3%, respectively. For all periods, the primary reason for the difference
between the federal statutory income tax rate of 21% and the effective tax rate
was the effect of state taxes.

Industry Mergers and Acquisitions



  On June 21, 2022, Pacific Woodtech, a manufacturer of engineered wood
products, announced an agreement to acquire Louisiana-Pacific Corporation's EWP
division. The acquisition closed in early August 2022. Pacific Woodtech is a
competitor to our Wood Products segment. This transaction has not, and we do not
expect it to have, a material impact on our future results of operations.

  On July 11, 2022, US LBM, a distributor of specialty building materials,
announced an agreement to acquire Foxworth-Galbraith Lumber, a building products
supplier and manufacturer in the Southwest U.S. The acquisition closed in early
August 2022. US LBM and Foxworth-Galbraith are both customers of ours. This
transaction has not, and we do not expect it to have, a material impact on our
future results of operations.

Liquidity and Capital Resources



  We ended third quarter 2022 with $867.1 million of cash and cash equivalents
and $444.2 million of debt. At September 30, 2022, we had $1,263.2 million of
available liquidity (cash and cash equivalents and undrawn committed bank line
availability). We generated $118.2 million of cash during the nine months ended
September 30, 2022, as cash provided by
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operations was offset partially by funding the Acquisition, capital spending,
and dividends paid on our common stock. Further descriptions of our cash sources
and uses for the nine month comparative periods are noted below.

  We believe that our cash flows from operations, combined with our current cash
levels and available borrowing capacity, will be adequate to fund debt service
requirements and provide cash, as required, to support our ongoing operations,
capital expenditures, lease obligations, working capital, income tax payments,
and to pay cash dividends to holders of our common stock over the next
12 months. We expect to fund our seasonal and intra-month working capital
requirements in the remainder of 2022 from cash on hand and, if necessary,
borrowings under our revolving credit facility.

Sources and Uses of Cash



  We generate cash primarily from sales of our products, as well as short-term
and long-term borrowings. Our primary uses of cash are for expenses related to
the manufacture and distribution of building products, including inventory
purchased for resale, wood fiber, labor, energy, and glues and resins. In
addition to paying for ongoing operating costs, we use cash to invest in our
business, service our debt and lease obligations, and return cash to our
shareholders through dividends or common stock repurchases. Below is a
discussion of our sources and uses of cash for operating activities, investing
activities, and financing activities.

                                        Nine Months Ended
                                           September 30
                                       2022           2021
                                           (thousands)

Net cash provided by operations $ 814,125 $ 527,091 Net cash used for investment (575,622) (50,824) Net cash used for financing (120,346) (94,763)





Operating Activities

  For the nine months ended September 30, 2022, our operating activities
generated $814.1 million of cash, compared with $527.1 million of cash generated
in the same period in 2021. The $287.0 million increase in cash provided by
operations was due primarily to an improvement in income from operations. See
"Our Operating Results" in this Management's Discussion and Analysis of
Financial Condition and Results of Operations for more information related to
factors affecting our operating results. In addition, cash paid for taxes, net
of refunds received, decreased $14.5 million compared to the prior year.

  The increase in working capital during both periods was primarily attributable
to higher receivables and inventories, offset by an increase in accounts payable
and accrued liabilities. The increases in receivables in both periods primarily
reflect increased sales of approximately 13% and 17%, comparing sales for the
months of September 2022 and 2021 with sales for the months of December 2021 and
2020, respectively. Inventories increased during the nine months ended
September 30, 2022 primarily due to increased cost of inventory purchased for
resale for EWP and general line products, the acquisition of two plywood
facilities during the third quarter, and higher production costs for our
manufactured products. During the nine months ended September 30, 2021
inventories increased primarily due to increased cost of inventory purchased for
resale. The increase in accounts payable and accrued liabilities as of
September 30, 2022 was primarily related to the increase in inventories. During
the nine months ended September 30, 2021, seasonally higher purchase activity
and extended terms offered by major vendors to our BMD segment led to an
increase in accounts payable and an increase in accrued rebates contributed to
the increase in accrued liabilities.

Investment Activities



  During the nine months ended September 30, 2022, we used $516.9 million for
the Acquisition. These facilities will provide incremental stress-rated veneer
needed to optimize and expand our southeastern U.S. EWP production capacity and
improve our mix of specialty plywood products. During the nine months ended
September 30, 2022 and 2021, we used $61.8 million and $51.5 million,
respectively, of cash for purchases of property and equipment, including
business improvement and quality/efficiency projects, replacement and expansion
projects, and ongoing environmental compliance. During the nine months ended
September 30, 2022, we received $2.5 million of earn-out income related to a
previous asset sale in our Wood Products segment.

  Excluding acquisitions, we expect capital expenditures in 2022 to total
approximately $100 million to $120 million. We expect our capital spending in
2022 will be for business improvement and quality/efficiency projects,
replacement and expansion projects, and ongoing environmental compliance. Our
2022 capital expenditures range includes funding for our
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BMD organic expansions in Ohio, Kentucky, and Minnesota, replacement of a dryer
at our Chester, South Carolina, veneer and plywood plant, and post-acquisition
veneer equipment related spending at our Chapman, Alabama facility. We expect
our capital spending, excluding acquisitions, to be approximately $120 million
to $140 million in 2023. These levels 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.

Financing Activities



  During the nine months ended September 30, 2022, our financing activities used
$120.3 million of cash, including $114.0 million for common stock dividend
payments and $3.9 million of tax withholding payments on stock-based awards.
During the nine months ended September 30, 2022, we did not borrow under our
revolving credit facility, and therefore have no borrowing outstanding on the
facility as of September 30, 2022.

  During the nine months ended September 30, 2021, our financing activities used
$94.8 million of cash, including $91.0 million for common stock dividend
payments and $2.7 million of tax withholding payments on stock-based awards.
During the nine months ended September 30, 2021, we also borrowed $28.0 million
under our revolving credit facility, which was subsequently repaid during the
same period with cash on hand.

  Future dividend declarations, including amount per share, record date and
payment date, will be made at the discretion of our board of directors and will
depend upon, among other things, legal capital requirements and surplus, our
future operations and earnings, general financial condition, material cash
requirements, restrictions imposed by our asset-based credit facility and the
indenture governing our senior notes, applicable laws, and other factors that
our board of directors may deem relevant.

  On September 9, 2022, we entered into the Eighth Amendment to the Amended and
Restated Credit Agreement (the Amendment) related to our senior secured
asset-based revolving credit facility and term loan. The Amendment increases the
maximum amount available for revolving loans from $350 million to $400 million,
extends the maturity date of the agreement, and replaced the LIBOR rate with
SOFR. The term loan remains at $50.0 million.

  On July 28, 2022, our board of directors authorized the repurchase of an
additional 1.5 million shares of our common stock. This increase is in addition
to the remaining authorized shares under our prior common stock repurchase
program (the Program). The total combined authorization is approximately 2.0
million shares. 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. We are not obligated to
purchase any shares, and there is no set date that the program will expire. 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 nine months
ended September 30, 2022, we did not purchase any shares under the Program.

  For more information related to our debt transactions and structure, our
dividend policy, and our stock repurchase program, see the discussion in Note 7,
Debt, and Note 10, Stockholders' Equity, respectively, of the Condensed Notes to
Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial
Statements" of this Form 10-Q.

Other Material Cash Requirements



  For information about other material cash requirements, see Liquidity and
Capital Resources in "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" in our 2021 Form 10-K. As of September 30,
2022, there have been no material changes in other material cash requirements
outside the ordinary course of business since December 31, 2021.

Guarantees



  Note 9, Debt, and Note 17, Commitments, Legal Proceedings and Contingencies,
and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8.
Financial Statements and Supplementary Data" in our 2021 Form 10-K describe the
nature of our guarantees, including the approximate terms of the guarantees, how
the guarantees arose, the events or circumstances that would require us to
perform under the guarantees, and the maximum potential undiscounted amounts of
future payments we could be required to make. As of September 30, 2022, there
have been no material changes to the guarantees disclosed in our 2021 Form 10-K.

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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. Seasonal changes in levels of building activity affect our building
products businesses, which are dependent on housing starts,
repair-and-remodeling activities, and light commercial construction activities.
We typically report lower sales volumes in the first and fourth quarters due to
the impact of poor weather on the construction market, and we generally have
higher sales volumes in the second and third quarters, reflecting an increase in
construction due to more favorable weather conditions. We typically have higher
working capital in the first and second quarters in preparation and response to
the building season. Seasonally cold weather increases costs, especially energy
consumption costs, at most of our manufacturing facilities.

Employees



  As of October 16, 2022, we had approximately 6,820 employees. Approximately
21% of these employees work pursuant to collective bargaining agreements. As of
October 16, 2022, we had ten collective bargaining agreements. One agreement
covering approximately 100 employees at our Canadian EWP facility is set to
expire on December 31, 2022. 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.
If any of these agreements are not renewed or extended upon their termination,
we could experience a material labor disruption, strike, or significantly
increased labor costs at one or more of our facilities, either in the course of
negotiations of a labor agreement or otherwise. Labor disruptions or shortages
could prevent us from meeting customer demands or result in increased costs,
thereby reducing our sales and profitability.

Disclosures of Financial Market Risks

In the normal course of business, we are exposed to financial risks such as changes in commodity prices, interest rates, and foreign currency exchange rates. As of September 30, 2022, there have been no material changes to financial market risks disclosed in our 2021 Form 10-K.

Environmental

As of September 30, 2022, there have been no material changes to environmental issues disclosed in our 2021 Form 10-K. For additional information, see Environmental in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2021 Form 10-K.

Critical Accounting Estimates



  Critical accounting estimates are those that are most important to the
portrayal of our financial condition and results. These estimates require
management's most difficult, subjective, or complex judgments, often as a result
of the need to estimate matters that are inherently uncertain. We review the
development, selection, and disclosure of our critical accounting estimates with
the Audit Committee of our board of directors. For information about critical
accounting estimates, see Critical Accounting Estimates in "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations" in our
2021 Form 10-K. At September 30, 2022, there have been no material changes to
our critical accounting estimates from those disclosed in our 2021 Form 10-K,
except as noted below.

Business Combinations

  From time to time, we may enter into material business combinations. We
allocate the total purchase price of a business combination to the assets
acquired and liabilities assumed based on their estimated fair values at the
acquisition date, with the excess purchase price recorded as goodwill. The
acquisition method of accounting requires us to make significant estimates and
assumptions regarding the fair values of the elements of a business combination
as of the date of acquisition, including the fair values (fair value is
determined using the income approach, cost approach and/or market approach) of
inventory, property, plant and equipment, and identifiable intangible assets,
among others. This method also requires us to refine these estimates over a
measurement period not to exceed one year to reflect new information obtained
about facts and circumstances that existed as of the acquisition date that, if
known, would have affected the measurement of the amounts recognized as of that
date. If we are required to retroactively adjust provisional amounts that we
have recorded for the fair value of assets and liabilities in connection with
acquisitions, these adjustments could have a material impact on our financial
condition and results of operations. Additionally, we expense any
acquisition-related costs as incurred in connection with each business
combination.
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  Significant estimates and assumptions used to determine the fair value of
assets acquired, including property, plant, and equipment, customer
relationships, and other identifiable intangible assets, includes future cash
flows that we expect to generate from the acquired assets. If the subsequent
actual results and updated projections of the underlying business activity
change compared with the assumptions and projections used to develop these
values, we could record impairment charges. In addition, we have estimated the
economic lives of certain acquired assets and these lives are used to calculate
depreciation and amortization expense. If our estimates of the economic lives
change, depreciation and amortization expenses could be increased or decreased.

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 Condensed Notes to Unaudited Quarterly
Consolidated Financial Statements in "Item 1. Financial Statements" in this
Form 10-Q.

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