Key points for investors:
- Q3 2025 results: consolidated sales $1.7 billion (down 3% YoY); net income $21.8 million ($0.58/share) vs. $91.0 million ($2.33/share) in Q3 2024. Reduced earnings driven by softer Wood Products pricing and volumes.
- Segment performance: Wood Products sales (including distribution) $396.4 million (-13% YoY); Wood Products segment EBITDA $14.5 million vs. $77.4 million a year ago, pressured by lower EWP and plywood prices, volumes and higher per-unit conversion costs. Building Materials Distribution (BMD) sales $1.6 billion (-1% YoY); BMD segment EBITDA $69.8 million vs. $87.7 million prior year; BMD EBITDA margin 4.5% (down from 5.6% YoY) due to commodity and EWP price headwinds and higher S&D expense from growth initiatives.
- Volumes & pricing: Q3 EWP volumes down notably (I-joist -10% YoY, LVL -7% YoY; EWP sequential volume -15%). Plywood: Q3 volume ~387M ft (slightly down YoY), average plywood net price $325/M (down 2% YoY and 5% sequentially). Management sees EWP pricing having stabilized and believes prices may be at a bottom heading into 2026.
- Q4 and 2026 outlook: Q4 estimated EBITDA ranges: Wood Products breakeven to $15M; BMD $40M–$55M. Expect seasonal volume declines; October BMD daily sales ~5% below Q3 pace. Anticipated Q4 effective tax rate 26–27%. Early industry projections for 2026 are flat vs. 2025 with cautious H1 and gradual improvement later as interest rates normalize.
- Capital allocation & liquidity: Year-to-date capex $187M through Sept; 2025 capex guidance $230–$250M; 2026 expected capex $150–$170M. Returned capital: $27M dividends YTD and declared $0.22/share quarterly dividend; repurchased ~ $120M of stock YTD and Board authorized a new $300M buyback program. Management prioritizes investing in the asset base, disciplined M&A, and returning capital to shareholders.
- Strategic execution: Continuing investments in EWP production (Oakdale modernization complete; Thorsby line operational H1 2026), expansion of distribution footprint (new Hondo, TX DC), focus on growing general-line products, multifamily and door/millwork businesses to diversify revenue and margin mix. Two-step distribution and national footprint cited as competitive advantages.
- Risks & near-term headwinds: Ongoing trade/tariff uncertainty (plywood import tariffs), commodity price volatility, seasonal slowdown in Q4, and competitive pricing pressure in EWP and plywood. Management is taking site-specific cost and operational improvements to preserve long-term margins.
Implication for investors: The company is navigating a softer housing-related demand environment with margin pressure in Wood Products but still generating meaningful EBITDA from BMD. Management emphasizes balance between growth investments and shareholder returns (large buyback authorization). Recovery in EWP pricing and housing demand in 2026 would be key upside catalysts; near-term performance remains exposed to seasonality, trade policy and commodity price swings.
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