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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
 
For the quarterly period ended
March 31, 2020
 
 
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the transition period from                        to                       
 
Commission File Number:  001-35805 
Boise Cascade Company
(Exact name of registrant as specified in its charter)
 
Delaware
20-1496201
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
1111 West Jefferson Street Suite 300
BoiseIdaho 83702-5389
(Address of principal executive offices) (Zip Code)
 
(208) 384-6161
(Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes x     No o
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes x     No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer x    Accelerated filer o    Non-accelerated filer o    Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).       
Yes   No x

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
BCC
New York Stock Exchange
 
There were 39,196,619 shares of the registrant's common stock, $0.01 par value per share, outstanding on May 1, 2020.



Table of Contents
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


ii

Table of Contents

PART I—FINANCIAL INFORMATION
 
ITEM 1.
FINANCIAL STATEMENTS
 
Boise Cascade Company
Consolidated Statements of Operations
(unaudited) 
 
Three Months Ended
March 31
 
2020
 
2019
 
(thousands, except per-share data)
Sales
$
1,170,534

 
$
1,042,086

 
 
 
 
Costs and expenses
 

 
 

Materials, labor, and other operating expenses (excluding depreciation)
992,270

 
897,822

Depreciation and amortization
35,332

 
19,217

Selling and distribution expenses
99,463

 
87,026

General and administrative expenses
16,084

 
16,675

Loss on curtailment of facility
1,669

 

Other (income) expense, net
169

 
(308
)
 
1,144,987

 
1,020,432

 
 
 
 
Income from operations
25,547

 
21,654

 
 
 
 
Foreign currency exchange gain (loss)
(873
)
 
162

Pension expense (excluding service costs)
(387
)
 
(299
)
Interest expense
(6,421
)
 
(6,437
)
Interest income
655

 
492

Change in fair value of interest rate swaps
(2,314
)
 
(983
)
 
(9,340
)
 
(7,065
)
 
 
 
 
Income before income taxes
16,207

 
14,589

Income tax provision
(4,007
)
 
(3,200
)
Net income
$
12,200

 
$
11,389

 
 
 
 
Weighted average common shares outstanding:
 
 
 
Basic
39,163

 
38,884

Diluted
39,405

 
39,203

 
 
 
 
Net income per common share:
 
 
 
Basic
$
0.31

 
$
0.29

Diluted
$
0.31

 
$
0.29

 
 
 
 
Dividends declared per common share
$
0.10

 
$
0.09

 
See accompanying condensed notes to unaudited quarterly consolidated financial statements.




1

Table of Contents

Boise Cascade Company
Consolidated Statements of Comprehensive Income
(unaudited) 
 
Three Months Ended
March 31
 
2020
 
2019
 
(thousands)
Net income
$
12,200

 
$
11,389

Other comprehensive income (loss), net of tax
 
 
 
  Defined benefit pension plans
 
 
 
Amortization of actuarial (gain) loss, net of tax of $51 and ($11), respectively
151

 
(32
)
Effect of settlements, net of tax of $22 and $-, respectively
64

 

Other comprehensive income (loss), net of tax
215

 
(32
)
Comprehensive income
$
12,415

 
$
11,357


See accompanying condensed notes to unaudited quarterly consolidated financial statements.




2

Table of Contents


Boise Cascade Company
Consolidated Balance Sheets
(unaudited)
 
March 31,
2020
 
December 31,
2019
 
(thousands)
ASSETS
 

 
 

Current
 

 
 

Cash and cash equivalents
$
214,992

 
$
285,237

Receivables
 
 
 

Trade, less allowances of $980 and $591
327,254

 
215,894

Related parties
585

 
568

Other
12,288

 
15,184

Inventories
536,314

 
497,596

Prepaid expenses and other
13,957

 
8,285

Total current assets
1,105,390

 
1,022,764

 
 
 
 
Property and equipment, net
455,506

 
476,949

Operating lease right-of-use assets
64,496

 
64,228

Finance lease right-of-use assets
22,325

 
21,798

Timber deposits
14,658

 
12,287

Goodwill
60,382

 
60,382

Intangible assets, net
17,492

 
17,797

Deferred income taxes
7,509

 
7,952

Other assets
7,609

 
9,194

Total assets
$
1,755,367

 
$
1,693,351

 
See accompanying condensed notes to unaudited quarterly consolidated financial statements.




3

Table of Contents

Boise Cascade Company
Consolidated Balance Sheets (continued)
(unaudited)
 
March 31,
2020
 
December 31,
2019
 
(thousands, except per-share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current
 
 
 
Accounts payable
 
 
 
Trade
$
307,224

 
$
222,930

Related parties
2,431

 
1,624

Accrued liabilities
 
 
 
Compensation and benefits
56,379

 
83,943

Interest payable
1,782

 
6,723

Other
71,120

 
69,772

Total current liabilities
438,936

 
384,992

 
 
 
 
Debt
 
 
 
Long-term debt
439,915

 
440,544

 
 
 
 
Other
 
 
 
Compensation and benefits
41,953

 
45,586

Operating lease liabilities, net of current portion
58,367

 
58,029

Finance lease liabilities, net of current portion
23,919

 
23,419

Deferred income taxes
28,128

 
26,694

Other long-term liabilities
15,878

 
12,757

 
168,245

 
166,485

 
 
 
 
Commitments and contingent liabilities


 


 
 
 
 
Stockholders' equity
 
 
 
Preferred stock, $0.01 par value per share; 50,000 shares authorized, no shares issued and outstanding

 

Common stock, $0.01 par value per share; 300,000 shares authorized, 44,564 and 44,353 shares issued, respectively
446

 
444

Treasury stock, 5,367 shares at cost
(138,909
)
 
(138,909
)
Additional paid-in capital
531,735

 
533,345

Accumulated other comprehensive loss
(50,033
)
 
(50,248
)
Retained earnings
365,032

 
356,698

Total stockholders' equity
708,271

 
701,330

Total liabilities and stockholders' equity
$
1,755,367

 
$
1,693,351


See accompanying condensed notes to unaudited quarterly consolidated financial statements.



4

Table of Contents

Boise Cascade Company
Consolidated Statements of Cash Flows
(unaudited)
 
Three Months Ended
March 31
 
2020
 
2019
 
(thousands)
Cash provided by (used for) operations
 
 
 
Net income
$
12,200

 
$
11,389

Items in net income not using (providing) cash
 
 
 
Depreciation and amortization, including deferred financing costs and other
35,859

 
19,788

Stock-based compensation
1,674

 
2,200

Pension expense
555

 
460

Deferred income taxes
1,197

 
1,313

Change in fair value of interest rate swaps
2,314

 
983

Loss on curtailment of facility (excluding severance)
1,438

 

Other
155

 
(49
)
Decrease (increase) in working capital
 
 
 
Receivables
(108,229
)
 
(75,606
)
Inventories
(39,045
)
 
(39,483
)
Prepaid expenses and other
(3,205
)
 
(1,883
)
Accounts payable and accrued liabilities
55,629

 
29,810

Pension contributions
(726
)
 
(469
)
Income taxes payable
(2,111
)
 
12,753

Other
(172
)
 
1,835

Net cash used for operations
(42,467
)
 
(36,959
)
 
 
 
 
Cash provided by (used for) investment
 

 
 

Expenditures for property and equipment
(18,563
)
 
(14,347
)
Proceeds from sale of facilities

 
2,493

Proceeds from sales of assets and other
103

 
1,149

Net cash used for investment
(18,460
)
 
(10,705
)
 
 
 
 
Cash provided by (used for) financing
 
 
 
Dividends paid on common stock
(4,645
)
 
(4,053
)
Tax withholding payments on stock-based awards
(3,309
)
 
(3,569
)
Other
(1,364
)
 
(181
)
Net cash used for financing
(9,318
)
 
(7,803
)
 
 
 
 
Net decrease in cash and cash equivalents
(70,245
)
 
(55,467
)
 
 
 
 
Balance at beginning of the period
285,237

 
191,671

 
 
 
 
Balance at end of the period
$
214,992

 
$
136,204

 
See accompanying condensed notes to unaudited quarterly consolidated financial statements.


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Boise Cascade Company
Consolidated Statements of Stockholders' Equity
(unaudited)
 
Common Stock
 
Treasury Stock
 
Additional Paid-In Capital
 
Accumulated Other Comprehensive Loss
 
Retained Earnings
 
Total
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
(thousands)
Balance at December 31, 2019
44,353

 
$
444

 
5,367

 
$
(138,909
)
 
$
533,345

 
$
(50,248
)
 
$
356,698

 
$
701,330

Net income
 
 
 
 
 
 
 
 
 
 
 
 
12,200

 
12,200

Other comprehensive income
 
 
 
 
 
 
 
 
 
 
215

 
 
 
215

Common stock issued
211

 
2

 
 
 
 
 
 
 
 
 
 
 
2

Stock-based compensation
 
 
 
 
 
 
 
 
1,674

 
 
 
 
 
1,674

Common stock dividends ($0.10 per share)
 
 
 
 
 
 
 
 
 
 
 
 
(3,866
)
 
(3,866
)
Tax withholding payments on stock-based awards
 
 
 
 
 
 
 
 
(3,309
)
 
 
 
 
 
(3,309
)
Proceeds from exercise of stock options
 
 
 
 
 
 
 
 
27

 
 
 
 
 
27

Other
 
 
 
 
 
 
 
 
(2
)
 
 
 
 
 
(2
)
Balance at March 31, 2020
44,564

 
$
446

 
5,367

 
$
(138,909
)
 
$
531,735

 
$
(50,033
)
 
$
365,032

 
$
708,271


See accompanying condensed notes to unaudited quarterly consolidated financial statements.



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Boise Cascade Company
Consolidated Statements of Stockholders' Equity (continued)
(unaudited)
 
Common Stock
 
Treasury Stock
 
Additional Paid-In Capital
 
Accumulated Other Comprehensive Loss
 
Retained Earnings
 
Total
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
(thousands)
Balance at December 31, 2018
44,076

 
$
441

 
5,367

 
$
(138,909
)
 
$
528,654

 
$
(47,652
)
 
$
330,056

 
$
672,590

Net income
 
 
 
 
 
 
 
 
 
 
 
 
11,389

 
11,389

Other comprehensive loss
 
 
 
 
 
 
 
 
 
 
(32
)
 
 
 
(32
)
Common stock issued
265

 
2

 
 
 
 
 
 
 
 
 
 
 
2

Stock-based compensation
 
 
 
 
 
 
 
 
2,200

 
 
 
 
 
2,200

Common stock dividends ($0.09 per share)
 
 
 
 
 
 
 
 
 
 
 
 
(3,561
)
 
(3,561
)
Tax withholding payments on stock-based awards
 
 
 
 
 
 
 
 
(3,569
)
 
 
 
 
 
(3,569
)
Other
 
 
 
 
 
 
 
 
(2
)
 
 
 
 
 
(2
)
Balance at March 31, 2019
44,341

 
$
443

 
5,367

 
$
(138,909
)
 
$
527,283

 
$
(47,684
)
 
$
337,884

 
$
679,017


See accompanying condensed notes to unaudited quarterly consolidated financial statements.


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Condensed Notes to Unaudited Quarterly Consolidated Financial Statements

1.
Nature of Operations and Consolidation
 
Nature of Operations
 
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. We are one of the largest producers of engineered wood products (EWP) and plywood in North America and a leading United States (U.S.) wholesale distributor of building products.

We operate our business using two reportable segments: (1) Wood Products, which primarily manufactures EWP and plywood, and (2) Building Materials Distribution, which is a wholesale distributor of building materials. For more information, see Note 12, Segment Information.
 
Consolidation
 
The accompanying quarterly consolidated financial statements have not been audited by an independent registered public accounting firm but, in the opinion of management, include all adjustments necessary to present fairly the financial position, results of operations, cash flows, and stockholders' equity for the interim periods presented. Except as disclosed within these condensed notes to unaudited quarterly consolidated financial statements, the adjustments made were of a normal, recurring nature. Certain information and footnote disclosures normally included in our annual consolidated financial statements have been condensed or omitted. The quarterly consolidated financial statements include the accounts of Boise Cascade and its subsidiaries after elimination of intercompany balances and transactions. Quarterly results are not necessarily indicative of results that may be expected for the full year. These condensed notes to unaudited quarterly consolidated financial statements should be read in conjunction with our 2019 Form 10-K and the other reports we file with the Securities and Exchange Commission (SEC).

2.
Summary of Significant Accounting Policies

Accounting Policies

The complete summary of significant accounting policies is included in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" in our 2019 Form 10-K.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of accounts receivable, inventories, goodwill, intangible assets, and other long-lived assets; legal contingencies; guarantee obligations; indemnifications; assumptions used in retirement, medical, and workers' compensation benefits; assumptions used in the determination of right-of-use assets and related lease liabilities; stock-based compensation; fair value measurements; income taxes; and vendor and customer rebates, among others. These estimates and assumptions are based on management's best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.  


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Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. For revenue disaggregated by major product line for each reportable segment, see Note 12, Segment Information.

Fees for shipping and handling charged to customers for sales transactions are included in "Sales" in our Consolidated Statements of Operations. When control over products has transferred to the customer, we have elected to recognize costs related to shipping and handling as fulfillment costs. For our Wood Products segment, costs related to shipping and handling are included in "Materials, labor, and other operating expenses (excluding depreciation)" in our Consolidated Statements of Operations. In our Wood Products segment, we view our shipping and handling costs as a cost of the manufacturing process and the movement of product to our end customers. For our Building Materials Distribution segment, costs related to shipping and handling of $40.7 million and $36.5 million, respectively, are included in "Selling and distribution expenses" in our Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019. In our Building Materials Distribution segment, our activities relate to the purchase and resale of finished product, and excluding shipping and handling costs from “Materials, labor, and other operating expenses (excluding depreciation)” provides us a clearer view of our operating performance and the effectiveness of our sales and purchasing functions.

Customer Rebates and Allowances

Rebates are provided to our customers and our customers' customers based on the volume of their purchases, among other factors such as customer loyalty, conversion, and commitment. We provide the rebates to increase the sell-through of our products. Rebates are generally estimated based on the expected amount to be paid and recorded as a decrease in "Sales." At March 31, 2020, and December 31, 2019, we had $45.5 million and $49.4 million, respectively, of rebates payable to our customers recorded in "Accrued liabilities, Other" on our Consolidated Balance Sheets. We adjust our estimate of revenue at the earlier of when the probability of rebates paid changes or when the amounts become fixed. There have not been significant changes to our estimates of rebates, although it is reasonably possible that a change in the estimate may occur.

Vendor Rebates and Allowances
 
We receive rebates and allowances from our vendors under a number of different programs, including vendor marketing programs. At March 31, 2020, and December 31, 2019, we had $6.2 million and $9.2 million, respectively, of vendor rebates and allowances recorded in "Receivables, Other" on our Consolidated Balance Sheets. Rebates and allowances received from our vendors are recognized as a reduction of "Materials, labor, and other operating expenses (excluding depreciation)" when the product is sold, unless the rebates and allowances are linked to a specific incremental cost to sell a vendor's product. Amounts received from vendors that are linked to specific selling and distribution expenses are recognized as a reduction of "Selling and distribution expenses" in the period the expense is incurred.

Leases

We primarily lease land, building, and equipment under operating and finance leases. We determine if an arrangement is a lease at inception and assess lease classification as either operating or finance at lease inception or upon modification. Substantially all of our leases with initial terms greater than one year are for real estate, including distribution centers, corporate headquarters, land, and other office space. Substantially all of these lease agreements have fixed payment terms based on the passage of time and are recorded in our Building Materials Distribution segment. Many of our leases include fixed escalation clauses, renewal options and/or termination options that are factored into our determination of lease term and lease payments when appropriate. Renewal options generally range from one to ten years with fixed payment terms similar to those in the original lease agreements. Some lease agreements provide us with the option to purchase the leased property at market value. Our lease agreements do not contain any residual value guarantees.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of fixed lease payments over the lease term. The current portion of our operating and finance lease liabilities are recorded in "Accrued liabilities, Other" on our Consolidated Balance Sheets.
    
We use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. In determining our incremental borrowing rates, we give consideration to publicly available interest rates for instruments with similar characteristics, including credit rating, term, and collateralization.

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For purposes of determining straight-line rent expense, the lease term is calculated from the date we first take possession of the facility, including any periods of free rent and any renewal option periods we are reasonably certain of exercising. Variable lease expense generally includes reimbursement of actual costs for common area maintenance, property taxes, and insurance on leased real estate and are recorded as incurred. Most of our operating lease expense is recorded in "Selling and distribution expenses" in our Consolidated Statements of Operations. In addition, we do not separate lease and non-lease components for all of our leases.

Our short-term leases primarily include equipment rentals with lease terms on a month-to-month basis, which provide for our seasonal needs and flexibility in the use of equipment. Our short-term leases also include certain real estate for which either party has the right to cancel upon providing notice of 30 to 90 days. We do not recognize ROU assets or lease liabilities for short-term leases.

Inventories
 
Inventories included the following (work in process is not material):
 
 
 
March 31,
2020
 
December 31,
2019
 
 
(thousands)
Finished goods and work in process
 
$
456,509

 
$
413,020

Logs
 
40,247

 
45,574

Other raw materials and supplies
 
39,558

 
39,002

 
 
$
536,314

 
$
497,596



Property and Equipment
 
Property and equipment consisted of the following asset classes:
 
 
 
March 31,
2020
 
December 31,
2019
 
 
(thousands)
Land
 
$
38,274

 
$
39,304

Buildings
 
141,808

 
140,008

Improvements
 
61,326

 
61,187

Mobile equipment, information technology, and office furniture
 
168,711

 
165,445

Machinery and equipment
 
671,991

 
666,467

Construction in progress
 
35,270

 
34,846

 
 
1,117,380

 
1,107,257

Less accumulated depreciation
 
(661,874
)
 
(630,308
)
 
 
$
455,506

 
$
476,949



Long-Lived Asset Impairment

We review long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of assets may not be recoverable (triggering event). An impairment of long-lived assets exists when the carrying value is not recoverable through future undiscounted cash flows from operations and when the carrying value of an asset or asset group exceeds its fair value. No triggering event was identified during the quarter ended March 31, 2020.

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Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy under GAAP gives the highest priority to quoted market prices (Level 1) and the lowest priority to unobservable inputs (Level 3). In general, and where applicable, we use quoted prices in active markets for identical assets or liabilities to determine fair value (Level 1). If quoted prices in active markets for identical assets or liabilities are not available to determine fair value, we use quoted prices for similar assets and liabilities or inputs that are observable either directly or indirectly (Level 2). If quoted prices for identical or similar assets are not available or are unobservable, we may use internally developed valuation models, whose inputs include bid prices, and third-party valuations utilizing underlying asset assumptions (Level 3).

Financial Instruments
 
Our financial instruments are cash and cash equivalents, accounts receivable, accounts payable, long-term debt, and interest rate swaps. Our cash is recorded at cost, which approximates fair value, and our cash equivalents are money market funds. As of March 31, 2020, and December 31, 2019, we held $182.1 million and $259.5 million, respectively, in money market funds that are measured at fair value on a recurring basis using Level 1 inputs. The recorded values of accounts receivable and accounts payable approximate fair values based on their short-term nature. At March 31, 2020, and December 31, 2019, the book value of our fixed-rate debt for each period was $350.0 million, and the fair value was estimated to be $331.6 million and $364.7 million, respectively. The difference between the book value and the fair value is derived from the difference between the period-end market interest rate and the stated rate of our fixed-rate, long-term debt. We estimated the fair value of our fixed-rate debt using quoted market prices of our debt in inactive markets (Level 2 inputs). The interest rate on our term loans is based on market conditions such as the London Interbank Offered Rate (LIBOR) or a base rate. Because the interest rate on the term loans is based on current market conditions, we believe that the estimated fair value of the outstanding balance on our term loans approximates book value. As discussed below, we also have interest rate swaps to mitigate our variable interest rate exposure, the fair value of which is measured based on Level 2 inputs.

Interest Rate Risk and Interest Rate Swaps

We are exposed to interest rate risk arising from fluctuations in variable-rate LIBOR on our term loans and when we have loan amounts outstanding on our Revolving Credit Facility. At March 31, 2020, we had $95.0 million of variable-rate debt outstanding based on one-month LIBOR. 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 change the variable-rate cash flow exposure to fixed-rate cash flows. In accordance with our risk management strategy, we actively monitor our interest rate exposure and use derivative instruments from time to time to manage the related risk. We do not speculate using derivative instruments.

At March 31, 2020, we had two interest rate swap agreements with notional principal amounts of $50.0 million and $45.0 million. Under the interest rate swaps, we receive one-month LIBOR-based variable interest rate payments and make fixed interest rate payments, thereby fixing the interest rate on $95.0 million of variable rate debt exposure. Payments on the interest rate swaps with notional principal amounts of $50.0 million and $45.0 million are due on a monthly basis at an annual fixed rate of 1.007% and 1.256%, respectively, and expire in February 2022 and March 2022, respectively. The interest rate swap agreements were not designated as cash flow hedges, 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 March 31, 2020, we recorded a long-term liability of $1.5 million in "Other long-term liabilities" on our Consolidated Balance Sheets, representing the fair value of the interest rate swap agreements. At December 31, 2019, we recorded a long-term asset of $0.8 million in "Other assets" on our Consolidated Balance Sheets, representing the fair value of the interest rate swap agreements. The swaps were valued based on observable inputs for similar assets and liabilities and other observable inputs for interest rates and yield curves (Level 2 inputs).

Concentration of Credit Risk
 
We are exposed to credit risk related to customer accounts receivable. In order to manage credit risk, we consider customer concentrations and current economic trends and monitor the creditworthiness of significant customers based on ongoing credit evaluations. At March 31, 2020, receivables from two customers accounted for approximately 13% and 12% of total receivables. At December 31, 2019, receivables from these two customers accounted for approximately 14% and 12% of total receivables. No other customer accounted for 10% or more of total receivables.


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New and Recently Adopted Accounting Standards
 
In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Our current contracts that reference LIBOR include certain debt instruments and interest rate swaps. The amendments are effective for eligible contract modifications subsequent to March 12, 2020 and through December 31, 2022. We are currently evaluating the effects of this ASU on our consolidated financial statements.
    
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to reduce complexity in accounting for income taxes. This ASU removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the effects of this ASU on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. This ASU amends ASC 715 to remove disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant related to defined benefit pension and other postretirement plans. The ASU's changes related to disclosures are part of the FASB's disclosure framework project. The updated guidance is effective retrospectively for annual reporting periods ending after December 15, 2020, with early adoption permitted. We are currently evaluating the effects of this ASU on our disclosures in the notes to our financial statements.

There were no other accounting standards recently issued that had or are expected to have a material impact on our consolidated financial statements and associated disclosures.

3.    Income Taxes

For the three months ended March 31, 2020 and 2019, we recorded $4.0 million and $3.2 million, respectively, of income tax expense and had an effective rate of 24.7% and 21.9%, respectively. During the three months ended March 31, 2020, 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, offset by excess tax benefits of vested share-based payment awards and accounting for the tax impact of the CARES Act. During the three months ended March 31, 2019, 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, offset by excess tax benefits of vested share-based payment awards.

During the three months ended March 31, 2020, cash paid for taxes, net of refunds received, was $5.3 million. During the three months ended March 31, 2019, refunds received, net of cash taxes paid, were $11.0 million.

4.
Net Income Per Common Share
 
Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Weighted average common shares outstanding for the basic net income per common share calculation includes certain vested restricted stock units (RSUs) and performance stock units (PSUs) as there are no conditions under which those shares will not be issued. Diluted net income per common share is computed by dividing net income by the combination of the weighted average number of common shares outstanding during the period and other potentially dilutive weighted average common shares. Other potentially dilutive weighted average common shares include the dilutive effect of stock options, RSUs, and PSUs for each period using the treasury stock method. Under the treasury stock method, the exercise price of a share and the amount of compensation expense, if any, for future service that has not yet been recognized are assumed to be used to repurchase shares in the current period.


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The following table sets forth the computation of basic and diluted net income per common share:

 
Three Months Ended
March 31
 
2020
 
2019
 
(thousands, except per-share data)
Net income
$
12,200

 
$
11,389

Weighted average common shares outstanding during the period (for basic calculation)
39,163

 
38,884

Dilutive effect of other potential common shares
242

 
319

Weighted average common shares and potential common shares (for diluted calculation)
39,405

 
39,203

 
 
 
 
Net income per common share - Basic
$
0.31

 
$
0.29

Net income per common share - Diluted
$
0.31

 
$
0.29



The computation of the dilutive effect of other potential common shares excludes stock awards representing no shares and 0.2 million shares of common stock, respectively, in the three months ended March 31, 2020 and 2019. Under the treasury stock method, the inclusion of these stock awards would have been antidilutive.

5.
Curtailment of Manufacturing Facility

On February 20, 2020, we decided to permanently curtail I-joist production at our Roxboro, North Carolina facility by March 31, 2020. As a result of the curtailment, we recorded $15.0 million of accelerated depreciation during first quarter 2020 to fully depreciate the curtailed I-joist assets. In addition, we recorded $1.7 million of various closure-related costs in "Loss on curtailment of facility" in our Consolidated Statements of Operations.

6.
Debt
 
Long-term debt consisted of the following:
 
 
March 31,
2020
 
December 31,
2019
 
(thousands)
Asset-based revolving credit facility due 2024
$

 
$

Asset-based credit facility term loan due 2024
50,000

 
50,000

Term loan due 2026
45,000

 
45,000

5.625% senior notes due 2024
350,000

 
350,000

Deferred financing costs
(5,085
)
 
(4,456
)
Long-term debt
$
439,915

 
$
440,544


 
Asset-Based Credit Facility

On May 15, 2015, Boise Cascade and its principal operating subsidiaries, Boise Cascade Wood Products, L.L.C., and Boise Cascade Building Materials Distribution, L.L.C., as borrowers, and Boise Cascade Wood Products Holdings Corp., as guarantor, entered into an Amended and Restated Credit Agreement, as amended, (Amended Agreement) with Wells Fargo Capital Finance, LLC, as administrative agent, and the banks named therein as lenders. On March 13, 2020, we entered into the sixth amendment to the Amended Agreement to reduce the maximum amount available for revolving loans from $370 million to $350 million (Revolving Credit Facility) and to extend the maturity date of the Credit Agreement from May 1, 2022, to the earlier of (i) March 13, 2025 and (ii) 90 days prior to the maturity of our $350 million of 5.625%senior notes due September 1, 2024 (or the maturity date of any permitted refinancing indebtedness in respect thereof). The term loan within the Amended Agreement remains at $50.0 million (ABL Term Loan). Interest on borrowings under our Revolving Credit Facility and ABL Term Loan are payable monthly. Borrowings under the Amended Agreement are constrained by a borrowing base formula dependent upon levels of eligible receivables and inventory reduced by outstanding borrowings and letters of credit (Availability).

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The Amended Agreement is secured by a first-priority security interest in substantially all of our assets, except for property and equipment. The proceeds of borrowings under the agreement are available for working capital and other general corporate purposes.
    
The Amended Agreement contains customary nonfinancial covenants, including a negative pledge covenant and restrictions on new indebtedness, investments, distributions to equity holders, asset sales, and affiliate transactions, the scope of which are dependent on the Availability existing from time to time. The Amended Agreement also contains a requirement that we meet a 1:1 fixed-charge coverage ratio (FCCR), applicable only if Availability falls below 10% of the aggregate revolving lending commitments, or $35 million. Availability exceeded the minimum threshold amounts required for testing of the FCCR at all times since entering into the Amended Agreement, and Availability at March 31, 2020, was $345.4 million.

The Amended Agreement permits us to pay dividends only if at the time of payment (i) no default has occurred or is continuing (or would result from such payment) under the Amended Agreement, and (ii) pro forma Excess Availability (as defined in the Amended Agreement) is equal to or exceeds 25% of the aggregate Revolver Commitments (as defined in the Amended Agreement) or (iii) (x) pro forma Excess Availability is equal to or exceeds 15% of the aggregate Revolver Commitment and (y) our fixed-charge coverage ratio is greater than or equal to 1:1 on a pro forma basis.

Revolving Credit Facility

Interest rates under the Revolving Credit Facility are based, at our election, on either LIBOR or a base rate, as defined in the Amended Agreement, plus a spread over the index elected that ranges from 1.25% to 1.50% for loans based on LIBOR and from 0.25% to 0.50% for loans based on the base rate. The spread is determined on the basis of a pricing grid that results in a higher spread as average quarterly Availability declines. Letters of credit are subject to a fronting fee payable to the issuing bank and a fee payable to the lenders equal to the LIBOR margin rate. In addition, we are required to pay an unused commitment fee at a rate of 0.25% per annum of the average unused portion of the lending commitments.

At both March 31, 2020, and December 31, 2019, we had no borrowings outstanding under the Revolving Credit Facility and $4.6 million of letters of credit outstanding. These letters of credit and borrowings, if any, reduce Availability under the Revolving Credit Facility by an equivalent amount.

ABL Term Loan

The ABL Term Loan was provided by institutions within the Farm Credit system. Borrowings under the ABL Term Loan may be repaid from time to time at the discretion of the borrowers without premium or penalty. However, any principal amount of ABL Term Loan repaid may not be subsequently re-borrowed.

Interest rates under the ABL Term Loan are based, at our election, on either LIBOR or a base rate, as defined in the Amended Agreement, plus a spread over the index elected that ranges from 1.75% to 2.00% for LIBOR rate loans and from 0.75% to 1.00% for base rate loans, both dependent on the amount of Average Excess Availability (as defined in the Amended Agreement). During the three months ended March 31, 2020, the average interest rate on the ABL Term Loan was approximately 3.26%.

We have received and expect to continue receiving patronage credits under the ABL Term Loan. Patronage credits are distributions of profits from banks in the Farm Credit system, which are cooperatives that are required to distribute profits to their members. Patronage distributions, which are generally made in cash, are received in the year after they are earned. Patronage credits are recorded as a reduction to interest expense in the year earned. After giving effect to expected patronage distributions, the effective average net interest rate on the ABL Term Loan was approximately 2.3% during the three months ended March 31, 2020.

Term Loan

On March 30, 2016 (Closing Date), Boise Cascade and its principal operating subsidiaries, Boise Cascade Wood Products, L.L.C., and Boise Cascade Building Materials Distribution, L.L.C., as borrowers, and the guarantors party thereto, entered into a term loan agreement, as amended, (Term Loan Agreement) with American AgCredit, PCA, as administrative agent and sole lead arranger, and other banks in the Farm Credit system named therein as lenders. The Term Loan Agreement was for a $75.0 million secured term loan (Term Loan). The outstanding principal balance of the Term Loan amortizes and is payable in equal installments of $10 million per year on each of the sixth, seventh, eighth, and ninth anniversaries of the

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Closing Date, with the remaining principal balance due and payable on March 30, 2026. Interest on our Term Loan is payable monthly.

In December 2016, we prepaid $30 million of the Term Loan, which became available to reborrow. In November 2018, we terminated the ability to reborrow this prepaid Term Loan. This prepayment of $30 million satisfied our principal obligations due on the sixth, seventh, and eighth anniversaries of the Closing Date.

Pursuant to the Term Loan Agreement, the borrowers are required to maintain, as of the end of any fiscal quarter, a Capitalization Ratio lower than 60%, a Consolidated Net Worth greater than $350 million, and Available Liquidity greater than $100 million (each as defined in the Term Loan Agreement). In addition, under the Term Loan Agreement, and subject to certain exceptions, the borrowers may not, among other things, (i) incur indebtedness, (ii) incur liens, (iii) make junior payments, (iv) make certain investments, and (v) under certain circumstances, make capital expenditures in excess of $50 million during four consecutive quarters. The Term Loan Agreement also includes customary representations of the borrowers and provides for certain events of default customary for similar facilities.

The Term Loan Agreement permits us to pay dividends only if at the time of payment (i) no default has occurred or is continuing (or would result from such payment) under the Term Loan Agreement, and (ii) our interest coverage ratio is greater than or equal to 3:1 at such time or (iii) our fixed-charge coverage ratio is greater than or equal to 1:1.

Interest rates under the Term Loan Agreement are based, at our election, on either the LIBOR or a base rate, as defined in the Term Loan Agreement, plus a spread over the index. The applicable spread for the Term Loan ranges from 1.875% to 2.125% for LIBOR rate loans, and 0.875% to 1.125% for base rate loans, both dependent on our Interest Coverage Ratio (as defined in the Term Loan Agreement). During the three months ended March 31, 2020, the average interest rate on the Term Loan was approximately 3.55%. We have received and expect to continue receiving patronage credits under the Term Loan. After giving effect to expected patronage distributions, the effective average net interest rate on the Term Loan was approximately 2.5%.
    
The Term Loan is secured by a first priority mortgage on our Thorsby, Alabama, and Roxboro, North Carolina, EWP facilities and a first priority security interest on the equipment and certain tangible personal property located therein.

2024 Notes

On August 29, 2016, Boise Cascade issued $350 million of 5.625% senior notes due September 1, 2024 (2024 Notes), through a private placement that was exempt from the registration requirements of the Securities Act. Interest on our 2024 Notes is payable semiannually in arrears on March 1 and September 1. The 2024 Notes are guaranteed by each of our existing and future direct or indirect domestic subsidiaries that is a guarantor under our Amended Agreement.

The 2024 Notes are senior unsecured obligations and rank equally with all of the existing and future senior indebtedness of Boise Cascade Company and of the guarantors, senior to all of their existing and future subordinated indebtedness, effectively subordinated to all of their present and future senior secured indebtedness (including all borrowings with respect to our Amended Agreement to the extent of the value of the assets securing such indebtedness), and structurally subordinated to the indebtedness of any subsidiaries that do not guarantee the 2024 Notes.

The terms of the indenture governing the 2024 Notes, among other things, limit the ability of Boise Cascade and our restricted subsidiaries to: incur additional debt; declare or pay dividends; redeem stock or make other distributions to stockholders; make investments; create liens on assets; consolidate, merge or transfer substantially all of their assets; enter into transactions with affiliates; and sell or transfer certain assets. The indenture governing the 2024 Notes permits us to pay dividends only if at the time of payment (i) no default has occurred or is continuing (or would result from such payment) under the indenture, and (ii) our consolidated leverage ratio is no greater than 3.5:1, or (iii) the dividend, together with other dividends since the issue date, would not exceed our "builder" basket under the indenture. In addition, the indenture includes certain specific baskets for the payment of dividends.

The indenture governing the 2024 Notes provides for customary events of default and remedies.

Interest Rate Swaps

For information on interest rate swaps, see Interest Rate Risk and Interest Rate Swaps of Note 2, Summary of Significant Accounting Policies.
    

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Cash Paid for Interest

For the three months ended March 31, 2020 and 2019, cash payments for interest were $10.7 million and $10.8 million, respectively.

7.    Leases
    
Lease Costs

The components of lease expense were as follows:
 
Three Months Ended
March 31
 
2020
 
2019
 
(thousands)
Operating lease cost
$
3,346

 
$
3,341

Finance lease cost
 
 
 
Amortization of right-of-use assets
447

 
375

Interest on lease liabilities
485

 
461

Variable lease cost
707

 
619

Short-term lease cost
1,133

 
994

Sublease income
(39
)
 
(132
)
Total lease cost
$
6,079

 
$
5,658



Other Information

Supplemental cash flow information related to leases was as follows:
 
Three Months Ended
March 31
 
2020
 
2019
 
(thousands)
Cash paid for amounts included in the measurement of lease liabilities
 
 
 
Operating cash flows from operating leases
$
3,329

 
$
3,301

Operating cash flows from finance leases
485

 
461

Financing cash flows from finance leases
264

 
181

Right-of-use assets obtained in exchange for lease obligations
 
 
 
Operating leases
2,608

 
585

Finance leases
974

 



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Other information related to leases was as follows:
 
March 31, 2020
 
December 31, 2019
 
 
 
 
Weighted-average remaining lease term (years)
 
 
 
Operating leases
8

 
8

Finance leases
14

 
14

Weighted-average discount rate
 
 
 
Operating leases
6.4
%
 
6.5
%
Finance leases
8.5
%
 
8.5
%


As of March 31, 2020, our minimum lease payment requirements for noncancelable operating and finance leases are as follows:
 
 
Operating Leases
 
Finance Leases
 
 
(thousands)
Remainder of 2020
 
$
9,990

 
$
2,436

2021
 
12,759

 
3,284

2022
 
11,407

 
3,278

2023
 
11,093

 
3,306

2024
 
10,502

 
3,289

Thereafter
 
33,185

 
28,926

Total future minimum lease payments
 
88,936

 
44,519

Less: interest
 
(21,224
)
 
(19,306
)
Total lease obligations
 
67,712

 
25,213

Less: current obligations
 
(9,345
)
 
(1,294
)
Long-term lease obligations
 
$
58,367

 
$
23,919



As of March 31, 2020, the minimum lease payment amount for operating leases signed but not yet commenced was $3.9 million.

8.    Retirement and Benefit Plans
 
The following table presents the pension benefit costs:
 
 
Three Months Ended
March 31
 
2020
 
2019
 
(thousands)
Service cost
$
168

 
$
161

Interest cost
1,473

 
1,816

Expected return on plan assets
(1,374
)
 
(1,474
)
Amortization of actuarial (gain) loss
202

 
(43
)
Plan settlement loss
86

 

Net periodic benefit expense
$
555

 
$
460


 
Service cost is recorded in the same income statement line items as other employee compensation costs arising from services rendered, and the other components of net periodic benefit expense are recorded in "Pension expense (excluding service costs)" in our Consolidated Statements of Operations.

During the three months ended March 31, 2020, we contributed $0.7 million in cash to the pension plans. For the remainder of 2020, we expect to make approximately $1.0 million in cash contributions to the pension plans.

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9.
Stock-Based Compensation

In February 2020 and 2019, we granted two types of stock-based awards under our incentive plan: performance stock units (PSUs) and restricted stock units (RSUs).

PSU and RSU Awards
    
During the three months ended March 31, 2020, we granted 94,850 PSUs to our officers and other employees, subject to performance and service conditions. For the officers, the number of shares actually awarded will range from 0% and 200% of the target amount, depending upon Boise Cascade's 2020 return on invested capital (ROIC), as approved by our Compensation Committee in accordance with the related grant agreement. For the other employees, the number of shares actually awarded will range from 0% to 200% of the target amount, depending upon Boise Cascade’s 2020 EBITDA, defined as income before interest (interest expense and interest income), income taxes, and depreciation and amortization, determined in accordance with the related grant agreement. Because the ROIC and EBITDA components contain a performance condition, we record compensation expense over the requisite service period based on the most probable number of shares expected to vest.
    
During the three months ended March 31, 2019, we granted 110,923 PSUs to our officers and other employees, subject to performance and service conditions. During the 2019 performance period, officers and other employees earned 93% and 96%, respectively, of the target based on Boise Cascade’s 2019 ROIC and EBITDA, determined by our Compensation Committee in accordance with the related grant agreement.

The PSUs granted to officers generally vest in a single installment three years from the date of grant, while the PSUs granted to other employees vest in three equal tranches each year after the grant date.

During the three months ended March 31, 2020 and 2019, we granted an aggregate of 125,716 and 165,350 RSUs, respectively, to our officers, other employees, and nonemployee directors with only service conditions. The RSUs granted to officers and other employees vest in three equal tranches each year after the grant date. The RSUs granted to nonemployee directors vest over a one year period.

We based the fair value of PSU and RSU awards on the closing market price of our common stock on the grant date. During both of the three months ended March 31, 2020 and 2019, the total fair value of PSUs and RSUs vested was $11.1 million.

The following summarizes the activity of our PSUs and RSUs awarded under our incentive plan for the three months ended March 31, 2020:
 
PSUs
 
RSUs
 
Number of shares
 
Weighted Average Grant-Date Fair Value
 
Number of shares
 
Weighted Average Grant-Date Fair Value
Outstanding, December 31, 2019
295,347

 
$
31.09

 
257,564

 
$
31.14

Granted
94,850

 
36.45

 
125,716

 
36.45

Performance condition adjustment (a)
(6,989
)
 
29.48

 

 

Vested
(162,622
)
 
28.93

 
(143,807
)
 
30.88

Forfeited
(24,246
)
 
32.57

 
(26,707
)
 
32.82

Outstanding, March 31, 2020
196,340

 
$
35.34

 
212,766

 
$
34.24

_______________________________ 
(a)
Represents total PSUs forfeited during the three months ended March 31, 2020 related to the 2019 performance condition adjustment described above.

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Compensation Expense

We record compensation expense over the awards' vesting period and account for share-based award forfeitures as they occur, rather than making estimates of future forfeitures. Any shares not vested are forfeited. We recognize stock awards with only service conditions on a straight-line basis over the requisite service period. Most of our share-based compensation expense was recorded in "General and administrative expenses" in our Consolidated Statements of Operations. Total stock-based compensation recognized from PSUs and RSUs, net of forfeitures, was as follows:
 
Three Months Ended
March 31
 
2020
 
2019
 
(thousands)
PSUs
$
610

 
$
979

RSUs
1,064

 
1,221

Total
$
1,674

 
$
2,200



The related tax benefit for the three months ended March 31, 2020 and 2019, was $0.4 million and $0.6 million, respectively. As of March 31, 2020, total unrecognized compensation expense related to nonvested share-based compensation arrangements was $8.5 million. This expense is expected to be recognized over a weighted-average period of 2.1 years.

10.    Stockholders' Equity    

Dividends
    
On November 14, 2017, we announced that our board of directors approved a dividend policy to pay quarterly cash dividends to holders of our common stock. For more information regarding our dividend declarations and payments made during the three months ended March 31, 2020 and 2019, see "Common stock dividends" on our Consolidated Statements of Stockholders' Equity.

On May 7, 2020, our board of directors declared a dividend of $0.10 per share on our common stock, payable on June 15, 2020, to stockholders of record on June 1, 2020. For a description of the restrictions in our asset-based credit facility, Term Loan, and the indenture governing our senior notes on our ability to pay dividends, see Note 6, Debt.

Future quarterly 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, contractual obligations, restrictions imposed by our asset-based credit facility, term loan, and the indenture governing our senior notes, applicable laws, and other factors that our board of directors may deem relevant.


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Accumulated Other Comprehensive Loss
 
The following table details the changes in accumulated other comprehensive loss for the three months ended March 31, 2020 and 2019:

 
Three Months Ended
March 31
 
2020
 
2019
 
(thousands)
Beginning balance, net of taxes
$
(50,248
)
 
$
(47,652
)
Amortization of actuarial (gain) loss, before taxes (a)
202

 
(43
)
Effect of settlements, before taxes (a)
86

 

Income taxes
(73
)
 
11

Ending balance, net of taxes
$
(50,033
)
 
$
(47,684
)
___________________________________ 
 
(a)
Represents amounts reclassified from accumulated other comprehensive loss. These amounts are included in the computation of net periodic pension cost. For additional information, see Note 8, Retirement and Benefit Plans.

11.
Transactions With Related Party
 
Louisiana Timber Procurement Company, L.L.C. (LTP) is an unconsolidated variable-interest entity that is 50% owned by us and 50% owned by Packaging Corporation of America (PCA). LTP procures sawtimber, pulpwood, residual chips, and other residual wood fiber to meet the wood and fiber requirements of us and PCA in Louisiana. We are not the primary beneficiary of LTP as we do not have power to direct the activities that most significantly affect the economic performance of LTP. Accordingly, we do not consolidate LTP's results in our financial statements.

Sales

Related-party sales to LTP from our Wood Products segment in our Consolidated Statements of Operations were $4.2 million and $4.5 million, respectively, during the three months ended March 31, 2020 and 2019. These sales are recorded in "Sales" in our Consolidated Statements of Operations.

Costs and Expenses

Related-party wood fiber purchases from LTP were $22.6 million and $20.0 million, respectively, during the three months ended March 31, 2020 and 2019. These costs are recorded in "Materials, labor, and other operating expenses (excluding depreciation)" in our Consolidated Statements of Operations.


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12.
Segment Information
 
We operate our business using two reportable segments: Wood Products and Building Materials Distribution. Unallocated corporate costs are presented as reconciling items to arrive at operating income. There are no differences in our basis of measurement of segment profit or loss from those disclosed in Note 17, Segment Information, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" in our 2019 Form 10-K.    

Wood Products and Building Materials Distribution segment sales to external customers, including related parties, by product line are as follows:

 
 
Three Months Ended
March 31
 
 
2020
 
2019
 
 
(millions)
Wood Products (a)
 
 
 
 
LVL
 
$
6.1

 
$
11.9

I-joists
 
4.5

 
5.3

Other engineered wood products
 
6.4

 
5.7

Plywood and veneer
 
63.8

 
67.4

Lumber
 
12.3

 
13.2

Byproducts
 
20.7

 
20.1

Other
 
6.8

 
10.8

 
 
120.5

 
134.4

 
 
 
 
 
Building Materials Distribution  
 
 
 
 
Commodity
 
440.3

 
398.4

General line
 
397.3

 
323.4

Engineered wood products
 
212.4

 
185.9

 
 
1,050.0

 
907.7

 
 
$
1,170.5

 
$
1,042.1

 ___________________________________ 

(a)
Amounts represent sales to external customers. Sales are calculated after intersegment sales eliminations to our Building Materials Distribution segment, as well as the cost of EWP rebates and sales allowances provided at various stages of the supply chain (including distributors, retail lumberyards, and professional builders). For the three months ended March 31, 2020, approximately 79% of Wood Products' EWP sales volumes were to our Building Materials Distribution segment.


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An analysis of our operations by segment is as follows: 
 
Three Months Ended
March 31
 
2020
 
2019
 
(thousands)
Net sales by segment
 
 
 
Wood Products
$
320,061

 
$
319,523

Building Materials Distribution
1,049,997

 
907,708

Intersegment eliminations (a)
(199,524
)
 
(185,145
)
Total net sales
$
1,170,534

 
$
1,042,086

 
 
 
 
Segment operating income
 
 
 
Wood Products (b)
$
3,763

 
$
11,630

Building Materials Distribution
29,302

 
17,517

Total segment operating income
33,065

 
29,147

Unallocated corporate costs
(7,518
)
 
(7,493
)
Income from operations
$
25,547

 
$
21,654

___________________________________ 
 
(a)
Primarily represents intersegment sales from our Wood Products segment to our Building Materials Distribution segment.

(b)
Wood Products segment operating income for the three months ended March 31, 2020, includes $15.0 million of accelerated depreciation and $1.7 million of other closure-related costs due to the permanent curtailment of I-joist production at our Roxboro, North Carolina facility. For more information, see Note 5, Curtailment of Manufacturing Facility.

13.    Commitments, Legal Proceedings and Contingencies, and Guarantees
 
Commitments
 
We are a party to a number of long-term log supply agreements that are discussed in Note 18, Commitments, Legal Proceedings and Contingencies, and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" in our 2019 Form 10-K. In addition, we have purchase obligations for goods and services, capital expenditures, and raw materials entered into in the normal course of business. As of March 31, 2020, there have been no material changes to the above commitments disclosed in the 2019 Form 10-K.
 
Legal Proceedings and Contingencies

We are a party to legal proceedings that arise in the ordinary course of our business, including commercial liability claims, premises claims, environmental claims, and employment-related claims, among others. As of the date of this filing, we believe it is not reasonably possible that any of the legal actions against us will, individually or in the aggregate, have a material adverse effect on our financial position, results of operations, or cash flows.

Guarantees
 
We provide guarantees, indemnifications, and assurances to others. Note 18, Commitments, Legal Proceedings and Contingencies, and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" in our 2019 Form 10-K describes 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 March 31, 2020, there have been no material changes to the guarantees disclosed in the 2019 Form 10-K.  

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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 2019 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 2019 Form 10-K, as well as those factors listed in other documents we file with the Securities and Exchange Commission (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. 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.

Executive Overview
 
We recorded income from operations of $25.5 million during the three months ended March 31, 2020, compared with income from operations of $21.7 million during the three months ended March 31, 2019. In our Wood Products segment, income decreased $7.9 million to $3.8 million for the three months ended March 31, 2020, from $11.6 million for the three months ended March 31, 2019. The decrease in segment income was due primarily to accelerated depreciation of $15.0 million and other closure-related costs of $1.7 million at our Roxboro, North Carolina facility, as well as lower plywood prices. These decreases were offset partially by lower manufacturing costs and higher EWP volumes. In our Building Materials Distribution segment, income increased $11.8 million to $29.3 million for the three months ended March 31, 2020, from $17.5 million for the three months ended March 31, 2019, driven primarily by a gross margin increase of $24.6 million, resulting from improved gross margins on commodity products and higher sales of general line and EWP products compared with first quarter 2019, offset partially by increased selling and distribution expenses of $12.2 million. These changes are discussed further in "Our Operating Results" below.

We ended first quarter 2020 with $215.0 million of cash and cash equivalents and $345.4 million of undrawn committed bank line availability, for total available liquidity of $560.4 million. We had $439.9 million of outstanding debt at March 31, 2020, with no maturities prior to 2024. We