Jeff Strom: Yes. The general line is really — is doing well and is really holding up. Like I said that the one thing that we have seen this year, maybe a little bit different than last year when we went through all the destocking on some things, inventory in the channel. I’d tell you, still lean, but we’re seeing a willingness this year that we didn’t see last year on some of these winter buys or price increases for people to buy into them a little bit and put a little bit more on the ground for those certain items. And then just — it’s a reflection of the confidence they have on what’s coming down the pike.
Ketan Mamtora: Got it. That’s helpful. And then just one last one from me. You talked about mid-single-digit price erosion in EWP in Q1. Would you say at this point that prices are stabilizing post that? Or is there kind of more incremental downward pressure as we move through 2024? Or is it too early to say at this point?
Mike Brown: So Ketan, it’s Mike. Thanks for the question. Well, I think maybe it’s a bit too early in the year to have a definitive view of what’s going to happen. I can tell you that there are still pricing pressures in specific geographies. And I think the time that we’ll have a better idea is clearly once we get into the start of the building season. So historically, February has not been the best month of the year for EWP demand just as a generalized statement, excluding the last few years, which have been a bit crazy. But generally speaking, in times gone by, we start to see an uptick in demand going from — starting in March and further out into April and May. If that comes to pass, as it historically has, then I would hope that some of the pricing pressure will be alleviated, but we really don’t know yet halfway through February. It’s a bit early to say exactly what’s going to happen in the peak building season.
Operator: Our next question will be coming from Reuben Garner of Benchmark.
Reuben Garner: Congrats, Mike, on your retirement. It’s been great hearing for me in the last few years. So I appreciate your support over that time. So I guess, Kelly, this is kind of a follow-up to your comment about comparing today to 2019. One of the biggest things that’s changed has been, I think, the pricing power that you’ve shown, especially in some of the EWP — in the two EWP categories. Can you talk about what’s kind of changed today versus four, five years ago that gives you confidence that these levels will hold, whether it’s from a competitive standpoint or things you guys have done internally to adjust your pricing methodology? I think the starts are up 10%, I think pricing is obviously up a lot more than that over that time frame. So any kind of color on how you — how confident you are and what’s changed internally to kind of make that happen?
Kelly Hibbs: Yes, good question, Reuben. So yes, my 2019 to 2023 framework, let’s break that into a few buckets. If you think about commodities, they looked a lot like — today it looks a lot — ’23 looks a lot like ’19 did if you go back and look at the composite averages. So the pricing there is similar. Now have we seen growth in EWP pricing? Yes. Have we seen growth in general line pricing? Yes. Today, general line pricing is pretty sticky and holding up. We are seeing some pricing pressures we’ve alluded to in EWP. But if you if you bundle that all together, I think it really comes back to the strategy in BMD in terms of looking to rich in that product mix, i.e., grow EWP, grow general line, but very much stay in commodities.
And we’ve done all that. And we’ve also just continued to scale the business. And so we think capture market share over time as well. So I think it’s been a combination of all those things, Reuben. That makes us pretty confident that we think we have set a higher bar.
Nate Jorgensen: Yes, Reuben, it’s Nate. Maybe just to — certainly, I think Kelly outlined the BMD strategy and our plan. And again, we feel good about how that’s showing up in the marketplace each and every day, both for our customers and our suppliers. Maybe just on the Wood Products front, just to reinforce that, obviously, the EWP franchise and the veneer that supports that and Plywood is really — continues to be the focal point for us. So as you think about that earnings, performance and stability, maybe as compared to where we were five plus years ago, I think we’ve strengthened our EWP franchise in terms of our capabilities, our overall footprint in terms of our volume and also, in some cases, we’ve taken out some products that we simply no longer produce.
So I think that clarity and that focus in Wood Products has been an important part of the answer as well. And we feel good about, obviously, where we’re going, given our investments that will be taking place in Alabama and Louisiana here over the next couple of years.
Reuben Garner: And since Su took all my questions, I’m going to jump to the capital allocation one. I’m just good too. The last few years, you guys have obviously built a bit of a fortress of a balance sheet. I’m just curious if there’s been any change or if you anticipate any change in maybe the philosophy and returning cash to shareholders, whether it’s be a ramping share repurchases versus the way you guys have paid out a dividend in the past? Or if you think you’ll stick to a similar philosophy going forward for assuming that you don’t have places to put it to work for organic growth or M&A?
Kelly Hibbs: Yes, sure. Thanks, Reuben. Good question. So the overarching capital allocation strategy is unchanged. We’re going to focus on reinvestment and growth and via organic or M&A opportunities and obviously, we have a big capital spend ahead of us here in ’24 and ’25. And so I guess in terms of then returned to shareholders, we’ll look to continue to grow the regular dividend over time. But as I look forward here into 2024 a little bit, absent M&A, my expectation would be that we will be speaking to further shareholder returns as we work our way through 2024, and those could be in the form of special dividends or stock repurchases or frankly, a combination of the two. I don’t want to get ahead of my board on that topic in terms of the puts and takes and how we think about it, but that’s our expectation sitting here today.
Operator: We have a follow-up question coming from Kurt Yinger of D.A. Davison.
Kurt Yinger: Great. Not to beat a dead horse on EWP, but Mike, I wanted to go back to your comment around pockets of pricing pressure kind of persisting in certain geographies. Is that primarily competitors buying to pick up some share and secure a bit more volume ahead of the building season, general pushback from builders or dealers, potentially some import competition? I mean what would you say are kind of the biggest underlying drivers of kind of this trickle down and slow discounting that we’ve seen, I guess, late into 2023 and maybe even here to start 2024?
Mike Brown: Yes, sure, Kurt. So maybe part of the answer you asked around imports, that’s really not much of a thing, okay? They show up and disappear. They are a little bit of an annoyance in certain geographies at certain times, but that tends to be very spasmodic. The kind of sort of the overarching issue is the manufacturing. And so in certain geographies, and I won’t go into, obviously, specifics, there are some folks that think the answer is lead with price. And — as a result, we respond accordingly. It’s not in one particular producer necessarily in all geographies. It’s sort of a combination of things. And we have, as I know you know this, but we have a particular way of going to market where we bring a variety of items in the package that we supply.
So there’s the product, there’s the service, obviously, the BMD provides. We have obviously software as well as outsource systems. So we look at it that over the longer term, the value that we bring is different to others. And hence, our pricing structure is different to others. But in the intermediary times, sometimes we just have to react because that’s what we need to do because we have product that we would like to sell into those geographies. And we have very good partners that are in those geographies that we wish to support.
Nate Jorgensen: Kurt, it’s Nate. Maybe just to add to Mike’s comments. I think if you look at kind of a pricing conversation of EWP, this time of the year, this is not unusual when you kind of go back through time. So the fact we hadn’t had that maybe during the COVID period was represented something maybe that was different. This is, I think, a typical environment in terms of some of the competitive conversations. And as Mike described, we’ll look at those case by case, market by market. I think as we move — transition to the building season, I think the conversation then always have to be competitive, but it always comes down to, can you serve and support the marketplace. And it’s really critical, obviously, during the building season that you have that provide that great capability and experience for both obviously the lumber yard side of things as well as the homebuilders.
And so that execution and making sure our team stays very focused on that is going to be — can be front and center for us. And to the extent we do that well, we feel that we’ll continue to earn the business that’s out there, again, both from our dealer partners as well as our builder partners. So again, not unusual that we’re in this moment today. But as things kind of tension of the conversation will be who can serve and support my business, and again, as Mike described, we feel good about how we’re positioned to do that.
Operator: Thank you. This concludes today’s Q&A session. I would now like to turn the call back over to Nate Jorgensen for closing remarks.
Nate Jorgensen: Great. Thanks, Lisa. Just we appreciate everyone joining us on the call this morning and for our update, and we thank you for your continued interest and support of Boise Cascade. With that, be well, be safe. Thank you.
Operator: Thank you all for joining today’s conference call. This concludes today’s conference. You all may disconnect.
