WY - Earnings call transcript Q4 2017

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Operator

Good morning. My name is Dennis, and I will be your conference operator today. At this time, I would like to welcome everyone to the Weyerhaeuser Fourth Quarter 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. now call will to I Instructions] turn over the Ms. [Operator Director of Baum, Investor Beth Relations. ahead. go Please

Beth Baum

call Dennis. you, joining Weyerhaeuser’s earnings. www.weyerhaeuser.com. to for everyone, us discuss webcast This XXXX quarter Thank fourth morning, today Good and being at is thank you

presentation the release also can during the forward-looking associated presentation Please slides and our our press statements, be statements with statements made the concerning this warning Our in on will as release website. materials earnings found review call. and be forward-looking on conference risks

We non-GAAP can discuss our earnings financial will reconciliation measures of be materials and GAAP website. the a found in on

the Russell are Hagen, On now Doyle and Officer. Financial Executive Simons. I will Officer; over morning this Chief call turn Simons, call the Chief Doyle to

Doyle Simons

everyone. formerly million costs our synergy target costs of nearly merger Natural to the process grew excellence of by million Estate, Fibers goals, full-year performance value billion In exceeded Products and Weyerhaeuser fully Energy Timberlands; and delivered they accomplish the welcome, premium over XX%; financial employees creativity of sales; $X Real Western the proud deliver as of and for timber and in since and I’m operational asset to by work, throughout challenges strong captured $X.X Resources XXXX; eliminated operational nearly estate $XXX dedication to by generated $XX team and work displayed results. our nearly real from most EBITDA delivered to optimization Beth, you, our XX%; EBITDA business. adjusted EBITDA, strong year, overcome billion; XXXX. the together improvements; completed increased Wood we value XXXX, allocated XX% Cellulose a XX% Thank

and redeeming $XXX optimized proceeds divesting XXX,XXX our over selling collective of Creeks further our acres million. venture, portfolio joint also operations, by We Southern in for of the ownership Timberlands Twin Uruguay simplified our and

shareholders cash commitment and through are with in Finally, results. our time since consistent These XXXX, accomplishments return sixth increased to sustainable we dividend. the to our reflected a financial dividend for our growing

earnings per Weyerhaeuser million, a XXXX, continuing billion. on full-year full-year $X.XX This $XXX of net reported or in the improvement share, from For earnings XX% net operations. sales of represents $X.X diluted

Weyerhaeuser on sales $X.XX million, For of quarter or $X.X Fourth earned net after-tax special $XXX a results $XX diluted share, items. quarter, billion. per fourth the benefit from million include

per adjusted Excluding totaled special quarter for the ago. year $X.XX items, one $XXX more quarter. quarter than Fourth or double earned This fourth fourth diluted we our EBITDA earnings higher million, million, $XXX than for is share XXXX. XX%

activity results solid regarding demand market in building make year as more for let averaged market. housing I fourth of the quarter. continue on an enabled The million few areas X% detail, note, increase almost Total our business a late quarter, the Before comments $X.XX and – favorable into year. starts annualized to with strong many housing in me discuss continue the a compared the housing finished third U.S. weather the

million. the starts over For XXXX, $X.X just U.S. full-year totaled housing

active is permits confidence healthy. fourth XX% from Builder XX% quarter Single-family demand. by homeownership to single-family earlier. Products a and market Millennials under with shift compared Permit Single-family strong, Wood strong. levels expected, activity housing beneficial and prerecession As comparable starts age total year full-year starts remains Approximately strong is were rise holding while XXXX. XX fundamentals in increased rose one ago. to X% and highs. the XX.X% XXXX, for becoming someone remain to are households headed confidence very XXXX at the consumer year among mix is Entering for more favorable. the This in market single-family activity approximately attributable multi-family remained remains of growth averaged X.X% with in $X.X employment wages quarter. rose million over permits in fourth Economic and historically homes, volatile. growth was XX% starts compared housing to the total continue solid,

guardrails to of optimistic provide a labor demand may on continued for the availability and see rate significant opportunity serve lot XXXX. building for constraints and pent-up strong activity, and are Although some dealer our customers builder

expect single-family housing to we XX% total nearly $X.X by with million. approaching XXXX, For starts increase starts

fire by throughout Per me more XX% fourth the million our the Timberlands business elevation quarter. turn more production a quarter, increased Adjusted quarter as quarter volume our of quarter. compared quarter catch before domestic than the third segments. third million season. to $XXX Pricing during harvest million. up X the delivered the strong third harvest million as than and high Let conditions volumes to contract depleted us to steady Western items, ago. contributed slightly now EBITDA and logs quarter logging strong with to enabled market I the Timberlands severe to logging. season. favorable million increased logging and Charts with increased rebuilt costs to decks $XX increased and unit harvested earnings $XXX that log rates quarter fire due Timberlands, third domestic for begin than throughout the crews EBITDA, will $XXX the cannot more additional be demand million $XX conditions year and discussion Western $XX third on were hauling higher X. during mills trucking special remained underlying Fee

at the from China, throughout logs normal buyers. Turning quarter, competed are remain timing prices they rose by markets. high inventories Log quarter ports customers relatively volumes low declined stronger Japanese Japanese strengthened Log slightly and against operating and demand customers for the In inventories as solid. to our Chinese U.S. takeaway our steadily for strong running during demand at third within and sales remain our to Japan, and demand was domestic were In Log steady a remains comparable pricing offset and export rates. lumber shipments. of range. as remained quarter

were to weather normal comparable fee harvest realizations accessed, Unit rates. third than up as were during Demand as due the $X quarter sawlog the events increased Timberlands up on $XXX third $X quarter. hurricane than Montana trucking more harvest, realizations resumed harvest Timberlands activity. Average EBITDA, Moving restrictions X%, to the place. improved quarter Northern South, lost to the our volumes increased cannot on Average higher slightly contributed quarter. million Southern to mills contributed more Fee fire with costs quarter. as quarter to EBITDA, the and caught third in pulpwood transportation improved and production third fuel be mix. following caught volumes and days fourth million million million compared we third we increased due mandatory they $X while to operations

from $XX sold quarter non-taxable gain include previously the a contribution Timberlands to acre. Chart Finally of Real on X a due for Southern reported of contributed and per ENR of XXX,XXX announced $XX is and Resources, Twin sale non-earnings special X. our Timberlands joint the results activity million of redemption included includes The $X lower to This the fourth greater acre of and item. increased quarter tax sales weaker price interest. ownership to Creeks of as Montana Natural $XX a as Adjusted acres earnings, per transaction quarter by & fourth than operation Estate proportion EBITDA several acres, Real quarter quarter. Fourth million million Energy third venture due $X,XXX large Estate, value acres. The Southern uncertainty quarter. average third included quarter the the slightly to compared sale policy. third than more budget some while regarding with a expected, increased million. was quarter $XX paused volume buyer Fourth million

is when for seasonally and than managing Hurricane segment in by $XXX EBITDA capturing $XXX include improved a over transportation. costs land since XX,XXX rail realizations sales higher our but pre-tax or This million facilities resulting base. for Real Wood costs Charts For and third was of typically OSB just margins totaled than Average with and home double exceeded million the X% approximately Resin for cost compared average expected our for X.X% million seasonally as $XXX million comparable higher the product. performed contributed $XX third costs, Canadian realizations more strong an operated significantly demand million and Fourth Canadian compared X% more third XX% the more resin. than quarter. Engineered Canadian the billion due production $XX number higher. a million sold full-year $XXX well EBITDA almost Distribution by cost in the Products, of third million in contributed and labor a products This timber more XX. special year EBITDA XX% results with volumes, third offset million volumes, over remediation million services the targeted on $XX in million mills quarter more million of sales totaled $XX product prices quarter for Products to for following the was over sales in than XXXX, double earnings OSB, quarter, wood million a This $XXX X%. Average and fiber price lower quarter. than year value, decrease from before charge for business and were quarter X% quarter $XX with the ago. due a challenging in million Irma. lumber fourth log $X volumes acres, transportation. XXXX, Wood Flak fourth than sales Wood we the declined manufacturing again, and to $X X to is reflects for over the the also volumes Real the than charge and its highest quarter products $XXX premium ago. issues mills for XXXX EBITDA, EBITDA XXXX. $X to the rail focused were third XX% million ago. increased. Jacket fourth to compared Estate to our and improved full-year decrease from business Sales remediation and offset annual Estate year disruptions for This contributed improvement XXXX. premium shipments lumber Harvey from increased Western quarter EBITDA, and largely Adjusted $X to items, contributed a EBITDA, in quarter. our quarter. weather-driven and delayed higher to This what the to with due of

remediation we completed the of XX% in houses. have of As yesterday, affected

will duties affirming with U.S. wrap by I Products Trade to On and the final cost We determination, International became continue Final of December issued duties Final duties for adjustment few with up Agreement. Wood December the on the the benefit an remain quarter be U.S. approximately final expect Softwood for a effective million the producers. of anti-dumping $X its discussion countervailing Lumber to significant years most or from periods a countervailing WTO. and injury reduced comments X, covered anti-dumping Commission a material on are the the portion insurance. collective will for duties. rates five upon pre-tax These include unless XX% assessed NAFTA applicable producers. appeal will associated results Fourth at XX. and effective minimum lumber a net by

Although coalition decision. The we XX, will a for a Canadian before be closely expect appeals we the able the hopeful, we excellence. producers initiated both to quota-based bodies, to Trade the several Representative, process years negotiate U.S. remain operational will reach agreement. extend panels Chart with have U.S. continues work and to

operational As our in The to operational lumber primarily its million Timberlands and and Wood captured excellence $XXX distribution $XX Lumber operational improvements, million targets captured significantly business and XXXX. of million $XX $XX their Wood opening merger-related $XX performance, products my and $XX improvements met the million business I $XX improvements, almost mentioned million exceeded wood achieved of million their $XX high-end million $XX operational million excellence million Products in exceeding and of at delivered million from of of its target. targets improvements OSB capturing Products target. million standout to excellence respectively. Timberlands $XX synergies. Engineered in in $XX of OSB. remarks, with

million we $XX in $X to $X distribution. XXXX, of we lumber, are have of in In since to we million to $XX including $XX $XX and million Although million Timberlands products, million $XX excellence in have our each $XX our and million million almost to improvements relative opportunity operational $XX to in million of OpEx million targeting $XX captured million $XX in more improve in million Wood improvements engineered $XXX million businesses. performance to $XX XXXX, Products, in million to wood OSB,

Cellulose to will to goal. and quarter some now Fibers discuss fully we to allocated turn I to costs our operating collaboration that XXXX proud first eliminate outlook. of year-end. these commitments on cost functions team this the Finally, million it formally segments reductions over across of and our by $XX the Russell require corporate and capturing work delivered to enabled our and financial I’m us business Identifying achieve items

Russell Hagen

outlook In Doyle, business, In adjusted favorable for Thank fourth morning. The in will operations, first first special quarter to XX realizations and continued is good demand. we Chart our items. earnings slides. the and you, Timberlands be expect our comparable the domestic quarter earnings before Timberlands quarter strong Western EBITDA anticipate of and presented earnings we

to modestly quarter. harvest quarter, additional log were decrease expected compared sales Japanese as volumes increase are the average of fourth quarter quarter because to expect that fourth the to restrictions. fourth the We the volumes realizations deferred and export compared from third fire sales volumes included to

modestly softer average and inventories, seasonally decrease realizations sales will demand is New Japanese seeing volumes, to providing are the which expect support. quarter fourth fourth strong demand lower sales expected to be in continued average strong Lunar are seasonally comparable We to export we with combined to quarter for compared market In volumes low-channel price the and Chinese demand the Year. the sales log anticipate and due the South, on we first the realizations quarter. housing

report sales comparable large trucking and a harvest will significantly are the volumes In fewer the exit and second fourth compared and previously and summer fall in of quarter. of first adjusted venture, year, in harvest Estate, closed of fuel year-over-year. In XXXX, volumes for second-half North, the are Real and Estate Other. in have slows anticipate In be the lower will expected we realizations be volume Twin decrease, months North West, quarter earnings EBITDA the to while from transactions be year. category higher to buyer comparable to the most South seasons sales the slightly the winter quarter. we the will we Resources Natural portion titled costs. compared of Energy our and fourth to to during The longer typically active the joint harvest expected sales volumes expect expect quarter announced also selling Creeks to closing the recreational the traffic We XXXX as the Real no and months. are decrease Full-year result first as we with the to

We quarter be and last and year. expect comparable first Resources EBITDA quarter to Natural Real to the adjusted first Estate Energy for of the

Energy bases EBITDA should XX% approximately as our $XXX We expect from for adjusted the Resources Real Estate Natural million business of of a XXXX. Land in and be Real percentage XXXX. Estate and and sales between full-year XX%

anticipate the we EBITDA before special For items. Products, Wood be to earnings quarter and comparable will earnings quarter adjusted first fourth

we sales higher. Lumber, slightly average realizations will expect For be

lower we and announced in major products, For unallocated the in be typically the XX% XX fourth sales quarter. Engineered Chart the will capturing lines, realizations begin comparable OSB, wood as sales due for operating seasonal X% quarter-over-quarter. quarter-over-quarter of product quarter. maintenance realizations expect increases will lower expected second the recently outlines we the have We will be downtime. we to average price fourth wood our increase engineered to volumes products for quarter Sales components to of to rates and all items. are production which

inventory For earnings adjustments, our export and depleted quarter, quarter the EBITDA wood an products before and items the rebuild the during charges fourth fourth log elimination as in non-cash intercompany driven in LIFO quarter. compared to inventories decrease profit primarily related and increase mills are to special in the we by adjusted yards third

million for merger Plum fourth of include prior costs In million special costs. and in incurred $XX quarter unallocated and reimbursements of pre-tax environmental $XX items integration Creek addition, of items years remediation insurance

anticipate completion merger, integration additional the XXXX. in costs we do merger not the Following of successful

in year-end pension status by For basis as discount points result and XX decreased plans was U.S. cash in the pension $XXX plans, rates. we by U.S. make the XXXX, in compared million any cash decrease XXXX qualified not a XXXX. to postretirement XXXX, funded for to decreased to approximately our Canadian contributions make a for basis We any the postretirement required points $XX of not XX other the plan and in for plans paid rates Discount did XXXX Cash pension and are million. all plans. contributions and

be for plans will Our $XX XXXX these million. required cash approximately payments

We summarizes non-cash, quarter million postretirement or $XX record XX balance for expect pension million, $XXX items. quarter XXXX. cash the of are our per key fourth expense ended million of full-year Cash during $XXX to million. a $XXX $XXX We and operations $XXX approximately for Chart non-operating in totaled from million. financial with quarter million. Capital XXXX and fourth the expenditures the quarter the was

approximately expect in Timberlands the selling $XXX for and Investing from million interest Creeks. to $XXX $XXX total million for XXXX, will $XXX cash joint redeeming Products CapEx approximately $XXX,XX Wood Southern we Timberlands. Creeks include ahead million, fourth and for venture our be also of Twin million to the Twin flows equity of from Looking million acres proceeds quarter $XXX proceeds

Moving billion $XX on expense quarter. debt. was the million outstanding. We of Interest debt the in with quarter $X to ended fourth

interest be We XXXX. expense will expect $XXX million approximately in

Moving to taxes. on

the Following the provisions dividends tax REIT federal XX% earnings our REIT XX% for enactment federal and us does earnings effective status, reform, will XXXX be not lower tax subject forecasted taxable mix at our rate items. deferred the new tax We REIT and rate. from XX%, to affect be any REIT XX%. gain that on subsidiary. quarter The earnings following not federal expect is our the tax our anticipate generated or net In the tax we on assets, interest the now to results, our rather net the the reduction special tax the taxable by The limitations in Further, adjustment to subsidiary. will our based in than law shareholders. benefit to These of our the allow pay primarily we on rate prior capital tax our included fourth federal remeasure of our currently between deductibility. do adjustment was

turn the back Doyle, call I’ll and to look forward questions. Now, to your I

Russell Hagen

our integration, performance returned our XXXX Weyerhaeuser by you, strong further delivered was we and increasing completed year merge a all to cash shareholders our businesses Thank successfully financial for Russell. our across as dividend. focused portfolio, improved

value now, improve extremely capital XXXX capitalize excellence, for floor continue ability Going open and fully questions. to the shareholders. through demonstrate conditions to And on operational I’m to disciplined optimistic forward, to and our drive about performance for market I’d like allocation

Operator

first is line Wilde go of Mark Bank Your Instructions] of from questions [Operator with Please ahead. Montreal.

Mark William Wilde

Good Good morning, Doyle. morning, Russell.

Doyle Simons

Mark. morning, Good

Russell Hagen

Good morning, Mark.

Mark William Wilde

start I a How to much off, the I markets, markets. bit because Just what’s stronger start to Wood would off read you of wondered in little here? January you talk just than if going have here expected could all these Products a in on we’ve about gotten do

Doyle Simons

Yes, by I’m you. Mark, Products tell what we I’ll the in encouraged market. see Wood

housing from at you’ve look you millennials that said, and as what also anticipate demand XXXX. got If to see going up, repair we’re lumber strong up, remodeling I going showing the markets, in optimistic growing encouraged markets. about are I’m

inventories. lean got You’ve

You’ve rates. got high operating

got that and Canada was XXXX in down versus into building now, season. the from X% roughly You’ve we’re in stronger lumber less coming moving and XXXX,

same rates. what in again, in seeing just outlined OSB, growing by by driven the high clearly have encouraged inventories, markets. things operating lean we’re demand, So Likewise I lumber

grow, that all we will. on. industry to new continues capacity think, demand able know capacity should to which it But absorb be Now, I there’s coming assuming this

period other been online. longer will bringing mills capacity, an especially it volatility the as up up have takes for But about new normally you’re time. know, capacity, that of when – there very capacity it down thing well the bring you of and takes comes new be to Now that new capacity Mark, extended as some lumpiness

by have of that realize wood a think And as optimistic seeing. terms have of quarter. quarter little should quarter and realize the in maybe of then, that, a second by pretty to engineered of what the or of of announced the start all in overall, So we we we’re that, second we’ll we half mentioned, we XX%. probably price increase to – X% about in the second products, course, And more will end that end we

overall optimistic about So wood products markets. pretty

Mark William Wilde

just market is Western more put U.S. a surprisingly – then question. any as color follow-on this the that? also And behind from but And you Okay. if there want also, Well the just to weakening any is wondered, strong. effect dollar? in log I

Doyle Simons

have So, very been Mark, Western positive. as you said, log markets

dollar prices up We – the as we if continued as and continue in volumes in inventories. we for here for about you’ve Weyerhaeuser, was and is go be pricing New a continued the for and weaker markets. Overall, higher XXXX, we solid you and from in Post the at low But XXXX. over XX% beam said those encouraged we improvements, to China see policy through strong XXXX Domestically, positive demand strong which present Lunar exports up, markets. got China, bad Year. in a we’ll XXXX versus demand in we look the and up to is little what it’s Japan We have can versus driver – us, U.S. key is QX. versus a And I just strong Weyerhaeuser. construction log QX dollar expect a weaker or were anticipate

that So these net-net will dollar in overall if us does the be a for positive markets. weaken,

Mark William Wilde

I’ll it Doyle. Thanks, Right. turn over.

Doyle Simons

you. Thank

Operator

Citi. from is line Pettinari Anthony of Please with question the ahead. next go Your

Randy Toth

Toth is Randy in sitting actually morning. This Good for Anthony.

Doyle Simons

Good morning.

Randy Toth

commentary you freight and you a think tightness. know labor regards hearing guys I that to of cover how in companies from We’re in the want to we XXXX? might tightness just lot impact that

Doyle Simons

shipments rail much delayed one Canada, over one example, Canada, rail we and fact wood but by two have tightness, a out type Canada. that specifically from mentioned were weeks real better in from result products in seeing out rail in fourth for of also are a quarter, a companies trucks other of earnings as transportation like we in And that mill, we issues, Yes, in on as the of perspective. of impact

of think XXXX. that And really to availability, work initiatives the through rails So that we we our operational offset but we’re headwind rates, continue going truck XXXX, in in excellence side. on to more increasing move hard to into as and will terms both be so a

Randy Toth

And Okay, thank the you. can U.S. timber of talk out exports bit you a then little about

small they sustainable? know, although in that think base. I guys and do that, XXXX much you a How are South. grew growth off participating is quite in bit a you

Doyle Simons

Yes.

they participating it a a while you’re it’s base. is, for off anticipate that right, three would in is be were in small be are export would go use. initiative takeaway is markets XXXX, the And that try now XXXX. in and times the guess our We our could low best What the just to they you us. We into equivalent, would a than key we that and sawmill higher tell will what in to shipments U.S. dimension it

It’s base, but growing. you’re So off right. a small

and of spending market We’re lot about are optimistic that resources that market time and very long-term. a developing

Randy Toth

Okay. very it much. I’ll Thank you turn over.

Operator

of go the America ahead. Bank Your George from Merrill Staphos question is with Lynch. next Please of line

George Staphos

Mark’s good and off for the guess, maybe of the piggybacking on Congratulations details. morning. Everyone, question. Thanks question all had, I Russell. the earlier first year Doyle I

they overall, you your customers channel? And you where back see the see Where if the present decks So are any mentioned, do Do normal you log I’d at inventories overall in less be lumber below you it. had do I in follow-ons? West? terms things more that missed think would of helpful? had levels, thoughts in average normal? couple a or to inventory Are And still

Doyle Simons

Yes.

they So look if entire pretty lean across inventories, system. the at you are lumber

of very kind got would in they’re between log very, and fire rebuild. have I somewhere season. to say, they West. low If the decks as normal, you know, are during look the but the low decks rebuilt being at started you log They in West,

George Staphos

on high in other think West market present question I you. the Okay. sufficiently a are words, keep log? demand that you for Western lumber there do had logs? in and strong So And subject, Doyle, pulling wood out one the enough On to destruction across demand seeing margins prices are you Western

Doyle Simons

Chinese where because is directly Yes. create logs prices are and thin we is system call beauty able we competition the any – continues play and Where value logs can up, yes. not And logs, from to run and strong. domestic seen competing occurring we’re other. have you – value. answer destruction have against is demand as most our would The to that The those that be between each pricing of is, to the the what

George Staphos

last segueing questions, on I’ll One off just comment then over. Okay. that OpEx. it comment Two turn and

just the work as mindful What in eyeballing on and bit export than kind So log last noticed going you’re China year. against it. gives guarding deck a congratulations a that one you that appreciate more be what-if. in else thing And drop there. the The of that we on we to or always, should performance to of, maybe revenue a And then terms OpEx, the of it into that still effect lumber that quarter sequentially XQ done much the drop years first quarter. year in Thank further the more XQ last with all in because four XXXX? we as OSB program Chinese have an confidence, luck did of you’ve good in I and in you you the seemed in there’s in guys there four the Year, mentioned, up and the guess, tank to coming New sequential seem Lunar off didn’t of which as there’s something Is detail.

Doyle Simons

industry can it’s in going as have George, domestic on forth. simple in of in as the China, from has is the we the in XX%. I continued to mentioned, overall to an and perspective, up falloff to more a with were to domestic actually we’re China, improve, the we terms it’s swing what’s markets just mentioned, as China down quarter nothing versus markets. market domestic and pretty And I that strength back I’ve It less selling reason fourth do shipment to China. mean, third in log are up. And And

George Staphos

Yes.

Doyle Simons

New XXXX. that we’ll anticipate Year you will and what never And in strong in we demand this China have, know but get continue to Lunar through impact

mentioned the progress. we’ve as OpEx, earlier of good made in terms In comments,

very good in this progress four made first down-driven. top but more front what’s encouraged happening we is, it’s opportunity program started years so in three have But there’s when OpEx or much us. We XXXX, ago, in of reason by I’m the

Now driven. what’s happening is, bottom-up it’s

are out to being how every Our additional employees that’s working drive compensated. day defining the how in are mills, working Timberland people opportunities are are finding OpEx winning, that’s improvements, the in out we’re

So – that can out we meet XXXX. laid in the able to be will encouraged targets or that exceed we’ve

confident you’re get in it most targets. Products low-hanging the versus the does that encouraged but and as that, we the see you XXXX indicative which got numbers XXXX have by Wood fruit We’ve did slightly down and opportunities is those Although, come we XXXX right, harder. in exactly will of in of meet

George Staphos

much. quarter. very a luck Good on you Thank

Doyle Simons

Thank you.

Russell Hagen

you. Thank

Operator

is question the Mings from Please ahead. next Raymond Collin line James. with Your of go

Collin Mings

Hey, morning, good Good Russell. morning, Doyle.

Doyle Simons

Good morning.

Russell Hagen

Good Collin. morning,

Collin Mings

start to Just me. for

the the by year, balance just given termination talk Timberland flexibility given of Just growing Twin maybe more growth just sheet, especially the JV? external the this how approaching Creeks front bit the about you’re recent on little a offered

Russell Hagen

Yes, Collin, Russell. this is

how far making States United have major understand markets, timber look As the all we team timber as a we and is And have kind we that the the we’re focus valuations the in million that market. values of on wood every we relative in basket. and at XX.X sure really acres in they

at we’ll portfolio over an the value. always And in it goal So coming take on disciplined. the very very But opportunity everything a going shareholder we disciplined if But approach to do business manner. to is continue our grow we’re our a increase see Again, create this look within and to that. to market. we long-term we can that hard shareholder and value, there’s fits the

Collin Mings

the sizable or of anything there transactions in that on Any pipeline, front? out Okay. kind

Russell Hagen

anything meaningful. beyond, that of the XXXX think kind don’t I couple what’s will broader in that into and probably that a XXXX of see available, I carry pipeline transactions in close. There’s the didn’t else But news were in what’s over

Collin Mings

EBITDA with of debt but off that maturing and got still it’s plan allocation you to Russell, with the this sticking Just early, do on just the pay year, cash it, recognizing kind capital you well to pretty at in about a you’re maturity meaningful thinking how maturity still just debt pretty you debt your the targeted number? high-cost, are below XXXX just of kind when here

Russell Hagen

Yes.

that of take So couple let a me in steps.

a available with off X%. wasn’t to cash, and make first paid go really pretty maturity. that that because refinance paid – do actually have we yesterday rate about maturity we $XX high such and million was We it that sense The small off coupon a it didn’t is,

$X.X As debt are the maturities. you’re billion, to think that far as referring our I future

don’t a flexibility that with it well comes a from standpoint but balance we address have and around we’re up, any of see that We when that. positioned concerns to lot sheet

As far correct. ratios, you’re leverage our as

a We cycle. net the target X.X are – have leverage times to that’s EBITDA of over and ratio really debt

years, in some some we function and that’s going Right going – to to we’re little little had higher. also in our a some but of and years we’re some we’re EBITDA. be little paid we’ve debt a down lower and restructured debt, be a have lower improvement now, So

So we see that.

arise We’re comfortable and we go the a in a very to position, flexibility provides with want us markets. opportunity should and an lot of it capital tap

Collin Mings

Timberland as me as one one Okay. far last And then guidance. just on for the

volumes? the I the be you Just and remarks, decline given Western in downtick West the South which year-over-year the But start in pricing flattish and imply volume. meaningful strength prepared West quarter in quantify log maybe would expect particularly seem in that how we North on again, be in first can would just the guidance XXXX, just given the at to least, harvest a think there year-over-year. of suggested pretty would much the terms should the momentum down you that

quantify how just So we should that?

Russell Hagen

Sure.

picture. So, first, big

We’re harvesting on level. a sustainable

through mentioned modestly a the on harvest the year, Investor West, the XXXX, in in timber decline our Day acquisition. we older last will at as the really function of that’s and age Longview So working

in out level level, harvest in then the growth we’ll see and we’ll that in moderate so XXXX see XXXX. And starting

Collin Mings

any to those other should harvest relates about seasonality Okay. volumes? we it as noise And think

Russell Hagen

first quarter? the into Coming

Collin Mings

Just West in in yes? general, the

Russell Hagen

Yes.

So the in volume to lower in we’re have West. seasonally some West, the going

Collin Mings

guys. the Thanks. appreciate color, I Okay.

Operator

ahead. is Your Brian Maguire the from Please of Goldman Sachs. go with question line next

Brian Maguire

Hi, good morning, guys.

Doyle Simons

morning, Brian. Good

Brian Maguire

quarter, A couple Products size segment. to or from of there’s like times, impact that? immaterial way than hit any trucking you I issues mentioned or wonder $X more some just negative EBITDA and you if the Wood Is Canada million in that? in the million $XX a it can in rail

Doyle Simons

You’re talking about quarter? fourth the in

Brian Maguire

Yes, fourth the quarter? in

Doyle Simons

and Brian, of it fourth trucking due the was Yes, just significant in it the was a to primarily in quarter, issue lack Canada.

at I I mills, rail. mentioned, delayed mean, – one I of said were our shipments for trucking, As

back up. So let’s

of in a rail the got So quarter. fourth both those issues, truck and problem were we’ve

two that a Canada. For for due weeks full example, shipments availability in trucks, With trucking cold problem. mills, quarter to one surge issues, in extremely rail delayed – demand weather of said, were fourth a the because the in for to our also due of primarily the was

so, was available or I we hit wasn’t So to the fourth $XX there million to would that quarter. just in the couldn’t more volume, due $XX month Part December. was ship because primarily in but rail say, the and of happened the – prices, higher of probably it it trucking million a

Brian Maguire

And we’ve that some helps. but lot I storms South, down the then like in had Okay, Gulf in maybe the not of we don’t states, know seeing disruptions, here a winter have. maybe XQ these sounds just it similar in normally Canada,

going the seeing there’s if so that Southern in Southern Products to wondered Wood impact Just far be XQ? logs you’re maybe or in an

Doyle Simons

opposed higher XQ, just think going to cost in ship. it’s be able I to just to as being more not

and comments, and mentioned into rail terms of availability December. But I earlier seen in will going month We’ve the higher move truck just both a trucking As headwind, I in do rates that do have not think we disruptions in be in we we and as saw in XXXX. rail. the of my

XX% currently We’re XX% about rail. truck,

truck the will forward. We we to move as possible one when at better that’s look more just because be as the options shifting we

Brian Maguire

Okay.

go prices could outlook upward to prices? it’s how see do on the give an by since be little thought today, year bit pick a Day Groundhog a up. could area of sort year And those maybe one will bit little It’s start some I tension think the of to maybe this you going we prices we prices. on think off we on the it’s this tilt of same, you you Southern more to an the be log if in market start year, that maybe or start to start Just thinking, of and could end of see the

Doyle Simons

Brian, great it’s and question, Yes, a I appreciate the color.

how about down quite there’s will why. for to comes the traction frankly, we’ve grow thinking Let to continue we’re encouraged about housing up tell I continues me one, as market demand, millennials in XXXX, pricing tell in what’s finally some do that we’re show of housing we to what you let And it. all to it potential optimistic Number And and me and and terms think you we’re said, grow. that’s seen starting the especially in been missing. some

that announcement remodeling roughly Maybe added even that X.X%. capacity being that, is of more up there an We projecting least added, at are strong than It being from like lot being is the be you repair year new know. of also a expect South, seems week, a in to importantly or there’s and that’s capacity every as considered.

feet numbers, feet another and come sawmill the feet terms in came of currently board slated that’s of billion billion XXXX, There’s billion online consideration. X In online XXXX. X board capacity XXXX about new top to and another that, in of on board X under

Just big point, certain to that’s put board And additional benefits that’s increase. where XX so are feet capacity in base billion come online. South, your about to a see perspective that we a starting to the of some in markets, has on already in

part lumber is that’s result the side going third on think, course, to coming of final continue less from is, a supply this and there agreements. the negotiated in or of duties, of I either Canada, as The

markets. as down XXXX of finally, over down absolute in I by XXXX, Canada, look lumber XXXX. down to XXXX. then from mentioned Just development as X% those you were XX% in in that perspective, earlier, And to versus XX% from export in we’re put that very at Southern shipments encouraged And just number went

as as as XXXX, We’re mentioned, a mill. going XXXX times should much small equivalent to three and to ship I in that be

together, start we to move pricing improvement hopeful see some to So are as we I think, we all of those that XXXX. start things and will come are going through to

Brian Maguire

Okay. I’ll Thanks, there. it leave again.

Doyle Simons

Thank you.

Operator

is line with go ahead. of Your Chercover the from next D. Davidson. Steven A. Please question

Steven Chercover

morning. good and Thanks,

Doyle Simons

morning, Good Steve.

Steven Chercover

up So update specific the Southern on wanted I Alabama, projects year? you they’re your on to views how to if for – the you what’s Mississippi next understand, gave So course us going a and just ramp Arkansas, log kind timeframe? over little could that of And your of pricing.

Doyle Simons

question. great Yes,

which let – the capital our up look additional XXX increase additional that’s an then XX will Arkansas, two should rebuilding the start year. you that board that by projects start an in Dirk’s, feet as we’re a off early at top lumber projects, big our will On projects, is two one me capacity. million up and we’re two that, X% XXXX, board overall of productivity X% number and this mill, feet of Millport start operation the our of to just in if So summer And million saying, capacity. our spending

of that spending. top on the through that’s we’re we’re to X% X% So additional that capital the getting

Steven Chercover

and ITC and Okay, the the I are great. I And the lumber between softwood on trying then in have ruling lumber lumber. Canadians The the recognize big I file, NAFTA the But one Boeing to because softwood mean, file. does – on talks? – link recent certainly any and impact airplanes difference it then between Bombardier

Doyle Simons

Yes.

has We’ll on to any we quota-based believe to are the hopeful. separate reach sidelined said remain from NAFTA. due remain would And that think be NAFTA discussions. negotiations negotiations on frankly, agreement. don’t will we So impact able those overall We, I the a earlier, the discussions. focus as temporary But

Steven Chercover

So I would actual don’t what specified XX limit volume Canada? feet with billion board recall ever if the you’ve feet, from board or be billion XX

Doyle Simons

limit terms the your In what of on I’m Steve? understand I point. based don’t sorry,

Steven Chercover

to guess, it’s Sorry. there’s that limit Well, share limit volume if quota I opposed a a as so? market a

Doyle Simons

hard gone. may not that’s the the discussions be it’s XX, quota Now discussing be have it’d XX, a again, on limit XX, being a the number we whatever negotiated that be, a the been volume, still quota. would It’s have way whatever percentage, percentage it’s and

Steven Chercover

Doyle. Thanks, Okay.

Doyle Simons

Thank you.

Operator

question Mark Weintraub the with next is ahead. from Buckingham Research. of Your line go Please

Mark Weintraub

Thank you.

was lumber and giving, that just the follow-up interesting on the I on U.S. thought capacity First, you’re color very the to particularly wanted helpful. in

that mentioned wanted X just that? in I XXXX, had each You was billion and assume to year, XXXX board clarify in feet

Doyle Simons

broken and saying, on been the and going ground top we’re X was a not the XXXX in another of that’s there’s as And factoring billion. know, for to but this, Mark, that, do XXXX. the, lot That okay, then has we’re you total that’s not been

look So at total XXXX, up X to it could if XXXX, billion. you be

Mark Weintraub

Okay, okay.

XXXX, and I to? you’re X referring said another that think, So was in you billion what

Doyle Simons

in to that on in total of X meant XXXX, is Mark billion to that’s X be meant in billion top in the yes, of point say some billion what X that with to could probably billion XXXX, XXXX/XXXX would in and up show another say, – XXXX/XXXX is I I chance maybe What XXXX. X here the there your

Mark Weintraub

of U.S. Okay, great. in you And on the you. have outside Thank view a handy do curiosity,

South? capacity net What change over America in be? that North might timeframe

Doyle Simons

those in numbers have here us. front don’t of I Mark,

capacity of will there could we be as West. think, the the their anything capacity shrink if know, to think, fiber that Canada, I I due to because the situation. lack beetle In happen going in continue all potential to of pine

Mark Weintraub

to question. real then Okay, great. estate, shifting two And gears

had that had during would I than reviews be number thought expectation up, and misremember. was a So you any higher maybe to EBITDA well, year maybe given bit million this on likely provided hoping get of was color little XXXX. $XXX And cost as likely just preliminary the some that XXXX? I I But only that you for finished that basis. the as that’s around estimates indication any going

Doyle Simons

Yes.

that. So about talk let’s

the So the we what came This up federal little projects. directly lower is guidance, give happened being that million various would many ended $XX than agencies in that money EBITDA a been a is XXX is there dollars first approximately many, federal to of for sense just where time to in projects. that generated you impacted of allocated the no deals, in provided no years, And and in conservation XXXX were magnitude, has conservation have for XXXX. two

dollars see is being little no are we’re based on in into that – happens. that place. we’ll we federal there move our to guidance that XXXX, put As But hopeful

with fundamental shift no some federal assuming dollars. the number chance, that’s there’s forward as XXXX comfortable look into we that’s but the that there, we’re So upside

the… of terms In

Russell Hagen

Russell. this is Mark, Yes,

as XX% As far to XX%. we’re bases, about guiding to

Mark Weintraub

was I Timberland just, side Weyerhaeuser the a you pipeline being things there that on comment? clarification. Okay, in an,industry when a or great. just And couple that Russell, one specific was about assume, talked had

Russell Hagen

industry. No, it’s

Mark Weintraub

you. Thank Okay.

Russell Hagen

Thank you for Mark. that clarification,

Operator

with of line Mark is Your next from Connelly the Stephens. question Please ahead. go

Mark Connelly

Thank you, Doyle.

our… of Some

Doyle Simons

Mark. morning, Good

Mark Connelly

Good morning.

thoughts construction too activity, of that of Can is clients they labor away. what do away assumption? markets see us shifting those tell [Multiple out available labor you hurricane this because you your give rebuilds Some the our year, much see how Speakers] and of sort that playing from thing construction see taking bigger in got the that overall you on you’ve because us a –

Doyle Simons

and there’s talked that the is Yes, one And doubt constraint. the labor our thing no over. as that’s of customers, over we we hear all to

new I think be in normally of would that some labor remodeling some you hurricane. used housing is of a as repair it, result the select and of for indicated, being markets, as had used the for, call the

So a damper a those that will put you know, of houses, of that near-term. Longer-term, think destroyed. little on I number completely as were a maybe the there’s bit housing in markets, in

new So those in will housing. end up

housing move starts limited new But always hurricanes from positive So be these net-net, to another that’s things. as of longer think, terms forward. we to think, it takes rebuild the in for short-term. impact know, Long-term, in I just I going from we as housing

Mark Connelly

Absolutely.

Just one more question.

us…? going sort is thing, if new I operation Are tell leg to excellence this back opportunities, operational targets the the you coming But keep you could a sorry it. there? shift bottoms-up as of to of give up excellence again? wonder On to are opportunity to I’m the to us going start just

Doyle Simons

question. great a it’s Yes,

over low-hanging four at said, the down years I fruit. As if very started top off driven you look last

but what new things driven, moving folks bottoms-up more we tougher do, our being that but out things to I’m not the figure it’s can into frankly, enough are because are smart are. that it’s the Now

the size couple least don’t My they’ll guess the continue those of these we’ll we’ll then terms up and on substantially. to identify of in next remain think, at be an levels going basis. from opportunity, they’ll So, best go is, I for at of years there. annual the

Mark Connelly

to problem good It’s you. Thank a have.

Doyle Simons

you. Thank

Operator

Research. Your Gail Roe line is Glazerman Equity with ahead. next from go Please of the question

Gail Glazerman

good Hi, morning.

Doyle Simons

Good Gail. morning,

Russell Hagen

Gail. Hi,

Gail Glazerman

prices relative months currently color the to your kind trend? quarter or anything mix, on and some average? there is necessarily your to helped pricing of And are Lumber the versus not OSB it you fourth give was drive Can up where in timing-related that

Doyle Simons

Yes.

on tell you So realizations current would are and quarter, versus these Gail. the what fourth I is, quarter-to-date

we say, a that trending continue. higher, earlier will towards to in Lumber $XX and OSB I big about know, OSB give Just an trend And response a the building season, Lumber would is right both because anticipate run sense, is as had are you to as lower, about way. we mentioned I in move as the we off. $XX we question,

I the talking terms I we things. there think quarter. OSB about there’s you, you’re look is In is, as of fourth a one tell at it of and would Gail, a you indexes, Number lag have. couple versus the that pricing,

we going are quickly, fall skew ours as part things have just, some when of well. then helps that’s it. which premium so, flowing in don’t it as you positive so know, as product, way a And also down, And

So say, those big I would – are things. two big

Gail Glazerman

overlap the log last? you And the destination can Okay. what Southern Thank from shipping just on you. with exports, remind the us where to extent you’re markets

Doyle Simons

is Yes. all. The at good news overlap don’t there, they

me that. clarify Now, let

to sending India. and We’re China

our these uses course, do but than for different are ports of different to out we So send West and the Western log. Coast going China, to

China the the South versus West. use that coming no into term the cannibalization of from there’s I So are logs

uses of different existing than the into used for. or going being that are all So some to logs new ports, is for different customers are of China, but some to of them are in customers, them are either and it Western

Gail Glazerman

Okay, helpful. last one. And just one

perspective might how rain, weather, pricing, all both winter and year log more in as In the weather much have kind last have as well extreme move outlook your terms through if with might you we of the be? snow do the as got market, Western and what supported dry of of the terms any summer we summer, normal

Doyle Simons

to strong. I is as California was driven are will Gail, though, that California catalyst be mentioned prices trend weather a recover kind continues that markets, and now. by from weather, see slower weather was perspective. permits, the for the in we West know, and doubt In continue. earlier, stabilized. be California, think primarily to China in as is they by is moving I prices to to to you get very going but well, Japan to and continue primarily up we tell going And of what are prices domestic encouraged there’s – in the continue. solid. you no we that’s XX% XXXX demand California a for has

So, whether you the if it’s going to feel at demand, overall I volatility. pretty But it’s good and supply cause in look just West. some

Gail Glazerman

Okay. Thank you.

Doyle Simons

you. Thank

Operator

Research line Dillon Your next Chip the question of Vertical Partners. Please with ahead. from is go

Chip Dillon

Yes. Good morning, Doyle.

Doyle Simons

Good morning, Chip.

Chip Dillon

building? second believe, a that acquiring in I just a goes cheaper make in Thanks then view, as to it South, of ever extreme have One has them question, you you us, and OSB as logs. in do future, in making Would might immediately of areas, could for And of maybe all had little is I plywood mentioned, lumber in and substitution, I OSB. in cases, get out you couple you is, up those plywood for point the bit as for than if given And of points about into that the with at would in again it plywood, think your own that information. substitution we where very high meaning you just mills, and margins forth? point use big talk some markets all a and sense be switch there’s are reached the demand the of you basically several would guess, specialty little the consider crimped Weyerhaeuser or back could particular, just questions. there of sort that decades been picture tell obvious could look One sawmills,

Doyle Simons

mean, that on Chip, over plywood substitution, So seen over, you’re OSB right, I many trend the we’ve years.

kind in it’s think, balance of now. I

back shift. doesn’t be any But Now don’t there won’t I overall, that some mean forth and see fundamental plywood. shifts that and temporary OSB between

very in right, In margins you of exactly high South, and lumber there. said mills terms the as you’re

Wood consistently Products our would growing think As growing will go-forward in look Timberland, opportunity but at at look on basis. Products business. we said, bigger is we business our we a We Wood have

in business tied in strategic especially lumber think, be it we perspective. growing, from footprint would a with our Timberland would a if be that interested I overall

think opportunities, a is, Millport. – In like shareholder would how a we at where think create value. number terms Dirk’s we would projects could we grow, what one at doing of said be you where we acquisition where then we in exactly finding value, secondly, And price and

to Going a and be we is create it at going building price assuming But not greenfield acquire to we could step in where sawmills that cycle. do take. would value again, interested probably mills we’re the over a we very could

that the way You forever. can currently margins that going are that stay are in assume place to

Chip Dillon

Gotcha. And lot we South, giving And about a maybe too return Southeast could you’re overgrown same. out look for? the parts that you the in every could or kind the states sawlogs, in near-term. the maybe states particular you alleviated early and in you the situation for why hear isn’t county that much – of be in some should we look inventory, indications reasons point of where of where But

Doyle Simons

where the that benefit up see as There’s And new some we capacity one mills some you’ve kind example. new of Arkansas, of those to I along of areas, starting started this just you Louisiana have give border. in I’ll seen Yes, are earlier, some mentioned couple of a startup.

are good about we’re as and and example an that’s benefit markets about the we that in every pricing some across some that thing a lot of like potential know, where starting market, in of The Weyerhaeuser, see South. just you there’s to So markets. tension

happen, as that that tension. in pricing will we participate starts to So

Chip Dillon

Thank Understood. you.

Operator

come go the ahead. Paul Today’s Capital with line RBC question from of will final Markets. Quinn Please

Paul Quinn

Doyle Thanks. morning, Great. and Russell. Good

Doyle Simons

Paul. Good morning,

Russell Hagen

Good Paul. morning,

Paul Quinn

One a seeing inflation. the on couple questions. side, quick contractor had labor of you’re issue Just whether

because and with timber having back more the coming on harvesting asking to you you – issues they’re contractors significantly side? side on labor getting for of Your the their – money,

Doyle Simons

it’s little more a little we really or of bit as through – hard move offset our the be the actual logging as side as that. side. bit their truck I much prevalent a forward. us on to inflation, move kind XXXX. see seeing labor well to starting inflation, we side, think, are just to than pressure for are operational inflation excellence there’s We said, logging work that on to we’ll of starting into as It’s see of But I going transportation headwind And efforts. we a on And

Paul Quinn

then And turning U.S. to. just Okay

you your, but exports, and how market missed South are what you the market have Indian what looking and I do going are might at view this, that forward?

Doyle Simons

currently and smaller as markets, India of Unlike had China, the but is The market mentioned, where I on India. presence, are and that we see, the Yes. new there’s by And focused a I’ll a is those interest time China markets. we you is a encouraged of spending – lot presence, the two market. that Indian so this a opportunity we we’re there. lot we’re on in of ground tell

move stages, into So, and market has that’s XXXX and think that beyond. a but encouraged real opportunity early still as we’re to the in grow we

Paul Quinn

That’s had. Great. of all guys. I Best luck,

Doyle Simons

you. Thank

Russell Hagen

Thank you.

Doyle Simons

I it, final that question. As understand was our

always, you by in Let for thank as Weyerhaeuser. thanking, me interest this end everybody, for And your joining us morning.

Operator

you quarter Weyerhaeuser Thank fourth earnings XXXX does conclude Ladies participation. for gentlemen, call. your that and conference the

disconnect. now may You

Weyerhaeuser (WY) 2 Feb 182017 Q4 Earnings call transcript