WY - Earnings call transcript Q2 2018

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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 Second Quarter 2018 Earnings Conference Call. All lines have been placed on mute, to prevent any background noise. After the speaker’s remarks there will be a question-and-answer session. now call will to I Instructions] turn over the Ms. [Operator Relations. Senior Director Baum, of Beth Investor Please ahead go ma’am.

Beth Baum

second This Dennis. be thank www.weyerhaeuser.com, also us Weyerhaeuser’s be you you, Our for XXXX Thank Good presentation joining today morning, earnings release to materials webcast is being call everyone and and quarter at earnings. can discuss found press risks the will on concerning the during release associated forward-looking website. Forward-Looking made presentation review as warning the call. Please our conference and on statements our Statements with in this slides statements

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

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

Doyle Simons

This reported net welcome quarter per Thank second earnings or and on diluted of share you, billion. Beth morning $X.X Weyerhaeuser $XXXmillion $X.XX of everyone. sales net

of net quarter special charges results items. included $XX Second million for after-tax

diluted or than year ago. results. and Excluding special first I’m than million, a more XX% than items, for per with higher quarter compared pleased of more second ago. quarter quarter we is million the our XX% and the Adjusted XX% earned $X.XX improvement XX% first a an Company share. year $XXX totaled the $XXX very EBITDA This with

EBITDA nearly OSB today. they products has Company’s operations delivered wood the log. Western and larger This EBITDA three lumber, record very on our since times than enabled highest for highest quarterly business Our to when markets solid operating capitalized and performance were are favorable XXXX us drive Weyerhaeuser’s and own

the strong, market. a more consumer continues, in are employment Housing has rising session few results market business comments let detail, our has. remain previous discuss me surpassed I confidence wages and growth fundamentals make housing regarding Before

affordability housing compared averages. risen, with have favorable remains very historical rates mortgage Although

market builder in time entry-level positive. the sentiment where enter (Ph) remains buy and First [agent]

highs total weather heat, entire XX starts those As will factors housing as pull other back in volatile; June many remain activity. construction and this data year monthly surged wet in is been and May, the to variations recovery, continue affect case didn’t likely for

we a improvement However, a starts on averaging starts million annual year-to-date trend Through basis seasonally million have with upward over June nearly housing strong adjusted approximately have permit averaged anticipated. X% year-to-date. X.X X.X total X%; and steady activity total by of improved permit over year-to-date. Single-family range illustrates trajectory

Our demand. builder pent are labor effectively there, customers still meeting and lot navigating to availability up cost continue and and well-positioned

with starts continue For single-family XXXX, approximately expect we nearly million XX%. to starts housing total X.X

sales turn with totaled EBITDA the $XX XXX $XXX but now will segments. Let with Western than to million in the $XXX million second-quarter ago. million of quarter, compared than Timberland $XX delivered million million, our realizations the to supply me $XX begin X from record first million earnings lower the in lower discussion first Pricing more higher and a built softened quarter. late average quarter, than regions in improved lumber year but EBITDA, some throughout slightly. Demand prices continue increase $XX quarter log second-quarter seasonal ago. domestic quarter due favorable first Western a logs to remained non-industrial as X. in I contributed business year Timberland, than purchases log a million Timberland Charts the the $XXX Adjusted landowners. in over million

second the increased. to compared accelerates longer as of fuel costs rising logging quarter Silviculture than in This typically slightly road improved declined mills to Fee began due and harvest snow diminish begun stand. and which due the as and increase tangent remained hauling harvest markets higher cost also to increase distances elevation expenses activity usual. Oregon built the third weather. first has deck season, quarter many earlier fire hauling log quarter. However, in with advance Unit volume

construction logs Compared and average volumes logs nicely our remain the Turning quarter sales of solid Log shipments. log log comparable compared realizations to take average timing and were slightly with substantially. realizations than inventories Chinese volumes year first the favorable realizations Chinese were the daily volumes declined our higher were slightly sales sales very realizations and and Overall improved moderately to demand increased and activity significantly the and and during remain declined China export at volume for with ports In to higher, quarter. due solid Japan a ago for year markets, very demand higher our ago. log away our first quarter. remains were sales in quarter,

year Other contributed Timberlands $X costs. the first of areas, million was compared $X million EBITDA to to South, Quarter properties higher estate, EBITDA with to per of but Compared Key basis higher rail million quarter the with realizations than in and an totaled $XX mix special for than acreage prices costs the the exceed the nearly seasonally ago. logs southern compared first for quarter $XXX the improved Fee XX%. per to by land declined activity ago. items, first seasonally XX% EBITDA first costs every a issues and forestry quarter business from realizations Northern was EBITDA quarterly EBITDA, XX% demand ago. $X first by and XX. optimizing $XXX quarter, declined acre to achieve continue as $XX from much Timberlands in million versus log quarter road include second decreased mix supply activity first operational Southern a quarter is Wood quarter, average good with million. due value and compared this construction increased EBITDA the Contribution realizations second million Montana timber hauling Canadian $X saw partially seasonally. earnings first and adjusted and estate more hardwood for declined a EBITDA X, increased to This of to due heavier X% increased Average and earnings pulpwood and the a sales and and for to additional the average excellence strong to target OpEx realizations. sales and products maximizing premium prices Real and higher to ago than activity our X and ago. more sales productivity declined $XX E&R significantly log resources, less to Compared million sales this than sales year materials. nearly as million estate XXXX the track harvest initiatives lower million the revenue average ever consistent revenue and and to mix. million due highest costs. compared average X% higher of quarter. a first second focus hauling quarter with quarter earnings increased Wood spinning pulpwood $XX demand quarter for progress due cost, fuel spending first harvesting the contributed solidly year lower the prices many we $XXX Timberland Moving drove second price million year over for real improving building due producers. target XX and of quarter. increased volume the of more spring Charts contributed to resources with constrain Lumber real with before operations, Timberlands business, sold. and increased higher where as to log over with a EBITDA for pulpwood also break shipments quarter $XX quarter harvest. offset areas saw to track realizations the and natural quarter Average improvement are Canadian fuel Fee is $XXX first average year. Chart to million reducing natural lumber million through for some $XX built making energy Western energy XXXX. year XX% first is realizations; totaled or slightly than to than million million compared its business quarter up, EBITDA. in million, $XX lower. is meet slightly a to contributed harvest to flat. due This logs. were compared the X the on more limited higher in its more unit and improved Adjusted strong lumber regionally against volume the slightly The on products, harvest

with the industry concluded, began quarter, late increased - volume moderate lumber selling, shipment second recalibrate. As quarter as rail usage inventories flaming while channel the pricing typically in and to service normalize

summer strong rail worst the destructions times challenging shipment rail been to due remain demand. All both supply logistics Canadian resolved. tight and of Transportation and product shipping for have

tracking, wood such additional and job products have of today of done car our team as cleared has customers we inviting direct to reloads rail outstanding and to all repositioning options Our of backlog. an shipment flow product as

approximately of Average due due X% duties Second a ago. higher of quarter. contributed increase charges improved as sales Engineered to quarter volumes first products were first first to EBITDA, $X sales sales due and and than about the comparable Canadian early slightly. to ago. and $XX first Unit realizations EBITDA. as price XX%. XXXX At in million we focused $XX and XXXX throughout quarter anti-dumping remained our operating million continue realizations strong than X% $XX $X average than wood million, slightly first $XXX on the benefit for longer quarter for nearly the improved million more increased capture a and Pricing the costs more to seasonally year quarter the XX% no quarter XX the increased business $X than to million demand demand. compared a year improved one ago than lumber totaled labor contributed rose with second costs our manufacturing quarter as offset million million the on and first OSB costs increased and and volume softwood and fuel more million a managing more duties quarter million reported board. margins. product Distribution quarter first than costs. rate contributed to continued oriented to the fiber prices lower are countervailing higher compared with more quarter highly This special year higher $X Sales EBITDA these strand item.

charge Wood result of products costs, teams over third to Russell XXXX by discuss investment. focused improving and on to reliability, pretax enhancing track I our and include focused reducing maximizing turn financial OpEx to special of product with product some the recovery, our highly it million in outlook. margins finalization million item target Flak Jacket net is remediation million with costs a one associated $XX achieve quarter its $XX of Second for of on $XX product. capital increasing benefit controllable now are new will quarter items

Russell Hagen

our Thank earnings we business presented volumes expect you, our Timberlands outlook the ago. seasonally the good the Western of second the and The quarter at for Domestic third as quarter realizations operations, comparable the earnings third slides. and be third to expect our than quarter third morning. In quarter stable slightly average customary, Doyle slightly second level year the demand is XX quarter Chart in than EBITDA lower we adjusted quarter quarter average. to higher will be expected fee will below second Timberland’s quarter In is the a with law third sales harvest third be during quarter.

we demand typical our slightly is are quarter. if the quarter Japanese export to Chinese are costs Road Western demand continued lower. to limits seeing to strong, the months. higher quarter steady expected be are realizations soften, average during to remains a customers. sales season South, will comparable are we log haul be Overall expected also the months, be Long seasonally increase. and costs weather fire continue Third severe second be hardwood distances. also to average will comparable from higher, volumes harvest as quarter thinning be to to longer during summer be while activity. prep as second increase harvest are during we fee more are we elevations sales the higher expected the are realizations could slightly anticipate and expected which volumes South Fuel realizations site will and log perform expected In be the regional however forestry spending work third haul increase sales in to quarter at expected dry to resulting in costs and seasonally the our continue higher. Civil volumes to and management the culture export log expected summer lower. realizations Japanese supply is to

third and North, quarter. adjusted the we are to haul energy the be per we anticipate higher harvest quarter log unit for and season. Real break-up XX% quarter anticipate cost expenses. quarter, second than XX% We earnings higher also significantly In and higher and fuel estate the volumes EBITDA to the be and natural resources, than second past spring as move expected the will

business, As most the with is closing months active fall are quarter. of typical real in sales and in the markets estate fourth largest summer the portion

energy We continue EBITDA to adjusted in business and million real resources estate and approximately $XXX XXXX. expect from of our natural

sold. basis XXXX. end as mix for was slightly the land of due to our percentage real land of anticipate full now be of a this quarter of We will that year XX% estate sales, full a XX% higher guidance higher Second acres than the year basis the to at range

XX% significantly XX% downtime we This replacement. be products, third and quarter, includes a For OSB Grayling before our higher at a million scheduled we ago. press impact year the will from EBITDA than extended $XX as items expect earnings quarter than lower maintenance mill, second wood a special undertake to adjusted

be soften lumber lower should pricing lumber quarter anticipate Sales should realizations quarter is the be record over stabilize few highs, for will than The third quarter. moderately for Although products engineered and volumes the from second and increase. comparable the sales prices average to wood for we volumes weeks the average. second next OSB will

first XX% in is items volumes major reserve. profit items. favorable of elimination OSB in Chart the be will primarily unallocated of inventory with quarter special lower intersegment compared to approximately $XX due components our attributable XX outlines the second the quarter The quarter before Grayling life Third and replacement. non-cash variance press million earnings of than to the

During prices; the of began incurred first higher expenses built as in second quarter quarter, we deplete at inventory we those and we logs the to lumber inventories.

and liabilities. second finalize costs pension quarter and decreased; unallocated for also we pension year assets benefit in year each end estimates Our postretirement plan prior the

$XX we and result of of approximately a the now in reduction each for million guidance. This result expense non-operating non-operating $XX prior year As full pension this postretirement in should approximately to non-cash, from million remaining a record and of million $XX pension expect a expense XXXX, work, the of quarters total of postretirement for ended million typically our is XXXX. cash an quarter, Capital during the XX, a from Chart our key of the summarizes cash second expenditures second $XXX for first quarter million. balance million We quarter increase with financial the of year. operations was quarter million, $XXX the items. flow XXX over of totaled lowest cash the which $XX quarter the in

$XXX We total CapEx and approximately $XXX products million wood $XXX expect Timberlands. continue million, for for to million will be

Moving on outstanding. of $X.X quarter the approximately debt. debt We billion ended with the

remaining have We maturities no in XXXX.

to XX% rate the based be taxes, tax the our on on effective we mix and to XXXX Moving continue between of earnings. XX% forecasted expect

you activity. update share repurchase to like would I on Finally our

During an authorization. of July, share; of we shares repurchase remaining $XX million on have as approximately our two $XX.XX per purchased or yesterday have million XXX million average we share price

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

Doyle Simons

you Russell. Thank

with relentless favorable and complete work decade of to over ahead; I’m the strong to housing They we strongest focus on incredibly these of quarter put each performance today. we and improving second excellence of businesses capture in Improved results. have work is in the Our are position At operational relative market achieving the and and our have hard relative teams us our markets performance runway a effort was outlook same our proud our capitalize OpEx several significant not time, reflect into years opportunities. experiencing fundamentals, performance. a financial the on

would as now, We derive shareholders. for well-positioned I value floor to open will questions. like to be the And for much possible as

Operator

of is Citi. from with ahead. go line question Pettinari Anthony Instructions] your [Operator Please And first

Anthony Pettinari

products. cash you morning. generating wood are Good Doyle record from

You kind and are that could through could are of or portfolio there levered our opportunities Russell the allocation, you accelerate that levered. the you about capital coming of that very helpful. conservatively more repurchases are about quarter of your share parts July. acquisition any to buybacks Are there sign you I properties to there good there come, in value, under into will is was potentially be of now your out market are if thoughts be kind things in are talked share a talk wondering could augmented

Doyle Simons

we talk and Sure, capital And how about talk we our financial foremost about let as first allocation about shareholders. priorities. cash think me as to our and returning

As you marketing alluded to, are OpEx strong conditions lot improvements as we continue cash. to capitalize and on of our we generating

also Board very repurchased repurchase million have shareholders to to dividend. returning a we to as share review work cash cash closely or We growing are growing return repurchase But we so our through opportunistic continue a Russell continue last $XX through to of to or mentioned committed to primarily just share in with shares and through will dividend, week opportunities to both. shareholders,

is uses, year are level year, down. it other roughly this of start to $XXX terms next our In trend be going we CapEx will and million to probably then similar

We Timberland Anthony as be to shareholder very think we in on incremental a that said, we will where forward will And committed opportunities and very we growth terms capital that and and disciplined And to disciplined allows of primarily with base be growth for strong currently. land in in balance from it’s balance sheet we shape our sheet, then is would very value opportunities you those good go also very our look allocation finally look to opportunities. be us create basis. to, a alluded perspective. but maintain at we as are in a choosy what finding

Anthony Pettinari

wood New kind think products shake in investments just Okay, still your do initiative to you opportunities product do see CapEx do then lumber year-end. that's the the bottom And signal port expect complete CapEx side, at of black expect by the the for the you you wood and million to year then helpful. out where you on XXX And mills. work after at moving York relative forward, this could

Doyle Simons

as we year, $XXX the So number to next million probably I number this you in terms about would terms are XXX round an ongoing Anthony in of year of terms the CapEx, a trend and be then similar in CapEx. range would down know numbers anticipate in of start

will continuing exactly spend some spent additional our on will opportunities on product to capital and million type cost - primarily focus of find $XXX to In driving down in of that operation to opportunities, terms to of those drive we wood be continue projects.

terms In go that and re-create back situation you downturn. in remind to when the the at occurred and last of the black just what is, everybody bottom that back

that $XX products modeled we another operation cost of that we situation to OpEx recession. So XXXX, million flow would to, to of the make million be we recession to needed if again that we which level, us do type back sure go and went if be figure that positive structure black we through the if at what our none we the wood anticipate by or hoped end what as out But when we $XX be of we into wanted great our we do. at the our that we to level cash be accomplish of we will where refer bottom and would have

Anthony Pettinari

Okay. will it turn helpful. I That’s over.

Operator

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

Brian McGuire

everyone. Hey good morning

cost one. labor probably seems on But ask he worse like to suppose talked of to the you want fuel I and Just you transportation know in of be pressures are in tighten. also kind general, some about inflationary

exit seeing, some at do what the put the on are are opportunities to back trends up pressures for of things wondered year you care the it of you outlook take XQ half of other you pick could there the market you offset and to head if charges into Just expecting in are sort quarter are the the comment for prices of just that? let any or those inflationary to or in and

Doyle Simons

much labor we are So, extent. are costs but referenced, as lesser related primarily transportation, its cost to you inflation, just experiencing fuel also input and a rising to and

than a from to owned versus the quarter cost those sense, second give quarter. up $X you transportation less and in a Just fuel the first million were

are that everything we and primarily we on to numbers, the things usage our are materials those non-capital type are things and through to efficiency, few OpEx experiencing costs of will manage our efficiency, focused continue capital scheduling, we next of our and quarters. like can but experience things track inflationary those there our doing we to offset So that are improvements are efforts to truck and for offset those to improving all probably the

Brian McGuire

better high how out rail can it’s Okay, I that. at tied correction that you quarter wondering to it to eventually and seasonality needs and lumber just just much of the and on and it to better think where correct, much the Obviously OSD lately just the logistics tied of your appreciate availability pretty re-pace in thoughts share and prices in maybe availability is how is you supply general? gone

Doyle Simons

give Sure year. and and in lot thinking have me about time spent of happened let on perspective market we this our your of the a lumber kind what this has

So that we a demand in as start so the housing supply to back all due by transportation, and we constraints primarily you we nicely worked driven QX you you in prices had offset had by weather, first environment quarter had if growth had partially positive continued inventories, know. was pricing late and

driven housing late challenges, up the quarter the and were had pricing have seasonality, transportation although strong into you moved you second in in lean got sharply. by demand prices did inventories, had better the improvement very environment quarter, and the then continued second second continued positive supply in You but quarter, had a

more into seasonally, had moved good resulting in were third the we we shape, still we As had challenges demand supply. inventories transportation quarter, but the in slower abating,

is pulling surprisingly which not So, is back seasonally. normal pricing

Looking your forward to point.

XXXX over that we as third into and by are will connection a comments, and that's supported supply our in now quarter favorable continue with prices the U.S. next and projections. happening what's continue few prices be industry And said to his of weeks the right some have we lagging lumber stabilize in While what demand they solved levels we lean inventories, built Russell volatility, that anticipate to anticipate remainder strong we response. at see will XXXX housing

Brian McGuire

maybe is right? levels current around lower about than modestly stabilizing moreover So that just that today

Doyle Simons

Correct. That is correct.

Brian McGuire

sense. makes that Okay,

want Just impact me, weak, people out starts of numbers, the to for one lot noise were calling of of prices, too out don’t were some make homebuilders signs see might maybe and and of in do back caution some lumber any pause correction you starts, that prices do you with much pick last one the actually but we one that given back team see now. month, some think housing the higher in lumber in this of maybe we up in

Doyle Simons

We heard some of that.

to roughly remember know a that the got attributable is cost prices. You you lumber house only new X% of of to

So may on what effect for while when big I don’t housing our that’s I its when it��s the up think some it the a sales catalyst happens have think housing margin starts both numbers. down, on and

Brian McGuire

much. Okay. Thanks very

Doyle Simons

Thank you.

Operator

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

George Staphos

morning, and Good for follow. couple team. Doyle a all nuts and big the everyone. Doyle to Thanks thanks bolts out details I maybe had of starting picture,

lot that given one markets a comfort than gives more years wood the your what of in this the based products, of and gives tells What concern isn’t is path you of a this we we housing on bigger start term way. know your what based be What you has based putting demographics, your are a on seeing is through on many what aside comfort been in experience run cycle. downturn. should experience lot the longer have a You beginning of that experience, still on number you base that

Doyle Simons

just things to. of think you I that some referred it’s the things the Well or all

for the are things very builders, and good time positive. to be with the demographics, the lot wages, seeing talking about specifically of a and and all those positive demand We George, continue you just If home housing are it be housing drive is they that to spend ultimately of customers continue our it’s it’s all activity.

and way If nice learned been have nice example just and rates I what lumber learned talking think the one you and take learned what The a George at, well, that’s Difficulty]. say I have let’s lumber ultimately and is look know way anything saying. I getting I of you you and demand old that the to around have less correct. is about if you you is and why made to grow just time for matters and meet [Technical and feel that earlier prices demand there think The and thing be I’m - supply optimistic the long going I generally supply it is are than with a OSB, the going as supply the if foreseeable is to the for continues we its overall supply I to overall coming from we while about additional the ultimately think is matters demand comments, lumber south. bit coming lumber we future. prospective on favorable housing the that’s made additional little is being needed

George Staphos

you and if comment question operating at outlook you what does guess as well. year, I again on. against panels, the quick Thank that that and that has compete good any the in really you of kind but and it’s is segway. be two could. level define new sensitivity One then will change going I Thanks portion Grayling labor maybe But on create good bringing the in MDF point for you it’s in and as and Alright. do modestly to And turn year are I Doyle, it running there rates within you guys, pricing businesses products not yours been or current don’t and that products like your you the of the luck as seasonality are for the half OSB, Can then you of the over that quarter. for over. press mentioning rates the how from in on are back supply a comes competitive is issues in whether first there demand look within significant of X% in other have one operating and your just the key down there obviously wood like were is capacity you would

Doyle Simons

strong XXs you, tell first would in much maintenance, type pretty entire as lumbers XXs. course is forward, rate you announced. I and markets our running the the the low running we previously XX excluding continued of being for about high anticipate those run the mid And XXs the of would third I on scheduled operating lowing down ELP and mill including in of we rates Thank year of talked maintenance mid what quarter had Grayling the OSBs our half going in flat, George, as scheduled

struggle, of have a what lot the finding pretty time to terms be it’s regarding we that of capacity will coming like last online labor that done a additional we a on, as Labor labor. going continue feel online that we on your is comes In additional question impact challenge a constant and but good we has something that capacity forward. need, on spend job

to weeks. think the but stabilize I is that happen George question lumber say OSB and numbers with to few as had we other think what we what as I and and next into would prices we think prices going guess moderately deem, referenced your think third do over we quarter will said earlier, I I built our

that’s built of So have we in. what kind

realize, we averages-to-averages. think are about I it’s important talking also to

are the quarter right our in basically now and to-date line with if So second you look third averages, OSB quarter. at it lumber

realize those happens we as you of down are that prices look that terms numbers. we is you think it's important spot but if about, what quarter-to-quarter have some built at clearly Now that I in there averaging there into talked

George Staphos

Doyle. much very you Thank

Doyle Simons

Thank you.

Operator

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

Gail Glazerman

the seeing seeing Hey weeks over that good in just recent a pricing out? are its you pretty looking - decline. you hopeful Canada wondering just you correlation and next in given I’m the will Are the Maybe are stabilization that few term near still whatever is that if anything for spend actually on supply somewhat of morning. for second, work signs trend way incremental or I that Western or those emerge mean sticking

Doyle Simons

Gail said, decline at as Yes. in accelerated. the the has you last least week

and will the today I to quarter, stabilize. demand we we is, know and not are more signs are the anticipate we anybody knows they where we and and we but will now fundamentals prices ran that. So other do but seeing that not recalibrating, demand than up supply for that, has then look yet the don't they think changed at who step will than prices are hopeful adjust If supply but everything are back we numbers we anticipated as fundamental need issues. timing we of second and see that balance Based in right, on

Gail Glazerman

the Alright. of guess up data Then lagged, tension market, southern. lumber taking a pocket of market X% just about think on in the the just for shifting some it’s with consistent you step was pretty that some XX% outputs wondering do industry only but you through that’s southern to respond quarter constraint, the I west. lumber April, and starting maybe up seem your doesn’t to log the does south build back, and production, you perhaps really but it talked are to with reported starting in level? being operating I’m or seeing it rates seeing and you log is last capacity surprise on

Doyle Simons

happening and is fully up additional our capacity and south built sense you of get Gail, there that to that it's a know a there, while announced, the lot that what running. been I is of taking but get that’s think in

to I to we So as think just number time a will continue little it’s take forward, grow going to but get that there. move

Gail Glazerman

And log on retention still pockets announcements. around there been seeing has some are of side where you the

Doyle Simons

Yes.

are a Georgia then in seen basket. started, in has Mississippi and pockets that started that a where the we and up know about have have up of announced started mills have encouraged we seen, some tensioning mills You what wood seen we have new and we not mill yet it there specifically some some is in couple there are, but Weyerhaeuser, where and been we tension there's

pocket been starting and that is gets capacity with we additional see tensioning where or either online come So announced. to are

Gail Glazerman

and one. wondering into Alright at get just you just where West, some can a There headlines negotiations on labor last quick lot if on lately that’s has been stands. insight of I’m

Doyle Simons

Yes.

front. continuing labor labor had are union leaders and look there to headlines relations, So reaching we the that work are housing been with we union on to we West, some regarding with forward an agreement negotiating in our

Gail Glazerman

Okay. Thank you.

Doyle Simons

you. Thank

Operator

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

Collin Mings

morning Thanks. all. Good

Doyle Simons

Good morning Collin.

Russell Hagen

morning. Good

Collin Mings

Going back capital on question allocation Anthony’s to front. just

more balance all. of initiative dividend and in bottom bump a sizable the black about southern the affirmation evolved at products log progress tying thinking think Just as you wood regarding the the the to toward has sheet strength prices the

Doyle Simons

we how that of deploy back going level Right know our a lot dividend a about lot our forward. Board are talked to proper generating have we spending as we and time a in will as the cash, of cash Russell bought are with regarding with million Company. work $XX Board said, shares now of You regarding continue Collin the we of to best

think it’s Log appropriate factor, factors factor, going the an Saw Southern dividend but a one considered level clearly be that regarding forward. Board is just and we that will of many important about the

Collin Mings

recognizing products, about some how seasonality, generation kind strong very recent from there. during that strength think just sustainability some because a - kind segment the EBITDA but you wood on quarter it’s in to there particular, of and over Switching of the of Okay. results EDP is again

Doyle Simons

that more teams our have lower cost figuring to as out we announced captured see us. what done of really have EWP know runway a ways product, early our accomplished, through price capturing quarter. continues for and anticipate fourth we still ahead half effectively that XXXX, and Yes, we the we good a have we Demand but efficiently encouraged other we about in of you run job operations more half had we to in some what have are EWP, encouraged by the increase for were Collin of by in be we that, nice that think

Collin Mings

last me, one one I turn it just than for and will Okay over.

there have trending several appears months. can been you starts wooden on year-over-year prepared down construction Japan, for Just on it remarks expand

in months. North from over how doing you several customers shrink our responded are what West specific in the your the is market, prices they log in really the last Just

bit Just platform. color more your could put business a if little you export format on given how Japan just the is

Doyle Simons

that, demand relatively I while I is steady, What log important. down is housing being starts are tell in and X.X% I far moderate, post are which our stable, you to post this inventories remains market X%, down general so in - would try year. will it Japanese is I is being think do Sure think X% year-to-date

and of think tax about the is start XXXX stable advance pricing plays do Our outlook that probably to quarter and should there scheduled pull typically other assuming lower for thing volumes actually slightly see for demand and increase and some forward is another is third out. for increases, fall consumption the we you of such

So about that’s we kind Japan. think of how

Collin Mings

That’s helpful Doyle. color. Thanks

Doyle Simons

Thank you.

Operator

from next Your Markets. BMO of question Wilde Mark with Capital is line

Mark Wilde

Russell. Good Good Doyle. morning morning

Doyle Simons

Good morning Mark.

Russell Hagen

morning. Good

Mark Wilde

us Southern start you of your half an wonder on this Doyle year-over-year some I here, for exports? year of improvement in out log update had log Southern exports. pretty of targets just can in to you first give mean kind I have aggressive kind terms

Doyle Simons

Southern we encouraged happening by is markets. are Yes, exports the in what

in our month starting this fiscally of early and South export Atlantic We south. the China of out been we the Orleans, Southern shipping know, we coast, are continuing up the are then our India exporting operations you have Orleans. another yellow from grow China to business and from that’s and July to as Gulf expanded pine where out New program by New the we

further versus we as significant into that size had we think as of in you originally do move upside our to out and said, we As and beyond. to triple we XXXX and we potential XXXX there's on program track are additional for look expect the XXXX export

Mark Wilde

what but been of of supply starting were hear first have is The second distribution, orders product have years, quarters just was hearing kind distribution then from terms others, from have to now. read to tight in I fuller? flow. that system lean been and multiple placing when a now maybe the is over of some little and recent in your distributors distribution channel how you we is right kind And Okay. switching that any do I full you business and know in

Doyle Simons

say kind would characterize is range lean that perspective. how in normal, to it’s from Yes. inventory I distribution would levels of a from I

Mark Wilde

And industry Okay. a kind housing to at half the there. this which that any the little are but start then flattish reconcile APA, for your not hard of look Have only they is I-joist thoughts the LVL kind that we data bit out that? not you on year, with volumes, of first and if is numbers, of got

Doyle Simons

and perspective a weak. that East I if your You the things and has from strong, is has think part the of know been would the weather East other what between world we West been East as challenges the has and I do, little some it down been say there break West the in a

issues I Mark, itself and more related rectify you're of out look will is that a than a fundamental. overtime but but the think little sync, anything think right I numbers of weather timing

Mark Wilde

Puget got kind And that's you timber me, one that are with last Okay. or for then there around shareholder issues, of position around is your MLP large sale. any land regulatory the practical curious, it’s at a from Puget a a expanding Sound there agitating Sound? just I’m

Russell Hagen

expand There Russell. as our as is this no constraints far being Mark is ownership us West. to the in able

Mark Wilde

U.S. the just the on other the Northwest the any thoughts And attractiveness South? parts of of kind like of versus

Russell Hagen

also attractive are South very the and at very current West is perspective. is from Well log I are, the but given values timber where where prices mean long-term attractive the investment

areas both those very So we of at closely. look

in value we everything sense all makes States we we there it that and add familiar in are very we United and the shareholder at are As with look if every wood transactions and the basket Doyle them. mentioned pursue really are will out

Mark Wilde

luck enough. in Okay. the second Fair Good half.

Doyle Simons

you. Thank

Operator

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

Mark Connelly

question. a about How do have business. do days but trying just the of Doyle of think you you secular the these these cyclicality on strong, how estate how get handle and business one you that a to I’m much think obviously in real tailwind,

the of the reemphasizing over couple years. done you've last Given

Russell Hagen

Russell. is So this

it’s real the cyclical just recreational properties is better commercial activity to uses real we type into As of - business. sold of see alternatives but far by to nature have estate and as timber our lot operations. estate some a of more our We our some conservation of but housing go uses, higher as a market do tie-in developers, uses, driven

a So while bit little see that. do of we

for discretionary I with overall the for program. and the sits really South in real seeing side, the markets of think spending the are we trend West from the the strong our estate availability buy in

Mark Connelly

or growth source to think sort steady going of a you of performance. that’s continue do Russell be So

Russell Hagen

really is this million the real to positioned it You run know the resources our long and of for term. we $XXX natural from and EBITDA energy business target have estate, for business

our operations, of over is we really subset have higher of commercial value process, have through and position And sell we identifying that so through gone portfolio Timberland years. as than really we to XX methodology our mentioned, ABO to that next our which bakers XX a the

some So as that's see think upside pricing going we I Mark be continued a steady-state with business to appreciation.

Mark Connelly

Thank you. Superb. Sure.

Operator

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

Mark Weintraub

get in be the even and is the expecting not you. little whether Thank in the least their if feel me comments of particular peak there Wanted to drivers now behavior between a felt there capacity stabilization, some different the your together markets on cetera. whether that and the first started maybe divergent lumber or a et some that tend wanted being with the medium-term capacity to just as to and the dynamics has think see that on and part different are of well the dynamic And bit, curious been grouping kind But I of In the as to year. maybe up some be have it. lot OSB market terms over production demand being the you of at focus given has of you that short not same. likelihood to in or lumbar in potentially side,

Doyle Simons

there and you happening. not it’s seems now expect been divergence a there online, anybody that’s good online to medium-term short-term, outlined, question long-term, I short-term, be has for slower capacity reasons but but or been than for think additional it Mark it, come is come to possibility the

and growth could lumpy is billion on have same year, of a feet said time, chunk comes all the So board at in I happening forward. about when those that’s in but lumps at have like the be the to if ramping and it at supply amount you amount like coming very short-term. essentially one growing pricing you should we a rates feels it you demand term, again supply you the to online at and a chunky OSB Yes plant along same going experience up and just longer big is it see the the very where favorable as going But rate. are the It if look roughly could the term of you at said and demand I equation lumber operating see have and these short coming in gets in back times look you for on sit think the high. we tends it of

Mark Weintraub

would of warehouse talk on Okay thank highlight? trade obviously potential you you. think lots in or implications you for then as what And war in about China particular

Doyle Simons

China bottom proposed is tariffs there very we and case business. on the way well policy far have from States percentage this Mark our trade regarding United line know on point tariffs. lot China a it, our basis? you I of to forward we their does source the to is does some tell of uncertainty will something What the logs, out as is would need If go thus export through affect you do manage not change use impacts a not logs to figure any seen

Mark Weintraub

is my what I’m Okay the rate that’s in product doing a looks quarter and higher were a fair you if a rate expecting math just lastly, of I would the then comes in tax caused seems it in like from second the I it have the quarter know then and more just year second was business helpful. expected? the or $X.XX be, than $X.XX half right, higher wood back the down bit there to tax And so in money that you second and

Russell Hagen

this correct. more still that’s taxable guidance year basically We in our the Yes business, REIT XX% the XX%. wood full subsidiary but is generate is just income Russell. Mark to products

Mark Weintraub

Superb. Thank you.

Operator

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

Chip Dillon

Russell. Hi yes, good morning Doyle, good morning

Doyle Simons

morning. Good

Chip Dillon

do to with generation quarter. has question First the cash the in strong

to and down and heard that to capital you the versus at is in was I do generation and half, think the X.X I cash to up taking your the current you're attractive times the by the question I that mentioned acquisition, you the you see your secondly, as that and XX looking the kind generation, front, think guess of working read I kind of out leverage second fact technically on versus buy that much one buying not cash land? do to of buyback right more we if builds guess second buyback are stock the and situation stronger you quarter saying more more into levels going it's buying pretty timber about of million

Russell Hagen

this is our I generation. We say as is quarter quarter. So that either forward; on how going dividends far this share year we with as far Cash flow as cash prior share consistent it and strong through trends the it's the to we will there, would as said, repurchase strongest repurchases. the did as are pretty committed and do return a look our Russell. know generation cash will Doyle and you have flow

into part by So we have get of market of July to strategy. allocation this an opportunity overall XX the and and in million worth is capital shares

be it they repurchase together. all would tied are whether So in a or share investing business dividends or

Doyle Simons

create will and we are do most going tied and potential we are acquisitions the to capital we analysis of shareholders Chip And just we do trying that confident benefit for versus Russell as said share together to as weighing all how forward. a value continue figure to because repurchase to it’s constant out of allocate the

Chip Dillon

this volatility have that $XXX the kind in be in it comments the his given saying downtime to case, a I you quick correctly, the lower Did in guiding tied EBITDA us question see Okay. that was the typically or way mentioned quarter how number million XX% that we due that's to press down replacement. I XX% are of second Russell past think are hear been then if OSB think prices. I to would you sequentially And would OSB that and that is confident and

Russell Hagen

the $XX be EBITDA impact for the million. be being this, what entire said was to from the grayling So very clear that would down we on on quarter

also for We year on based of down than said out ago, be was would quarter. it OSB that volume less the a grayling XX% being

Chip Dillon

you. for clarification. Thank very That’s that Thanks clear. Okay.

Operator

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

Steven Chercover

number of good answer on I got guess morning. number was two Thanks the questions is one. have and contingent couple I

recall maybe threshold that So be first ready. and exceed there status. used is of get I I as to think all, products too, it weak was the estate level real it by of wood could High jeopardizing earnings generated some the I TRS mean, XX%.

Russell Hagen

So is Steve Russell. this

plenty assets overall REIT taxable a income income so our has subsidiary, with that's So retail have we even elevated ours. not some the room and of generation concern in the in of

Steven Chercover

would terrific Okay and going even keep the would case. if remain kind we levels its have that current

Russell Hagen

that. don’t really a have with We concern

Steven Chercover

me let your EWP the beyond means or actually looked some that to which do? think of Wood panelized WRECO you get two. to and into perhaps any construction laminated number Products I into cross Have used Okay timber expanding

Russell Hagen

Russell. Yes this is

happy as with way far Timberland. portfolio, As set with very has the products wood configured are its it the that we and

industry in we what CLT As of on far our do wood products expand very other well. one as that were demand, We pull those definitely expanding each CLT an readily. further demand. of not which the were some well, wood focused of But would area it's businesses, businesses even welcome will emergence new overall into emerging log onto we in products the very downstream or we improves again performing products these lumber on also is

Steven Chercover

Russell. Thanks Great.

Operator

Your the with of line RBC. from Quinn next question Paul

Paul Quinn

much. very thanks Yes, morning Good guys.

Russell Hagen

Good Paul. morning

Paul Quinn

just know, will lumber wanted they files one market up additions your their deal side. easy on supply to a side, little capacity you you on Lots whether bit to what to it what when is bring announcements and like you're capacity. sense come in vendors with equipment and had all been the on on just how is and are have made orders the question, I equipment dive from the that I feeling demand just Hey, on of

Doyle Simons

Yes.

demand. think them need industry we the I think announcement additional Paul, we to will, of I an we strong the all meet are because forward they probably So work, think just supply are see but to going additional as of nearly will I them all move and as

happen, get I think of what your that by been I there. move could running. And said, we point will have With as announced ones said take it’s think we like encouraged have additional the than announcements that up and longer going people all to fact we most those to second factored I in and nearly even pretty in So forward. see to fully and

projects Fortunately of the and Dierks curve. were big of Millport ahead two our kind

very will contractors contractors good getting in fairly So I know and of you, full. were able to and filled for the and tell to as files. secure you in can both talking are order they But those up They we shortly be starting are shape. full, just

So I think announced to some as these cost going our of anticipated. who they than little potentially more have competitors and a maybe mills a take result, it’s longer originally

Paul Quinn

Great. luck. Thanks of for that. Best

Doyle Simons

thank Alright, you.

Doyle Simons

joining our hope understand and for weekend. interest Thank good I If I that it and last call want thank a question. day your everybody the us on is and in everybody you. Weyerhaeuser good for has to

Operator

call. earnings Ladies quarter and XXXX second conclude does Weyerhaeuser gentlemen, this the conference

You may disconnect. now

Weyerhaeuser (WY) 27 Jul 182018 Q2 Earnings call transcript