WY - Earnings call transcript Q4 2020

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Operator

Greetings, and welcome to the Weyerhaeuser Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Beth Baum, Vice President of Investor Relations and Enterprise Planning. Thank you, Ms. Baum.

begin. may You

Elizabeth Baum

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

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

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

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

Devin Stockfish

full morning, you $XXX today. Thanks, of joining diluted Beth. million or thank and $X.XX everyone, on $X.X Good billion. GAAP of year net per sales earnings Weyerhaeuser for reported share, us This morning,

than share. year performance per special XX was $X.X full or Excluding our years. in items, more $X.XX increase XXXX earnings million highest Adjusted EBITDA EBITDA and $XXX the XX% totaled over diluted nearly year billion, XXXX full

GAAP For $X.X of fourth billion. reported sales per earnings on we quarter, $X.XX $XXX million of diluted share, the or net

like our charges gratitude in $X.XX open Adjusted million, sincere dedication, resiliency we special million their $XX $XXX million to flexibility this than XXX% the my earned more or and morning for XXXX. expressing to quarter or Excluding for I'd EBITDA fourth exceptional after-tax per net XXXX. for of share $XXX by diluted items, quarter. employees was performance, than higher

unprecedented results continued delivered operating in of to face maintained serve focus, our strong Our challenges. people and market and a the safety customers

strengthening achieving $X our segment, superior gross excellence operating of $XXX from strategically is our than debt executed controllable XXXX; positioning our Products million operational billion company a performance contractor serious industry-leading dividend assets, portfolio included: reducing Wood of drive accomplishments billion shareholders. strategy. businesses approximately of new delivering unrivaled more adjusted record-breaking by that our costs market manufacturing sustainability new proud sustainable over our a of to company-wide which upgrading of capturing a and target; extremely XXXX, our a operations; Timberland in than cycles; exceptionally $X.X across improvements, exceeding in EBITDA for reducing and introducing over the well, value our Holdings; framework I'm long-term further increase All Oregon by more injuries our record million; $XXX and low annual employee XX%; significantly launching lumber improving

continued on let starts million nearly activity. the third over Single-family me Single-family building housing units residential housing of Before I improving adjusted market. the business construction new seasonal no improvement activity comments quarter U.S. averaged quarter-over-quarter. for of XX% quarter. starts the U.S. basis, the Total some first quarter, fourth housing catalyst, represents with the pace now quarter year XX% ago. primary discuss throughout in XX% a results, make one slowdown an on seasonally were fourth fourth activity XX% its compared approximately with X.X torrid

since level the reaching the have before seasonally in Additionally, housing X.X units Recession, highest adjusted permits surged to a million Great December.

in building materials record what notably, supported record backlog, into January, lows, cautionary including customers. mortgage that hearing this worth sales, are Certain existing to and As with adults of most labor activity, months and a credit for homebuilder home well homebuilders. place, for availability a will our low housing support for demand are supports the we demographic post-COVID Biden age progress favorable drive the under flexibility, for we homeownership U.S. single-family older larger to we first-time possibility rates near as macroeconomic continue trends interest are federal inventory expect as seeing strong numerous deciding millennial noting, to XXXX, homes, tax homebuyers administration. anecdotally preference ongoing homebuilders headwinds of are and growing U.S. from lot tailwinds constraints strong relating while challenges in by confidence, work-from-home

However, equity continued backdrop million increasingly XXXX, With in we the stock, housing and low rising interest businesses rates, aging single-family expect anticipate X.XX in primarily driven housing for strength in and also over favorable, remodel starts years. remain housing Collectively, repair an the appears tailwind housing we to activity. strong by and expect next we a our XXXX. dynamics positive will be several activity these home

quarter $XXX $XX quarter. adjusted market, higher and inventory results. throughout the Southern Timberlands' slow demand positions Oregon, of remained and advantage as to Oregon I'll In quarter, to Log begin come by announced the favorable X Pages the strong were where domestic average our following increased to sought quarter, for certain with through now in mills Turning million as earnings the start tight fourth lean to compared of the to lumber logs. prices realizations included sales EBITDA adjusted $XXX online some to prepared gain of for due landowners season. by the quarter million compared replenish western increased activity. severe harvest markets salvage million, million particularly take our fire previously Timberlands. EBITDA Japan a with domestic X slides. operations business discussion Timberlands third on sale were export third which $XX the Earnings Timberlands' primarily increased Western on the

logs primarily activity. operations log with and for salvage markets diameter softened, significant supply salvage in commenced, As improved smaller pricing

Oregon. affected Our quarter fully with fee Timberlands salvage by harvest initiated increased resumed we compared X% as on operations and harvest the volume in third activity our

and realizations Oregon. not quarter hauling operational yields increased due are logging costs downgrades fourth moderately lower requirements, market, haul the activity salvage associated to experiencing and during to on all higher increased in and Log modestly logs. and safety distances with We our salvage any

lumber. availability fourth export our housing as reduced In imported activity the to Japan, and domestic through of logs our for U.S. strengthened markets Turning robust markets. lumber improved demand quarter the

the strengthened pest in fourth increased logs were U.S. due the market log in reduced restricted the as volumes Japan, availability European salvage issues. container and imports and China Japanese of third with Australian to the sales Similar quarter Our for significantly supply to compared realizations quarter.

sales volumes over significantly average quarter increased realizations and slightly. to increased Our the China third

Moving to the South.

Southern $X quarter. the compared million third with EBITDA Timberlands' increased adjusted

sawlog and markets Atlantic steady Fiber to markets. in seasonal outages softened panel pricing modestly tensioned Southern availability. quarter, weather limited strong Coast some fourth markets more reduced as remained in log and drove areas log most improved the maintenance in due demand, lumber wet Atlantic demand slightly as the limited supply although markets

wet increased sales than to realizations offset was adjusted less the for completed were EBITDA. sawlogs and quarter the as $X as Estate, quarter were weather. Our Pages Energy and volume Natural Real slightly $XX the fee XX. and improved million the log lower spending Estate compared the quarter slightly million Timberlands' October Resources, Northern to third harvest Average quarter, slightly third for million due third to with E&R partially lower comparable higher sales $XX realizations. fiber third contributed due we EBITDA to to XX lower Real unusually -- adjusted and slightly logs. hardwood in earnings by realizations realizations activity fourth

the our the XX strong lumber operational and third products, sales adjusted in transactions. year, in in strong highest activity Wood generated half due toward of our heavily fourth segment quarter, adjusted EBITDA activity, activity as limited per Wood remodel compared construction third small revised the Products For limited to slowdown to of seasonal OSB year, and In remained than of value, proud the and And price to quarter mix. of the adjusted and replenishment began $XXX quarter XXXX across XXXX, with Average over construction. year. declined quarter buyers on weighted expectation of included new in year sharply lines, unusually favorable prices to XX. was and the distribution for lower Pages more in slightly than million delivered and Products high Fourth despite but years. guidance. entered seasonal the was our conditions Fourth million at contributed quarter levels, this full October, full the product generated demand timing a repair a weather Real record. Benchmark earnings the up year the $XX pandemic. million ease adjusted quarter quarter year Estate lumber incredibly of businesses was I'm $XXX EBITDA first Similar acre million the due EBITDA, full remodel EBITDA our to from In transactions. business parcel XXXX EBITDA. and highest performance to challenges and adjusted Wood significantly our disruptions slowdown the proportion our housing. fourth an transaction $XXX ago significant XXXX, robust repair quarter and to high through XX residential record in

as about COVID-related concerns quarter. lean As quarter third framing and On shortly a improved the third price we lumber compared the $XX quarter. and million, benefit the quarter. comparable volumes. decreased for quarter Average remained began and late quarter back X% at to oriented third primarily markets X decreased $XX Engineered only sales record of with to solid in sales as just distribution, thereafter. board average, progressed, the with quarter. our this million compared by by strong decreased web fourth volumes costs time sales November products' to the a activity, compared which modest OSB our pricing the as a of raw compared for planned Average stronger prior rates to disruptions million Despite the the stock. is wood a business of new XX% with seasonal decreased December. construction and OSB EBITDA due increased delivered mills. third reduction in section $XXX the as third inventories with OSB realizations in in the this Average buyers to surpassing our record we quarter, and and XX% demand composite were Sales I-joists pricing what lumber a pricing established by third compared to pace, third rebounding modestly costs, for completed established quarter realizations $XX quarter. EBITDA EBITDA drove with increases. softening Operating manufacturing composite capture Average fourth decreased at shutdowns Canadian the significantly. slightly reduction, performed through quarter. improved costs material by million typical higher In supply quarter strand the above the Western year. maintenance step quarter realizations for of during increased result last log improved fourth OSB And $XXX record current distribution XX%. third EBITDA unit decreased was compared of EBITDA million increased

excellence. to like to Now I'd turn operational

million environment. target, to an controllable improvements, operating captured southern very rates product increase and and approximately improve XXXX, continued value, unwavering notable Products in in and of our multiple south the Timberlands, business enhance million created million exceeding also future the fluctuating and from enterprise. turnaround efficiencies activity. expanded and challenging achieve This drones improve milestones reduce costs, to commitment significant our In mix. through enhanced delivered $XX despite margin meaningful enhancements $XX while teams our through avoid million harvesting initiatives operating the reforestation also on to data a machine focus employees response The our XXXX, costs Timberlands capture records OpEx and Wood capabilities our $XX enhanced us optimize contributions future survival mill implement $XX initiatives Our pandemic. and despite delivered to of million time, with to reliability through across enabled future analysis a capturing to operating postures continued further OpEx to mechanized business opportunities planting use fertilization In of business LIDAR improvements of value in west, technology. seedling in $XXX -- OpEx

and example, low reliability achieved costs mills through has and and also The avoided our record manufacturing consecutive For efficiency business the OSB production controllable second delivered procurement costs volumes. our year, business initiatives. future lumber record for increased

we mill, In addition reduce downtime. Wood flexing disruptions. ongoing improved out-of-log include strategically sell additional ensure consume $XX internal log internally Products. volume fee value-accretive million that to and wood pandemic-related in an to logs to these achievements, our margins Examples market most both our that to is harvest mills its flexing Timberlands of effort during OpEx to routed to harvest cross-business products we captured And the every procurement

our discuss collaboration first we're XXXX, to $XX across of see quarter to I'm as And forward and we to items million deliver I'll creativity, operating business that OpEx improvements to to strive look another the businesses. to we financial industry-leading excited and our innovation emerges outlook. targeting Russell now As performance some all turn across over $XX it million segments. continuously

Russell Hagen

portion and operations our Thanks, Adjusted cash a billion, $X.X this through this or financial and and for and XXXX, funds Timberlands XX. Wood key of strongest on distribution, from invested year. Devin, XX full cash since into I'll fourth XXXX. highlighted year as quarter billion totaled pages everyone. and quarter We million FAD, for are back FAD good outstanding. totaled begin which totaled to our portion fourth the operating debt capital Products used We $XXX the highest Cash since XX. million our full on which expenditures, morning, year. our is the our XXXX, significant for items, cash for $X.XX summarized This for $XXX reduce available of Page flow adjusted a full operating year's flow over businesses

due to XXXX our of to With end adjusted compared ratio net strong performance, over XXXX. $XXX we cycle. X/X% on of in X.Xx substantially of our early debt reduction, the at the end our debt leverage which XXXX. incurred debt net billion million ratio, activity, redeemed target of special XXXX, the which, approximately at $XXX has extinguishment, We EBITDA EBITDA notes item. X.Xx is which charge high were September results leverage this a below pretax ended with million that in quarter, We adjusted the X.Xx fourth in is million This was of addition a just year During total a the our as $X.X is the reduction comfortably included under to EBITDA of to XXXX. X $XX a our outstanding, improved

this have also of additional have cash when we quarter note earmark our note, million, until no to X% We repay XXXX. of will the maturities debt in After matures $XXX fourth it repayment XXXX. late

and in $X.XX the a we reinitiating position, we $XXX with share sustainable during dividend, appropriate Overall, our base addition In cycle a that XXXX. year, per year our shareholders investment-grade the million the structure dividend over solid supports which fourth dividend ended is which improving was a included returned profile. to quarter framework and the a strong to in credit quarterly the leverage, financial debt over with paid

earnings which items the to first XX. Turning XXXX, business, be on and higher and adjusted key now XX for expect net to fourth quarter. our slightly to our outlook quarter quarter In EBITDA than and full summarized Timberlands are Pages quarter In we year fourth our first lumber the Western mill Timberlands will volumes strong remains demand fourth inventories domestic ended log operations, favorable West in we and expect the log quarter. Domestic quarter markets. to sales our comparable be the due first the at moderate levels,

first average. fourth expect slightly quarter fee quarter. be comparable first anticipate realizations will below be sales average quarter will quarter the with volumes the domestic We the We fourth harvest

volume. XXXX during activities, spending the will our compared experiencing half of price to revised also comprise We wood will We plan Western road and months. any activity this currently the as we salvage be expect We'll for are Oregon our nearly activity fourth as XXXX front-loading roadwork logs. our slows lower we quarter salvage focus anticipate not Western salvage be currently erosion winter Western the to harvest harvest

haul and to slightly costs log increased fourth salvage results unit are in market. to to lower The compared expected Additionally, the distance activity efficiency quarter. hauling and increase

XXXX as disruptions the comparable be be realizations average Log sales fee Moving imports. average log supported in expected in log housing the remain remains to of than sales export the first imports first Japanese infrastructure Demand and Japan limited. quarter remained log South, quarter, the quarter are conclusion volumes lumber Japan, demand volumes expected average are the improved and to reductions. In government will higher markets. we realizations improving by volumes in In spending an export our slightly following quarter. fourth supply economy, continued harvest the anticipate to solid, to Chinese to fourth sales and sales and our activity be the quarter. fourth higher harvest of strong

fee log Additionally, to expect sales the are are quarter. volumes expected to the In harvest slightly fourth North, expected average log quarter, be comparable will to lower. while to sales comparable we fourth average be realizations be realizations

Turning to full plan. year our harvest

total will year we company full volume tons. approximately expect the For XX.X be harvest XXXX, million

southern harvest up we West, level of expect more activity salvage normalized volumes X% operations. our reflects the resume and In will on lower. This productivity logging XXXX be our approximately a our as will expect XX%, reductions. We pandemic-related volumes we lower our harvest following approximately be harvest the

on This Oregon fiber moderately than wrap We up demand for the expect quarter be Northern XXXX. divestiture our to a with Timberlands of lower northern transactions. I'll comments harvest few Montana volumes and segment our logs. the Timberlands reflects Timberlands softer fourth

sale fourth sale cash was million the in Oregon acres, gain mid-coastal a The inflow of of acres of related As reported for cash outflow $XX a which $XXX X of to cash We XX,XXX and a these as Oregon XXX,XXX reported a included the million. indicated, transactions this on item. net $XXX million quarter $XXX Devin was million for outflow special Timberlands. purchase Southern of

Turning to Real Natural Properties this in properties. recreational strong. remain and shifting societal demand segment. for Resources preferences Estate, real driving are robust A time our our Interest Real Energy estate during

and approximately for similar full year. $XXX estate will year of EBITDA XX% adjusted activity the as XX% real estate the we in a sales approximately percentage our is We to be to real million. be XXXX XXXX. cadence anticipate our cadence of Land And both expect XXXX expected basis XXXX of to

modestly EBITDA For transactions. timing the XXXX for quarter the lower expect this due be first of adjusted will segment to we first quarter, than

slightly We quarter first net mix. than earnings, to however, due XXXX higher the expect be to

very In is home carried markets, rising a and builder forward an drive are activity continued and of from anticipating remodel spring upgrades. demand customers first stock continued levels, segment, as our remain and expected the in quarter. repair For building lean, Products home limited quarter construction Channel in with purchasing interest the trends work-from-home equity, at solid remain aging our advance dealer and strong Wood and inventories residential remodeling to favorable new fourth housing generally season.

fourth sales within following lumber Production Excluding the and businesses quarter, the and quarter. higher for fourth OSB planned realizations adjusted maintenance board, expect effect the average to will of than we significantly are engineered expected EBITDA of in wood volumes changes quarter quarter. during the completion be strand in first increase the our oriented

our product wood volumes, is expect across be first levels. the benchmark also costs to higher Entering manufacturing board We costs strand and the framing composite for new lumber while fourth quarter, should products, and comparable improved a lumber engineered lines January, primarily sales reached and near-record oriented peak in slightly at pricing the for quarter.

lumber, are For sales approximately average. our average fourth and realizations are realizations higher, quarter-to-date than $XXX quarter higher current the approximately $XXX

For average. are approximately average higher realizations and our realizations higher, our sales quarter are the $XX quarter-to-date OSB, $XX than sales fourth approximately current

As every approximately $XX quarterly for realizations a of of reminder, lumber, And for on million in a approximately EBITDA $XX quarterly every $X million on EBITDA in change change basis. realizations is basis. a is $XX OSB,

engineered solid our for in section be XXXX will and modestly XXXX. benefits increases we announced of realizations January August products I-joist For capture sales price products and wood average the as higher

adjusted intersegment the the of for offset seasonal by when the to inventories profit fourth effects million inventory increase our and and than profit in the LIFO of foreign on Fourth end quarter on below log unfavorable quarter, major as inventory Turning compared in of normal primarily intersegment variable now The the lower of Page exchange items $X to LIFO driven components quarter, expense. at elimination and with was rates, quarter compensation inventories variances partially by the were third summarized third lower levels. unallocated of the EBITDA elimination a from was XX. charge

company group contract, Moving the pension we $XXX a U.S. which our to the insurance annuity carrier. pension. required. Contract liabilities from funded quarter, plan fourth purchase completed transfers cash approximately to contribution pension assets, an was our million purchase with of In no of U.S.

to pretax transaction, our reduce million series result actions this noncash pension quarter obligations. in The taken a charge. of settlement included the of latest fourth is special a plan As items transaction $XXX a

billion $X since beginning XXXX. in We the have now settled of efforts these nearly

and XXXX decreased points For rates rates. funded $XXX by driven million Discount not XX approximately basis lower decreased and primarily our points approximately the XXXX qualified by plans our any paid pension U.S. XX approximately the post-employment year for basis we million. ended plans plan. for and cash do $XX In to was discount the plans, contributions plans. Cash status for Canadian by XXXX, post-retirement U.S. anticipate to compared in XXXX, pension

all million. payments cash required be $XX for plans approximately will Our other

Excluding in noncash, XXXX. our million fourth $XX expense postretirement settlement nonoperating our and pension charge, quarter was

We report items in outlook $XX expense expect XX. of highlighted additional to Page I'll a XXXX. up approximately with million wrap on few

was Our of full early extinguishment $XX before expense, excludes approximately million. debt This items, interest special year million. charges XXXX $XXX of our

interest for expense be XXXX. expect full We will year the million $XXX

capital to Turning expenditures.

the is result demand XXXX timberlands. will expect Wood year, which investments. planned reforestation our CapEx deferred will product mix to will $XXX and completed. hold production process Products costs, of CapEx cost sawmills, capacity. of Products' inclusive serve market of logs its project total capital for approximately of efficiently This up million modernize highly board better the structure, the mill's and more XXXX from begin Dierks as improvements Timberlands, successful million corporate million last undertake be and enhance IT projects Millport includes in $XXX when multiyear will project $X Similar Louisiana a to approximately in million, rebuilds sawmill. our system We the feet the significantly to Wood equipment for our this reduce strategic XXX These $XXX for project is adjacent for to in additional began also increasing ramping high-return and some we optimize million

taxes. now Turning to

rate XXXX special year excluding XX%, effective items. full was Our tax

year REIT on XX% before earnings and quarter between special we our the will subsidiary. effective expect first mix full the our rate forecasted based and items XX% tax between XXXX, taxable For and be of REIT

$XX the net we year XXXX. taxes, for cash in million paid For full

our receive XXXX to contribution mid-XXXX. with pension associated As a million $XX in refund discussed, we previously expect

cash we to generally comparable expense. this will our taxes be tax our overall XXXX expect Excluding refund,

over your Devin, back Now I'll call the turn and I look forward questions. to to

Devin Stockfish

again, closing, for and employees I'm this at adherence operating results, I to last very with company Russell. that, time pleased and being to, in frankly, these progress challenges, despite in thank our flexibility remarkable imaginable Notwithstanding XXXX, we values strategic Thanks, the professionally we our year. and tested ways on In personally made weren't initiatives. want achieved their dedication, numerous

forward, strong from the Looking The in and administration of products. U.S. has a this accelerated a potential macroeconomic backdrop drive excited for that housing stimulus demand fundamentals we for could by front package for us and believe I'm favorable products. opportunities sharply, year. market incremental federal will the continue to our support demand new also our

cost operating manufacturing industry-leading Our are structure. an reliability with unprecedented facilities and

strong Solutions, XXXX, across We a to including opportunities shareholders demand. relating timber market to create up portfolio our have return enables and future unmatched cash industry-leading serve framework us mass in exciting for and conditions. to questions. that performance now a sheet steadfast carbon, capital Entering new for potential dividend And like value and to assets, meaningful customers pursuit climate remain floor of allocation. and sources In balance open through to we're our disciplined of the well we positioned, shareholders I'd an present and

Operator

Instructions]. [Operator

Anthony from comes question Pettinari with first Citi. Our

Anthony Pettinari

Oregon give submarket term. And that we then seeing over there what which sort I'm footprint it submarket? between averages log the just have to is, of sort South-wide opportunity there flat of year. seems sort guess Devin, and there in where upgrade differences in your look price, to to maybe of the past average opportunity from regional wondering, kind on where your or seem question weakest maybe a challenged that bigger tension some strongest flat of of footprint your upgraded you is maybe the regions a a long balance regional we the south? parallel corresponds when color With the underneath fairly be of sheet my you're Timbermart-South. some subregions South prices the can kind the us last any southern of seeing the prices been the price see are is, year, and I hood real is you in that

Devin Stockfish

a Yes. Maybe in different pieces. that I'll take few

you're at level, high Anthony, a Just, right.

-- back that We are of the south still issues it goes number the a really seen oversupply in we've Great Recession with seeing in that markets. the to

obviously, very important you differs to somewhat market. it's wood that, specific. by that and are remember supply As note, And basket always demand

us mill stronger Mississippi. submarkets, North to is good A would that seen Florida we've capacity from are years, really wood Atlantic as billion into should us, And major of into this coming X.X capacity I recent really in as fair new the new that of Carolina. South, of we in all of coming [indiscernible] the When markets, take favorable capacity up coming to board the be announcements the on Now the some the And amount about expecting continued products years. region, allows a advantage say, baskets capacity. last remember news a new those about the Forest we're couple across our feet several thing new mill, think the some in to scale through south is over such that business very markets. has Idaho

about Southern here starting thing there regions, just that, the little a to I We're in million Louisiana, time. Arkansas, grow markets starting would improvements mention just think, over could some in Mississippi, bit And the of tension South. also in and export the is then Alabama. to continue I We're some see in areas Central those other across see regions. to markets X.X have total of North We Central Georgia acres and certain other

in As ramping you our back export programs started know, had we China. really up XXXX, primarily to

some into but backed now programs came We've the With tariffs that into China, off, our reaccelerated well. play, export come the have as we opportunities tariff India situation that picking off. up

that's doing. they're optimization optimization we I going Russell's time. that quite continue area, new the that frankly, proximity So ways over portfolio, we're We've is time. West. while, in our true the work that will But tension and work expect in that continue work look to regions and It's perhaps role the to port, would with for been did will for West. for work across another frankly, accelerate value up for to doing forward. South that Oregon, going again, that that the the that, all a drive respect and the With South. in in a true include of both work even to that's to to ongoing those and some have sure, That's the

Anthony Pettinari

could the Okay. mean, stimulus, what China. with move switching That's maybe And the Weyerhaeuser then then have very can term? kind anything the announcements office, of approach on flurry you've a there there Is to helpful. XXXX? And environmental really term? long moderate more seen, kind on be I needle plan, thoughts Biden in first-time of that been maybe of Of for meaningful gears. just and what any homebuyer taking the near credit most

Devin Stockfish

Yes.

with some business. new watching administration, closely. think, that to be policy, going to do Administration. in those and really look us and going we for as there I real the are As how Biden impact noted, the puts any opportunities for are you that's Tax, to are there things regulatory our takes, that But administration we're some see with

accelerate will a trade to normalized that programs where tariffs be into should mentioned of market, help A into environment more continue our a we China export You couple avoid which can them. positive. us

the policy, forestry responsibilities, additional could side. administration demand the policies on significant of in infrastructure that's I change. every to a specifically even that labor, the which how ask spur that just under environmental come I'll the then we some benefit. something positive could carbon infrastructure Since downstream And anything us, plan, the aspect is global think, I I you squarely And progresses. extent plan think have big new maybe different products. falls the that within side, its around we'll that both for see But and could And some benefits out will immigration side? that's want but administration. The us. homebuilder for market, I new that for incrementally Congress, think, on the through And mention to something our Russell, additional bit some think that thing Russell's got climate that certainly policy into the is really a that's around think the little into that, way allow a of also could warming something perhaps, I be find

Russell Hagen

Biden the a starting specific the of focal point get taken seeing that to is demonstrates and The early actions to framed change, we're clearly, on going mean, up carbon, them. I focus going Sure. some discussed. Administration policy be and to to climate this for is that they've

of the political So climate health I see or is And would aimed level, preferences to building in something of a I type if off at be policies do say federal think don't of pull federal there across But saw just wood. the wood-based supporting at trade come I'd the don't and carbon like that. of forest mitigation that for agencies. recognizing environmental I benefits form in purchasing and carbon will solutions surprised cap that, the benefits change could all the stored then because I structure. -- think we a tax we'll

the only I so for positive, as not think And for are Weyerhaeuser, all whole. those a but industry very

again, mature. focus and see particular. as area, they see for beneficial, So I we'll Weyerhaeuser, markets and to And the more in this again, continue on to think innovation, we'll for continue that's industry

Operator

George Bank next Staphos question America. with comes from of Our

George Staphos

Congratulations question on start kind housing you demand. to the results. for I impact with on a of the top-down and related to wanted ultimate

demographics, larger towards beginning be would some wages said, move to higher moving enumerated quickly. hopefully these even contacts a homes number That and of also affordability up a and little would get moving about too. imagine our more bit prices I are and worried things, to matter, rates of the on home of that for benefit based a improved things. housing single-family sorts you So employment

the that What be above, acknowledge that of confidence wrong the about talked the of been most in your to move probably all the I your customers continue of you answer is way housing things the going a of to gives terms bit can but gives affordability? given opening that So comments, what in spike that you little what's a confidence, in higher?

Devin Stockfish

There's I a affordability that. going Yes. no note question the And about piece you be to headwind. think is

the the though, new is just have for COVID I the of to Certainly, lot And a at some we they're amount event, that We all But been just millions of low building can inventory or policy and any trends it's -- think that States back housing. massively to we've homes The which confidence, talking in term, significant just keeping reached need in that home no goes to in have relatively of whether whether pretty this about that just years, markets point, it point overwhelming demographic is supportive. in things just really that it's to finally going they're get And specific over normal really present. it present, for underbuilding build just sale the virtually a for inflection where, to building low. to environment a of even. for there's homes. terms of been more confident demand to existing activity for the year. for demand near participate be interest builders decade. the think right a with which the to the we've of demand kind are stay United the seems -- just extent home be above In we've at it will pace is, with inventory back around starts rates sale now, I There federal hit over

we're term, have XXXX, going you're of affordability So about the But, this year. to pretty a the I construction least is tailwinds be one positive solved. The are think is there in support for feeling that right. that, near exactly setup lot at to piece but to for the

George Staphos

where and of this about 'XX. ability talked, can or with anytime the to What of capacity? rebuilding growth not additional given, mentioned, feet sawmill terms can to project, I you sold other of What soon. it's we new stopping its or new would less switching imagine, with a creep? much produce through a across adding by projects that panels, of put shifts board mill or kind to productivity either the number billion capacity or Louisiana project your XXX you're had as project bit, just you're Louisiana dirks else your more lumber improve like get looks mills, in additional you capacity what in as And did gears on places lot and across You you like demand more in out. do you're And you crank of out

Devin Stockfish

Yes.

So just a few comments there.

a well Just This some key terms we're mill fee of a timberlands. It's by the This strategically a very from about. really new briefly allow to great there. got It's surrounded mill comment located. customers. of on amount is in. the a us situated our project configuration. serving excited in We've really is significant that employee very This improve going It's product mix to mill. hold base

about So this. excited we're really

along efficient think to of just Dierks Millport over this be going terms the mill our some to mill really of lines great I low-cost, a time. make is in that's going lumber and very highly

fair on notwithstanding of of terms fact up flex right? across additional a example good the production of near different that in downtime the for where into And record comes footprint. XXXX, a the took the amount the improving play number OSB mill In in we we very a spring. we hit instances. that And Is of a are that, volume side, in on volume ability term, in to reliability our focused

those so And true that's And a will reliability across from volume and EWP system. lumber the equally an extra improvements provide standpoint.

that across But we're system back note comes some So volumes. continuing reliability in program. invest as focused that what of our driving being increasing capital there's creep through that. on efficiencies I are costs, reducing volume is as at part programs and And to going to opposed be largely in our our would the to mills CapEx the directly focused improving those system

million million another project, mills adding board of million so maybe And our run just our off the that's up coming short Millport, ramp way year. from another additional volume of long-winded here XX answer some then the feet least a that's so holding XX continuing flex to from at And of continuing to saying, term. this Millport we in XXX to are well,

George Staphos

us good one, you maintenance could give some of of Devin. by? what the fourth I last activity outage No, that numbers that's effect impacted if your the If A in on could guardrail the have was color, might quarter sort what Products? ask, Wood in

Devin Stockfish

Yes.

And so in our unit $XX And costs for by million manufacturing drove was that $XX to quarter. the up million OSB that really business.

Operator

of Wilde question next from is with Montreal. Mark Bank Our

Mark Wilde

ago. X Devin, hard just to Thanks. imagine it's where months were we

Devin Stockfish

that an Mark. understatement, Well, is

a in I sure. think, for been It's ride wild XXXX.

Mark Wilde

keep us mind. of Yes. Probably to something all in good for

we from you $XX of question. first that quarter? of, just of some George's give throughput on to and the million standpoint have beyond fourth maintenance in what you that's wood following Just operations kind $XX quarter, the in helping then million us in Can sense

Devin Stockfish

Yes.

over bit price costs, to in rest some volume the lumber the So really, QX, Products, The majority of net of going recognize for and OSB Wood around little that, half, on is any if reduced we about QX be you EWP. increases be as and that's to a million a then manufacturing of to $XX increases is think or going in little pricing. incremental

Mark Wilde

in That's Okay. give you you're generate to forward, X lot some be supplement going of pull dividend might the a then helpful. Whether lot, tariff? prioritize next the of cash. X would priorities accumulate just the stock, just you the cash, you a how use whether And like? whether repurchasing if thoughts the you we would what us a you months, at on for Could to might might trajectory current market look continue on

Devin Stockfish

strong going optimistic very to And we're to Well, plays of we out, that course are we're some like flow. generate over if the going cash that see you markets XXXX. strong say,

ultimately, framework, under or, for available through And shareholders, dividend is and of XX% growth, of XX% with over any to FAD indicated share paydown the our be above debt plan to XX% right would to flow base return new and both we've cash then, dividend that to dividend. FAD the the our further supplemental XXXX circumstances, the XX% As repurchase. back

opportunities the and I at so cash on accretive we'll from to say look expect something for those allocate are shareholders. those And right to generally. would standpoint to dependent the most continue value we'll opportunistically an strategic. I and continue are that But And create finding deals obviously, optimization long-term that's that's area that closely opportunities and just look growth would Timberland's an that growth both the more at,

be And that to disciplined going so very to continue in we're respect.

year. new And for is that In really, matching dividend this annually the sure dividend a supplemental year. is to flow in reason really as mentioned, supplemental -- we're the anticipates that QX make cash framework the to pay we that paid of prior just to for that for interim be we're variable component dividend the the generating our out terms potential year, going

anticipating quarter that, of first XXXX So that generally, flow. first we're be paid would on the XXXX based the supplemental cash dividend in

that's under go where later things could situation the annually some be of would to a year? Now we paid well, most in that in interim door dividend conceivable. the we're QX supplemental Certainly, sort consider there again, be I expecting look, shut that if really on definitively. circumstances. out But wouldn't

Mark Wilde

consolidation this the West us All And of Fraser-Norbord taking that in in taking place me the for the products impact one are consolidation about business. Weyerhaeuser's last businesses? deal. both also then Okay. is or with for manufacturing distribution implications building seeing think products right. Can place just, we more wood help you We're

Devin Stockfish

Yes.

combined and have company both companies. have West Both competitors On Fraser-Norbord, BFS-BMC respect for the us. both These customers deals. solid Fraser-Norbord sure will for run. West on we Ray of are very well of teams. those Peter companies. companies comment be lot well-run and the both a They're So and very I'm

good going then, had do OSB customers always Weyerhaeuser. businesses has find markets. the ways have working create with for we'll with and firm. these those BFS and the so to both Dave of customers. chain team everything to a be continue obviously, going we're forward. can help strong we'll with to great supply their to We've compete for log The we work have, relationship And in I together the combined And of value relationships been to we a good put we'll with anticipate of on to from continue their them firms. them long-standing in both And really as have And Flitman lumber suppliers merger, BFS-BMC them side.

those predict, there opportunities I some to hard continued the consolidation, generally, are for I value still markets. their things for Timing think, surprised but just are that consolidation I'm in there be if companies on wouldn't through create in out always consolidation. there's stakeholders sure specifics, to the market

Mark Wilde

those But for do you in or not? see any businesses you implication

Devin Stockfish

create so mean, to opportunities looking as for always we're I well. value Well,

And looking so for comment deals, our any but I wouldn't to specifically improve the opportunities we're always of portfolio. on value

businesses. the as compete We'll West on asking Fraser-Norbord we as have or materially material don't continue BFS-BMC think and specifically any of we going with you're I our impact -- about always them deals, with If those a have are to always them have. to work

Operator

Our next question comes from Mark Weintraub with Seaport Global.

Mark Weintraub

and of question, up Mark. actually kind George both one on Devin, following

So if your much was of way affected OSB XXXX disruptions, levels might of much a ballpark in you part disruptions kind in that, and as be, of labor that COVID for were to in year? the force production lumber production a And you there what during guys the how of pickup?

Devin Stockfish

of is did our Yes. answer take some all in the businesses. We downtime second question, the the X spring With of yes. part really across the respect to

year. for overall impact so And our that have did an volumes on the

the in being of of percentage to As little points increased we a really just businesses the result reliability, few continued think that safe relative we'll with market-related XXXX, I across comp think those about assume to XXXX downtime down on a due also XXXX as volumes have a but it's both to focus bit spring.

Mark Weintraub

western terrific be gears markets that's export money to be the that obviously, shifting to where the being, your timberlands, lot in of rather X to and used area make than where, Okay. again used a can happening driver. kind more sooner And a question then later? you And

that that, at be does get basket forecast what X.XX might there? start might you're -- tension, million that this anticipating, thoughts price would it Or housing see some real and Given more appear what does action juncture? we your

Devin Stockfish

Yes.

just as I yes. of of driver of what States. activity, far, XXXX think is, this is, of level general lumber for all the portion log down answer market XXXX United big depressed statement, western the market pricing the prices. by And tension most the really was a short a kept a With in So housing and

seen, least lumber back historically logs at pricing. benefit is what so form past, will the the of obviously, we've cash the woods be flow increasing log them going to for are recent pay the in prices much But negative. of go of that more not caused to to people And in

And statement. so at we've prices. that prices, that put out a japan lumber low levels, increase to will prices That's seen Certainly, of we That's on remain. when some export healthy the you restrictions expect markets. see have QX, But tension we does stay to lumber in QX statement. China ability log strong as your continue the continue. into a market to Coming

going lumber there. to Mark, function the this volumes. will only market doing. are Oregon that, salvage caveat is portions tension through dynamic prices what in as really work of So on there be just, It's a landowners The a year just of is their

one term, through And of some we're near activity, the things so landowners, is harvest. younger as are than is seeing you're in that salvage all that typically are means what that harvesting the here, normally stands included, that, probably of that working you the ourselves would

and XX we that into out to And chip going opposed in really we're XXs to market. are stands going are as and to we're low so as saw XX, that see the more harvesting

tensioned. But in Oregon basket So fairly overall, of of portion and Washington that may depressive effect a here little have XXXX. the bit a for a wood remains

Operator

Connelly Inc. Our next question comes Stephens, from with Mark

Mark Connelly

lot to listened about logistics. we of we've transportation calls first the of where warnings heard one is This a haven't and

sense of you So for issue that's you? is how us playing do you going that think I was to out become give just bigger what a And wondering could now? if a

Devin Stockfish

and significant somewhat this not tight, in certain rail. in year geographies. trucking overall, seeing of as say aren't with tight a but the mean and as been there struggling tightness rail is the issue The so magnitude South. that. that particular, the some does finding past, having say with of in I'd are years in would in some pretty But we the that some I particularly Yes. issues in capacity Trucking not they challenges South, transportation. in trucking the availability specifically, are have, didn't capacity mention But is around haven't folks same bit it companies lot again, south, a issues

Mark Connelly

are and it good see contemplating too pretty made is goes harvest a the or in. you plan And substantial Or as way to you early that have still just That's situation respond be any longer-term market in short-term pulpwood, back? to changes? how much you conditions

Devin Stockfish

Yes.

As logs much higher -- we we pulp of southern that this percentage the is about because go a South. think in the have primarily into statement our a market

the looking think activity As about harvesting we obviously, generally, we're at in harvest point regular of our basis growth the that harvest year-to-year to we on markets, want basis, we the on value keep balance a we're over a how manage is, in because time. going looking timberlands at trying the our the to on of maximize and in we're time. what's over really But our

at at what's many a markets, market, the and that and thinning some the we need look up do is Russell answer basis, from for we high-level into from perspective, looking little obviously, are on to really as mentioned, as to wood. But as really think which clear backlog, get is, and as opportunities we you so do the are And year-to-year XXXX, that that about in really from put a that. But South, fiber don't in silvicultural a to heavier pulpwood that's little tons the continue you catching the we going what more important a on different bit cutting. on does thinning

Operator

Davidson. Our next Kurt question with comes Yinger from D.A.

Kurt Yinger

Two quick ones.

way log versus quarter. about drag the QX fourth quantify or in you Products, talked Is Wood higher either what quarter like in from First to costs any maybe the there that 'XX? looked

Devin Stockfish

log Canada. -- the log in QX that's, the the about And lumber we to $XX in from QX, the primarily, within when and higher cost $XX talk Yes. range. that for impact, to for in example, million relative West costs, obviously, that And higher million

so benefits as -- And us that's obviously, that well.

logs lot the a So of we in west. sell

so standpoint it cost pocket, one drag business. in the was of little from get And but for lumber bit a that a a certainly, we

Kurt Yinger

Right.

how about fully Makes long price you August an in would the And on I And increase you kind get right as heard noted I that and due of January. wanted Russell just to well? August realizations? lastly talk as expect that then sure believe just kind Could engineered increase of sense. I then Okay. the to wood. make additional amount one was whether in similar a during

Devin Stockfish

XX%, and and by was product increase January The to geography. X% that Yes. varies

matter And bit that just process are protections little so it within a general we're the usually price get rolling in you cetera, most of within year. through most of contracts, vast et as and that But you'll a with that little last within a then trailing, within it get to of the a quarters X year, majority X building of months. a

Operator

last Markets. with Capital comes Our from RBC Paul question Quinn

Paul Quinn

guess, I Polo, discount Mark, question. at an just easy you're trading going Devin, peers, just up difference? Rainier, to to make a quite wondering how you're your that

Devin Stockfish

Yes.

dividend, into Number interesting think, a to couple take one, for I place. the did some action of that. an a us. things framework with in new obviously, So We go was respect putting year XXXX dividend

that. some people getting around there's minds I -- so their think And that is of

we has I'd and of you since dividend our imagine, we've the supportive. had Overall, that lot investors can say pretty As new been response positive with rolled a conversations framework. out

that and the rationale But it fits in and to the prove how have get we still the flows. out. with business people think I cash

And new that out. forward the think commitments that's look it. so we as rolling a that of framework to continue of made on And we'll delivering I part part to

of to going So piece markets it. I They're us. a are for a we like be we strong. feel are certainly, where pretty a in And think that's the tailwind position

really Our well. businesses are running really,

a back positioned we're most so that generate giving of well that And lot of advantage and cash, be of opportunity take to shareholders. to we'll very and

we you And commitment, I that so, on deliver that to continue close. should see as think, gap

Paul Quinn

side? And And whether just I at put over any for as that follow-up, in you're Fraser-Norbord the Okay. West did looked up just that you portfolio note sale a on asset? that transaction XXXX, themselves anticipating changes

Devin Stockfish

Yes.

we're the and year would about in work going is we say, to and to Timberland something Russell to we So timber And on I'm and optimize do side in always do that continue grow for That's forward. that going be the out, space. us, something year excited looking continue of some to I doing portfolio. really will

Timberland probably side. make the would so we're And the likely to most moves portfolio that's on going be that

have. Wood assets think the On the we side, that Products like I we

terms that Wood Wood we there, in final that's bolt-on Wood Products space, the found is And necessarily a so mill not acquisitions that would portfolio large and I the in the it's right look if the was focus. I'd of big locale. here the right on Products' If of Products' on wouldn't But currently question. I the anticipate price we side, changes or at think side. acquisition a in our sort say Well, small

us everyone. So thanks, your you morning, this Weyerhaeuser. for Stay again, safe, everyone, and continued in joining interest thank for

Operator

teleconference. today's concludes This

at time, thank your you for may lines disconnect we your and this You participation.

Weyerhaeuser (WY) 29 Jan 212020 Q4 Earnings call transcript