WY - Earnings call transcript Q2 2021

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Operator

Greetings and welcome to the Weyerhaeuser’s Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions].

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

You begin. may

Elizabeth Baum

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

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

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

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

Devin W. Stockfish

our and share last for accomplishments $X the record morning by of net us adjusted billion. I'm company's quarter Thank joining This reported $X.X delivered diluted Good team's of $X.X quarterly in net morning XX%. earnings you Their record extremely per on surpassing Beth. thank $X.XX second billion, you collective Weyerhaeuser second sales EBITDA or at strongest on the everyone efforts quarter's billion today. of proud quarter.

by first is billion almost record year-to-date another Our EBITDA adjusted XXXX. higher half than Wood quarter $X.X XX%. $X surpassing billion quarter's EBITDA last the at of record delivered products of adjusted

timberlands year's on the the of Demand to and domestic increased quarter. EBITDA by the a and healthy prices through with our as late market. quarter earnings of extremely slightly approximately in bolster drove In volumes second fire persistent demand to operations adjusted steady begin X quarter Western second conditions discussion the Oregon high Consequently, Salvage early business period Oregon to lumber abundance quarter. diameter pull markets measures Pages continuing season the the in to strong higher log downward response quarter. compared fires of from temperatures. despite in remained now our with of are favorable smaller some I'll first second experienced precautionary for in the dry X% Turning improved slides. pressure. our results. during took X an decline and resulting in EBITDA the adjusted logs from prices to remains This Timberlands a last mills inventories supply earnings the have smaller sales logs West to diameter market. an logs supply in modestly

this productivity salvage has warm higher costs. to and have domestic weather lower date, volume slightly Salvage transition elevation realizations thirds of result slowed quarter. which harvest began of operations higher two a summer somewhat we tracks generally our To our nearly we have early sales planned harvested dynamic, were arrived productivity As in salvage the and lower in the Oregon. in operating as

Forestry seasonally summer and of amount during this quarter costs work warmer road do the significant the were higher months. a as during we

and and lumber availability for demand logistics demand impact container sales and has logs. Turning export remained with American into lumber to in North imported and significantly. to Global Japan our logs markets, and strong particularly to strong respect China for realizations constraints our our in increased resulted availability continued demand lumber increased locally Japan China. prices imported produced of for the strong This shipping

imported continues to logs a of Additionally, reduce supply Australian ban log on the China. to

domestic demand quarter customers. strong capitalize the we as market from on signals flexed our Our sales China volumes the in Chinese pricing from to intentionally volume increased in

first compared the with South, by increased quarter. the approximately to XX% Southern EBITDA timberlands Moving adjusted

as Fiber persistent supply. conditions remained also constrained record Southern limitations markets improved due wet saw log markets strengthened mill supply and pricing from wet quarter for panel lumber most the lean and to inventories of weather. and resulting

catch higher limit significantly quarter first costs quarter. sales heavy South. a our events. the increased were despite the forestry from realizations rain ability and wet in events slightly impacts were the [ph] higher. As ice slightly volumes higher The across however and were our and go delayed the than in haul snow result, the sales did multiple quarter road to on up harvests from costs and quarter Log seasonally weather first and Fee

export increases of and Southern represents Although India signals second see quarter. in sales component and operations, a we volumes to China small continue realizations our both demand the from resulting strengthening in

North slightly and due to freight to availability significantly offset rates higher the realizations. partially compared headwind. first seasonal lower adjusted notable spring increased the to break significantly sales decreased container continued However, conditions be up associated by sales with In quarter EBITDA volumes

estate, very X the of year first Pages Earnings mix with properties timing with properties approximately significantly Turning and compared remained strong quarter average energy, by compared but Earnings acre per XX. Demand EBITDA real on to and than quarter we real XXX% to and to levels. and the of XXXX. higher sales by historical X% than elevated more the been estate and adjusted for due HBU sold ago quarter. year-to-date natural compared are decreased increased price resources of has second

products been We In many strong prior value and This $X.X Pages in billion almost products with to premiums EBITDA of demand capitalize resulting regions. and our construction materials the this continue with significant remained on is through to adjusted quarter. in energy transactions earnings quarter. a stream timber. high market increased increasing XX and have by improved steady XX. prices Wood of production natural Wood compared resources during as the

some transportation ongoing in the distribution not thank and composite these EBITDA records our work with successfully challenges new want were tremendous headwinds. OSB, average Lumber helping lumber, logistics supply adjusted the but towards latter activity first with Our in of and and quarterly framing These I sales at part to to quarter. specifically to quarter for of their drop record in availability treaters. of and first and The the quarter. yourself home segment, largely was us chain the all May. established soften resin spending it second a activity do delivered market the as prices consumer off the the repair results navigate remodel and coming pricing businesses centers yourself inventories out lower lumber compared withstanding teams restrictions half extent XX% it result call changing higher began habits demand and lumber the In strong in of weakened high in do COVID increased resulted quarter. the and exceptional out lumber during

May a remainder a and peaked lumber in result, the the pace late quarter. at of rapid As for retreated prices

home increased remain distributors centers the and remains at EBITDA positions dynamic professional and at home XX% end. and building levels dealers first the at Buyer meaningful or quarter. positioning normal pricing with inventories to with serving Although million build quarter repair for and increased, $XXX treaters reluctance compared cautious remodel segments the Adjusted lumber below inventory inventory environment. and

Canadian Our continued increased sales primarily the to channel costs slightly supply second realizations for moderately. throughout lean increased Log and the Inventories and to by XX% sales availability remain OSB due experienced constraints volumes in as in historic transportation quarter, and challenges. outpace strength markets supply. the logs. increased demand resin quarter second persisted

the OSB to million end before accelerate to increased pricing of compared first adjusted first As compared $XXX with pricing quarter. quarter. quarter. or by peaking the at levels increased composite to OSB EBITDA continued XX% a the the XX% Average record result,

the increased improvement. a realizations Our section I-joist sales This the and and to and planned material a was distribution, the With EBITDA In quarter, for modestly financial primarily resin, Sales improved oriented were discuss primarily increases higher our project by complete increased sales and unit the price for for due extended Sales first $XX manufacturing most EBITDA the a sales to the continue outlook. I-joist demand quarter, veneer. compared to strand business quarter and and production solid board products. outage solid a some turn costs for realizations products call in and at section mill. from higher XX% Canadian slightly Fiber improved over year items million million adjusted improved strong compared the adjusted offset improvement by decreased first to our volumes XX% products, quarter, wood we and XX%. maintenance costs partially products. all to products, for increased Engineered Nancy captured logs. higher to and over webstock, OSB drove increased Production I'll last capital benefit announced that, $XX margins. to volumes across costs raw and Elk third as volumes

Nancy S. Loewe

quarter second of dividend. Thank the on cash nearly are Year-to-date, returned based Page our from totaled $X you, summarized Devin for record. billion cash operations second in with with key generated Page billion I'll half available to operating and begin approximately financial through good on These are everyone. $X.X distribution operations morning adjusted and highlighted $X.X of million highest XX. XXXX year-to-date. our over Adjusted payment related first funds flows over we FAD quarter our billion quarterly second We to which items, our year-to-date for $X.X billion shareholders as have $XXX XX. or quarter on

a to XXXX, framework. our shareholders majority new of our annual case adjusted total XX% the XX% we As the FAD. reminder, component returned a supplemental return to be of dividend target of to of From the will variable

quarter Turning ended $X.X under we sheet, just billion approximately of the balance cash billion with and to $X.X debt. the of

million charges. the loan quarter X% repay incurred we We when fourth quarter. second XXXX the term matures extinguishment in in variable rate early our to due million $XXX and During $XXX it repaid note no plan

forward, XX outlook business XX. than the second and quarter EBITDA presented key and timberlands and quarter third $XX Looking approximately be In Pages earnings items third full are year expect will for quarter. million our on XXXX lower we adjusted

is related operations, second to significant log timberland in smaller domestic anticipate inventory. the pricing lower Western mills our saw This fire with third logs. to for We lower due absent diameter realizations disruptions. the quarter Turning slightly ample domestic modestly ended sales primarily quarter

productive, export expect the of warmer accelerate higher to strong months, slightly spending are haul on harvest favorable We fee elevation log and drier road in and will We higher harvest as activities operations anticipate those log favorable where volumes higher will less weather pricing resulting Typical unit and condition. cost. and lower limited summer focus demand. forestry large with tracks remain supply per due seasonally, activity

Japan the Moving export markets, log in to remained strong. demand

our be the quarter. sales significantly realization. In second log to sales to higher generally realizations expect slightly and we volumes China, quarter higher volumes sales comparable We third sales anticipate and

demand the moderates strong a summer in the higher during generally quarter significantly during we per volume South, increase third other the log countries and remain thinning cost logs due to as haul remain log constrained. Although we as higher imports expect rainy U.S. from activity. demand fee season, as harvest for seasonal Chinese anticipate well will unit In

logs. pricing be average sales a fiber due of expect we second log percentage our be mix will log Although to saw realizations to lower quarter, fiber should the and comparable slightly higher

road the our of of and up months. realizations this segment. activity I'll fee timberland, spring July the with comment forestry higher be transaction. North these Xth. this as volumes of the gain In to North, during item timberland seasonally sale the completed completed cost as drier of as come timberlands season. wrap expect third was related significantly gain reported summer expected within mix due special while The expected most million be quarter, a also lower We the break million on up a inflow will on the are higher to of will be Cascades is sales harvest cash out to In we a are outlook approximately record $XX to a $XXX which and we

the segment, real properties will lower a we XXXX, adjusted sold. third our resources million third estate, quarter be ago natural higher due earnings will to to $XX EBITDA but to mix than approximately land year energy, average one Turning the expect comparable and on of be basis quarter

As Devin on pricing strong properties. to mentioned, we continue HBU demand and exceptionally capitalize for

strong In addition, seen construction of materials. year-to-date we've production

now XX% result, $XXX increasing As estate percentage adjusted for are a as be XX% approximately XXXX, to guidance sales to We full expect for land EBITDA the a to year of bases real we our million. year.

record pricing wood has our for oriented from has also board pricing product recently benchmark lumber levels, significantly declined. benchmark for reduced quarter and strand segment, For third

will EBITDA the adjusted expecting significantly third lower are in we be result, a As quarter.

$XXX our realizations quarter lower lumber, and realizations current average. are $XXX For approximately than the approximately lower quarter-to-date second are

due OSB, still current of realizations than our order the files. For to significantly average length our are second quarter higher the

the realizations higher higher, OSB approximately are than quarter-to-date average. realizations approximately quarter Our $XXX are and current second $XXX

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

activity. demand centers prices normalize and improve signals inventories it For have higher lumber, retreated as for volumes do expect we sales yourself at as and treaters home

also costs are logs. quarter. Canadian unit and would We costs partially improved anticipating by for We higher anticipate manufacturing Western this offset during slightly the

strength will oriented to board, residential remain we and continued favorable For expect new due construction strand activity. demand

following and We rates expected the fiber capital and rates, increased improved expect With quarter improved OSB we by costs. volumes partially at complete operating second manufacturing are third previously operating higher mill outage anticipate project to cost. the be mentioned. quarter offset to our Elk higher These improvements sales

higher products from webstock we we will benchmark over We strand oriented primarily for pricing quarters. ranges previously higher approximately several anticipate of section as increase captured be lags sales OSB increases. engineered the we realizations raw May XXXX, next quarter. webstock to to material the XX% and board by significantly our costs and For one as another products solid benefit I-joist expect announced wood which continue price In announced from XX% for cost

in recent strong distribution I'll adjusted For are couple expected lower will results with wrap EBITDA. items. our total company the Business on up we're perspective. reduced to a pricing financial additional and business, remain to comments our declines significantly result a commodity in historical expecting margins compared of

end assets For second in finalized each year and for estimates quarter, liabilities. pension prior we year the

additional funded for for a we million As improvement announced our year across post-employment pension $XX non-operating result, items. increase our in reduction outlook full a post-employment in we status June businesses. non-cash, million $XXX Slide as and in well as projects includes our our return expenditure shows current It net expense. a pension capital also back some XX high recorded and

third we mix XXXX contribution effective XXXX. refund tax our forecasted with taxes, subsidiary. to and now expect our REIT The now of the million approved rate has been based tax taxable earnings XX% XX% between expect on the of to between to to the receive our pension refund and $XX in be associated Turning we quarter REIT

Devin will and I to to forward the questions. look turn now So call back your

Devin W. Stockfish

thanks Great, Nancy.

remodel Before quarter averaging housing permits total housing in million units. wrapping pace the starts repair and adjusted I'll averaging expect back half May over our year. Single monthly since in quarter housing markets. this comments of activity activity on up basis their in second customers reached continued navigated an family impressive pullback highest on Notwithstanding disruptions, second continues builders strong a June the level at starts X.X as supply and chain make morning year-to-date housing total the a few XXXX. with slight home U.S. and a is the X.X to seasonally robust million momentum in units the of

encouraging longer-term and by very is housing remains outlook Our near-term housing favorable and fundamentals. bolstered demand long-term

remodels to remodel, Turning elevated for do healthy. levels demand larger the small pandemic, professional in and demand has established the softened from repair projects remain for yourself although it

demand in continues on favorable our rising housing. Our long-term remodel low well an to and stock, supported capitalize fundamentals record outlook housing to and repair In be for interest favorable positioned on we equity, home we're for delivered financial performance rates. quarter by the and closing, aging U.S. second best

are OPEX to track Looking focused our industry to $XX million million. on target our of across and operations XXXX deliver leading on remain forward, performance we $XX

on excited all sheet to that Investor with key now for and $X.X billion, forward September hold initiatives. morning. on that the of balance floor update Virtual announce again and finally to open nearly supplemental I shareholders questions. speaking to with cash a to variable we adjusted be instructions expect FAD of Nancy, extremely Day framework. update September. new significant and And up pleased in Our our this dividend a our we in to we'll and component an allocation Russell, And return is year-to-date strong will release of the through give look later and included I'd will I'm amounts to you like capital press share will longer-term details registration Event sustainability strategic We're XXnd.

Operator

[Operator Instructions].

first Pettinari Anthony Please question. question from with with Our your comes proceed Citi.

Anthony Pettinari

anticipating agree you wondering I below lumber prices mean any talked your morning. think sure the in talk seeing that demand to a I or anticipate specifically Good in not and pick-up that? about so, market last September, about over that more about seem XQ. at of now give see you Devin, for moderated of I'm August week or more are are cash you currently, there? competitors, or And that a if July can wondering color see would in just you of I is with decent the you the am you can talked would how right historical below little something you that end levels, inventories chunk a costs price have to if you declines kind just

Devin W. Stockfish

context different just high into of strong Obviously repair spring for and the seen Absolutely. levels most lumber matter Well OSB the recently. being really function reached May. of a remodel the that little a housing, pricing off bit and that very of question. then of here address and spring this and just was significantly we'll pieces come pricing We've historically through the

mention I'd in our is strong do function I been July over sales that come down yourself measures. smaller say late relative months We've market the is primarily XX% into of pricing to that and historical will June on to XX% reasonably what's market. still of seen it in by the a of terms couple spring. past of the Although going really

build producers customers. So the segments, other of look would been the treater that's a that that up improvement, which, Weyerhaeuser in move to gone product warehouse caused little to the pressure markets have sort really into to of that's bit pricing inventory -- and home those as

picking back the how market of as fall, up at it the think into here. head current be looking I situation terms and we we're should In yourself do

pickup the of sales activity into we've seen bit just little In improvement the warehouse of fact, there this treater. terms home and a a in even week,

and picking going expect that would to that's up we start think I to accelerate. So,

prices. get vacation I you'll the that of just moderation we the weather, do you'll see and shot high As the in yourself all school, suspect kids And the see I of and down. frankly getting. the lumber to season will press with back into the little cooler was think fall, winding that bit be sticker some downtick it a was going lumber prices

that prices we levels earlier We're at down. about. not of prices terms than spring. be little we the have the of at the to settle pricing seen lumber that think the into range all historical albeit have the the past over-correct in of a record channel wouldn't environment, talking depending you're all, seen is in surprised couple higher to We've inventory, a just differential when levels A that come bit. So, first expecting probably part that I it's certainly of on what saw in on comments think

with increase about pricing the will think that the to haven't of a probably think have segment normal than lower environment. little dynamic in treater I the log normal, and in costs, relative it's a the Columbia bit cash improvement home say and gone look dealer elevated there, with manufacturers you I I in British BC when it's they some little question possible segment, as pricing entirely in wanted I cash below inventory still went. respect a other of that's where the build probably certainly think to the to your costs builder prices portions, at but warehouse and dynamics a really

a I do because in think cost the has of that gone relative that floor little how develops. America probably dynamic to see up history. bit we'll overall So North

it strong. that here head segment we're start stay yourself fall. segment expecting up remodel and should should as repair picking again, pro construction remain of should do strong So into and we residential The

very historical to strong pricing expecting range we're by settle a overall into still context. new pricing any So that's

Anthony Pettinari

sort and the you're maybe net seems quality morning, this of should we a be think talk versus And It shifting you're a they creep talk very valuations seller just I saw can at think higher we price. transaction mean, you you Weyerhaeuser then That's any helpful. premium a an environment? net of big in, accelerating risen pretty gears, Okay. for timberlands, in is sectors. industrial of lot seeing timberlands, ESG market seeing across there buyer, for about high M&A announced sort about I about Can as just XXXX, attractive quality have this that to

Devin W. Stockfish

of bit. Well, say I the was certainly first It the we up. we're to think but a see no that year, I'd a pick up little activity see for doubt slow little picking starting the half

of in in in In definitely pickup interest in a we've terms the a and that's valuations, quality South. both statement and seen timberland, West the

valuations see can in announced the recently that of You deals. some of

we've this I bit. think those timber the that's certainly into it think that a think respect the the the up are piece, a always we're I in, bit. I is seeing With to activity, in of piece, timberlands But that's something value lot may improve day we said, seeing ESG and to in the base, tick market. our of what a interest there our to space, carbon always be quality we're optimize valuations do as of our playing little Certainly grow day out. looking doing we're

And buy-side. sometimes the sell also that's that's side, the on but on

You've seen late. a couple of of and Alabama, with transactions Oregon us

every So looking, look we comes we're deal through. that always at

in team to I got disciplined. his continue be conversations, are to but be and Russell deals, think lots that having are at we'll looking space. you've of active

on deals sense, us. that execute and are and financial disciplined remain we'll for that good make value so And accretive like

look we of growing continue expect and be improve just in to timber on to we'll base. and our terms So, optimizing active,

Anthony Pettinari

Okay. I'll helpful. That's turn it over.

Devin W. Stockfish

Thanks.

Operator

proceed George with next with Please Bank question question. your Staphos from Our of America. is

George Staphos

Thanks on hi my very Hope you're taking the Thanks hi Beth. much. quarter. well. Congratulations Hi Nancy, for Devin, doing question.

question, first had come something back want Anthony The up. teed that I to to

the dealers order to distributor lumber risk left pick to up you you're as about and jam, of at be because or log standoff, signs distributors to as of ordering, best lower yet up hand then break low just heard to and no are which you that or sticks see demand might going rebuild in mouth to maybe taking period for and are not of price that this not shaking out? one the that all will you, beginning are start for and of you distributors very, that So, prices and prices keeping seeing very What how low think head on dealer inventory with where to do we've those a the you showing inventories inventories. their any a do just on be something see thing and right, low wants kind dealers of that

Devin W. Stockfish

well out cautious building inventories. have the to in day Yeah, you're environment, really in dynamic our things; right. you've And what sense and really pricing going out environment. day out very the falling terms into that's be That's get plays I of in that starts very back one for first, people exactly a has in markets are you long two think to about a time. pricing When bottom what's that started the they of on people in is going bring to market a

You today. look going at on what's

in downtick in seen print the smallest In saw that it that night or XX pricing showed we've the we fact, XX last weeks.

that there's British and other that start in think That dynamics that give the starting gives reached people perhaps to start because fires a I some feel building confidence the usually normalizing of people on Columbia, will going floor things inventory. are to we've upwards. some are

supplying of sure that thing to second have it's matter space, you're you're that is, if a customers. The make always you your in

short. situation, come meet the challenges, I the for get so, happens there's sure your with low don't people and the for customer any going of they outlook demands, out played that risk when relatively will that we've the picking inventory And year, customers make you fire whatsoever, say, to half that with to some in to back what pricing have we're and seen extent that their it's to of quickly. enough careful results in. terms in builder too feel from them the up what hearing then caught that to of get is transportation the like have you're dance usually a dynamic And

inventories build really in them start network I material of the distributor we've So, dealer to seen point. at wouldn't this say terms

said the I this been and change improvement bit uptick you coming momentum there's here that noticed little that have quickly. of could out as seen see the dynamic gains that starts Although, earlier, to of we home the treater and relatively Even warehouse we've an back. start week system, that a pulling inventory extent

George Staphos

Okay. Thanks timber. two-part heard as Tycon question, second helpful. what for remediating, redoing switch way we in kind China and relatively gathered to some a with We've they've that, I disruptions very inventories been want of gears high. Devin. That's they of timber particularly for the my from on handle are

little a on still demand was China. seeing into surprised that pleasantly you're I So timber strong surprised,

and you're to prices than you Do in why explain that we're then gaining think you could you a Thank seasonal basis three in degree still South, U.S. of commentary that flat year-on-year, some fairly think and you And or to on now terms that timber? a prices are up more are real starting If on pick the the buy happening for to period have perhaps other reasons. lifting that's see deflationary want stumpage, skeptical in of ton you. you regions? a to versus why is share begun I say to couple a bucks some

Devin W. Stockfish

logs, of Australian chain for and American the supply challenges those but together really ban North come from on market have first well China European Well us very been up all back for China this cover the strong logs. years. that thanks. question above I'll Pricing that and, opened of Part has seen, the of been exporters, has has year. a market really number the what in been we've things

And nice been us. a really so market that's for

mentioned down you issues. bit They've big meters, momentarily, We is little that's piece cubic so the that it. had up away And first environmental hot into are the at But are regulatory when is X.X some inventory rainy of see that at ports inspections go into every which I'll are China, up comments you few and increased little there a bit one the mentioned, at the one some get is ports year million season. which the a from largest deeper As June get dynamic changing but levels a which May, you just the overall. port at of of log-in there's the they're a saw end to of port, in did is George. push take demand all, there is always driving they're mills inland. what trying essentially Weyerhaeuser that of to down the doing I the mean, tick And a specific facilities. a also things

that And it very where to they're of market. a in there's port. of need time dynamic going get still into imported logs little to away going a resolved. happens time We're will China, to China those of optimistic you're on some lot a mills so bit trying from that there move that still That from

So that's issue. more really of I temporary a think

customer strong. us For is is in very log our strong. particular, Chinese Pricing still demand

And actually export to or our China quarter-over-quarter QX. versus rather so up into have volume contemplating QX we're expecting

going but we're So a on just, the dynamic there the still of back little the half mentioned, that positive very bit year. of I about market from over items

on Moving are uptick we a going there two to obviously in the pricing, I Southern things market, have there. of bit and seen an think

summer for time the And particularly that's the in and for going the saw on this inventories time, the that log that's logging of multiple certainly in the course and pulp of weather And kept of spring. is year. events really a weather wet of out When keeps see which the limits One pretty mills the pulp dynamic. supply of mills. over to woods them the period the been the low you the South that's

And is an been do of certain that's also this there's it. saw capacity But I for about think increment piece several talking geographies, of And a new which we've mill the that, been in. years. come in so that's

the see new If effect. billion you into of new baskets in capacity board those where South that capacity a X coming, is tensioning feet wood put you

don't I be think so, different to And hockey geographies. be by just the of stick it's going any going steady improvement a stretch across It's to slow, imagination.

because geography here just to And and each lumber. is a of of that and to so, the even specific we number South continue going mills to be going that's the future expect again, think we it's but wood to announced great happen. We've for manufacture a recently tension baskets that a number continue to to slowly seen foreseeable place will

George Staphos

quarter. thoughts See Clearly. Good Thanks the luck Devin. guys. you the for for

Devin W. Stockfish

you. Thank

Operator

Mark Our your question. next Connelly with question with Please Stephens. proceed is from

Mark Connelly

cultured how Weyerhaeuser but can It's since It the like big of talk been are has versus trends in talk the silver topic your advances weather? [ph] gains. be about in more other culture time much about you silver used a affecting to about a that we conversation, talked issues yield long

Devin W. Stockfish

Yeah.

on of think day across seedling don't become our have much and of I reason just improvements the part as maximize team part we it that day different is culture And to our it's operation. R&D a the yield regimes works talk about silver we to portfolio.

it's So, time We talk I part normal us. I think maybe that you're probably right. our don't used be we'll competitive over it much, of as to say that because to become advantage something is just a as we about would for continue course.

do in silver very forestry think we well. I culture

to that make working are a lot folks, best have every We base. of we're land day the PhDs, driving foresters across lot a yield that our sure of great of lot a

And ability right think that the seedlings, really for targeting say the across gets the we're ensure as about landscape. the and when I it the climate growth make change, really in changing example, a is our our even climate that the of planting you part. example, seedlings an important to think sure using warmer we're teams landscape, maximizing for I will we're and so, that survival to

we're still talking if not what as core So much. it it and is basis on that's we very definitely a to even about important something the do, day-to-day

Mark Connelly

Helpful.

actually about talking been the and seen we years like big haven't talking way Just change Do in you investment? part gears, of or about being homes on about a affordability, are changes think those switching are that anytime constructed. the I but shifts for are and if feel coming this is big lot a a require actually that a labor we've challenges, home couple going to are soon, they builders your

Devin W. Stockfish

an to at that for home years. is to really a the how awareness many folks more of get at more Well, need builders, to one, the the chain, of of to for we and challenges we talk number make big we've board, across the I dealers, seen affordable, just labor overcome the housing some variety reasons think homes. when throughout And that's that's build on the efficient there supply

to So But that desire really seen have date improvements been there. there's margins. around the a improvements you're to right, make we've I the think

that I change material houses think be real process. a in we change to going the slow five we're way homes. you're build see And we having how to build to it's going tough now, from a if or four, really fundamentally that's and not sure I'm conversation this years three,

terms You'll improvements But -- chain an supply we these established the margin. homes. build probably build continued see it's of how in this around

And so improvements overly going big we that to to seen date, I'm sure just the not change I'm near-term. and in optimistic that's haven't

we're -- to very very with talked them supplier. we're close customers, think have our a We we're I nimble and

our So extent do we how we business meet the adjust well that need that. positioned customer to to do we'll to be to needs,

Mark Connelly

Thanks Devin, helpful. that’s

Operator

Susan with Maklari Our your question Sachs. next from question. proceed with Please Goldman is

Susan Maklari

thoughts peers your of to question Can these Thank capacity, is in your talk bit potentially implications offline emerging events you. stories on together? from as some think around business forest Good you for do out the natural morning, everyone. capacity of West, about and around come the your first we they kind My your little a Canada. the and fires as potential outlook taking especially

Devin W. Stockfish

Yeah.

That this fires. have we speak guess obviously from and in worse, around near-term a being observation issues near-term, a West fire No would the see a we're it's these I can a situation season certainly said expecting the year, the stay we seeing moment. we comment start that been out. the In British but I that natural we're Nothing nimble and at we, longer-term. our in So, and on point. our then land, say maybe here on overall, in adjust some the every even disasters as production, near-term to to here rough to fire specifically play or Columbia things

day-to-day say of point. will planning. in this announce with long-term I And to here change, at you can forest and seeing into something to natural it's hurricanes, some so, that West we're environment the in events fires but other that the that's South, the bake have on nothing that your basis something a over time, the certainly

not we for manufacturing. well example, Columbia, over available having another time British as serious season, so, for those wood obviously see products And trees are fire

our work? about capital long-term planning, we as that decide think consideration we we as into to going take to do So where put are we

Susan Maklari

Okay, in engineered mentioned May. second that's My is announced your very in your comments increase that XX% helpful. wood to you XX% products you a in question

those products think like coming about sustain forward? and lumber, you can going we around dynamics ability talk alternative prices pricing the framing your down, As to realize to that

Devin W. Stockfish

send We new market the Well, into as that residential EWP a very construction. primarily product been whole has tensioned.

the slow component And are so hasn't construction, lumber a the mark remodel, nor have which down really repair expecting sort primarily is and OSB seen unlike that of heavier of we for little half that residential and of any year. EWP back and the noticeable

challenges, bit dynamic So, costs of there there OSB and run-up input than different well. in gone is veneer the quite the as with pricing, up of have the is resin some part the lumber for EWP webstock a little OSB. making a issue the And too prices,

think to for that in that there's costs. some in pricing about balance Absent increase the those residential capturing material announced construction we on pretty that EWP terms of So May. we feel I the happening something pricing raw overcome market of good

Susan Maklari

That's helpful. alright. Thank Okay, very you. Good luck.

Devin W. Stockfish

Thank you.

Operator

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

Mark Wilde

the and of seen inventories, producers net below on pointing Can Pacific just or cash. gone last your both whether at back reduce Nancy, couple pointing you've take they're they're I'd the the in Beth. fires, at weeks. have Coast about terms Canadian that And of big of scheduling lumber activity cuts of in production virtually prices I'm the U.S. over talk Devin, to have Western some of they also Devin, question, morning, to West to production in because to that ratcheted production July. aware and all? Good to U.S. back all levels Canada that kind you the come there Northwest like and we pointing to They're last in are some producers in July the are

Devin W. Stockfish

for thanks question. Mark, the Yeah,

probably trying West or production we we're We have had any manufacturing, the across Columbia. in had peak. and we're dialing sense overtime shifts when pricing were this I and general back extra at those hours comment date either the in in spring not run portfolio the a to you not the the in would that earlier British our material of say to reductions all-time that is

do on, to a closely posture, a look we time. as something dialed normal it's all mentioned. really situation think more is at I The eye we're No the keeping I impact that fire something back close British So in would got that's across a operating but Washington at Northwest the still reasonable in have Oregon, we've Washington situation. that's say fire it number fire point Columbia, one Oregon. the A of star the in this we point BC, worse log we haven't. but activity only of but the timberlands up we watch and of downtime, that and something challenged I some operating obviously lot some mill mill and decks British log that at Columbia. we'll a the closely. real I is probably this has even just logging obviously point little at is in near this the here at than is situation at because ceased going there in point term, to change would think at BC If have availability in point take be to doesn't our which areas,

Mark Wilde

understand just kind it's talk there, that operations in that might of on pretty about to you standpoint a formula it? significant due BC October. just Can as situation, impact on have your And up go costs, follow up from log are increase what a to I BC again

Devin W. Stockfish

on one the that July increase, announced increase. Xst, was Significant significant Yeah.

costs already industry had we just up think. additional challenge I log a across standpoint the so in BC have that to That issue certainly BC. And the gone adds floor in cost from

on cost been low we've us mill. Weyerhaeuser focused having a specific For

costs probably at standpoint I think But a costs said, with cost that's top think that forward. mill. up have and raised operating BC top we're quartile structure gone the from and the I cost our associated decile Princeton log if other not being

our for closer price, even operate cost but this mill top certainly can getting mill it's profitably, or costs So, we that at rather. think we low still I

Mark Wilde

helpful. That's Okay. really

and there seemed of follow-up, in about pay an first talked assume be that it Now a first seen you on think of if of that the of quarter just go going now? back to months, couple until safe what that a the want we with of wondered, of the variable a couple supplemental that had paying Is you for kind some in I go quarter ago you're XXXX, about XXXX. might bit to we've of the just XXXX last little wait opening to to markets months

Mark Wilde

little about And where we've year. the unique said reason $X.X QX we going later the paid billion in some out year. of ruled we've really fiscal previously, a the possibility generating already the bit the new as quarter, there framework typically dividend through component adjusted know, FAD. situation be haven't variable and to are, But year. prior the in for out we're generated you of anticipates that of that we to nearly you you're think Well, for second the a sort cash right. the ensure the definitively that And, interim of supplemental is in And, dividends to of Mark, primary end supplemental flow we're dividend the that just that we're matching

We balance. have a very significant cash

factors out. those And the both of and the continuing so to year that's terms something playing the Board rest of we is see assess how in

say that to of we'd would supplemental year, of be paid XXXX vast for flow going out the still that, later I out to some is for haven't but back the in of the again QX do in still expect at ruled consider this at the if I'd Board XXXX. we point So, majority dividend cash we would which over year, the the even point, that say were half

Mark Wilde

Okay, alright, I'll helpful. that's over. it turn

Devin W. Stockfish

Thanks.

Operator

Quinn from question. is with with your Markets. Capital RBC proceed next Paul question Please Our

Paul Quinn

Yeah, thanks very much. Good morning guys.

Devin W. Stockfish

Thanks.

Paul Quinn

Hey, your budget. you noticed increased I have CAPEX

major I in back more QX the us on got QX? finished terms there you've projects to get Elk is and some the Just an to in details that wondering now in volumes you production, give if project issue could guess was of and

Devin W. Stockfish

and million that XX did increase in million, then CAPEX we XX our our or million About XXXX as so IT Yeah, projects in side, XX that so some said. focused announce timberland mills. is on about largely we we of by were is an had products, the wood

context, the you back that to go XX budget XXXX. breakdown. mind you if couple CAPEX reduce we to things that's did in for keep think about million, XXXX in When So of our

reliable. that So low had projects number be products cost, we to the we wood in will position a returns, the highly generate very strong business, think efficient, of queue business across to really the continue

a have which we from gamut completed we Elk stacker, variety So, project upgrading the sorter They was of in projects to the the the queue. CDKs run forming line.

on of a across de-bottlenecking, mill, costs, variety focused largely just improving the So projects reducing reliability. and

manufacturing one there's our the not in I of have those each based up that projects roadmaps performance. And mill get it's assets thing broad highlight So, necessarily of top would to we as that to on all range really, said, projects. quartile I individual a just it's

Paul Quinn

to where and North addition mean, XXXX lumber up the of XXXX. that And in in are a number got, projects Okay. X.X I future Is you of pricing X.X billion capacity turn lumber in or capacity have totaling coming of been I sort then America, over of terms announced. I've in into marketplace? level billion the if another then supply

Devin W. Stockfish

really know, reasons. doesn't a You of it couple for

we it, the going North the typically capacity do when about way continue as into about U.S. we see we you're a American market think So to whole, the coming is which to think think

I coming the place going know wood you're South. just lumber. such tension think primarily a capacity Pacific of much in into new great it's a see way manufacture to Northwest, the basket. to don't We that's

associated log that fiber there. we're I to the probably folks think Columbia that of. I over aware from time, will prevent you're so issue in And the do putting because think much with capacity And going lose capacity of British costs well too availability

America. capacity more next we're in amount capacity America. look, we continued North North think right. some But it, net-net I you additions on the the that to won't be I cover years, anticipating over without we about that So, across we XX mean, X of if need housing see basis a think will overall able to

I see that. And so, think continue will to we

will or tension. in keep more I the signal demand that less think

point. So it's this not something me worries that overly at

Paul Quinn

mean, Okay. back back just up guys lastly, then you And have I put to quarters. record

Your urgency shareholders like investors what somebody here flat to Rainier a stock up are to any do Weyerhaeuser help here, which to missing is date able here? is the like to versus at through be XX%, something year

Devin W. Stockfish

shareholders. of of portfolio for Well, do ways. focused improve driving assets. again, long-term always on in constantly managing here And our a actively We're we emphasize to that say, our are value it our number underlying as we the extremely we and value I'll

a products. and to number effect, programs that You've timber of our seen transactions wood CAPEX

on industry have an focus unrelenting performance. excellence We operational driving and leading

a think paid time. of terms us years, dollars really enable over a to return future. OPEX EBITDA down as in we for importantly, an over over sheet base that We've our have from plus made well billion that to positioned competitive is of we've the seen last of to the results series a that really margin. allocation as over significant I shareholders the variable year decisions dividend structure capital supplemental new You've well amounts And debt, strong, our us our of balance is positioning going have cash very

is dividend digest something the generated in magnitude market to variable be. FAD very that's is just through meaningful first As quarter the we've supplemental positioned payment of And going with XXXX. think dividend deliver what first the seen of the that year, the probably half the to starting of you've to I that we're a

that think investor should the we benefit start seeing dividend, reflect the as we underlying new gets So starts structure, pay more see price dividend and to value. the better familiar variable our I share market as base with the out the

we're other our The be to company enhance other the some development future, our I'd that say focus including drive opportunities that we're optimistic to market increased climate interest is over for are a the and solutions catalyst the time. and the on taking natural going other of to really position thing actions business investor valuation

Paul Quinn

you're lot. I hope right. a Thanks

Devin W. Stockfish

Thank you.

Operator

Our Please Global. with question. is proceed question Seaport next with Weintraub from Mark your

Mark Weintraub

a carrying increase you'd to over little nearly the because back cut yield but it first, level. is dividend then current just the obviously Maybe question, dividend the last not ordinary you. prior X% Thank and the on

that So process the the large dividends, the here you core upside your supplemental thought can of of embraced level do to by is your what you're really hurt investors you dividend, relay be using, would that that the there and be yet dividend, kind much core how getting on you're think again new sort might haven't dividend low? fact and framework core the

Devin W. Stockfish

as grow cycles. part overall relatively Mark, think a businesses time. and that it's again, intend structure we've I sustainable of to of would is and new base do dividend core that dividend certainly say base the dividend, a dividend generate over digesting so But respect said I We the across a market couple with to base cash want be supportable things, we the from philosophy business That's we our framework. and to our dividend over the it.

businesses. as pricing get dividend. stable we're timberlands organic and E&R that market our intend in from across or distributed growth be But generate even framework, and reasonable, is dividend to costs incremental cash time. variety going the the over in out obviously, when So, key business, from going that cash more overall sustainable largely acquisitions. environment can to I will above we strong that significant is dividend you the the flow is base is base that note, of over the growth in different to grow bottom And taking disciplined the that growth of certainly, And cycles. about think flow driven angles, shareholders would a the out, to just the come The the

answer how So, I still question short the think going is is to the market digesting this your to work. is,

they as over time, work start dividend start appreciation variable come the will dividend think see to into for going to base time. over play, increase grow to the in they there is I how see this as an be

Mark Weintraub

Okay, And on the thank quick in two follow-ups particular. lumber demand for you.

magnitude the but the going lumber how So yourself, much is renovation you projects? in have big say had big your hold of could there business Do typically, of decline Yourself the versus you It type order renovation it the been thought mentioned that into up, do

Devin W. Stockfish

the Yeah, warehouse a us we business big segment. improvement for home into so have

And be in so that -- up can that. than to the Pacific less Northwest in slightly to XX%, up maybe the South

part overall Yourself the overall you Do We of demand. business. somewhere the in So about repair it's When It market lumber a decent the as of our XX%. is segment and of think think remodel whole, a neighborhood

Yourself stores, the So, the into overall you the we the course, look It do and smaller a spend. Do across big sell a that market, repair is box but portion lot of at much remodel overall of

Mark Weintraub

sure make I like half it's understood Do Okay, is [Multiple or to So, Yourself that so Speakers] of the It XX%. remodel the XX% just repair of

Devin W. Stockfish

of repair that about that the think we've seen is but of you look, Harvard Center when a segment and to borne remodel of well from look other about and some come spend estimate I stuff sources Yeah, at. the think some are hard from Joint that as out we we Do the with terms Yourself the total, up concrete is XX%. in Those think It numbers in

it's think XX%. So we and that, triangulate the we about

Mark Weintraub

chain homes of creating demand killing said a mentioned the confronting supply are they're of you the builders quite chain housing And Okay. think, because to chain any you and kind issues, build. That impact And things that supply out, lot those issues issues opposed it affecting the that but optimistic. you seeing builders? supply seeing negative they got backlog lot maybe you're a as on stretching to still Are of impact, certainly etc. of

Devin W. Stockfish

been building, the primary I issues. that the think been seen that think building largest issue. you've the I has behind the To that's reason products, Yeah, slowdown chain extent in supply

they've to again, those what from the bit gamut. and the level, sales is talked troubles to But challenges up everything of demand windows we've talk go a this conversations supply some other And builders, customers, to slowed year. to of the from And paint, the there, those the based activity had U.S. back think, houses I having the strong. as optimistic runs to but notwithstanding year. in of you they're little getting really for that. for with when we still the a some on so we're with affordability we appliances, to it demand catch just and try hear customers And the think going to of build lot chain, discussions community, that some The housing incredibly half the I think, we buyer still in they're is the is on

Mark Weintraub

I more, thought, question the you sales is in there was guess no and a Right, or slowed are slow right doubt they've so seeing that not pace. too much? a their the production now there's just pace so

Devin W. Stockfish

Yeah, we've they'll anecdotes a that have we've we that little a I had back house have couple a heard and that of the like now, bit come waitlist, a we'll conversations to to definitely in buyers of them put tell think seen them can't on right months. you've we sell

little a exactly. kind So how bit that. magnitude of The I think of pin right. much hard there has that's been of to down we that's But directionally, think

Mark Weintraub

impact products you in might that bracketing just a magnitude, sort us quarter, pricing, the past prior in given things quick, what like improved then that? and changes or efficiencies the of time with and X wood the the versus share real various the some us is can of something Okay, you've be the

Devin W. Stockfish

up that's we sales as price we so certainly what's of quarter-over-quarter. down. EBITDA volume bit products be sales question because expect of to I would the cost and think whether Yeah, magnitude be in wood up going I'm give Improvement going be to there's on materially. I expect think, up X not a up volumes, some to a terms to or there warehouse you just with Home little But

up products. quarter the in So price EBITDA wood would X for be

Mark Weintraub

much. so thanks Okay,

Devin W. Stockfish

you. Thank

Operator

question. Please with proceed question last Our your Kurt with D.A. from comes Yinger Davidson.

Kurt Yinger

everyone. morning good and thanks, Great,

pretty inflection factors Do and for on you finally lapped Just consider see product point we're a solid, kind would of fundamentals that Southern the at side, the you big get that? the think profitability of salvage where that you start the optimistic an export on lumber in can way pretty to sustained improvement look sounds could you sound in business demand pricing. side, timberland in activity potential wood on and the sorry, healthy, gains pretty the what

Devin W. Stockfish

good is It's going bit this lumber here that's I'm as Yeah, lumber that pricing business. on they're levels the Oregon this going a We pricing little as different through we're and the harvest West obviously because and the fires work to you'll result to strong year of be going last in so start year. good kind as year. by harvest a and In so saw ticking a basket say, demand salvage to over We'll a of of time. answer slowly market. South West, by would I this see and up seeing dynamics levels and a dip wood each slightly in reasonable, very tension long

So about business. we really good feel that

a capacity been that that South, had in strong we We've disconnects continue the Bewer within [ph] largely those to as play mill, good to about mills that for continuing think Mississippi, over excellence. future. The tension and it'll little the us. the of was I focused it's that's Louisiana, are to quite for the directionally there. are overall to that's for just operational the And very the we're do announced It's coming slowly will terms just where woods pricing, that within the out Mill we out to I margin coming of bit. aside happen amount obviously, a wood that's And have of in feeling Mill, got, markets are think foreseeable just of see over pricing announced in I a that demand there starting in, that to out new happen. going up Idaho South think the bit. putting function a don't geographies of the play I And going on From we've to an several example, supply, Forest going South, years, I'm but talked pressure are we've some here on in think that about and inventory baskets time, number Toko good put standpoint, recover. between out overnight. continue be Recession a Products process Great

to we think efficiency year good business. But and that's that every OPEX every day, in put performance our program, operating part out new I the trying to lower targets we're Our costs. improve increase very of is and

I margin the there so as good feel opportunity well. And improvement about

repair good demand housing and we've wood got people, through overall to I is we've got think system, remodel So around and positive. businesses, the demand drive good story

those of feel So both about businesses. good we

Kurt Yinger

Got QX, it, first maybe for half be meaningfully timberlands, maybe or like helpful. at looks profitability looking could on QX there just that there's in a XX% incremental overall any versus of from profitability? down quarter, harvest that's have okay, up the kind way to should second the the is see costs And half look pretty fourth we there, sounds the to so. as volume that like impact we ahead some greater seasonal

Devin W. Stockfish

so units elevation or always to we do us, because Yeah, the And there. in road that lower the couple up quarter cost things a in higher earnings quarter. a West, elevation QX, that's typically units. more forestry work higher hill for we and move

ramp of that's been South. up QX, weather pattern. did a a certainly lot harvests, seasonal has we in the So typical QX, In there relative to rainy

of And able anticipated. up the back ice we we'll to that had weren't hard to that issues so as as I of the half absent catch expect most storms year, are saw up over we events get the the much weather we control. of that QX with

typically cost mentioned. So up, little just pick because you'll -- are harvest I or the activity in see the better, is dynamics to activity QX a costs reverse

So, I can dimension it that a probably of just but way, terms number. not you in specific giving

Kurt Yinger

all that's no, had. great. Alright, Okay, the Appreciate I Thank color. that's you.

Devin W. Stockfish

Well, I final think question. that Alright. was our

So day. continued joining you Have thanks thank for Weyerhaeuser. your us And everyone great a in interest this morning. to for

Operator

conference. This concludes today's

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

Weyerhaeuser (WY) 30 Jul 212021 Q2 Earnings call transcript